Before even thinking about looking for a house the times now demand that all buyers and potential buyers objectively consider their true financial "home buying" potential.
The financial capital markets are changing daily. Banks and financial institutions are up-grading their underwriting standards.
Cash down-payments are now being required. The loose mortgage granting days are over.
Questions every home buyer needs to ask themselves:
1) Do I have sufficient cash, between 10 and 20% for a down payment?
2) Do I have sufficient cash for all closing and moving costs?
3) Do I have a superior credit rating?
4) Do I have to sell my existing home before I buy another?
5) Do I qualify for a conventional home loan?
6) Am I educated in the merits of an FHA or VA loan?
Of these questions # 4 is critical. In this type of market will my existing home sell for more, or less than I paid for it? Is my existing home financed over the fair market value of the house?
Is my property located in a community in which values will continue to slide downward for many more months?
Many homeowners, in the coming months, are going to find themselves unable to sell their existing homes while others will hit the impenetrable wall of not being able to find adequate financing.
The financial market turbulence is going to continue. Much now depends upon the stability of the stock markets worldwide. Years ago we had a saying in real estate, " When the banks catch cold, real estate catches pneumonia!" The same is true today.
A decade ago it was common practice for real estate agents to financially qualify potential buyers. Today this needs to be done and for both buyers and sellers.
Mortgage financing is more complicated than just the interest rates. It's also about "liquidity." It's about risk and it's truly about value.
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