Trouble pulling the trigger on your first home?

Tips on making the move to homeowner By Melissa Paul

You’ve made up your mind to buy a place of your own. You’ve saved a hefty down payment. You’ve poured over the daily downloads for months on end. You’ve made open house tours part of your weekend ritual. But months, perhaps years, have passed and you find yourself still in your rental, no closer to being a homeowner than when you started. But why?

Perhaps, because your current home is familiar. You know exactly what to expect. You’ve come to accept its shortcomings whether they are loud neighbors, a leaky ceiling or scant street parking. There are few surprises.

For many first-time homebuyers, pulling the trigger can be a frightening experience. Will you be happy there? Will you like your neighbors? Will you be tied down, house rich and cash poor? What if you lose your job? Will you hate your commute? In short, your fears stem from the unknown.

Paolo Forte is the eternal condo-shopper. “I’ve been looking for four years," says the 35-year-old Boston resident. "I have actually seen condos come on the market, sell, and then be resold a second time. While I’ve been waiting, condo prices continue to rise, and I keep spending more money on rent.”

In Betsy Townsend’s 10 years as a Realtor® in Boston’s pricey Beacon Hill, she’s seen everything. “I find that people often hesitate to make the ‘biggest purchase of their life’ because they fear they will make a ‘bad investment’ and pay too much,” she said. “Sometimes people lose site of the fact that they are looking for a place to live instead of just an investment.”

Still, there is hope anyone like Forte who have hesitated when they should have been bidding. You are surrounded by family, friends and co-workers who took the leap and are reaping the benefits. Give these steps a try and you could be among them:

• Get comfortable with your finances: Anticipate the new costs that you will incur such as taxes, homeowners insurance, utility bills, and commuting costs. This will help you determine the maximum price you can spend on a house. Enlist the help of a financial expert if you need help. Remember, the first year is the hardest; you will start to receive tax benefits in year two.
• Partner with a Realtor: Even though the internet gives you access to endless amounts of market information, don’t be fooled into going it alone. Instead, try out a few realtors and when you find one you like who listens to you, stick with him. He or she can line up properties to view, answer many of your questions, and make connections for you in your new community. Best of all, Realtors often have the inside track on a new properties just coming on the market.
• Accept some risk: Realize that there is uncertainty in everything, but no matter what happens, you will deal with it. Ask family and friends about their experiences and learn from them. Be sure to keep some cash reserves in the bank as a safety net. And remember, you have home owners insurance for a reason.
• Fine tune your “must-haves”: Is there a community that you absolutely want to live in? Are you adamant about wanting a garage, a fireplace or a finished basement? Make your list of what’s important to you and look for it. You may find that you are willing to sacrifice one feature, if the rest is fabulous. If you are not crazy about the house, don’t bid. It’s important that you love it at the outset.
• Be ready to bid: Great houses don’t stay on the market long. Sometimes one open house leads to three offers. If you love it, be ready to make your best offer. If you are wavering, ask yourself, “How will I feel if I don’t get this house?” You might just get it, and if not, at least you’ll you know you tried.
• Reap the reward: Owning a home can be one of the most exciting and satisfying things you’ll ever do in your life. It’s an investment that can pay you personal dividends as well as financial.

For Forte, his 2007 new year’s resolution is to pull the trigger on a new home. “I’m finally ready to take the step. I’m tired of standing on the sidelines. I’ve set a deadline and I am ready to bid when I see it. It’s been a long time coming, but I know I am on my way to being a homeowner.”

10 benefits of buying at the end of the year

By Michele Dawson

With interest rates for 30-year fixed mortgages still hovering at around 6 percent, the end of the year is a great time for renters to become homeowners, growing families to move to more accommodating homes, and Baby Boomers to find houses that fit their evolving lifestyles.

In addition to low interest rates, there are other benefits to buying at the end of the year, including:

Tax savings. Closing on your new home by Dec. 31 means you can deduct mortgage interest, property taxes and points on your loan on your income tax return. You can also deduct the interest costs associated with a home equity loan. These deductions are significant, especially in the early years of your loan when you are paying off so much interest.

Sellers might be more motivated. Many sellers will also be anxious to sell by the end of the year so that they, too, can enjoy tax savings on the next home they purchase. That means you may have more leverage during negotiations and they may be willing to accept lower than their listing price. However, if you're in a strong seller's market, you'll want to be conservative -- and always heed the advice of your real estate professional.

If you're buying a new house, there's a good chance builders will be offering incentives. Many builders will throw in nice little extras to sell as many houses as they can by the end of the year.

Generally speaking, your housing choices during the fall are still healthy. By December there are traditionally fewer houses on the market. October and November are great months to go house hunting.

It's easier to move. Many moving companies are booked six or so weeks in advance during the busy summer months. In the fall and winter it's normally easier to secure the services of a moving company or rental equipment on shorter notice.

A new home for the holidays. The holiday season is a great time to celebrate your new home with family and friends.

In addition, you'll enjoy the many benefits that come with homeownership, regardless of what time of year you buy, including:

Paying toward something you own. If you're renting, your rent payment goes toward something that will last you a month -- a place to live for 30 or so days. When you buy a house, your monthly mortgage payment goes toward something you own.

Consistent payments. Landlords have the discretion to increase your rent, plus it's exposed to inflation. Once you secure a mortgage, you can rely on consistent payments (if you have a fixed-rate mortgage).

A place to make your own. When you own your house, you can update your kitchen, paint your home's exterior in any color you choose, change your fixtures, and replace your carpeting -- all with the knowledge that the changes you make are your own.

Gaining equity. In the beginning, most of your payment goes toward interest. But gradually more will go toward paying off your principal, meaning you build up equity -- or savings -- in your home. Another factor in equity is appreciation. As home values go up in your area, so too does your rate of equity.

Number of first-time home buyers is increasing

Survey shows they are taking advantage of falling prices, interest rates

The Associated Press

Low home prices and excess supply helped drive a rise in first-time U.S. home buyers and reduce excess inventory, according to a study released Saturday by The National Association of Realtors.

According to the survey, which was released at the 2008 Realtors Conference & Expo, the number of first-time buyers rose to 41 percent from 39 percent of all transactions in 2007.

"First-time buyers are much more flexible in entering the market because they aren't concerned about selling an existing home," National Association of Realtors Chief Economist Lawrence Yun said in a statement.

Yun attributed the increase to low home prices, "plentiful" supply and affordable interest rates. Looking ahead, Yun expects further increases in first-time home buyers because of a temporary first-time buyer tax credit and improvements to the FHA loan program.

"It's been an optimal time for entry-level buyers with a long-term view," Yun said.

According to the study, the median age of first-time buyers was 30, down from 31 in 2007.

The median income for a first-time buyer was $60,600 and typical first-time buyers bought homes costing $165,000.

Of first-time buyers who made a down payment, 69 percent used savings and 26 percent used money from a friend or relative. Another 7 percent received a loan from a relative or friend, while 16 percent used funds from their investments. A fixed-rate mortgage was chosen by 92 percent of those surveyed.

Looking at home sellers, the median age was 47 with income of $91,000. Three-quarters of respondents were married, lived in their home for six years and had their home on the market for eight weeks.

Results from the survey come from a questionnaire that NAR mailed to 133,000 home buyers and sellers nationwide who bought their homes between July 2007 and June.

Educated Homeowners Surviving Housing Crisis

by Broderick Perkins

If the experts have said it once, they've said it a thousand times, but they can't say it enough. Homeownership doesn't come with a manual. It's up to you to learn what you are getting into before you embark on what's likely the most valuable acquisition you'll ever complete. It's no surprise new mortgage modification programs, foreclosure assistance and bankruptcy laws come with mandated homeownership counseling. When you get schooled on the issues of homeownership, you have much greater chance to continue as a homeowner -- even when the economy crashes down around you. The foreclosure rate for low-income homeowners who attended homeownership education programs had a foreclosure rate that was 20 times less severe than that for subprime borrowers and three times better than that found in the prime mortgage market during the second quarter of 2008, according to data from NeighborWorks America, a staunch non-profit advocate for healthy communities. "The facts tell the real story," says Kenneth D. Wade, CEO of NeighborWorks. "The vast majority of mortgages facilitated by NeighborWorks organizations are to buyers with low and moderate incomes and less than perfect credit scores, yet by obtaining quality mortgage advice these homeowners have been able to sustain homeownership during the most severe housing crisis since the Great Depression," Wade added. Long before homeownership counseling was de rigueur, South County Housing, a chartered NeighborWorks member in Gilroy, CA, was doling out a heavy curriculum of homeownership studies along with sweat-equity programs and loans that look a lot like subprime mortgages. However, thanks to smarts the group gave its largely Latino buyers, South County's portfolio foreclosure rates today hover around zero, belying rates in the rest of foreclosure-hammered California. There's more. When NeighborWorks compared its total loan portfolio's foreclosure start rate of 0.21 percent in the second quarter of 2008, it found the overall nationwide homeowner market had a foreclosure rate more than five times as much, 1.08 percent. Nationwide, the foreclosure start rate for only conventional conforming loans was 0.61 percent, compared to NeighborWorks' portfolio rate of 0.21 percent. Buying a home today without learning what it takes to keep it, is like a trip to a Vegas -- for insights on both the money-losing potential in the casinos and the kind of widespread homeownership devastation that comes with ignorance. Learned homeowners consistently out perform those without the lessons. Says Wade, "The idea that some observers now are pointing to low-income people as the cause of the financial crisis we’re facing today is just wrong. NeighborWorks organizations have a track record of providing one-on-one mortgage advice, encouraging homebuyers to avoid loans that they can not afford for the long term." The message is brutally simple. Seek accredited homeownership counseling now and prepare in advance for your own home. Even if you already own your home, enroll in a counseling session. There's plenty of counseling available. In October, the U.S. Department of Housing and Urban Development (HUD) doled out, to more than 2,300 local housing counseling agencies, $50 million in housing counseling training and housing counseling grants for first-time home buyers. It's your tax money. Use it. Get home schooled.

Real Estate Outlook: Housing in Recovery

by Kenneth R. Harney

With all the turbulence and losses in stocks and bad economic news in the headlines lately, you can easily lose perspective on what's really going on in the real estate sector.

For example, new mortgage applications increased last week by 12 percent, according to the Mortgage Bankers Association. Applications from people looking to buy houses with FHA loans were up by 15.3 percent, while applications from purchasers seeking conventional mortgages rose by six and a half percent.

How could that be, with all the grim economic news? Well, remember that there is a huge pent-up demand simmering away out there for housing -- especially from first-time buyers who want to scoop up low-priced deals.

When fixed interest rates drop -- and last week they were down by a quarter of a percentage point -- those buyers start doing the math and getting into the market with offers.

Fixed thirty year rates fell from six and a half percent to 6.24 percent during the week. Fifteen year rates broke below six percent to 5.9 percent, down from 6.14 percent.

Another piece of positive news you may not have noticed: Pending home sales were higher than year-earlier levels for the second straight month -- 1.6 percent higher than September 2007 .

Although pending sales contracts were down slightly for the month, in the western states they wee up by 3.7 percent, and now stand at an extraordinary 39.7 percent higher than they were at the same time in 2007.

At the National Association of Realtors' convention in Orlando, chief economist Lawrence Yun, warned the delegates not to expect a housing recovery overnight, certainly not with unemployment on the rise. But he projected a slow, steady, multi-year upward trend, with 5.02 million total sales this year, 5.3 million for 2009, and 5.6 million for 2010.

Already sales are up significantly in major markets in many parts of the U.S. Yun specifically mentioned the west coast of Florida, the Phoenix area, Virginia, Long Island New York, Kansas City, Minnesota and Idaho.

So here's the key point to keep in mind as you try to make sense of the headlines: The stock market is NOT the housing market. It's on a whole different set of tracks. And it's been in a highly volatile state for more than a month.

Housing, on the other hand, has already endured its painful correction for two and a half years … is now pretty much stabilized … and is slowing moving toward its cyclical recovery.

Can I qualify for a home loan?

You may have heard some ads on the radio about how the market here in Nebraska is good and you can get a loan. This is very true. While there are far less options out there today for people with poor credit there are still plenty of options for people with good credit. In general, good credit would be defined by little or no late payments in the last year, no judgments or collections and at least 2 years after a bankruptcy. If you have had a bankruptcy, it is important that you establish positive credit. Assuming you have a stable job and your ratios are in line you can get a loan. What types of loans are available? The most common loan we are seeing right now are FHA. An FHA loan has more lenient income to debt ratios and require only 3% down. (Starting January 1 the down payment minimum increases to 3.5%) If you have served in the military, you may be eligible for a VA loan. This is a 100% loan. Since it is a government backed loan, the ratios are also more lenient.Finally, there is the Conventional loan. A conventional loan would be used if you have 20% down and excellent credit. Finally, if you are a first time homebuyer and don't make too much money, there is a 100% loan (USDA) and a $15,000 down payment assistance program, both are only available in rural areas. Both of these programs are available in our Eagle area. Don't forget, if you purchase a home before July 1, 2009, and you are a first time homebuyer, you are eliglible for a $7,500 federal tax credit. There has never been a better time to buy a new home!!!! Call Hartland Homes today to find out more or email us!

Nebraska Ranks 49th in Foreclosures!

Nebraska Ranks 49th in Foreclosures! So what does this mean? Our foreclosure rate is the 2nd lowest in the US! That is good news. As I said in my last post, Nebraska isn't really experiencing the "foreclosure crisis" and our banks are in good shape too. Are we experiencing more foreclosures than 3-4 years ago? Yes. However, you need to keep in mind that our foreclosure rate is very low when compared to the rest of the nation. The following statistics are courtesy of RealtyTrac : For the month of October, in Lancaster county there were 8 foreclosures filed, that is 1 in every 14,413 housing units. Now, compare that to Riverside county in California: 6,897 foreclosures filed, that is 1 in every 106 housing units. Or even worse in Clark county, Nevada: 12,1550 foreclosures filed which is 1 in every 62 housing units! As you can see, what is happening in Lincoln is realitively minor.

It seems lately all we hear about is the looming financial crisis and the bail out. I was very happy to read the Journal Star’s article on Nebraska banks being ok.
It is important for Nebraskans to know that, as with the Real Estate foreclosure mess, this financial crisis is national, NOT local! The media is largely national. And although what happens on a national level does affect us to a certain degree, the biggest factor in our economy right now is the negative media!!!
Did you know that the Real Estate foreclosure mess is primarily in Nevada, California, Arizona and Florida? These are places where prices rose exorbitantly and risky loans with adjustable rate mortgages were offered. Investors were buying like crazy to flip for a profit, counting on the increasing prices and incredible demand. When they got scared and pulled out, it caused a glut of supply and prices started falling. Regular people wanting to own but not able to afford these pricy homes took advantage of loose mortgage requirements and loans with lower starting interest rates. Then, when the rates began to rise, and prices began to fall, these homeowners (who were already stretched beyond their means and a credit risk too boot) could not make their payments or refinance to get extra money!
From 2004 to 2006, subprime loans, as a percentage of all mortgages, doubled. It is only reasonable to assume that default rate on these loans would be higher than on standard loans with more conservative requirements. However, keep in mind that over 95% of these loans are not in default! You would never know!

What does all this mean for Nebraskan’s who want to get a loan to buy a home? There are still lots of options available. What is not available is “no document loans”, 80/20 (100%) loans with less than stellar credit, or loans for 125% of the purchase price. What is available? FHA loans with 3% down and reasonable credit. (this will increase to 3.5% down on 1/1/09) There is also the VA 100% loan for veterans, 100% loan available in rural areas, $15,000 down payment assistance in rural areas, and don’t forget the $7,500 tax credit!