Good times for good credit in real estate
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by: jlee
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Word Count: 382
Good credit really comes in handy in real estate these days. A slower national property market in recent years has meant fewer buyers, and more incentives for those who can qualify for a mortgage. If you've got good credit, you can do more than just finance the home of your dreams - you can buy it at a lower price than ever before, and mortgage it for less.
This situation is the result of several trends . Most notably, there was the sub prime mortgage crunch at the end of the real estate boom, which saw millions of homeowners default on mortgages, and go to foreclosure. Homeowners ended up in this position because they had low credit scores, and couldn't easily find a mortgage - lenders who did take them on would only grant them high interest (sub prime) mortgages, with monthly payments that proved impossible to keep up with over time. At the high point of the boom this wasn't a problem - subprime borrowers could simply sell their homes for much more than what they paid, erase the debt, and make a profit. But this strategy lost its effectiveness when markets began to slow, and home prices fell or remained static.
The sub prime mortgage crunch was both a result and a cause of cooling national home markets. Slowing demand and lower home prices caused the market downturn and the initial mortgage crisis, and that caused the markets to slow even more.
Both trends left many fewer buyers in the market, but those who could afford to remain had a big advantage: they were paying less for homes, and at lower interest rates. Lenders were forced to tighten credit restrictions to prevent another wave of loan defaults, which meant fewer borrowers, but better deals for those who could qualify. These days homeowners are paying some of the lowest mortgage interest rates in recent history, thanks to the sub prime mortgage crunch.
Foreclosure and short sale investment opportunities are also on the rise nationwide, as a result of cooling markets - these sales provide even more opportunities for buyers with good credit.
If you're considering buying real estate, there's never been a better time to check your credit score and see what it can do for you in the market.
About the Author
Justin Lee is an experienced real estate market analyst, and top Montgomery County, Maryland real estate professional. His website includes a wide variety of tools for real estate agents, buyers, and sellers, including market information, and a comprehensive search tool for Montgomery County, Maryland MLS listings.
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