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Wednesday, January 28, 2009

Tips For Homebuyers in 2009

Tips for homebuyers in 2009:

1. Cash is the new king:
If you can spare the cash, it has a heck of a lot more buying clout now. In the past, people were asked to seek out more liquid investments, for their cash on hand and grab an easy-to-get low-interest mortgage. Now, with the equity markets depressed at the same time that mortgage loans are hard to find, the tables have turned. Those wielding ready cash in a recession are always ahead of the game.

2. Negotiate extras ... and more extras:
While sellers continue to offer throw-ins such as built-in appliances, flat-screen TVs and even cars, the best throw-ins are always the ones that take monetary form. Think of having seller paid closing costs, a year's worth of paid property taxes, repair credits and paid homeowners association dues, to name only a few.

3. Start a down payment fund The goal should be 20 percent:
Set monthly saving goals. Shore up the family budget. Work an extra job if you must. The pain will precede a gain: lower house payments and higher equity in the future.

4. Determine your own home buying budget:
Do this before you start talking with lenders. They will tell you what you qualify for, but only you can determine what you can really afford. Be realistic and work in a buffer for contingencies and negative life events.

5. Clean up your credit score:
You've heard this one before. But now it's more important than ever if you hope to get home financing in '09. Correct reporting-agency errors that may be dragging down your score. Pay your bills on time. Pay down active credit cards, but don't close out paid-off accounts.

6. Research equals savings:
Don't hesitate to do your own research. Go online and scour newspapers and other local sources looking for housing inventory backlogs, the average for-sale time that homes are on the market and average selling prices. Also, be wary of the number of area foreclosures and major-employer layoffs. You'll get a better sense of how much negotiating clout you'll really have and which way the market is moving. Information is power -- in your case, purchasing power.

7. Don't overlook neighborhood issues:
If and when you do qualify for a mortgage, don't overlook these important issues in your exuberance: quality of schools, traffic noise, upcoming zoning issues, neighborhood stability, home turnover, crime levels and the presence of any sex offenders.

8. Watch for foreclosed-property inventory to loosen:
Banks soon will be under greater pressure to cut their losses on property they own through foreclosure and to increase revenues. With a smaller percentage of distressed homes selling at auction, banks are loaded up with more of these nonperforming assets. In major markets, more agents are specializing in prying loose REOs -- real estate owned by banks. Again, cash on hand talks loudest.

9. Look for other looming opportunities:
Can't get a loan? The financial markets should begin to untangle at least a little bit in 2009. The newly Fed-fortified banks will, or at least should, start moving that money. They are banks, after all. But don't expect a return to zero down payments.

Source: Bankrate.com