The recent normalization of the real estate market has created a strong buyer’s market, particularly for first-time buyers and real estate investors who don’t have to wait for their home to sell before taking advantage of lower prices and increased choices.
NEW TAX CREDITS FOR FIRST-TIME BUYERS
NEW TAX CREDITS FOR FIRST-TIME BUYERS
First-time homebuyers, defined as people who haven’t owned a home in the past three years, are eligible to receive up to $7,500 in tax credits, based on a joint filing couple earning less than $150,000 annual income. Individuals earning less that $75,000 can receive up to $3,750. The tax credit is actually a zero interest loan that is repayable over 15 years. The credit applies to homes purchased up to July 1,2009
INTEREST RATES ARE LOW
Thirty-year fixed-rate mortgages (FRMs) have been hovering around 5.5 percent for the past several months, representing the most stable period for interest rates in the past 40 years. Rates are expected to stay low for the near future.
REFINANCING REMAINS POPULAR
Freddie Mac reports that home loan refinances account for approximately 60 percent of total loan applications. Since 2001, the average of a loan prior to refinance was 2.7 years. Due to the unpredictability of adjustable-rate mortgages (ARMs), more people are switching to more stable FRMs. Of the ARMs that were refinanced in 2008, 97 percent were switched to FRMs.
LOANS REMAIN AVAILABLE
Although underwriting guidelines have changed and will most likely continue to do so, lenders are still making home loans. The best advice is to:
- Reduce or eliminate all credit card debt (note: 30% or lower debt to credit limit ratio is ideal).
- Avoid high interest rate loans on consumer purchases.
- Build your cash reserves as much as possible.
- Raise your credit score as high as possible to get the best loan rate. Note: Only cardholders will have their credit score affected by credit card activity. “Authorized users” on credit cards will no longer be considered.
- Be prepared to document your income and assets.
100 PERCENT FINANCING AVAILABLE, RURAL PARTS OF
PHOENIX METRO
PHOENIX METRO
The United States Department of Agriculture (USDA) is in the mortgage business and offers 100 percent home mortgages. Some parts of the greater Phoenix Metro area are included within the USDA Rural Development program offering 100% residential funding. Section 502 loans are primarily used to help low-income individuals or households purchase homes in rural areas. Few people including real estate agents and loan officers are aware of this government program.
The major benefits are:
- 100% mortgage LTV based on the APPRAISED value
- Zero down payment and there is no minimum contribution required.
- No limit on seller concessions or gift
- No mortgage insurance required
- No reserves required
- 30 year fixed rate only
- Lenders must be USDA approved.
- Low interest rates, (this is not a sub-prime mortgage)
- Flexible Credit Guidelines.
Not every home or buyer will qualify for this loan, but if they do they are getting one of the top mortgages with low interest rates on the market right now.
