The coronavirus pandemic threw a wrench into just about everyone’s plans. Vacations were canceled, lesson plans were turned upside down and millions of Americans were suddenly out of a job.
If you were planning to buy a house in the near future, you might be questioning whether you should put that idea on pause, too.
Mortgage Rates Are At All-Time Lows
The Federal Reserve cut its federal funds interest rate in early March by 0.5 percentage points to a range of 1% to 1.25% in response to the pandemic’s effect on our economy. Two weeks later, it made another emergency rate cut of 1 percentage point to a range of 0% to 0.25% ― the lowest level since the Great Recession.
Though the Fed’s target rate doesn’t have a direct effect on mortgage interest rates, there is a connection between the two, and mortgage rates dropped accordingly. Mortgage rates fell to all-time lows in April, and the average rate on a 30-year fixed-rate mortgage now hovers around 3.4%.
Andrea Woroch, who advises consumers on how to save money, said she refinanced her current mortgage just a few weeks ago. She was able to shave more than 1% off her interest rate, which means she will save more than $100,000 over the life of the loan.
Should You Buy A House During A Pandemic?
Rock-bottom rates make homebuying an attractive option, but there are still many unknowns and challenges when it comes to assessing how the pandemic will affect the market and consumers’ financial lives.
As of April, more than 30 million Americans had filed for unemployment. Some states have begun to reopen businesses slowly, but there’s no telling what kind of ripple effect the shutdown will have on employment for months to come.
Buying a home when your job stability is uncertain is a risky prospect. The next year might present once-in-a-lifetime opportunities to buy, but that doesn’t mean you should go for it if you aren’t prepared.
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