Mortgage 411 Center

If you are in the market to buy your first home you may be able to take advantage of a new federal tax credit for first time homebuyers.  Here are some facts about the tax credit:

• The tax credit is for first-time home buyers only, a first-time buyer is defined as someone who has not owned a home in the past three years .
• The tax credit does not have to be repaid. This is a change from last year’s tax credit which was basically an interest-free loan, repaid over 15 years.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.   So someone purchasing a $60,000 home would only receive a $6,000 credit, while someone purchasing a $300,000 home would only receive the $8,000 maximum.
• The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
• Single taxpayers with modified adjusted gross incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.  Those with incomes over that amount may still qualify for a partial tax credit.

As you can see this is a great incentive for those who are considering purchasing a home this year, but are unsure if now is the right time to take the path to homeownership.  For more reasons why 2009 may be a great time to buy,  please read:

Why 2009 is the Time to Buy

Why 2009 is the Time to Buy - Part 2

Remember, before you even begin to look at houses you should contact a mortgage professional to get pre-approved for a loan,  so that you will be sure you qualify and so you will know exactly how much home you can afford. 

Please contact us with any questions or to get started today.

Personally I hate it when everyone in the real estate business talks about how “It’s a great time to buy!”. Of course they are going to say that, they are trying to sell you a house or a mortgage loan, or they somehow make their money in Real Estate, what do you expect them to say? (Donald Trump are you listening? Have you ever once stated that it was NOT the time to buy???) However, I do think that those who are saying it this time, taking into account the combination of low interest rates and low home prices, may actually be right. Here’s why.

As a mortgage professional, I am seeing a large increase in the number of homeowners looking to refinance their mortgage loan. They have all heard about the current low interest rates and want to take advantage of them. Right now, I have enough refinances to keep me busy for the foreseeable future. I have no need to market to prospective homebuyers, but I am. There are a lot of great incentives to buy right now and I don’t want anyone to miss out on these opportunites. To learn why read the previous post, A New Home For the New Year - Why 2009 is the Time to Buy.

However, I am not the only mortgage professional who thinks it is time to buy. Tennessee Mortgage Professional Danny Thornton thinks it is Time to get off the fence, and shares with us the new commercial from the National Association of Realtors with the same message. I like the commercial so much I have posted it on my own website and am sharing it here as well.

My only complaint is that the commercial should have advised potential homebuyers to get preapproved for a mortgage loan, before talking to a Realtor. What good is convincing potential homebuyers to get off of the fence and buy a home only to find out they don’t qualify for a mortgage loan in the first place?

If you think 2009 is the time to buy and are ready to get off the fence and into your own home visit www.aboveallmortgage.com.

Since I have previously written about making refinancing your current mortgage a goal for the New Year, I now would like to address why those who are looking to purchase a home should do so in 2009. First, let’s be clear, the real estate market of today is a lot different than it was a few years ago, where almost anyone could get approved for a loan, regardless of credit, income, or assets. However, assuming your credit is in good shape, you have a steady income which you can document, and you have sufficient savings there is still money to lend. If you are not quite ready to buy, I will be writing next about coming up with a plan to help realize your dream of homeownership.

Why should you buy in 2009?

1) Mortgage interest rates are at an all time low and lower rates mean lower payments.

2) Home prices have dropped making homes more affordable. In some areas there are real bargains.

3) Excess inventory make this a buyer’s market, and sellers may be more willing to negotiate.

4) First time homebuyers may be eligible for a tax credit of up to $8000 on homes purchased before December 31, 2009.

5) The combination of these factors actually make buying a home now a wiser choice than at the peak of the market when there was a frenzy to outbid other potential buyers on already overpriced homes, no additional incentives to buy, and the lingering fear that the bubble would one day burst.

6) Waiting for the market to reach the bottom is a bad idea. The only way to know when we’ve truly reached the bottom is when home prices start to go back up.

For those who are thinking about buying but may still be “on the fence”, you may need to ask yourself “Is It Time to Develop a Sense of Urgency?”, and consider taking advantage of these opportunities before it is too late. For those who are ready to act, the first step to purchasing your new home is to contact a mortgage professional to learn more about the loan process, find out how much you can afford, and to get pre-approved. Getting pre-approved before you start looking for homes will show that you are a serious and qualified buyer and will give you an advantage when you decide to make an offer on a home.

Visit www.aboveallmortgage.com to take the first step to becoming a homeowner in 2009.

Potential borrowers often wonder where they should go when shopping for a mortgage. If they are buying a home should they go with their Realtor’s mortgage person? Should they visit their local bank? Call one of those large national mortgage companies who advertise on TV? What about a mortgage broker? There are a lot of choices out there and consumers are often unsure which road to take.

All of these options can work but they each have their own advantages and disadvantages. Let’s take a look at them more closely:

1) Your Realtor’s mortgage person/company. Some real estate agencies have in-house lenders. Others have relationships with local mortgage people in the area, or your agent may have someone he or she recommends. Some buyers think this is the best choice because their agent can be involved in the transaction and ensure that it gets done. After all the loan officer is not going to want the angry real estate agent knocking on his office door every day demanding to know the status of your loan. This may work if you know your agent well, and trust him or her to make sure you are getting into the best loan for you, and not any program that will qualify you just to get the deal to go to closing so the agent and his mortgage friend can get paid. Also, steer clear of anyone who tells you that you have to use the in-house lender or local mortgage partner. They are clearly only looking out for one person and it’s not you!

2) Your local bank. You may very well get the best deal at the local bank as they sometimes offer some of the lowest rates, that is if you have perfect credit, can document your income and have the necessary money for down payment and closing costs. This is a very small number of borrowers and may not be you. Local banks also have some great programs for first time buyers that you probably can’t get elsewhere. However, don’t think that they will approve you just because you are a long time customer, know all the employees, never bounced a check etc. Unless you meet their strict criteria they probably won’t.

3) National mortgage companies you see on TV. You may think that this is the safest choice. How can you go wrong with a company that has ads running during the Super Bowl, right? Wrong. In the past years these types of companies have proven to be some of the worst choices for potential borrowers, charging high fees and rates, putting people in loans they could not afford and causing people to lose their homes. Many of these companies are now out of business, and some well on their way. Not to mention these companies are huge and get thousands of calls a day, so you can forget personal service and having someone to answer your questions about all the fees and charges that you don’t understand. In fairness, not all national mortgage companies are bad, and there are probably a lot of hard working mortgage professionals employed by these companies who will work to get you the best deal. The problem lies in weeding out the good from the bad.

4) Mortgage Brokers. A mortgage broker does not work for anyone bank or lending institution. A good broker will have access to a variety of different lenders and programs, even those for borrowers with less than perfect credit. You will have more options for financing with a broker than a local bank and most likely even the large mortgage company so there will be no need to shop around. If you do not meet the criteria of one lender, you may certainly be able to qualify for a loan at another.

Also a good broker will be able to offer you personalized service and work to get you the best possible rates for you because unlike the real estate agency’s in-house lender (who is basically handed clients by all the company’s agents) the mortgage broker will actually have to earn your business and work to keep it. There are a few brokers that are dishonest, and care more about their commission than they do their clients. But the majority (and those who wanted to remain in business) are not and know that if they do not find the best loan for the buyer the bank or lender down the street will.

Whoever you choose for your mortgage needs it is most important that you find someone you can TRUST. Don’t be afraid to shop around, and ask questions before applying for the loan. And if you are currently working with someone who is not returning your calls, answering your emails, or helping you understand your options, don’t be afraid to take the exit off of that road and go elsewhere.