Good vs Bad in the Real Estate Market

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Real estate has had several changes in the last couple of years.  Are those changes for the better or worse?

In most cases, those changes have been for the better.  Despite the tighten of mortgage qualification for getting a loan, a homeowner can rest assure that they can afford the home that they have chosen.   In other words, the lender is ensuring that the income to debt ratio is not dispropositioned to what you can afford to pay.  In the past, only the items on your credit report were considered when purchasing a home not the part of your income you use to run the home ie utilities, grocery, etc.  Now, with the crack down all of that information is considered.

Another way that the changes in real estate has improved real estate is that the value will never again get so over-inflated that individuals can not own a home.  In recent years in some states the only way an individual could own a home was to have an interest only loan.  Those loans are not the best choice if you do not know how they work.  Those loans have negative amortization.  With negative amortization, the homeowner will be forced to make a balloon payment to catch up the prinicipal payment some time in the life of the loan. 

Another important change that this change in real estate has brought is education of the consumer.  Never before has there a need for a revolution to educate the consumer on mortgages, real estate, and even insurance.  This has always been needed, but now more professional are using it.  It has been a  long time practice of mine to include that because an educated consumer can make an educated decision about a purchase that may be the largest one that they make in his or her life time.  It is our responsibility as professionals to empower the consumer with knowledge and not keep things behind closed door.   Thinking about the financial health of my clients have not only made them my clients, but my friends and lifetime clients. 

Lastly, all in all the negative of this time far outweigh the bad, but I wanted to reflect on the good.    Before you take out a loan review your credit, learn about the market, ask questions, and above all read what you are signing.

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