My New Blog

Many people are asking is now a good time to buy a home? What they are really asking is; "are the values still dropping", and "is it really possible to obtain new home financing right now?" 

My answer is that it is a great time to buy!  Possibly one of the best times in history!  Why?  Rates are low, prices have dropped in many cases to half of what they were at the height of the market.  Because of over supply of homes and record numbers of short sales and foreclosures, you have many very motivated sellers, truly making this a buyers market.  However, many people are waking up and realizing what a great time this is and creating more competition for a homes that truly look like a steal!  This is causing prices in many markets to stabalize (stop dropping) and in some markets actually causing prices to go up! This demand for homes is further being fueled by the governments temporary First Time Homebuyer Tax Credit Program. This is a program available to first time homebuyers or homebuyers who hasn't owned a home during the last 36 months.  These homebuyers can qualify for up to $8,000 under the Federal Governments First Time Homebuyer tax credit program.  What is a tax credit? Simply its  $8,000.00 free from Uncle Sam as part of the Obama's Economic Stimulus package that will never have to be re-paid, as long as you live in the home for at least 3 years.  But time is running out, you must close on your new home by December 1, 2009, in order to qualify.  This means that you should have a home picked out by October 1, to make sure that time does not run out!  

But is there financing out there? There is actually plenty of financing available for those looking to borrow $417,000 or less.  Nationwide, there are still Conventional first time homebuyers that require only 3% down payment. For government designated "declining markets such as Arizona, California, Florida, and Nevada, these first time homebuyer programs arent currently available. However, there are plenty of attractive alternatives:

-VA Zero down financing for Veterans.

-FHA Government Insured loans requiring only 3.5% down on purchases.

-USDA Mortgages which will finance up to 102% of the purchase price are excellent loan programs for borrowers buying outside major urban centers.

-Fannie Mae has a limited 5% down financing in declining markets.

-HUD has a $100 down program on certain HUD homes.

-FHA and Fannie Mae even have home improvement purchase programs for those buying a "fixer upper" where you can obtain money over and above the purchase price for doing repairs after closing!

You can see there are quite a choice of programs available however, qualifying for these loans has become more strict.  The homebuyer today will need to document all their income for loan qualification using tax returns, W2's and Paystubs.  Gone are the days of "stated income" and so called "bank statement" loans where in many cases all that was required was the word of the borrower to qualify.  The other thing that has become more strict is the credit requirements. Most programs require a minimum credit score of 620 and scores well over 700 for those looking for the very lowest interest rates.  however, there are still  a few programs available for borrowers with scores as low as 580, but these will require a 20% down payment and have a little bit higher rate.  Of course there are other factors that the lender will consider when qualifying for a loan like; 

-source and seasoning of funds,

-stable work history - meaning 2 year work history in the same line of work with a minimal amount of gaps of employment,

Of course, there are many more factors that go into qualifying for a mortgage, and every ones situation is different, often with compensating factors coming in to play,  which makes it so important to be qualified by an experienced loan officer prior to putting that first offer in on a home.    

Bottom line: If you have decent credit, about 3.5% down payment saved up or you have a relative who can give it to you, if you're looking to own a home for possibly less then the cost of renting,  if you are looking for the opportunity of a life time in real estate, you better get house hunting before the kids are back in school!