First Time Homebuyer
Is Now a Good Time to Buy?
October 5, 2010 by Sasha C. Farmer, REALTOR ® · 2 Comments
Time Magazine’s September 11 cover story attempts to make a strong case against homeownership in the article found here; but I have actually found my recent conversations with clients (current and pending) to present a story that is quite the opposite.
Are you still debating whether or not it is a “good time to buy”? It is never a good time to buy for EVERYONE, but right now is a GREAT time to buy for many people, and I hope the naysayers aren’t swaying people away from making a decision that could very well be right for them. If you have income/job consistency and plan to stay in the same location for 5+ years, this may be the best time to buy that we’ll see in this lifetime. In Charlottesville, we have excellent selection, competitive prices, and we’re seeing the same low interest rates that all of these experts mention.
Here is an interesting article from Steve Harney, a real estate expert who has stayed abreast of the current real state market and seems to do a good job reporting on it fairly.
“If you don’t own a home, buy one. If you own one home, buy another one. And if you own two homes, buy a third and lend your relatives the money to buy one.” – John Paulson 9/27/2010
WOW! That’s a powerful statement.
There is no question that John Paulson is a bull when it comes to residential real estate right now. Should we care what Mr. Paulson thinks? Should we listen to him? The answer to both questions is a resounding ‘YES’. Here are several reasons why.
Who is John Paulson?
Paulson is the person who made a fortune betting that the subprime mortgage mess would cause the the real estate market to collapse. He understands how the housing market works and knows when to buy and when to sell. What do others think of Paulson?
According to Forbes John Paulson is:
a multibillionaire hedge fund operator and the investment genius who made a killing going short subprime mortgages a few years ago.
According to the Wall Street Journal Paulson is:
a hedge fund tycoon who made his name, and a fortune, betting against subprime mortgages when no one else even knew what they were.
What did other financial players think of his statement?
The Wall Street Journal agrees with Paulson:
Ignore the critics. The odds have to be on his side…It isn’t just that home prices have fallen a long way. It’s also that, if you can get a mortgage, you are basically taking a reverse bet on the bond market. You could be a long-term borrower at fixed rates, instead of a long-term lender. Right now you can borrow for 30 years at around 4.3%. After the mortgage tax deduction, for some people the net effective interest rate is nearer to 3%. That’s going to prove an awesome deal if we see inflation again.
And Forbes said:
As this is the best time in 50 years to buy homes, Paulson advised his listeners to take 30 year mortgages to buy a home as “your debt and interest payments get locked in at record lows, while the price of your home will rise.”
Are others also saying now is the time to buy?
Just last week, we posted that there is a growing number of people saying that NOW is the time to buy, including:
- The Wall Street Journal
- Professor Karl Case, founder of the Case Shiller House Pricing Index
- The wealthiest families in the country and
- 70% of everyone else in America
Bottom Line
Thinking of buying a home? Are you taking advice from a friend or family member telling you that now is not the time? It may be time to listen to people who better understand the opportunities that exist in real estate today.
via If HE Says It Is Time To Buy a Home, BUY A HOME!.
I hope that if you’re considering purchasing a home, you will give me a call or shoot me an email to discuss your options and take a look at whether or not buying a new home in Charlottesville might be the right decision for you!
Trying to Utilize FHA Financing? Check this List of Condo Communities to See if They're Approved!
February 10, 2010 by Sasha C. Farmer, REALTOR ® · Leave a Comment
If you’re planning to utilize FHA financing to purchase your next home, you have to use a little bit of caution when considering condos in Charlottesville, as not all of them are approved for FHA financing.
Check out the link below to see whether or not the condo you’re considering is approved for FHA;
HUD.GOV Condos with FHA Financing
If the condo community you’re considering is not on this list, you may need to check with your mortgage lender to see if you will be able to come up with an alternative type of financing. Additionally, if you live in one of the condos that is not able to provide FHA financing, you should be aware that it may limit the potential number of Purchasers who will have the ability to buy your home on the resale market!
Please give me a call if I can help connect you with a lender who may be able to help you find alternative financing, or get you pre-qualified!
[Photo Credit: http://www.radrounds.com]
New Forms to Claim The First-Time Homebuyer Tax Credit
January 17, 2010 by Sasha C. Farmer, REALTOR ® · 1 Comment
The new forms to submit when claiming the first time homebuyer tax credit have finally been released! Form 5405 will now be needed when submitting a tax claim, and this is likely mainly due to the large numbers of tax fraud we were experiencing in res
ponse to the First Time Homebuyer tax credit. Please be sure to file this along with your claim, so you don’t experience any sort of delay in claiming your credit!
Click HERE to directly download a copy of Form 5405 from the IRS website for yourself.
From the Washington Post coverage of the new forms…
“Form 5405, First-Time Homebuyer Credit and Repayment of the Credit” can be downloaded from the IRS web site.
First-time buyers will have to send a copy (keep your originals!) of one of these documents to back up their claim to the tax credit:
- A copy of their HUD-1 Settlement Statement, complete with dates and signed by all parties.
- Mobile-home buyers can send in a copy of their signed, dated and fully executed sales contract.
- New-home buyers who don’t have a HUD-1 settlement statment must send in a copy of the certificate of occupancy.
All of these documents need to show names, dates, addresses, signatures, and prices.
[From Local Address - New tax forms released for claiming the home buyer credit ]
The experience of my clients thus far has been that getting the credit has been fairly painless. I hope that this will continue through the extension of the credit in 2010, but I would love any feedback you may have!
[Photo Credit: The Backyard Wealth Blog]
January is National Radon Month!
December 28, 2009 by Sasha C. Farmer, REALTOR ® · Leave a Comment
For those of you who aren’t yet familiar with radon, it is an odorless gas that is undetectable by humans. As described on the EPA website;
Radon is a cancer-causing natural radioactive gas that you can’t see, smell or taste. Its presence in your home can pose a danger to your family’s health. Radon is the leading cause of lung cancer among non-smokers. Radon is the second leading cause of lung cancer in America and claims about 20,000 lives annually. Learn how you can protect your family. Test Your Home for Radon — it’s easy and inexpensive. Fix your home if you have a radon level of 4 pCi/L or more.
In Charlottesville, the standard is to test for radon when you purchase your home during the inspection period (and some people will opt not to test at all) but for most people, that is the first and only test for radon that they will do on their home. There are many areas in Charlottesville where radon gas is present in homes, so if you’ve never checked- now is a great time!
Testing for radon is easy and inexpensive, and the EPA Radon site has lots of local and national links to help connect you with how to purchase a self-test, connect with someone locally to administer a professional test, and find people to mitigate a radon problem should you have one.
Locally, one of my preferred home inspectors, John Handloser with Pillar to Post Home Inspections, will be happy to administer a professional radon test in your home- call him a few days in advance to schedule him to come out.
According to NAR, 4 out of 10 Recent Buyers Used FHA Loans
December 23, 2009 by Sasha C. Farmer, REALTOR ® · Leave a Comment
As you probably already know, FHA loans are becoming an extremely popular loan device for purchasers in this marketplace. FHA loans used to evoke lots of negative connotations, a few of which were; lots of extra requirements, much longer time to process, and stringent and difficult home inspection standards. However, these hassles have been eliminated, and FHA loans seem to rarely differ in difficulty from pursuing a conventional loan. I expect that the use of FHA loans will only continue to grow into 2010.
According to the most recent REALTORS® Confidence Index, 39 percent of recent buyers purchased a home with a Federal Housing Administration-insured loan. REALTORS® who took part in the November survey also reported that the number of first-time home buyers continued to climb to 51 percent.
“FHA helps provide affordable mortgage financing to home owners, particularly first-time home buyers who are so important in drawing down inventory to help stabilize the current housing market,” said NAR President Vicki Cox Golder. “These recent survey results reaffirm that, despite its current challenges, FHA is a critical part of the American housing fabric.”
—NAR
[From REALTOR® Magazine-Daily News-4 out of 10 Recent Buyers Used FHA Loans]
An interesting thing about interest rates and value…
December 23, 2009 by Sasha C. Farmer, REALTOR ® · Leave a Comment
I have spoken to many of my clients about this previously, when saying that often a 1/4 point increase in interest rate can result in a higher monthly mortgage payment than would a 5% increase in sales price. What this means, is that the buyers out there who are waiting for the market to “hit bottom” may end up finding that their dream home becomes more expensive, even as the price drops. Marc Roth, writing for BusinessWeek sums it up nicely (emphasis added);
So, what can we learn from the historical trends and numbers?
First, rates have far further to move upward than downward; for more than 30 years, 7% was the low and 18% the high. The norm was 9% in the 1970s, 10% in the mid-1980s through the early 1990s, 7% to 8% for much of the 1990s, and 6% only over the last handful of years.
Second, the last time the long-term trends reversed from low to high, it took more than 20 years (1970 to 1992) for the rate to get back to where it was, and 30 years to actually start trending below the 1970 low.
Finally, the most important lesson is to understand the actual financial impact the rate has on the cost of purchasing and paying off a home.
Every quarter-point change in interest rates is equivalent to approximately $6,000 for every $100,000 borrowed over the course of a 30-year fixed. While different in each region, for the sake of simplicity, let’s assume that the average person is putting $40,000 down and borrowing $200,000 to pay the price of a typical home nationwide. Thus, over the course of the life of the loan, each quarter-point move up in interest rates will cost that buyer $12,000.
[From If You Don't Buy a House Now, You're Stupid or Broke - BusinessWeek]
Don’t just look at list prices when trying to determine the cost of your home- your interest rate may actually have a significantly higher impact.
If you could use a recommendation to a good local lender, who can walk you through all of the stipulations of your financing and help you determine if now is the right time for you to buy, please don’t hesitate to call.
[Image courtesy of http://www.tutor2u.net/blog/files/interest_rates.gif]
New Tax Credit for Current Home Owner's Making a Home Purchase and the Extended First Time Buyer Credit
November 7, 2009 by Sasha C. Farmer, REALTOR ® · Leave a Comment
Today, President Obama signed off on the Extended Home Buyer Tax Credit, now to include a credit for current Home Owners.
This new initiative will continue the current $8,000 first time home buyer credit to eligible participants until 2010- July 1, 2010 to be exact, which is when all closings must have occurred. In order to be eligible for this credit, you must have the property under contract no later than April 30, 2010.
It has also expanded the credit to current home owners. Anyone who has used their residence as a primary residence consecutively for 5 our of the last 8 years are also eligible for a tax credit when making their next home purchase. This is a $6,500 credit and the same deadlines still apply; April 30, 2010 for homes to be under contract, and July 1, 2010 for the sale to have closed.
Many of the details are explained in the following PDF document- please contact me with any specific questions!
Click here to download the November 7, 2010 Extended and Expanded Tax Credit.
