When the sales in the real estate industry are slow, there will be a surplus of properties for sale, and buyers can have the chance to find a cheaper house. If you are house hunting, you must understand that there are times when you must pounce on the opportunity and there are times when you must restrain yourself and avoid buying on impulse. Remember that buying a house during a down economy still presents serious risks. Here are a few smart tips for purchasing a house during a recession.
Put Your Finances In Order
One of the biggest threats in buying a house during a down economy is that you might lose your job at any moment after closing the deal. With companies declaring bankruptcy, and laying off a couple of workers to save on expenses, you can't truly say that your job is secured.
In addition, you must know that banks might raise their lending standards. This means that you must have a good credit to get the best mortgage rate. You must also prepare a decent down payment and have your income verified. If you are uncertain about your job security, and if you can't satisfy the credit requirements, it is best to hold off buying a property for the time being.
Research About The Real Estate Market
As a potential homebuyer, you must do some research on the real estate market. This means searching online for listings, checking local newspapers, or consult with a real estate agent to learn about a particular area.
The main goal is to learn about the price range for a particular real estate market. You need to know what is considered low or excessive in that particular area. This will help you make a smart bid and provide you with some idea whether you have a good bargaining room on a certain house.
Set A Budget And Stay With It
If you are set upon buying a house, you must decide upon a budget and be conservative about it. This means that you need to find a house you can predictably afford. Based on a professional's tip, your monthly mortgage payment must not exceed 35% of your gross monthly household income. As an additional tip, it is a good idea to target a 30-year, fixed-rate mortgage option.
Look Out For Foreclosures
Foreclosed houses are usually available at sharp discounts; thus, it is a good idea to check out these houses in the market. However, as a potential homebuyer, you must also understand that buying foreclosed houses can present challenges- legal and other issues- that are best handled by professionals. If you are thinking of checking out foreclosed properties, you must have an experienced professional assist you in this endeavor.
Look For Motivated Sellers
Aside from the foreclosure market, you must also look for motivated sellers who are in a hurry to sell their property. This can provide you with an additional bargaining opportunity. Here are some signs of a motivated seller:
- The house has been listed for a couple of months and the seller has lowered the price in several occasions.
- When you visit the house during an inspection, it is empty. This suggests that the seller has moved and may be paying off two mortgages.
These are a few tips for homebuyers who want to purchase a property during a down economy. These tips can help you find a good deal for the right house.