Jeff Younger

We have all heard comments like this recently, "Now is the time to buy, Values have never been lower" or maybe we have heard this, "Don't buy now, property values are coming down even further" So if you are interested in buying a home right now I can understand why you might be a little concerned about which one of these statements are correct.

Test yourself below, where do you think we are based on this graph below?

Where you feel the market is will greatly influence when you buy your home. If you picked the lowest part of the graph (point of maximum Financial Opportunity) then you really should be buying now. But if you picked somewhere higher up on the line then it would make sense to wait and watch the market come down wouldn't it?

Would it be a mistake to buy now if the market could go down yet another 10% - 20%? The human tendency is to want to time the market to the lowest possible price and then buy, but the reality with timing the market is that most of us won't be able to do it. A perfect example of that is when I bought my home, I am in the real estate world every day and I still missed the bottom of the market by almost 10%. By the time I bought the market was already heading up and I had missed the absolute lowest buying opportunity. The reality is that most of us will miss the lowest buying opportunities.

If you are not buying your home all cash then the second major variable that you need to look at is the lending environment. What are the interest rates doing? How easy or hard is it to borrow money? For most of us the reality is that we are going to have a home loan and that makes the lending environment a major consideration for us when entering the home buying market.

The graph above shows a history of interest rates. What stands out to me is the fact that we are currently at historically low rates. There is not much room for rates to go down and there is a lot of room for interest rates to go up. (Here is where many people say the government or the Federal Reserve won't allow it under current economic conditions, but the truth is they don't have complete control over that, but that is for another article on another day)

Let me give you an example of how the price you pay and the interest rate play out. Let's look at two different buyers' scenarios:

Buyer #1 - buys today at the current market and gets a $400,000 loan at an interest rate of 5%. That would give him a $2,147 payment.

Buyer #2 - waits and the market value goes down but rates go up. He buys the exact home next door to buyer #1 but he gets a $360,000 loan at 6%. His payment will be $2,158 per Even though he paid $40,000 less; because of the interest rate increase the payment is barely $10 different than the buyer that paid 10% more.

It sounds crazy, but the payments are about the same because the increase in interest rate offset the savings from buying at a lower price.

Now I would rather pay the lower price and have the low payment, but if you are going to be buying for a longer term hold it probably won't make nearly as much difference as you would think. By the way, except for certain buying opportunities, most of us should be buying a home with the intent of keeping it for a long time. The crazy appreciation days that we just went through are most likely a long way off.

If you are thinking of buying in the next several years then now may be as good a time as any. With the lowest interest rates in history, the current tax incentive that runs out in June of this year and the lending institutions tightening their guidelines and making it tougher to borrow almost daily you may get a lower price in the future but end up paying more anyways. Just make sure that you are ready and stable financially, that you don't take on a mortgage payment larger than you can afford and plan on living in that home for 5 - 10 years.

If you would like to see a power point presentation on this click video below. If you would like to talk more in depth with me feel free to contact me at Jeff@BroadviewMortgage.com.

FHA loan may be just the right ticket for you in 2010!

With conventional lenders demanding higher credit scores and bigger down payments, FHA mortgages have become extremely popular. There are several major benefits for choosing an FHA Mortgage Loan if you're a First-Time Home Buyer or really any buyer who wants to put less than 20% down on a new home.

So what is an FHA Loan? An FHA loan is a loan that is guaranteed by the Federal Housing Administration. Because FHA insures these loans, lenders are able to take on riskier loans than they otherwise might consider. Currently the FHA loan limit in orange County and Los Angeles County is $729,750. Anyone that does not have 20% for the Down payment should be looking at the FHA Loan Program.

Several of the major benefits are:

• A much lower down payment, (3.5% of the purchase price) so the borrower can actually borrow up to 96.5% of the purchase price. In addition the 3.5 percent down payment can be a gift provided by a relative, government agency or other third party

• Less Conservative Credit requirements/ lower fico score requirements. Officially FHA loans have no minimum fico score requirement. But most FHA lenders have put a minimum fico requirement on the loans they will close. Typically that is a 620 fico score which is much lower than the typical 680 score those most conventional lenders require.

• The seller is allowed to credit up to 6% of the sales price to help the buyer with closing costs. Closing costs and fees can also be rolled into the loan principal, so you don't have to pay them up front.

• Qualifying for an FHA loan is another benefit. FHA is typically much more lenient on employment history and will allow non-occupant co-borrowers to help in qualifying. This allows the borrower to use income from family members to help them qualify on the loan.

If you think this might be the right loan for your situation you should find a direct lender that specializes in FHA loans. Feel free to contact me if you have any questions and look forward to our next conversation regarding the facts behind the Governments tax credit.