Is Now A Good Time to Buy a House?

One reader wrote in recently to ask us, "…if they should buy a home now or wait in case prices fall lower."

Indeed, recent data on the housing market paints a stark picture. Home prices are declining in many regions nationwide.  Last month the National Association of Realtors projected, that existing-home sales will fall 6.8% this year, while new-home sales are likely to fall 19%.

At the same time, foreclosures are soaring.  Foreclosure filings were up 93% in July from the previous year — or one foreclosure filing for every 693 households.

For homeowners trying to sell, the news is expected to get worse.  Wall Street has been burned by bad subprime loans and is curtailing new investments in mortgage lenders.  As a result, consumers without stellar credit may be unable to get mortgages at reasonable rates.

So what does this all mean for buyers sitting on the fence?

Unfortunately, there is no blanket answer that covers every scenario.  If you're unsure whether now is a good time to buy a house or not, you have to consider many variables, including the market you're thinking of buying in.

There are a lot of contingencies in the real estate market right now, so if you're in doubt or don't know whether now is the right time for you, talk to us. 

We can better explain specifics of the St. Louis real estate market with a free consultation.

Retirement? Don't Count on Your Home  

In recent years, many families — even those with savings on the small side — have been able to think about retirement with some measure of confidence.  The value of their homes, in most cases, has soared.

A study released recently by Bell Investment Advisors in Oakland, California, found that 68% of surveyed 60-year-olds count their personal residence as a retirement asset.  And of those 68%, one in four say their home represents half or more of their retirement savings.

The past several months, however, illustrate the risks involved in looking to your home to support your retirement.  Home prices nationwide are falling, and the decline is accelerating.

You might be planning to sell your house and move to a smaller and less-expensive home as you enter retirement.  What happens, though, is that retirees often end up staying where they are, or — if they do sell — buy a home of equal or greater value.

Interest rates, too, could have a big effect on plans you might have to tap the equity in your home, especially if you're thinking about a reverse mortgage.  With this type of borrowing, you can receive monthly payments, a lump sum or a line of credit.  The amount you can borrow is tied in large part to prevailing interest rates; the higher the rate, the less money you get from a lender.

In short, if the value of your home falls — which many Americans had come to assume would never happen — there's less equity to help finance your retirement.

Are you planning your retirement around the equity in your house?  We'd love to hear your comments on this growing trend, and how you see the market trend today affecting your retirement years.

Click the "Comment" link below and leave us your thoughts on this.

Will an Interest Rate Cut Help?

Economic growth has slowed enough to prompt a reduction in interest rates from the Federal Reserve, and economists see a nearly one in three chance of recession in the next year, according to a Reuters poll of economists.

Housing is already in recession and paralysis has overtaken many areas of lending. In the poll, in which 114 analysts took part, the median of 78 forecasts was for growth to ease to a 2% annual rate in the fourth quarter before picking up to 2.3% in the first quarter next year.

The median forecast of 66 economists who gave an estimate put the chance of recession in the next 12 months at 31.5%.

Will the Fed cutting interest rates help at this point?  What do you think?  Is it too little too late?  We'd love to hear your opinion.  Click the comment link below and tell us what you think.

The Dangers of a Debt Consolidation Loan

For many people a debt consolidation loan implies convenience - the convenience to pay one single bill instead of 20 or 30 odd bills in a month.

It also implies hassle-free consolidation of all existing liabilities under one umbrella.  What’s more, if the interest rate is supposedly lower than existing ones, what could be better than a debt consolidation loan? 

The fact is: Convenience alone is no guarantee that you will incur savings.

Most of the time a debt consolidation loan will promise you a lower interest rate than your current liabilities.  There is always a catch in the agreement of the debt consolidation loan.  To know if the interest rate is truly lower than current rates, be sure to check interest rates on each of your existing liabilities.  Then check this with the offered rate on the debt consolidation loan.  If it really is lower, the next thing you need to check is if this is a promotional rate or not.  Many banks will try to lure unsuspecting customers by offering a debt consolidation loan with a low interest rate.  This is usually a promotional rate and ceases after the promotional period ends.  Be sure to read the fine print of the agreement very carefully to check what the interest rate changes to after the promotional period.  Chances are the rate will be much higher than even normal rates!

Shop around, hunt for the best deals, and do your own research.  This way you will not only learn about promotional schemes on the debt consolidation loan but also find ways to negotiate and bargain your way through.  Credit unions often tend to provide more attractive rates than banks.

Also, be very careful about the secured versus unsecured debt consolidation loans and don't sign over your house when agreeing to a "secured" debt consolidation loan or else you may find yourself without a house some day.

The St. Louis Real Estate Market - Boom or Bust?

Almost every day, we see on the news about how more and more people are getting stuck in the foreclosure trap in real estate.

People are losing their homes.  This is serious stuff.  It’s downright painful and devastating to countless 1000’s.

Does that mean we are in for a boom or a bust in real estate?

Is one person’s pain, another’s gain?

We'd love to hear your thoughts and comments.  Just click the "comment" link below and tell us what you think.