Nov
11
Trying to buy a house in today’s housing market? Here are some tips for you! First of all, always go into the real estate market with the desire to learn as much as you can. Even those who have bought and sold multiple properties frequently discover some aspect of the transaction that causes them to research, talk to experts, and grow their knowledge. Education is priceless.
The past year there’s a lot of “doom and gloom” being spread in the media about the housing market and overall turbulent economy. But, if you’re in a position to take advantage of falling housing prices, getting a loan and moving forward with a real estate purchase could, in the long run, add strength to your financial portfolio. Now is the time to get involved in buying real estate. We will never see such great deals of homes in our lives. So in order to take advantage of this situation, you will need to know how the mortgage business has slightly changed.
When it comes to the banks and lending institutions, the rules for getting a loan have changed. It is important that you are aware of how this affects you before you find the home that you love so that you can be confident that you will be able to buy it. In today’s real estate market, “bidding wars” aren’t as prevalent as they once were, timing and being ready to initiate a well-planned offer are more important to the successful purchase and closing of a home.
Start with an accurate appraisal of your target house. First and foremost, make sure that the property appraises properly. The appraisal determines the true market value of the home. It also shows discrepancies such as if the seller lists an erroneous square footage, the appraisal should reflect the correct figure (which in some cases is less than advertised). Lending institutions and banks, especially these days, use the appraisal to make sure the home appraises at or higher than the requested loan thereby lowering the bank’s risk if you default on the loan.
Secondly, prepare to enter into the negotiations with a large down payment. Cash is KING. Save, save, save for that down payment. With the way the lending business is today, everyone knows that tighter restrictions are being called for in the real estate lending market, but what that means for each person is different. The reality of what was taking place about a year ago is totally different from what it is today.
Finally, try to Understand what all of the bank requirements are. Buyers need to know that shopping for a home needs to fit their budget, rather than finding a wonderful place they’d like to live in and then attempting to leverage beyond their means. Pretty much no income verification doesn’t exist anymore. You can’t expect to get a 95 percent or 100 percent mortgage on your property – those days are long gone. Show your lending institution your “rock solid” financial basis from both a historical view and a projected future (short range future that is).
Do yourself a major favor to get prepared for this mission. Check your own credit score! If you don’t have a very good credit score, it’s going to be difficult in terms of borrowing. Be prepared to give enough information to document your employment and taxes. Tax returns are seldom, these days, taken from the borrower. You should know that the banks will generally request the tax return themselves. With that stated, you can certainly understand that any and all “financial skeletons” that you may have… will certainly jump out of the closet during this encounter. BE PREPARED.
During you financial preparations you need to also set contingencies. Making sure that the appraisal comes in at the right price and making sure that you can get financing are two critical aspects of buying a home. Keep in mind that even with a loan approval, there are other factors that can lead to the denial or approval of a loan. Contingencies help to make sure that you don’t get locked into a legally-binding contract to purchase a home that you can’t get financing for or that doesn’t meet the expected appraisal. There are numerous other contingencies that can be set. The best way to prepare for all contingencies is to align with a great real estate agent from the start.
Always approach your home buying mission as positive as possible. But do prepare for worst case scenario. If you encounter problems with the customary lending channels you can also approach and contact any number of mortgage brokers. They are prepared and equipped to arrange for financing that banks turn down.
By: George Eckenrode