Real Estate Market
The real estate market is unstable and rightfully so As property values continue to drop, many homeowners owe more on their mortgage loan than their home is worth. Others have taken out a home equity loan which prevents them from reducing their asking price and lessen their chance of finding a buyer.
Investors worry about the real estate market and the toll it has taken on their return on investment. The past few years have been challenging for investors who buy homes and commercial real estate. Declining property values and increasing property taxes have eaten away profit margins.
Home buyers are skeptical about buying houses and are concerned property values will continue to drop. New banking regulations have made it challenging for those with mediocre credit scores to obtain a home loan. Mortgage loans for bad credit are a thing of the past and resulted in fewer buyers for millions of properties for sale across the nation.
While it may sound like the forecast for the real estate market is gloom and doom, there is light at the end of the tunnel. Many independent realtors have turned their attention to selling bank owned homes. These properties are often listed at 10- to 20-percent below market value. While many foreclosure homes require repair or renovation, lenders allow borrowers to obtain additional funds for necessary work.
Buyers and real estate investors should consider Fannie Mae's Home Path Mortgage program which offers low-cost foreclosure homes with special financing options. Home Path financing offers buyers multiple benefits including low down payment requirements and flexible mortgage terms.
Home Path properties include single- and multi-family homes, condominiums, townhomes, mobile and manufactured homes. Many of these bank owned foreclosure homes require renovation and may qualify for Home Path renovation mortgage financing which offers additional funds for light renovations.
Fannie Mae lenders can help buyers determine if they qualify for HUDs Neighborhood Stabilization Program which offers grant money to buyers who purchase homes in areas hit hard by foreclosure.
Individuals who want to buy a house but do not qualify for financing should consider scouting out lease-to-own homes or properties sold with seller carry back financing. Both options give buyers the opportunity to buy a house while engaging in credit repair.
Lease to own involves renting a property for a predetermined time period. A real estate contract is drafted which includes the purchase price and percentage of rent payment which is contributed toward the purchase.
Most sellers engaging in lease-to-own require a down payment of 5- to 10-percent and contribute 25- to 50-percent of rent money toward the purchase price. When the contract expires, buyers obtain financing through a mortgage lender.
Seller carry back financing involves the seller acting as the lender. In most cases, sellers carry back a portion of the purchase price and buyers obtain financing for the balance. Rarely do sellers offer 100-percent financing. Therefore, buyers who enter into seller carry back mortgages must be creditworthy enough to obtain partial financing through a conventional lender.
These are just a few options for buying houses in a distressed real estate market. Our real estate article library offers an abundance of mortgage financing and house buying strategies. Topics range from buying a house with poor credit to tips for scouting out profitable investment properties. We invite you to subscribe to our mailing list to receive newly published real estate market information and resources.
Published on July 02, 2010 at 03:11 AM