Making the Most of the Turbulent Housing Market
In today’s turbulent market, buying a home is not a choice that should be made quickly, nor taken lightly. It is true that home prices are extremely low, certainly the lowest in the twenty-first century, and interest rates have never been lower, with some mortgage lenders offering interests rates between 3.5% and 4.5%. However, many fear that we have not reached the bottom yet and that with the troubles in America’s economy, it is hard to know when is the right time to purchase a home.
While we may not have reached the bottom of the housing market, it is safe to say that it is currently a buyers market. This is not a good thing if you are trying to sell a home, nor is it good for housing developers, with most areas in the United States having multiple empty lots that may not actually have a house built on them for years, if they ever do. However, while this is not good for real estate investors, it does work out well for the home buyer.
One thing to keep in mind is that there are many foreclosures available all over the country. Some cities, like Detroit, have a disproportionate number of foreclosures and empty homes, but this can be seen in almost all cities in the country. What this means is that there are thousands upon thousands of Bank Owned Homes, which are basically dead weight on the banks ledgers. So, the sooner the banks can get rid of the bad debt, even if it means taking a considerable loss, they will look better and more secure, at least on paper.
So, the buyer has a lot of flexibility when making an offer on a foreclosure, as well as having many homes to check for. Also, where once buying a foreclosure meant investing in a home that had holes in the wall, the wiring ripped out, and no AC, more and more we are seeing quality homes that are in excellent condition being foreclosed on. As a result, there is no need to get stuck with a fixer upper, unless you want one. Of course, the flip side to that, is that as a result of so many good condition foreclosures, if you do go for a fixer upper, you will likely be able to get it for much less.
Not only does the high number of foreclosed properties on the market mean that there are many low cost options out there, but this also has an effect on the price of regular homes, driving the prices lower. Again, while this isn’t a good thing in for those selling a home, it is a good thing for home buyers.
Getting Credit in this Turbulent Market
While the number of foreclosures, low home prices, and excellent interest rates make it a buyers market, most lenders have gotten much more strict about how they lend out credit. This is, of course, at odds with the fact that Congress and President Obama decided to transfer billions of our dollars to the bank, but this is besides the point. The fact is that even after this transfer of the public wealth to the major banks, they are not lending. So, getting a loan becomes a problem, especially for those with less than perfect credit.
One of the best things you can do is speak with your local credit union, as more often than not, most credit unions have been practicing much less risky lending practices and are more connected to the community.
It is also important to check your credit report and clean up and problems before applying for a loan. Remember that having a line of unused credit is often looked at as a good thing, so after paying off your debt, don’t immediately cancel your credit line, unless there is a charge for keeping it.
Getting credit is not impossible now, but it is much harder, so make sure that you look as attractive as possible before applying for a loan.