Mortgage Rate News

Apparently, there are still some folks out there offering seminars on how to get rich by flipping homes. Here is a reader question:

I am thinking of investing in real estate. A buddy of mine is telling me that I should get into house flipping, and he can help me get started if I attend a seminar. Is this a good way to get into real estate?

While it is true that now can be a good time to buy a home, it is not the best time to buy for flipping purposes. Home values are still struggling, and if you buy a home now to turnaround and sell again, you are not likely to make any money.

Right now, when you buy a home and get into a home mortgage loan, it is more of a long term deal. The home will likely increase in value, but it will probably take seven to ten years to get any real appreciation out of it.

Buy a home for investment purposes

If you have the credit and the down payment for it, you could get into real estate investing by buying an investment property. This is something that will offer you a regular monthly return (this isn’t house flipping). If you can buy a home that you can rent out to cover the home mortgage loan payments, that might be a good idea. There are some good deals on foreclosures right now, and that could be one way to create another income stream.

But beware of house flipping. With the real estate market as it is now, you are not likely to make a quick profit. Now is the time to think of investing in real estate as a long term investment.

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Janet Yellen, the president of the San Francisco Federal Reserve, has said that housing markets have “hit the skids” since the days of easy credit and booming home sales. Finally, years of easy money and easy mortgage financing requirements have caught up with the markets. Housing relief bills and other government measures may not be enough. Calculated Risk reports on some of Yellen’s comments about housing markets:

Since then, housing markets have “hit the skids.” In inflation-adjusted terms, residential construction fell by 13 percent in 2006 and by 14 percent in the first half of last year. Of course, once the financial shock hit last summer, things got even worse, with real residential construction dropping at a 24 percent rate on average since then. And, indicators of conditions in housing markets are pointing lower for the future. Housing starts and permits as well as sales are trending down, and inventories of unsold homes remain at very high levels. These inventories will need to be worked off before construction can begin to rebound.

Indeed, with housing markets showing increased inventory, it is no surprise that home prices are down quite a bit as sellers try to do what they can to sell their homes. Also contributing to the lower home prices overall are the foreclosures. These are sold at low prices so that mortgage lenders do not have to sit on them.

If you are savvy with your decisions, and if you have the credit score and down payment to make it possible, you can probably not only get a good deal when you buy a home, but you could also get a good deal on a home mortgage loan. Now might be a good time to invest in real estate.

Tags: housing markets, home prices, home mortgage loan, mortgage loan blog,
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With foreclosures on the rise across the country, plenty of people are starting to think that maybe these homes make good real estate opportunities. But how does one go about finding these foreclosures, or real estate owned properties? According to Inman News, they are starting to go on foreclosure tours:

“The response from consumers is tremendous. We have first-time home buyers, people who want to move up, and we have investors — it’s pretty much across the board right now,” she said.

Foreclosure tours are springing up across the country, offering to take interested parties on tours of properties that banks have repossessed. This allows a wide variety of people to see what’s there — and take advantage of real estate opportunities.

Some of those operating tours offer them for free, while others charge a fee ranging from $50 to $200 for a day full of properties that have been foreclosed on. Most tour operators keep paperwork with them so that buyers can fill out contracts on the spot. Some even bring mortgage brokers and lenders along to approve funding.

Foreclosure tours can expose buyers to real estate opportunities

Home prices in many real estate markets are lower than they have been for years. And lenders want to get rid of these real estate owned (REO) properties if they can, recouping some of their foreclosure-related losses. This means that whether buyers are looking for an investment, or just for a place to live, they can find some great bargains.

But it important to be careful when buying foreclosures, whether you find them on a tour or elsewhere. You want to check the neighborhood. In some real estate markets, the homes are unlikely to ever gain significantly in value. Carefully choose REO properties in areas that have a strong likelihood of recovery.

Tags: foreclosure tours, home mortgage trends, home mortgage loan, mortgage loan blog,
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