The percentage of current and performing mortgages fell to 86.4 percent at the end of the fourth quarter of 2009, down 0.9 percent from the previous three months, marking a decline for the seventh consecutive quarter, according to the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
“Many consumers utilized loan modifications to prevent going into foreclosure status, but many were fitted with less than desirable rates. Thus, it caused them to go back into foreclosure status fairly quick,” said TJ Noye, Precision Funding.
Yet, mortgage backers and rates are not the only problem with the real estate market. Also, it is the state of housing sales that exists within the market. As inventory increased, an influx of empty homes in every neighborhood began to create depreciating values of surrounding occupied homes.
The purchasing of new homes decreased 2.2 percent, according to the Commerce Department. The median sales price climbed the highest than in two years previously.
“Yes, this sounds very bleak for the seller and even the potential buyer. There are solutions for both if they do their homework,” said Eric Skeeter, Pillar Property Group.
For instance, a seller can look at short sales as an option to get their home sold quickly at a fair price and often without owing their mortgage lender a dime. It is recommended to seek a professional in a short sale before commencing in the process, according to Skeeter.
What about buyer options? There are numerous options for potential home buyers even if their credit is not so stellar. There is the rent-to-own option, which has become popular in this depressed market. The criterion is not as much based on credit but on the work stability of the potential home buyer.
The process is basically that the potential buyer places a down payment on the property and makes monthly payments to the owner(s) of the property. Many of these down payments are non-refundable. The good news for the buyer is that this method will not damage their credit even if they decide to no longer pursue the purchase option of the property.
“Consumers should investigate their lending options before accepting the first offer from any lending institution,”
Financial institutions are like any other business and are selling a product to make a profit. A consumer should have a couple of options presented to them when it comes to financing a home by a respectable lender, according to Noye.
“We utilize the traditional methods of lending as well as look for alternative lenders for potential first-time home buyers,’ said Noye.
Is it still good to invest in property? Pillar Advantage hears this question from many inside and outside investors. Our response is simply yes. Property investments are still safe by all means. But, you need to have the knowhow behind it.
“Investors need to adhere to the old-school thought of not placing all your eggs into one basket,” said Matthew Sindlinger, Pillar Advantage.
Potential property investors need to diversify their property investments. To illustrate our point, let us say you are an investor with one property and you ended up with a non-performing dud. Well, you just assumed all the risk despite how appealing the property was when you purchased it.
Now, let us say the same property is in a portfolio along with 24 other properties. With a good property manager, the probability is high that these property investments are performing high.
“Investors should speak to qualified specialists before considering this avenue. There are several factors to be considered when you speak of property in conjunction with investment diversification,”
For more information about the topics discussed in the article, please contact Pillar Property Group.