Timing the housing market is tricky under most circumstances.  But the United States is currently experiencing a housing “crisis,” in which properties are being sold for less than the sellers owe on their mortgages.  Record numbers of homeowners face mortgage delinquency and even foreclosure.  There is a positive side, though, to this situation.  People interested in buying homes are seeing prices that are much lower than they were even a year ago.  Is it the right time for you to buy a home?

 

It could be a great time to buy a home.  If you are currently renting or leasing, buying might make sense if you plan on living in the home for more than a few years.  Say you are interested in a property that lists for $500,000.  If you offer $450,000 and stand firm, you have a good chance of getting the house.  If the seller is motivated and needs to unload the property, the buyer stands to gain.  Now, after you buy the property, the value may continue to go down in the current market, so if you wanted to sell after only a year or so, you probably couldn’t recoup your $450,000.  If you waited for three to five years, the market will probably have had time to rebound and you can list your home at a higher price. 

 

The downside to the current market for buyers is that it may be more difficult to get financing. Previously, banks were awarding mortgages to people with sub-stellar credit. Now, the bar has been raised.  The interest rates for mortgages are also very unstable currently.  Many people may want to purchase a home but are hesitant to do so because of the great fluctuating economy, inflation, and other factors.  If you think now is the time for you to buy a home, consider the following:

 

First, make sure your finances are in good shape.  Check your credit score: if it’s below about 700, you’ll find it hard to get a low-interest mortgage.  A good first step is to pay off (or at least substantially down) your debt.  Pay off high interest debt first, like credit cards, and then attack lower interest items, like student loans.  Also be prepared to put down a sizeable down payment, if you decide to purchase a house.  Lenders are no longer as willing to let people move into properties without 15% or even 20% down payments.

 

Foreclosures are rising, and many people see this as a great opportunity to swoop in and get a great deal on a house.  Be cautious, though.  While prices may be good, it still may not be a great deal.  Look out for neighborhoods with a high concentration of foreclosures.  This can mean that there is some economic problem in the area, which will also affect you if you purchase a home there.  It can also lower the value of your home, making it harder to sell.

 

Another thing to be careful of is rushing into a commitment.  You may be afraid that if you wait too long, prices will start going back up.  But if you rush into buying, you may end up paying more for a home that isn’t worth it.  And then you’re basically stuck with it until you can find a buyer who will pay what you need them to.  Take your time and research properties that you are interested in.  It can be helpful if you find out what the seller bought the home for and how much he/she still owes.  This is public information, and your realtor can help you access it.  Then you can make an offer – and don’t be afraid to make yours low.  In this market, you may be surprised what sellers will agree to.

 

The decision to buy a home is so important – take the time to prepare and research.  If you are committed to buying, this may be a great time, just don’t rush into anything.  It is your market; take advantage of it.