Home shoppers across the nation have even a larger variety of discount real estate options to choose from real estate research firm Trulia.com recently reported that 25 percent of all of the nation's home sellers have slashed their listing prices in July. This trend marked the fourth consecutive month of real estate discounting. According to the recent findings produced by analyzing data in America's 50 largest cities, the average home price reduction was at approximately 10 percent with a total estimated price reduction of $30.1 billion.
According to Trulia CEO Pete Flint, one of the biggest obstacles in the floundering home market is the lack of qualified borrowers. Although millions of people have applied for new mortgages and refinancing opportunities, less of them are qualifying for home loans.
Mortgage Applications and Credit
Thanks to the shift in the economy, lenders are implementing new restrictions that borrowers must conquer en force. Recently, the Fair Isaac Corporation, the brain child behind the nation's FICO credit rating system released statistics showing that about 43.4 million people are now considered to be high-risk borrowers.
Prior to the shift in the real estate industry, consumers with a credit score of 580 were considered to be good enough to qualify for loans backed by Federal Housing Authority. However, the government agency raised the minimum credit score to 620. That trend is also apparent in the private mortgage-lending sector. Consumers now need to have excellent credit scores closer to the 700 ranges to get the best mortgage rates available.
The relationship between credit scores and mortgage rates is very simple; only those with the highest credit scores will qualify for the lowest mortgage rates. As of August 2010, home loan interest rates have been at historic lows. For more than eight consecutive weeks, mortgage rates have earned that title. As of August 19, 2010, Fannie Mae was offering a 4.42 percent rate to approved applicants.
What Types of Homes are Discounted
Word on the street is that the national economy is 70 percent based on consumer spending, and currently home discount shopping is fueling the trend. Foreclosed home specialist, RealtyTrac.com recently that reported that 31 percent of all homes purchased in the first quarter of 2010 were foreclosed properties. Those homes were sold for 27 percent less than current market value. Across the board, home sellers are in the position of having to discount their offerings to compete with the assortment of foreclosed properties.
At this stage of the game, home shoppers can find nearly every type of property at a substantial discount. CNN Money recently reported that there are a large assortment of turnkey ready condos priced below peak market values by 25 percent. Or, for those with panache for the pricier side of life can also score mega-mansions featuring slashed price tags.
While mega mansion bargains are everywhere, house shoppers can find the widest selection in markets hardest hit by the real estate retraction. According to Forbes.com, there are two types of cities flush with discounted luxury properties; "bubble markets" including Los Angles, Las Vegas and many cities in Florida and ‘weakened’ luxury markets such as Crested Butte, Colorado and pricey Alpine N.J. Plus those with stars in their eyes can also scoop up amazing property deals from celebrities such as Christie Brinkley and Mel Gibson.
Avoid Falling in Love with a Home Price
Despite the current obstacles present in the real estate market, homes are being bought and sold on a daily basis. If you are financially set to enter the real estate market, the timing could not be better because of all the bargains and cheap money (courtesy of low interest rates) to be had. However consumers are advised not to shop by home price alone.
If you are ready to buy your part of the American dream then making sure that you consider other aspects instead of home price is imperative. Consumers should consider factors such as:
- Location in relation to commute time
- Additional expenses associated with the home purchase
- Long-term nesting potential
- Quality of Life
- School districts
While the real estate landscape is officially a "buyers market," consumers are in the position to score amazing bargains throughout the country. Mortgage Marvel can help you find the lowest mortgage rates available, in real time and without invading your privacy.
