Whether someone is a seasoned home owner or a first time buyer, purchasing a home in today’s faltering economic climate is not one of the most pleasant experiences to undergo–and survive at the same time. For individuals who have less than a perfect credit history or must sell the current home they own in order to purchase another home, the prospect of buying property seems daunting and perhaps a little dangerous, to say the least.
New Jersey foreclosure sales have declined, influenced by a moratorium issued by the court last December that prevents banks from immediately processing foreclosure claims, giving home owners more time to salvage their mortgages if possible. In addition, loans for homes are available at record-low interest rates, as well as extremely affordable prices. This attractive situation is enticing people who realize an opportunity like this may not appear again for awhile. While wanting to seriously investigate the housing market options, people may not know what to expect or where to start, which makes them hesitate to take the plunge.
For those who find themselves in this situation, here is some information about what to expect when selling and buying a home.
If you are a Buyer
Buyers who possess home equity remain the principle entities driving the market. These are the people who recognize opportunities exist to profit from purchasing loan-delinquent homes. For example, according to the National Association of Realtors, nearly 29% of buyers paid for their homes with cash rather than credit. Foreclosed homes represented almost 29% of the purchases, while another 12% consisted of “short sales”, an agreed upon price by the lending institution to pay the balance of someone’s mortgage in order to prevent foreclosure.
If someone does not currently own a home that must be sold, this type of housing market epitomizes the perfect situation to easily own a home. In fact, first-time home buyers constitute 30% of the market, simply because they realize this optimal economic condition for owning a home is not going to last.
However, be aware that purchasing a home does not happen overnight. A recent survey conducted by the New Jersey Association of Realtors found that most people searched for about four months before finding the house of their dreams.
What to Expect from the Market
Due to the present market condition, New Jersey offers thousands of homes for sale at prices about which buyers used to dream. However, with economic volatility provoking a feeling of hesitancy among home buyers, many are waiting to see which way the market is going to head, even as property prices continue falling. In New Jersey, the average price of a single-family dwelling decreased from about $350,000 four years ago to $300,000 last year. During the first four months of 2011, prices fell even further to $280,000.
Today, North Jersey boasts the most flourishing housing market because that is where the jobs are, in addition to its nearness to New York City and easy access to public transportation services. In addition, the counties of Union, Monmouth, Morris, Essex, Bergen, Somerset, Passaic and Middlesex all have enough homes to sell that would take almost a year before all would be sold.
If a buyer takes the time to investigate foreclosed properties and withstand the complex and sometimes aggravating process of purchasing such a home, they can take delight in knowing they have permanently improved their financial situation by taking advantage of a once-in-a-lifetime bargain.
If You are a Seller
Advice given by experts in the housing market to sellers today suggests that if it is not absolutely necessary to sell your home, don’t do it. However, if you must sell your home, realtors recommend that you take an assertive stance with your price and move out as fast as possible. In addition, many sellers reduce the asking price once the house has been on the market for two or three weeks, rather than waiting several months, a behavior practiced before the recession.
The Financing
Because of the economic downturn, banks and other lending institutions practice stringent guidelines regarding credit requirements when approving home loans. Interest rates are low but unfortunately, many home buyers may encounter difficulties in securing financing.
While interest rates are at an all-time low, the biggest challenge facing many home buyers is securing financing. Banks have tightened credit requirements, as has the government for those applying for FHA-backed loans. Most mortgage lenders now require anyone wanting a loan to possess a credit score of 620 or higher. FHA loans, which are backed by the government, require a score of no less than 580.
At the moment, the market is somewhat stable, but it is also waiting for the impending discharge of thousands of foreclosed properties from limbo, which will make a definite impact on the future condition of the market. Because of such turbulent conditions, people who purchase homes today do so not because they view it as an investment, but because it represents a better place to live than their previous residence.