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Notes on Buying Your First Home in an Economic Crisis

Notes on Buying Your First Home in an Economic Crisis

The current economic situation cannot be called stable. It further complicates the emergence and spread of coronavirus infection. But that doesn’t mean people have stopped buying houses. If the issue of purchasing real estate is also relevant for you, continue reading. The main issue to consider is the purchase of a home from a previous owner or developer. If you look at new houses in New Jersey, you will see that this is a very good deal. The city received a large influx of investments. The number of residents and jobs is also constantly growing. In the future, you will be able to sell real estate in this place for a much larger amount.

Is it a bad time to buy a house?

Looking at the situation with the global pandemic and growing unemployment, one might think that making expensive purchases is not wise now. But the risk is often justified. It all depends on your financial capabilities and stability. Experts believe that the best time to buy a home is the time when others are biding their time or cannot afford to spend so much.

Be optimistic

Many young people think it is not profitable for them to buy a house at the moment. Due to their limited career experience and low credit ratings, young professionals are offered not the most favorable interest rates on mortgages.

Experienced realtors advise not to be afraid of this circumstance. The real estate market is constantly evolving. Despite a short-term decline in housing prices by 1-2% in some years, prices are rising again. Your house will rise in price by an average of 3-5% per year. If you plan to sell your home in 10 years, this will be a great deal for you.

On a tight budget, it’s best not to rush. The price of real estate in the city center or in good areas grows faster. Therefore, it is better to wait for a better deal than to buy the first house that you can afford.

Look Where Others Aren’t

Shoppers on a modest budget should look out for out-of-center or less popular areas. In this case, they have a chance to get much more space or comfort than if they just pay for a prestigious area. Realtors talk about cases when you can drive an extra 45 minutes from the center and save $ 250,000 for a house with the same area.

In the face of the pandemic, many people have switched to remote work. This opened up even more options for shoppers on a budget as they can now easily switch states. Consider Texas homes for sale options. The advantage of this state is that there is no real estate tax when buying it.

Be flexible

Some real estate transactions are complicated by the seller’s life circumstances. In this case, not only money plays an important role in who ultimately gets the house. Practicing realtors advise to be flexible and meet the desires of sellers in order to get a discount. Most often, sellers ask:

  • Postpone the date of moving;
  • Let the former owners rent your new home for a while;
  • Save green space in the garden and so on.

One client said that the condition for receiving a huge discount was to rent out the top floor of a three-story mansion for a whole year. The tenants were noisy young people, so the client spent many sleepless nights in his own home. But he was able to close a deal in which he had many competitors. At the same time, competitors offered significantly larger amounts, but they were not ready to make sacrifices.

Airbag in the form of additional savings

If you make an upfront payment of 20% of the value of the home, the lender will not require you to buy mortgage insurance. Thus, you will save an additional 3-5%. Also, if you have an additional amount in your bank account that allows you to cover monthly expenses and make mortgage payments within 2-6 months, you will be provided with significantly more favorable conditions. This approach will ensure your safety in the event of loss of income. You can also save several thousand dollars on interest and insurance.

Conclusion

When renting a house, people cannot feel safe. The owner can increase the payment amount or sell the property at any time. The sooner you can save up for your own home, the better. Do not be afraid of a mortgage. The better you prepare, the better the conditions will be. If you have time to assess the real estate market, then sooner or later you will turn up a very good option.

 

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