Tiered Real Estate Blog – Reality in Realty

There are millions of Americans who are short selling (selling their home for less than they owe) their homes or losing them to foreclosure.  Frequently we are asked two questions: Will anyone rent to me? and Will I ever get to buy a home again?  The answer to both of those questions is yes!

First, the rental market is thriving.  The reason is because when someone leaves their house due to short sale or foreclosure (or giving it back to the bank), they need a place to live and no bank is going to give a loan immediately after losing their current home.  So they need to rent.  Anyone who rents has to understand that if a perspective renter had good credit and a substantial amount of money to put down, they wouldn’t be a renter!  They would take advantage of the good mortgage rates and cheap homes and buy!  While that isn’t always the case (there are instances where it makes more sense for someone to rent than to buy, like constantly relocating for work) it is an overwhelming majority of the time.  Armed with that knowledge, landlords understand that most people who are going to apply to rent have bad credit and everyone needs a place to live.  Most landlords will certainly consider (and most will rent to) people who have lost their homes.

What about buying?  Before the current market conditions took hold, bad financial items on your credit (like foreclosures and bankruptcies) would make someone largely unable to buy a home for 7-10 years.  However, it has become so prevalent today that it isn’t financially reasonable to assume that banks will (or can) wait that long.  Their is talk that 10 million homes could be sold either through foreclosure or short sale (and that doesn’t include the number of bankruptcies that are out there).  If banks told 10 million families that they couldn’t buy a home for 7-10 years, what would that do to their bottom lines?  There are too many people who can make too much money for the banks for the banks to simply tell them all ‘no’.  What we expect to see is that banks will make people sit on the sidelines for a couple of years to prove that they have their finances in order.  Then when they apply for a loan, they can show the bank that they are in control of their money and can truly afford a modest home and banks are going to accept those people.

If for some reason the banks decide that they are not, it can be expected that the government will step in and expand the FHA program even further than it already is so that they can back loans to make sure that the money starts flowing in the economy.

The bottom line is that 10 million families have too much potential profit for banks to pass on.  If you lose your home or short sell your home, done worry.  Get your financial house in order and then in a couple of a years you should be able to get back into home ownership.

If you are struggling, need to sell or rent or if you are the person looking to buy, let one of the great agents at Tiered Real Estate help you!