If you’ve been thinking about buying a house, you’re not alone. After the pandemic and a record drop in interest rates sparked a frenzied search for new space, this spring’s selling season is poised to be a doozy.
Even in a red-hot housing market with low inventory and high competition, the usual buying questions still apply. But there are some extra considerations to mull.
Has the pandemic changed how much house you can afford?
First, look at what you have saved up for a down payment and what your monthly mortgage payments would be. For renters, what you’re currently paying a month is a good barometer. Owning a property includes upfront expenses, like closing costs, and ongoing costs, like maintenance and homeowner’s association fees. Aim for a monthly mortgage payment that won’t stretch your budget too far, along with some cushion to handle emergencies and other unexpected fees.
A house budget must consider the following: the mortgage rate, how much you saved for a down payment, how much you can afford in monthly mortgage payments, local housing prices and other expenses such as taxes and closing costs.
The current housing boom is partly fueled by the drop in interest rates. As rates creep up, some house hunters may feel the urge to move more quickly. Mortgage lenders will look at your income, credit history and debt-to-income ratio before you lock in a low rate, so have those numbers at the ready. Consider getting preapproval so you can put in an offer quickly.
