How Does Negative Equity Affect YOU as a Homebuyer?
After many years of saving up for a down payment, you may now be in a position to buy a new house. Before you can do that, there are some things that you need to be aware of when figuring out what you can qualify for, such as negative equity or the decline in the supply of inventory. According to Steve Cook, managing editor of Real Estate Economy Watch, the year began with inventories only 2% above where they were a year ago. To help determine whether or not 2014 is a good time for you to sell your home, you should always contact a local real estate professional to assist you. Additionally, your equity and your credit scores affect what you qualify for when it comes to a mortgage.
First, it is crucial that you understand the meaning of what negative equity is before any action can be taken. According to Investopedia.com, negative equity is when the value of an asset falls below the outstanding balance on the loan used to purchase that asset. Being in negative equity may have some consequences attached; however, it is never too late to fix the problem and move forward from it. A real estate professional is very knowledgeable about the ins and outs of their business and it is their job to assist you with any kind of issue that you may be faced with, including your equity. Agents are valuable resources that can provide you with the most accurate information about how to correct the problems and take the proper action. If you are unsure if the equity of your current home is negative, a Home Equity Calculator could be useful, providing you with the exact value of your home and where you need to go from there.
One of the best ways you can reduce your new monthly mortgage is to improve your credit score before the process actually begins. In addition to paying your bills on time, be sure to reduce your debts (especially those with high interest rates) and keep unused lines of credit open. All of these strategies can improve your score and allow you to qualify for the best mortgage interest rates available. You can check your credit score on a site like AnnualCreditReport.com a few times a year to keep track of any areas of concern or improvements.
Making the decision to move to a new home and figuring out how to sell your current one can be a challenge. The good news is that you do not have to go through the process alone. There are plenty of real estate agents that are patiently waiting for your call. For additional questions, comments, or concerns, connect with a real estate agent on the Homes.com Q&A channel!