Tuesday, March 23, 2010

A good time to buy

This is a great time for anyone that would like to buy a home. Whether shopping for a first home, wanting to trade to accommodate a growing family or downsizing to something more efficient the current prices are about as low as we will ever see. The true bottom of the real estate market might not be here yet but there are plenty of bargains available that will still be seen as bargains in the years ahead.

Some of the best values are on fixer-uppers. Many of these homes are foreclosures that former owners could not afford to maintain properly or just older homes that need a little TLC. The FHA has a little-publicized 203k program that helps people get into this type of home. This program allows prospective home buyers to borrow the purchase price plus a considerable amount more to be used for renovation. Work to be done needs must be documented and renovation must be completed within six months of the purchase date. Other FHA rule such as down payment amount, interest rate and term of the loan remain the same as on standard loans.

Anyone thinking of purchasing now should move quickly. The federal tax incentives for home buyers are set to expire on April 30. These now consist of an $8,000 credit for first-time buyers and up to $6,500 for many others purchasing a home.

Also, the FHA is set to tighten other lending regulations soon. Down payments will increase because the cap on seller kick-backs will go down from the present 6% to 3%. The up-front mortgage insurance fee is increasing by ½%. FICO credit score requirements will also be tightened with a 580 necessary to receive the lowest 3.5% down payment. Those scoring below 580 will need 10% down after these rules take effect.

This situation might be behind some of the increased sales activity seen in the Tampa Bay area in March. A secondary effect of the increased sales has been a reduction of inventory of for-sale houses. The result is being felt by potential buyers as reduced time on the market and sale prices close to or at the asking price.

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