Dave Voight

Homebuyers have until April 30th 2010 to find a home and get it under contract in order to qualify for the homebuyer's tax credit. If they can do that by midnight on Friday, April 30^th, they will likely be eligible to qualify to pick up a check from the Federal government for up to $8000. But, once that moment is gone, don't look for the tax credit to be extended again.

Waiting an extra few days or weeks to purchase a home this spring could cost buyers thousands of dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by FHA.

Coming just weeks before the April 30^th deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board's mortgage-backed securities purchase program (which has kept mortgage rates artificially low for over a year), these FHA changes make it even more important to act now to save big.

Here are a few reasons why:

On April 5^th, the cost of required up-front mortgage insurance for FHA loans will increase from 1.75% of the loan amount to 2.25%. For a buyer of a $200,000 home with $7000 down, the up-front mortgage insurance will increase by $965. While the impact is minimal, it not only adds to the up-front cost, but since it is financed into the loan, it also affects the monthly payment to a small degree, over time.

Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these "seller concessions" can increase the amount of cash a buyer will be required to pay at closing by $6000 for a home purchase of $200,000.

There is only one way to avoid being affected by all of these costly changes that lie ahead - submit all FHA mortgage applications by the last week in March.

This information was obtained from Karen Chartier of Envoy Mortgage.

When selecting a home inspector, you should definitely not go with the cheapest inspector. There are home inspectors in the Metro Atlanta area that charge anywhere from $150 per inspection and up. In my experience, every home inspector that I have seen that charges less than $325 has not been good and you get what you pay for. Many of them will run through the home in less than 1 ½ hours and provide the buyer with a terrible report. I had a recent experience where the $150 inspector did not go into the attic, did not test the air conditioner (which did not work), missed several obvious issues. One of the obvious issues was a plumbing leak under the master bathroom shower with a very large dripping wet stain in the ceiling of the garage, and this guy was a plumber.

I may be a little more critical of home inspectors than most real estate agents since I used to be a home inspector with 10 years experience. Even some of the inspectors who charge $350+ are not very good.

Here are some things you should look for in a home inspector. At a minimum, the inspector should be ASHI certified if doing a resale home. ASHI stands for American Society of Home Inspectors and you can find certified inspectors at www.ashi.org Some of their inspectors are just candidates, make sure the inspector you select is a full member. There are other organizations that certify home inspector, but ASHI has the most credibility in my opinion of non-code certified organizations.

If you are purchasing a new home, the inspector should be ICC certified. ICC stands for International Code Council. All full members of the GAHI (The Georgia Association of Home Inspectors) in Metro Atlanta are ICC certified. This is a very good organization of home inspectors and their website is www.gahi.com

Most decent home inspectors take at least 2 to 3 hours for small homes and longer on large ones. I would ask any home inspectors that you are considering the following questions:

•1. What are your certifications?

•2. How long have you personally been inspecting homes as a full time home inspector. Some of them will tell you, our company has been in business for x number of years, you should not care how long the company has been in business, just how long the inspector has been performing home inspections. In my personal experience, an inspector does not get good until at least 5 years into their career.

•3. Ask the inspector roughly how many homes have you inspected.

•4. Ask to see a copy of their inspection report. Some inspectors will provide you with a short checklist report. A longer narrative report with pictures is ideal. It shows how much pride the inspector has in their business and how thorough they are.

•5. Ask for references and call them.

•6. Some agents will tell you to make sure the inspection company has E+O insurance. This really does not matter. All good home inspectors that I know in Georgia will limit their liability to the inspection fee and if there are problems, they will simply refund the inspection fee and not make a claim. If they make a claim, they will usually get dropped by the insurance company or their rates will double or triple. I am just telling it like it is!

•7. Make sure the home inspector has liability insurance to cover items that they may damage during the inspection.

•8. Ask the inspector if you can follow them around during the inspection and ask questions. If they don't like this, that tells you a lot about the inspector and their customer service.

•9. Ask the inspector how many inspections do you perform each day. If the answer is 3 or higher, stay away from them. They will probably not spend much time inspecting the home. Also ask them, how long will the inspection take. Once again, you don't want them spending less than 2 hours in the home. 3 hours or longer is better. The only exception to this is if they have 2 or more inspectors inspecting the same house at the same time.

You are ready to buy a house, where do you start? Your first step in your home search should be to contact a lender, unless you are a cash buyer. This is extremely important for a number of reasons. They will be the ones to let you know about the current programs, how much money you will need as a down payment, the total money needed to close and the loan amount you can be approved for. They will also provide you with a pre-approval letter or pre-qualification letter, which you will need when submitting an offer on a home. Most sellers will require this letter when presenting an offer, especially if the home is an REO (bank owned) property. Without a pre-qualification letter, we have no idea how much home you can afford. If you look at homes that are above what you qualify for (ex. $180,000), you will be disappointed when you look at the homes that you do qualify for (ex. $150,000). The credit market has changed dramatically recently which can affect how much home you can afford. Most lenders can provide you with a pre-qualification letter within 1 to 2 business days.

It is best to get a pre-approval letter. It usually takes a lender anywhere from 14 to 28 days to get your loan approved through desktop underwriting depending on the type of loan and your current circumstances. If you are pre-approved, this can benefit you in several ways. If a seller has multiple offers on a home, they will most likely select a buyer with a pre-approval over a buyer with a pre-qualification letter. You can also close much quicker with a pre-approval letter. Closing quicker can allow you to schedule the closing for the end of the month and reduce the amount of closing costs.

If you are paying by cash, you will need a source of funds document from your financial institution.

Here are some lenders I trust in the Metro Atlanta area:

Carey Cox with Mortgage South Lenders: 404-886-1556.

Karen Chartier with Flagstar Bank: 770-781-1640

Meryl Dwyer with Suntrust: 678-858-8150

When comparing lenders, they usually have slightly different interest rates and fees. Ask the lender for a good faith estimate and what the APR is. The APR (Annual percentage rate) is the effective interest rate you will be charge per year on the loan. The APR includes the interest rate and all the fees included. Thus, you can effectively compare lenders by APR, not their current interest rate. According to the Regulation Z law, the lender is required to disclose the APR.

When you purchase your next property, it is very important to look at the school districts. A home that is located in a school district with poor test results or rankings, will typically sell for less than if the same home were located in a good school district. If you purchase a home in a good school district, it will be easier to sell and your children will get a better education.

You can look up Metro Atlanta school information at my website www.davevoighthomes.com Click on "School Info" link at left side of screen. You can also get school rankings at website http://www.schooldigger.com/

Section 121 of the IRS tax documents allows you to exclude the gains you make on the sale of your principal residence if you meet the following criteria.

You must own and occupy the residence for 2 of the last 5 years.

This is available only once every 2 years.

You can exclude up to $250,000 in gains per owner-occupant.

For complete details click on the following link http://www.irs.gov/irb/2004-39_IRB/ar07.html

If your spouse will allow it, I would recommend purchasing a fixer upper in a nice neighborhood. Make sure the home you purchase is in a good school district and a low crime area. You can fix up the property during the 2 years that you live in it and then not pay taxes on the gains up to $250,000 per owner-occupant when you sell it.

Unfortunately, I cannot take my own advice. My wife will not allow it.