One thing we know about the COVID-19 pandemic is that nothing is ever easy. NOT-A-THING...
No surprise that thinking about buying a home in the midst of all of that's going on... would come with some "thangs" to chat about!
It's likely that if you're on the house hunt now (or gearing up to start), you may very well see/hear some information that doesn't quite seem to be adding up, lol.
One expert says that you should buy a home "right now" because mortgage interest rates are down. (Ummm... that's partially true.)
Another expert puts a bug in your ear that it's actually harder to buy a home right now because mortgage lender requirements are stricter than ever before. (Uhh... that's partially true too!)
So, as your "financial girlfriend" (a.k.a the one who's going to keep it real with you), I'll just lay out some quick facts about the current home-buying climate... to help you make an informed decision for yourself.
Fair enough? *2020 elbow bump*
Here are three things to keep in mind when deciding if NOW if the right time to become a homeowner...
1. Mortgage interest rates are at an all-time low
In June 2020, the average rate on a 30-year fixed mortgage fell to 2.94%.
Umm... somebody pinch me (you)!
Why? Because it's the first time the rate has ever fallen below 3% in U.S. history.
It's understandable why this record-breaking interest rate makes home buying look MIGHTY good right about now.
Sidebar: These record-low rates have also sparked a significant jump in refinancing activity... a potential opportunity for existing homeowners to grab a lower interest rate... lower monthly payments... or a shortened loan length!
2. Mortgage lenders are digging stability
Let's rewind to the good ole days of early March 2020... when lenders were willing to "work with you" if you had a less than stellar credit score and just "a little bit" saved for a downpayment.
Pre-COVID-19, banks and lenders were a little less restrictive with the criteria they were using to determine consumer loan eligibility.
Yeah, those days are kinda on-hold.
In an effort to protect themselves, banks are upping the ante when it comes to requirements.
Lenders have tightened the belt on who they lend money to in response to skyrocketing unemployment and the overall unpredictability of the economy during a pandemic.
Banks are "loving up on" less risky consumers, who have higher credit scores and more assets. *sigh*
JP Morgan Chase, the fourth-largest U.S. mortgage lender in 2019, is requiring new mortgage applicants to have a credit score of at least 700 and make a down payment equal to 20% of the home’s value.
If you're not quite there, no worries. Where there's a will there's a way!
For example, you might learn that you need to spend more time saving for your downpayment.
Or, you may have to work a little harder to find a mortgage lender that loves you anyway... money/credit flaws and all!:)
*If you need help with your coins, grab a spot in my free budget class HERE!
3. "Oh, you've got to be quicker than that"
*Shoulder tap*... don't let the tighter restrictions fool you.
Folks are LOOKING TO BUY!
According to Business Insider, June 2020 has seen the highest number of mortgage applications in 11 years.
- These ridiculously low interest rates are inspiring people to "make a move"
- The pandemic has sparked an urban exodus in some regions (Yes! Folks are getting out of the city in search of more space and serenity.)
- People want to finalize home plans before the anticipated "second-wave" of mandatory quarantines
Whatever the inspo... homes are moving FAST!
According to Zillow, homes sold in the U.S. during the second week of June are only staying on the market for 22 days -the fastest purchase pace since June 2018.
With homes moving so quickly, buyers have been paying the full seller asking price for homes -and oftentimes, more- to sweeten the deal (i.e. beat out the other offers).
Patience will be the name of the game in finding your best deal!
>>>BONUS TIP: Remember to make the decision that is best for you. Carefully consider your job stability and savings before making the new home leap!<<<
Truth is, the housing market (just like nearly everything else right now) is in a state of "we'll see what happens".
What was true in April may not ring true in September, as the country continues to address the current pandemic and all of its residual consequences.
Whether you are hoping to buy in 2020, 2021, or beyond... my best advice is to do careful, thorough research and put yourself in the best financial shape you can get in... so that you're ready whenever the time is right for you!
- Stay up-to-date with the good/bad/ugly of the housing market in your specific area
- Save, save, save!
- If you're ready to make the jump, join my free Live Richer Challenge: Home Buying Edition to help you through every step of the process!
Before you go, let me know in the comments if you're jumping into the housing market –– buying, selling, or refinancing?!
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