Girlsgirl asked:
First time buyer In process of buying a house and having second thoughts, worried about negative equity?
My boyfriend and I are currently in the process of purchasing a house, we’ve paid a lot of money for a 2-bed house as it’s in top condition and location. Legal fees have already been paid, however reading that housing minister said 5-10% house price drop at BEST and predictions of up to 20% am now worried about neg equity (especially at time of remortgage, end of fixed rate). Would you pull out of sale on this information and lose legal fees?
Comments 14
I don’t know, what kind of legal fees are you talking about? Is your job secure? Do you see yourself living there for a few years? These are questions you need to ask. If you think you and the BF may wind up marrying and starting a family, chances are in 5 years you will need a bigger space, so I’d think twice about it. The market will pick up but who knows when. If you think you may stay there 10 years, then I’d take the chance.
Posted 07 Aug 2008 at 9:09 pm ¶this is easy. when in doubt, don’t buy. just put your money in a CD for now.
Posted 08 Aug 2008 at 12:12 am ¶No! Don’t pull out. Eventually the house prices will stabilise and rise again. A lot of my friends were first time buyers in the early nineties and had to deal with negative equity - in those days the situation was even worse with much higher interest rates. Eventually, things turned and their properties made profit. You just need to be in this for the long haul and ride it out. Its not worth losing the legal fees over. Good luck and congratulations on getting on the ladder - you should be proud of yourselves - thats a great achievement in todays climate.
Posted 09 Aug 2008 at 12:27 am ¶I wouldn’t pull out - because I stick to my promises.
If you do pull out, you will find it VERY hard to get taken seriously by estate agents again - any other property you make an offer on will probably get put to the vendor with a “However, better warn you - they have pulled out of other purchases because they got cold feet.”
Chances are, the price you’re getting the house for is ALREADY lower than prices were at the peak. Most houses (in the SE, anyway) have already been reduced.
Posted 09 Aug 2008 at 12:09 pm ¶My Girlfriend and I are also currently in the process of looking for a house, haven’t purchased one quite yet. The best thing to do is to go to your bank and see what they tell you, i’m sure its based on the amount of the loan you have, and your and your boyfriends incomes, see what they tell you about negative equity. I would probably pull out of the sale, yes if the bank advises you it is a bad financial decision just make sure you check with them and go from there.
Posted 12 Aug 2008 at 8:40 pm ¶I never think it’s a bad time to buy a home. It’s only bad to buy a home you can’t afford! Take the plunge but be conservative. This is a great time to buy a home as a long term investment. Historically buying a home is the best and safest investment you will ever make, and it will also be one of your greatest retirement tools!!! GOOD LUCK!!!
Posted 15 Aug 2008 at 7:36 pm ¶I would never buy a house at this moment in time if you have a deposit then you will have some equity but i think that we are looking at the thatcher years again. your house will not be worth anything and if we hit a recession then it will take at least 5-10 years to get out. my boyfreind has been right about every prediction we have been renting for two years just waiting for the right time and mortgage. we would be homeless right now if we had gone through with it.
but this is up to you and govement ministers will alway say its ok. you just have to look at america right now and see that it is not. but i would always go with my instincts even if they say no.
Posted 17 Aug 2008 at 1:46 am ¶You need to understand WHY you are buying first. If you are buying the house to live in, then it is much less of a problem than if you are buying it to fix up and resell.
If you plan to live there a while (5 or more years), then get a fixed rate loan and move on.
If you are really still not comfortable, then don’t buy.
Posted 18 Aug 2008 at 4:43 am ¶READ the contract you signed: you may be liable for more than fees already paid. Be careful about loan you take out so that you don’t end up with negative equity.
Posted 20 Aug 2008 at 7:32 am ¶No to be honest, although house prices are coming down they will come back up again (dont know when though) so your house will end up being worth a lot more than you paid for it, it is only really an issue if you are only going to keep your house for 2/3 years, if you plan on living there for a longer period of time then i wouldnt really worry about it.
Posted 21 Aug 2008 at 2:56 am ¶First, it sounds like you have an adjustable rate mortgage (”especially at time of remortgage, end of fixed rate”), why would you do that? The funky arms are what’s causing a lot of the housing problems. See if you can switch to a conventional 30 yr fixed.
If you don’t buy you will be renting, correct? You are throwing your money away there, no question about it. If you buy you have a good chance of having decent equity in a good location (”top condition and location”) that years down the road you may not be able to purchase when the market comes back. Remember, the huge equity jumps in 2002-2004 were not normal!
If you need to purchase another place before the market comes back you can always rent your home. There are plenty of Real Estate firms that offer property management, so that even people who don’t understand the process can rent their houses. I actually have a rental property right now, and the mortgage company that I’m working with (for a new purchase) will count 75% of the rent payment as income . . . so if you get a decent amount for rent, financially it shouldn’t stop you from purchasing another home.
Don’t walk away . . . remember that this is an awesome time to buy (decent interest rates and inventory driving prices down). Homes in top condition in top locations will gain equity better, so you’ve done well there. Renting is just paying someone else’s mortgage, build your wealth, not theirs!
Posted 22 Aug 2008 at 1:42 am ¶No…you are buying property to live in not to sell it tomorrow. If you are planning to stay in the home for 5 years or longer you should be fine. The real estate maeket is in decline for sellers not buyers. This is one of the best buyers markets in about 30 years. Sadly, most people (even real estate investors) are clueless about the past bubble. They thought it was good and now look. Home values rise and fall the same way any other product does. It’s called supply and demand. Right now there is a low demand and a huge supply hence the prices are down.
Posted 22 Aug 2008 at 11:12 pm ¶unfortunately no one has a crystal ball, the most at risk from negative equity are those with a loan value of 100% plus of the properties value.
In this market you even less likely to fall into that situation as prices have adjusted themselves, look at it this way this time last year house prices were over inflated so people remortgaging now are finding them selves having problems. now many of these people are debted up to the hilt on other loans and credit cards which they dont tend to confess to.
Now if you have a fixed rate deal now assuming it is a 2 year plus deal you are really banking on house prices beginning to rise again, which of course they will in the future, historically we are still in a period of low rates and inflation even with the credit crunch in mid flow.
if everyone went by what was said in the financial press I wouldnt be in a job still I am a mortgage advisor and so is my partner we are really busy at the moment so dont worry and good luck with the move!
Posted 23 Aug 2008 at 4:42 am ¶Yikes!
However, not all real estate markets are the same. It’s all a ten year cycle. Or so I hear! If you’ll be there for awhile, it should re-bound.
Can you get a loan with no pre-pay so that you can refinance whenever you want to?
Posted 24 Aug 2008 at 11:59 pm ¶Post a Comment