James Hurt

Some people might see now as a bad time to buy a home; the market is unsteady, prices are fluctuating, and banks are not inclined to lend. Yet, for a first time home buyer, now is a perfect time to buy.

First off is price; there are homes on the market that – as little as a year ago – were going for two, three, and even more times their current asking price. So, there are incredible bargains to be found. Two key elements to consider though are location and condition. A dirt cheap home might be that price because it is in a terrible neighborhood. This is where checking with local realtors and doing some homework is important. And next, there’s the condition of the home. If the homeowner has been struggling financially for some time, they may not have been able to perform routine maintenance and upkeep. So, get the home inspected to insure plumbing, electrical, foundation, and so on are in good condition. If not, offer less.

While many banks are tightening up on credit, you can still get a loan – provided you follow certain steps. First, keep the same job, and keep working it the same way. This may sound confusing, but here’s how that works. If you’re working for an employer, maintain your work status with that employer. If you’re a full-time employee, don’t let them change you to a contract employee. Even though you’re doing the same work for the same boss, this is considered a change in employment, and most banks will shoot you down on a loan. So, as much as possible, keep your same type of job, at least until after your closing.

Right now, the interest rates are incredibly low; so – if you qualify for a mortgage – you can get a great loan. The key here will be your credit rating. So, before approaching a bank, get a copy of your credit report and see what your number is. If you have some old bills or too many credit cards – pay those bills and cancel some of those cards. These will boost your rating, and this can shave as much as a percentage point off of your interest rate.

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The Money you Save on Your New Home will make up for the Loss of Your Old Home

When going from one home to another, there are always expenses: moving vans, packing, closing fees, utility transfer fees etc. Yet, in the long run, the new home will save you money.

In general, an older home needs more repairs. You have to improve the electrical fuse box and system so that your home has enough amperage to handle your power needs. Over time, the roof will wear out and need to be patched and/or replaced; with a very old home, the roof will no longer under warranty, which means you face the prospect of paying for the repairs entirely. Also, years ago people didn’t know that fiberglass insulation was hazardous to your health or that lead pipes could be too. Older homes tend to have many such building materials, and they can all pose a health risk.

In the case of newer homes, they don’t contain any hazardous construction components that you’ll have to pay to remove and replace. Any work you do need will generally be covered by warranties and/or insurance. This will save you money in day to day expenses, and your home insurance. Another factor that will aid in saving money with a newer home is that they tend to have components that resist burning, and even have security system elements built into them. These also get you a savings on your insurance.

As for long term costs, older homes are subject to cumulative damage from storms and seasonal changes. There are also insects – carpenter ants, termites etc – that can gradually eat a home from the inside out. Not only do newer homes have less trouble with such things, but they’re often built with materials that have been treated to repel insects. Also, the ground under the foundation of a new home is treated with insecticide to prevent the pests from burrowing into you home.

With older homes, over time, neighborhoods can change. What was once a nice bedroom community might now be the heart of the downtown business district, or maybe right next to a highway or airport. For that matter, perhaps the community has gone into an economic recession, and now crime is an issue and the street is full of empty or dilapidated homes. By buying a newer home, you can avoid all of these negative aspects that tend to reduce a home’s value, and increase the insurance premiums and other costs associated with an older home.

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The US government implemented the American Recovery and Reinvestment Act in 2009, and it gives first time home buyers a one time tax credit of eight thousand dollars. The key elements to the credit are that you have to be buying your primary residence – that is – the home you’re going to live in. And second, you have to buy the home sometime during most of 2009 – from the first of January to the first of December.

Here are some critical aspects of the program. First, you can’t have owned a home in the three years before the date of your current purchase; this is the definition of a first time home buyer. If you’re married, this applies to both of you.

The tax credit, while it can be eight thousand dollars, might not be that high; it is calculated based on the purchase price of the residence. The credit is ten percent of that price, up to the maximum of eight thousand.

To properly claim the credit, you must close on the home between the timeframe – January First to December First – and then you claim it on your tax return filed in 2010. You will need the Form 5405, and file it with the IRS, in order to get the amount properly recorded in their files. Also, the amount will then be entered into line 67 on the 1040 income tax paperwork. You don’t need any other form of paperwork, and you don’t even have to speak to the IRS to get the amount pre-approved. One little warning with the credit, you can’t use Form 5405 to claim the credit on a future purchase that is going to take place after the December First deadline.

While the type of home you can buy is very flexible – you can even buy a houseboat, so long as it’s going to be your primary residence – you are limited in whom you can buy it from. Buying it from a member of your immediate family – parents, children etc – is not allowed.

So, while the credit is good, time is swiftly running out; if you’re going to make use of it – hurry.

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We spend our lives believing the written word! Why? Especially when the written word is provided by sources not much more reliable than fortune cookie. I am tired of the negative influence of the media and I know you are too. I read everywhere about the recession and the down market, but I have more listings than ever and am closing deals for my clients weekly. No matter the current economic storm people need a place to live and a certain percentage of people will qualify for new homes. So trust in the math and go out their and get you clients the deal of a lifetime. TODAY IS THE TIME TO BUY!!!

The world is changing interest rates are at an all time low and sellers are motivated. Recently with the new changes in RESPA builder mortgage companies are in jeopardy .This is great news since customer service is the differential between the lenders. My customers are already experiencing t he benefits of this free market. The time to buy Real Estate !