The world is scary right now, and if you were thinking of purchasing a home before, you may be wondering if it’s still the right move. The answer, say many experts, is yes. Mortgage rates are going down (and down, and down) if you can afford a home, you should purchase one sooner rather than later.
But will there Be a recession?
The recession has begun, but experts are predicting that things will not be a bubble-bursting housing crisis like the recession of 2008, so you will likely not buy a home now that will lose a significant amount of value any time soon. Therefore, it’s a great time to buy a house. You may actually even get a good deal thanks to the current climate.
Should I wait to buy a home?
That depends. On the one hand, some home buyers will bet that prices are going to drop further and further as the global health and financial crisis continues to unfold. But are you buying a home as an investment, because you are ready to be a homeowner, or both? People stay in their homes longer than they used to, so if you are buying for yourself, don’t delay. You might wait and lose out on the home that’s right for you because you’re betting that prices will drop, which they may or may not. But if you’re looking to buy an investment property, you can afford to wait and see what happens. You may not be able to snap up the townhouse you’ve had your eye on for a song, but another suitable one might come up when things have dropped a bit.
Can you afford it? Do you want to own a home?
Are you ready and able to also afford the closing costs and ongoing cost of owning a home? Often, people forget that homes require operating costs, maintenance and ongoing investments as things need replacing (and that’s not even talking about updating for aesthetics).
A good rule of thumb when interested in the home is to ask sellers what their utility fees are for the year. This will give you a rough idea of what you will be spending to heat and cool the home, as well as pay in electricity. Also consider such possible costs as snow plowing, association fees, and road maintenance if the home is on a private road.
But don’t get overwhelmed! Knowing these costs up front shouldn’t deter you from buying. Rather, it should inform you of what you can realistically afford. Better to buy a more affordable home and start building equity while comfortably affording it than to get in over your head. With more financial stability comes the ability to handle the occasional house emergency (think flooded basement, replacing an old boiler) and maybe even update to make it more your own
(painting, new appliances, replacing that 70’s tile in the bathroom).
What Does the Interest Rate Mean for Me?
Well, a lower interest rate means that you will pay lower interest on a large purchase such as a home, which is a huge savings over the term of your loan. However, make sure that you are locking in at that rate. Discuss your mortgage terms with your mortgage broker and ensure that you are choosing the best ones for you. A 15-year mortgage is an aggressive way to pay off your loan faster, while a traditional 30-year fixed can be less money out of your paycheck monthly.
Also, remember that the lines to lock in that current lower–than low rate that the Fed is offering right now are long, so getting in line sooner rather than later can help ensure that you are getting a great deal.
While you are considering your options and (virtually) house hunting, remember to be safe, take care of yourselves and others, and know that we are here for you to answer any questions you may have. Even while staying and working from home, agents can get you more information, more photos, and even virtual tours of the home you’re interested in.
Do you have questions about buying or selling a home in the Philadelphia area? We can help you find the answers you’re looking for. Get in touch!