One of the most stressful times during a real estate transaction can come after the inspection. Even if the inspector uncovers only minor issues, sometimes buyers and sellers can let their egos and emotions get in the way over costs and responsibility for repairs. The important thing to remember is to keep it in perspective. Is a squabble over a few hundred dollars really worth risking not getting the home you want or losing a good buyer? Probably not.
We can’t quite shake that snow around Chicago, but March is coming and that makes it feel closer to spring. Spring is also the time when lots of people shake off the winter blahs and start thinking about buying or selling a home. Here is a roundup of a few things to think about for the spring market:
This post is from Steve Schneider at PHH Home Loans, Coldwell Banker’s mortgage brokerage affiliate.
“Where do we go from here?” That question from Alicia Keys’ song is on the minds of many Americans, as they wonder where home loan rates are headed after the recent negative news for Bonds.
Last week, Congress was busy at work on negotiations to extend the Bush-era tax cuts. That news kept a lid on any improvement for Bonds and home loan rates, due to the prospect of an ever-increasing deficit.
And adding to the troubles for Bonds and home loan rates last week was news that inflation is growing in China… and growing fast. How does that impact us? Remember, it’s a global economy, so Bond prices all over the world worsen on news of inflation, which is bad for home loan rates.
So the big question is: Will home loan rates go back down?
Although rates are still near historic lows, they have been headed up… and indications are that those unbelievably low home loan rates may be behind us. In fact, there are only a few things that would bring back the lows that we saw in early November:
Realistically, the chances of these events happening are unlikely – and in the end, rates may see some brief and fleeting improvements, but many experts believe they will likely continue to creep up over time. And when you include the stimulative action of extending the present tax rates and adding further cuts, it’s tough to see Bonds or home loan rates improving much.
The good news is that home loan rates are still extremely attractive and are still near historic lows for now. If you or someone you know has been thinking about purchasing or refinancing a home, NOW is the time to call or email to get started.
Just when everyone is telling you this is a terrible time to buy a home, the Wall Street Journal plays the devil’s advocate and makes a list of 10 reasons you should buy now. Some highlights:
CNNMoney has a list of the six biggest mistakes homebuyers make, including:
The nice thing about working with us is that we will walk you through the entire buying process to avoid these mistakes, but this list is good advice for those just thinking about buying a home.
This article from the Milwaukee Journal Sentinel talks about the importance of home inspections for both sellers and home buyers:
[A] professional home inspector will be able to point out issues that might go unnoticed by someone who doesn’t know the ins and outs of inspecting. Today’s buyers are quick to point out flaws uncovered by the home inspectors they bring with them, particularly if the flaws could compromise health or safety. Buyers can use problems as bargaining chips, causing previously agreed upon prices to be lowered or even the cancellation of a deal. Inspections help uncover imperfections that often can be fixed easily and inexpensively, so it’s worth it to get your home inspected before you list it.
In Chicago at least, standard practice is for the buyer to hire an inspector once they have already signed a contract to buy a home. At that point though, an inspection can turn up issues that sellers may not have known about, and could have fixed for much less money and fewer headaches. It may be worth it to hire an inspector and resolve any issues before you even list your home.
The $8,000 tax credit for first-time home buyers expires on November 30, unless Congress acts on a number of proposals on the table to extend it. Over 1.8 million buyers will have taken advantage of the credit by the time it expires. Lawmakers are considering extending that deadline, making the credit available to all home buyers, not just first timers, and increasing the amount to $15,000. More on the proposals at CNN/Money.
Seven New Rules for the First-Time Home Buyer – NYTimes.com
The New York Times posted this useful checklist of things first time home buyers should think about before taking the plunge on a home. One of the more interesting points is that the old adage about stretching your budget to buy a first home–presumably because the appreciation in value would pay off in the future–isn’t always a good idea now that we’ve all learned home values can in fact decline, and rather quickly. The piece also includes helpful tips for planning expenses and adjusting expectations about your future income.
The single most important thing to understand before you start shopping for a home is how much you can afford to spend. CNNMoney.com has a handy calculator that lets you plug in values such as your annual income, other debts like car payments or student loans, a proposed mortgage rates, and taxes to calculate how much you can afford in both a conservative or aggressive scenario.
There is a fair amount of confusion about the new $8,000 tax credit available to qualifying first-time home buyers. In the past, first-time buyers could get a $7,500 credit, but it had to be repaid to the government over time. The new credit does not have to be repaid, and can be claimed on either your 2008 or 2009 tax return. For instance, if you bought a home for the first time in 2008, but have already filed your taxes without taking the credit, you can claim it on your 2009 returns. Essentially, it is a one-time gift from the government toward the purchase of your first home.
The video above from the Illinois Association of Realtors explains the tax credit in more detail, as does Mary Ellen Podmolik in her weekly column in the Chicago Tribune.
In a press release last week, National Association of Realtors president Charles McMillan applauded the Federal Reserve’s move to purchase an additional $750 billion on mortgage-based securities from Fannie Mae and Freddie Mac and up to $300 billion in Treasury notes. “Greater numbers of home buyers will be able to purchase a home, and homeowners facing challenges will be able to refinance into better terms,” he said. “We already are experiencing a great improvement in housing affordability due to historically low interest rates, and the Fed’s move will push affordability conditions to the best levels in 40 years.”
Finding an area with appreciation potential — chicagotribune.com
This syndicated article in the Tribune says that the trick to buying a home now is finding a neighborhood with appreciation potential:
Real estate specialists who view the economy on a large screen are confident that those with the nerve to buy a home in the current market will one day be glad they did—particularly if they’re now able to capture a quality property in a desirable neighborhood at a bargain price.
“Throughout history, property markets have always gone through cycles. Buying smart now means picking one of those prime neighborhoods where values will be among the first to rebound,” says Barry Nystedt, a real estate broker and president of the National Association of Exclusive Buyer Agents ( www.naeba.org).
Nystedt, who considers this an opportune time for first-time buyers to make a purchase, predicts that values in many coveted communities will very gradually begin rising during the next six to 12 months. In areas where the economy is weak, however, he says prices could remain stagnant for three years or longer.
First-time buyers who can make a good downpayment and plan to stay in their home for three to five years are in prime position to find a deal. To help you find the right neighborhood, the Trib also published this nifty map that shows home value changes all over the Chicago area for the past year.
Buyers that got off the sidelines and into the game — chicagotribune.com
The Tribune’s Mary Ellen Podmolik profiles a couple buyers who decided to take the plunge in the recent unsteady market. How did they do it? The old fashioned way. Mortgages are still available for buyers who qualify under traditional rules (steady employment, good credit history) and can put at least five percent down, if not more.
One couple Podmolik mentions, first-time buyers, adjusted their expectations as to how big of a house they could afford and made sure they put down as much money as possible. Another man, who qualified for a jumbo loan, had to put down at least 25 percent and pass a number of checks on his employment history. The point is that you can buy a home now, as long as you can truly afford it.
Is Now a Good Time to Buy a Home? – WSJ.com
Doesn’t it seem like someone is always saying it’s a good time to buy a home? Obviously, this is a tough time to be doing any kind of significant spending, let alone making purchase as large as a home. But the Wall Street Journal says that now may be a good time to buy if you:
If you’ve been listening closely, that’s the same advice you’ve already heard about buying at any time, not just in the current tough market.
A $7,500 nudge for first-time homebuyers — chicagotribune.com
As part of the sweeping housing bill passed by Congress last week, first-time home buyers will get a tax credit of $7,500 if they make their purchase from April 9, 2008 through June 30, 2009. Only first-time buyers or those who have been renting for the past three years are eligible, and the home must be a primary residence. The credit is adjusted for those at higher income levels as well, but it provides a nice little incentive for those looking to test the waters on a new home within the next year.
