The property market remains a considerable concern for the federal government, both in terms of the treatment of home owners and the issues caused by negative equity. Just last month, five of the largest U.S. banks agreed to provide a $25 billion settlement to homeowners who had been the victim of improper foreclosure practices, while figures from the last quarter of 2011 also revealed that 23% of U.S. mortgages were underwater, according to the National Association of Realtors. These figures reveal the dangers facing homeowners and families in 2012, and, along with other considerations, dictate the need for a careful and well-thought-out decision-making process prior to purchasing a property.
Choosing Your Mortgage: Pick the Right One for You and Your Partner
In some ways, couples looking for properties in the current market have an easier choice than those who bought during the housing boom. The high-risk and stated-income mortgage types that were created to suit unqualified borrowers are no longer available, as lenders have strived to adapt to the changing macro-environment and new government legislation. Today's house hunters generally have to choose between fixed and adjustable rate mortgages, and must select the right one to suit their financial circumstances. This tends to suit couples rather than individual buyers, simply because applications that boast dual incomes have a better chance of succeeding in the current market.
Fixed rate mortgages offer the lowest risk for couples who are looking to buy, simply because the rate of interest remains unchanged throughout the duration of the loan. This ensures that monthly repayments remain consistent over time, which makes it far easier for you to budget and meet your requirements as a debtor. With an adjustable rate mortgage rate (ARM), the rate of interest is liable to fluctuate considerably in line with market conditions, and while this may cause your monthly liability to decrease, it is more likely to adjust upwards and increase your burden. Your salary constraints and potential for future earnings should therefore be influential in your decision.
Your Home As an Investment: The Importance of Location and Development
For any couple looking to buy a home, there are wider considerations that should also influence their decision. The first is the issue of location, and the importance that it plays in determining a property's value over time. After all, when purchasing a home, you are investing a significant sum of capital into real estate, and it is always better to do this with a view to maximizing its value where possible. Given the fact that so many U.S. homes are currently burdened with negative equity, it is important that potential buyers consider every possible avenue to either maintain or increase a property's value.
Supply and demand remain key to determining value, so try to assess the area in which each house that you view is situated. For example, if a house is located in a developing residential area where there are few properties on the market, then your investment will secure a home that is in high demand and part of a limited supply. In addition to this, consider the house on its own merit, and whether it has the scope for significant development or expansion as an individual property. Both of these factors can add significant value to a home and have the potential to increase your return should you choose to sell in the future.
The Everyday Practicalities of Home Ownership: Looking to the Future
With such an importance placed on mortgage types and finding a home, it is all too easy to forget the everyday practicalities of being a homeowner. If you plan to purchase a property and live in it for a significant period of time, for example, then it is important that you consider your long-term plans both individually and as a couple. Having children and adding to the family unit is a key part of this decision-making process, and given the fact that according to the Pew Research Center, the average U.S. household grew for the first time in decades between 2000 and 2010, it is something that influences many potential home buyers throughout the country.
While preparing for the future will dictate the size of any house that you may buy, it also brings into focus other considerations. The most significant consideration for parents and potential parents is schooling, and the exact proximity of a property to good quality and accessible educational facilities. According to the findings of The National Association of Realtors in 2011, 27% of home buyers cited the quality of local schooling as being critical to deciding whether to purchase a specific property, while a further 22% said that having conveniently placed schools was also an influential factor.
The Bottom Line
If you are a couple looking to purchase a home, then you have certain advantages over individual buyers in the current marketplace. However, it is still important that you consider your options carefully before committing to being a homeowner, and you should pay specific attention to your finances and future plans in order to ensure that your investment is a rewarding one.