Buying After The Sub-Prime Crunch

The days of getting a quick easy mortgage are clearly over.  A year ago, mortgage money was flowing.  Predatory lenders signed people up for mortgages without paperwork, gave out loans that covered 100% of the home's value and weighed them down with outrageous payments that exceeded their income.  The subsequent fallout from those loan practices has been tremendous, leaving lenders scrambling to clean up a mess of foreclosures and defaults.

They've also tightened the purse strings - especially when it comes to the subprime market.  Lenders are demanding documentation, downpayments and turning back to more traditional methods of qualifying loans.  Those with a long history of paying bills on time won't be affected, but first time buyers or buyers with spotty credit histories need to get their paperwork in order.

Here are 5 ways to make buying after the sub-prime crunch a reality:

1. Find a banker or mortgage broker you can trust.
    
2. Improve your credit rating: even if you're a year or more away from making a purchase, it's never too early to start.
    
3. Clean up your credit report: take care of any problems or errors on your report.
    
4. Educate yourself: learn the terms and take time to build your team of experts.
    
5. Work with a real estate professional: a good real estate professional will always save you time and money in a real estate transaction versus going it alone.

Buying a home will probably be the single biggest financial investment you'll ever make but it doesn't have to be the biggest risk you ever take.  With the right real estate agent, financing, information, and financial management, you will be on the path to a future that includes home ownership.

A Little Good News About St. Louis Real Estate?

It seems there's nothing but bad news for the housing market every day: More mortgage resets are ahead in the next year, lenders are tightening standards and homes continue to pour onto the market.  All point to home values continuing to move lower in the near future.  There are plenty of statistics to warrant a gloomy outlook.

The National Association of Realtors says existing single-family home sales dropped 8.6 percent to a seasonally adjusted annual rate of 4.38 million in September, compared to a pace of 4.79 million in August.  That rate is 19.8 percent below the 5.46 million-unit pace from September a year ago.  What's more, the median existing single-family home price was $210,200 in September, down 4.9 percent from the same time last year.

But there are also some encouraging signs.  Lawrence Yun, chief economist for the National Association of Realtors (NAR) believes home values may start recovering next year because significant demand has been accumulating.  He says prices actually continue to trend upward in the Northeast, Midwest, throughout the condo sector and in areas that are not dependent on jumbo loans.

Moody's Economy.com economist Patrick McPherron isn't so confident about a fast housing recovery and anticipates the market staying down at least through 2008.  He says that a weakening in the economy and financial markets, combined with higher guidelines for mortgage lending, will drive down demand.

It all seems to depend on who you talk to, or listen to, as to just how bad the country's real estate markets really are.

What do you think?  Do you think things are beginning to show signs of turning around?  Or do you think we'd all be advised to hunker down for the long haul?  We'd love to hear your comments by using the "Comment" link below.  Your name and email address are required to post your comment, but know we respect your privacy and your email address will NOT BE PUBLISHED here for anyone else to see or harvest.. so go ahead and tell us what you think.

Real Estate Downturn Continues

The downturn in housing shows no signs of improvement as Toll Brothers, the largest U.S. luxury home builder, said tighter credit is likely to weigh on its future bottom line.  S&P added to the negative tone when it lowered its credit rating on four home builders.  Moody's also has several home builders under review.

To leave a comment about this story and video, use the comment link below.  We'd love to hear from you.

When NOT to Buy Real Estate

Most people would probably think a real estate agent writing about NOT buying a house now must mean the agent has either lost his/her mind or is independently wealthy.  But, I believe there are a few times when the decision to buy real estate should be put on hold.  I'd be interested to hear what you think at the end of the article.

If you have recently changed jobs, you may have a hard time getting financing for a new home.  Instead of wasting valuable time looking for a home, a smarter option might be to continue saving for a down payment while maintaining a regular work schedule.  You could also work at improving your credit history by purchasing things on credit and promptly paying them off.  Once your current employment history and monthly income has been consistent for at least a year and you have a healthy down payment saved, then contact us to be shown homes for sale in the area you are wanting to buy in.

If you suspect you might need to change jobs soon it would be wise not to purchase a home.  The process of buying a home is expensive even if you don't consider the actual cost of the home.  Imagine being laid off or transferred shortly after buying a home.  If you're forced to make a quick sale of a home you just bought, chances are you could lose money.  Waiting until there is stability in your life might be the prudent choice.

If you're new to an area, it might be a good idea to explore it a little before jumping into purchasing a home there.  It can take time for the character details of different neighborhoods to reveal themselves, and buying in the "wrong neighborhood" is a decision that could affect you for life.  Renting for at least a few months can seem like a waste of money, but in fact it gives you valuable time to make a wise decision about where you want to live and invest your hard earned money.

There are other circumstances and instances which could make a buying real estate a poor choice at a given time, these are just a few thoughts.  I'd love to hear yours.  Leave your comment by clicking the "Comment" link below.  ALthough you need to supply an email address along with your name to leave a post, don't worry, your email address WILL NOT BE PUBLISHED here for anyone to see or abuse.  We are very strict about that, and hope you will leave us your thoughts on this topic.

Buying Foreclosures: Things You Should Know

If you're considering buying a foreclosed property, there is a lot you should know if you have never done it before.  Yes, there are a lot of great deals in the market these days, but there are different stages of foreclosure and the more you know, the more you can protect yourself.

Pre-foreclosure is when the homeowner still owns the property and knows there is potential for foreclosure. They’re likely not current on their payments and are in danger of destroying their credit and losing any equity they have.

The second option is buying at auction.  Approach this method with caution - there is a lot of risk such as liens on the title and unknown repairs.  Also, cash is typically needed at this stage if you beat the bank's bid and win the auction.

The last option is post-foreclosure.  At this point, the home is known as REO - real estate owned property by a bank or lender.  The bank won at the auction and is now selling the home to recoup as much money as possible - at least what is owed on the property.  The bank will most likely hire a local real estate agent to put it on the market.  The longer the home is on the market, the more willing the bank is to work with you on selling price.  Keep in mind, banks do not want to be in the business of owning real estate – they want to get rid of it as quickly as possible.

Here are a few things to keep in mind when purchasing a foreclosed property:

1. Get a full approval from a mortgage lender who has verified your income and assets. This will give you more negotiating power.
    
2. Pick a zip code you are interested in and do research on what homes are selling for and the recent trends with property values in that area.
    
3. Get an inspection done and make your offer contingent on satisfactory results from the inspection.
    
4. Determine potential repairs and their costs.
    
5. Remember you have the upper hand in negotiations when it comes to the bank paying closing costs and making repairs.

Be cautious and patient in the foreclosure buying process.  If handled properly, you could find a great home in which you may have some instant equity.

Considering a foreclosure?  Have any questions?  Post them here by using the "Comments" link below.