There is no better time than now to purchase a home. It is important to thinkbeyond a changing real estate market. Instead, you should consider a dynamicone that includes a decreasing housing price, cautious mortgage lenders, newmarkets, and long-term commitments from both buyers and investors.
Also, ARMs and pay-option adjustable rate mortgages (orARMs) are no longer available. These loans, which were created by banks in 2000 as anexotic option for mortgages that allowed borrowers "leverage up" andpay a higher house payment, proved to be unfeasible. They led to large-scaledefaults within three months. First, youshould consider that you must have sufficient income to pay the mortgage if youplan to purchase a house. Every borrowermust have a down payment. The only twobasic types of mortgages available are the 30-year fixed-rate and 15-yearadjustable-rate mortgages. This means that you cannot leverage up your mortgageand housing prices will stay stable. Youshould buy now, but don't expect major increases in home prices.
Many home buyers can't afford to buy a house with cashout of their pockets. Most lenders won't approve mortgage applications unlessyou have a high FICO score of 700 or higher. You have enough cash to pay yourdown payment and closing costs and have a healthy cash reserve. Your financialdata is clean. Anotheradvantage is that your loan application was approved by another institution.This means that you are showing other lenders that you don't need them byqualifying for a loan. You must alsoensure that the property appraises at least twice the contract price and thatthe area is stable in the market. It willbe difficult for appraisers to continue to blame for the housing crisis. Theyare responsible for overappraising property during boom years andunderappraising now.
A competent agent can help you navigate difficultnegotiations and help you find a worthwhile short sale or foreclosure. HUDHomeStore.com can helpyou find a HUD-certified agent to help you make an offer on a HUDhome.com. The agent might not be able to tell you that foreclosuresand short sales are often severely damaged properties that will need tens ofthousands in renovations, maintenance, or rebuilding. Look for sellers with lots of equity who are looking to sellbut face foreclosures. In anticipation ofa rebound in the housing market, homeowners are eager to sell or refinancetheir homes, particularly those that are more than 25% underwater. Most sellers will list the property at a lower price toavoid foreclosures. You'll get a better-maintained property that will need lessrenovations, maintenance, and upkeep.
Buyers need to realize that there is no longer a timewhen you can flip houses every 24 month and make a fortune with tax-freeprofits. Whetheryou're buying the property as an investor, or to live there, you can make sureyou don’t lose any money once you have accounted for the cost of selling it. Investors who buy foreclosures and fix them up may not beable resell them as quickly and lenders might not secure financing theirbuyers. While the rest of market iscatching up, you will be able to make the most of your long-term plan and bringin the cash.
It is a great time to purchase a home and an equally goodtime to invest in property. Real estate is a great investment. However, you don't haveto flip properties quickly. This was the mistake made by many investors whocouldn't get out of their homes in the time that the market crashed. Buy one or more foreclosures, or as many as you can finance.Think long-term and focus on the monthly income you can earn. A foreclosure in Atlanta can be purchased for $75,000, andyou will get between $800 and $1,000 per month in rent. That's a great returnon your investment.
