Foreclose Alert MLS Listings

Homeowners can’t be too careful in making financial decisions regarding home loans and property transactions in the crippled housing industry.

Here are five considerations for homeowners because today’s market is different than the booming housing market of 2002-2006.

1. Harder to get home loan credit. If you are a first-time buyer or a repeat buyer who needs to qualify for a new mortgage, the mortgage credit market is much tighter. Wall Street’s questionable credit practices that precipitated the housing collapse in 2007 are partially to blame. Overall, the ailing U.S. economy is on the brink of recession. The ability to qualify for credit in today’s housing market is the opposite of the period 2002-2006. Instead of throwing money at you for a new home with gimmicks such as interest-only loans, mortgage lenders generally write new home loans for people with sizeable down payments and strong credit records.

2. Buyer’s market. When the real estate market was booming, sellers held the upper hand. They could ask for a higher price than they paid for their house because home values were consistently rising. Now that property values have sunk, selling your home is a challenge. Your home may sit on the market for months.

3. Consumer relief far off for some homeowners. As of November 2008, the federal government has not yet come up with a plan that provides mortgage relief for homeowners who are nearing financial ruin but have not yet entered foreclosure. How can struggling homeowners get out of their financial predicament if their wages buy less than two years ago? Many Americans have mortgage payments based on a different economy, an economy in which people thought their earning power would go up, not down. The Fed’s interest rate cuts have not provided relief for homeowners with fixed rate mortgages.

4. Difficulty of refinancing. The home refinance used to be a strong option for people who needed a lower mortgage payment or needed to get their hands on their home equity. Now it is hard to qualify for refinancing without assistance from a federal program because people have poor credit and cannot qualify for a lower payment.

5. The value of green building. Even though few can afford to build a new home, prospective homebuyers should research the long-term value and sustainability of homes designed according to green building principles. Green homes can save homeowners thousands in repairs and utility costs over the life of the home. The fact that green homes are better for the environment is an added bonus.

Getting to know the real estate and mortgage markets is challenging. Homeowners and prospective homeowners should do a lot of research before making important decisions like buying a home, selling a home, or refinancing their mortgage. If you know all of your options and consult with qualified housing professionals, you can make smarter financial decisions.