If you’re as busy as the next person in the DC Metro area, then you probably have not had the time to pick up a newspaper or watch more than 30 minutes of the news. However, I’m sure you have heard from co-workers or friends about the negative press surrounding the mortgage and housing markets. The rancor of this situation has caused some sort of paralysis in the consumers. But where there’s adversity, there’s opportunity. By human nature, we tend to listen to our friends or mentors or should I say go along with what everyone else is doing. We wait for someone to say “It’s OK.” Just call this your little push in the back.

If you have been researching home prices then you have probably seen that the national average is down. This will continue, but remember three things. The first is that the markets that have been hit the hardest drag down the average depreciation (Miami, California, Las Vegas, Phoenix). Secondly, homes that were priced $500,000 and higher were more inflated than the entry level housing. The bigger they are the harder they fall. When those homes depreciate, they will be affected more than the lower priced homes. Finally, because dismay can create an instinctive reaction among sellers and the market perception keeps buyers hesitant, prices may be lower on the way down that at the bottom of the barrel.

What does this all mean? It’s a GREAT time to shop for a moderately priced home in Northern Virginia or Washington DC. When the market has found a solid bottom and the demand returns, there will be a lot less ambiguity about what a home in your area is really worth. Sellers will be less willing to entertain offers, and selection will decrease.

The news might have you thinking that it’s impossible to get a loan these days. This is far from true. Experience has given lenders a clear picture of the kinds of loans that shouldn’t be offered again. But the loans that have performed more consistently are still available, and you might be surprised what you can qualify for.

Banks like to see strength in at least 2 of the 4 areas:

1. Credit score and credit history
2. Sufficient, verifiable income for the payment amount and monthly debt
3. Equity in the property or down payment
4. Liquid assets (money in the bank, stock market, IRA’s, 401k’s, etc…)

The items that will make your loan more difficult to obtain:

1. Non-Owner Occupied (investment property)
2. Stated or No Income (meaning you can’t prove income with W2’s or Tax Returns)

Bottom Line: If you can justifiably afford to make a regular house payment, there’s a great chance that this can be proven to a lender, who will in turn be glad to give you an excellent loan.

There’s even further incentive to act on this information. Even if prices decline another 10%, due to the market hysteria, there are sellers out there right now selling for 20% under current appraised value. So you might find a house for $300,000 today that will end up being worth $330,000 when the market bottoms out. A catch 22, but true. This also means that your value is likely to be at it’s highest as far as refinancing is concerned, and remember that equity is one of the positive factors banks consider.

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