Welcome Home: Buy real estate in 2010
Whether you’re a first-time homebuyer or a repeat buyer there are three very important reasons why now is the time to purchase a home. Really, this time we mean it! For months now, we’ve been shouting it, but new federal guidelines are giving buyers more reasons to buy now.1. The Federal Housing Authority has announced policy changes to address risk factors and to strengthen finances. These changes include: increasing the mortgage insurance premium, currently 1.75 percent of the loan amount, to 2.25 percent, starting in the Spring of 2010.The combination of minimum FICO score and down payment will be updated for new borrowers with a credit score below 580. Those buyers will now need to provide a 10 percent down payment when 3.5 percent works for those with higher FICOs.Finally, allowable seller concessions will be reduced from the current 6 percent down to just 3 percent of the contract price – these changes are expected to occur in early Summer, 2010.2. Current tax credit opportunities include $8,000 for first-time home buyers, and $6,500 for “move-up” buyers, or those who have been in their current home for five of the last eight years.To qualify for the credit(s), a buyer must be under contract by April 30, and close the purchase by June 30, 2010.This might seem like something close to 150 days… but the buyer must consider the time it takes to shop for a home, negotiate a price, apply for a loan, successfully move through underwriting (possibly the longest part of the process), inspect the home, resolve inspection objections, and so on… and those 150 days suddenly don’t seem like enough. Those wanting to take advantage of the tax credits should be shopping now for that new home.3. The Fed has stated that they will stop purchasing Mortgage Backed Securities in April, 2010. It is widely agreed that mortgage interest rates will begin to increase as a result, so by the time you’re about ready to take advantage of the tax credits, home loan interest rates will start to go up, incrementally reducing purchasing power. RE/MAX CEO and recent appointee to the Denver Federal Reserve Board, Margaret Kelly, was interviewed on CNBC, just prior to the State of the Union address Wednesday night. Among other things, she stated that the first-time homebuyer tax credit caused as many as 2 million people to buy homes in 2009, who might not have otherwise. Further, the new, updated credit may cause as many as 1.5 million more “move-up” sales in 2010, than might have otherwise occurred. The bad news is, foreclosures continue to increase. Predictions are that as many as 4.2 million more homeowners will be forced into foreclosure in 2010, – 8 percent percent more than in 2009.RE/MAX, along with the HUD and FHA are examining ways to “stem foreclosures” in order to increase the housing recovery. Call us to find out more about this and other recent news items that might cause YOU to decide that today is a good day to shop for real estate. We can help you here, or anywhere in the world!TheTeam@Elich.com is at Re/Max Properties of the Summit, 305 Main Street in Frisco. Butch Elich & Paula Parker are longtime locals providing real estate customers with award winning service. Find them at http://www.elich.com or search for them by name on Google, Twitter, or Facebook.
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