Real Estate in 2008 where are we? Well, if you believe everything you hear in the media we are all doomed. Foreclosures are way up, homes aren't selling and everything is doom and gloom. While Southern California real estate has seen a more a robust market, it's not all bad.
How about this? Mortgage rates are incredibly low and may go even lower if the Fed once again cuts interest rates in January. This is a great "Buyers" market. Inventory is high and sellers motivated. This is also a great time to invest in real estate as there are many distressed properties and prices are more reasonable, and many properties can be had at a great price.
For buyers, mortgage loans may be harder to come by as it is harder to qualify for mortgage loans today than a year ago. In most cases you must be able to provide complete documentation during the loan process. You must be able to substantiate your income today where recently stated income loans were easier to get. Honestly, that's the way it should have always been. 100% financing is now more difficult to obtain and that's good too because buyers should have the financial ability to invest in their home from the start or wait until they can save up for a down payment. Both borrower and lender should have skin in the game. Over the past few years many people purchased homes that were probably more home than they could afford. But due to "creative financing" and stated income loans, and unbelievable teaser rates they were able to qualify. Now the loans are adjusting to their actual rates and for many the new payment is just too much to pay each month. The problem is that in today's mortgage market many people cannot re-finance because they can no longer qualify for the large loan amount they have. Many also have severe pre-payment penalties to deal with. Anyone in this scenario should contact their mortgage professional as soon as possible.
For sellers it's tough today to sell quickly; no doubt about it. Average Days on Market is growing and sellers are getting frustrated. However, in many cases if a home is priced correctly it will sell. Below I have included six basic steps to homeownership.
Six Steps to Homeownership
1. Think carefully about your home buying goals. For most people, homeownership is an integral part of the American dream and the advantages (tax benefits, sense of community, financial investment) far outweigh any drawbacks.
2. Check your credit. Your credit history is one of the first things a mortgage lender will review, so request a copy of your credit report from one of the three major credit reporting agencies (Equifax 800-685-1111, Experian 888-397-3742, TransUnion 800-888-4213). Review it carefully and if you find discrepancies, work with the credit agencies to resolve them. Try to do these three months before you apply for a home loan.
3. Save for your down payment and closing costs. The down payment is seemingly one of the biggest barriers, but many mortgage lenders still offer low down payment loans. Three and five percent down payments are commonly available. More is better !!!!
4. Get preapproved for a home loan. Ask your local lender to preapprove, not prequalify you, for a mortgage. This service is usually free and it lets you know exactly how much home you can afford BEFORE you start your search. A preapproval makes you more attractive as a serious buyer, and home sellers are more likely to accept offers from buyers who can secure financing.
5. Know your options. You may want to check with your lender, your local housing department, or a local nonprofit housing organization to see if down payment assistance programs are available. You'll have to meet certain eligibility requirements, but these programs may offer loans you take in addition to your mortgage (silent seconds) to help make the down payment. These may have below market interest rates or may not require repayment until you sell your home. Alternatively, some local housing departments offer low interest rate loans for the entire mortgage, sometimes a full point below market interest rates.
6. Learn as much as you can. Many mortgage lenders, nonprofit organizations, and real estate companies offer home buyer education classes to prepare you for owning a home. Classes normally run about four hours and walk you through the basics of home buying and how to manage the responsibilities of homeownership.
Check out the National Association of Realtors's new website -- www.housingmarketfacts.com it's designed to give homebuyers and sellers information that illustrates the value of real estate as a long-term investment.
and is not a part of nor affiliated with the City of Chino Hills.