Mortgage Finance Blog

Top 5 Moves When Entering the Real Estate Market

September 14th, 2012 9:38 AM by Diego Quintero

Many markets are reporting bidding wars & increased sales prices, with typically cash investors making winning bids. Some markets, like most of New England, are moving along slowly and attracting more owner occupants than investor-purchased properties.

The inventory of homes in areas of high-investor demand are causing prices to spike upwards. For those who are in slower markets, be prepared to pay an even higher price.

Ken Harney of the Washington Post states, "Analysts say negative equity plays a major role: It discourages people who might want to sell from doing so. They don’t want to take a big loss, especially in a slowly improving price environment. So they sit tight rather than list. Banks with large stocks of pre-foreclosure and foreclosed properties are doing the same, creating a so-called shadow inventory of houses estimated to total 1.5 million units."

The negative equity is obviously a major problem. Even with the incredible increase in real estate values in the sand states, the US is still 23.5% below the 2006 peak as reported by With 1.5M properties on stand-by, can values decrease if these banks unleash the supply too quickly? We would like to believe that it will be released slowly to prevent an over supply. The real question is how can consumers protect themselves?

Here are the top 5 considerations if you intend on buying real estate in the next 6 months. Whether as a first time home buyer or a seasoned investor, start with preparation, then move to market research.

1. Get your free credit report. Use the once-yearly, free government-backed service. Call your creditors to fix any inaccurate reporting. If you wish to boost your credit scores, then opt-out!

2. Get a free real estate & finance education. There are lots of non-profit agencies, state agencies, and for-profit professionals conducting home buying seminars. Go! Get educated, as the market is not the same as when you last bought a home. Underwriters are more thorough, paperwork is more intensive, and the rules of the game have changed.

3. Visit your trusted mortgage broker to discuss finance options. Mortgage planning is critical and is overlooked by many first time home buyers. A visit to your broker will ensure that your bank records are in order, credit issues are fixed, and you'll be presented with estimates. All of this is generally FREE! 

Beginning this relationship early takes a lot of stress out of the process. Talk to them about your plans and goals. Keep in mind that if you are in the market for a home, you will be advised to hold on to your cash. Keep driving your clunker and stay away from increasing credit card debt. And, don't allow anyone to review your credit.

4. Get a referral for a Real Estate agent from your mortgage broker, non-profit agency (Real Estate education), friends, co-workers, etc. Beginning this endeavor with a team is much better than trying to bring new working relationships together. As a team, trust is easier to attain and there is more focus on you, the consumer. Meet your Real Estate agent and let them know your loan approval details. Discuss your timeline and your ideal-home characteristics.

5. Ask the agent to send you listings that match those parameters. Gauge the marketplace for a short time before entering any offers. Putting in offers too soon may land you an expensive home. After several tours of homes, you’ll know what you should spend before long.

In most communities across the US, renting is more expensive than buying. It has become a simple decision to buy, especially since interest rates are low and home prices have finally leveled-off. Forbes reported that the bottom of the housing market leveled off this year.

Additionally, The National Association of Realtors reported that in the first quarter of 2012, the median existing single-family home price rose in 74 of the 146 metro areas that the association tracks.

There are plenty of online resources for consumers to begin measuring the marketplace. Sites like, and have helped beginners gauge the marketplace before calling-in professionals. Keep in mind that a Realtor can help hone your home searches with better, more up-to-date information.

Home buying takes preparation and patience. By following the five steps and developing your team, you will be well on your way to your first/next home purchase.

Your trusted mortgage broker,

Diego L. Quintero, RI/MLO

Posted in:General
Posted by Diego Quintero on September 14th, 2012 9:38 AM


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