Questions to Ask Before Buying A Home

Questions to Ask Before Buying A Home

The Pros & Cons of Mortgage Debt

Basics

Houses are generally the most expensive purchase most people will make. In order to swing it, most people take out a mortgage. There are a few different types to consider.

FHA loans: For first-time homebuyers with little savings, the Federal Housing Administration, or FHA, has a loan guarantee program that allows first-time homebuyers to buy a home with as little as 3% down. Borrowers do have to pay extra to have the loan guaranteed by the FHA.

VA loans: Similarly, the Veterans Administration (VA) guarantees loans to service members and eligible surviving spouses. Loans backed by the VA might not require a down payment if the sales price is equal to or less than the appraised value. No private mortgage insurance is required, as the VA insures the loan. Even if you have less-than-perfect credit, you can get a loan at competitive interest rates.

Key Sectors to Watch This Late in the Market Cycle

At A Glance: Job Growth, Hourly Earnings & Housing Indicators

U.S. Home Price Appreciation Cooling Off...

Bullish Omen: New-Home Sales Soar!

Chart of The Day: Home Prices Surge +20% in 5 Months...

For some perspective on the all-important US real estate market, today's chart illustrates the inflation-adjusted median price of a single-family home in the United States over the past 42 years.

Not only did housing prices increase at a rapid rate from 1991 to 2005, the rate at which housing prices increased -- increased. All those gains were given back during the following 6.5 years. 

Over the past five months, however, the median price of a single-family home has surged by over 20% -- the biggest five-month gain on record (the data goes back to 1968).

The sharp downward trend that began in mid-2005 is now over.

Chart & Commentary Courtesy of Chart of the Day

Housing Starts & Building Permits Continue to Recover...

Bullish Omens: Consumer Confidence and Home Prices Reach 5-Year Highs...

Home Prices Up Over +10% In The Past 12 Months...

The Housing Market is 52% of The Way Back to Normal...

The Housing Market Has Come a Long Way Since December 2011...

...and the housing sector has more than doubled...


 

Bullish Omen!: Housing Starts On The Upswing...

Housing Starts Up, But Manufacturing Down...

Existing Home Sales Rise in April...

Mortgage Rates Rising: A Sign That The Economy & The Housing Market Are Improving...

Dependency Epidemic: 67 Million Americans Now Get Food Stamps, Housing Subsidies or Other Federal Aid...

Home Sales Cancellations Overwhelming The Housing Recovery...

This chart from Nomura shows the percentage of real estate pros who are experiencing sales cancellations. As 2011 went on, the number of people having an issue with cancellations due to mortgage obtainment started rising!

From Nomura:

"In his testimony before Congress, Fed Chairman Ben Bernanke continued to show his concern that clogged housing finance remains a sizable drag on the economy. Indeed, despite lower mortgage rates, the share of real estate practitioners who experienced cancellation due to inability to obtain mortgage loans in January rose to 8.0% from the recent low of 1.0%. In Figure 1, the category “cancellation due to other problems” comprises many issues, probably also including cancellation because of mortgage problems. Many potential home buyers can’t take advantage of favorable borrowing conditions due to difficulty in getting mortgage loans."