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”.

First time home buyers, you are living in an unprecedented time.  The market is flooded with low cost housing, a surplus not seen since The Great Depression.

However, on a less positive note, most of the zero down mortgages have disappeared from the landscape and they won’t be back for a long time.  You can probably purchase a home today with the equivalent of zero down but note that word “equivalent”.  If you qualify for some of the city, state or federally sponsored first time home buyers programs, you will collect cash either before or after closing on your new home. 

If you have family or friends who are willing to help you out by gifting you money for your down payment, that could help you through the rough patch.  Be sure to work with a talented and ethical mortgage consultant when purchasing a home.  These folks can track down every dollar to which you are entitled and make creative suggestions for how to bridge gaps that may arise.

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”.

Yes, that’s right.  If you are a First Time Homebuyer and were hoping to get a great deal on a home, but can’t buy till this fall, low mortgage interest rates are good news.  It seems the weak economy, the stalled housing market and the European fiscal crisis are all GOOD news for home buyers.  Because job creation is lagging behind the economic recovery, many areas of Minnesota still have high unemployment.  This translates into home foreclosures as the unemployed struggle and lose the fight to keep up with mortgage payments.  Foreclosures keep home prices low as banks use fire sale pricing to get rid of them.

The housing market took a dive after the end of the special home buyer tax credits.  These special tax credits ended on April 30 and May was a dismal month for home sales.  As home sales slow down, home owners become more motivated to discount their homes’ prices.   We expect to see more advertised low prices over the summer and into the fall.  One report that I read said the Twin Cities was one of the worst areas of the country, better only than Los Vegas, in terms of dropping home values.

The European fiscal crisis has made Wall Street very nervous.  If the European economy goes into a recession, that might stall the United States recovery.  During times of Wall Street panic, the bond market typically does better than the stock market.  Mortgage money is financed through bonds.  When bond sales are good, there is more mortgage money to lend at lower interest rates.  Thus, most experts agree that we will see spectacularly low rates through the end of 2010 and maybe even into 2011.

So… lots of homes on the market at low prices and low interest rates on mortgage money.  Sounds like a buyers’ market to me.  Be sure and plan to take advantage of the great affordable housing out there this year before the ecomony gets back on its feet and these bargains disappear.

For answers to your mortgage and home purchase questions, attend our FREE FIRST TIME HOMEBUYER CLASS offered monthly in the Twin Cities metro area.

We get asked this question a lot in our First-Time Homebuyer Classes.  Remember, before the tax credit which started in April, 2008, people bought homes for the first time.  I’m sure that after the tax credit expired in April of 2010, people will still buy homes for the first time.  Owning rather than renting is still a good idea. 

Is this still a good time to buy a first home?  Yes, yes, yes.  This is the lowest home prices have been in last 8 years.  There are still a large number of foreclosed homes coming on the market.  While I feel sympathetic to those homeowners who have lost their homes to foreclosure, these foreclosed homes present a remarkable value to the first-time buyer.  Many are discounted in price 30-50% from their original purchase price.  And the banks that own the homes give a rapid response to your offer. 

It’s still up to you to save a down payment, in most cases 3.5% of the purchase price.  If necessary, you should also work on a good credit rating which will help keep your mortgage interest rate affordable.  But don’t miss out on one of the best buyer markets in a decade.

For more answers to your detailed questions, sign up and attend one of our FREE HOMEBUYER CLASSES!!

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”.

Home-buying as a couple is likely to be more fun than home-buying on your own.  For one thing, you now have two incomes.  Mortgage consultants will look at your combined monthly gross income to find out “how much house” you can buy.

As a single person with an income of $40,000 a year and no debt, you could afford a home that costs about $120,000.  As an engaged or married couple with two incomes totaling $80,000 a year and no debt, you could now afford a home of about $250,000 a year.

Whether your goal is to live inexpensively the first several years together and save money, or spend more money to get a “dream home” for your first home together, the point is you have choices now that you didn’t have as a single person.

This answer may differ from state to state so I am talking about my experience in Minnesota in this response.  Condominiums or “condos” as they are called look a lot like an apartment.  The typical condo unit is in a building with a centralized entrance, often a security entrance.  Once you are admitted to the building, each floor of the building will have hallways with condo unit entrances off of the hallway.  A condo unit can be on the second or third or seventeenth floor of the building.  Thus, it has no land under it.  This is unusual in real estate and when condos were first introduced, it took awhile for people to accept the idea. 

When you buy a condo, you get two things.  You get private ownership interest in the condo unit and shared interest in the parts of the building and grounds that are shared with all the other homeowners.   The homeowners’ association, of which you are now a member, manages this shared property.   You can do whatever you want to your unit as long as it doesn’t impact any other homeowner and it follows association rules.  You can’t do anything you want to the shared space unless you obtain permission from the other homeowners.  For example, you can’t change the outside of your door which faces the shared hallway.  Most homeowner associations develop a list of rules and regulations to make sure that all owners respect each other’s rights.  Usually, the heat in a condo building is central and the costs of heat are included in your homeowner association dues.  Some other utilities might be centralized as well such as garbage removal or water and sewer services.

A townhome most typically will have its own front door.  Usually, that front door faces the outside rather than a hallway.  It will stand on a small piece of ground or on its own small lot.  The townhome will typically have its own furnace and hot water heater so you will pay these bills and replace these utilities when they wear out.  There still is a homeowners’ association and you still cannot make changes to the outside of the unit without association approval.   Many first-time homebuyers purchase a condo or a townhome first because they tend to be less expensive and less work than owning a single family 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”.

If you bought or are buying your first home between January 1, 2008 and June 30, 2010, you will qualify for a refundable credit from the IRS.  There are two types of tax credit.  The non-refundable credits reduce your tax but only can reduce your tax to zero.  Refundable credits mean that once your tax is at zero, the rest of the credit will be mailed to you as a check.

For example, let’s say your taxes are $5000 this year and you have already paid $4500 towards those taxes in withholding from your paychecks.  So you would owe $500 to the IRS.  However, you bought your first home this year (2009) so when you file your taxes in 2010 for 2009, you claim the first time homebuyer credit.  The IRS would send you a refund check for $7500.  They would take $500 from the credit to pay the balance of the taxes you owed to them.  The rest would be refunded to you.

Now there are some differences in the tax credits available for first-time homebuyers.   If you bought between January 1, 2008 and December 31, 2008, the credit is $7500 and must be repaid over 15 years starting the second year after receiving the credit at $500 per year.  If you bought between January 1, 2009 and June 30, 2010, the credit is $8000 and doesn’t have to be repaid if you live in that home you bought for 3 or more years.  If you bought between January 1, 2009 and November 6, 2009, the credit is $8000 and you can e-file to claim the credit.  If you bought your first home after November 7, 2009 but before June 30, 2010, you cannot e-file your return to claim the $8000 credit as the IRS now requires you to attach proof of home purchase to your return.

If you have filed taxes for 2008 but bought your first home after you filed, you can file an amended return this year to claim the credit.  You don’t have to wait to file your tax return for 2009.  This is a great benefit for first time buyers, defined by the IRS as folks who haven’t owned a home for the three years prior to closing on their new home.  Good luck in buying that first great 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”.

Yes, our good Uncle Sam has once more come through for us and you can benefit from Congress’s largesse.  The $8000 tax credit for first-time homebuyers has been extended through April 30, 2010.  If you have been shopping and missed the first deadline of November 30, 2009, your impulse will be to kick back and enjoy the reprieve.  If you haven’t started shopping yet, your impulse may be to say “hey, I have a lot of time now”.

But let’s face a few facts.  First of all, spring is the busiest time of the year for real estate sales.  In Minnesota, the snow, the cold, the short days and the holidays conspire to distract home buyers in November and December.  These are usually slow shopping months.  But the pace picks up in February and March.   The Parade of Homes, sponsored by the Builder’s Association, runs through mid-March.  This gets homebuyer’s out shopping. The days become longer, the snow starts to melt, spring is in the air and first time homebuyers, like Monarch butterflies, swarm around the good homes.

The deadline for the first-time homebuyer tax credit will fall right towards the end of the spring real estate market.  Spring is always a busy time, even in this down economy.  This year it will be doubly busy because of the tax credit and good homes will be in short supply. 

If I were a first-time homebuyer, I would start shopping now.  November and December are slow months without much competition from other buyers.  There will be good deals out there.  Also, the mortgage interest rates tend to drop during these months due to less demand so you will pay less for your monthly house payment.  Finally, you will have plenty of time to get it all done before the tax credit disappears and you won’t have to worry about making the deadline.

Be smart.  Plan ahead.  Beat the crowd.  Get a great house and a great mortgage.

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”.

On November 6, 2009, President Obama signed into law an extension and expansion of the First Time HomeBuyer Tax Credit which has been in effect since January 1, 2009.  Briefly, the law extends the $8000 tax credit which was due to expire on November 30, 2009.  The new law extends the credit into 2010.  The rules state that the home purchase agreement must be written and signed by April 30, 2010 and closed by June 30, 2010.  The former requirement that the buyers not have owned a home in the past three years is still in effect.  The credit is limited to 10% of the purchase price of the home or $8000, whichever is less.  Income requirements have been increased.  The law is effective immediately.

The law is also expanded to include homeowners who have owned their home at least five years of the last eight years.  If these homeowners sell their current home and buy a new home before April 30, 2010 and close both transactions by June 30, 2010, they can take a tax credit of $6500.  This law goes into effect immediately and will affect any closings occurring between November 6, 2009 and the end of the program on June 30 of 2010.

Both first-timers and repeat buyers will have a price ceiling for the new home of $800,000.  The real estate lobby worked hard and long to encourage lawmakers to sign this program extension.  There was concern that if the program ended in November, 2009, the housing market would take a nose dive.  Timing the program ending for next April is better because the real estate market is typically the strongest over the spring and summer months.

If you have questions, come to our homebuyers class where we have the answers as well as  special handouts covering program rules and your questions.