Today's real estate market is better than ever for investors and homebuyers with credit, cash, or documentable income.
Prices are down. With lower prices and low interest rates, renters often can make payments, even with a low down payment.
Buyer's Market: There's more on the market and fewer buyers
Motivated sellers will negotiate to make a quick deal; terms can be more flexible.
This market isn't for everyone, but those in the position to invest may do very well by taking advantage of today's opportunities.
With prices down, there is a great opportunity for investors and other buyers to get while the getting is good. Since values have come down, there is an abundance of "good deals" available. Some homes locally are selling under $200,000, and even a four unit property was advertised recently for about the same price. Interest rates are very low with investors paying $1,280 per month on a $200,000 loan and homeowners paying $1,216 per month on a $200,000 loan.
Lenders are eager to make loans to the “new” borrower, one with good credit, documentable income, and equity or a down payment. This is the main area that has changed recently in real estate lending. But even those with a 620 credit score can qualify if they can document income.
The problems of recent times have left lenders with fewer borrowers to profit from. Even though many lenders have gone out of business and other lenders are cutting back on their programs, there is a lot of money available.
Banks are like candy stores; they come up with new things to sell to get more business. This is great until values went down like they did in the early 1980’s. Interest rates on home loans were about 21% (for a few months) versus the current 6% fixed 30 year rate. Fixed interest rates on real estate today are about what they were in 1950.
Loan programs now are changing rapidly, with “specials” or “sale” present today more than ever before. A loan program that exists today may not exist after the end of the month.
Mortgage brokers are one way to find the best loan. Mortgage brokers work for the borrower, not for the bank. Mortgage brokers have more than one bank from which to choose. They can help select a loan to meets a borrower's special needs; for example, a borrower may want to pay less with an interest-only loan, or pay more to increase equity sooner.
Investing and Home Ownership
Lower home prices mean that renters may now become buyers by turning their rent payments into mortgage payments.
Savvy homebuyers set the groundwork for later profit by purchasing a home at the lowest price. Then they plan to keep the property to take advantage of peace of mind, the tax benefits, the future appreciation, and future rental income; and later they refinance every 5-7 years to get cash for further investing.
Investors and homebuyers should take these steps:
- Research the best property to fit their needs.
- Get help from a quality company to improve credit scores to get a lower interest rate and a lower payment.
- Get pre-approved on a real estate loan, so when an opportunity presents itself, they will be ready to take action.
The “deals” today are around for those that take the time to research the real estate inventory, get quality advice, and know what they want.
Humboldt Mortgage Company broker Bob Lawton can support buyers with pre-approval, credit score improvement, and loan selection. We have been providing quality financing at the same location since 1964.