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Home Buyers
The recent downturn in the housing market has created a climate that buyers are increasingly taking advantage of. Home prices are hitting lows, and it seems as though the bottom may be nowhere in sight. While this means investing in real estate is an extremely dangerous short term proposition, anyone interested in a long term investment or a home for the first time can get exactly what they want for a whole lot less than they used to be able to find. Sellers, many of whom have been holding out, waiting for a rebound, are starting to realize that they will likely lose more by waiting than they will by selling now. That desperation has led a lot of sellers to make accommodations that even a year ago would not have happened.
While the housing bubble lead to a market where buyers were at a severe disadvantage, the buyer has now reclaimed the position of strength in negotiating a home sale. A home inspection with guarantees to replace parts is just the beginning; you can now get a myriad of inspections covering environmental concerns like radon and lead paint, as well as inspections of home infrastructure. You can get a lot more out of a home buyer when they are worried about whether the home they have invested so much into will be able to sell.
When negotiating a sale, look into any and everything you can get the seller to cover, anything about the house you want replaced. The home inspection process isn’t the only part of the sale where you can get serious concessions, these days most home sellers agree to pay closing costs up front in order to guarantee a home sale. Since these costs are substantial, this removes much of the upfront cost of a home purchase. Truly, there isn’t anything that is too far to ask for these days, but be careful, because if a home seller simply cannot meet a demand, you are going to prevent a purchase that may already be a great deal. What’s the lesson? In this market, it never hurts to see how far a seller will go.
Posted: September 10th, 2008 at 2:02 pm
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Posted in
Real Estate Investment
Financing a home purchase is a complicated process, and even someone who is in good financial shape may have difficulty with the details. When financing a home purchase, you will need to find out how much you can afford to spend, get together a down payment for your home, and get financing for the rest. In order to be ready for the home buying process, you will need to take a number of important steps, as detailed below.
First, you should look into your credit rating. Your Fico score is an analysis of each of the major credit monitoring companies numbers, and can be found through a number of services, including myfico.com. Your credit score is based on the amount of outstanding debt you have, whether you regularly pay bill late, etc. Your credit score will determine how much money you can borrow, as well as what interest rate you will be able to get. If your credit score isn’t good, the current loan climate isn’t exactly friendly for finding a loan, so keep that in mind when beginning your home purchase.
Once you know your credit status, you need to figure out what you can afford. This means you should start using online calculators, as well as calling credit organizations to determine what they would be comfortable loaning you. As well, you need to ensure you have a down payment ready. While you can get financing from Freddie Mac or Fannie Mae if you aren’t able to raise enough capital, it is extremely hard to get a good rate these days without a fairly high down payment. As well, you will have to pay insurance on your loan to insulate the provider from potential failure to make payments. By agreeing to such a condition, you will likely be paying a decent amount of money toward insurance each month.
Once you have cash lined up, and an estimate of what you can afford, you are ready to start working on your home purchase. Finding the right home is another matter altogether, but in the current market, altogether easier than a few years ago. The important thing is not to stretch your finances too far, after all, that’s what got the country into the mortgage crisis in the first place.
Posted: September 10th, 2008 at 2:50 pm
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