To Buy, Sell or Hold in an Unstable Market
Family and Consumer Sciences Agent
When President Obama signed the housing recovery plan in February 2009, many expected home buying and selling to pick up and foreclosures to stop. Even with the $8000 incentive for first time homebuyers, sales are still at a snail's pace. According to the Florida Association of Realtors, the national average price for an existing home is around $183, 300 and in Florida the average is $144, 400. Sellers are apprehensively putting up for sale signs. Those without a major reason to sell are holding or staying put, instead focusing on upkeep and paying that monthly mortgage. On the other hand, prospective buyers with good credit are gleefully hitting the house hunting trail.
Should you consider buying? This is a great time to buy. Interest rates are low and there is plenty of inventory from foreclosing homes to new construction. However, buyers must meet tough standards to qualify for mortgages. Lender look for borrowers with:
a steady source of income
proof that they can afford to pay the mortgage
good credit with scores in the 700’s
proof that you are a responsible borrower
• a down payment - on conventional loans that is between 5 to 10 percent of the selling price
Before you buy, educate yourself on the process. Dr. Hyun-Jeong Lee of UF/IFAS with the help of county faculty developed an extensive curriculum on the home buying process and your county Family and Consumer Sciences agent will be glad to share this valuable information with you. Be realistic on how much you can afford (subprime lenders did not care about this)and take time to understand your loan. Get pre-qualified, this gives you additional bargaining power. Be sure to understand insurance costs and have enough insurance to rebuild your home in case disaster occurs. Many communities and financial institutions have first-time homebuyer programs, find out what is available in your area.
Should you consider selling? Selling in this market may bring agony. If you must sell, price the home right. Overpricing will not move your sale and under pricing when you need the money is not an option either. Spruce up your house, clear the clutter. If you decide to get a home equity line of credit for major repairs, make sure you get the money back during the sale. Offer incentives such as paying the closing costs, this might nudge the buyer to the dotted line.
Holding on or staying put? Stay on top of repairs and maintenance. Get everything in your home in working order, renovate, replace and simply update. Get an energy audit from your utility company and improve energy efficiency. Review insurance after any upgrades and make sure you are well covered. Refinance at a lower interest rate. The current rates are hovering around 5%, therefore, if you have a higher interest rate and have good credit, consider refinancing to save some money.
In this housing market you have to play your cards right, one wrong move and it could cost you in the long run. Evaluate your situation and get information to make the best decision. If necessary, seek professional help.