Mortgage Rate News

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When it comes to buying a home, it is important to consider your options. And it is important to be aware of some of the main issues associated with buying a home. This is especially true if you want to purchase a home that is in foreclosure. Buying a foreclosure can be a tricky proposition, and you need to be careful. There are definite advantages and definite bargains to be made. But if you aren’t careful, you could get way more than you bargained for. And not in a good way.

Real Estate Pro Articles offers these helpful guidelines to use when buying a foreclosure:

1. Finance: Real estate calls for huge investments, so check the availability of finances. See how much you have and how much will you need approximately. Ascertaining that, get yourself pre-qualified for securing a loan.
2. Look for available foreclosure homes: Search carefully for foreclosure listings available on various websites, real estate magazines and advertisements in newspapers. Contacting banks to get information is also a good idea, as banks are the most common lenders who sell foreclosed properties.
3. Know what you want: Be clear about what kind of a property you are looking for. This will help in choosing a property among the various available properties which matches your requirements the best. Think on parameters like, size, expected rate, locality, amenities, etc.
4. Knowledge about foreclosure laws: Buying foreclosed properties has its own intricacies, so it is very essential that you gain proper knowledge as to the laws and procedures governing foreclosures in your State.
5. Consulting a realtor: If you are not sure about how to go about making the investment in foreclosure homes, then consulting a realtor who has the requisite experience in dealing with foreclosed properties is a good idea as he will guide you and help in getting the right kind of property.
6. Thorough inspection: Examine the property that you wish to buy very carefully as there will be repairs that may be needed and for which you will have to pay. This will help you to negotiate better.
7. Closing the deal: Once you have made the offer and the seller accepts it, then on making the payment and finalizing the deal, carefully ascertain that all legal compliances are done with, necessary documents are in order and that you get a clear title to the property. Seek assistance from attorney if you feel the need.

It is still a good time to buy a home. Mortgage rates are low, and so are home prices. And if you are interested in something that is an uncommon deal, you might consider buying a foreclosure. Just make sure you are careful, and you know what you are getting into.

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The news, of course, is that the recession is over. But, even though there has been a technical end to the recession, it doesn’t mean that things are suddenly going to get better. Indeed, there are still foreclosures likely, and the unpleasant fact that many people still can’t afford their mortgage payments — whether they got a home they couldn’t really afford in the first place, or whether they fell on bad luck and job loss during the recession.

As it looks as though more foreclosures could be coming in the future, and the housing market may dip again, it is little surprise that some are starting to look around for a solution to their problems. And, in some cases, the solution is presenting itself in what is known as strategic default, or foreclosure on purpose.

Walking away from your home mortgage loan

Some markets have been so hard hit, and will probably take so long to recover, that there are those that feel that the only viable option is to allow foreclosure. Indeed, Mish’s Global Economic Trend Analysis shared a letter from someone who recommended just such a course of action:

I said the answer was easy, walk away. In fact, I told her I would stop paying the mortgage and see how long it took them to foreclose. She might be able to live there 6 months or more rent free.

Her fiancé was there and he didn’t agree with my answer. He said that her credit would be ruined for ten years and that the value would come back. I responded that a foreclosure would stay on a credit report for 10 years, but if you work hard at re-establishing your credit, the score can come back in a year or two.

I have seen people plenty of people with credit scores over 700 within one year of a bankruptcy or foreclosure. As far as the value coming back, I told him that it would take 10 years or more before that value comes back.

It’s an interesting thought. But in some cases, foreclosure can be a way to get a new start — as long as you aren’t too emotionally invested in staying in your home.  But if you decide that strategic default is the way to go, you should have a plan to rebuild your credit. The letter writer on Mish’s suggested that you have a credit card and a good car. You won’t be able to get a good rate on a car loan, so you need a good one. And you need a credit card to help rebuild your credit. Just don’t max out the credit card.

What do you think? Is strategic default a viable option in some cases?

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There are concerns that things may not be improving as much as hoped for the housing market. Sure, home prices seem to be stabilizing and the first time home buyer tax credit resulted in the sale of hundreds of thousands of homes. But another real estate collapse may be on the way — and we aren’t even recovered from this one. Here is what CNN Money points out about what could announce the run up to another housing market collapse:

“There is a lack of new debt,” says Michael Haas, a real estate attorney at Jones Day. “There is a hesitancy to extend credit when there is a real possibility that the real estate may be worth less than it was a few years ago.”

Now, in a situation eerily similar to the subprime crisis, the result is likely to be a wave of foreclosures and loan defaults that could, in turn, trigger a collapse in the market of the structured bonds backed by commercial real estate and construction debt.

There could be some indicators that another real estate collapse — and the accompanying mortgage crisis — could be imminent. Here are some signs to be on the watch for:

1. Big Projects: Look out for what is happening with big commercial and residential projects that are starting to default. These projects may have gotten financing during the last bubble, but they may be struggling now. And if big projects default, that means that securities based on these loans will plunge.
2. Special Servicers: These are mortgage lender firms and special servicers that take over loans that are heading for trouble in an effort to salvage the situation. When more loans are heading to special servicers, that means that it is likely that things are troubled in the mortgage market in general. That could be a sign that more defaults are coming.
3. Regional Banks: So far, many local and regional banks have been fairly well shielded from the effects of the subprime mortgage crisis. Many of them did not take on risky loans and other debt. However, as the economy continues to remain sluggish, the regional projects financed by local banks may begin to falter, and that could cause another, more severe credit squeeze.

We’re not out of the woods yet, and it is important to be on the look out for signs that things may head into another wave of foreclosures. Although, if things do start improving markedly, none of these problems may surface.