There are both benefits and drawbacks to the housing market in today’s economy. When the housing bubble burst, prices for new homes plunged. Unfortunately, so did the credit of many homeowners (and other people).
That means that if you’re in the market for a new house, you are at an advantage in some ways and a disadvantage in others. You may be more likely to actually be able to afford a home, but less likely to have the credit to be considered.
Similarly, you may have the income to afford monthly payments on a mortgage, but not the money to afford a down payment.
One thing you could do is look for a zero down home loan. These still exist, believe it or not. The recession hit a lot of people, not just you, and if banks didn’t provide zero down home loans, then they wouldn’t be selling many homes.
Lenders are still pretty fussy about who can get a zero down home loan though. If your wallet took a hit in the recession, but not your credit, you could qualify for one. If your credit is shot though, getting a zero down home loan could still be pretty tricky, or downright impossible.
Another thing which might help is choosing a location to live in based on the cost of homes, as opposed to the other way around.
If you don’t have a strong preference about what state you live in, consider moving somewhere where the homes are dirt cheap. Many of these homes are in excellent condition and very roomy and comfortable—they’re just in places in the country which have emptied out as people have moved to the cities in search of work.
If you are considering moving to what the USDA denotes to be a “targeted rural area,” you could get an even better deal. The USDA 100% Financing Program allows you to get a home with no down payment. 6% of the purchase price goes toward closing costs.
There are limitations imposed based on income levels, so you may or may not qualify for the program.
Buying a home is still possible, even in this economy. You have to look for the ways you can turn the situation to your advantage. Having good credit is a huge help, so if you don’t, make that your first step.
Once you’ve established good credit, search for a zero down payment loan on an affordable home in a nice area. Make sure that you accept only a fixed mortgage rate.
Ballooning mortgage rates are what landed so many homeowners in foreclosure situations in the first place.