The question that I get asked most often from client is “Is it a good time to buy a house?” Well, the answer to this question almost always depends on who is asking and what his/her reasons for buying a home are. Often people fall into the traps of wanting to buy a home so badly that they overlook many of the dangers and potentially stressful things that could happen down the line.

Many of my short sale clients have made themselves “house poor” (as the Department of Housing and Urban Development calls it). This is something I often warn my clients about. Being “House Poor” means that “… by putting too much emphasis (and income) into your housing expense, you may be forced to cut other expenditures, whether it be for travel, entertainment or some more important needs, such as education expenses or retirement funding.”

By making inappropriate housing decisions, many have exposed themselves to a great deal of financial exposure. By pushing themselves to their financial limits, they find themselves unable to meet their mortgage payment obligations as that payment takes a higher percentage of their income. When funds get short, other loans and obligations (and credit ratings) can and will suffer.

Additionally by not completely understanding the economic state of the nation, often homebuyers ignore housing values. Economic downturns are often accompanied by, at the very least, stagnation in housing values. And, even though it sounds crazy in markets that have seen double-digit annual appreciation in recent years, occasionally housing values will decline (as they have in recent years). Worse than a situation where it is difficult to pay the mortgage is one where there is the prospect of losing a home–or trying to sell it in a distressed market.

However, for savvy buyers with steady incomes, good credit and supple savings – this is a great time to buy a home. Firstly, mortgage Interest Rates are at their lowest levels years, meaning lower payments and the ability to devote less income to housing expenses. However, buyers should be warned against buying more house than they need simply because they can afford the payment.

Because less people are getting qualified for loans, there is less competition. As the market softens, less buyers will be in the market, meaning that negotiating position will be enhanced–and, it is unlikely that buyers will have to pay thousands of dollars over the listing price in order to get the home they want. More negotiating power usually means lower prices and lower monthly payments.

All in all, it can be a good and a bad time to buy a home depending on who you are and your financial health.

For more information, please visit www.crestico.com.

If you’re in the market to buy a home, you know what I am talking about. If you’re in the market to buy a home and you don’t know what I’m talking about – keep reading! It is vital information!

On October 1, 2011, as part of POTUS’ attempt to repair the country’s housing finance system, Fannie Mae and Freddie Mac will be reducing the size of loans eligible for purchase by them, in other words – lowering the conforming loan limits. In high cost areas (like Los Angeles county) this means that they will only be purchasing loans no bigger than $625,000 (dropping it from $729,000).

What does this mean? Politically, it’s a move away from the government-reliant system we have in place today and a step closer to the privatization of the housing market. What does this mean for a homebuyer? Well, if you are looking to purchase a home with a loan in the $625,000 to $729,000 range – your loan will no longer be considered to be "conforming" and will now be "jumbo." Jumbo loans often have higher rates than conforming loans (which means you will pay more interest on this loan). The government is aiming to reduce the risk taken on by these government agencies, by reducing the amounts of the loans eligible for purchase. But for you potential homebuyers, (in this range) you’re potentially looking at bigger payments.

The next impact affecting homebuyers, is the impact on home prices. Although some argue that this reduction will drive up demand (thereby increasing prices) for buyers to buy before the limits drop, that effect will be very short-lived, and it does not take the stringent financing requirements that most lenders have in place today.

Another drawback for homebuyers is the related increase in costs and fees that the Federal Housing Administration will be charging homebuyers looking to use FHA financing (meaning that they want to buy a home with a 3.5% down-payment). It sounds like looking to limit the taxpayers’ risks is also going to cost the taxpayers lots more money.