New York Bank Foreclosures: Rules for First-Time Home Buyers

by on States

New York bank foreclosures are good investments because of their cheap prices. Many smart investors are grabbing foreclosure properties as soon as they are placed on the market because they know that they could earn huge profits from them.

They bought these properties at very low prices, spend a reasonable amount for fixing them and sell them for a profit. Even first-time home buyers are getting into the foreclosure buying bandwagon, motivated by the $8,000 federal tax credit provided by the Obama Administration.
Financial planners and economist said that with home prices and interest rates at their lowest and large supply of New York bank foreclosures on the market, first-time buyers could never find a much better time to buy a property than now.

But they caution buyers against stretching their finances to buy their first homes. They said that banks and borrowers should go back to the standard rules which they forgot in their haste to write more mortgages and purchase bigger houses. They suggested putting in a 20 percent down payment so that first-time buyers could protect the value of their houses from dropping below the amount of their loans if property prices fall again.

Financial planners and economists said that getting a fixed-rate loan is a wise move so that the biggest part of borrowers’ monthly housing bill will remain stable. Meanwhile, first-time home buyers should not spend over 35 percent of their pretax income on loans, home insurance payments and property tax.

Adhering to the guidelines set by Freddie Mac and Fannie Mae, the Bank of America will not allow debts to hit more than 45 percent of the borrowers’ pretax income. Experts said that in adjustable-rate loans, banks would not be concerned whether borrowers can afford to pay the maximum payment when interest rates adjust in about 5 or 7 years.

Economists said that a good indicator of the future income of borrowers is the size of the house that they are going to purchase. They said that in general, people can make reasonable predictions of their finances and future incomes and they base their buying decisions on them. They added that if the loans are stretching the borrowers’ finance, there is a good chance that the loans are a bit of a stretch too.