Today’s environment is an unusual combination of good news-bad news. One person’s bad news, while tragic, is another’s good fortune. Someone losing home could be another’s bounty. The good news is that this combination of low housing prices and low mortgage rates are the opportunity of the century.. or possibly a lifetime.
I remember buying my first home in the recession following the savings and loan debacle. We were fortunate that we had saved enough for a 20% downpayment – required in those days to get a mortgage. The choices of mortgages were around 17% interest for a 30-year fixed or a couple of percent lower for an adjustable rate mortgage.
In today’s market, there are options for as little as 3% down with an FHA mortgage for qualifying buyers, Rates dipped recently to as low as 4.6%, and although they may be higher now, they have been close to or below 5%. These low rates mean you can afford to buy in a higher price range, or have lower monthly mortgage payments.
In addition to these conditions, there is a $8000 tax credit for first-time home buyers – defined as those who have never owned a home or not owned a home for at least 3 past years. The requirement is that the purchase closes before Dec 1, 2009. An additional provision, if you have already bought in 2009, you can take this $8000 tax credit immediately on your 2008 return.
These conditions are unprecedented: low housing prices, low mortgage rates and bennies from the government for buying! I wish I were a first time home buyer now – I could’ve paid off my first home within 12-15 years and built up a nice equity for my childrens’ college fees.
With the government working hard on getting the housing market out of the slump, it won’t be long before homes are selling quickly. Those who wait on the fence through this year will be kicking themselves for years to come.
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A definite great read….Barbra Scurley