The Top 3 Risks Of Buying A Home
There are several good reasons people are considering purchasing a home right now. Mortgage rates are at a record low, which means you’ll be able to borrow a home for a lot lesser than ever before. But with that said, there are also some massive risks of entering the real estate market right now.
Before you decide to buy your dream house, it’s beneficial you’re aware of the problems that can arise. Listed below are the top three risks that come with purchasing a home.
1. Along With Mortgage, Job Security Is At An All Time Low
Thanks to the coronavirus, the United States is in a recession. Unfortunately, when the economy isn’t performing too well, organizations will typically start to get rid of people. This happens because companies don’t make the same profit, which, in turn, means they don’t have the necessary resources to cover the costs (read employees).
This leaves several un employed and under a lot of stress. Because of this indefinite period of unemployment, it can be difficult to make your mortgage payments. If you’re trying to save your house from the risk of foreclosure, put your career first!
If you’re married and you’re buying a house with your partner, try to pick a more affordable house and your partner’s income can cover the mortgage payments in the case you lose your job. You could also choose to increase your emergency fund so that it can cover at least six months of your mortgage payments if something goes wrong.
2. COVID-19 Lockdowns Can Affect Your Salary
Even if you have a relatively stable job and you don’t think you’re going to lose it, you still might be under threat. Additional COVID-19 lockdowns could occur any day and this could affect your business hours. This could mean your office could close temporarily or you might also lose some key accounts!
3. You Will Likely Overpay
In the U.S, real estate prices have increased almost 15% every year. This increase in pricing happens because of a few factors, and one of them is the aforementioned mortgage rates. Another factor is that many homeowners don’t want to sell their home amidst a pandemic. This means, if you’re trying to buy a house right now, you’re probably going to get a house at an inflated price because of increased demand and decreased supply.
Because of these conditions, it’s very realistic that you might have to overpay for a house, which has happened because of unstable economic conditions. If you do buy a house right now, you might pay a high amount unnecessarily when you could’ve gotten it for a bargain in normal circumstances. It might also be hard to sell a house once the prices normalize because it might be hard to make a profit.
The risks that come with purchasing a home can seem a lot more real during the uncertain times that we’re going through. Chances are, interest rates won’t stay low for much longer and everything will normalize soon!