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While any recession indicates general economic hardship for a country-at-large, it’s typically an advantageous time for first-time home buyers and investment buyers. Along with home prices being lower, mortgage rates also tend to be lower. However, there are downsides to buying during a recession as well, and it’s important to take the right approach if you want to make the right decisions along the way. If you are thinking about buying your first home or an investment property in the midst of a recession, consider these tips before you dive in:
Evaluate Your Financial Standing
First of all, take a look at your finances and take an honest assessment. How much house can you afford? Even if you find a great deal on a home, can you comfortably afford the sale price and mortgage payment?
Also, consider your job stability. If you own a business, are you taking steps to ensure that it will continue to flourish in the coming months and years? If you’re an employee, how is your job security looking? No matter how good of a deal you score on a home, any added debt can harm you if you lose your job or experience another type of hardship.
If you will need a home loan to buy a house, be sure to research the various types. For example, FHA loans tend to work well for first-time buyers, borrowers who have less saved up for a down payment, and/or those who have a shorter credit history and won’t qualify for a conventional loan. If those circumstances sound familiar, an FHA application might be your best bet.
Don’t Buy Just Because It’s Cheap
It’s tempting when you see homes going for really low prices. And the truth is that some of the homes you find will actually be good deals. But not all of them will be.
For example, The Christian Science Monitor explains that if you find a foreclosed home selling as-is, and it needs a lot of repairs, then you could end up putting yourself in an unfavorable financial situation long-term. Plus, it’s not uncommon for the closing process to take longer on foreclosures. For any home that you’re seriously considering buying, make sure it meets your needs or has the potential to meet them without breaking your budget.
Be Open-Minded About Where You Buy
Another thing to consider is location. While buying in a prime neighborhood can benefit you in the short-term—particularly if it’s an investment rental—getting a house in an undiscovered neighborhood that has potential could be a great move. This means you could score a house at a much lower price and benefit most from appreciation. Plus, most people are not risk-takers by nature, so you would have an edge over other buyers in the area.
Learn Your Way in Technology
In times such as these, not as many buyers and sellers are willing to engage in physical showings and open houses. Fortunately, technology makes it possible to handle the home search and real estate transaction processes completely electronically, if that’s what all parties decide. Or you could utilize features like live video chat and virtual tours to view a home so that you are more prepared if you get a chance to see it in person. Either way, it helps to have a grasp on the technology involved.
Work with a Good Real Estate Agent
Lastly, you will want to work with a real estate agent. Whether you choose to utilize virtual or physical tours, or you plan to sign documents via the web or in person, Forbes explains that a qualified agent can walk you through the whole process and help you make the right decisions. Even with how much the real estate industry is changing, there’s no substitute for a stellar agent—in fact, it might be more necessary than ever.
Buying a house in the middle of a recession can work out great if you approach it the right way. Remember to assess your financial situation and job security, and don’t buy a house solely because it’s priced low. Also, consider buying in an undiscovered area, make sure you have a grasp on real estate technology, and find a qualified agent to guide you along the way. With these tips in practice, you can choose a home that benefits you now and in the future.