MAKE THE RIGHT COVID-19 MOVES
ACCESSING SAVING, BUYING A HOME, AND MOVING
October 31, 2020
Author: Betty White,
WHAT IS THE NEW LEGISLATION?
On March 27, 2020, Congress’ $2 trillion response to the economic consequences of the COVID-19 pandemic became law.
According to SEC.Gov, the new legislation allows retirement investors affected by the coronavirus to gain access to up to $100,000 of their retirement savings without being subject to early withdrawal penalties and with an expanded window for paying the income tax they owe on the amounts they withdraw.
The new legislation allows access to savings to help with expenses during the pandemic, but is it a good idea?
According to CNBC, 14% of Americans have already tapped into their retirement funds.
And, from a recent article on Time.com, approximately 33% of millennial workers have already taken a loan or withdrawn money from their 401(k) or similar retirement plan in 2020, or are thinking of doing so, compared to 15% of Gen Xers and 10% of baby boomers.
And, while the pandemic has caused a lot of market changes in how and where we live, one thing remains, we all need a place to live.
For those who are thinking of buying a home, accessing retirement and savings may be an opportunity to help with a down payment that would otherwise not been readily available.
SHOULD I BUY REAL ESTATE NOW?
As with all major purchases, research and review of all options are critical.
If you are in the market to buy a home during the pandemic the most important advice is to start the research process as soon as possible.
Buying a home is a time and energy-consuming process. However, when you add the global pandemic and everything that comes with it to the mix, things get a lot more complex and stressful. It does not matter whether you plan on buying personal or investment property, or whether you plan on buying alone or with a Co-Buyer, it will take a lot of your time.
Thus, start organizing your finances and your paperwork immediately, as those two things usually take a while.
Then, make a priority list! That is, consider what you need in your new home and what is not really necessary. Bear in mind that you are buying your new home during the pandemic as well, so be flexible.
Finally, consider whether you will be hiring a real estate agent to help you out with your purchase or whether you plan on doing everything by yourself. And, certainly, assess your entire situation before you access your retirement savings.
Another thing that has changed because of the coronavirus situation is the stability of mortgage rates. This happens when a country's economy is struggling. And currently, it is struggling big time. However, even though the real estate market is volatile, that does not mean that mortgage rates will stay the same forever. Since the whole situation is unprecedented, the rates may rise when you least expect it. Thus, as a buyer, be prepared for both a rise or drop in rates as we progress through this precarious time.
Besides the mortgage rates, interest rates are another thing that is falling at the moment. The rules have been relaxed on the loans you can take from certain accounts. Also, as mentioned above, the CARES Act loosened rules about penalties associated with accessing retirement accounts. Accessing savings to buy a home during a pandemic might even come without penalties for certain early withdrawals. Accessing retirement savings is tax-free, if you fulfill the requirements that the Act outlines. Usually, taking an early distribution of up to $100,000 during this calendar year will come without the 10% penalty tax.
So, take advantage of the situation, and if you can!
This may also be a time to consider pooling resources with family, friends and love interests to co-buy property to extend resources and increase buying power while lowering risk. Buying property with others to use as an Airbnb is very popular and can increase investment return significantly.
This is how many cash-strapped millennials are becoming homeowners right as we speak.
SAFETY & NEW TECHNOLOGY
The COVID-19 situation has forced us to practice social distancing and of course step up our digital game. Limited interaction, virtual tours, zoom calls, digital closings, and even scheduling a moving company to help with relocation are now fully online.
And remember, a little research goes a long way. Consider how some companies, are doing better than others during the pandemic because they have used technology prior to the pandemic and now are reaping the rewards of their foresight. One such company is Triple 7 Movers, who had already been using technology and online booking to streamline their processes, by adding additional safety measures and digital engagement at all times!
FIND RESOURCES YOU CAN TRUST
Just like finding movers you can trust, you need to find the right real estate agent. Find an agent that takes coronavirus seriously and who will go above and beyond to help you find a property that suits your needs and your budget in this unique market environment.
So, how does one find a real estate agent during the social distancing period? There are many companies and real estate agents in the market today and many can be found online or through a referral. And, if you are looking for an agent to help you co-buy with family and friends, to extend resources, you may want to consider using an agent from GoHomeBuyersUnite.com.
In the time where home prices have rise higher than incomes, home-buyers are facing an affordability crisis and, as mentioned earlier, an unprecedented pandemic impacting how we interact, shop, and contract for property and many other of life's requirements. So, if you are interested in buying real estate to live or invest in, or moving from one location to another, this may be a strange and confusing time but it is also a time so shop smart, ask questions, talk to others and then buy while there are significant advantages. Do not let fear stop you from living your best life. Practice safety and be considerate, we are all navigating the challenges of Covid-19.