Protection Tips for Buyers and Homeowners
It was in the year 2005 that the first indications of an impending market down turn were observed but it was not until 2007 that the market began crumbling. Since then, thousands of mortgage brokers and bankers have had to terminate operations. Despite these dire conditions, however, it was predicted that 2008 would likely be much worse. Many industry experts are particularly concerned that home foreclosures will see a dramatic increase while commercial real estate is likely to continue suffering even more.
This is certainly disturbing news, but homeowners and buyers must understand that certain steps exist to help protect them from the impending market crash.
You must first ensure that you fully understand the nature of your mortgage loan and its implications. Mortgages with adjustable rates were once quite attractive because of the associated benefit to homeowners from lower interest rates; but these now prove to be literal time bombs. It would be in your best interest to refinance your adjustable rate mortgage so you can now benefit from fixed interest rates.
If you, like many other sellers, are having trouble selling a property on the market for some time, you may want to consider offering concessions on the sales price and/or terms. The market is now overrun with inventory, thus allowing buyers the luxury of choice and the ability to state their own terms. In order to be a successful seller, you'll need to lower your asking price as well as throw in a few extra treats so as to "sweeten the deal" and get your house sold more quickly. If lowering the price is not a viable option for you, you may benefit from renting your home during the upcoming two to three year period.
The impending market crash is certain to also affect prospective buyers. Even though there are now more properties on the market at far lower prices, it is likely that prices will continue to decrease throughout the rest of the year. This simply means that buyers who are able to wait just a while longer before purchasing a home will likely be able to do so at even lower prices.
Buyers will also need to carefully consider the nature of the mortgage loans they obtain so as to ensure they do not suffer in the market crash. First-time buyers and/or buyers with poor credit ratings would benefit most from an FHA mortgage, while veterans will find worthwhile benefits in a VA mortgage. Both mortgage types offer more attractive terms than other mortgage products during the current market conditions.
Bear in mind that despite the numerous amounts of "no cost" mortgages being advertised, careful research of these mortgage offers is imperative before settling on any one in particular. In fact, you will find in most cases that "no cost" loans really do not exist; and that the costs are generally added back to the actual mortgage such that you end up repaying them at an even greater cost during the course of your loan term.