Times are tough, and the slow grinding “recovery” of the economy often seems more like wishful thinking than reality. Don’t give up hope! There are signs of life on the horizon. The housing market, one of the horsemen of the financial crisis, is creeping closer to stability.
Much of this is due to the record-low interest rates and extremes in housing affordability. It is the epitome of a buyer’s market, and many buyers are reaping the benefits. Much of this is due to foreclosures, offering great houses for a fraction of the cost. The bad news is that a short sale could take months, or even a year or more, before all of the interested parties agree and approve the offer. The good news is that if you have the time, you can find amazing deals.
Another positive sign is the increased scrutiny of borrowers and the tougher standards for mortgage eligibility. Gone are the days of low-doc and no-doc loans. These days even individuals with great credit ratings will find themselves jumping through the same hoops as everyone else. If you want to get a loan in this market, you will need to be prepared to provide any and all documentation they request, and continue to provide updated information right up until the closing is set.
Confused? Making it more difficult to get a mortgage can be, at best, an inconvenience, and at worst, a major roadblock to home ownership, but tightening lender standards is a significant step toward recovery. While tedious, tighter lending means that approved mortgage loans are smarter, stronger, and much more sustainable than the ones that fueled the housing collapse. The low rates will keep mortgage payments low well into the future of most mortgages, making them even more secure and more valuable to homeowners. A solid lending base and clearer loan regulation is setting the stage for lasting recovery in real estate, and the economy it helps to support.
Full recovery is still a long way off; it is no surprise that the cities that are experiencing the fastest recovery in the housing market are the cities with the lowest unemployment rates. However, when unemployment finally gives way to employment, the housing market will be ready to turn this slow grinding recovery into a solid foundation … with walls and a roof.
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