The pandemic may have caused another economic recession worldwide. But not even Covid-19 was able to stop the real estate market from breaking news. Home buyers are still flocking the housing market. This is even if there is a rise in house prices and many lost their jobs and businesses due to the pandemic. Should you pursue your plan of buying real estate in the middle of the Covid-19 pandemic.
Why Many Are Buying Houses During the Pandemic
Mortgage rates hit another all-time low during the Covid-19 crisis. This prompted consumers, especially first-time home buyers, to buy their first property. Many just can’t wait and don’t want to let the opportunity of finally securing a home purchase.
The second reason is since people now realized how valuable a house can be. Aside from the price value, sheltering in place made people realize they need a private place of their own to better safeguard their family against the risk of catching the virus. More people also started working from home and needed a bigger property to accommodate their new normal of work.
Why Some Regret Making a Home Purchase During the Pandemic
Some consumers who bought their first homes earlier this year are happy with their purchase. But some have regrets. Some common reasons why people regretted their Covid-19 home purchase are as follows.
- Forgot About the Perks of Renting
Many jumped into the home buying wagon even if they are not yet prepared to take on all the responsibilities of a homeowner. Some forgot how great it is to have a landlord take care and finance most repair issues. Some miss the flexibility that comes with renting while others miss the luxury of having professional landscaping at their disposal.
- Saying Yes to Less Than 20% Down Payment Mortgage
One regret most home buyers during the pandemic have is putting less than 20% down payment for their mortgage. This meant their monthly mortgage payments are higher and their loan size is bigger. They are also paying for mortgage insurance which only added to their costs and expenses.
- Having a Monthly Mortgage More Than 30% of Your Gross Income
When your monthly mortgage payments consumer more than 30% of your monthly income, you will soon realize how big of a percentage this is. You can end up with less money to pay for your needs and other debts. You will find it hard to comfortably afford your needs, let alone consistently save money each month and have funds to pay for emergency expenses.
- Buying a House Worth at Least Four Times Your Annual Salary
Experts tell us to buy a house we can comfortably afford. As a general rule, one should not go overboard the budget by choosing a house that is only worth three times your annual salary. Buy a house that is about four times your annual salary or more than that and you can have more debt, bigger repair and maintenance costs, and costlier property taxes.
- Skipping Home Inspections Just to Hasten the Sale
According to reports, 20% waived home inspections in June as an attempt to secure the sale against other home buyers. Since many of these buyers only say the house via pictures and a virtual tour, many failed to assess the house itself, the neighborhood, and other factors. Some finished with a fixer-upper home while others now regret the location of their new home.
Home-buying Tips Worth Keeping in Mind
If you made up your mind about buying a house soon, make sure you do your research first. It pays to learn from the mistakes of the other buyers who did home shopping during the pandemic.
- Ensure You Have Enough Cash Buffer When Buying
A healthy cash buffer will give you peace of mind in case you experience a financial setback after closing. You will want to save at least 10% of the value of the house you can realistically afford. This is on top of your ash saved up for the 20% down payment.
- Be Ready for a Bidding War
Even with a recession, people are still out to buy houses. Be ready to go to a bidding war but be conscious when placing a bid. You don’t want to buy a house you will have a hard time paying for in the future.
- Invest in a home inspection
Don’t be tempted to buy a house only saw on FaceTime or in pictures. Travel if you must and visit the location at different times of the day. Don’t skip a professional home inspection and get to know the neighborhood before you buy a house.
It can be difficult to tell if the pandemic is your best bet for a home purchase. But you must take extra precautions before you let go of your hard-earned cash for a house. Take your time making a decision, shopping for mortgages, and house-hunting. Listen to your gut feel and heed the advice of the experts for a better Covid-19 home buying experience.