The sub-prime fallout has impacted many folks in the real estate business. Lending institutions have seen a lot of their loans forced into foreclosure which in some cases has lead to bankruptcy. Sub-prime borrowers have taken the other blow by defaulting on their mortgage payments and losing their home to foreclosure. The result is less people are now able to obtain home loans, especially when trying to obtain 100% financing.
However, the results are not as gruesome for everyone. Many real estate investors see it as a great opportunity for them. Real estate investor Wendy Patton, on CREOnline.com, explains the positive impact the sub-prime woes have on lease options…
“When investing in lease options, it is harder for us to find quality tenant/buyers when almost anyone who can fog a mirror can get a mortgage. Not only that, but because it was so easy to get 100% financing, most buyers save nothing and are unable or unwilling to pay much for an option fee.
With the lending companies tightening their belts, I expect we will see a growing population of QUALITY tenant/buyers who are able to pay HIGHER option fees.”
Source: Why Soft Real Estate Markets are GREAT for Investors – by Wendy Patton, CREOnline.com
The other side of this is tenants may need additional time to obtain financing in order to take the option.
For investors, buying real estate during these times is a great option as home prices are at their lowest in years and quality tenants are saturating the market.
My home buying advice for potential borrowers is to locate home buyer rebates. A good place to start is DoorFly.com, where agents bid rebates to potential home buyers for an opportunity to win their business. The Website benefits both parties: Home Buyers gain a rebate realtor and agents gain a new client! During these tough time, any extra money you can save during the home buying process may be well worth it.
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