With the national economy having problems, the housing market has come to a bit of a halt and homes are not being purchased as often as they were a few years ago. In some cases, this can be good news to you if you are buying a home. While often you can get some great deals on homes today, you’ll still find that there are some risk to purchasing during an economic recession. Before you purchasing your home, here are a few tips to remember as you decide to purchase while a recession is occurring.
Tip #1 – Get Your Finances in Order
The first tip to keep in mind when buying a home during an economic recession is to get your finances in order. The possibility of losing your job is a big risk that you take when buying at this point in time. This means that you should ensure you have job security before you decide to buy right now. Lending standards have also been raised by banks during this time, which means it’s tougher to get a loan. To get a great rate you’ll need a good down payment, income verification, and great credit. If you don’t think you can meet the credit requirements or you don’t think that your job is really secure, you may want to wait on purchasing a new home.
Tip #2 – Purchase a Home You Really Want
Those who lost a lot when the housing bust occurred lost because they had purchased homes as an investment. This is not the time to start flipping real estate fast. Avoid buying a home just because it is cheap. You’ll want to ensure you buy a home that you really want to live in if you are going to take this step right now. During an economic recession, it’s a good idea to only buy a home that you expect to live in for about 3-5 years, otherwise you may end up losing money.
Tip #3 – Be Conservative When Buying
It’s a good idea to be conservative if you’re buying a home during the economic recession. This is not a good time to start stretching out your finances. If you’re going to buy at this time, make sure you can easily afford it. At this point your housing payment shouldn’t be more than 35% of the income you bring into your home. With the lower interest rates available, a 30 year fixed rate mortgage is perfect. Just ensure that the payments can be easily afforded so you don’t end up struggling financially in the future.
Tip #4 – Consider Buying Foreclosures
Last, you may want to consider buying foreclosures. Foreclosures have been at an all time high in the last couple years. However, this has afforded some great deals on the market for those who want to buy a home. You can often find some great discounts on homes that have been foreclosed on and it’s a good idea to check out the local foreclosures in your area. While there are definitely benefits to purchasing a foreclosure, you’ll also find that there are some challenges as well. If you decide to go this route, ensure you have a professional that has experience with foreclosures helping you out.