Category: Blog

We all remember how things went during the 2008 financial crisis, and while those who lost their jobs in the financial markets tried to laugh it off, we all knew how much people have suffered because of this. Many have lost their homes, their living, and some even lost everything but the shirt on their back. And lately, with reports of the private equity firms doing similar things as the banks that caused the 2008 crisis are popping up, we can’t help but think if it’s all happening again. Though is there any truth to this? Not about the private equity firms, we all know that they are in it for the money, but the 2008 crisis happening again.

Fortunately enough, though the private equity firms are not subject to the new rules put on banks, they also do not have the same power as banks to sell these junk mortgage bonds as investments to the public. Though, the market crash was tied in closely to the property market, it was actually the huge amount of leverage, money borrowed to purchase investments, used to buy the junk mortgage bonds, that caused the whole thing to collapse. So rest assured that things are not going to become as bad as what happened almost a decade ago. Carpet cleaning is a boring chore that most people do themselves, but one car hire a carpet cleaner to take care of this job.

How BAD could it get ?

While another crash is unlikely through this scenario, there is still the problem with private equity firms not being subject to the same rules as the banks.  Though new rules are set up for them to ease up on the rates when a mortgaged home owner fails to pay for legitimate reasons, these only apply for newly purchased mortgage bonds, and there is more than a thousands of these bonds out there right now unaffected by this.

This affects good number home owners with mortgages and people who rent, as a lot of mortgages and rental properties were bought up by these private equity firms. When banks were the ones collecting on the mortgage, they were required by law to be more lenient when the situation of the home owner is valid, but private equity firms are not subject to these rules, at least the ones holding on to the junk bonds we talked about. This can lead to a number of foreclosures that would affect, though ever so slightly, the property market. Not to mention the whole problem with the people side of things.

And when it comes to rental, unlike having a landlord you can talk to, these equity firms are far away and almost impossible to negotiate with. So if you are late on rent, you might get the boot, unable to negotiate a deal or leniency like with landlords and banks.

Not to worry though, as officials have taken notice of this and have already made steps to even things out for all of us. And as I stated earlier, if there is another financial crisis, it won’t be because of the housing market.

There are factors you need to look at before you buy a home, and for developers and investors, you need to read this as well as you will need to know all of these in order to really make your investments yield good results.

Many would like to own their own home, it is the American dream. But when is it time for you to buy a home? Are you really prepared for such a commitment? A lot of people do not realize this, but it is essential to start with renting homes when you are young. After graduating, you get your first job, and while your first job is always exciting, there is a good chance that you will one day be leaving the company for better opportunities elsewhere. These opportunities could range from being in the same city to a different state, which home ownership could really limit you from leaving. But if you are already at a stage where you do not need to worry much about this, like being able to afford a second home and renting out the old one, or having enough money to uproot your life and starting a new one in a new place, then good for you.

Remember the LCP rule!

Location

You have to consider a lot of things when buying a home, and this will vary if you are single or married and have kids, such as the accessibility of public transportation, the security of the area, how family friendly it is, schools, shops, and other things you might need or want to have easy access to in your life. But the main reason for you to do this is to be able to know if it is a good investment, the location can determine what the price of your hose will be in the future, how easy it is to rent or sell if and when you want to, and how likely it will remain in good condition (Natural disasters).

Condition 

Newly build or an existing house, you will need to have a good inspector, as they will determine the quality and condition of the house you are prospectively buying. The idea is simple enough to understand, you don’t want to buy a crappy new house nor a dilapidated old one. Both of these are obviously bad investments that will just drain the money out from your wallet.

Price

Never mind the interest rates or the mortgage, if you are making a good living and have a good credit score you wouldn’t really need to worry about that much. What matters is if it is priced correctly, while of course you have to take account the developer, owner, and realtor making a bit of money, after assessing the two things previous to this, you can pretty much calculate how much the house should cost. You do not want to have a mortgage higher than the value of your home, which will definitely lead to your financial ruin.

So in conclusion, if you want to buy a home just remember these three things: 

• A good location for security, convenience, and investment.
• Get an inspector to see if the home is built well, whether or not it is a newly built home.
• See to it that it is not an overpriced poor investment.