Attention: First Time Homebuyers

Welcome back!

The recovery of the real estate market depends on first time homebuyers.  Not only do they represent a large number of sales, but without them there would be no move-up market.  Current homeowners would not be able to move-up if they can’t sell their current homes.

HUD now says that first time homebuyers who qualify for the federal tax credit can apply as much as $8,000 to the down payment when financing a home with a FHA loan.  FHA currently requires that buyers make a minimum down payment of 3.5 percent of the sales price of the home…this means that a first time homebuyer can borrow as much as $228,500 and buy with no money down!

Four important things to keep in mind:

1. You don’t qualify if you have owned a home during the three years before you plan to purchase.
2. You must close before December 1, 2009
3. Your income must not exceed $75,000 if single and $150,000 if married.
4. You can’t use the credit against the down payment from just anyone, it must come from state housing agencies or certain non-profits.

If you are a first time homebuyer the time to act is now.  A closing by December 1st, 2009 means you ought to have a contract written by November 1st, and to write a contract you ought to begin looking for homes in September and October.  Even if you were to follow this schedule you may still be cutting it close.  ACT NOW and contact us!

Housing Market Recovering

The housing market is a buyer’s market and they are buying.  Existing home sales jumped to a two year high.

The National Association of Realtors reports sales of existing homes jumped 7.2 percent in July.  This is the biggest monthly increase since the Association began keeping track in 1999.

Sales rose to an annual pace of 5.24 million. It was the fourth consecutive monthly increase in existing home sales, the longest streak since June 2004. Sales were 5 percent higher than a year ago, the first time sales were above year ago levels since November 2005.

“The housing market has decisively turned for the better,” said NAR chief economist Lawrence Yun in a statement. “A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing the higher sales.”

Tax credits, prices that have been driven lower for the last two years, and historically low mortgage rates are all contributing to rising sales.

Freddie Mac (NYSE: FRE) this week reported 30-year fixed-rate mortgages fell to an average of 5.12 percent this week. A year ago, long-term mortgages were 6.5 percent.

Yun also notes in some recovering markets, like San Diego, Las Vegas, Phoenix and Orlando, the demand for foreclosed and lower priced homes has spiked, and lack of inventory is becoming a common complaint.