Buying a house during the COVID-19 pandemic: what you should know. Some homebuyers regret rushing the process to benefit from low mortgage rates.
Mortgage rates reached another all-time low in September (9th time this year!), with Freddie Mac showing the 30-year fixed rate falling to 2.86 percent. But that doesn’t necessarily mean it’s the best time to buy a house.
Over 55 percent of new homeowners who rushed to take advantage of favorable mortgage rates now regret buying a home during the COVID-19 pandemic, according to research by LendEDU.
Nearly a third of new homeowners agree that they should have waited to buy a home for financial reasons. More than 45 percent of them are already struggling to make mortgage payments, with 23 percent reporting that they or their partner have been laid off due to the coronavirus pandemic (Pew Research Center says 52% of lower-income adults have lost household income since the start of the pandemic). Almost half of them have entered a temporary pandemic forbearance agreement with their lender or are making reduced monthly payments.
On the other end of the spectrum, 43 percent of new homeowners don’t regret buying a house during the COVID-19 pandemic and 51 percent aren’t having trouble making mortgage payments.
Buying a House During the COVID-19 Pandemic: What You Should Know
The coronavirus pandemic has led to a period of great economic uncertainty and instability. Large and small companies are going through rounds of layoffs, having employees work reduced hours, or have had to close their operations altogether.
Even if homebuyers saved for a down payment and were planning on buying a home in 2020, the issue of job security and financial wellness should have factored into their decision to buy a house during the COVID-19 pandemic. Nearly 25 percent of new homeowners reported a layoff in their household and another 18 percent were experiencing new financial struggles brought on by the coronavirus pandemic.
Some new homeowners might regret their decision to buy a home during the COVID-19 pandemic because they were being impulsive or weren’t well informed of the process of buying a home. In a recent Bank of America survey, over 80 percent of prospective homebuyers said they needed help understanding what they could afford, yet only 44 percent of them planned on getting preapproved for a mortgage to see how much they qualify for. Yet another survey by LendingTree found that 64 percent of homebuyers were willing to go over budget for their perfect house.
Failing to set a budget and fully grasp the implications of taking out a mortgage and becoming a homeowner is a recipe for disaster anytime and all the more so during a pandemic that’s prompted the worst global economic crisis since the Great Depression.