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Coinciding Settlements Clauses – Funding Issues
People who are selling their home in order to buy another frequently put a “coinciding settlements” clause into their contract offer on the new home. The purpose of this is usually twofold. In this article, we discuss the first purpose which is to...
Destin Florida Triples In 3 Years
Do you want to see something that is absolutely amazing? Let me show you what has happened in Destin, Florida over the last 3 years. Back in August of 2002, the median price of a home selling in Destin was $229,000. One year later, August 2003, the...
How Thousands of people are buying second homes in Spain?
With a major portion of the Iberian Peninsula occupied by Spain (80%), it is indeed inviting a location for investment towards an ideal second home. Spain is also sound with reference to geography, climate and cultural richness. A large coastline...
Real Estate: Financial Considerations $$$
Raw land as opposed to improved property is much more difficult to finance through traditional lenders. The main reasons are that it generates very little income, development costs can be expensive, there are no buildings or improvements that...
The Real Estate Bubble-when Will It Burst?
More and more individuals are realizing that real estate is much safer, and a better return on investment than many traditional investment vehicles. Unlike stocks or bonds, real estate investments can usually be liquidated in order for the investor...
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Home Buyer Beware – Know The Signs Of Real Estate Market Trouble
Lots of articles have appeared recently about the booming real estate market in the United States. Home prices, especially on the East and West coasts, are not only at record levels, but are increasing at record rates. In some areas around Washington, D.C. and San Francisco, home prices have tripled in the last five years. While many homeowners have been enjoying huge increases in their equity, realized when they either sell their home or borrow against it, the market has become increasingly difficult for those trying to buy homes. It may get worse, as there are now some strong signs that the market may be near its peak:
# The prices of homes in many markets are so high that few buyers can purchase them using traditional mortgages. In Washington, D.C., for instance, 48% of new mortgages are of the interest-only variety, where the buyer pays only the interest on the loan for the first few years. This keeps the payments low enough that the buyer can qualify for the loan. The problem is that the buyer is only paying interest and not actually contributing to the purchase price of the home. The fact that so many buyers are obtaining interest-only loans suggests that prices in those markets may be too high to be sustained.
# Many home appraisers have complained that lenders are constantly pressuring them to “make the numbers” when appraising homes. Appraisers in some modestly-appreciating markets, such as Buffalo, NY, say that they are often given a value when assigned an appraisal, with the unspoken understanding that their appraisal is expected to come in at or above that figure. The lending industry is competitive, and lenders want to issue as many loans as possible. It would appear that quite a few of them are even willing to lend money when the home doesn’t appraise for the asking price. Appraisers point out that if they don’t provide the “requested” figures, then the lenders will simply hire other appraisers.
# The foreclosure rate is increasing. The rate increased in March and April over the same months last year,
suggesting that more buyers may have discovered that they have mortgages on which they cannot make the payments. The foreclosure rates are the highest in Florida and Texas, which have foreclosure rates that are nearly triple the national average. With interest rates near historic lows, mortgages are more likely to become even less affordable as interest rates increase.
What this means for prospective buyers is that they must do even more research before buying a home. Buyers should genuinely consider whether or not they could actually afford to make home payments that include a reduction in principal. If a buyer can’t afford a home without taking out an interest-only loan, the buyer probably can’t afford the home. Buyers should be suspicious of home appraisals and should, if possible, ask the appraiser if they are being pressured to provide a predetermined figure. Every buyer wants his or her home to appraise for at least the amount of the loan. But the current market is one where buyers are straining to make payments on prices that are at record levels. The last thing any buyer wants is to strain to make payments on a mortgage that exceeds the value of the home. The real estate market is in a precarious state at the moment, and prospective buyers should do as much research as possible to make sure that they can both pay for, and keep, their new home.
About the Author: ©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.End-Your-Debt.com, a Website devoted to debt consolidation information and http://www.HomeEquityHelp.net, a site devoted to information on home equity loans.
Source: www.isnare.com
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