The housing market saw a surprising boost during the pandemic as people bought homes even during traditionally slow seasons in fall and winter. The low mortgage rates were one of the main reasons why people started buying homes.
Even as the housing market saw an increase in demand, people are unsure if it’s a good time to buy a house. Some may point to the low mortgage as a good sign to buy a house. On the other hand, others think that people should not rush to buy a house since there are still plenty of chances in the future.
People should remember that buying a house is a major decision and is probably one of the biggest decisions a person will make. Due to this, it’s essential to take some things into account before finalizing the decision to buy one.
Consider Your Credit Score
One thing people should do is to consider their credit score. Their credit score shows the financial standing of a person. It plays a huge factor in the loans and interest rates they can get when they make a major purchase like a house. Lenders use credit scores to assess if there is a huge or low risk in lending money to a person.
The pandemic compelled lenders to become stringent with lending money up to a point where they had a minimum credit score for a person to qualify. When a person has a higher credit score, he can receive better loan terms from the lender.
So, people should check their credit score before they borrow money. They can check their credit score through their monthly bank statement from their credit card company. They can also check it through their online account. People should know their credit score before they consider applying for a mortgage.
Think About the Mortgage Rates
Potential homebuyers should also think about the mortgage rates. The rates are quite volatile and change regularly. For instance, when the pandemic started, the Federal Reserve lowered the rate at least twice. This allowed interest rates on savings accounts and credit cards to go down as well.
While mortgage rates did not go down as expected at the start, they eventually went down to record lows. Unlike other interest rates, mortgage rates depend mainly on demand and are not affected much by the Fed rates.
Even as mortgage rates go down when the economy is down, the current crisis is unprecedented. This makes mortgage rates somewhat volatile. This is illustrated during the first few months of 2021. The rates were low in January but went up in the following months. The increase may even affect the current housing rally that started last year.
Consider the Down Payment
Potential homebuyers should also think about the down payment they need to make for a house they plan to buy. They should try to have funds ready to cover the down payment. Having money to pay the down payment allows homebuyers to save thousands of dollars. While buying a home is a daunting task, it is simple and uncomplicated when people have a plan.
For instance, if a homebuyer pays a 20 percent down payment for a house, they can get lower monthly payments since they need to finance a smaller amount for purchasing a house. In addition to lower monthly payments, they can avoid private mortgage insurance (PMI), which lenders add to the monthly payment if the homebuyer doesn’t pay a 20 percent down payment.
So it’s always a good idea to have funds ready to pay for the house’s down payment.
Go on a Virtual Tour
Another thing potential homebuyers should do is to go on a virtual tour when they’re buying an existing home. They should ask for a virtual tour from the real estate agents who are selling the home to them.
A virtual tour has become a necessity during the pandemic since it’s much safer than going on a physical tour of a home, which increases the risk of infection. They shouldn’t rely on pictures alone since there may have been changed from the time the person took the pictures to the time when he put the home up for sale.
The current technology is capable of handling virtual tours where potential buyers do not need to visit the house physically. The virtual tour should cover all parts of the house, including the living room, the dining room, kitchens, and all the bedrooms. It should also go through the toilets to ensure they see everything.
Buying a house is among the biggest decisions people make in their lives. Due to this, they should consider everything before finalizing their decision to purchase a house.