The real estate and mortgage markets have changed tremendously over the last year. Not so long ago, all a seller had to do was put a sign in front of his house and he’d have people lined up to buy. Buyers rushed to find the new listings, hoping to be the first to put in an offer. Everyone had stories about how much they had made by buying real estate. At the same time, mortgages were easier to get than they’ve ever been before. No money for a down payment? No problem. Bad credit? That wasn’t a problem either. Maybe you didn’t have the income to qualify, or maybe you didn’t even have a job. There were mortgages for these buyers, too.
Things have changed. Now there are stories about how real estate is in a slump, and in the Chicago area it has gone from being a strong seller’s market to a true buyer’s market. The mortgage industry has tightened up, too. Most of the 100% financing programs are gone, and you will need to prove your income in order to get a loan. But it isn’t all bad news. In fact, now could be the best time in years to buy a home. The best time to buy is when people are anxious to sell. Couples and individuals who are ready to buy now are getting great deals.
This is a great time to buy, but to get the best deal you need to have a plan. You should know up front what is important for you in buying a home. Where do you want to live? Is the location close to your job, friends and family? How are the schools, transportation, shopping and amenities? Is this a house you plan on being in for years to come? Or will it be a starter house, a stepping stone to a new home a few years down the line? On the financial side, have you put together a budget and decided how much you can afford for a monthly payment? What will your income and financial picture look like 5 years from now? How about 10 years down the road? Thinking these things through in advance can help you to make the right decision.
The other key to success is to put together a team of experts. You will need a Realtor who has access to all the homes on the market, knows the area and can tell you what properties have sold for. A good Realtor will help you to find the right home, and good negotiating skills can make sure you get it for the right price. On the mortgage side, you need to be pre-approved with a mortgage professional before you even start looking. This way you know exactly how much of a home you can afford, and there won’t be any unpleasant surprises down the road. Even with all the changes, there are still programs designed specifically for first-time buyers, including loans with no down payment required. A good mortgage lender can help you sort out the options so you pick the program that is best for you.
Buying in a down market means you are going against the popular tide. But that is when bargains are available. A few years down the road, when the prices are climbing again, you will probably look like a genius.