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Real Estate Value in the US Double DIPS An All Time Low for 2011 RealtyPartner

Article by Jeff Noel

At the present moment, evidence that the American real estate market isn’t turning around in the near future are becoming more apparent. According to the polls, market prices in the US are at an all time low for 2011… all are happening for a number of reasons.Below are some of the huge reasons cited:Potential increase in interest ratesRecently, interest rates have been relatively low, so an increase would seem inevitable. Essentially, interest rates and real estate value are opposites on a scale and whenever the rates increase utlimately results in a decline in real estate prices. However, regardless of this the banks will find an exit out. Cash paying investors are the true winners in today’s market simply because they waited patiently for this insane price drops.Strict lending policiesAll financial institutions will not have any other option when more real estate goes into foreclosure status, than to implement harsh lending policies. This means that they will need higher qualifying credit reports plus scores; bigger down payments; more expensive insurance premiums; larger fees and considerably more to meet the guidelines for a mortgage nowadays. This results in a limit in the number of people who can buy homes and further affect any possibility of fully recovering collectively.Lots of foreclosuresIn 2011, there will be huge waves of ARMs (adjustable rate mortgages) coupled with interest rates set to go higher from the lower previous rates. These include the 2001 ten year ARMs; 2004 seven year ARMs; 2006 five year ARMs and some 3 year ARMs stemming from 2008. They would be added to the ones that were reset during 2010 and various other creative financing like toxic mortgages so to speak. Considering that those loans will end up past due and then put up for bidding as foreclosed properties, this will cause the real estate values to decrease continuously further without exception.

Introduction of strategic defaultAlthough the mounting issues that the market is now facing, strategic default will soon add to the list. With the emergence of this new technique, the economy could potentially be crippled beyond its current status. The reason why this technique is so dangerous is because it appeals to everyone who owes more than what their property is appraised at, regardless of whether or not they are behind. At one time, it was perceived that renting was wasting money but it can now be deemed as safe or possibly an investment. For example, a monthly rent with 00 value would equate to ,000 in two years, but if the property is swapped default strategically, its a possibility to save 0,000 based on the amount that the market would decline by in a certain location.Additionally, all the mentioned challenges earlier that our real estate market is facing is feeding off one another. So, any escalation in one will result in the others to ignite a downward spiral in real estate value further as a whole.

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When it comes to owning property many people around the world will tell you that this is a lifelong dream. While once an opportunity that seemed to be reserved for either the wealthiest or the most miserly among the general population home ownership is now something that is accessible to a larger segment of the population than ever before.

This is good news for many but for some can lead to confusing encounters with mortgage brokers and serious sharks along the way. The best advice that anyone can give someone attempting to embrace the dream of real estate ownership is to deal with a reputable company when it comes to obtaining a mortgage. Even when dealing with reputable lending companies you must watch out for those who do not have your best interest at heart.

If you would like some very practical advice when it comes to getting a mortgage, then you are at the right place. First of all, avoid lenders that are encouraging you to take a loan for more money than you are comfortable repaying. Foreclosures are at a record high when it comes to the mortgage industry at the moment because of predatory lending practice on behalf of some mortgage brokers. These practices include convincing people to borrow more money than they could realistically hope to pay over time and have any quality of life as well as convincing homebuyers to take out adjustable rate mortgages in the beginning in order to procure lower rates.

Shop around before you decide to buy when it comes to mortgages. This doesn’t mean to actually apply for mortgages all over town but do the research and compare rates before applying with any one company. Talk to several different brokers and find out what they have to offer you that the other company down the road cannot or will not offer. Keep in mind that mortgage companies will offer everything under the sun from free toasters to free vacations in order to get you to go with their company. The proof is in the terms however. It is simply not worth that free toaster if you are going to end up paying a 6.9% interest rate instead of a 5.9% rate. You will have paid for that toaster many times over in the process of paying the mortgage.

Even after you’ve applied for a mortgage, if the deal seems to be going south check out your other options. There are all kinds of problems that crop up along the way. You are not marrying the mortgage broker. Nine times out of ten you aren’t even making any sort of commitment at all to your mortgage broker. You will however be living in the house you select. If there is a problem with the mortgage company for the specific home you want do not hesitate to change in order to get the home you desire for your family rather than allowing the mortgage company to dictate what kind of home you can buy.

I mention this because we had a very similar problem when we purchased our turn of the century home. The mortgage company didn’t think the home was worth the risk because of its age. We saw the beauty and the potential in our home that is coming along quite nicely and managed to be approved and financed in short order with another mortgage company. If this was the case in our situation, chances are that it will work for others as well.

In all honesty, it is nearly impossible to buy a home in this day and age without taking out a mortgage. It is best however if you see the process as a learning experience rather than an abject lesson in intimidation. This is your home and your money that will be spent in order to purchase the home. You are asking them for a loan but quite frankly, they need your business. Do not hesitate to shop around for the best deal with a mortgage just as you did when finding your home.