The Foreclosure Market: Invest In Real Estate Now!
Is The Foreclosure Market Bad For Everyone?
Thanks to the sub-prime mortgage bust, the rate of foreclosures is at an all-time high. Millions of individuals who were provided sub-prime loans have begun to default on their mortgages as the interest rates move from fixed to variable or as the principle balance is added to the monthly payments (for interest-only mortgages). Uneducated homeowners have found themselves stuck with mounting monthly payments that they are unable to afford as the economy sinks into a recession.
Where's the silver lining? The situation has created a new opportunity for individuals seeking to capitalize on falling property values in response to the flooded foreclosure market.
The Government Bail-Out
In response to the mortgage credit crisis, the government is backing troubled financial institutions and offering incentives for buyers to purchase homes that are being foreclosed, so that they do not sit on the market for extended periods of time and negatively affect the lenders that hold the mortgages.
Opportunistic real estate investors were already eager to capitalize on the flood of foreclosed properties, and government incentives have made the choice almost too easy to make.
Easy To Buy, Difficult To Finance
Thanks to the abundance of properties on the market, it is easy enough to find a property and pay bottom-dollar for it. Thanks to the sub-prime mortgage mess, however, it may be significantly more difficult to obtain financing.
Buyers and investors need to be prepared to provide sizeable down payments (instead of seeking loans that require no money down or low money down) and agree to higher interest rates, depending on the level of risk incurred by the lending institution.
This is not to say that creative financing is not possible, but it does require significantly more creativity at this point of the mortgage loan cycle.
The Real Estate Investor's Silver Spoon
While the sub-prime mortgage mess is catastrophic for delinquent homeowners and their associated lending institutions, it gives real estate investors the chance to realize significant windfall profits if they are willing and able to take the risk.
Economic cycles are inevitable; those who can handle the downturns of this foreclosure market may benefit at the peak of the next cycle if they seize opportunity and buy now!