William C. Dudley, President of the Federal Reserve Bank of New York, recently offered some advice on the subject of formation of asset bubbles in the economy and what central banks can do to deal with it. The recent financial crisis highlighted how poor regulation made the financial system vulnerable and led to bubble formation. [Read more…]
California Housing Market Shows Upswing
Figures collated in February show a small but significant improvement in the housing market in Southern California. As compared to February 2009, prices have risen by about 10%. The positive turn is not limited to sale prices alone. Fewer foreclosures were recorded last month, showing that the local homeowners are in better financial situation than they were last year. [Read more…]
If You’re Facing Foreclosure Learn How to Use a Mortgage Audit to Reduce Debt
Borrowers facing foreclosure because of default on payments can use mortgage audit as a means of getting their mortgage terms softened. However, there are drastically differing views on whether this tactic will actually work. [Read more…]
New Bubbles in the Economy Could Be Forming with Cheap Money
With interest rates close to their historical lows, some economists believe that new bubbles might be forming in some areas of the economy. If this is true, the Fed could be solving the current crisis but giving rise to a similar problem in future. [Read more…]
Positive Sign for Consumer Spending as Home Equity Loans Set to Rise
Home equity loans, which accounted for almost 2% of all consumer spending in 2001-2005 are all set to rise again. This could be good news for the overall economy as it will give a boost to consumer spending, which further triggers business activity and GDP growth. Home equity lending activity had seen a dip during 2008 and 2009 as house prices fell continuously. [Read more…]
Keep This in Mind before You Strike a Real Estate Deal
Buying a house requires serious thought and planning. It is a major investment and it could significantly stretch your finance and affect your lifestyle. That is why striking the right deal is critical. Here are some important aspects you must consider before you come to your decision.
Make a Commitment
Firstly, make sure you are likely to live in the same area for at least a period of 5 years if you intend to buy a house there. Buying and selling are costly affairs and the housing market is volatile, with prices changing frequently. As with any investment, it is wise to consider a decent lock-in period so that you can get optimum returns. By buying and selling a house too often, you would end up paying a huge amount as transaction costs, including brokerage, mortgage closing, processing a new mortgage etc.
Maintain Good Credit History
A good credit record will help you get attractive deals on mortgages and keep you in a strong bargaining position when you are negotiating your loan terms and even the house price. When shopping for the best mortgage, look for lenders who are willing to offer lower down payments. If your past record is good, you may even get a loan with a down payment of just 3% of the purchase price. Pre-approval is another good way to strengthen your bargaining position and make the process of buying the house faster.
Avoid a Deal that Puts Your Finances in Severe Stress
Look at houses that have affordable price tags. There are many online calculators that can help you assess the ideal investment amount for you based on your income and current liabilities. Get a professional to tell you whether the house you like is worth the price quoted by the seller. He can also help you make the right bid.
Understand the Trend
Review the recent sales in the area and understand the prevailing trend and pricing before you make your bid. A look at the previous three month period sales in that location should usually give you a good idea of what a competitive offer would be for a particular property. Start with about 5% lower than the recent sale prices for comparable properties.
With some planning and research on recent sales, and understanding your financial situation, you can find the right house at the best possible price.
Krugman Blames Lack of Regulations for Financial Crisis
Paul Krugman, the Nobel Prize winning economist, has blamed lax regulation for the financial crisis. He said that unless there is an agency that has the sole responsibility of protecting consumers, we will not be immune from similar crises in future. [Read more…]
Rise in Mortgage Applications Hints at Housing Market Recovery
The Mortgage Bankers Association (MBA) has reported a rise in mortgage applications in the US for the second straight week. Real estate analysts believe this could be a sign that the housing market demand is beginning to recover from the lows that it has hit since the subprime crisis. [Read more…]
Trouble Brewing in Commercial Real Estate
As the economy continues on its gradual path to recovery, signs of another major crisis are emerging – this time in the commercial real estate sector. If the problems in the sector are not dealt with quickly and ruthlessly, they have the potential to throw the recovery off track and plunge the economy back into recession. [Read more…]
Is This the Right Time to Buy a House?
Property prices have been falling for a long time now and interest rates too are at extremely low levels. In addition, the government is offering a one time tax incentive to home buyers. Is this historically the best time to buy a house? Many industry insiders believe so. [Read more…]
