Home Buyers - How to Avoid Buyer's Remorse

No one wants to contract a case of buyer�s remorse. You might not be familiar with the term but you might be with the emotion. You know, it�s that nagging feeling you get after you make any major purchase that you�ve either paid too much or received too little for your investment. In most cases, there is no recourse for the buyer to receive compensation once the contract has been signed.

If a homeowner wants to avoid buyer�s remorse, why are there so many people out there who suffer from it? The answer usually stems from the fact that most of these home buyers engaged in a major transaction without enough knowledge and information about what the whole process.

If you have heard it once, you�ve heard it said a hundred times, the best way to make sure that you choose the right home is to properly prepare yourself by getting as much information about home buying as you can. Naturally, your objective is not to overanalyze home buying until you are paralyzed by the complexity of the transaction but to be well informed about all the decisions you are likely to encounter.

You already know that the purchase of a home is a tremendous investment, both monetarily and emotionally, so do a little research and it will pay off in big dividends and help you avoid the all consuming buyer�s remorse. The following are some things you can do that will help your transaction progress smoothly and improve the odds that you will be an informed and satisfied homeowner:

• Get help. Your home is likely to represent one of the largest investments in your life. In order to make sure that the transaction goes smoothly it is of vital importance that you choose the right agent to represent your interests. The right agent for you will be someone whose experience, knowledge and personality you can trust which will allow you to feel comfortable with the whole transaction. Usually a good indicator of a successful agent is one who has at least five years of successful experience and is in the real estate business fulltime Try to find an agent that is familiar and knowledgeable about the neighborhood and community that you plan to move into. Don�t make the mistake many home buyers do by automatically selecting a family member or friend who is in the business, unless you know without a doubt that they are a consummate professional.

• Get pre-approved. Do you already know how much home you can afford? There is nothing more frustrating than spending the time looking for a home, finding the perfect home, and then discovering that it is out of your price range. Be sure to do your financial homework first. Assess your financial situation and then speak with a lender to learn about the different financing options available to you. When you find the right lender get the paperwork processed so that you will be ready to buy when you find the right home.

• Avoid other major purchases. In order to determine the amount of home you can afford a lender uses your debt-to-income ratio. This ratio is the percentage of your pre-tax income that you spend on debt. Your debt ratio will include: monthly housing costs, car payments, credit cards, student loans, and any other installment debt. If you take on more debt just before buying a home, it will have a definite impact on the amount of the home loan that the lender will finance. Delay all major purchases until your home purchase is finalized.

• Ask Questions. No one knows the home better than the seller of the property; however it is not always in the seller�s best interest to disclose all the information. If you can find out the seller�s motivation for selling you might be able to negotiate a better deal on the house. Try to find out the last time service was performed on the roof, furnace, plumbing and water heating. Asking the right questions now can end up saving you a lot of money in the long run.

• Get a home inspection. The last thing you want to discover after you have bought a home is that you have purchased a "money pit". By "money pit", I am referring to a home that is full of major defects not readily seen that are going to end up draining you of all available financial resources. Save yourself a lot of time in future litigation and renovation by bringing in a licensed, professional home inspector to inspect the home before you buy. If any major problems are found, it will steer you away from a bad decision and/or it will help you negotiate a better price at the negotiating table.

By Nef Cortez
Published: 2/22/2007

Steps To Buying A Home

While this article was originally geared towards the first-time homebuyers, often a ripening age and the passing of time since your last purchase might slide you right back into that greenhorn status. Following are the steps you can expect to take when buying a home... at least in Kentucky. There are real estate laws and a "this-is-the-way-we've-always-done-it" mentality that sets each state uniquely apart, so talk to a local Realtor before you decide to purchase. That's what we're here for!

Though this must-do tip is not an official "step," I'm going to say it anyways . . . stop making late payments! It affects your credit, adversely. Which brings me to the authentic first step.

Find a Lender!

Okay, I don't mean to yell, but as first steps go, this one's a doozy. I can't stress enough the importance of finding a mortgage lender. Many a dream home has been lost because the debt-to-income ratio just doesn't jive or your credit rating has dropped significantly when you weren't even looking.

The unofficial rule of thumb for finding a lender is to talk to at least two of them. And tell them you're shopping around! This encourages lenders to not only find the best loan for your situation, but a little competition might go a long way towards reducing your interest rate. Don't be concerned that lenders pulling your credit will affect your credit rating. Not the case anymore. Once you've found your lender, you can lock into the interest rate for 30, 60 or even 90 days. But you don't have to. Keep in mind, though, that the interest rates could change before you lock in.

Your lender will then give you a letter of approval or commitment letter. Times being what they are, many sellers/Realtors want this submitted right alongside the offer.

Decide on a Realtor.

Don't even look at homes without first finding a Realtor. And I'll tell you why. I am nauseatingly consistent in telling people this: Realtors are just people. And there are good people and bad people . . . Some people are lazy. Some are air-headed. Some are indifferent. Some are just plain mean. You never want to be stuck with someone you don't like or trust. Pick the Realtor you want.

There's a little known term that most laypeople don't know. It's called "Procuring Cause." What that means is that if a Realtor shows you a home that you decide to buy, you cannot then bring your own Realtor into the mix. There are disgustingly few exceptions. The first exception is if the Realtor that showed you the home is sweet enough to give up his commission out of the goodness of his heart and allow you your chosen representation. Enough said. The second is if your Realtor will guide you through the process and expend considerable effort and time without pay. Also enough said.

Finding a Realtor is easy. Talk to people you trust. Ask them if they liked their Realtor, and why. Good Realtors should get more business from word-of-mouth than soliciting folks at their doors.

Please, please remember, though, that Realtors aren't perfect. We make the same mistakes that other humans do. Try and cut us a little slack when we don't call you back right away because our phone fell in the toilet. Stuff happens.

Search for a home.

This is one of the most enjoyable aspects of the process, but make it easier both on yourselves and your Realtor. Prepare. I know that when you've finally reached this stage, you're chomping at the bit to "kick some tires," but it's important to narrow the search down first. Make a wish list. Write down all the things that are important to you. If you must have a first-floor master, write it down. If you want a basement but will do without one for the home that has a ton of storage space, leave it off. You don't want to waste everyone's time looking at homes you're not going to buy, but you also don't want to miss a terrific home because your criteria is choking it out.

Writing the offer.

Once you've found your dream home, it's time to make an offer. Your Realtor will hold your hand throughout this whole process, but I'll address briefly what to expect. Having decided on the home to buy, your Realtor will do some research on your behalf. She'll run the comps to find out if the home is priced accordingly, how many days it's been on the market, etc.

Armed with all the information revealed by your Realtor, you'll submit an offer on the home. It will either be accepted, rejected or countered. If the seller counters the offer, you will have a limited amount of time to respond with your own rejection or counter. Once the offer or counteroffer is accepted, you move on to the next stage.

Inspections.

Your contract should allow you a time limit for inspections. Some states may require home or pest inspections, some may not, but they are highly encouraged. Let me put it this way: If I am your Realtor and you decide not to have inspections, I will require you to sign a Home Inspection Disclosure stating that I pleaded shamelessly with you to have inspections, but you declined and therefore release me from any liability resulting from said refusal . . . or words to that effect. Have inspections!

Many lenders will require you to have termite inspections. That's okay. In Kentucky, the price for the inspection is minimal. But home inspections are equally (if not more) vital. For a few hundred dollars, you can find out beforehand whether or not there are any plumbing leaks, foundational instability, shingle damage, repairs and/or renovations that are not up-to-code, if your chimney needs tuck pointing or your tub drains slowly, whether your bathroom has proper ventilation or the attic has adequate insulation, whether there are electrical issues, siding issues, drainage issues . . . the list goes on. Again, have a home inspection.

Once the inspections are concluded, if you didn't state in the contract that you were buying the home as-is, you can ask the seller to make repairs. Please don't make the same blunder that some married folk find themselves making. You need to pick and choose your battles. If you can fix it yourself for minimal cost and effort, don't ask for it. If it's no big deal to you in the whole scheme of things, let it go. The mistake most people make is nickel-and-diming the sellers into wondering why they ever accepted your offer in the first place. Let your Realtor be your guide. A good starting point is safety. You want to make sure the home is safe before you pack it full of kids, pets and all your worldly possessions.

Escrow.

Escrow is just the period of time from contract acceptance to closing. It's boring, but you can offset the tedium or lessen the anxiety by packing. Now is the time to box up your possessions. Meanwhile, your lender is working to set the closing date and gathering any necessary paperwork that may be missing.

Utilities.

Remember to call the utility companies a week ahead of the closing date to schedule the turning on or transfer of service for the day of possession.

Closing.

This is it! Whether you're jumping from the closing table into the moving van or waiting because you've given the sellers a few days to move out, you will own your home today! Be prepared to sign enough paperwork to line your new kitchen. Either before the closing agent sticks a pen in your hand instructing you to "sign here, here and here" or when he's out of the room making copies is the time to ask the sellers what day is trash pick-up and whether or not that ugly bush is on your property or your neighbor's.

By Lisa Buth
Published: 10/26/2007

FHA Reform Could Mean Good News for Bad Credit Borrowers

With defaults and foreclosures on the rise it's becoming clear that many homeowners are in worsening shape over their home loans. In the past a mortgage refinance would have spelled relief, but with home values rising more slowly this isn't an option for everyone.

The Future of Your Bad Credit Mortgage

Recently the National Association of Realtors� appeared before Congress with the goal of enacting Federal Housing Authority (FHA) reform. NAR recognizes the fact that many homeowners are not in a good position with their mortgages, especially those with poor or bad credit, and argued that the solution lies in changes to the FHA program. For years the FHA has been an excellent program for low-income and bad credit borrowers--providing they met certain criteria. Because the Federal Housing Authority insures the loan, lenders are often willing to extend credit to those that might otherwise get turned away. NAR's reform proposals could spell relief to those in need of a mortgage refinance.

New Refinance Options Proposed

A few of the changes NAR suggested were eliminating the 3% down payment requirement, raising loan limits, and providing risk-based pricing. Said NAR spokesperson Iona Harrison, "The FHA program makes it possible for higher risk, yet credit-worthy, borrowers to get prime financing." However, one of the best suggestions from NAR proposed that the FHA waive its requirement that a homeowner be current on their mortgage in order to refinance to an FHA loan. According to NAR President Pat Combs, this could help many "to skirt foreclosure and keep their homes."

A Brighter Outlook for Bad Credit Borrowers

This news spells a positive outlook for homeowners with bad credit who need to refinance their way out of trouble. Much of the press recently has been negative: homeowners bought homes they couldn't afford and lenders got too greedy. Whatever the cause may be, it's clear that the NAR is trying to come up with solutions. If you want to get involved contact your Congressman and ask them to support the proposed FHA reforms. It could help more than you think.

By Gabriel Traverso
Mortgage Credit Problems Columnist

Debt consolidation - Options for Reducing Your Debt

Studies show that Americans are now saving less than ever before. Along with that, Americans are carrying a heavier debt load than ever. It�s easy for a home loan, a car loan and a few credit card bills to get out of hand, and many people are struggling with more debt than they can easily pay. To make matters worse, new bankruptcy legislation will make it harder than ever to file bankruptcy for those who simply cannot pay their bills.

There are a number of solutions available that allow most people to reduce their interest rate on their debt, reduce their total monthly payment, or both:

• Ask for a lower rate on your credit card. If you have been making payments regularly, and you haven�t had a history of late payment, you may be able to lower your interest rate on your credit cards simply by calling your credit card company and asking them! It doesn�t always work, but the market for credit cards is pretty competitive these days, and many lenders would rather lower your interest rate than lose you as a customer. It�s worth asking.

• Get a new credit card. If your lender isn�t willing to lower your rate, shop around for a credit card with a better interest rate. There is no reason to be paying 20% or more in credit card interest if you don�t have to. The interest on credit cards is not tax deductible, but if you can get a credit card with a lower interest rate and you move balances from other cards to that one, you can save quite a bit.

• Take out a traditional bank loan with collateral. You can probably obtain a simple installment loan from your bank by putting up cash or investments as collateral for the loan. Like credit cards, the interest isn�t tax deductible, but the interest rate may be better than credit cards, and if you consolidate several payments into one with a bank loan, you will lower your monthly payment.

• Take out a home equity loan or home equity line of credit. If you have equity in your home, you can borrow up to 80% of your equity in either a lump sum or a revolving line of credit. Interest rates are still quite low on home loans, so this one could be a good way to consolidate your debt. As a bonus, the interest is tax deductible. A minor downside is the fact that these loans usually have application fees and/or closing costs.

Most people can utilize one of the ideas above to help them reduce their debt. If none of these options work for you, you should consider speaking to a credit counselor, who can outline other options that may work for you. Many credit-counseling agencies are non-profit, so it may be worth your while to talk to a credit counselor if nothing else will work.

by Charles Essmeier

Borrow on a Budget: Getting the Cheapest Home Improvement Loans

Getting the cheapest home improvement loans isn't always easy. It can require going to several different lenders for quotes as well as several hours spent comparing the interest rates and terms of several possibilities. All of that work can pay off in the end, though, because the cheapest home improvement loans can save you hundreds or even thousands in the long run.

Before you can find the cheapest home improvement loans, though, you need to know a little bit about what you're looking for and what lenders are looking at.

Factors that affect your loan

You may have to visit several different lenders to find the cheapest home improvement loans, but every one that you go to will be taking several things into consideration when creating a quote for you.

The first thing that they'll look at is the equity in your home, which is an indication of how much of the mortgage on the home has been paid off. The equity in your home is one of the major factors in determining the maximum amount that a lender is willing to loan you, since it is an indication of how much money they'd get back if they had to repossess the home. Usually, the cheapest home improvement loans are offered to people who have high equity in their homes.

Of course, there are other factors to be considered as well� things such as your credit score, the type of improvements or repairs that you're wanting to do, and national and local interest rates can all be major considerations when a lender is trying to determine if you qualify for the cheapest home improvement loans.

What to look for in a loan

Even if the first quote that you receive seems pretty good, you should take some time to see if there are any other options available in order to get the absolute cheapest home improvement loans that you can.

Visit several banks and finance companies and request quotes from each of them� you may find that the interest rates and terms that you're offered differ at least slightly from institution to institution.

Carefully look at all of the quotes that you've received, trying to find the one with the lowest interest rate that still has flexible repayment terms. Narrow your options down to only two or three quotes, and decide from there which of the offers has the best options for your needs.

While it may seem like more work than it's worth sometimes, taking your time to find the cheapest home improvement loans to finance your repair or improvement project can save you both time and money in the long run.

The extra time that you spend now will likely result in you repaying the loan faster and having more free time and money afterwards.

by John Mussi

Your Home Equity Mortgage Loan Could Use a Fix

If you have a home equity line of credit or home equity loan with an adjustable rate, consider fixing your rate and payment while rates are still low.

Many borrowers have home equity lines of credit (HELOCs) to consolidate debt and avoid bad credit. Others took out second mortgages to pay for medical emergencies, home improvements, or other large purchases. While using debt secured by your home is often the cheapest financing available, and far superior to credit card debt, you should keep an eye on your interest rate.

What Rate Do You Pay For Your Home Equity Line of Credit? Most HELOCs carry rates based on the prime rate and may change every month. If you have bad credit, the rate on your home equity loan could be several points higher than the prime rate, and you have little protection against rate and payment increases.

Can This Problem Be Fixed? Check your loan documents. Some HELOCs and ARM second mortgages allow you to fix your interest rate at one or more times during the life of the loan. If your loan features this option, consider exercising it before rates go up.

Other Options for Fixing a Bad Credit Home Equity Loan include wrapping the line of credit or second mortgage into a new first mortgage, or refinancing your ARM home equity loan or HELOC with a fixed rate second mortgage. Replacing your existing first and second mortgage with a new first mortgage makes sense if you can get a better rate and terms than you have now.

Check Your Documents. Home Equity lines often carry a penalty of about $500 if you pay them off within three years of the origination date. Terms for a bad credit home equity loan may be more restrictive than that. Check your loan documents before applying for a home equity refinance to avoid expensive surprises. If you have a penalty, check with your current lender. Some are willing to waive the penalty if you refinance through them.

By Gina Pogol
Mortgage Credit Problems Columnist

Why Choose a Home Equity Loan?

There are many reasons for choosing a home equity loan. A home equity loan allows homeowners to obtain a loan in addition to their original loan using the equity in their home. Home equity loans are generally a second mortgage, and are used for personal use.

Home equity loans are also known as equity release schemes. Home equity loans are aimed mainly at those homeowners that have paid their mortgages off. They can receive a cash lump sum or some income by unlocking that capital.

People take out a home equity loan for a variety of reasons. Some people do it in order to finance home improvements, buy a new car, consolidate their debts or go on holiday. Others may want to receive a regular income source so that they can pay for residential care, or just the cost of care.

Home equity loans have fixed rates with longer terms, over a fixed period of time. Home equity loans can be ideal for longer-term financial goals because you receive the amount of money you borrow in one lump sum. A home equity line of credit is similar to a credit card, where you may regularly use it up to your credit limit.

One of the premium features of a home equity line of credit is that the interest rate is typically lower than that of a credit card.

A Home Equity Loan will usually mean that you get better interest rates, but you should always remember that your house is at risk if you fail to repay the Home Equity Loan.

The amount you can borrow with a Home Equity Loan depends on the amount of equity in your property. Equity is the market value of your property minus any outstanding mortgage or loans you have on it.

People with poor credit ratings will find a Home Equity Loan more easily accessible to them because the lender is taking a lot less risk themselves. Home equity loans are also beneficial for people with a poor credit rating. A lot of traditional lenders categorise such people as "high-risk". Home equity loans for such borrowers don't pose any risk as in case the borrower defaults on the repayments, the lender can sell the house to reclaim the money from the available equity.

Here are some of the benefits of a home equity loan:

A Home Equity Loan is an easy and manageable route to generating extra cash.

Using Home Equity Loan for debt consolidation means that with one single payment each month, you have more control over your monthly budget.

With a remortgage you have the same expenses you do when taking on a mortgage: surveys, valuation, mortgage indemnity and solicitors fees to pay. With Home Equity Loan you have none of this, making it easier to arrange.

Repayment period on Home Equity Loan can be anything from 5 - 25 years.

You can use Home Equity Loan for any purpose - for example, debt consolidation, home improvements, buying a car or going on holiday.

Protected payment plans for Home Equity Loan can provide extra peace of mind.

Always consider your options carefully, as your home is at risk if you do not keep up repayments on a mortgage or other loans secured on it.

by John Mussi

The Debt Free Lifestyle

Many people have been taught that you cannot get ahead without debt. We are also inundated with advertising telling us we can have anything we want. All we need to do is put it on our credit card.

We have become an impatient society, we want it right now. We have lost the ethic of working for what we want.

It is not how much money you make; it is what you do with it. By living without debt you can actually have a higher income since you are not paying out interest, you are actually getting paid interest on invested money.

All debt is not created equal. We will classify them as good debt and bad debt.

To simplify the classification we will say that good debt is a loan for something that you could sell at any time and repay the debt. This narrows down good debt to a home loan and possibly a home equity loan.

A bad debt, of course, is a loan on anything that will lose value.

Let's take a look at some debts that we would consider bad debt.

Home equity loans are in the gray area. They could be considered good debt if they are used to repair or improve your home, but you would be a lot better off to just save up the money for the project. Home equity loans become bad debt when used for purposes other than home improvement or maintenance. In other words a bad home equity loan is for anything that does not add to the value of your house. Do not jeopardize your home by taking out a home equity loan on unnecessary items.

One possible good use for a home equity loan is when the interest rates are low. You can use a home equity loan to refinance your mortgage. Home equity loans generally have lower costs than conventional home loans.

We consider school loans bad debt. If you finish school, get a good high paying job and then attack the loan like mad, a school loan may work out. The problem is that there are too many things that can go wrong. At best, even if you do graduate and get a good job there are always a lot of other expenses at this time in ones life. You are really behind financially when you start your working life in debt.

Auto loans are bad loans that have become common practice to us. We pay interest on a vehicle that will only be worth one half of its original purchase price in five years. Lately it has also been common for us to borrow more than a vehicle is worth. We can trade a car in that we still owe on, and roll that owed amount over into another vehicle. This gives us a loan amount that is higher than the value of the car that we drive away. We have lost our capacity to say NO.

Co-signing is a bad debt that usually and unfortunately involves family. If someone cannot qualify for a loan at a regular lending institution, they should not get a loan. The fact that they can't qualify for a loan elsewhere should tell you that they are a huge risk. Use this opportunity to teach them how they can get what they want by working harder for it and delaying the purchase.

If you want to get off of the debt treadmill, you must run as far away from debt as you can. You cannot use debt to get out of debt. Even if you do, you have not changed your habits; you must change your lifestyle.

by John Cook

Six key aspects of a home equity loan

Ever feel lost when people talk about subjects like a home equity loan? It certainly does sound something like what you would hear on a business news show. But for every homeowner or someone considering property purchase, home equity is an important concept to grasp. It really isn�t very complicated either. Therefore, piror to understanding a home equity loan, let�s first talk about home equity.

What is home equity?

Equity can simply be understood as the monetary value of something you own after you deduct the amount of outstanding loan you have on it. For example, if your house is worth $200,000 and you owe your finance company $50,000, then the equity of your home would be $150,000. So basically, the more loans you clear on your home the greater equity it will have. A surge in the real estate market and prices of property also helps in adding on to your home equity.

What is a home equity loan?

Now that you have an idea of what a home equity is, let�s get into a home equity loan. Simply put, it is the process of taking a second mortgage on your home. For example, if your have recently bought a house for $200,000 on mortgage, a home equity loan will allow you to secure a second mortgage of 25% of your first mortgage, which would be $25,000 in this case. Depending on the lender, one may even be given as much as 80% of the original mortgage for their second mortgage.

Six key aspects to consider

1. First of all, issue a home equity loan only if you must. It is always better to not have any additional loans than the one you already posses.

2. If you do feel you need to secure a home equity loan, then you will generally need to have a great credit score since this loan is mostly given to those who are considered "qualified borrowers," i.e. those who have a good track record of paying back on time what they have borrowed.

3. Keep in mind that apart from the credit score, your home itself will also be on the line as collateral with the lender. So defaulting on your loan could result in losing your home.

4. One good advantage of a home equity loan is the fact that the interest rate is generally lower than those of credit cards. So if you do need to borrow money through a credit card for something large, then this would be a less expensive option. But make sure you do a proper comparison of the cost of borrowing money with other options that you might have.

5. The interest you pay on your home equity loan is also tax deductible, which can be a huge benefit when you are cash strapped. But there are limitations to this, so look into it carefully.

6. Shop around. Don�t jump into the first option you see on being issued a home equity loan. Find out how you can get the best interest rate (fixed or adjustable) and read the fine print on your withdrawal limit.

By Alan Lim
Published: 12/1/2007

Scams in No Income Verification Home Equity Mortgage Loans

If you have bad credit and have a hard time proving your income, a No Income Verification (NIV) home equity loan can seem like a dream come true. And it can be--if you actually have sufficient income to make the payments.

Certain home equity lenders target homeowners with less education, low income, or poor credit for abusive lending practices. One of the tools they use is a home equity loan that doesn't require the borrowers to prove their income.

What is an NIV Home Equity Loan?

Some borrowers are self employed and have a hard time documenting the actual cash coming in from their businesses because of large tax write-offs. Others get income from alimony or child support and may have difficulty coming up with canceled checks to prove they receive the income. For these and other borrowers, NIV loans, also called stated income loans, can make the difference between being approved and declined for financing.

"Liars' Loans" for Home Equity Financing

NIV loans are also called "liars' loans" in the industry because some loan officers use them to get a borrower approved for a loan he can't possibly afford. If a lender writes in an income for you that is clearly higher than what you make, or pressures to you state a higher than realistic income on your application, you may be about to be stripped of your equity. Scammers saddle bad credit borrowers with loans that carry high rates and fees, and could suck the equity from your home and cause you to lose it.

Always check your loan documents, and never sign anything that overstates your income. Review your loan documents, check the rate and fees, and make sure that the payment is one you can safely afford.

By Gina Pogol
Mortgage Credit Problems Columnist

Refinance Home Loans

Are you considering refinancing your home mortgage? Refinance Home Mortgage allows you to take a new mortgage for relatively lower interest rate. Home refinance is nothing but paying off one home loan with another loan. If you do everything correctly you can easily apply for a refinance home mortgage and pay of your other outstanding debts.

A Refinance home mortgage is the best option for those who have a good financial sense and are willing to put their money to good use. Refinance loans can help you consolidate your debt, lower your interest rate and help you get the cash out. Mortgage loans help you to buy residential or commercial properties without paying the full value of the properties up front, while paying a fraction of the real value of the property. By getting mortgage loans you are pledging your property against the remaining value of it. The opportunities for getting a home mortgage loan have increased tremendously, with numerous banks and financial institutions offering various options. However, you need to be careful in comparing different rates available in the market, as you must be considering the monetary benefit of the home mortgage loan seriously. Home mortgage loan brokers have extensive knowledge about the best resources available for mortgage loans and they would be able to help you out in finding out the best possible deal for you. It will be very difficult for you to find out yourself a lucrative mortgage loan, since mortgage rates tend to vary based on interest rates. Since stock markets play an important role in the direction of interest rates, it would be better for you to get professional assistance from professional brokers. I personally believe that lay persons would not be aware of interest rate, stock market, Wall Street sentiment and overall macroeconomic trends that influence the home mortgage loan rates. Apart from financial companies and banks, thrift institutions, commercial banks, mortgage companies, and credit unions, etc also offer lucrative home mortgage loans, given owning a house is a dream of everybody. Benefits of Refinance home mortgage

If you refinance mortgage your old rate with higher monthly payment is replaced by new and lower interest rate that equates a lower monthly payment. You can easily convert your current adjustable rate into a fixed rate mortgage. Mortgage refinance will allow you to shorten the length of your mortgage You can easily cash out some of your equity for debt consolidation You can also remove the mortgage insurance if you have reached 20% equity mark.

By: Darren Dunner

How Much Can I Afford to Buy a House?

Buying a home of your own is still the American Dream, but knowing when and how to take the plunge can be difficult. It is no secret that home ownership rates have been steadily rising over the past several years, aided by both historically low interest rates and unconventional mortgages which allow buyers to put down as little as 3% of the value of the home.

When deciding how much home you can afford, it is a good idea to consult with a mortgage lender before you begin your search for a home. Getting pre-qualified will make your home search a lot easier by allowing you to focus only on those properties you can actually afford to buy. Two of the most important factors lenders use in determining how much you can borrow on a home mortgage loan are the debt-to-income ratio and mortgage-to-income ratio.

Debt-to-Income ratio

The debt-to-income ratio is the percentage of your monthly income that is committed to repayment of outstanding debt such as credit card debt, car loan, student loans and etc. Suppose your gross income per month is $5,000 and you owe $1,000 in debt per month, then, your debt-to-income ratio is 20%. Typically, the mortgage lender will balk if this ratio is more than 40%. Obviously the lower this figure, the better your finances will look to prospective lenders and the more you will be able to borrow on your home mortgage loan. If you think your debt to income ratio is too high, it may be a good idea to retire some of your outstanding debt before attempting to qualify for a mortgage. If you have outstanding credit card loans or a personal loan, paying them off will increase your credit score and allow you to borrow more to buy a home. For the same reason, it is a good idea to not take on more debt when you are attempting to qualify for a mortgage.

Mortgage-to-Income ratio

Your monthly income will also be a major factor as your bank or mortgage company determines how much they can lend you. In general, lenders will look at the mortgage-to-income ratio of no more than 30%. Using the example above, a lender can expect that you can reasonably pay as much as $1,500 per month in mortgage payments based on your gross income of $5,000 per month. In addition, the mortgage lender will want to see a good steady work history and good visibility of earnings. Be sure to provide proof of all your sources of income. Things like pay stubs, cancelled checks, etc. are very important when applying for a mortgage.

It is important for the potential home buyer to realistically assess how much he or she can afford in monthly mortgage payments. Be sure to include such home related expenses as homeowners' insurance, real estate taxes and money for home repairs in your monthly payment estimates. It is best to not over extend when determining how much home you can afford. In other words, never buy the most expensive home you can afford.

Likewise, you should think twice before borrowing as much as you qualify. You are in a 'risky' position if you have a maximum mortgage payments, as unexpected events such as unemployment or sickness could happen. Therefore, it is always a good idea to make as high a down payment as you possibly can. Making a 20% down payment on the home you buy will not only lower your monthly mortgage payments, but it will also mean you are not subject to costly private mortgage insurance. Private mortgage insurance is designed to protect the lender if you default on the loan. A higher down payment means you will not need to pay the high cost of this insurance.

Once you have determined how much home you can afford, be sure to shop around for the best home for your needs. Be sure you consider the nature of the neighborhood in which the home is located and its prospects for growth. Remember that your home is not simply a place to live. It is an investment as well. A good home in a good location can be a great investment as well as your primary residence. Getting pre-qualified will help you to concentrate only on homes that you can afford to buy.

By: www.buy-and-sell-house-fast.com

Want to Buy a House? Things You Should Avoid!

There is no doubt that buying a home is a major decision. Your home is probably the most expensive single purchase you will ever make, and with median home prices now exceeding $180,000 that trend is likely to continue. If you want to buy a house, there are many things to consider before making such a major commitment.

Avoid major purchases

It is important to avoid other major purchases until you close the mortgage loan on your home. The mortgage lender will take a look at all your outstanding debt, including car loans, personal loans and credit card balances. Any purchase that increases your debt can negatively affect your credit rating and unnecessarily increase your interest rate.

If you want to buy a house, it is also a good idea to hold off on major purchases so that you will have cash on hand for any unforeseen home repairs or other surprises. Also don't forget that you will need money for furniture and home appliances. It is always a good idea to have some cash on hand for these kinds of necessities.

Avoid credit report error

Many home buyers are also blindsided by surprises contained in their credit reports. A mistake, or a negative credit event you have forgotten about, could have a big impact on your mortgage loan application. It is not unusual for credit reports to contain errors, so it is always a good idea to get a copy of your own credit report and review it carefully prior to applying for a mortgage loan. This tactic gives you advance notice of any issues creditors are likely to have, and if the negative information is incorrect, it gives you a chance to clean up your credit report before the mortgage lender sees it.

Avoid job changes

Remember too that home mortgage lenders will take your job history into account. Most lenders prefer long-term employment histories. Hence, it is never a good idea to change jobs while in the middle of a home and home mortgage search. Of course, some job changes are involuntary, but if you can at all avoid it, you should put off your job change until after the mortgage loan has been negotiated and closed.

Avoid paying any earnest money directly to seller

These days it is becoming more and more common for sellers to sell their homes themselves, without the help of a real estate agent. This type of arrangement can be a good deal for both buyer and seller, but it may present a challenge to the potential buyer when it comes to the so-called earnest money used to prove that the buyer is serious about purchasing.

It is important that any earnest money used to back up the offer go into a trust fund if you want to buy a house and not directly into the hands of the home seller. The use of a trust fund is to protect your interests and make sure the money is not used inappropriately. If you are negotiating with a seller who is not using the services of a real estate professional, it is vital for the buyer to use an attorney to represent your interests and hold any deposit money until the closing.

Avoid buying homeowners insurance after purchase

Speaking of protection, the time to line up home owners insurance is before the purchase, not afterward. Your mortgage lender will want to see insurance information before the closing of the loan. Taking care of insurance needs ahead of time will also give you time to shop around for the best rate. When shopping for homeowners insurance, be sure that your policy covers the replacement cost of the home. With home prices rising by double digits every year, it is vital that your insurance policy pay what it will actually cost to rebuild your home in the event of a fire or natural disaster. If the home you are buying lies in a flood zone or earthquake prone area, you may need to consider specialty insurance to cover these specific types of hazards.

Avoid emotionally involved

It is important to take the purchase of the home very seriously and try not to get emotionally involved in the purchase. Especially, don't become friends with the seller. Try to treat the home as a purely financial transaction. It is difficult to not become emotional about something as personal as a home, but emotions can sometimes be blinding. Becoming emotionally attached to a house could cause you to overlook problems with the home construction or deficiencies in the location.

Avoid casual home inspection

Finally, another mistake many people make is not having the home inspected by a qualified home inspector. Merely having the house looked at by a relative or friend with knowledge of construction may not be enough. A home inspector can uncover potential problems like termite infestation, cracks in the foundation or other serious problems a casual look may not reveal.

Engaging the services of a professional is a very important part of the home buying process. In addition to the home inspection, it is important to engage the services of a real estate agent, a real estate attorney or both. Buying real estate is a complicated process, and having someone to guide you through the process will help you avoid any unpleasant surprises.

By: www.buy-and-sell-house-fast.com

Rent or Buy a House?

Buying a home is a major financial commitment, and it can be a great investment as well. Home prices have continued to rise year after year, even in times when the overall economy was not so strong. Rising home prices can be somewhat of a conundrum for those not already in the housing market, however. As prices rise higher and higher, renters may be left wondering if they can really afford to become homeowners. The decision of whether to rent or buy a house is an important one, and it is vital to be sure buying a home is the right move before making the plunge.

Before you decide to buy a home of your own, it is vital that you understand all the expenses involved with home ownership. While the costs of the down payment and the monthly mortgage payments are obvious, there are some other expenses involved with home ownership that you may not have thought of. For one thing, if the heater dies on the coldest night of the year, or if the toilet plugs up, there is no landlord to call. You will have to call a technician or a plumber, and you and only you will be responsible for the cost of the home repairs.

In addition, you will also be responsible for all the monthly utility bills, including the phone, gas, electricity, trash, water, cable TV, etc. Be sure your budget allows for these bills in addition to the monthly mortgage payment.

As a homeowner, you will also be responsible for paying real estate taxes on the assessed value of your home. Be sure you know how much the taxes are before you buy the home. Also take into account that property taxes are likely to rise over time. Be sure to budget extra money to take care of these real estate taxes.And finally, be sure that your home is adequately insured and that you can afford the insurance payments. Be sure any insurance policy you take out will cover the actual replacement cost of the home, not just its current value.

If you rent a home or apartment, your commitment to the property is limited by the length of the lease. Whether the lease is month to month or a year at a time, your commitment is limited to the time you choose to reside there.

When you choose to buy a home, however, you are making a 15-year or 30-year commitment to a mortgage loan. You must make sure you are able to make that monthly payment, no matter what your circumstances. Buying a home requires a long term, well thought out commitment of both time and money. Be sure you are ready for this commitment before taking the plunge into home ownership.

Of course, you will never own the property you rent. On the other hand, even if you have a big mortgage, you will build up equity in your home month after month. Instead of paying your landlord's mortgage, you will be paying your own mortgage. This ownership can make home ownership a very attractive option indeed.

Another advantage of home ownership is that your payment can be fixed for the life of the loan. If you choose a fixed rate mortgage, you can be sure that your monthly payment will be the same month after month for the life of the mortgage loan. Compared to your monthly rent payment, which is likely to rise year after year at least as fast as inflation, your monthly mortgage payment will not rise. This can make your monthly mortgage payment more affordable than your rent.

Another popular advantage of buying versus renting is the tax deductibility of mortgage interest. This tax deductible interest can provide the homeowner with a big savings at tax time. Renters typically are not able to deduct any part of their monthly rental payments.

The most important thing to consider when deciding whether to rent or buy a house is your level of commitment and your financial stability. You will need to ensure that you can afford the monthly mortgage payments, plus any home repairs, insurance and taxes. A home of your own can provide both a residence and peace of mind, but it is important to be sure a home is the right choice for you. Don't let yourself be pressured into this important decision. Whether to rent or buy a house is a decision every person must make for him or herself. So, should you rent or buy a house? Find out the answer by using this mortgage calculator and click on 'Rent vs Buy' link.

By: www.buy-and-sell-house-fast.com

Is Now a Good Time to Buy a House?

It's the most commonly asked question of economists and realtors, the question that is on the minds of most buyers. Is this a good time to buy a house? The answer depends on a number of personal factors, but the general response in most cases is - yes. It's nearly always a good time to buy a house.

Buying a house for quick profit

Of course, that answer is qualified by a number of factors. For instance, what's your reason for buying? If, for example, you're buying with an eye to turning a quick profit, some experts suggest that you have about another five years before the current trend in rising house prices slows or evens off. As long as house prices are rising at 15% or more per year, it's possible to make profits of as much as 100 - 200% of your initial cash investment. A $10,000 down payment on a $200,000 property has the potential of netting you over $20,000 profit if the property value rises at 25 - 30%.

It depends as well on the market in which you're buying. In some markets, notably urban centers on the East and West coasts, real estate prices and values are rising at astronomical rates. A savvy investor with a nose for a good deal can conceivably turn a profit in the high double digits by 'flipping' a piece of real estate - selling it within several months of buying it.

What about those that say that the real estate bubble is going to burst and people are going to lose money on their houses? Again, the answer depends on your intent for buying a house. Even the most negative of the naysayers agree that housing prices aren't likely to drop much, if at all. If you're looking for a quick profit in high-turnover real estate sales, experts suggest that you keep your ear tuned to the unemployment and interest rates. If they start to rise, home sales will slow down and prices will either even out or drop. As long as the interest rates and unemployment rate remain low, it's a good time to buy a house as a quick turnover investment (flipping houses).

Buying a home to live

What if you're looking for a home rather than a house? You're still in luck. Over the short term, there is a chance that home prices will drop. On the other hand, odds are extremely high that home prices will be higher in the long term. In other words, real estate will continue to be what it has always been - a steadily appreciating, long-term investment. If you plan to buy a house and will be living in the home for at least five years, it may not matter so much what happens with home prices now. Home prices could fall as a result of rising interest rates, but a lower price home might not save you much.

For instance, if you finance the entire $400,000 home with a traditional 30-year fixed mortgage rate at 6 percent. Then, your monthly payments would be $2,398. If now, we assume due to rising interest rate, the home prices fell to $350,000. If you finance $350,000 at 7 percent, your monthly mortgage payment would be $2,328. As you can see, it's really not much a difference from today's payment on a $400,000 home.

It is always a good time to buy a house as long as you know how to take necessary steps to protect yourself against a downturn in housing prices. If you've bought a home, experts say, this is the time to put as much into the paying off the principle of your mortgage as possible. The more you put into the principle, the higher your equity in the house when and if you do decide to sell. Never take up crazy mortgages loans such as adjustable-rate, interest-only, option-payment ... and other risky mortgage loans that will get you into trouble should the home prices soften and interest rates rise.

Most importantly, buy the home that suit the type of mortgage you can afford; do not change your mortgage to suit the home you 'want' to buy. Most experts do agree on one thing - the longer you own your house, the more your investment will be worth. If you're buying during a hot real estate market with prices at all-time highs, they suggest that you plan to hold the property for at least five years to see a real profit in it.

Is now a good time to buy a house? The absolute bottom line is, of course, your own finances. If you're in a position to support a monthly mortgage, if your credit is good enough to qualify for low interest rates, and if you expect to live in the house for at least five years, then you're almost guaranteed a profit when you sell. If you love the house, and know that you can afford the mortgage - it's a good time to buy a house, no matter what the market might do.

By: www.buy-and-sell-house-fast.com

Four Truths About Buying a New Home No One Tells You

1. Bob Vila is not building your home.

You've seen those TV shows like "This Old House," where Bob, Norm or Steve and a crew of careful craftsmen lovingly restore a home. The workers ruminate endlessly about the correct way to install this door or that siding. Many home buyers think they are getting this level of care when they build or buy a new home. And why not? It's not like builders are giving away these homes.

Sorry, folks, this type of skilled building is seen only on television. Real life means building crews who are more like Larry, Curly, and Moe-bumbling idiots who couldn't tell their butt from a two-by-four. The only thing these guys ruminate on endlessly is which bar they'll hit at quitting time.

One home buyer we interviewed said she was shocked at the level of workmanship on her $140,000 semi-custom home. Sloppy carpentry, lousy cabinet installation, incompetent roofers -- the buyer got the full treatment. "You think you're getting quality craftsmen," she told us. "What you really get is Larry, Daryl and Daryl, from the old Bob Newhart TV show."

This is the ultimate reality check on building a new home: Bob Vila is not your builder. As a result, you need to protect yourself. That's the goal of this book: we'll tell you exactly how you can do this and get the best deal for the dollar.

2. You get to pay for all those wonderful advancements of science.

Building a home in the 1990s is a quick lesson in environmental "correctness." Water-saving toilets, extra insulation, super-efficient furnaces are now required by law in many communities -- and who do you think pays for all this? You, in the form of higher home prices. Sure, some of this stuff may pay dividends down the line (in lower utility bills), but you still have to pay for all these expensive toys today.

Stringent enviornmental laws translate into tougher building standards and limited supply of certain materials. And when the supply goes down, it's you that's left holding the bag. The builders' lobby estimated that the spotted owl related reduction of logging in the Pacific Northwest has raised prices by $3000 per house. Even more insidious are "impact fees," which are taxes on new home buyers to fund parks and schools in many communities.

Hence that home built today may be more "politically correct" than one built in 1969 -- but you get to pay for the privilege.

3. It always takes more time, money and patience than the original estimate.

So, your builder says he can build you a $215,000 home in just four months? Six months later, you're pulling your hair out because that home is now $240,000 and isn't even finished yet.

The percentage of homes finished on time and on budget must be infinitesimally small. Nearly every home buyer we've interviewed across the country recounts a similar story -- it cost more and took longer than they anticipated. Recognizing this at the outset is the best course. In the following chapters, we'll give you specific suggestions for minimizing the pain.

4. "New construction" does not mean "soundly constructed.

" High price does not mean high quality. In the bizarre world of new homes, "new" doesn't have the same meaning as say, a new car. A new home means only that no one has lived there yet -- and that's a plus and a minus.

"New" does not mean the house was soundly constructed. A quickly slapped-up tract house with the cheapest of cheap materials may be "new," but it could cause years of headaches.And just because you're spending a lot of money does not mean you're getting commensurate quality. A $300,000 house may be loaded with cheap windows, a lousy paint job and poor roofing -- if you don't pay attention, you might get a house that's really worth much less than you're paying... especially if you're stuck with repair bills and costly maintenance.

Some builders seem keenly aware that most of their customers have no clue when it comes to separating quality from shodding construction. Ray Redden, president of Redden Properties, an Atlanta, Georgia builder said in a recent issue of Builder magazine, "Most home buyer's preception of quality starts (and finishes) with how much moulding there is in the house." And sadly, there is a ring of truth to that insulting statement. The best solution to protect yourself from shoddy construction is to arm yourself with knowledge. While you can't become an expert in construction overnight, you can surround yourself with experts who won't be fooled by a shoddy house that's disguised with pretty moulding. More on this strategy later.

Buy a House Online

More and more home buyers are using Internet when searching for a home. According to the National Association of Realtor Profile of Home Buyers and Sellers, 77% of home buyers use the web as a resource to buy a house online and there are about half a million websites hawking dream homes.

When it comes to buying your house and finding the best deal on a mortgage loan, the Internet can be a huge help. Today, it is a common practice to find and buy a house online. All major real estate companies, and many smaller regional ones as well, provide their own web sites where potential home buyers can browse available homes at their leisure. These web sites allow home buyers to screen homes based on price, location, number of bedrooms, number of bathrooms and a myriad of other items.

Banks, credit unions and mortgage brokers also allow the potential buyer to get pre-approved for a mortgage. Pre-qualification on a mortgage means the potential buyer will know exactly where he or she stands and how much he or she can borrow before they start the search.

Armed with information like how much home you can afford, it is time to hit the Internet and find the home of your dreams. You can start with the web site of any major national real estate broker. You can either limit your home search to their properties, or you can use their web site as a starting point to search the Multi-Listing Service (MLS).

The internet allows the potential home buyer to limit their search to the amount they can afford. Searches can be further filtered by type of home, number of bedrooms, number of bathrooms, garage space, acreage and a host of other factors. Searches can also be limited to a city, town or ZIP code. The search criteria of real estate web sites is very broad, and this can make searching the internet for a home a real snap.

In addition to searching current homes, the web sites of real estate companies allow interested home buyers to sign up for email alerts. These alerts notify the prospective buyer when a new home comes on the market. You can be assured of being the first to know about a home that fits your specific needs.

In addition to the many web sites run by real estate companies, there are many web sites run by the various for sale by owner companies. More and more homeowners are choosing to forgo the real estate agent, and the real estate commission, in favor of a fixed price system that provides support but allows the homeowner to show and sell their own house. These for sale by owner web sites generally offer the same sort of search criteria as the web sites of the major national real estate firms. A for sale by owner situation can provide an excellent way to buy a home, and working directly with the seller can sometimes provide an excellent benefit.

The latest real estate trend is to buy a house online. No matter what part of the country you live in, or what type of home you are buying, the internet can help you quickly narrow your search and focus your times on the properties that are best suited to your lifestyle and budget. The internet allows you to browse for hours at your leisure, and then print a list of prime properties to investigate either on your own or with the help of your real estate professional.

By: www.buy-and-sell-house-fast.com

Buy House With Bad Credit

There is no doubt that buying a home is a big decision. A home is the most important, and most expensive, single item most people will purchase in their lifetimes, and getting the best deal on a home loan can save you thousands of dollars over the life of the loan.

If your credit is less than stellar, then find a house to buy can be even more of a challenge. While those whose credit is perfect will be likely to qualify for those eye popping low rates advertised by the banks, home buyers with bad credit will have few options and be subject to higher interest rates, higher down payment requirements and higher monthly payments. So, how do you buy a house with bad credit?

One of the most important steps to take if your credit is less than perfect is to get pre-qualified for a mortgage before you begin shopping for a home. While it is important for any home buyer to pre-qualify for a mortgage, it is even more important for those with bad credit. When you pre-qualify for a mortgage loan, you will know up front exactly how much you can borrow. This means that you can tailor your home search to only those properties in your price range. You will not waste time looking at properties that you cannot afford to purchase.

Getting a copy of your free credit report, and trying your best to clean up the negative information, is also an important step to take before you begin trying to find a home and a mortgage. While it is very difficult to remove legitimate negative information from a credit report, it is entirely possible that your credit report contains errors. A recent survey by a consumer rights organization revealed that 7 out of 10 credit reports reviewed contained at least one error. You can get help to repair your credit and improve on your credit score.

The prospective home buyer should be sure to request a copy of their credit report from all three major credit reporting agencies, TransUnion, Experian and Equifax. Under a new law amendment to 'Fair Credit Reporting Act', all consumers are entitled to get one copy of their credit report free each year. Check with the credit-reporting agency to see if you are entitled to one of these free reports. Once you have the reports in hand, be sure to review it carefully and immediately report any errors you find. Cleaning up any problems you find will help improve your credit score and help you get the best possible interest rate and terms on your home mortgage loan. For example, by merely increasing your credit score from 570 to above 620 will lower the interest rate by up to three-quarters of a percentage point!

You may decide to wait for six months to a year to see how your credit score shape up in order to obtain a better interest rate on your loan. However, depending upon the housing prices movement in your area, waiting for more than a year before buying a home may cost your spending 5% to 15% more than what it would cost you today! Therefore, you are advised to consider various factors, housing prices trend and credit score, to find the best time to buy your home.

Once your credit is as good as you can make it, now it is time to start shopping around for the best mortgage loan. While you may not qualify for the best rates, but mortgage loan rates can still vary from lender to lender. Be sure to shop around at local banks, credit unions, savings and loan associations and mortgage brokers. Be sure you understand all the terms and conditions, including any fees or extra costs.

There is no denying that buying a home with bad credit makes finding a mortgage loan more of a challenge. But bad credit is no reason to abandon your dreams of home ownership. Some advance planning and hard work will allow you to buy the home you need, even if your credit is less than perfect.

By: www.buy-and-sell-house-fast.com

Protecting Yourself From a Real Estate Bubble

As any stock investor can tell you, it is no fun to be in a bubble when it bursts. While there is still considerable debate about whether or not the recent run up in home prices represents a true bubble, it is certainly prudent for those in the real estate market, whether as homeowners, investors, or both, to take the necessary steps to protect themselves against a downturn in housing prices.

Avoid borrowing the home equity

First important strategy for avoiding the pain of a real estate bubble burst is to leave the equity in your home where it is. It can be tempting to tap the home equity to pay off credit card bills, put the kids through college, or even take that dream vacation. It is best, however, to allow the equity to do what it was designed to do � help you actually own your home.

Borrowing against the equity in a home could leave you in the uncomfortable and untenable position of owing more on the home than it is worth. Many lenders today will allow homeowners to borrow 100%, or even more, of the value of the home. If home prices tick down even a couple of percentage points, the borrower could easily find him or herself owing more than the current value of the home.

Focus on principal repayment

Closely related to the need to leave built up equity alone is to build up additional equity. The more equity you have built up in your home the more protection you will have in the event that housing prices stagnate or decline. Building equity through additional principal payments is the fastest and easiest way to put as much money in your home as possible.

While this repayment of principal is important for every home buyer, it is particularly essential for those people who succumbed to the wave of interest only and option ARM mortgages. Interest only mortgages can be particularly dangerous in a down market, and making advance payments on principal is the only way these mortgage holders have to protect themselves.

Abandon risky mortgage loan

Dumping those adjustable rate mortgages for the predictability of a fixed rate loan is another important way to protect yourself from the bursting of the housing bubble. It can be difficult to maintain good progress paying down a loan if the interest rate is constantly rising. As mortgage rate is expected to rise slowly, get a fixed rate loan (15- or 30- year loan) now and make sure you can afford the payments.

Think of it this way - there are few situations more terrible than facing rising monthly mortgage payments at the same time the value of the home is declining. If you hold an adjustable rate mortgage when interest rates are rising, you could find yourself in just such a situation. And since rising interest rates are likely to be one of the triggers that deflates the housing bubble, this possibility is all too real.

Commit larger home down payment

First time home buyers can be particularly at risk when there is a downturn in the housing market. That is because many of the mortgage loans being written today are being written with minimal down payments, or sometimes none at all. This means that these first time home buyers have no equity at all in their homes, and if housing prices decline they could end up owing more than the home is worth. That is why it is important for all first time home buyers to try to muster at least a 10% down payment on the home they buy. If first time buyer can't afford a large home down payment (see how to find money for your home down payment here) or a fixed-rate mortgage, the advice is don't buy and continue renting.

Long term investment

The last step, and this is quite important, is to take a step back from the view that real estate is always a great investment. While it is true that homes have been a stellar investment in the past few years, this is not always the case. Viewing real estate as just another investment, like the hot internet stocks of yesterday, can lead buyers to repeat their past mistakes.

The last tip for surviving a potential bursting of the housing bubble is to think of your home first and foremost as a place to live, not as an investment to retire on. If you think of your home as a long term commitment, you will be more likely to protect that investment by taking the other steps listed in this article, such as paying down principal, avoiding interest only and adjustable rate loans and leaving the equity in the home untapped.

In short, it is extremely difficult to time the real estate market. The bottom line for home buyers to protect themselves from any potential housing bubble is to get a fixed rate loan, stay away from tapping the home equity and enjoy living in your house for a long time.

By: www.buy-and-sell-house-fast.com