While this news is certainly disturbing, it is important for homeowners as well as home buyers to understand that there are steps they can take to help protect themselves from the impending real estate crash in 2008. 

First, make sure you understand exactly what kind of mortgage loan you have and the implications of your mortgage type. While adjustable rate mortgages were certainly attractive a few years ago because they allowed homeowners the benefit of lower interest rates, today they are a disaster waiting to happen. If you have an adjustable rate mortgage, it is essential that you consider obtaining a fixed rate mortgage. 

If you have your house on the market and are experiencing difficulty selling it, as is the case with many sellers, recognize the fact that you may need to make some concessions on the terms and/or the selling price. The market is rife with inventory right now and buyers are able to choose what they want and on their own terms. If you want to be one of the sellers that is successful in selling their home, you will need to lower the price and possibly even toss in a few extras to move your house off the market. If you cannot lower the price, think about whether you might be better off financially to rent the home over the course of the next two to three years. 

The impending real estate crash will also most certainly impact prospective buyers as well. While there is a tremendous amount of inventory currently available and prices are lower than they have been in several years, it certainly appears as though there will be even more price reductions throughout the remainder of 2008. In some areas, prices could go drastically lower. This means that if you can wait awhile longer to buy a home you may be able to take advantage of even lower prices. 

As a buyer, you also need to make sure you give careful thought and consideration to the type of mortgage loan you take out to ensure you do not become caught up in the real estate crash. If you are a first-time homebuyer and/or you have a credit rating that is less than favorable, it is a good idea to consider taking out a FHA mortgage. If you are a veteran, a VA mortgage is also a good option. Both of these types of mortgage products offer terms that can be more attractive in the current market than other types of mortgage products. 

Keep in mind that while there are still numerous ‘no cost’ mortgage loans being advertised, it is imperative that you research such mortgage offers carefully before you try to take advantage of one. In most cases, there is really no such thing as a ‘no cost’ loan. The costs are usually added back into the mortgage and that means you will be paying them off at a greater cost over the term of your loan.

Today that is no longer the case; however. While rents have continued to rise in many locations, consumers are still finding they are often able to rent for less money than what they would pay for a monthly mortgage payment on a comparable property. In some cases, renters are able to save between 40% and 50% by renting instead of buying. 

One of the reasons for this is that in some locations, property values rose quite steeply. Today, buyers who snatched up those homes without blinking have discovered they must now sell. The problem? They need to sell the homes at the prices at which they purchased them two years ago to recoup the balance they owe on the mortgage. Renters just are not willing to pay more money than a home is worth. 

Even renters who are able to qualify for mortgages just do not feel as though they are getting enough home for their money, especially when they can often rent a comparable or even larger home for less money. 

As a result of the shifting market, many experts are quick to point out that today the market is no longer a seller’s market and it is not really a buyer’s market either. Instead, it has become more of a renter’s market. 

Other renters are holding off on the idea of buying because they are concerned that prices have not yet hit the lowest point. They are primarily concerned that if they purchase a home today it may not be worth the same amount just six months from now. They feel it is far more prudent to wait and see exactly where the housing market will land before they consider buying a home. Other renters are concerned about the upcoming hurricane season. Few have forgotten the hurricane season of just two years ago that devastated many areas. Homeowners in those areas, especially those without insurance, have yet to recover. 

While some areas are experiencing a deficit in supply of rental properties, in other areas homeowners have recognized the wisdom of holding off on selling their homes. They, too, are reluctant to sell their homes now when it seems more prudent to wait and see when the market will stabilize. To help make ends meet, many of these homeowners are willing to rent out their homes to the scores of renters lining up to take advantage of the opportunity. Even homes that are on the market for sale are also available for rent. While renters must accept the reality that the home in which they are living must be available for showings, they still feel the trade-off is quite worth it. 

Would-be investors who attempted to get in on the quick profit potential of flipping homes have also discovered that it makes more sense to rent out their properties right now instead of trying to selling them. In some cases, investors are discovering they simply do not have any other options when they must meet mortgage payments every month and are unable to sell their properties. In some cases, this means renting the properties at a loss, creating a negative cash flow. 

In fact, this situation has become so much of a problem that landlords in certain niche markets are finding they must cut rents in order to create even a small amount of cash flow. These investors have quickly discovered that it is far better to rent right away at a loss than wait several months to try and attain the amount of rent they really need. Although landlords are often upside down on most of these properties, renting them out has proven to be the safest method; at least for now.

that they are surprised to be facing foreclosure. If you are keeping up with your mail and calls, then you shouldn’t be surprised at all, most reputable financial lenders, including locally owned and operated banks, will do just about anything to keep borrowers in their homes. Unfortunately, this is an important point that many either don’t know or just don’t take into consideration.

If you’re a homeowner who has received an intent to foreclose notice, you may want to start packing your bags right away. Yes, this does sound like the most logical step to take, but it isn’t your only option. As a reminder, financial lenders want to keep borrowers in their homes, especially those that are only facing temporary financial hardships. That is just one of the many reasons why you should pick up the phone and schedule a meeting in person with the bank’s chief loan officer.

Before your property enters into foreclosure, homeowners are also encouraged to try and sell their property. If your financial situation isn’t temporary then this might be the best option for you. In some states, the process of foreclosing on a home and it acquiring a new owner can take up to 120 days. This does leave you room to try to find a new buyer. You may have nothing to lose by placing a for sale sign in your yard or by placing advertisements in your local newspaper. You may even want to use the assistance of a professional real estate agent.

When trying to sell your home at the last minute, there are some important steps that you must to take. If you want to sell your home at any cost, remember that you still need enough money to payoff your current mortgage. For example, if you owe $50,000 on your mortgage, you can’t sell your home for $45,000.

It is also important to take your moving and living expenses into consideration. Make sure that you walk away with enough money to help you find a new home, even if it only involves renting an apartment. As it was previously stated, the entire process of foreclosing on a property can take up to 120 days or more in some states. Instead of moving right away, you can use this time to try and make good on your outstanding mortgage. Consider selling your valuables or getting a second job. At the very least, stay in the home and save as much money as you can. Remember, you need to have access to some money to move and rent a new apartment.

There are also a select number of states who give foreclosed property owners time to reclaim their home. These laws are referred to as redemption period laws. If your state has these laws in place, you might not even be required to move right away after your home is sold at a foreclosure auction. With that said, if you not anticipate being able to re-buy your home or get your mortgage in good standing, you should start making arrangements to leave the property.

As for when you do move, there are a number of important steps you will want to take. First, remove all of your belongings from the home in a timely manner. After a set period of time, you may lose ownership of these items due to abandonment. Losing your home to foreclosure can be a stressful, frustrating, and a maddening experience. No matter how mad or upset you are, no good can come from “trashing,” the property before you leave. In fact, you may face legal repercussions for doing so. Be sure to leave with your head held high.

As a reminder, foreclosure laws and the rights that homeowners vary by state. Before you pack up and leave your home it is important to review these laws or speak with an expert.

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