If you have purchased or sold a piece of real estate in the last 3 years then you should know that the real estate climate has changed drastically. It has changed so drastically that not one part of the market has been left untouched. Financing a home has changed, how you search for a house has changed, even where you get your money to buy a house has changed.
With all these changes, I thought it would be a good idea to present some of the most important lessons that you as a buyer or seller of residential real estate can take away from the last few years’ real estate market.
Don’t buy your home as an investment.
The old mantra from realtors, lenders, and homebuyers was that a homeowner’s home was an investment that they could use to borrow money from or eventually sell at a huge profit. This kind of thinking isn’t bad but somehow in the early 2000’s, this changed to “Your house is more of an investment than a home”. People bought based on a quick resell for a profit and got loans on the basis that they would only have them for a few years. This hurt the market when those same people were unable to get out of those bad loans.
Lesson #2 Your payment is more important than your equity.
The amount of payment that you must make each month on a mortgage is far more important than the equity you believe you have in a house. Why?? Because the equity is a floating number that can change on factors that have nothing to do with you like market fluctuation, area foreclosure rate, and area school test scores. These are things you cannot control and they affect your equity. However, your payment is something you do have a say in and it affects your real income and expenses. I would rather have a reasonable payment on a house with no equity than a house with huge equity with a ridiculous payment.
Lesson #3 Don’t let your banker plan your finances
Too many people in the past let a banker tell them how much they could afford in a house. Once many people heard how much they could afford, they looked for a house that was really outside of their income range. The logic was “He’s a banker, if he tells me I can afford this then I guess I can”. People were so excited with this newfound money that they went out and bought homes and furnishings that they never should have purchased. When you go to get a loan, figure out how much you can afford and tell your banker. Not the other way around. Plan your budget by yourself and be conservative. If you are not sure how to make a budget, then get help from someone who is not loaning you money.
While these lessons can be painful to some, they are the first steps in learning what to do to secure your financial future.
Until next week, Good luck and God Bless and remember… If you want to sell your house within 7 days regardless of if you have equity… check out our informative website at www.sellonterms.com for more information.