Since the COVID-19 pandemic struck early in 2020, there have been lots of changes in the housing industry.
Perhaps, you’ve been saving money to buy a house, but suddenly, the pandemic gave you pause. Should you go ahead with your plans during the pandemic? Could it be the right time to purchase a home, or should you wait for some other time?
As with most financial questions, the answer depends on many factors. This article explores the pros and cons of buying a home during the pandemic.
Advantages of buying a home during the COVID-19 Pandemic
As much as some people may find it challenging, for those who have the money it can be a good time to buy a house.
- Regardless of the pandemic, owning a home can improve the quality of your life, especially now that many people are currently working from home.
- Mortgage rates are near all time lows.
- There’s decreased competition in the real estate industry since fewer people are looking for new homes.
- You can purchase the home at a lower price than pre-pandemic era because of low demand.
- You can get better interest rates and buy the home at a lower cost.
Why reconsider purchasing a home during the pandemic
Before you proceed with your decision to buy a home now, here is what you should know:
- Since lenders do not want to risk giving out a large mortgage, you may need to pay a larger down payment, unlike before the pandemic.
- There are higher risks of contracting the virus when you move from one place to another.
- Getting professional appraisers and inspectors can be a hustle during the pandemic.
If you decide to buy a home during the pandemic
The pandemic has existed for almost a year now and no one knows when it will end. If you decide to go ahead with your plans to buy a new home, here’s what you can expect and what you should do:
Be Ready for Increased Competition from Other Buyers. The fact that you plan to buy a home during the pandemic doesn’t make you the only bidder. You may be surprised to learn that many other people are looking for a home. You may think that you’ll get a good deal, but other buyers may be willing to purchase the same home at a higher price that the sellers likely will accept. Even if you plan to buy within a rural area, you may face high bidding competition.
Do your due diligence before you buy. Because the pandemic brought on many uncertainties, you should take your time to be thorough in your research before closing the deal.
First, do due diligence to know the real value of the home. Rushing through the process can be risky. You may end up paying more than the actual value.
Conduct home inspections to identify areas that need repairs. You do not want to move into a home that will incur fix-up expenses.
Check if there are any disputes on property ownership and establish ways to protect your interests and property rights.
Check the home’s age, public records, and the previous homeowners’ history. In short, weigh all risks and rewards of buying the home.
Be ready for tough lender scrutiny. Getting a mortgage during a pandemic can be challenging. Most lenders know that homeowners are finding it hard to clear their mortgages in time. In this case, they limit lending money to homebuyers who may default on the mortgage. As a result, buyers are finding it hard to get their loans approved.
Be prepared for a huge volume of paperwork to show your financial capability. To reduce the overall loan, try to make a substantial down payment according to what you can afford. If a seller sees an offer with a higher down payment, that offer stands a better chance of securing the home.
For the best results, shop around at several lenders before deciding where to apply for your loan. You’d want to compare different quotes and settle for one that suits your needs. This will save you money in the long run, and you will be more at peace as you repay your loan.
Identify a realtor that offers remote closing options. You may want to inspect the home physically, but this may not be possible because of social distancing requirements. Some 70 percent to 90 percent of companies have embraced virtual office work. Many realtors continue to embrace virtual and video home tours before closing the deal, allowing a buyer to purchase the home without physical inspection.
Consider your financial capability. The most crucial factor to consider when buying a home is your financial health. Weigh your options and decide whether to buy a home during this time or to wait.
If you do not have substantial financial backing, you’d want to wait until you build a robust financial portfolio. However, if you can afford to purchase a home during the pandemic, be sure to consider the factors above before you proceed.
If your finances are in order and you land a good deal, buying a home could be a good move for you.