If you are still on the market and looking to purchase a home right now, here are 4 tips to consider.
The COVID-19 pandemic’s effects are still unveiling, but chances are your life has significantly changed already.
If you worked in an office, you are likely working from home and have been for a while. If you had a vacation planned, those plans got pushed back indefinitely. If you were on the market looking for a home, however, what do you do now?
If you are still on the market and looking to purchase a home right now, here are 4 tips to consider.
Consider Your Gross Income
As a general rule, experts advise your monthly mortgage never to exceed 30% of your gross income, which is a pretty easy rule to remember. However, during the pandemic, which has caused rates to decline, some people may feel tempted to overlook this rule.
It really depends on how much you make and the money left in your account that you can count on for other expenses when the mortgage has been paid. You can easily spend even 40% of a monthly gross income of $60,000 and still be left with quite a lot of money. But if you earn only $10,000, that same rate may be too much to bear!
Have Some Money Saved
Apart from the 20%, you’ll need for the down payment, it’s best to have some additional savings (either currency or even assets) you can use as your cushion.
This pandemic presents some uncertain times, and when times are uncertain, the real estate market becomes even more volatile. You may feel very tempted to walk away from your newly-bought house if things get bad. But having some extra funds to rely on can prevent you from needing to sell your home when the market’s down.
Adjust Your Home Price Expectations
A quick way to figure out your price range when it comes to buying a home is to multiply your annual gross income by three. This prevents you from stretching your finances beyond what your pockets can realistically handle, so if you make around $200,000 a year, you can look for homes up to $600,000.
This can also prevent you from buying a home that comes attached with a very high property tax, something else you should consider when buying a home.
Start the Process Early
Buying in a rush isn’t really ideal during a pandemic – the market’s not in a stellar position right now. It’s best to take your time and start working with your lender early in the process so that you have all the information and can make good, informed decisions.
