$8,000 Home Buyer Tax Credit -
Ending Soon
As we head into the fall, recent housing numbers and anecdotal evidence, suggests that home buying has certainly picked up. One of the reasons for the increase in home sales, outside of lower prices and interest rates, is the $8,000 first time home buyer tax credit. This credit applies to new home buyers (or those who have not owned a home in the past three years) and it comes to an end on Monday November 30, 2009.
What that means, is that in order to take advantage of this credit, your home purchase must close by that date. With most home closings taking between 30 and 45 days in the current market, that means we are getting closer and closer to the deadline to where new home buyers will be certain they will be able to take advantage of this credit.
For those that have interest in purchasing and obtaining the tax credit, now would be the time to act. Especially if you have concerns which may lengthen the process, such as credit or down payment issues that may affect the loan process.
In addition, there is also a negative in the positive that is increased buyers; that is a more difficult time in getting your purchase offer accepted. Home buyers and real estate agents in the current market have reported that multiple offers are common place on almost all bank owned homes in the current market. Meaning that it could take longer until you have your offer accepted, as you may end up having to bid on more than one property.
In addition, other transactions such as short sales, will typically take longer to close as well, as a third party bank must approve the sale.
What this all means is that this is certainly an opportune time to purchase, with the combination of affordability and tax credits in the current market for buyers. However, with the time length from start to finish of purchasing a home in the current market, November 30th is a lot closer then it may seem. If you are looking to purchase, now may be the time to contact a mortgage broker to begin the prequalification process and real estate agent to begin searching for homes.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
Credit Scores and Down Payments for Mortgage Loans
In today's mortgage and real estate market, two of the most common questions we receive are, what type of credit score do I need to purchase or refinance a home. And what type of down payment do I need to purchase a home. The answer is, it depends on the type of loan you can obtain, what type of property it is and whether you plan on living in the home or renting it, among other things. As always, this information is subject to change, but here is a brief synopsis of where we sit in the current market.
Credit Scores: First, one of the most important issues to consider is your credit score. We have written articles in the past which can be read on our blog about keeping good credit and improving your credit score and will provide more information in the near future as the scoring models change. But, the credit score you need will depend upon the type of loan you obtain.
The minimum score you will realistically be able to obtain financing with in this market will be a 620 fico score. With a 620 credit score you will be able to obtain an FHA loan, a Veterans Administration (if you are active or retired military) or even a conventional loan. However, if you score is in this range, it will probably make sense to not obtain a conventional loan as it will be pricier for a fico in that range.
Instead if you are looking to obtain a conventional loan, to obtain the most ideal rates you will now need a 740 fico, with good rates still available, but not the lowest available at 740, 720, 700, 680, and 660 and down to a 620 fico.
Down Payments: Next you must consider down payments for the type of loan you are looking for. The lowest down payment available is currently, nothing, as Veterans Administration loans do not require any down payment. These loans are of course for current or retired military with proper qualification however and only can be used for the home you will live in, no investment or second homes.
Then there is FHA mortgages which now have a minimum down payment of 3.5%. There are no restrictions on who can obtain an FHA loan and these types of loan even allow for someone not living in the home to help the buyer qualify, such as a parent co-signing for a child. However, these loans are again only for primary residences and no investment or second homes.
Finally, there are conventional loans. The minimum down payment for conventional loans will be 5% for a primary residence and even that is getting more and more difficult with 10% now becoming the norm. However, you can also finance second homes and investment properties as well through conventional loans, with a minimum of a 20% down payment required.
These are just some of the many factors to consider when purchasing or refinancing a home, but this should provide answers to two of the most common questions in today's market.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
Case-Shiller Index Thinks So
After nearly three years of declining home prices, the value of U.S. homes finally grew on a monthly basis in May for the first time in nearly three years, according to a 20-city index released this past week.
The index showed a month-over-month increase of 0.5%, according to the report from financial data company Standard & Poor's and economists Case-Shiller. This was the first increase in the monthly index since July 2006.
Annually, home prices in the 20 cities have fallen 17.1%, but it was the second straight month that the year-over-year decline lessened.
According, to David Blitzer, chairman of the index committee S&P, "This could be an indication that home price declines are finally stabilizing."
However, Robert Shiller, the Yale economist who co-founded the index, says that there has been a decrease in foreclosure sales and that this shows up in the index statistics as a plus for home prices. But added that foreclosures could increase again in the near furture, but the future does look encouraging. In fact, with recent efforts of the government, confidence is moving higher and we are beginning to see signs of recovery in other areas as well.
On the other hand, Paul Bishop, the managing director of research for the National Association of Realtors, was glad to see the upturn but did not want to overemphasize the results of a single month, saying the economy is not out of the woods yet.
"Job losses could continue after the recession ends," he said. "That's where the economy intersects with consumers in the most tangible way. Until consumers have some level of confidence that the economy is improving, many will be reluctant to buy."
Where prices are heading from here is yet to be seen. However, with the price of homes in the current market, coupled with government intervention for modification for existing homeowners, tax credits for new homeowners and historically low interest rates, buyer activity has increased. More homeowners are now attempting to remain in their homes and new home buyers are trying to purchase homes. It will of course be very interesting to see where June and July's numbers come out when released. As always as more information becomes available we will pass along the information and analysis.
For more information on mortgage programs, rates and information for potential and current homeowners, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
My name is Bill Kamboukos and I am the owner and broker of Strategic Mortgage a Tempe based mortgage broker.
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