Houses Are on Sale! Rates Are Low! 2012 Is the Year to Purchase!
by Patricia Leary ◊ Jan 06, 2012
Real estate is today’s golden opportunity. If you are in the position to purchase a home, 2012 is going to be the year to take advantage of low prices, low rates, and a lot of inventory.
Gold had dropped from over $400 an ounce to $250 an ounce (a 40 percent decline) from February 1996 to August 1999. Everyone knows what happened next. The price of gold rose from $250 an ounce to $1,500 an ounce in the next 12 years. We see the same thing in real estate today. I believe that the real estate market will rebound strongly the same way. Those who believe in real estate as a sound investment will be rewarded.
Despite the current economic situation with slow economic growth, almost 80 percent of American households believe that now is a good time to buy a home. Positive sentiment toward home buying is particularly strong among the young, the educated, white, and Hispanic households.
One of the reasons that prices are low is because lenders will look at the comparable properties that have recently sold. This will include properties that are bank owned or short sales. Underwater homeowners who are looking to sell have to sell at the going market value, which is most times more than the current mortgage balance on their property.
The need for a true mortgage professional is more important than ever because of all of the constant guideline changes we see on a daily basis. The lending industry has moved from the common sense practice to underwriters who have become fact checkers. Credit scores are the first thing that will be looked at, as well as the appraised value of the property. Appraisers are being scored and their data scrutinized. Income used to qualify borrowers has to be verified by their employer. Money that is going to be used for down payment and closing money has to be seasoned for 60 days in the buyer’s bank accounts unless a family member is gifting some of it. Every large deposit over $1,000 has to be sourced, if it’s not a payroll deposit – this means going back to your bank and getting documentation for that deposit.
When you start to think about purchasing a home, you need to sit down with a mortgage banker you can trust and go over your monthly income and credit to find out which program will be the best fit for you. You should then find out what the guidelines are for that specific product. Knowing how much you can borrow and what you will need for a down payment and closing costs is one of the most important factors in purchasing a home, as well as what you can spend a month for a mortgage. Once you know what you qualify to spend, you can then look at your monthly budget to see what you feel comfortable spending each month. This will be the factor used to determine your purchase price. You will need to show a current pay stub along with W-2’s for the previous two years.
Dotting all the I’s and crossing all of the T’s has never been more important than now in the lending industry. If you are renting, then you are paying a mortgage, your landlord’s. Think about paying your own and taking advantage of 2012’s real estate golden opportunity.
Call me, your local Mortgage Banker, to set up an appointment today at 203.645.1037.