Review Your Plans To Buy A Home Now.
Home prices are getting lower, and this has made many people think now is the time to begin looking for a new home. Is this really a good time to enter the housing market?
Let’s examine the two main factors that help with this decision. One is the state of the market. As we all know, housing prices have been coming recently, but we must keep in mind that these decreases are based on fairly inflated prices that were pushed up in the early part of the century because of loose credit policies. For a number of years, even the worst credit risks managed to get a mortgage because of the loose credit, and so this forced prices up.
So despite the fact that home prices have fallen more than 20% in some regions, they are still historically high based on the prices of the late 1990’s.
In the early part of this century, it was common to see home prices increase by 2 to 4.5% per quarter. There is a great deal more downside if these increases are to be removed.
Waiting longer can be the best advice right now. In the meantime, you can put your time to good use working on the second thing that determines the right time to buy: your financial state.
In order to guarantee that you get a mortgage and keep down the cost of home ownership while building a sound foundation for future financial health, there are a number of items you should concentrate on now. Credit conditions are now tighter than they were, so only a handful of borrowers are going to make it through the tighter requirements.
-Reduce debt. Bring your debt to income numbers down as low as you can since this is an important number for banks.
-Keep the job. If you just got a new job, your chances of a mortgage are poor. Stay with your job for a year or two before you apply for a home loan.
-Bring your salary level up. Your present income may not be enough to support a mortgage in addition to your other expenses. You should have a clear idea of how much monthly payments you can afford based on your salary. If you are being considered for a promotion, put off your home loan application until the higher salary is reflected in your paystub.
-Start or build a savings account. Banks look for a decent bank balance in addition to the funds needed for a deposit, to demonstrate stability in case of problems.
-Get, and keep your credit in the best shape. This means paying all of your bills on time, reducing debt and putting off applying for any new debt.
-Look towards the future. Put aside funds for your children’s education and your retirement. Life goes on while you are involved in other things!
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