With the current mortgage and foreclosure crisis, is right now a good time to buy a home?
It seems this is a question many people are asking. And many sources point to this being the case - the Fed has once again lowered interest rates, there is possibility of government backed bailouts for homeowners and home prices are falling in most areas. I’ve even seen this in my county where typically home values have risen more than 6% annually (and sometimes 6% every six months) for several years now.
On average, home prices have dropped 11% recently. This is quite huge. Coupled with the current 7-8% mortgage rate for the average borrower (5-6% for those with excellent credit), and the amount of house you can buy for the money has risen signifigantly.
It could definitely be a good time to buy a house. CNN Money has also mentioned it’s prime time for vacation home or second home shopping as well. There are some real bargains to be had.
However, this doesn’t mean one should go rush right out and buy the first thing they like - now is the time to do “due diligence.” Shop slow, shop around and watch out for any unfair practices in the lending industry.
I’ve heard it mentioned several times lately that some lenders are not providing Truth in Lending documents within the 3-day requirement. When questioned, borrowers have been told it will come with the loan documents at closing. This is totally wrong. The lender has 3 days from the date of application to provide the TIL to borrowers. Should this happen to you, kindly ask the lender if it was just misplaced or overlooked and to please send you another one. If they make excuses, they’re trying to hide something and you would be wise to demand it be disclosed immediately. Be fair about it, but be firm.
You know, it’s interesting to note that many of todays real estate millionaires got started back in the 80’s during the mortgage meltdown. Play right and perhaps you could be one of the next set of RE millionaires in 20 years. You can bet we are on the lookout for good deals and will snatch up any we see.
~ Annie
More like this . . .
RE Research Basics Now in Paperback! by Annie on August 26th, 2007
Seattle Experiences 16-year High for Unsold Homes by Annie on August 29th, 2007
Thoughts: Sub-Prime Meltdown by Annie on February 3rd, 2008
Will the changing face of suburban living cause slums? by Annie on March 4th, 2008
Real Estate Local: Tanked by Annie on March 17th, 2008
March 29th, 2008 at 6:08 pm
Yes, it is a good time to buy a home. I couldn’t agree more! However, not everyone should buy. Some people are really worried about what could happen in the near term and choose to rent. Others don’t have their finances in order, so should not even bother.
For those that would like to buy, there is a great selection, time to evaluate choices and bargains to be had. No one should buy unless they think they will stay in their home for a period of at least 3-5 years. Fuggedaboud anything less than that. A house is also a home, not an ATM machine. It is a great investment, but it no longer will happen over night.
March 29th, 2008 at 7:23 pm
Hi Debra,
Thanks for commenting.
And you’re absolutely right - not everyone should buy for a variety of reasons.
You’re also right a house is not an ATM either. This is why I mention it’s a slow investment - one could potentially become a person of considerable wealth if they invest wisely but that wealth won’t happen for probably 20 years.
~ Annie
April 1st, 2008 at 4:20 am
In many areas in California, bank owned proeprties are LISTED for as low as 40% of the peak value of comparable properties in 2006/2007.
Combined with low interest rates, qualified buyers could end up with monthly payments of about one third of a purchase in 2006 in the same area.
Amazing how this change happened in such an incredibly short time frame!
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