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June 5, 2020
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Real Estate & Business

Scott Sheldon
With the virus, should you be buying a home now?
April 3, 2020

Purchasing a house is a very large financial investment and it needs to be done with care and prudence. With the chaos, the doom and gloom you may be asking yourself should you buy a house? Should you wait or should you pull the trigger on the high-ticket item? Here are some things to consider so you can make the most informed decision for you and your family…

Mortgage rates, e.g. the cost of funds, can directly impact your ability to buy a house let alone your ability to manage a mortgage payment. Generally, but not always, when there is doom and gloom in the economy that’s good news for mortgage rates because in a doom and gloom economy people are less willing to take on risk. If you’re looking at stocks and bonds knowing that stocks are riskier but provide us a stronger upside and there’s negative economic information out there, you’ll probably put your money in the bond market where you can get a fixed safer return on your investment (ROI).

When this happens bond yields rise and the rates to consumers come down. That’s effectively what happens- what’s good news for the economy is bad news for mortgage rates and what’s bad news for the economy is good news for mortgage rates. This relationship generally holds true.

It’s quite possible that you could time this very prudently in getting an extremely low mortgage rate and aligning your ability to maintain that mortgage payment with your income.

 

That brings us to the next point which is income.

People buy houses when they’re feeling optimistic about their finances, more specifically about their ability to maintain a mortgage payment. If your income is stable and you’re not at risk of being furloughed, the opportunity to purchase a house right now is very large for two reasons: number one, you’ll be able to get an extremely low-interest rate (more than likely), and you’ll probably be able to negotiate a great opportunity on a house for you and your family.

The number one driver for a purchasing a house should be the ability to handle the mortgage payment. The purchase price of the property is important, but just remember at the end of the day you’re going to have that loan for 30 years, so it’s something that you want to make sure you can plan for with your financial situation.

 

Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.