Considering the present scenario when things went haywire and we were all affected by a global pandemic, all our plans are put on hold, and a lot of people are sceptical, wondering if It is a wise decision to buy a home during a period of recession. With uncertainty, people are in two minds, and the doubts have heightened for many. If you are planning to buy a house or take a house loan during the period of recession, here are the pros and cons you can consider before you make the big decision :
Pros of buying a house during the period of recession :
Dramatically low Mortgage Interest Rates
Mortgage interest rates have dramatically decreased, and they are the lowest they have ever been in history. They might even go lower. This means you can fix your mortgage payment for 30 years at a low rate.
Bargaining while buying
Housing agents and sellers are more willing to negotiate as they do not want their property listing to last longer in the market. Thus, you should be able to find more bargains during a recession.
Reduced Buying Competition
There are very few potential buyers, reducing the buying competition as economic downturns certainly mean that only a few people can afford to upgrade to a larger house or buy one.
Reduce the chances of Overpaying
You can simply decide to buy a house once you get to know the price range in the particular area to make sure you don’t end up overpaying.
Saving the money spent on paying Rent
Renting houses is likely to affect your finances and savings as rents skyrocket. Even if you think that your rent is not exorbitant or all your money is not going down the drain, you should consider buying a house instead of paying rent. This will help you to save the money you paid as rent for down payments.
Cons of buying a house during the period of recession :
Insufficient Financial means
If you don’t have sufficient financial means to buy a house or pay for your house EMI, it is the best decision to hold off plans till you are financially stable enough to manage home loan repayments.
Stricter Lending Policies
Even if you have a stable job to buy a house, you may experience trouble getting finances as banks have stricter lending policies.
With a lot of people losing their jobs, closing businesses and companies halting wages, it can lead to a difficult situation after you have invested enough money in buying the house. You may not even see it coming, but it will affect your finances to a considerable extent, and you may owe more than your home’s worth.
Despite the changing dynamics of real estate and the economy during the period of recession, deciding to buy a house can be tricky. Here, the trick lies in planning. It is important to note that the discretion is solely yours and the decision is yours to make because after all, buying a house is not just an investment, but an asset.