There were 1 million foreclosures in 2010, with more expected in 2011. With interest rates low and many properties on the market, what should you consider when purchasing a home. How can you avoid ending up in a distressed situation, or ending up underwater with a loan amount that is higher than the market value of your home?
Good news is that housing bubbles are not that common and usually more localized than the one that began in the summer of 2006, which wrecked havoc with the housing market throughout the country.
For decades, homebuyers have viewed a home as more than just a place to live. It was a piggybank that buyers could use to pay for things such as college education, vacations, a new car, etc. Resist the temptation to borrow against your home.
Low down payments, interest only, and adjustable rate mortgages got people in trouble in recent years. After being impossible to obtain these mortgages in the last few years, these mortgages are being offered again. Even if lenders are easing up on requirements, beware.
Don't buy beyond your means. But again, don't buy what you know you will outgrow in a short time. A 2 bedroom, 1 bath home will not work for long for a family or 4 or 5.
What are the most important things to consider? The mortgage, and buy in the best area that you can afford. Also, have the home inspected, so hopefully you won't have any big surprises after moving in. Home maintenance is essential to preserve the value of your home.
Home ownership still is the American Dream.