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IT'S A GOOD TIME TO BUY
Home buyer credit extension heads to Obama
Congress passed a bill this week extending the deadline to close escrow and qualify for the federal home buyers tax credit. President Obama is expected to sign the bill extending the deadline to Sept. 30, 2010, instead of its original June 30 deadline.
MAKING SENSE OF THE STORY FOR CONSUMERS
- The bill extends the deadline to close escrow for home buyers who entered into a home purchase contract by the April 30 deadline. First-time buyers may be eligible to receive up to $8,000 and qualified existing homeowners may receive up to $6,500 if the home buyer closes escrow by Sept. 30.
- Home buyers entering into sales contracts May 1 or later are not eligible for the federal tax credit, but they may qualify for the California home buyer tax credit.
- The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) and the NATIONAL ASSOCIATION OF REALTORS® worked closely with members of Congress to extend the deadline. Estimates from NAR show nearly 180,000 home buyers nationwide would have missed out on the tax credit if the deadline was not extended, including nearly 17,700 home buyers in California.
- Many of the home buyers who would have missed out on the tax credit are in the midst of purchasing a short sale or foreclosure, which generally take longer to close due to the amount of paperwork involved in the transaction.
To provide good information for you about buying a home now, let's try and make a little sense of this crazy, and a little scary market.
LOOK BEFORE YOU LEAP
Your first step is research. Real estate markets are local; there are not just cities, but sub-cities. Neighborhoods are right next to each other; and one may be improving while the other is dying. Get in your car and drive around. Get a feel for the areas and tracts. Next, get the help of the smartest broker in town. This person will know how long homes have been on the market, what the homes nearby were listed for and how much they actually sell for. (If you're considering buying a foreclosure, consult a realtor that is very knowledgeable in bank owned properties, to hand hold you through this process.) Use the information to make an informed offer.
MAKE SURE YOU HAVE THE MONEY
Lenders use to adhere to stringent guidelines, among them the requirement that no more than 36 percent of your monthly income be used to cover your total debts, including your mortgage payment. During the houseing boom, that debt-to-income ratio was pushed to the wayside. Down payment requirements all but vanished. The sky was the limit.
Those days are over. 12 million homeowners are in danger of foreclosure and lenders have learned their lessons. As a result, credit is tighter than it has been for years. It's not that you can't get a loan, but you likely can't get an attractive one if your credit is less than pristine. And even if its is, the hurdles you need to jump over are dramatic: The maximum debt-to-income ratio has returned to 43 percent. Down payment requirements of 10 percent or more are back. For people with the best credit, the 30-year fixed-rate mortgage is now about 5.36 percent; on a $300,000 loan, that's a monthly payment of $1,638.
How much of a house can you afford? There are two things to consider. First, the down payment and second, take a hard look at your monthly budget: Your housing expenses should account for no more than 35 percent of your income. The biggest mistake buyers make is to look at the mortgage payment, factor in taxes and insurance, and think that's the total. You need to consider that you'll want to decorate, landscape and heat and cool the place. YES, there will be utilities to pay every month.
Jackie & Dave, have the pulse on the real estate market in the desert. Give us a call today and we would be more than happy to help you with any of your real estate needs.
JACKIE HICKS & DAVE BIENEK
Phone: 760.567.5455 or 760.625.7796
Email: Jackie@JackieHicks.com or Dave@DaveBienek.com
Web: www.JackieHicks.com or www.DaveBienek.com
Fax: 760.771.6760
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