Don’t let the historically low interest rates and news of a rebounding economy fool you: buying a home post-recession can still be tough in many markets. Lenders have become more selective, and buyers in many areas are experiencing unprecedented short sales, foreclosures, and multiple offer situations.
Stricter lending practices have shut many would-be buyers out of the market. Lenders are now requiring homeowners to have excellent credit scores, which has led to an increase in buyers paying cash rather than pursuing a loan. Recent data show that over one-fourth of existing home sales involved buyers who paid cash. But a cash purchase isn’t feasible for every homeowner.
Most major, private lenders now require a 20 percent down payment for a home loan, a requirement that is keeping many would-be buyers out of the market. Lenders lost millions when the housing market crashed, so they’re skittish about lending to buyers who can’t afford a large down payment. Smaller down payments are still possible in some circumstances, but those buyers may have to buy pricey mortgage insurance.
First-time homebuyers have a particularly steep uphill battle. Buyers looking to enter the market hope to take advantage of low interest rates and prices, but will find it tough to comply with new lending standards. New buyers should be prepared to get creative, perhaps by asking a family member to co-sign on a loan, or by looking for state-run grant programs. New buyers should also do their research, using online tools such as write my paper – custom apple iphone … viber, wechat, bbm and imessage – including the stickers, status, profiles, pictures, …” essay writing service for college Direct Lending Solutions to help inform them about the process.
Securing a mortgage isn’t the only barrier to homeownership. In some markets, the low rates and prices have spurred competition among buyers. Big cities have seen an influx in foreign investors—most of them cash buyers—looking to capitalize by purchasing an income property they can rent out or flip. Cash tends to be more attractive to sellers in a multiple offer situation.
Some homes are seeing multiple offers from traditional buyers, and buyers may find themselves in a bidding war. There are also an unprecedented number of foreclosures and short sales on the market, both of which can present challenges to buyers. Bank-owned homes generally sell “as is,” meaning the buyer cannot ask the bank to pay for repairs. Short sales are situations where the seller owes more on the home than it is currently worth, and the bank must approve the sale price. This process can often take months, and banks can be difficult or impossible to negotiate with.
These challenges can be intimidating, but buyers shouldn’t lose hope. It’s still possible to buy a great home at a low rate if you are persistent and do your research.