With Mortgage Interest Rates Low, Is Now the Time to Buy a Home?
Earlier this month, the interest rate for a 30-year fixed-rate mortgage dropped to an historic low and some experts think rates for home loans could drop even further in light of the Federal Reserve’s monetary policy response to Coronavirus (COVID-19). At the same time, Allegheny County is one of a small group of U.S. counties with large populations where owning a home is more affordable than renting. Prospective first-time homebuyers in our area, who had been sitting on the sidelines, may be asking themselves whether now is the time to buy. The short answer: It depends.
While low interest rates certainly make homeownership more affordable, renters should avoid rushing into homeownership if they haven’t done their homework. Here are some questions to ask yourself to determine whether it’s the right time for you to buy. Do I have:
- A reliable, steady source of income?
- Good credit?
- A sufficient down payment?
- Enough savings for home repairs?
- Do I plan to stay in a home for more than 5 years?
- Have I completed certified homebuyer education?
Answering “yes” to all of the above indicates you are prepared to buy a home you can afford. If you answered “no” to one or more of these questions, then now is the time to start preparing for the right time to own a home. While it’s tempting to jump into homeownership when mortgage rates are so low, it’s risky if you are not a prepared homebuyer.
The first step is to take a homebuyer education course, certified by the U.S. Dept. of Housing and Urban Development, where you can learn how your credit score affects your mortgage rate, loan options, how to shop for a home, planning for down payment and closing costs, home maintenance, and more. Then, you can meet with a housing counselor who can coach you through the process. While our organization is suspending in-person education and counseling temporarily, to protect our customers, staff, and community during the COVID-19 outbreak, we can still provide you with our services. Online homebuyer education and virtual counseling services are available.
Whether you’re preparing to buy now or a year from now, NeighborWorks Western Pennsylvania is proud to be your partner on the journey to homeownership.