Get ready to buy in 2009

Get ready to buy in 2009
2008 marked a year of rising home sales, falling home prices, a record number of foreclosures, the conservatorship of Fannie Mae and Freddie Mac, rising unemployment, and the official declaration of a recession that began in December 2007.  Unfortunately higher rates of unemployment mean more foreclosures, which could continue to drive down home prices, making 2009 a great time to purchase a home.

MAKING SENSE OF THE STORY FOR CONSUMERS

 

·       Consumers considering the purchase of a home should first get their credit and finances in order.  Reducing spending, limiting credit card balances to no more than 25 percent of the available balance, and monitoring credit reports are highly recommended by most financial experts.  Even borrowers with less than ideal credit scores and credit histories still may qualify for a home loan.  Some lenders will be more forgiving if the borrower has started meeting monthly debt obligations in the last six to 12 months.  Consumers can view their credit reports from Experian, Equifax and Transunion by visitingwww.annualcreditreport.com.  The free credit reports will provide a borrower’s credit history, but not the credit score.  The credit score can be purchased for approximately $10 from Equifax.

·      Good credit doesn’t mean simply paying bills on time; it also can mean job stability.  Most lenders require borrowers to have worked for the same employer for at least one year, possibly longer before they will approve the home loan application.  For self-employed individuals, most lenders will want at least two years of tax returns before approving a conventional loan.

·      It’s very important that borrowers know early on in the homebuying process how much house they can afford, and there are various ways to determine this. Borrowers can visit a local lender to get prequalified or preapproved for a loan; or go online.  Lenders will review the borrower’s income, debt, assets and liabilities to determine the maximum mortgage payment the borrower can afford.  Web sites, such as www.bankrate.com, also can help determine this. 

·      The services of a REALTOR® should be used in every real estate transaction. REALTORS® can provide an overview of current market conditions, coordinate home tours, and assist with making offers and counteroffers, as well as help with the myriad of details involved in every real estate transaction.

·      Reviewing the purchase contract and loan documents also is extremely important, especially if purchasing a property through a short sale or foreclosure.  If the property is owned by the bank, the home-buying process could take much longer than a traditional transaction.  It is recommended that borrowers ask their attorney, or broker to explain anything in the contract and/or loan documents that the borrower doesn’t understand.  

Source: CAR