Me Myself N My Mortgage Theories

The economy seems to be in recession ever since the credit crunch and rising foreclosures and their impact on the housing market. Mortgage rates have gone up thereby bringing down home sales price. So, the year 2009 isn’t the worse time to buy a home. But homebuyers need to be a bit careful when they get into the market and they may have to take a few risks during this recession period. Given below are 4 tips that’ll help you buy a home successfully during a recession.

1. Make sure you’re financially secured: The biggest fear during a recession is whether you’d lose your job, that too, after closing a financial transaction. So, if you’re buying a home, just make sure you have solid job security.

Apart from job security, you need good credit, enough funds to make a down payment and you should be able to provide documents for income verification. In fact, you need to fit into the current lending standards which have actually tightened since the credit crunch. So, if you don’t have good income and credit and you’re uncertain about your job security, it’s better to wait till you’re financially secured.

2. Check your affordability: The year 2009 isn’t the right time for you to stretch your money and invest it into several options simultaneously. Therefore, when you go for a mortgage, make sure you check your affordability. Try keeping your monthly housing payment within 35% of your gross monthly household income. Moreover, going for a fixed rate loan would be better as your payments would be quite stable.

3. Avoid buying for investment: It isn’t a good time for real estate flipping. So, avoid buying a home as a short time investment. As home prices are likely to decline further, you may not get better returns from such an investment. Therefore, buy a home only if you’re planning to occupy it for a period of 5-7 years.

4. Take advantage of concessions: Since the credit crunch and downturn in the housing market, a large number of homes have been on sale for months due to lack of potential buyers. As such, sellers have been providing concessions and bringing down the listing price in order to attract buyers. You can take advantage of the special offers and concessions, request a low listing price or ask for seller paid closing costs etc. But make sure you don’t go overboard while seeking concessions.

This entry was posted on Saturday, June 6th, 2009 at 6:17 am and is filed under Mortgage. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.