How to Buy a Property in a Recession
How to Buy a Property in a Recession
Author: Suzie Wilson ⎸[email protected] ⎸Happier Home
Whether you’re buying your first home or another investment property, know that the home-buying experience and process remain quite consistent. However, you may find that there are additional matters you should be aware of when buying during a recession.
While it generally works in your favor to purchase in a down market, buying an investment property during this time does mean that you need to take extra care that your investment is recession-proof—that is to say, there’s a need to follow proper due diligence and choose a good location. The same could be said about buying your first home in an economic crisis, which will require a good mix of optimism and realism.
But of course, the process does not end there. So without further ado, here are some of the most important steps you should take when buying a home during an economic recession.
Make sure you can afford to buy.
First thing’s first—before buying property as a first-timer or otherwise, you need to be absolutely sure you can afford it (home sales in Philadelphia have averaged $248,000). The fact is, your home purchasing power goes well beyond just what you have coming in month to month, so it’s important to get to know what other variables you need to take into consideration, as well.
If you’re buying a home for the first time, it’s a good idea to set your housing payment at under 30 percent of your monthly income. Not only that, but you also want to make sure that you have a good credit score, as your financing will hinge heavily on this. And of course, don’t lose sight of the fact that you will need to have sufficient savings to cover your down payment, which is usually at 20 percent of the purchase price, as well as have enough to cover closing costs and the like later on.
When it comes to buying investment properties, much of the considerations are, again, similar. However, if you really want to determine if you can afford it, you also have to take into account ownership costs, as you want to ensure that the property will not drain your bank account over time.
Whether you’re a first-time or experienced home buyer, you’ll need to touch base with a knowledgeable and skilled real estate agent. The team of talented and dedicated professionals at RE/MAX Access can walk you through each step of the home-buying process and find you the home you desire.
Get to know your financing options.
Now, financing a property can be done in several ways. There are, of course, conventional bank loans, which is the most common option for all sorts of buyers. When financing investment property, there are also other options that you can explore, such as tapping home equity or short-term fix-and-flip loans.
For first-time homebuyers, know that some mortgage lenders actually offer perks like low down payments and other programs, so it’s definitely wise to shop around and compare different offerings. Not only that, but you may also find that some states offer first-time homebuyer grants, so it’s definitely worth finding out what’s on offer where you are.
Consider buying a foreclosed home.
Finally, if making the best possible purchase or investment is your priority, foreclosed homes can be worth considering. These can be quite attractive options because of low selling prices, which can make them great deals, especially in certain locations where home prices are generally higher. Not only that, but you could also be on the receiving end of some favorable concessions.
Of course, there are risks, as well, which is why when buying a foreclosed home, you really need to have a clear picture of what a foreclosure purchase entails. Most importantly, you’ll want to get the property thoroughly inspected to ensure that possible issues are known and sufficiently addressed before you even make an offer.
Suffice it to say, the home-buying experience may seem labyrinthian even in the best of times, but the truth is, you just need to break down the process and take it a step at a time. By taking extra care when buying in a recession, you can be looking at a solid purchase, regardless if it’s your first home or investment property. So apply due diligence and don’t take shortcuts so you get a real bang for your buck.