Take a look at the following article published by Rismedia. There's some interesting information for first time home buyers!RISMEDIA, August 13, 2008-(MCT/RISMedia)-Some first-time home buyers find it difficult to save up the cash needed for a deposit on a desired property. While those buyers may forever struggle to fill that cookie jar, President George W. Bush inked a bill last month aimed at giving those entering the housing market a financial boost.
“First-time home buyers make up about 40 percent of the entire market,” Sandy Dunn, president of the National Association of Home Builders (NAHB) and a home builder from Point Pleasant, W.Va., said during a recent news tele-conference. “They don’t have a home to sell and they bring demand to the market. As more than 2 million anticipated first-time buyers enter the market and claim the credit, this will stimulate buying up the housing ladder.”
For homes bought between April 9 and June 30 by first-time home buyers, the law provides a one-time refundable tax credit of $7,500 or 10% of the property’s purchase price.
However, this is not a free-money deal.
For example, a buyer who claims the $7,500 tax credit on their 2008 tax return will be required to pay back that money in $500 annual increments deducted from their income taxes for 15 years starting in 2010.
While getting more first-time home buyers into the market will help to whittle down existing inventory, Ed Brady, a home builder from Illinois who builds about 130 homes annually, noted that the new law provides FHA insurance for a program geared to prevent families facing foreclosure from losing their homes.
“Together, the first-time home buyer tax credit and foreclosure relief in the housing bill will help to reduce inventories,” said Brady. “In turn, this will firm up prices and send a signal that we are either at the bottom or very near the bottom and that there isn’t a better time to buy than today’s market.”
But, before a first-time home buyer can take advantage of the tax credit, they must qualify to buy a house and fully understand all that this new plan offers. According to a survey of 1,029 adults with household incomes of $40,000 or more, conducted by Market Tools on behalf of Beazer Homes, 77% of respondents were unaware of the new temporary tax credit. What’s more, however, 29% of survey respondents said the availability of such a credit would increase their likelihood of purchasing a new home now.
So, here are answers to some commonly asked questions about first-time homeownership and expert opinions on how to guide your new home buyers through the process:
How is the real estate market for the first-time home buyer?“For the first-time home buyer, the market is very good. The number of properties on the market gives them a much greater choice compared to a few years ago. And with much more properties on the market, it allows the buyer much more room to negotiate price.” — Steve Snell, executive director of the Realtors Association of York & Adams Counties in Pennsylvania.
What should first-time home buyers be looking for, in terms of price?“My only counsel is, if we have learned anything over the years, that first-time home buyers should not overbuy. They should determine what their needs are over their wants. The high number of foreclosures in the county tell us that some people cut it too close. You have to allow a little room for life to happen,” Snell said.
How much does a buyer need to put down on a house?“The majority of first-time home buyers will need 3% down. A buyer can still get 6 percent seller assistance — that’s money, up to 6 percent of the sale price of the house, given back to the buyer by the seller to help with closing costs.” — Raymond McGettigan of Fidelis Mortgage in Lancaster County.
Which type of homes are first-time home buyers looking to purchase?“In terms of first-time home buyers, we are seeing them stay in the $150,000 range and looking for starter homes that could have two bedrooms and one bath,” McGettigan said.
What credit range should a first-time home buyer have in order to buy a home?At a minimum, they should have a 580 score. Anyone in the 700 range has good control of their finances. The higher the score, the better your interest rate is going to be,” McGettigan said.
When it comes to the real estate outlook, NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said the housing stimulus package will provide long-term relief. “Provisions to stem foreclosures are helpful, but a greater lift to the economy should come from higher mortgage limits, enhancements to the FHA loan program and the first-time home buyer tax credit,” he said.
“These are excellent tools that will help buyers get into the market to take advantage of the unprecedented drop in home prices in many areas, as well as a wide selection of inventory, to make an investment in their future.”
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Anna-Lise Troup @ 9:59 AM
