Buying a house during a recession has its benefits: you’ll typically get lower interest rates, and there will likely be less competition. Whether you’re a first-time home buyer or looking for your next investment property, keep in mind the following advice as you comb the market for your big purchase.
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Looking for a home
Perusing real estate listings can be fun, but it can also be stressful. With so many options out there, it’s tough to know at a glance whether a home will have the characteristics you desire. As you begin the house-hunting process, it’s wise to connect with a reputable company like House Hub Real Estate Investments to help you narrow down your choices and find the best property that’s suitable for your needs.
Before you get too deep into house-hunting make a list of non-negotiables. This is especially important for first-time buyers because it will help you weed out homes that aren’t right for you. Things to consider are neighborhood, price, outdoor space, and the number of bedrooms. Some parts of a house can be altered or changed over time, but consider the permanent aspects of the house—its location, for example—in order to determine what you can and can’t live without.
As you consider these aspects, come up with a figure for what you can afford. If you plan to finance a home, a conventional mortgage can be a great choice. These loans are low-cost and come in a range of options for down payments. Conventional loans allow you to choose between rates, such as an adjustable or fixed rate loan. If you can pay 20% for your down payment, you can also avoid mortgage insurance.
Investment buyers looking for new properties should keep a few things in mind. If you’re looking to buy a home that you can rent, keep an eye out for rental signs in your area. Have a look online and see if the rental is listed for sale; if it’s not, you might have a great lead on your hands.
Find neighborhoods that are thriving, and consider aspects such as the quality of schools, unemployment and job growth rates, population growth, and the type of neighborhood—whether it’s where college students live or if young professionals tend to live there. Also consider walkability, which is an important aspect if you’re hoping to invest in a new rental property.
Buying during a recession
While it may feel risky to buy a property in the midst of a recession, there are some silver linings.
One great reason to buy during a recession is that you’ll have access to lower interest rates. The competition will probably be less fierce than usual, and you might have a better chance of finding a home that would otherwise be hard to get. According to ZenBusiness, home prices typically drop, meaning you may find an option that under normal circumstances would be out of your price range.
The challenges of buying a home during a recession typically revolve around managing your own home sale and qualifying for a loan. If you have trouble selling your home to buy a new one, consider renting it out until you find a buyer. It may be a little harder to get a loan during a recession, so work toward building your credit and reducing your debt-to-income ratio. Whether you’re a first-time homebuyer or investing in a new property, remember to determine what’s important to you in a new home. A recession has both positive and negative effects on the housing market, and you just might find that now is the perfect time to buy.