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Do An Assessment Of Your Home Purchase Plans.

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A lot of people view today's real estate market as a great opportunity to take advantage of falling home prices to finally purchase a home of their own. Is this the case?

Let's examine the two main factors that determine this decision. The first factor is, of course, the housing market itself. As we all know, housing prices have been falling recently, but we must keep in mind that these decreases are based on fairly inflated prices that were run up in the early part of the century because of loose credit policies. For many years, even the worst credit risks were able to buy a home because of the loose credit, and so this forced prices up.

So despite the fact that home prices have fallen more than 20% in some regions, they are still historically steep based on the prices of the late 1990's.

From 2000 until recently, home prices were increasing over 4% every quarter. There is a lot more downside if these increases are to be removed.

Waiting longer can be the best advice right now. But don't allow this time go to waste-it can be used to look at the other important factor in a home buying decision, the buyer's financial state.

If a buyer is interested in obtaining the best mortgage with the lowest rates and best terms, he has to be in the best financial condition. Borrowing conditions are going to get tighter before they get easier, so the best borrowers are the only ones who will obtain the mortgages.

-Reduce debt. Get your debt to income ratio down as low as you can since this is an important number for banks.

-Stabilize yourself in the job market. Not having a good job history is a big factor in bringing your credit rating down. Stick with your job for a year or two and then apply for a home loan.

-Bring your salary level up. Your current salary may not be enough to support a mortgage in addition to your other expenses. You can find out how much you can afford for a mortgage by talking to a mortgage broker, or using an online calculator. If you are up for a new position, put off your mortgage application until the higher salary is reflected in your paystub.

Save, save, save. Lenders look for a decent bank balance in addition to the amount required for a deposit, to demonstrate stability in case of problems.

-Get your credit in shape. There are many guides to credit repair techniques; take any steps you need to in order to increase your credit score.

-Consider your future. Set aside money for your children's education and your retirement. Life goes on while you are doing other things!

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