Amid troubled economic news comes a bright spot--according to the National Association of Realtors (NAR), home prices are at the lowest they’ve been in a decade. Before the housing balloon began to expand and then the bottom fell out, home prices have gone old school, returning to what buyers might see in days gone past.
In fact prices are so low that a whopping 33% of buyers in February paid in cash for their home, a trend seen mainly with distressed, short sale or foreclosed property purchases.
For those who don’t have spare cash laying around, the mortgage loan industry is equally as ripe. With rates not seen since the 1970’s, buyers can jump on a solid 30-year fixed mortgage for under 5%.
Additionally, buyers have the “pick of the litter” with inventory continuing to grow. From distressed “fixer uppers” to turn key homes, home buyers can get exactly what they want for a low mortgage rate and an equally low price.
4 Home Buying Tips
Although the home buying ground is fertile, homebuyers are urged to proceed with caution, dot their “I’s” and cross their “t’s.”
- Prepare for success. Whether you plan to pursue a distressed property or your dream home, scrutinize your credit report and get your financial house in order before you shop. As with any purchase, determine how much you can afford using a mortgage calculator and prepare a home buying timeline. If you don’t have the finances to purchase the home today but will in six months, create a financial worksheet to keep you on the right path. Remember, many mortgage companies prefer you have a healthy down payment (20% is ideal).
This is also the time to ensure your credit report accurately reflects your financial behavior. Correct inaccuracies and pay down debt if your score is too low. Scores higher between 660 and 849 garner the lowest mortgage rates.
- Shop for a home within your budget. Don’t look at homes beyond your price range in an effort to lowball the seller…you’ll only waste everyone’s time. Instead, narrow in on a specific price range and neighborhood for the most efficient house hunt. Consider looking at homes lower than your price range if you are interested in renovating the home. Be sure to build expenses into the overall price before shopping.
- Explore a variety of mortgage brokers or lenders. Mortgage brokers are competing for your business so examine a wide variety of mortgage products and mortgage companies to determine which fit is best for you.
When meeting with the mortgage broker, ask about rate discounts if you agree to make payments electronically or if you have other products with the lender (such as auto loans). Also, if you don’t qualify for a loan or if you are assigned a higher rate, ask the mortgage broker what steps you could take to get a lower rate. Turn to your mortgage calculator to reconfigure price structures and rates.
- Take an active role in the appraisal process. The appraisal could possibly make or break the sale once you’ve found the home. Conduct your own home appraisal by tapping into the MLS (multiple listing system) to find comparable homes. In some cases, appraisers are using foreclosed or short sale properties as a comparable, which is a huge “no no.” If you believe your appraisal does not accurately reflect the home’s worth, challenge the report and ask for a new review.