Thinking About Buying a Home?
Trouble in the housing market could mean big savings if you’re looking to buy a home. The Census Bureau reports that over 2 million homes are currently vacant. The near record high number of vacancies is a result of the subprime fallout, which has seen the foreclosure rate drastically increase. Savvy consumers looking to buy a home can take advantage of these market conditions to net large savings.
Buying a HUD Home
The U.S. Department of Housing and Urban Development (HUD) purchases foreclosed homes from lenders and then, they sell those homes to consumers. A benefit to buying a HUD home is that the price is usually at or below market value. This means you can find great deals on your next home. Plus, you do not have to haggle with a current home owner who thinks his or her precious house is worth far more than the market dictates.
Since foreclosures are at near record highs, HUD homes are abundant. These homes are not only in impoverished areas but can be found in some of the most posh neighborhoods as well. Finding a HUD home in the location you want to live is relatively easy. HUD lists homes for sale by state, which means you can locate a home without going through a real estate agent.
HUD homes are generally considered “fixer-uppers,” meaning the condition of the home needs improvement. Fortunately, HUD offers special repair programs where consumers may be eligible for grants or discounts for home improvements. This program can greatly reduce the home buyer’s risk, cost of repair, and increase the market value of the home.
Buying a New Home
The number of vacant homes on the market has lowered the demand for new homes. Yet, you can still find good deals. Home builders are lowering the cost of new homes and offering incentives like free decks and kitchen upgrades to spur consumer buying.
If you are considering purchasing a new home, an important consideration is the interest rate on your home loan. Since the Federal Reserve cut a key interest rate by 25 basis points on Oct. 31, 2007, now may be a great time to lock in a fixed interest rate. One quarter of a percentage point may seem like a small difference, but it will save you thousands over the life of a 30 year loan.
Another crucial consideration for buying a new home is location. A prospering area can make your home a successful investment when property value increases. However, a declining region can stifle potential gains in property value and may not increase enough to counter long-term inflation. When purchasing a new home, a little research and due diligence can equal large returns on your largest investment.
Homeownership allows you to provide a stable environment for your family and potentially, see a large return on your investment. However, if you are already overwhelmed by debt, then you should consider whether or not a mortgage payment if feasible. The current housing conditions were partially caused by consumers overestimating what they could afford. Purchasing a home is a major decision that shouldn’t be entered into lightly.
Author Bio: Scott Sumerford has several years of experience working in the financial industry and has written a myriad of articles on various financial matters. Read more about how Credit Solutions offers a viable alternative to debt consolidation.
