It is a buyer's market

When it comes to real estate the general sentiment appears to be that of putting 2009 in the past and looking forward to a brighter 2010.  Looking at where we are and where we are headed as far as real estate goes will take us from the present into the future.  Currently home values are affordable, because prices are low and interest rates are low.  Both of these low levels add up to the fact that it is a great time to be a buyer when it comes to real estate.

Interest rates have been hovering at 5% or lower for the better part of the past year, a trend that cannot be expected to continue.  As the market stabilizes more and the economy gets better, interest rates will rise.  While home prices still may drop in many areas of the country, they will not drop much more.  Areas that are less affected by foreclosures, short sales and REO properties are likely to level out faster than other areas due to the lack of distressed sales in their inventories.  A rise in interest rates may bring real estate prices down to sell but the days of 20% and 30% decreases appear to be unlikely.

In a nutshell now is a great time to buy if you have been waiting for the right time to plunge into the market.  Take advantage of low interest rates while they are here.  It is a buyer’s market now, it won’t be forever.

For an interesting analysis of the real estate conditions and a forecast of 2010, by CNN Money, click here.

The Senate has approved an extended and expanded tax credit for home buyers

On Wednesday the senate passed an expanded tax credit.  The First Time Home Buyer Tax credit has been seen as a huge success and its expiration on November 30 has had many feeling nervous about what its end will mean.  Those fears can now be put aside.  While the bill still has to pass through the House, which it is expected to do next week, is was overwhelmingly approved by the Senate in a 98-0 vote.

What is new and improved with the extended and expanded tax credit?  The new and improved tax credit is still for first time home buyers but will also include home buyers who have owned their current home for 5 years or more.  The credit is up to for $6,500 for these current homeowners and remains at up to $8,000 for First time home buyers or home buyers who have not owned a home for the past three years.  The tax credit  is income restricted, an individual cannot make more that $125,000 annually and a couple cannot make more than $225,000 jointly.  A home must be  a primary residence and valued at $800,000 or less.  Buyers must have a property under contract to purchase by April 30, 2010, and the property must close by June 30, 2010.

The passing of this extended, expanded tax credit is good news on the real estate front and is expected to be the last tax credit offered for a long time to come.

There has been a push in the House to get the First Time Home Buyer Tax Credit extended, as well as expanded.  Last week the House passed a bill extending the $8,000 tax credit into next year for military, diplomatic and intelligence workers who have been working overseas.  This bill’s passage leaves many hopeful that an extension for regular first time home buyers will pass as well.  Much of the increase of real estate sales has been attributed to the First Time Home Buyer Tax Credit.

There is a strong sentiment to extend the First Time Home Buyer Tax Credit because the real estate market is not seen as completely stable yet.  The hope is that if the tax credit is extended then real estate sales will continue to improve.  If the credit gets opened up to include all home buyers, as some would hope, then real estate sales volume is expected to pick up quite a bit.

For the latest from Realty Times regarding the tax credit click here.

Take your time and know what you are doing before buying your first home

It is a great time to by a first home.  Not only are home values down and mortgage rates at historic lows but the First Time Home Buyer Tax Credit will give you 10% of your home’s value (up to $8,000) at closing.  These three items can add up to significant savings for the first time home buyer, making it an ideal time to start looking at real estate.  However, there are important things to keep in mind before buying your first home to make sure this important decision is the right one for you and your wallet.

• Get Information.  Most communities offer free seminars for first time home buyers.  There are also non-profits that offer helpful advice and information.  Visit www.HUD.gov for helpful tips and a list of agencies near you that have free information available.
• Know What You Can Afford.  Analyze your monthly budget.  A good rule of thumb is that your mortgage should be 28% of your expenses or less to be successful financially.  Remember to factor in home owners insurance and property taxes into this scenario.
• Talk to a Lender. Start talking with a bank or mortgage lender and get the ball rolling.  The process of being approved by a lender is a longer process these days and you want to make sure that you get approved before the First Time Home Buyer Tax Credit expires on November 30.
• Find a Real Estate Professional.  Finding the right real estate agent to work with can make your deal run that much more smoothly.  A good real estate agent will help find you a home that works for you, not against you.  A good real estate professional can also help you find a good lender if you have had a hard time during that step.
• Know What You Are Committing to. During a real estate deal you are signing a lot of papers.  Know what you are signing.  If your real estate agent is having a hard time explaining things to you you might want to take the extra step and get a real estate lawyer to review your documents.

When it comes to buying your first home you want to make sure your are buying something you can afford, something located in a neighborhood you want to live in and, most of all, a place that you want to call home.  Take all of the information and advice you can get, filter and decipher it and make the best decision for you.

Your uncle’s trying to encourage people to buy a home and if they’ll take his advice, he’ll give them $8,000 in the form of a tax credit on next year’s tax return.

You know about the tax credit and maybe some of your buyers know but they may not understand just how big of a deal it really is. 

• $8,000 is more than the down payment on a $225,000 home
• $8,000 could buy a lot of furniture and redecorating for a home
• $8,000 could be used to pay the buyer’s closing costs and buy down the interest rate to even lower than current rates

The First-time Home Buyer’s Tax Credit is scheduled to expire on December 1, 2009 which means that the buyer must be closed by November 30, 2009.  Since it takes four to six weeks lead time to get a mortgage approved and closed, the buyers need to be under contract by about October 15, 2009.  TIME IS RUNNING OUT.

The key to success in purchasing a home is buying what you can afford

If there is one thing we can take away from the real estate meltdown it is a realization of the importance of purchasing something you can afford to purchase, as opposed to purchasing something you would like to purchase regardless of the cost.  The days of no-doc loans and leveraging your assets to the hilt are gone.  In today’s real estate market it is more important than ever to borrow what you can afford, no more.

According to an article at Yahoo Real Estate, “Mortgage lenders generally use a ratio of 36 percent as the guideline for how high your debt-to-income ratio should be. A ratio above 36 percent is seen as risky, and the lender will likely either deny the loan or charge a higher interest rate. Another good guideline is that no more than 28 percent of your gross monthly income goes to housing expenses.”

Keeping the percentage at 28% or lower can only improve your financial situation.  Take a good hard look at your finances, look at your income and look at your expenses, both fixed and other spending habits.  The most important thing is to be honest with yourself, avoid the adage of the “eyes being bigger than the stomach” and accept what you can afford in the current real estate market.  In the long run you and your bank account will be better off for being realistic.

Click here and find helpful information on calculating an affordable mortgage at Yahoo Real Estate.

Low mortgage rates are doing the job to make real estate more affordable

Keeping mortgage rates low is helping to stimulate real estate across the Country.  For the past few months the public and private sectors have been putting their heads together to get our Country out of the mess we are in and real estate and lending have been the primary focus.  The lowering of mortgage rates and keeping the interest rates low has been playing a major role in turning real estate around and getting potential home buyers off of the sidelines and into property.  Low mortgage rates are helping keep the cost of buying real estate low, enticing people to buy property.

Mortgage rates have been holding at historically low rates.  The current average rate for a 30 year fixed mortgage is 5.12%.  The average rate for a 15 year fixed mortgage is 4.69%.  A recent article at Realty Times points out “Low rates contributed to existing home sales rising for the fourth consecutive month to an annual pace of 5.24 million in July, the most since August 2007, according to the National Association of Realtors.”

There is a drive to continue to keep mortgage rates low as the low rates appear to be doing the trick as the real estate sales volume continues to increase across the Nation.

For more information about mortgage rates visit Realty Times by clicking here.

If you decide to purchase a home by December 1, 2009, you will be entitled to an $8,000 tax credit. This amendment to the economic stimulus bill will be available to if you purchase your first home between 1/1/2009 and 12/1/2009. Home buyers will be entitled to claim a total tax credit of $8,000 or 10% of the purchase price, whichever is less.  To avoid possible abuse of this credit, it is only allowed for your primary residence and will only have to be re-paid if said house is sold within two years of purchase. Keep in mind that you must close on or before December 1, 2009 to be eligible for the credit. Most closings take about sixty days, so with that in mind you must go under contract by October 2nd, 2009 – this gives you seventy-three days from today to find your first home. If you manage to meet these deadlines, all you have to do to claim your credit is fill out I.R.S. Form 5405.

For more information about this credit go to the IRS website.

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I know you will love this great new way to look for homes.  So don’t delay – start searching for your dream home TODAY!

Always at your service

There is no doubt that the first time home buyer tax credit is a great thing but there are a few things to know before you assume that you qualify for the full $8,000.  The tax credit breaks down as follows:
Who qualifies? First time home buyers and people (or spouses) who have not owned a home for the previous 3 years.  You must purchase your home between January 1, 2009 and December 1, 2009.

• What qualifies for the first time home buyer’s tax credit? Only a primary house qualifies.  It does not matter if it is a single family home, duplex, townhome, condo, apartment or co-op, if it is a primary residence it will apply.

• What is the amount of the first time home buyer’s tax credit? $8,000 is the maximum amount of the credit.  There are 2 factors at play when it comes to getting the credit: The cost of the home and the income of the person or married couple purchasing the home.  The credit can be 10% of the closing price up to $8,000 or a person making $75,000 or less or a married couple making $150,000 or less are eligible for the full $8,000.

• Do you qualify for the first time home buyer’s tax credit if your income is higher? Yes and no.  If you make more than the $75,000/$150,000 limit you get less of a credit.  The maximum income is $95,000 for singles or $170,000 for couples.  If you make more than the maximum income you are not eligible for the tax credit.

The tax credit is a real boon for first time home buyers and does not have to be repaid.  If you qualify for the tax credit and have been considering purchasing a new home there could not be a better time.  Low interest rates, low home values and the first time home buyer tax credit all add up to the right time to call an experienced local Realtor.

Resource and for more information: Realtor.org