Home buying has been on the back burner for the last few years, as the mortgage debt mess has kept many people afraid of the process. With mortgages running high levels of risk, some people simply haven’t had the ability or desire to buy in this market. Recently, the foreclosure crisis is coming to an end and many people are beginning to step out once again. However, there are some things to consider before getting into a mortgage in today’s market.
Signing On The Line
Even before the mortgage industry trouble, getting a mortgage was considered a big deal. As one of the biggest investments of your life, obtaining a mortgage loan to purchase a home is no small matter. These days there are more things to consider than simply the down payment and closing costs.
First, remember that interest rate is still important. Just because rates are at all historic lows doesn’t mean that you shouldn’t fight for the best rate. As always, avoid variable interest rates and shop around until you find the lowest, fixed rate that you can get.
Also, the value of the home is important. Not just the current market value, but what it was worth prior to the market crash and the overall condition of the neighborhood where the home is located. You want to be sure that the home you are buying isn’t a good deal because it’s located in foreclosure packed area, but because it is a well maintained home that simply suffered value loss due to overall market conditions. Look at the historic values of the home to predict whether the home is likely to gain in value in the next few years.
Last, be sure you buy within reason. Just because you can afford a home today doesn’t mean you won’t be in over your head tomorrow, especially if you were to suffer a financial hardship. Look at the potential for maintaining the monthly payment on a single income, or in the event you lost a job. Preparing for the financial worst is a good way to avoid mortgage debt and keep the risk of foreclosure at bay.