Indianapolis Real Estate News
I hear it all the time…”I really want to move and take advantage of this buyer’s market to get into a bigger and better home but I have a home to sell first and can’t afford to sell it at today’s prices.” This is a problem many many people are facing and I believe a large part as to why the market is stagnate. People want to move up into nicer homes but cannot afford to take a beating on their current home.
IMHO, one of the most pragmatic things to do with current Indianapolis real estate market is to either rent your current home or do a lease option with it. If you rent out your current home, you can wait out the current market and then sell it in a couple of years once the market has fully turned around and you can get a fair price for it. This also allows you to take advantage of the current prices on the buying end that are being offered on some amazing homes and can put you in an instant equity situation with your new home.
The rents you receive will offset your mortgage cost in reality and in the eyes of the lender; usually the lender will credit you for 75% of your rent due to vacancies etc. The beautiful about Indianapolis real estate is that it is so affordable that you can normally easily cover your mortgage payment with fair market rent. If you do need the equity from your current home to purchase the new one, a refinance or HELOC is always an option. The costs you will incur to refinance will easily be recovered by be able to buy a home now versus waiting until the market has turned around. Just make sure you don’t overextend yourself and that the rents will cover your new mortgage payment or you are prepared to make up the difference.
The lease option is a similar situation but a little more complicated. I won’t go into too much detail in this post but the basics are that you lease your home to someone, usually they are credit challenged and get a mortgage right now, and they have an option to purchase your home at the end of a pre-determined amount of time. This is a good idea right now too because mortgages are getting harder and harder to get and many people want a home now but cannot qualify. You offer them a solution of having a home now while they rebuild their credit.
You should always consult a professional before doing either option, but both ways allow you to have you cake and eat it too. You CAN take advantage of the low price for homes right now without losing your shirt on your current home. I truly think this is the best of both worlds.
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Date: Tuesday, May, 13th 2008 @ 01:49:54 PMViews: 130
This blog entry currently has 2 comments posted.
Mike Taylor
Paul - These will typically be in the lender's guidelines for mortgages which to my knowledge are not available to the public. You could simply call any mortgage broker and ask them. I have a few I could recommend if you need one.
Posted on 2008-05-14 13:30:18
paul
Where can I find further information on the following quote:
"usually the lender will credit you for 75% of your rent due to vacancies etc."
Posted on 2008-05-14 13:25:42