A Cooling Real Estate Market and Investing in Pre-foreclosures - Ratinah

Real Estate Market and Investing - 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 bring their business down.

A Cooling Real Estate Market and Investing in Pre-foreclosures - Ratinah

A Cooling Real Estate Market and Investing in Pre-foreclosures - Ratinah

Many lenders have turned to mortgage products designed to lower monthly loan payments and to help borrowers qualify more easily for larger loan amounts, while others require less documentation during the approval process. These loans do make it easier for some people to get a mortgage, but they can also increase the chance that some borrowers may end up in foreclosure. For real estate investors or homebuyers, these market conditions are a window of opportunity

As the rate of appreciation in the monetary value of housing slows, more mortgages default. Foreclosure notices have edged up in recent months, providing another sign of cooling in real estate markets across the U.S. For example in San Diego County, CA. Banks and other lenders sent 1,266 default letters to borrowers in the third quarter, a notice giving homeowners 90 days to make payments before moving toward a foreclosure auction.

At the height of the real estate boom, double-digit increases in home equity meant customers could withdraw money from rising home equity to enjoy a lifestyle they really couldn't afford. Flush with the ability to take advantage of home equity loans, homeowners have withdrawn cash to buy new cars, furniture, vacations and other luxuries. Another boost to their lifestyle is provided when homeowners refinance using adjustable mortgage loans that cut their monthly payments.

But now conditions are changing, in many areas of the country real estate price levels are flat and not even rising in some real estate markets. With little or no increase in home equity, or even a loss of equity, homeowners can find themselves in a difficult position.

Additional forces are also impacting the housing market: The new federal law on credit card payments has shifted to increasing the minimum payments required for credit card debt. For many, that payout will now be double what it was before. And, as energy prices and healthcare costs continue to climb to new all-time highs. More and more people are in a financial situation where the money spent exceeds the money earned.

For first-time real estate investors or seasoned veterans, current market conditions are a window of opportunity for those shopping for real estate properties before foreclosure. More and more homeowners have withdrawn all of their equity (sometimes as much as 110% of their home's value.) and now the value of the home has dropped and they're upside down - where they owe more than they could sell the home. 

Stuck 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 solutions that offer homeowners by default a way to escape their mortgage payments. and for investors a way to secure property in the process.

That's A Cooling Real Estate Market and Investing in Pre-foreclosures - Ratinah


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