A person’s credit history has always been an essential part of qualifying for a real estate loan. To qualify for a real estate loan these days, the Collateral is King (that is, the property being purchased or refinanced) and is also going to qualify for the loan. Part of the reason the real estate market is so challenging today is that the entire market is viewed as “overvalued”. Prices went up fast, interest rates were lower than they had been in 40+ years and various loan programs made it easy to get into a property. Lenders didn’t seem to be worried about the overall value of real estate, so why should consumers? Today things are different, and consumers should worry a little and take these matters into their own hands. They should not rely strictly on the lenders’ or real estate brokers’ assessment of value. After all, as a buyer you are making an investment which you hope will pay off in the future.

The information resources are available to help consumers and investors do better research, and do it faster than ever before. Current price is a critical factor in determining Collateral Value. Market trends are also an essential element. Is the market going up, down or sideways? What is the market strength in the area; are there an excessive number of foreclosures in the area? Is property flipping creating a volatile market in the area surrounding your home? All of this information is readily available and can help you do a better job of assigning overall value to a home.

There is a very old saying; “If we do not learn from our mistakes, we are destined to repeat them”. Investing in real estate is not the “slam dunk” winner it was 3 or 4 years ago. A lot of people have lost money and lost their homes as the result of a super-hot real estate market that went flat, and then it went down. Consumers, investors and lenders must learn from this financial tragedy and do fundamental research to confirm value, For the first time in a long time, Collateral is King and without the fundamentals of value being present, your investment could be at risk for future value, so do your research!