Courtney Donato-Griffiths

Montgomery County residents, have been thinking about making a move but decided against it because you thought you couldn't sell you current home? Did you want to use the home buyer's tax credit, but waivered about buying because you thought it was too late to get the process going? Or did you not qualify because your income was too high? Or maybe because you owned a home, now or in the last three years, you didn't qualify?

Good news! The tax credit has now been extended and expanded in a way that will help sellers, help first time buyers, and help repeat buyers too. Let's look at the terms:

• The credit runs through April 30, 2010. You must have a signed contract by this date, but have until June 3, 2010 to close. Military buyers who have served out of the country and are on active duty have an extra year to pursue this credit.
• The credit is $8,000 for first time buyers, which includes those who have not owned a home for three years.
• Repeat buyers who have lived in their home as primary residence for five consecutive years of the past eight qualify for $6,500.
• Buyers but live in the new home for at least three years or repay the credit. This rule is waived for military personnel who must move sooner due to official business.
• Income limits to claim the full credit are $125,000 for single taxpayers and $225,000 for married taxpayers. The credit phases out for incomes up to $20,000 above the limit.
• The maximum value of the home is $800,000.

This credit, predicted to help stabilize housing throughout the country, can offer an added incentive to rethink your home buying or selling plans. Up to this point, buyers have been grabbing starter homes that tend to be lower priced. With this credit, there should put more homes on the market for you to consider as sellers move up.

If you want to move up to a bigger, better, or different home, the credit will provide an incentive to do it PLUS offer some assurance that when you list your home for sale, you will get a buyer more quickly. Currently, homes in Montgomery County require an average of 86 days to sell, down from 97 days in the period from April through June. (Historically, the best average number of days on the market (DOM) in the area is 76 days.) The average selling price in the county is $395,463. This is down 9.9% from last year. If you sell, you might have to tweak your desired price to be in line with neighborhood values but when you buy yourself, you will also benefit from this trend and be able to buy more house for less money yourself.

Courtney Donato-Griffiths can show you the perfect house in Potomac, Gaithersburg, Rockville, Kensington, Bethesda, or other Montgomery County locations and is ready to discuss all the scenarios of the new credit with you. Whether you are buying a Montgomery County home or selling one, Courtney your local Montgomery County specialist

As you prepare to buy your first home in Montgomery County, you have already said "yes" to the biggest questions of all: "Do I want to buy a home? Do I want to buy it now?" Now it's time to ask the big one: "How much house can I afford?"

If you have gone to the bank to get pre-approval, as your real estate agent (and everyone else on the planet) will urge you to do, you may have a ball park figure for what the lender says you can afford. This may be more or less than what you had in mind.

How Much Can You Afford?

How much you can afford these days is based on the 28/36 rule. The means your housing should be 28% or less of your gross income before taxes, while your debt (not including your mortgage) should be 36% or less of your income. Based on an income of $60,000, you might be able to append about $1,400 a month on your mortgage, taxes, and insurance, but this would dip to $1,000 if you paid about $650 about for credit cards, car payment, and other loans. (Click here for a handy 28/36 mortgage calculator to compute how the 28/36% rule would work out for you.) Banks may use a magical formula based on your FICO score, but they are considering similar things: how you your debt compares to your income.

If you have household income that totals $120,000, your might be able to pay $2,800 for housing with no debt. When most people go to the lender, they put on a positive face about how their income is stable. A discussion at the kitchen table with a calculator should center around if and how you can pay a house payment approaching $3,000 if one of you were laid off or one spouse decides to stay home with the kids or an elderly parent. Will you be able the handle increased energy costs of the home is bigger than your old residence? You need to be honest and forthright with the lender about the current state of your finances, but make sure to have a Plan B or Plan C in mind.

Don't Sacrifice It All For Your Down Payment

It's true that you can reduce the amount of the loan and the monthly payment by putting more money down. This makes many people look to the two biggest pots of money they have: retirement accounts and savings. With a retirement account, large sums of money may be available, but if you are under age 59 ½ , the money is usually taxable when you remove it; the amount of the loan is included in your 36% of debt. Young home buyers often see their future retirement as decades away, but it is important to retain the account and add to it as planned even when you buy a home. The stock market, which fuels the growth of your retirement fund, may not be doing well today, but over time this will not be the case. Tapping your retirement fund is not a great idea.

Buying a home may require mobilizing all sources of funds for the downpayment, but you should not put your last dime into the downpayment. Financial analysts maintain you should have three to six months income on hand, plus about five % of the purchase price of your home as a cushion for emergencies and repairs. In addition, you may need about 3-5% of the amount of the purchase price for closing costs and moving expenses. This may mean that you need to consider buying a less expensive home or consider a loan that requires down payment, such as FHA. You can always pay more down on the principle or refinance later if paying a large downpayment would leave you without any reserve. The word from Washington is that an extension of the tax credit is likely in some form, so you can probably plan on some assistance for either your downpayment or other move-in expenses.

With home price and interest rates low, this is great time to buy an affordable house - but not to overextend yourself. Talk to Courtney Griffiths today about buying a Montgomery County home Courtney will give the most to date information about the status of the first time homebuyers credit.

Still want your first home in Potomac or another Montgomery County city in time to take advantage of the $8,000 tax credit? Unless the credit is extended (cross your fingers!), deals must be closed by November 30, which means anything not in the works by October 15^th may not make it. If you are at the point in buying your new home that you are just thinking about it and leisurely driving through Potomac or Gaithersburg or Rockville and assessing what you like, you are unlikely to meet this deadline. However, if you are really ready to go, there are a few things you can do to rush you home purchase through the system.

Here's a caution. Undoubtedly, you've heard a lot of press lately about how this is a great time to take the plunge: there's a tax credit available, interest rates are low, home prices are reasonable, it's buyer's market, etc, etc. If things line up in your finances and in your life at the moment and you are sitting on the fence, JUST DO IT, as the slogan goes. If this is not the time for you, WAIT. After all, we're not talking about buying a pair of shoes or mustering the courage to try parasailing; we're talking about taking on a commitment that will change the course of your life and consume it in the short run. If the mortgage crises of the past years have taught us anything, it should be that responsibility and common sense need to have a big role in any financial decision.

In the real estate world, it usually takes 30-45 days for a sale to close once the seller has accepted the offer - if all goes well. These days, it is common for the process to hit a snag at the lender's or with the appraisal. Some things are out of your control, but here's what you can do to increase the probability of speedier transaction:

Get pre-approved with a lender. Even if you don't have a home selected, pre-approval will establish how much house the lender thinks you can afford. If you set your sites on homes in the bank's price range - even if you think you could afford more - stick with that. If the bank thinks you can afford more than you think you can, follow your gut.

Make sure your money is readily available. If it is in a 401K, stocks, or another investment, it can take a few days to access. Once the seller has accepted your offer, and your loan is approved, put the money where you can write a check. Banks carefully examine money that suddenly appears in accounts, so make sure to keep all paperwork so that bank can track the money's origin. This is especially true if your parent or your rich uncle give you the money.

Buy a trouble-free property. Any property can have hidden title issues, but short sales, homes in probate, homes owned by people getting a bitter divorce, can add time and drama to your sale. Sale sales, in particular take months to close, so regardless of how attractive the price is, put your money down on a nice home owned by motivated sellers if you want a quick sale.

Watch your credit activity before the closing. Even after you are approved for a loan, banks monitor your credit report for change and increased credit use until the day you close. Though it is tempting to buy the new furniture and appliances so they can be in place before you move in, the purchase can throw off the debt-to-income ratio lenders use to determine whether to grant the loan. You obviously need to have a stove and refrigerator, but hold off on charging as much as possible until after you receive basic loan approval. After that, watch it until you close, as lenders can change terms or even rescind loans if your credit picture changes drastically before the closing day.

Don't forget the closing costs. Before you get your keys, you will have to pay various fees and perhaps points. The amount of these fees can vary dramatically from lender to lender, so make sure to shop smart before you apply. Get a good idea of the fees from the lender you select and your Realtor. You will need to have the closing costs available when you sign on the dotted line, so it is essential to plan ahead so you will have the money in hand. This may mean you will need to alter the amount to down payment you can give, which may affect the loan you apply for.

If you are ready to JUST DO IT, Courtney Griffiths can help you navigate the system for a quick purchase. She specializes in first time buyers, and works with area lenders who can offer you loan options. If you have questions about your ownership readiness, she can help you with that too.

It is important to make the right decision in financial matters, especially when your credit history will take an immediate hit if you make the wrong one. If you are in a position of deciding between selling your home as a short sale or letting it go into foreclosure, it is critical to be aware of the differences of how either one could effect your credit.

There's Help to Prevent Foreclosure

In either case, you should examine available alternatives to spare your home and your credit. The State of Maryland is proactive about preventing future foreclosure; before making a decision check out foreclosure counseling services in Montgomery County or contact the Homeownership Preservation Foundation by telephone at 888-995-HOPE or at its website at www.995hope.org.

Maryland Governor O'Malley has launched the HOPE Initiative -- Home Owners Preserving Equity. HOPE provides access to counseling services and resources for homeowners needing to refinance. Call 1-877-462-7555 or visit www.mdhope.org for links to foreclosure counseling services.

If You Have to Make a Tough Choice...

If you home's value is less than an outstanding mortgage loan, a lender may authorize a short sale by accepting less than the amount owed. Considering the expense and the length of time involved in a foreclosure, lenders often make the decision to approve short sales. Recent revisions to Obama's Making Home Affordable program offer incentives to lenders who agree to short sales.

Both a foreclosure and a short sale will impact your credit score negatively. However, a homeowner who sells their home by a short sale will have a shorter period to credit-score recovery.

Once a short sale is completed your credit score could potentially drop 80 to 100 points. The rebound time for a credit score after a short sale is about 18 months. This is considered quick compared to the inability to get a new mortgage for three years after a foreclosure. Also, there is the 200-300 point credit score decline involved in a foreclosure.

If you are looking to purchase a home in the Montgomery County, you have other credit concerns we will discuss in a future blog. If you are ready to buy or have questions or concerns about today's real estate market, Courtney Griffiths can help you with all of your needs.

Even if you work in DC and love it, you may not want to live in this pricey, condo-dominated area. Your vision for your life may include some green grass and a little distance between where you live and where you work. If you set your sites on the Inner Ring suburbs of DC in Montgomery County, you can have it all.

Montgomery County is home to the three cities of Gaithersburg, Rockville, and Takoma Park, 12 towns including Kensington, Chevy Chase, and Somerset, four villages, including Chevy Chase, Section 3 and Section 5, North Chevy Chase, four Special Tax districts, including Friendship Heights, and dozens of unincorporated areas like Bethesda , Potomac , and Germantown. This mix of entities, each with its own personality, is governed by a County Executive/County Council.

Located north of the District and south of Baltimore, Montgomery County is well connected to the central city with three passenger rail systems, buses, and highways. The county is the 8^th most affluent in the county, with a median household income of $91,440, yet median housing prices are about $100,000 less than in DC.

Don't yet the high income scare you away, though; since the 1970's Montgomery County has actively tried to incorporate affordable housing into the mix with a Moderately Priced Dwelling Unit (MPDU) zoning plan. Developers who include more than a minimum number of MPDU's in their plans are allowed to make their developments more dense. In return for allowing them to build more homes and increase revenues, the neighborhoods are potentially more socioeconomically mixed.

An average home in Montgomery Counts is $397,320, about 17% less than year ago. Homes are on the market for an average of 97 days - more than in the core (80 days) but also more plentiful. The area has a 12.2 month stock of homes as compared to only a 5.5 month stock of homes in the District.

Whether you are a first time homebuyer in hot pursuit of the &8,000 tax credit or a seasoned buyer looking for high end amenities, Montgomery County could be the site of your next home. It's time to talk to Realtor® Courtney Griffiths. She specializes in working with first time buyers and can help you find an affordable home in Potomac or other fine cities in Montgomery County.