Eliseo Cisneros

For those who have been waiting on the sidelines to watch real estate values decline to the bottom, should reconsider buying now vs. waiting for values to go down more. There are several reasons why one should really consider buying now besides low home prices and historical low interest rates. The Federal and CA State Tax Credit should be highly considered if you are a first time homebuyer. Also the unemployment rate should also be considered during this economic environment. Furthermore, the current economic environment with respect to liquidity and credit are very critical with terms and conditions of mortgages which affect the amount of qualified borrowers.

Here is a quick overview of the CA Real Estate Market since it hit its median peak in June and July of 2007. Since the peak of 2007, values have been decreasing 14 months straight consecutively year-over-year. Real Estate values have decreased by 54.9% from its median value of $665,000 in June and July of 2007. The year 2008 was the worst year in values declining with a total of 41.5% reported on January 2009 from January 2008. The high drop, around half, in median is due to price depreciation, the other half is due to the types of homes selling (i.e. short sales, bank owned) and how those homes were financed. The month of January 2009 was the lowest median since it was $220,000 in May 2001.

Of the existing homes that sold in January 2009, 60.4 percent had been foreclosed on in the prior 12 months. A year ago it was 29.6 percent.

The median sales price is supposed to go down another 6% this year. However, sales this year are expected to increase 12.5% to 445,000, "compared with the forecasted 395,600 units, or 12% growth, in 2008," according the CAR. Distressed sales are expected to peak in early 2009. This is a critical factor for stabilization in the median price, according to CAR President William Brown.

The Federal and California State Tax Credits were designed to stimulate the economy by offering incentives total of $18,000 to homebuyers to go out and purchase a home.

The Federal Government is giving $8,000 in tax credit for first time homebuyers. Under the American Recovery and Reinvestment Act (ARRA), the tax credit increased from its original tax credit of $7,500 under the Housing and Economic Recovery Act (HERA). The new tax credit will never have to be repaid unlike its successor. The same income limits of the $7,500 apply to the new tax credit. To qualify for this credit you must purchase after January 1, 2009 and before December 1, 2009.

The CA Tax Credit is a total of $10,000 but it is restricted to new home sales only. It is a credit and not a loan, which means it never has to be repaid or a portion due if you remain in your home for at least 2 years. It is a total of 5% of the purchase price capped out at $10,000. The beauty of this credit is that it is not limited to first time homebuyers. There is no maximum income limits to qualify for the credit. You must purchase between March 1, 2009 and March 1, 2010 to qualify for the tax credit.

The Federal Reserve Bank has committed to purchasing $500 billion in mortgage backed securities to help keep mortgage interest rates affordable to homeowners and buyers. This purchase agreement will expire at the end of summer. After, mortgage interest rates may increase as high as 7% on a 30 year fixed mortgage. Until then, borrowers have the opportunity borrowing money at historic low mortgage interest rates.

The Financial Industry has been beaten very bad last year with the fall of giants such as Bear Stearns, Lehman Brothers, Wachovia, Washington Mutual, and more. This has caused for the credit markets to tighten up making it difficult for borrowers to borrow despite the low costs in borrowing. Fannie Mae and Freddie Mac have become very restrictive and expensive to borrow. The market landscape continues to change more restrictively which causes for some borrowers not to qualify. For example, FHA financing has never been credit driven, but lenders have increased from a 580 FICO to 620 FICO to qualify for FHA financing.

Unfortunately, 10.1 percent of California's population is unemployed and may continue to rise as the recession worsens. The unemployment rate brings fear of uncertainty in the job market place. One day you may have your job and the next you may be filing a jobless claim.

Putting all of these factors into perspective, it makes it the perfect time to buy a home. Not only does it make it a perfect time, but it is a critical window of opportunity for those who fortunate to still have a job. Today's mortgage payments based on the median sales price of $220,000 of January of this year is less expensive than paying rent with other perks homeowners get with respect to tax deductions and equity.

Have you been thinking about buying a home but are waiting to see if real estate values go down some more? You haven't saved enough money or maybe your credit is not where you would like for it to be to qualify for the best rates, terms and conditions.

If you have thought about making a purchase right now is the time to really start considering it. If you felt you have not saved money for a down payment, it is okay. There are different ways of obtaining the money for the down payment and closing costs. For example, you can borrow against your retirement plan to come up with the down payment. You may also borrow against the equity of your car to come up with a down payment. Or you can sell things of value such as baseball cards, jewlary, collection items, etc.

If you have money for down payment but feel like are short on the closing costs, relax the seller can help. The seller can contribute up to 3% for Agency programs or 6% for FHA financing. Seller contributions can really help you keep your out of pocket costs to a minimum. The only thing that needs to be done is making sure your Realtor negotiates the closing costs on your behalf.

During these difficult times, one must be greatful for still having their employment. With the unemployment way over 7% and times getting worst there is no telling who is next that may loose their job. Therefore, if you are employed you must act now before the worst comes if it comes. Besides paying a mortgage is less expensive than paying rent now a days.

Also you must not forget the incetives this market offers. The $8,000 tax credit. Low mortgage interest rates. Low real estate prices. New higher FHA and Agency Loan Limits.

If you have been waiting, now is the time to act. If you are never going to buy, then don't worry about.

Just a few months ago homeowners who needed to refinance their mortgage due to various reasons found themselves not being able to refinance because they owed more then what the property was worth. Some continued their mortgage payments until they couldn't anymore and let the property foreclose. Others decided on the Short Sale of their property and had the bank forgive them for the difference of what they owed and what the property sold for. Although the Short Sale was a better alternative then having the property foreclose, they still had to dump their real estate asset and go rent somewhere for the next three years.

The Housing and Economic Recovery Act of 2008 (HR3221) made it possible for distressed homeowners to refinance through the FHA Secured program under the HOPE for Homeowners (H4H) up to 90% Loan-to-Value (LTV) into an affordable 30 year FHA fixed. In my opinion, this program is superior because it allows the homeowner to save their biggest asset by refinancing their delinquent mortgage into a more affordable loan amount and payments. However, the Up Front Mortgage Insurance (UFMIP) of 3% and monthly Mortgage Insurance (MI) of 1.5% are to expensive and not all homeowners should have to penalized when they have not been late whatsoever on their mortgage.

The Federal Housing Administration (FHA) has been very aggressive in trying to stabilize the housing slump with various loan programs designed to increase sustainable home ownership. The Short Payoff Refinance is one of the many programs designed by FHA to help homeowners who have never been late on their mortgage payments or consumer debt to refinance their mortgage up to a maximum of 97% LTV under an FHA insured mortgage.

Homeowners with excessive obligations now have the opportunity to avoid financial hardship by refinancing under this program before it is to late. This Short Payoff Refinance will give the homeowner lower monthly payments and an affordable mortgage loan. Through this refinance it now gives the homeowner the opportunity to start savings in an asset accumulation account so there won't be a next time of possible financial hardship.

The Short Payoff Refinance is similar to Short Sale with respect to the documentation required with the exception of a purchase contract. The homeowner is required to provide a hardship letter along with a financial profile documenting all of their income and debts. Once the new loan has been approved, the negotiation process begins with the current lender. This process, like the Short Sale, can take more then 60 days depending on the lender.

Although this program is voluntary, most lenders are cooperating with this program. It makes more sense to comply with the Short Payoff Refinance then foreclosing on the property. Lenders have to much to risk by spending expensive attorney fees to foreclose on the property and then risking to sell the property at a lower price due to declining markets.

Finally a program that helps homeowners at the very start of the problem before it is too late. With proper Mortgage and Financial Planning the homeowner can sit with a Mortgage Planner and a Financial Planner to create a strategy that can be integrated with their overall financial plan and payment and equity objectives.

If you had enough money to pay off your mortgage right now, would you? Many people would. In fact, the ‘American Dream' is to own your own home, and to own it outright, with no mortgage. If the American Dream is so wonderful, how can we explain the fact that thousands of financially successful people, who have more than enough money to pay off their mortgage, refuse to do so.

The answer? Most of what we believe about mortgages and home equity, which we learned from our parents and grandparents, is wrong. They taught us to make a big down payment, get a fixed rate mortgage, and make extra principle payments in order to pay off your loan as early as you can. Mortgages, they said, are a necessary evil at best.

The problem with this rationale is it has become outdated. The rules of money have changed. Unlike our grandparents, we will no longer have the same job for 30 years. In many cases people will switch careers five or six times. Also, unlike our grandparents, we will no longer live in the same home for 30 years. Statistics show that the average homeowner lives in their home for only seven years. And unlike our grandparents, we will no longer keep the same mortgage for 30 years. According to the Federal National Mortgage Association, or Fannie Mae, the average American mortgage lasts 4.2 years.

Given these statistics, more middle class homeowners are choosing to use their mortgage as a tool just like the wealthy -- those with the ability to pay off their mortgage but refuse to do so. Will you be one of those who create a new, liquid, financially secure dream?