A lot of things have changed during the pandemic, which may push many people to rush to buy a home. That includes things like spending more time at home, low interest rates, and inventory selling quickly.
While many people are talking about how now is the time to buy, financial experts say it's still important we exercise caution.
“This is a business decision. It's not emotional, meaning that it has to be the business factors first. I would encourage people to slow way down,” said Chris Hogan, a financial expert at Ramsey Solutions.
Buyers should not rush through the home-buying process or skip certain steps.
Financial experts say some things buyers absolutely need to do before even applying for a loan include eliminating all debt, building an emergency fund that can get you through at least three months, and define boundaries regarding how much you're willing to spend.
When applying for a loan, buyers should look for a 15-year fixed rate mortgage, get a mortgage payment that's less than 25% of your take home pay, prepare for closing costs, and have a minimum down payment of at least 10%. This will help you avoid paying for private mortgage insurance.
“I want to make sure every I is dotted, and every T is crossed. It might feel like you're doing the unnecessary, but remember, you make your money on the buy with real estate,” said Hogan.
Taking all these steps may mean it will take longer for you to buy a home, but experts say there's nothing wrong with renting if it allows you to save money and get rid of debt.