by Edgar Frost

Created on: September 11, 2008

It certainly seems like this is the time to buy a home, or to at least start looking. In many parts of the United States, home prices have fallen substantially, and with more foreclosures coming and a large inventory of unsold homes, prices may even fall a little more. Before you buy, here are a few points to ponder.

There are a tremendous number of bargains in the market right now, but you need to realize why there are so many bargains: Lots of people got in over their head. They bought houses in a rapidly appreciating market with little or no money down, used adjustable rate and no interest loans, and generally had little idea how mortgages worked. Currrently, banks have tightened credit so it is harder to get a mortgage. As a result, this probably isn't as likely to happen to you because if you can't afford a mortgage, it's going to be hard to find someone to give you the money.

Now, for those of you with a down payment and a decent credit score, let's talk about why you should buy now. Take a look at the web site for your local association of realtors and look at their historical data from the last 20 years or so. You'll notice that current prices are trending toward prereal estate boom prices. A good deal of the froth in the market is going, and prices are coming down to a level that would make sense as a long-term investment. Let's also look at interest rates. Currently, rates on 30 year fixed mortgages are slightly above 6%. This isn't quite as good as some of the rates we have seen in the past few years, but by historical standards, it's a great rate. Prices are down, rates are down, what's not to like?

If you're a buyer, you have to admit that the market is going in your favor, and there are many bargains out there. As always, be smart and do your homework. You also need to realize that many house are being sold because they have to be sold, there's no choice. A great way to get a deal is by looking at foreclosed properties, especially if they have been on the market for a while. Banks are desperate to get rid of these properties, and in many cases, they are being sold at a fraction of what the bank is owed. Remember: Banks like to loan money, not manage houses. Use this to your advantage.

With that said, use the increase in foreclosures as a lesson. Only buy a house that you can afford easily. Try to buy on potential, and fix small things yourself to save money and make it better. Also, I would strongly recommend buying a multifamily house, since you might be able to have your tenants completely pay your mortgage. There are lots of great deals out there, just be smart about your purchase.

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