Home Buyers Still Waiting

According to the most recent information from Trulia home buyers are staying on the fense when it comes to buying a home.  Market uncertainty is scaring away people who don’t own a home, particularly those who are in the 18-34 age group previously most likely to buy, says online real estate service Trulia.

More than 70 percent of non-homeowners surveyed say they have no plans to purchase a home in the next year. But the good news is 12 percent of non-homeowners say they expect to buy a home in the next 12 months.

Non-homeowners with an annual household income of $50,000 to $75,000 agreed more strongly (78 percent) on a home being central to achieving their personal American Dream than those with an annual household income of under $49,000 or over $75,000 (51 percent and 53 percent, respectively).

But first time home buyers should NOT wait too long.  Now is a great time to go out an buy your first home.  Why?  Because many buyers think that there is an actual buying season and that our current one is over for this year.  This is just not true.  What this does is keep your competition for that house away.  Your competition just quit looking and buying.  This leaves you an open field.  Another reason is the tax credit that first time home buyers get when they purchase their first home. The First-time Home Buyer Tax Credit was passed this year as part of the Housing and Economic Recovery Act (H.R. 3221) on July 30 and targets any individual or household that hasn’t owned a home for at least three years. As a first time home buyer, you can take the credit on your 2008 tax return if you buy your house this year after April 9. It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if you wait to buy in the first half of 2009 you can take the credit on their 2009 tax return. But don’t wait too long…settlement MUST take place prior to July 1, 2009.

But remember, the actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so you can get 10 percent of the home price credited against your tax liability, up to a maximum $7,500. Income limits are $75,000 for individuals and $150,000 for households. Individuals whose income exceeds the $75,000 limit but isn’t more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000.

Any house is eligible as long as it’s a primary residence and is in the United States.

To help keep the program cost effective for taxpayers, the federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years, although repayment will be no more than $500 yearly and payments will not start until 2011. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable.

There’s one restriction on the type of financing that you can use if you plan to take the credit. That restriction is on tax-exempt mortgage financing. That only applies if you are using below-market interest-rate financing from a public agency or nonprofit that’s funding the loan using proceeds from a tax-exempt mortgage-revenue bond issue. For most buyers, this won’t be an issue. It’s mainly an issue for low-income buyers using special mortgage financing.

If you have any questions, please check our First Time Home Buyer’s Knowledge Base. You can also access the First-time home buyer tax credit chart.

Terry Iwaniw
REALTOR Associate
First Time Home Buyer Specialist
Foreclosure Prevention Consultant
RE/MAX Home Team
609-417-1086
http://www.terryi.com/
http://www.snewjerseyhomes.com/

Tags: buying a home, home inventories, housing market, real estate market

Federal Reserve Lowers Interest Rate

In a much anticipated move, the Federal Reserve lowered is prime interest rate by a full half of a percent to 4.75%.  The move was the Fed’s first rate reduction of any kind in four years, the steepest in nearly five years and its most abrupt reversal of course since January 2001, when policy makers sharply cut rates at an unscheduled emergency meeting just before the last recession.  For consumers, the Fed’s move could mean lower borrowing costs for mortgages and automobile loans.  With home prices down and lower interest rates, the Fed is hoping that home sales return to a normal pace to help stabilize the economy.  Much of our economy is driven by the housing market.  When housing slows, so does the economy.

A large majority of home buyers are under the misconception that there is no mortgage money for them to buy a home.  That is not true.  There is plenty of money for people looking to buy homes using standard mortgages, like FHA, VA or Conventional loans.  If a home buyer is looking to buy a home and is financing less than $471,000, if they can document their incomes and have fair credit, they can buy a house today.  It is the sub-prime borrowers that are having a hard time finding financing.  The days of financing 106% of the purchase price, with a 1.5% teaser rate and not providing any income documentation are gone.

In the last 6 months, we have seen the majority of home sellers drop their asking price, which is a good thing.  We have also seen many sellers just give up and take their homes off the market for good, stating that they are not going to give their homes away; they will just stay where they are for a few more years. 

What does all this mean for the average home buyer? - Lower mortgage payments.  Home prices are down, sellers are helping with closing costs, interest rates are historically low and there is an abundance of houses on the market. Buyers who come out in this market will be able to take advantage of the new market conditions. Those buyers who wait until Spring could find home prices are back on the rise again.

Tags: Buyer Information, buyers, buying a home, camden county, gloucester county, mortgages

Federal Reserve Lowers Interest Rate

In a much anticipated move, the Federal Reserve lowered is prime interest rate by a full half of a percent to 4.75%.  The move was the Fed’s first rate reduction of any kind in four years, the steepest in nearly five years and its most abrupt reversal of course since January 2001, when policy makers sharply cut rates at an unscheduled emergency meeting just before the last recession.  For consumers, the Fed’s move could mean lower borrowing costs for mortgages and automobile loans.  With home prices down and lower interest rates, the Fed is hoping that home sales return to a normal pace to help stabilize the economy.  Much of our economy is driven by the housing market.  When housing slows, so does the economy.

A large majority of home buyers are under the misconception that there is no mortgage money for them to buy a home.  That is not true.  There is plenty of money for people looking to buy homes using standard mortgages, like FHA, VA or Conventional loans.  If a home buyer is looking to buy a home and is financing less than $471,000, if they can document their incomes and have fair credit, they can buy a house today.  It is the sub-prime borrowers that are having a hard time finding financing.  The days of financing 106% of the purchase price, with a 1.5% teaser rate and not providing any income documentation are gone.

In the last 6 months, we have seen the majority of home sellers drop their asking price, which is a good thing.  We have also seen many sellers just give up and take their homes off the market for good, stating that they are not going to give their homes away; they will just stay where they are for a few more years.  

What does all this mean for the average home buyer? - Lower mortgage payments.  Home prices are down, sellers are helping with closing costs, interest rates are historically low and there is an abundance of houses on the market. Buyers who come out in this market will be able to take advantage of the new market conditions. Those buyers who wait until Spring could find home prices are back on the rise again.

Tags: Buyer Information, buyers, buying a home, camden county, gloucester county, mortgages

How to get THE home at THE price

Whether you are buying your first home or your fifth, the process of buying a home can be an emotional, time-consuming venture.  Feeling that, in the end, you made the right decision and got a good deal can make all the difference.

As with most major decisions, the amount of work and research you undertake before you start shopping can have a dramatic effect on how well you do in the end.
#1  Do you really need that backyard tennis court?
Everyone can picture their ideal home.  If you haven’t thoroughly prepared yourself prior to viewing houses, chances are that you will find what you think is your ideal home, and will wind up paying too much for it.

It is essential to treat the buying process in a slightly detached manner.  Those who fall in love with houses usually pay too much.

That’s why it’s recommended that you develop a list of needs and one of wants.  When looking at houses, make sure that they cover all of your needs - things like adequate space, a good neighborhood, perhaps a garage - and then have fun with items on your wants list.  Treating the process in a regimented manner will help you to make a rational, informed decision.
#2 Get pre-approved
Visit your lending institution prior to shopping.  Be sure to get a mortgage commitment in writing. Being pre-approved gives you a solid price range, and lets your Realtor® and potential sellers know that you are serious and not just a browser.

#3 Get the right people behind you
Buying a home is a complicated process, with many people involved.  Having the right people on your side can make a big difference.  An experienced, dedicated, and knowledgeable Realtor® we can put a team of advocates, including lenders, lawyers, home inspectors and movers, on your side immediately.

#4 Communicate
The more you share with your Realtor®, the better he or she will be able to represent you.  Letting your representative know exactly what you’re looking for, in terms of needs/wants, price range, and location, can eliminate unnecessary trips to unsuitable homes and that focus can help ensure that you wind up in the right home.

#5 Location, location, location
It’s still true.  The desirability and resale value of your home depend on location more than any other factor. People want a desirable community that includes character, quality of schools, access to work, major transportation arteries, recreational facilities, etc.

On your viewing trips, take a careful look and ask the following questions: How does this home compare to others in the neighborhood? Are yards fenced? Are there many children playing in the streets? Are the front and back yards and the exteriors of the homes properly maintained?  The less expensive houses in a better area tend to appreciate faster than the most expensive houses in a less desirable area.

Additional factors that affect the property value of a home include traffic, sounds, smells, zoning bylaws, and many others. Be objective. Be sure you are completely satisfied with the neighborhood. If you choose a neighborhood with problems, you likely won’t get as much as you hoped with it comes time to sell.
#6 Use your Realtor’s® knowledge 
We are trained in all aspects of real estate, including understanding supply and demand, economics, and the neighborhoods of the city in which they practice. A professional Realtor® can do much of the work for you, by reviewing your needs, reviewing available properties, and making an informed match. A comprehensive knowledge of the available homes in your neighborhood is one of your Realtor’s® strongest assets. With the aid of computerized systems, a Realtor® is notified within hours when a home becomes available.

#7 Pay attention to red flags
When evaluating a home, be sure you know the difference between acceptable and unacceptable problems. Cosmetic items like peeling paint, worn carpeting, or unattractive wallpaper can be easily remedied, and can be used as negotiation items, as there will be costs involved in updating the home.

Major problems, however, are clearly red flags.  Look for items such as major foundation cracks, water damage, outdated electrical systems, and inadequate plumbing. These items could be too expensive to remedy to make the home a worthwhile investment.
#8 Hire a home inspector
A home inspection is an inexpensive way to gain peace of mind, and guard your pocket book. A proper inspection will cover all areas of the house including foundation, electrical, heating, plumbing, floors, walls, ceilings, attic, roof, siding and trim, porches, patios, decks, garage and drainage. A professional inspector can give you an objective view of the property, with a written report, indicating the present condition and items that will need repair.

#9 Be cautious with fixer-uppers

Sometimes, a fixer-upper can be purchased below market value, and once sufficient repairs are made, can be sold at a significant profit. However, not all fixer-uppers will bring in the profits you might expect. 

Consumers often overestimate their level of dedication to doing extensive renovation work, and underestimate the costs associated with such work.  A wall that needs to be replaced can often lead to the discovery of faulty plumbing, electrical, or other major undertakings.  Your Realtor® and home inspector are your best allies when it comes to cost-benefit analyses.

#10 Consider your future needs
A move can be a major undertaking.  Take a good look at your current lifestyle and consider the future. Will you need extra space for a home office, a child, or perhaps a child moving back home? Perhaps it may be easier and less expensive if you purchase a home that can meet these needs now, rather than moving up to a larger home a few years down the road.

#11 Proceed quickly
When you’re ready to buy, act.  Good properties sell.  This is especially true given the current state of most real estate markets. However, when you work with a Realtor®, you have access to the latest technology. As part of the MLS and Agent Handshake networks, a Realtor® has access to properties within hours of when they are listed.

Technology works to your advantage. Many Realtors® now have personalized websites which allow you to sign on as a client, and receive notification of new listings via email. You save time and effort, and you can view only those homes that come closest to meeting your needs.

#12 Clarify relationships
In any real estate transaction, be very clear about who is working for whom, and what the relationship represents. Unless otherwise stated, an agent represents the seller in transactions for the sale of a home. This agent, as part of his or her fiduciary duty, must ensure that the seller’s (and not your) position is represented throughout the entire process.  Get a buyer’s agent on your side, or ensure that someone is acting in your best interests.

#13 Ask for a written CMA
A Comparative Market Analysis (CMA) is an analysis of comparable homes in a given neighborhood. It shows you the sale prices of comparable homes in the neighborhood, along with asking prices of other homes in the area currently on the market. A Realtor® can request this report for any home and neighborhood.  Ask for this report in writing. With this valuable document, you’ll have solid, reliable information about how fairly a home is priced compared to its real market value.

#14 Know the seller
Understanding a seller’s reasons for moving could work to your advantage during negotiations.  For instance, a seller who has been transferred to another city may be more motivated to sell than someone who is still shopping for a new home.  A vacant house, or a house that has been on the market for several months and has been reduced in price, could also provide the opportunity for lucrative negotiations.

#15 Keep it impersonal
Conversely, information could be used to your detriment. Information about your mortgage, size of down payment, move-in deadline, or circumstances for buying could be used to the seller’s benefit in negotiations. While you want your Realtor® to know these details, maintain your poker face and keep your cards hidden with the sellers and their agents.

#16 Measure twice, sign once
While you definitely want to move quickly once you’ve made the decision to purchase, you don’t want to cave in to pressure for a quick close. Someone who is trying to pressure you into buying a home is likely doing so for a reason. Make sure the reasons for you to buy a home are your reasons, not theirs.

#17 Exercise your negotiating skills
Even if you prefer not to haggle, it’s worth it, especially when it’s your home and one of your biggest investments. Most people expect to haggle over the price. There is always room for negotiation, and your Realtor® should be a professional negotiator.

#18 Avoid bidding wars
In some cases, the seller’s Realtor® may use scare tactics to rush the sale or increase the price. Falling for this trap could cost you money. If there is another buyer, or some other reason this pressure is being applied, whoever wins also loses because they tend to overpay. Let reason be your guide, not passion.

#19 Get it in writing
Legally, sellers must disclose all known material defects of a property. Ask for this in writing. Also be sure to consider the ramifications of these defects. Will they be costly down the road? Are they “serious” defects?

#20 Be aware of hidden costs
While Realtors® often tempt first-time buyers with rent/mortgage comparisons, there is more to a home than simply the mortgage. You will be responsible for other items including mortgage insurance, appraisal fees, legal fees, inspection fees, transfer taxes, title insurance, inspections, property tax, increased bills, etc. Your Realtor® can give you a good idea of the costs associated with buying a home that are beyond its final negotiated price.

Tags: Buyer Information, buyers, buying a home, Marketplace, Real Estate