Guest Blog By: Lisa Roberts
Are you exploring the idea of purchasing a home? Hesitancy is fairly understandable when you’re considering making the biggest financial investment of your life, all while navigating the effects of coronavirus. Yet, therein lies the irony. Real estate experts and market analysts report that now might actually be the best time to buy your first home, and below are the reasons why.
Rates are at an all-time low
Some cities are booming even amid the international pandemic. Las Vegas real estate, for instance, has been making numerous headlines for the boom it experienced even at these strange times. This market is healthy and thriving and, with rates holding steady and Federal Reserve officials expecting them to remain historically low for the rest of 2020 and beyond. Those keen on moving into their first home or adding a new one to their portfolio should not let this opportunity pass them by.
Still, given all of the general uncertainty the virus brings about, exercising caution is only conventional wisdom. Therefore, it makes sense to first consult a trusted advisor on the matter of which options are open to you at this time and how you can navigate through these circumstances for a preferred outcome.
More flexibility in your schedule
Still, low interest rates shouldn’t be the main factor in deciding to pull the trigger on such a big purchase like a house right away. This is because the housing inventory fails to meet the high demand. With a shortage of homes on the market and an increased number of homebuyers, you’re in for some competition and fewer choices. But there’s another side to that story.
Focusing on the home-buying process
On the bright side, COVID-19 has probably left your calendar wide open to:
- Hunt for homes. This is probably the longest part of the process of home buying because it’s not a kind of decision one should rush into. But with a schedule freer of social and travel plans than ever, you can fully invest your time and effort in finding your dream home.
- Get pre-approved. Getting your mortgage pre-approval is typically the number one tactic to convince the seller that it is your offer that they should accept. This proves that you’re not only a serious but also a more qualified buyer. Although it’s not a long and tedious process, it still takes some errands, phone calls, and calculations.
- Prepare for closing a deal. Once you’ve managed to find the right home, and the seller has accepted your offer, you can focus on closing contingencies such as home inspections, appraisals, loads of documents, insurance, and dealing with any problems that may cause delays so you can speed up the process.
- Close on the house. Many home sellers both need and appreciate the extra time to find their next home. So, if you have the luxury of allowing the seller to set the closing date within 120 days according to their preference, know that your flexibility will be a significant boon.
Tackling the move
Lastly, you will have more time on your hands to plan, organize, and make your move to your new Las Vegas home. Undoubtedly, relocation is a time-consuming endeavor. And, whichever method you prefer, you’ll have enough time to prepare. If you decide to hire movers, you will find that, even at the time of the pandemic, there are plenty of affordable and reputable moving companies at your disposal and a variety of services available. Therefore, you will be free to research your options and find the best one for you. Secondly, if you chose to tackle the move by yourself, your schedule flexibility will once again ensure that packing and transporting everything on your own isn’t an issue.
It’s a win-win scenario
There are two scenarios here. One is that, with high demand for homes and housing inventory down, some sellers will most likely take advantage of this situation to get the price of their homes up. Still, many believe that these prices will come down with a relative increase in inventory, while the interest rates will remain low, to aid the economy by driving it out of the recession. On the other hand, others believe that the prices will be soaring in the future, so make sure you stand on the safe side.
In the second event, given the instability currently taking place in the world, some sellers are either forced or eager to sell their home below the asking price. If there’s an opportunity for a considerable discount, you might as well strike while the iron’s hot. Even if the seller puts the property up for less than they might have initially hoped for, it certainly will be a win-win situation for both sellers and buyers because your purchase will, to a great degree, alleviate their financial worries.
Your finances can handle it
Once again, as you are painfully aware, a home purchase doesn’t mean just paying a mortgage. Along with the mortgage come property taxes, deposit, valuation, surveyor’s and legal fees, ongoing costs such as maintenance and insurance, repairs, etc. Given the costs you’ll be liable for, not having enough money is one of the most common concerns of first-time homebuyers.
You have a steady income
Your financial readiness to buy a home mostly depends on your job. Despite the great amount of uncertainty that the COVID-19 outbreak has brought, the economy is slowly recovering, and the overall picture regarding job security seems to be heading in a positive direction. Vegas was able to dodge the total collapse after April when the unemployment rate went shooting up to a whopping 34%, which was the highest percentage among major cities in America. State officials announced that this number tumbled down to 18% in June and 12.5% in October. So, presently, good job security is one of the reasons it’s a good time for first-time buyers to make their move.
Your credit score is good
Evaluating your finances and knowing where you stand is essential when applying for a home loan. You can get your credit score (for free) and see how it qualifies you for a good mortgage rate. Credit scores of 670-739 are considered good, 740-799 very good, and 800+ excellent. Also, make sure to request a copy of your credit history to ensure there aren’t any errors in your credit reports. If any major delinquent accounts pop up, you will have the chance to fix the problem by disputing the issue with the bureau and get a new copy of reports for you to apply.
Your DTI is low
Another thing your lender considers when you apply for a mortgage is your debt-to-income ratio. Even if you have stable earnings, an admirable credit score, and you’re never late with paying your bills, your DTI will still play a crucial role when the lender is deciding whether you can take on a mortgage or not. So, being satisfied with your DTI also takes its place among the reasons why now is the best time to buy your first home. Ideally, your front-end ratio should be no higher than 28%, and your back-end ratio no more than 36%. However, with a good credit score, savings amount, and the amount of your down payment, lenders may be willing to accept even higher ratios.