Assistant Vice President and Branch Manager
Corona Magnolia Branch
The current state of our nation’s economy has been difficult for many homeowners. Mounting foreclosures, plunging home values and swelling adjustable-rate mortgages have left some property owners facing bankruptcy or foreclosure. Conversely, the low interest rates and sharply discounted prices have created a unique advantage for many buyers in today’s housing market.
While buying low may be the natural and appropriate move for some, it may not be the right choice for all. Research each scenario, evaluate the variables and consider your options before purchasing a home.
Assess your situation As appealing as discounted properties can be, jumping into the housing market under the wrong pretenses could end up costing you in the longterm.
Expecting to “flip” the house as an investment property may be risky, given the transaction costs of buying and selling property. In general, if you buy a home, plan on living in the residence for at least a few years.
In addition, if you are not prepared to put forward at least 20 percent towards a down payment or to budget for monthly mortgage and principal payments, then it may not be the right time for you to buy a home. Both factors are vital to the decisionmaking process: the down payment provides an equity cushion in case prices keep declining and budgeting may help you gauge whether you can afford the payments.
Evaluate your finances Get your finances in order early. Make sure you have the job security to follow through on the purchase. Have your down payment ready and compile the information for your income verification. Ensure your credit history is as clean as possible by checking your credit report, confirming the data are accurate and correcting any errors. These steps can help ensure a favorable mortgage rate. Have a clear picture of the type of property you are looking for. Do the research and be ready to take action if you find one that fits. You might even be able to leverage the seller into paying for inspection-related improvements and providing other concessions such as assistance with closing costs.
Consider foreclosures Foreclosures have created home ownership opportunities for some buyers. You may want to review the foreclosures in your market as part of your home search. Buying such a property can be complicated so you may benefit from a professional who has foreclosure experience.
Research special homebuyer programs First-time homebuyers can still take advantage of the government’s tax credit of up to $8,000. The government recently extended this credit until September 30, 2010. There is also a long-time resident credit of up to $6,500 to others who do not qualify as first-time buyers. Please check with the IRS or your tax advisor for the details.
Stay put You may be able to benefit from the current market without purchasing a new home. One option is refinancing your mortgage. Generally, homeowners are encouraged to refinance if there is a difference of one to two percentage points between the current market’s interest rate and the existing one on the mortgage.
Making improvements to your current home is another option. If you have the capital, you may wish to make renovations to increase your home’s value and make the property more attractive to future buyers.
Energy efficient upgrades can save money on utility bills and may be eligible for tax rebates.
While the current housing market can still provide some significant challenges, with thorough planning, accurate assessment and sound decisions, you may be able to benefit from its unique opportunities.
For more information contact:
Corona Magnolia Branch
1431 South Rimpau, Suite 102
Corona, CA 92879
Curtis Flannigan, Branch Manager
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