IT'S A BUYERS HOME MARKET IN 2008

Due to the sub-prime melt down in in the real estate market, record foreclosures are being filed and hundreds of homes are flooding the market. Prices of homes have plunged and are still descending. Home builders , failing to foresee the coming imploding of the housing market, overbuilt and now they can't unload their inventories without making huge concessions on price and offering big dollar incentives to anyone remotely interested in buying one of their homes.



What does this all add up to? A BOOMING BUYERS MARKET IN 2008. Real estate is at bargain rates right now. Despite the doom and gloom that the media portrays, there is "real gold" in the mountains of real estatedom. You just need to know where to dig so to speak.



Real estate is in a discount mode throughout America. It hasn't been this way in a very long time. What this all adds up to is "a great deal in a great time" for first time home buyers or those who have been out of the market for a time and want to get back in.



It's as simply as supply and demand. There is a huge supply of residential real estate on hand and no body's buying like they use to. This creates three factors that work in favor of prospective home buyers.

1. Very motivated sellers greatly outnumber willing buyers in just about every corner of the United States.


2. Mortgage rates are still reasonably low.


3. There is a huge amount of down payment assistance for first time home buyers and others who have been out of the housing market for at least three years.

These three factors make for a very strong residential buyers market in 2008. Now is not the time to wait. It is the time to buy. It is the time to make your dreams of home ownership come true. It is a proven historical fact that the best time to make a move and acquire good assets, like houses, is when others are holding back.

Home ownership will help you increase your estate and you can stop making your landlord rich paying his/her mortgage and start to build a nest egg for yourself.

Even the down payment, normally the largest obstacle for most first time home buyers to overcome, has been removed. Up to $50,000 or more of FREE down payment assistance is now available to any first time home buyer (classified as one who has not owned an interest in real estate in the last three years). Wherever you live there is a down payment assistance program that likely exists that you can tap into and get started on the road to home ownership.

Generally you will need to obtain an approval certificate from a local government or housing agency that administers these funds. Once you've applied and been approved you will be given a certificate indicating the amount of down payment assistance you will be given. Once this occurs a bank, depending on your ability to show that you can afford the monthly payment, will gladly provide a low interest loan for you. There are several banks already working with local government and community agencies in connection with these loans.

THINK THESE PROGRAMS ARE ONLY FOR LOW INCOME PERSONS?

Think again. Many of the down payment assistance programs have no income restrictions whatsoever. You just need to take massive action and take advantage of the market. Its in your favor as a first time home buyer. Don't be left out. Make your dream of home ownership come true.

For additional details contact roylanders@housingamericans.com www.housingamericans.com

How The Mortgage Forgiveness Debt Relief Act of 2007 Benefits First Time Home Buyers

The Mortgage Forgiveness Debt Relief Act of 2007 (H.R. 3648) has finally been passed by both chambers of Congress as of December 14, 2007 and has been signed into law by the President. This long awaited bill provides much needed debt relief to thousands of home owners who unfortunately have been caught up in the catch-22 of the sub-prime loan fiasco and are losing their homes through the foreclosure process. Once the adjustable rate loans on those homes "adjust up" the home owner almost always cannot afford the higher payments and the foreclosure tidal wave sweeps them from their homes.


Even worse, if the home owner made arrangements to sell the house for less than the actual mortgage, through what is commonly known as a short sale, the IRS came swooping in and claimed the difference between the actual sale price and the mortgage owed on the property as "earned income". The foreclosed home owner not only lost his/her house, they also incurred an additional tax bill. Talk about a raw deal.


For example. If Joe and Jane Smith owned their home with an adjustable rate mortgage note of $500,000 and was paying at a low adjustable interest rate of 3% per year their payments would be approximately $1,250 per month. But after a two to three year period the interest rate adjusts to 5.75% on the same amount of $500,000. The payment adjusts to approximately $2,396 per month. Joe and Jane's budget will only allow for payments of $1700 per month maximum. They are in trouble. To add insult to injury the real estate market is spiraling down and property values have taken a nose dive, including Joe and Jane's home. The property's value is now $400,000. Joe and Jane's property value is now upside down. They can't afford to pay the mortgage on the property and they can't sell it even for the amount they owe on it. A "catch-22".


They don't pay the mortgage and the bank forecloses. Joe and Jane in the meantime find a buyer who will purchase the home for $375,000. The bank, because it knows something is better than nothing, agrees to accept the buyer's offer and to release Joe and Jane from the responsibility of the $500,000 mortgage debt, a difference of $125,000. This is called debt forgiveness. To the IRS its called income. Under the IRS code the IRS could and in many cases has sought to tax the home owner for the debt forgiveness amount. In this case Joe and Jane, as if not already in enough financial trouble, would owe taxes on the $125,000 too. That is until the recent passage of the Mortgage Forgiveness Debt Relief Act of 2007.


This Act amends the Internal Revenue Code to exclude from gross income amounts attributed to a discharge of indebtedness incurred to acquire a principle residence (the one the home owner lives in). The amount of debt forgiveness can be up to $2 Million. This is great relief for all of the Joe and Jane's of the adjustable rate world who just can't keep their homes because the payments are too high and in many instances the property value has also decrease significantly.


THIS IS GREAT NEWS FOR TWO REASONS:

1. The current homeowner is relieved of a staggering and depressive tax obligation possibility, given a way to sell the home for less than owed on it and avoid a foreclosure on the home owners record.



2. Because the bank has taken the property back in its Real Estate Owned (REO) department it is very motivated to get rid of the property as quick as possible to avoid holding it and suffering a further loss as well as bank regulation demerits that a bank suffers when property is taken back after a mortgage failure.

How Does This Help A First Time Home Buyer?

It helps the first time home buyer in many ways. The definition of a first time home buyer is anyone who has not owned a home within the last three years prior to obtaining a mortgage on their principle residence.

The Mortgage Forgiveness Debt Relief Act of 2007 will increase short sales of homes that homeowners cannot afford and now know they cannot be held liable for any "debt forgiveness" tax. Sellers who are forced into foreclosure will have more flexibility in negotiating with the mortgage holding bank and the buyer who makes an offer to purchase the property. Since the property value is now very low it is an excellent time for a buyer to buy the property and lock in the interest rate at a fixed amount that the buyer can afford. The interest rate should be fixed at a 30-40 year period. There are plenty of them available.

The bank is inclined to work with the buyer in order to get rid of the unwanted inventory. Remember banks are in the lending business, not the real estate business. They cannot make money unless loans are made. If they hold on to the real estate in inventory they don't make money. In fact they lose even more money because the home is now vacant, subject to vandalism and the maintenance and upkeep does not stop. The bank also has to hire a property management company to oversee the property. Get the picture. The bank does not want the property. It wants to sell it.

This is great for a first time home buyer. He/she can get a great low market buy, locked in with a long term mortgage rate that they know they can afford before going into the loan and best of all when the real estate industry rebounds, which it surely will, the buyer will reap the benefits of increased value appreciation that helps to build a solid estate.

The first time home buyer can also use one or more of several down payment assistance programs that will help with the down payment on the property purchase. This is money that never has to be repaid. There are several local, state and federal programs available. Down payment assistance up to $50,000 or more is possible.

Now is the time to Stop Making Your Landlord Rich!! and own your own home.

Hope this helps somebody go out and make their dream of home ownership come true.

Let me know what you think

Roy Landers

http://www.housingamericans.com/

Roylanders@housingamericans.com

Six Steps Every First Time Home Buyer Should Take

SIX BUYING STEPS EVER HOME BUYER SHOULD TAKE

Purchasing a new home is an important decision, especially so for a first time home buyer who doesn’t have the knowledge and experience in buying real estate. My goal is to provide the first time home buyer with tools and information so they can determine if home ownership is right for them. Buying a home is a process and essentially involves six steps:

1. Decide to Buy
2. Organize Paperwork
3. Shop for a Home
4. Prepare an Offer
5. Secure a Mortgage
6. Close the Deal

Many first time home buyers get caught in the trap of being unprepared and uninformed which can lead to much confusion and frustration. Educate yourself, organize your paperwork, and utilize the resources available and the home buying experience can be less stressful and more enjoyable.

Step 1: Decide to buy
So you want to be a first time home buyer? Ask yourself these questions:
What are your personal reasons?
Are you getting married or expecting a child and need more space or do you want to move closer to work? Maybe you are just tired of renting and want the benefits of home ownership? Sit down and make a wants versus a needs wish list and think it through. Make one of them “renting vs. owning” With rent you have a roof over your head and don’t have to worry about maintenance, etc. However, if you owned a home the roof would be yours, the monthly mortgage would be tax deductible, and the property will appreciate over a period of time adding more value to your estate.

How long do you plan to own the home if you buy?
You may be better off renting if you expect to move or get transferred within 2 years. Contact your loan consultant to figure out how long it would take to break-even on your expected home purchase. Calculate if you should rent or buy. Currently, it takes about 1.5-2 years to break even on a typical home purchase. However the wait is well worth it if you are going to stay. The average period of time that most people stay in a home they purchase is five years before they move, because they buy another home or otherwise.

Do you have enough cash for a down payment and closing costs?
Today, lenders are offering great zero down home first time home buyer programs, which require no money down and the seller can pay most or all of the closing costs. There are also many government and non-profit programs that provide free down payment assistance for the first time home buyer. You can go to the closing table with no check and still get your home.

Can you afford to carry a monthly mortgage and still pay your bills and go out to dinner or movie more than once a month with friends? A mortgage should not take so much of your money that you can’t have a life. After paying your monthly mortgage you should still be able to have some enjoyments of life. Sit down and make a budget to see where all your money is going during the course of a month. Usually you will find that you can cut back significantly on a lot of expenses. This is money that could go toward helping to pay your monthly mortgage.

Do you need a tax break?
In most cases, renters do not receive a tax break, homeowners do! You are able to deduct the interest on your mortgage loan and property taxes. Consult your tax accountant to discuss how purchasing a home will benefit you.

Step 2: Get Organized
Start a Home-Buying file
If you keep your records in one place, you can get organized in a few hours.

Credit data

Very Important: You should get a copy and check your mortgage credit report because it may differ significantly from the one you obtain online. Also, you should correct any problems before applying for a mortgage if possible.

Here is a list of loan documents a first time home buyer will need to process the loan:
1. Copy of purchase contract if you have found a property.
2. Current pay stub.
3. W2 forms and 1040's for last 2 years If self-employed: -1065 and k-1 returns -1120 tax forms.
4. Most recent (2) months asset statements including bank, money market, 401k, etc.
5. Loan/debt payment information for credit cards and auto, student, and personal loans.
6. Name and phone numbers for landlords, attorneys, and Realtors.
7. If its a condo purchase you will need to get declarations and by-laws and name and phone number of the condo association or management company.

Real Estate Listings:

Collect the listing sheets on the homes you may want to buy and make notes about properties.

Inspection Report:

If you are buying a condo you may choose not to have the property inspected but I feel that you should always use an inspector on a single family or multi-unit building. The property may look great but there may be some hidden defects such as foundation or structural problems which may cost thousands of dollars!

Insurance information:

Choose your insurance agent wisely and cut your insurance cost. Remember, a condo does not require exterior homeowner insurance because protection is provided by a blanket insurance policy with the association. You should check into insurance to cover personal belongings and interior structure (studs-in) since these items are not covered by a blanket policy.

Get Pre-Approved:

Currently, the real estate market is competitive and sellers are looking for buyers who are pre-approved not pre-qualified. A pre-qualification is simply a letter stating that you are pre-qualified to purchase a property based on information given to a loan officer. A pre-approval involves submitting a loan file to underwriting, accompanied by actual documentation, for approval and receiving a commitment letter. This commitment letter gives a first time home buyer negotiation leverage when submitting an offer to purchase a property.

A down payment assistance grant can be used with a loan from a bank to get you pre-approved. There are several banks that will jump at the chance to work with a government or non-profit agency that provides down payment assistance. The bank simply satisfies itself that the home buyer can make the payments and will provide the loan. These loans are very favorable and do not involve adjustable mortgage rates. They are fixed rate loans for 30-40 years.

Down payment assistance certificates can be obtained through a number of local, state and national down payment agencies. Once obtained and bank approved the buyer just goes shopping for a home.

Step 3: Shop for a Home
"Expect less, Be prepared for anything," is what a Samurai Warrior might say about buying a home. A home or condo does not always live up to their advertisements, but you may find a real charmer without many listed features. Decide whether or not to work with a real estate agent. If you work with a realtor, make sure they know your priorities, such as price, location, size, number of bedrooms, etc... Make a checklist of what you want, prioritize them, and give them to your agent. Make sure to interview and choose a realtor who best suits your personality and needs and makes you feel comfortable.

Take a checklist of questions to ask when you go to see a property. A beautiful Victorian may be a favorite until you check out your notes later and discover it needs a new roof or siding. (Hint – Always make a thorough check of the kitchen area). Make sure plumbing is okay.
When you find a home that interests you, research the neighborhood. Talk to the neighbors and find out what it's like to live there. You may want to park on the street and just observe activity and listen. If everything checks out you are ready to make an offer.

Special notes about Condos: Decide if you want to live in a low-rise or hi-rise building you should be aware that assessments are higher for hi-rise buildings due mainly to maintenance and security costs. Also, you need to know if any special assessments are in the works because it can hit your pocketbook hard. Finally, call the management company or association and find out if the owner occupancy ratio is below 60% because it may affect your resale value later.

Step 4: Prepare an Offer

Step back from your emotions. You're making a contract to purchase a home, which will legally bind you if the seller accepts. Unless you have down payment assistance from a seller or government program, you also will submit an earnest money deposit with your offer, which is only refundable under certain conditions.

Do your Research and Find out about:
1. Current market conditions.The higher the demand, the more you can expect to pay.
2. Price of comparable homes sold in the area recently. Check home values on the internet for the locale you are considering or rely on your realtor or loan officer to help you.
3. The seller's motivation. In cases, such as divorce or job relocation, the seller may settle for a lower price in exchange for a quicker sale.

Prepare your Offer
1. Always make an offer within your ability to pay.
2. To strengthen the offer, include your pre-approval commitment letter. If you have worked with our office to get your pre-approval certificate this will have already been taken care of.
3. Attach conditions to your offer. This allows flexibility for you to negotiate.
4. You usually will have to include a deposit with your offer, to apply as a good faith down payment if the deal goes through. If you have been issued a down payment certificate by an appropriate agency this requirement will have already been taken care of.

What's Next? The seller may accept, reject, or counter your offer. If the seller accepts, it is a done deal. If seller rejects, don't take it personally, look elsewhere, and you will find the perfect home. If the seller counters, you can accept or "counter the counter offer." I strongly advise that you work with an agent or other home buyer assistance agency or organization on your first home purchase because there are many legal forms and details that need to be addressed concerning your specific real estate transaction.

Step 5: Secure a Mortgage
The first step in the loan process is to get pre-approved. Once you are pre-approved with a lender or broker you can work with them or choose another lender. Choose a lender or mortgage broker. A lender actually makes the loan. A broker acts as a go-between for a buyer and a lender.

Submit your documentation.

If you have a pre-approval with a lender, your documents are good for at least 90-120 days with that lender. Otherwise, you will need to submit pay stub, bank statements, etc.
Check interest rates. Interest rates tend to fluctuate daily. You should check mortgage rates frequently. If interest rates are low, you may ask your lender to lock in a rate. Otherwise, you can choose to float but you may end up with a lot higher rate than expected. Are you a gambler?
Choose a loan. There are money loan types available, including adjustable rate loans that allow you to make lower payments in the beginning years but adjust upward later. With the current real estate market these loans are now disfavored. For the first time home buyer I especially recommend a fixed long term loan. Many first time home buyer programs have interest rates that are less than the current market rate and can be for 30-40 year fixed periods with no adjustable rate surprises in later years. You know exactly what you will be paying from day one to the mortgage pay off.

Step 6: Close the Deal
On closing day, the seller officially signs over the house to you. It can take anywhere between 15 to 90 days to close on a typical real estate transaction. The average time is about 45 days. To avoid last minute surprises: Set a closing date that works for you. If you are renting, set a closing date near the end of your lease to avoid paying unnecessary rent. Be sure to schedule enough time to move in and get 3 moving company quotes. The best bet is to close on the sale a few days before you move in to avoid being overwhelmed.

Estimate your final closing figures: A day or two prior to closing a statement is made available for you to review. Most importantly, the lender is required to give you a good faith estimate of closing costs. Go over the costs with your loan officer and make you sure you understand each one. Schedule a final walk-through. Make certain the seller has completed any repairs specified in the contract and satisfied any other conditions spelled out in the contract involving the home's condition.

Finally, sign the papers, get the keys, and hang your hat on home sweet home.

Hope this helps a prospective home buyer

Sincerely,

Roy Landers
http://www.thehomebuyersource.com/
roylanders@housingamericans.com