SayEducate

If you are looking to buy a home there are three different ways that you can show the seller you are ready to buy. Unfortunately, two of those are wrong.

Wrong, in the sense that they don’t give the seller confidence that you will actually close on the deal, the sort of assurance sellers need in this shaky economy.

Let’s take a look at three ways you can convey interest in a home, with only one method offering iron-clad assurance you will follow through:

Pre-qualification from a realtor – typically done verbally and without confirming your income, debt, and other personal financial information, this step means nothing to the seller. When a realtor pre-qualifies you, all they are ensuring is that the time they spend with you looking at houses to buy is time worth spending. For all they know, you could be making this information up!

Pre-qualification from a mortgage lender — your mortgage lender may be interested in loaning you the money to buy a home and is even willing to state in writing that you qualify for a loan. Trouble is, you haven’t been approved yet — anything can happen — you could lose your job, interest rates may jump up, etc. Not a bad step to take, but it won’t seal the deal.

Pre-approval from a mortgage lender — ah, now you’re talking! You not only got qualified for the loan, but you have been approved for the loan at “x” percent rate for “y” number of years. Get that information in writing and hand it to the seller and they’ll know that you’re in a position to buy their home.

The sub-prime mortgage meltdown has made everyone skittish, so why not assure the homeowner and give yourself the peace of mind by getting pre-approved for a mortgage before you present your offer? Ask your mortgage lender to provide proof of mortgage approval and carry that letter with you when presenting your offer.

As if struggling homeowners don’t have enough to worry about: the Federal Bureau of Investigation (FBI) is reporting that mortgage fraud is on the rise. In a report released last week, the FBI says that consumer complaints are now coming in at a record pace, underscoring the seriousness of the problem.

The FBI reports receiving 46,717 Suspicious Activity Reports related to mortgage fraud in 2007compared to 35,617 in 2006 and just 6,936 in 2003. Although just 7% of the reports cited an exact dollar loss, the total reported losses for 2007 was $813 million. The FBI says that their case load for mortgage fraud increased 47% in 2007 over 2006.

Citing the continued housing slump as one of the reasons for increased fraud, the FBI says that the current market is “…further incentive for shady real estate industry insiders to look for dishonest ways to turn a profit and growing opportunities for scam artists to prey on vulnerable homeowners.”

The FBI has identified the top 10 hotspots nationwide for mortgage fraud in 2007, which were carefully mapped from multiple public and private sources: Florida, Georgia, Michigan, California, Illinois, Ohio, Texas, New York, Colorado, and Minnesota. The north-central region of the US had the largest share of mortgage fraud, followed by the west and southeast regions.

Among the current mortgage scams the FBI has cited the following:

• Builder-bailout” schemes where developers unload excess inventory through financial trickery.

• Foreclosure rescue frauds that trick homeowners into signing over the deed to their house.

• Seller-assistance scams that use false appraisals to sell homes.

• Identity theft that leads to home equity credit lines being opened and drained.

Visit the FBI’s site to obtain your copy of their 2007 Mortgage Fraud Report.

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All those dire predictions for the housing market has plenty of consumers scared. Some people have refused to buy a house during this economy, waiting until things improve before wading back in. Others are seeing an opportunity to buy now and are reaping the benefits of that decision.

When it comes to predicting housing trends, much of the advice being offered isn’t always accurate. In fact, if you read some of the reports you’ll quickly notice a few problems regarding home values including:

Predictions are too generalized – Sure, foreclosures are way up in some areas but that doesn’t mean that every market reacts the same way. If there is an oversupply of homes, then prices will continue to drop while foreclosed homes in a tight housing market are likely to be snapped up quickly.

Local markets are too broad – Even within a metropolitan area, selling trends can vary considerably. One municipality could be struggling while another could be thriving — local conditions including schools, jobs, and amenities will often determine just how strong a housing market is. Even within a single municipality, one development could be very attractive while another one not so.

The types of housing vary in price — Condos could be losing value while houses could be stable or even rise in price in certain markets. A market’s average home value decline could be weighted because one type of housing is dropping in price, skewing numbers for that ranch or colonial considerably.

Forecasts are too long range — predicting the future is difficult even with a thorough trend analysis at your disposal. Variables including government intervention, supply & demand, and local job markets can change a market’s course almost overnight.

Although a housing predictor can offer some information of value, they aren’t perfect. You’d do better tracking local trends yourself and drawing your own conclusions based on your personal analysis.