Housing News

When the Economy Feels Shaky, Buying a Home May Still Be a Smart Financial Move

From zig-zagging interest rates and inflation to AI-driven job disruptions and global tariffs, economic uncertainty has the potential to disrupt both your wallet and your peace of mind.

That’s left many hesitant to make big financial moves like buying a home during shaky economic times. However, homeownership might provide you with more financial protection and flexibility—not less.

If you lose a job or fall on hard times, you may be able to receive mortgage protections that could help you stay inside your home instead of being evicted from a rental. And owning a home allows you to build equity, which may provide a financial cushion if you need to tap into that equity.

Given lower mortgage interest rates and the rise in home values over time, now might even be a good time for buyers looking to enter the market. Mortgage rates and home prices tend to fall and more homes typically hit the market when the economy is more challenging.

“If you want a home, you can afford a home, [and] you can qualify for a home…get a home,” said New American Funding Chief Servicing Officer Roger Stotts.

If you’ve lost your job, you may be able to pause mortgage payments with forbearance 

If you lose your job or face a financial setback, mortgage forbearance may allow you to temporarily pause your mortgage payments for a set period. This is an arrangement you make with your lender, generally lasting between three and 12 months.

Your ability to secure a forbearance depends on your lender, personal situation, and loan type.

Your lender may be able to tack the missed payments to the end of your loan. Or you may be able to repay what you owe through a plan once you’re back on your feet if your lender allows it.

“Communication is the key,” Stotts said, noting that reaching out to your lender is an important first step for those experiencing financial hardship. “I can’t think of a situation where we can’t help.”

Mortgage modifications may help you to keep your home

If your financial struggles are longer term, such as a salary cut or layoff, your lender might offer a loan modification depending on your situation.

This can involve adjusting your interest rate, extending the length of your loan, or reducing your principal balance to lower your monthly payment to something you can afford.

To qualify, your lender may ask for documentation of your hardship and current income.

“Modification means ‘I want to keep making payments, I want to keep my home, but my income has been curtailed,’” Stotts said.

Unlocking cash with home equity 

If you’ve built up equity in your home, either through rising property values or paying down your mortgage, you may be able to use to it help bridge the financial gap during a job search. Or your equity could help you pay down high-interest debt while staying in your home.

A second mortgage allows homeowners to access cash, often with better rates than credit cards or personal loans. This is a new loan in addition to your existing mortgage that taps into your home equity.

Homeowners may also want to consider a Home Equity Line of Credit (HELOC). The loan allows you to turn your home equity into a revolving credit line you can draw from as needed. These loans typically come with a variable rate.

A cash-out refinance is another option that allows homeowners to replace their existing mortgage with a new, larger one and take the difference in cash. They can use that money to cover bills or keep debt manageable.

Selling your home may provide a financial cushion

If you’re sitting on substantial home equity and the housing market in your area is strong, selling your home could also provide you with a financial cushion. (You may walk away with a solid profit, especially if home values have risen.)

That money could help you relocate for work, cover living expenses, or even help fund a smaller, more affordable home purchase.

If you intend to vacate your home and can no longer make payments, a sale allows you to capture as much of your equity as possible. That’s something that may not be possible if the property goes into foreclosure.

When buying a home may not be the right move

Homeownership is not a one-size-fits-all equation. If you are at high risk of job loss or rely on unstable or variable income, you may want to hold off on buying until your financial situation improves.

Buyers with little to no savings, who want to improve their credit score, or pay off debts may also benefit from waiting.

In these cases, renting may offer more flexibility and less financial risk until your situation stabilizes.

Homeownership often provides stability

Beyond your budget, owning a home can provide some stability during uncertain times.

Fixed-rate mortgages also offer predictability when it comes to housing costs, as the bulk of your housing costs don’t change. That’s something renters often don’t get.

Plus, buyers who plan on staying in their homes long-term start the clock on the likely increase in their property’s value over time.

“There’s only so much real estate,” said Stotts. “The value is [likely] going to go up [over the long-term.]”