During a recession the US economy is down, the housing market and home prices are depressed, and there are high unemployment numbers.
Consumers tend to become nervous about making big purchases or long-term financial commitments, and lenders require great credit to even consider a mortgage loan.
With all of this it can make sense for some individuals to purchase a home during these economic times, as long as the pros outweigh the cons.
A careful evaluation should be done to examine the individual situation, and this can help determine whether the advantages of buying a home during tough economic times are worth the drawbacks.
Pros: There are many advantages to buying a house during a recession.
As long as you have a 700 or higher credit score and can provide a 20% down payment most lenders will offer a mortgage.
In a recession housing values often plummet, and this means that you can get a home for much less now than you could five years ago.
There is a wide range of homes on the market, and these include foreclosures as well as private sellers.
The current mortgage rates and interest rates are incredibly low, and the homes on the market are priced at fantastic savings in many cases.
Another pro is that first time home buyers can take advantage of tax credits worth thousands of dollars.
In addition to a large number of foreclosures many home owners have found themselves underwater, and may be extremely motivated to sell.
The housing market is a strong buyers market right now, making it an ideal time to buy for many.
Cons: While there are many benefits to buying a house during a recession it is important to remember that there are also drawbacks as well.
During a recession the future economic outlook is not clear, and there is a lot of uncertainty.
Home prices could continue to fall after the home is purchased, causing you to lose value and equity quickly.
You could end up losing your employment if your employer downsizes or closes the doors, and this could make it impossible for you to stay current on the mortgage payments.
In tough economic times many people move to a better location, and if you have purchased a home this may be difficult to do.
The rising cost of fuel and food may make finances tight, and this could result in foreclosure in the future.
Buying a house during a recession will make sense for many people.
You can get a larger and higher priced home for less thanks to dropping home values, but this could also be a drawback as well after you have made the purchase.
This method can be very beneficial for many, but it is not right for everyone.
For some individuals the drawbacks of this purchase and the uncertainty caused by the poor economy mean that now is not the time to purchase a home.