Nov
4
$8000.00 Federal Tax Credit for home buyers may be extended!
Posted by Mark Anderson under For Buyers, General Information
Home buyers interested in the housing market in the fall of 2009 have some great advantages to help them! Even in traditionally high-cost areas like Orange County, California.
First of all, the low price of homes available for sale will prompt many to buy now. Distressed homes like short sale properties and REO, or, bank-owned properties - homes that have been through foreclosure - and motivated home sellers - have driven the prices to new lows.
When a calaulation is made on the low price of a home versus the income of area residents, it turns out that over 50% of residents in some areas can afford to buy now. This is the “affordability index” and we’ve been watching it for years. Just a few years ago, prices were so high and household income was similar to where it is right now - so that the affordability index hovered between 10-20% in some areas. That means that only 10% or 20% of the area buyers could even afford to buy. Now, the goal of home ownership is within the reach of over 50% of the population!
Interest rates are still at historically low levels. Contrary to many people’s ideas - there are loans available for qualified buyers! Consider that in the 80’s buyers were getting mortages at 15% - 18%! Today, current interest rates on 30-year, fixed mortgages is just over 5%! Some buyers even ask motivated sellers to contribute money toward their closing costs. They will then use that money to “buy down” the loan’s interest rate even more. As a general rule of thumb, each “point” in buy down money lowers the interest rate by 1/8 %. So, on a $300,000.00 loan, one point would be $3000.00 and it would adjust the interest rate from 5.0% to 4.875%. Over the term of the loan - that’s a lot of money saved!
Creative mortgages are still available. Almost gone are the no-document loans. Those were the loans where a buyer “stated” their income and assets. However, FHA loans have many features that make them an exciting alternative. For instance, with an FHA loan a buyer can put down as little as 3.5% as a down payment. On that $300,000.00 property we just mentioned - that would be under $12,000.00! Also, that money can be “gifted” from family members - or there can be non-occupant co-borrowers who can help buyers actually “qualify” for the loan. Also, FHA loans are assumable down the road. If interest rates are much higher in the future, and if the FHA seller has to move, they have a marketing benefit of being able to offer their assumable loan at a much lower rate.
Finally, the first-time home buyer tax credit of $8000.00 is due to expire on December 1, 2009. Fortunately, there is legislation winding through Congress to extend this credit until June 2010. They are also talking about adding a $6500.00 tax credit for other buyers in the market - not necessarily the first-time buyers!
We’ll keep an eye on this legislation and be back to report on it’s progress.
In the mean time - let your friends, relatives, co-workers and other potential home buyers know the benefits of buying right now! Low prices, low interest rates, tax credits and creative mortgages. This might be their opportunity to own their own home!
For additional details, visit www.LifestyleEstates.com or call Mark Anderson at 1.888.746.6275.
Comments (0)