Buying a Home? Read these Essential Tips on Avoiding Foreclosure
Many people across the nation are still at a loss for words when it comes to the number of foreclosures that are backlogged or already on the market. Despite the shock, some states have started to show some positive signs that indicate small progress. The Mortgage Bankers Association recently reported that the number of homes undergoing foreclosure and delinquent mortgages is down to 12.31% from 13.6%. These numbers are indicative of progress in the real estate arena. However, it is still important to look back and see what led to these increased foreclosures to prevent a repeat in the future.
One huge cause of the real estate market dilemma can be directly linked to lender mishandlings. Instead of insuring homebuyers had adequate income to support their mortgages, many lenders allowed those with little likelihood of success to make home purchases. Not only do lenders need to be more accountable for making sure borrowers can pay their mortgages, but buyers can take steps to help prevent foreclosure in the future as well.
What can you do as a buyer?
First and foremost it is essential that you make sure your income is more than adequate to support a mortgage payment. Creating a budget and determining your expenses should be part of the home buying process. To be extremely cautious, determine if you can still make your mortgage payment if one of the primary bread winners loses his or her job; this will help in making sure your mortgage payment is within your means. Second, make sure to thoroughly read the lender terms and conditions associated with your mortgage. What is your interest rate? Is this rate stable or can it fluctuates? How much will your new home cost when you take into consideration the interest rate? Understanding the lending terms and conditions can go a long way in helping you prevent foreclosure in the future.
These helpful tips are great not only for those looking to purchase homes now in the current buyers’ market with low interest rates and home prices, but also for all future home purchases. Make sure you can afford a home before you buy it and do your part in understanding the documents provided to you by your lender.