This year has been difficult for just about everyone, but if you were (or still are) thinking about buying a home in 2020, you might be feeling more than a little overwhelmed. An ongoing pandemic, the subsequent recession, and general uncertainty have forced many house-hunters to put their real estate dreams on hold. However, despite all these potential obstacles, homeownership is still a very attainable goal.
Don’t Let These Myths Keep You From Buying a Home!
Buying a home is a huge decision, and it’s one you shouldn’t make without careful planning. Unfortunately, there’s a lot of misinformation out there regarding the home-buying process and the real estate market as a whole, especially as the nation continues to navigate an unpredictable year.
Still unsure about making a move during 2020? Here are four of the most common myths that deter today’s buyers—and why you shouldn’t believe them.
It’s Not a Good Time to Move
On the surface, this myth may seem true. Towards the beginning of the year, a majority of sellers chose not to list their homes, while many buyers didn’t feel comfortable moving during quarantine. This caused the national real estate market to experience an unusual spring slump. The good news is that the market has made substantial progress since March—actually, real estate has become one of the most stable investments you can make in 2020.
Pent-up buyer demand has helped the market recover in record time. In fact, the number of mortgage applications, closed sales, and pending sales are up by double-digit percentages compared to last year. And if you’re still hesitant to buy during a pandemic, you’ll be happy to learn that most agents now offer virtual tours and have put social distancing measures in place to keep clients safe.
Homeownership Isn’t Affordable
Does it seem like houses are getting more and more expensive these days? You aren’t just imagining things—home prices are about 6.5% higher than they were last year. This means a home that was worth $250,000 in 2019 could now sell for nearly $270,000.
While this may seem like bad news for buyers, you shouldn’t be deterred by rising prices. Historically low interest rates have helped to make homes more affordable, even as they continue increasing in value. Although a small change in interest rates may not seem drastic, it can actually save you tens of thousands of dollars over the lifespan of your loan.
If you already have a bit saved up in the bank for a down payment, buying a home can even be more affordable than renting. Today’s average mortgage payment of $1,275 is $188 less than the average monthly rent. That equates to a savings of over $2,200 per year!
You Need a 20% Down Payment
You’ve probably heard that you need at least a 20% down payment to buy a home. While there is merit to putting down as much as possible, you can still purchase your own place with as little as 0% down by using the right loan.
According to a recent study by the National Association of Realtors, the median down payment for all buyers in 2019 was just 12%, and first-timers only put down an average of 6%. You might also qualify for an FHA or VA loan, which offer down payments as low as 3.5% or 0%, respectively.
It’s worth researching different types of mortgages, as well as down payment assistance programs available in your area. They could provide the financial boost you need to finally buy a home!
You Can’t Buy If You Have Debt or Bad Credit
The average American has accrued $38,000 in personal debt, excluding home mortgages. Even if you don’t owe quite that much, any kind of debt or a low credit score can seem like a pretty big roadblock if you’re trying to make a move. However, there are still a few options that can get you on the path to homeownership.
The easiest way to boost your credit score is to pay off your debts; consolidating your loans into one monthly payment could help you reduce your debt-to-income ratio. There are also a variety of loans tailored to buyers with lower credit scores, such as FHA, VA, or balloon mortgages.
It can take time to pay off debt and rebuild your credit, but that doesn’t mean you can’t work towards buying a home. If you have any questions about your individual situation, it’s best to contact your agent or financial advisor. They’ll have plenty of resources available to guide you in the right direction!
Take Advantage of a Hot Market
Are you thinking about buying a home before the end of the year? Contact us today to get the ball rolling on your real estate journey! We look forward to teaming up and finding you a place that checks all the boxes.
Need to sell before you buy? We can help with that, too!