If you’ve been holding off buying that first great or second move-up home, hoping that the market would drop in price, now’s the time to act.  There is absolutely no activity on Capitol Hill that would lead me to believe this tax credit will be extended.  In addition, there are some other things happening that may affect the how much home you can afford.

As you know, the tax credit is a refundable credit of $8000 for first-time homebuyers and $6500 for move up buyers who have owned another primary residence for at least 5 years.  In order to qualify for the credit in 2010, you must write a purchase agreement on a home by April 30^th, 2010.  You must then close on that home by June 30, 2010.  Tick tock.  Tick tock.  The clock is running out.

And as if that isn’t bad news enough, at the end of March, a Federal program which has been purchasing mortgaged backed securities will end.  This program has put an artificial price on these securities, insuring lower mortgage rates.  Most analysts are expecting mortgage rates to rise at the end of this program.  In other words, when the government stops buying these securities, the analysts don’t expect that the private investor market will pick up the slack.

This will mean an increase in the monthly mortgage payment for the home buyer.  For example, a payment on a $200,000 mortgage, principal and interest fixed over 30 years at 5% interest is $1074.  At 6%, it is $1200 or roughly another $125 per month. 

So get out there and buy now.  With the Federal buying program in place , you can lock in a lower interest rate and you will avoid the price increases that always accompany the brisk spring market.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.

Buying your first home is a big step.  You need two things before you decide to make that purchase.  First, you need to have all your financial ducks in a row.  Make sure you have money set aside for the down payment and that you have some money in reserve for any problems that might come up after you buy your home.  Look at your credit report and see if you need to change or correct it.  Make sure it presents you in the best light possible and that it tells the truth about you.  If there are mistakes or inaccuracies, take the time to get them fixed.

Second, make sure you are emotionally ready.  Buying a home means assuming responsibility for the new home.  It is a big financial commitment and a time commitment too.  When something breaks or needs repair, there is no landlord to call because the landlord IS YOU. 

I advise you to NOT buy a home if you also are planning a wedding or having a baby or changing jobs.  At least provide some time between these events.  Make sure that you are not taking on too much at one time.  All of these events are stressful and cost money.  Home buying should be a pleasant experience but it can become a nightmare if you are under too many time pressures and too many money pressures.

First time homebuyers will find good opportunities year round, but here in Minnesota, fall is especially a good time to shop.  The market is usually a little slower and sellers are delighted to see you visit their home.  Prices tend to be a little softer in the fall and mortgage interest rates usually drop in the fall as well.  However, any time is a good time when you are ready.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.

If you are actively shopping for your first home, it’s impossible to avoid looking at foreclosed homes.  They represent almost half of the homes on the market in Minnesota.  There are four things to remember when you consider purchasing a foreclosed home:

The owner of the home is a bank.  The bank representative has never lived in the home and will not tell you anything about it.  They don’t know how old the roof is, whether the furnace has had annual service, whether there has been a water leak in the home and if everything in the home works.  In other words, you will receive no information on the home except what you discover yourself.

The personal property remaining in the home is not owned by the bank and they cannot and will not sell it to you.  If there is still a refrigerator, a stove, a microwave, a washer and a dryer, technically they belong to the original home owner and not the bank.  If the home owner chooses, they can come and remove them before closing.  If they don’t come to remove them and they “abandon” them, then you can claim them at the time you move in.

The utilities in these homes may have been disconnected without properly preparing the home.  If the heat has been turned off in the wintertime and the plumbing in the home has not been winterized and treated with antifreeze, the pipes may freeze and burst.  When spring comes and the water melts, it may cause mold to grow in the home.  These homes can cost a lot of money to repair and restore. 

There are usually one or more problems with foreclosed homes that require remedy by the buyer.  These may be big problems (burst pipes, mold, ageing roof) or these may be small problems (missing appliances, doors, kitchen cabinets etc.).  Be prepared to spend some money after closing to restore the home.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.

We cover this pretty thoroughly in our First Time Home Buyer Seminar.  There are several mistakes Home Buyers may make when they decide to purchase their first home. 

Probably the biggest mistake that Home  Buyers make is tackling this complicated purchase without proper education or information.  Buying a home is a lot more risky than buying a car or a boat.  There are a lot more things that can go wrong or be wrong.  Go out and take a class or two.  Work only with real estate professionals who have been in the business awhile and know how to prevent the biggest mistakes.  Education, information and a great Realtor consultant can save you tens of thousands of dollars on a home purchase.

A second mistake Home Buyers  make  is not knowing how much house they  can afford.  Before you even think of starting to shop for a home, you should meet with a mortgage consultant.  Work with a reputable mortgage broker and someone who has been in the business at least 5 years and offers VA, FHA and conventional mortgages.  Let them tell you if you are ready to buy and how much house you can afford.  And then listen to them and don’t overbuy and make yourself “house poor”.

A third mistake is not using a home inspector to carefully review and check the house on your behalf.  Once you have found the home you want to buy, pay the dollars necessary to hire the best homebuyer inspector in the business.  One good inspector can save you thousands of dollars and hundreds of hours in repairs and replacement costs.  You can use their report to negotiate seller paid replacements and repairs.  Read all the documents you can get on that home including the Seller’s Disclosure and the required city inspections.  After you have paid for the home, if you find something wrong with it, it will be MUCH HARDER to get it repaired at the seller’s cost.

A fourth mistake Home Buyers make is not realizing how credit mistakes can affect their ability to qualify for a mortgage.  If your credit is shaky, especially in the current tight credit environment, you may not qualify for a home loan.  Meet with a mortgage consultant to find out where you stand and take the steps necessary to improve your credit rating.  You’ll have to do this sooner or later, if you really want to buy a home.  DO IT SOONER.

Can you see a theme in these four mistakes?  They all have to do with choosing ignorance over education.  An educated buyer is a happy buyer, one who is walking into a home purchase with their eyes wide open.  And a successful home buyer too!!

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.

Just to be clear with you, I LOVE the internet.  It has made more information available more quickly than any public library ever could.  It has made shopping for homes easier and faster for home buyers, much faster than paging through those phone-book-sized “home books” that Realtors used 15 years ago.  But it has caused some problems too.

When we revised our First Time Home Buyer Class a couple of years ago, I went out and met with six different parties that had come to our class in the past.  I wanted to find out why they came to the class, rather than just gathering information on the WEB.  Everyone agreed that the internet was confusing.  All six parties HAD been on the web at some point in preparing to buy a home.   There was a lot of information, it was true, but some of the information was contradictory.  Some of the information was hard to understand and too complicated.  Some of the information was written in highly technical terms.  There was no way to ask questions and get immediate answers.  The consensus was that the internet wasn’t very user friendly.

These are the folks that then decided a class might be more what they were looking for and signed up for our seminar.  They all agreed that sitting face to face with someone and getting answers on the spot from knowledgeable teachers was far superior to reading information on-line.

The internet can be very useful.  We hope this blog is useful.  But it can be confusing, complicated, contradictory and too slow in answering questions.  If you need answers NOW and if you find the information you’ve been reading is hard to interpret, sign up for a class.  You’ll be glad you did!!

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.

It’s a great country we live in and you can reap the benefits this year.  Congress has passed a new law which permits first time homebuyers who earn less than $75,000 (individual) or $150,000 (couple) to qualify for a special tax credit.  If you buy your first home (must not have owned a home in the previous 3 years), you can qualify for a gift from your government of up to $8000. 

The tax credit is 10% of the purchase price of the home or $8000, whichever is less.  This credit not only reduces your tax liability for the year in which it is used but also serves as a real credit.  That is, if you don’t pay enough taxes to use the full $8000, the government will mail you a check for the difference.  You could claim the credit this year, even if you have already filed your income tax return by using the new form, Form 9465, to request the credit.

So what are you waiting for?  Home prices have dropped the most they have ever dropped in recorded real estate history, mortgage interest rates are at record lows of 5% and you can get paid $8000 by your government when you buy your first home.  Is this a great deal or what?

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.

Did you know that one of the most powerful tools for first time homebuyers is right here? We offer free homebuyer classes in the Twin Cities MN. We’ve been teaching these classes for over ten years.  Hundreds of our students have graduated and had a successful experience buying their first home.  Our classes have much more to offer than any online class ever could because we tailor our classes to meet your needs! They are updated monthly as the information for home buyers changes.  Did you know, for instance, that there are special grants through Minnesota Housing Finance Agency for first time home buyers in Minnesota?  You can receive up to $14,999 to help with your down payment and closing costs.  There are also federal plans such as the time-limited $8000 first time homebuyer credit. There are also city and county sponsored programs, and many important details that our experts here can tell you about!

We have special homebuyer advice and ideas that you can tap into immediately. We cover an array of topics, including credit scores, mortgages, finding the right home, and much more! We also follow up with our students, sending you ongoing information after the class so that you’re in the loop for current home buying news and events. Visit our Signup page and signup for your free class today!

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.

Many Home Buyers are surprised to learn that in addition to a down payment, they may need to pay other fees at closing, commonly referred to as “closing costs”. The amount of these fees will vary from mortgage company to mortgage company. A good estimate is about 3-3.5% of the purchase price of the home.

When you are buying your first home, it may be hard for you to come up with enough money for both a down payment and closing costs. Many first time Home Buyers ask for closing cost assistance from the Seller. Most mortgage programs will permit the Sellers to help the Buyer pay for their closing costs. All you need is the Seller’s consent. Your Realtor will ask the Seller for this assistance when they write up the contract on your new home. Asking the seller for closing cost help is very commonly done, especially when buying your first home.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs. “Simple answers to home ownership questions”.

The mind boggles!!  $8000 in free cash, very few strings attached, from my favorite uncle, Uncle Sam.  I’m sure you’ve already spent this money in your mind but here area a few more suggestions related to home ownership.

Let’s say you are short of cash for the down payment but you have a blood relative who would “gift” you the money if you promised to repay them some time in the future.  If you were buying a home on an FHA mortgage, you would need 3.5% of the purchase price in down payment money.  For $8000, you could buy up to a $230,000 home (assuming you qualified for that much monthly payment) and take a loan from uncle/aunt/grandma/mom.  You could then collect your $8000 tax credit from Uncle Sam and pay them back this year.    If you’ve read some of our other blogs, you know that the closing costs can be paid by the seller.  You could get into that lovely home for FREE.

Or let’s say you are interested in a home but it needs some redecorating such as new carpet or flooring throughout ($4000), new paint in all the rooms ($300) and some new appliances in the kitchen ($3000).  None of these fixes would make it hard for you to get mortgage approval but they might make it hard for you to LOVE your home.  Buy the home, claim your $8000 tax credit and use the cash to create a home you LOVE.  Put in the carpet, repaint the rooms in custom colors and buy those stainless steel kitchen appliances.  Then sit back and enjoy.

Or let’s say the home is pretty darn nice but the yard isn’t.  It’s been neglected, never had any landscaping or fencing for the kids and the dog, and the deck needs to be removed and rebuilt.  Let’s plan a new deck ($5000) and let’s get some landscapers out there to put in the perennials, replace sod and add a tree or shrub or two ($3000).  From ugly to lovely.  There’s lots more ideas too but these should get you thinking of the POSSIBILITIES for that lovely $8000 First-Time Homebuyer Tax Credit.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.