As Mortgage Rates Continue to Tumble, Is Now the Right Time to Buy a Home?
Last week (7/12 - 7/18/20), the average mortgage rate for a 30-year fixed mortgage in the U.S. fell below 3 percent for the first time...ever.
Freddie Mac reported that the average rate for a 30-year fixed loan fell to 2.98 percent, its lowest in almost five decades of data. Alongside 30-year rates, the average 15-year fixed mortgage rate fell to 2.48 percent, the lowest in a data series going back almost 30 years.
At the beginning of 2020, mortgage rates were just under 4 percent. They plunged in February, at the same time COVID-19 ballooned into a global pandemic. And despite mortgage rate analysts predicting that rates wouldn’t bottom out under 3 percent, the tumbling trend has continued.
This begs the age-old question for would-be homeowners.
Is now the right time to buy a home?
Don’t ‘Panic Buy’ in the Pandemic
Let’s sit down for a minute and take a breather. Remember a few months back when Americans were panic-buying essentials like toilet paper, hand sanitizer and canned goods? How could we forget?!
The same reasoning for that type of ‘panic buying’ certainly does not and should not apply to real estate investments. Of course this is an unprecedented time and, in lots of cases, there are very attractive homebuyer deals available now that mortgage rates are low and home prices in certain areas are falling.
However, don’t let your real or perceived feelings of pressure and panic in this uncertain time be the reason you make the move to buy a home. There are many more factors to consider when making the decision to invest.
Consider You Whole Financial Picture
As an independent mortgage broker, seasoned yogi and wellness guru, I believe in applying the same principles you would in nurturing a whole life wellness plan to your finances. Before making a snap decision to purchase a home because rates are low - and before making this decision in general - you need to consider your whole financial picture.
- What type of home loan are you considering?
- How’s your credit score? Some lenders are requiring even higher credit scores now than pre-COVID-19.
- Do you have savings for a down payment or will you need assistance?
- Do you have enough cash to cover closing costs?
- Have you been pre-qualified for a home loan so you’ll know exactly much house you can afford? These mortgage calculators will give you a start.
- What is your debt-to-income ratio?
- How expensive will a homeowner’s insurance, flood insurance and any other hazard insurance policy you may need to protect your investment be?
- Are you prepared to cover the maintenance costs of a home?
This list can go on. With so many considerations, you should pause and determine your answers to all of these questions (and more!) before shopping for and purchasing a home.
Shopping for a Home? Practice Safety Measures and Lean on Your Realtor
As we’re still in the midst of a global pandemic, it’s important to protect yourself if you’ve decided you do want to shop for a home. Realtors in many markets are forgoing open houses because of safety concerns and the personal nature of touring real estate.
Fortunately, virtual tours, 360-degree house tours in property listings, and even Facetime calls helping interested buyers “tour” properties from a safe distance are on the rise. A good realtor who keeps safety in mind should offer these options to you while you’re on your shopping journey.
If you do meet in person, make sure you practice social distancing, wear a mask, and bring hand sanitizer along.
Choose a Lender Wisely and With a Little Help
You probably have a bank you trust, one that houses all of your checking, savings and investment accounts and helps you effectively manage your liquid assets. I know I do! A good bank makes all the difference.
Home loans, refinance loans, construction loans and others, however, often lend themselves to additional choice. No pun intended!
In my work as an independent mortgage consultant, I work to give you more choice in mortgage products, which is something a traditional bank can’t always do. When you work with a broker like me, together, we can compare loan products across multiple lending institutions and zero in on a customized loan that will work for your unique situation.
Instead of a one-size-fits-all loan, you’ll opt for the loan that’s right for YOU.
I’m Here to Help You
Pandemic or not, the above factors are just a few of the major considerations you should make as you determine whether it’s the right time to buy a home. If you’re weighing the decision to purchase your first home or possibly even refinance your existing home loan in lieu of falling rates, I’d love to learn more about your needs and see if I can help.
Together, we can navigate these uncharted waters and, empowered with knowledge, you can make the right decision at the right time.
Contact me anytime!
* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.