A Cooling Real Estate Market and Investing in Pre-foreclosures

A Cooling Real Estate Market and Investing in Pre-foreclosures

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With the housing market cooling and demand for mortgage loans shrinking,banks and other lenders are turning to nontraditional and sometimes riskier mortgages to bring in additional business and make up their dropped off business.Many lenders have turned to mortgage products designed to lower monthly loan payments and to help borrowers qualify more readily for larger loan amounts,while others require little in the way of documentation during the approval process. These loans do make it easier for some people to get mortgages,but they also can raise the possibility that some borrowers may end up in foreclosure. For the real estate investor or home buyer these market conditions represent a window of opportunityAs housing monetary value appreciation rates slow,more mortgages going into default. Foreclosure notices has edged up in recent months,providing yet Another sign of a cool down in the real estate market across the U.S. For example in San Diego County,CA. Banks and other lenders sent 1,266 letters of default to borrowers in the third quarter,a notice that gives homeowners 90 days to become current on payments before moving towards a foreclosure auction.  -!

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Additional forces are also having an impact on the housing market: New federal laws regarding credit card payments have passed to an increase in the minimum payment mandatory on credit card debt. For many people that payment will now be twice what it has been in the past. And,as energy prices and health care costs continue to march upwards to new all-time highs. Growing numbers of people are in financial situations where moines spent are exceeding monies earned.   -!

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For the first-time real estate investor or seasoned veteran,the current market conditions are a window of opportunity for those shopping to buy real estate property just before foreclosure. A growing number of homeowners have withdrawen all their equity (sometimes as much as 110% of their home’s value.) and now house values have turned down and they are upside down -where they owe more than they can sell the house for. Trapped in a situation where they can’t pay their debts and they can’t find a buyer for their home,real estate investors who understand the default process can offer a solution that offers the homeowner in default a way to escape from their mortgage payments and for the investor a way to secure a property in the process.  -!

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