In case you hadn't noticed, real estate is either at the low, going slightly lower, or starting to turn around. Add to this piece of information the fact that mortgage rates are either at their all time lows or just about there. Most people need a mortgage to buy a house and are generally looking for the best price they can find. Whether that means the best price on the house or on the mortgage, I believe they have reached the place to yell "Eureka". That brings us just two questions: Why hasn't real estate taken off, and, what are you waiting for? If you don't know the answers to those questions, let me help you with your investigation.
Although we are a nation of rugged individualists and entrepreneurs, we tend to be reluctant leaders. I believe that becomes quite obvious when you look at the lack of candidates we have to run for all the offices in the land. With several hundred million citizens, one would think that all of our candidates would have sterling credentials with many outstanding leadership qualities, tremendous experience and the knowledge that "there is no such thing as a free lunch". But I digress, so back to the point. The answer to the two questions mentioned above is that most Americans cannot go against the public perception. The public currently believes, on the whole, that real estate is going lower, as are mortgage rates. So why would they buy now using these rates?
How could I say something as foolish as what I just said a sentence or so ago? Simple, I talk with the general populace every day. When you have a nation where more people can tell you who the current American Idol is than can name the Secretary of State, you can easily understand what I am saying. We have been told the rich are perhaps too rich and the poor need an opportunity to get wealthy as well. Here it is! Go out and buy a house with the current financing that is being offered. You will have the best opportunity in years to increase your net worth through your actions. Best of all, you don't even need a lot of money to do this. Let me give you some ways to "pull this off".
1. Veterans get 100% financing up to $417,000 and looser qualifications.
2. FHA allows purchases with 3.5% down payment and as many co-signers as you can find. They are writing loans up to $729,750 in some areas.
3. Local programs in various states offering low cost or no cost seconds to help with a purchase.
4. Builders giving incredible discounts and financing on their unsold inventory.
5. Some sellers are offering under market financing as well.
6. Some lenders are selling some of their "real estate owned" at below market prices and terms.
7. Execute a lease option contract with a willing seller. This is a rental with a fixed price option to buy for a certain period of time. Part of the rent can go toward the down payment.
Now is the time to show that the "rich" aren't the only people who can realize when a good opportunity arises and to go forward to take advantage of that situation. The icing on the cake is the current tax law that will allow an individual who lives in the owner occupied house tax accumulation and sale of the house up to $250,000 in gains on the house; $500,000 for a married couple with the same scenario. You need only to hold the house for 2 years to get this income tax exclusion, or you could be appointed Secretary of the Treasury, but I digress again.
Now, for the sad part: most people will wait until housing has made its move, and then tell everyone or anyone who will listen, that it is a false move and the prices are going to come down again. After that, they will wait and watch prices move up slowly and make one of two decisions: move to a less expensive area and purchase there, or jump into the market when prices are 25% higher or more and take a "funky mortgage", such as as an option arm, to be able to make the payments that were in their reach when prices were 25% lower or more.
Why do we go through the same cycle over and over? People are human and susceptible to all distractions that simply distract human beings. These, of course, are American Idol, The View and other "entertainment" seen on TV; daily press conferences from our leader or leaders where nothing changes but the scenery; filling out the "final four field" and texting to everyone you know about anything that happened to anyone at anytime. Not making the list is establishing a plan to increase your net worth; examining the figures on the real estate market in your area and searching for the best situation in any area where you are likely to be taking some action in the near future.
I do not believe that my fellow man is lazy or uneducated, but simply overwhelmed by everyday life. I know it isn't easy out there for anyone. But now is the time to grab oneself by the hand and lead yourself to the promised land of a secure financial future. Take a little time out of your daily trials and tribulations and try to pinpoint some great opportunities. Call or write people you believe can help you in your quest and start accumulating information that you need to move forward. And, last but not least, take the plunge at a time that is as good as it has been in years. Give up the thought that you want to wait until the bottom is reached. There will not be an announcement!
Remember, we need as many wealthy people as we can get. We have a huge debt to repay, and inflation will not be able to do the job by itself. Best of all, we can change the "have" and "have not" ratio for good in this country.
Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom.