Thanks to Jake Stanton for this post today! Jake is GM/COO for Prudential First Realty located in West Des Moines, Iowa.

Tax Credits Are Over, But Rates Are Lower!

Earlier this year, there were a couple of fairly widespread predictions regarding what would happen to the housing market right around April of 2010. First, it was predicted that the Federal Tax Credit would expire on April 30th, and not be extended. This, of course, turned out to be true. Second, it was predicted that when the US Government stopped buying mortgage backed securities in March, interest rates would begin to tick upwards, with some predicting rates in the 6% range. This has turned out to be untrue. In fact, rates have actually moved the opposite direction and have dropped into the upper 4% to 5% range. And, if we do some simple math, we can see that in many cases our buyers have a better purchasing opportunity than when we had the tax credit!

Let’s look at a couple of scenarios:

-  In April, a homebuyer purchased a $180,000 home with 20% down on a 30-year mortgage at 5.21%, which is about what rates were in April. So, they financed $144,000 and the monthly principal and interest payment was $791.61. Let’s assume they qualified for the $8,000 homebuyer tax credit.

-  Today, a homebuyer purchases that same $180,000 home with 20% down on a 30-year mortgage, but at a rate of 4.84%. Financing the same $144,000 at this new rate will save the buyer $32/month, or $11,738 over the life of the loan. Sure, it’s not money in their pocket at tax time, but it’s a much greater dollar amount than the tax credit was able to provide!

Let’s look at it another way….

-  Today, a homebuyer purchases a house with 20% down on a 30-year mortgage, but at a rate of 4.84%. Keeping the monthly payment at the same $791.61 as the April tax credit buyer used, today’s buyer with today’s rate will have another $7,732 in purchasing power with no payment increase. And just like the tax credit, improved purchasing power provides an immediate benefit.

And of course, mortgage rate reductions benefit ALL HOME BUYERS, not just first time home buyers. Plus, unlike the Federal Tax Credit, there’s no deadline forcing you to make a decision right away. As long as rates stay favorable, your buyers can take the necessary time to find the home they want.

It’s a simple, but powerful concept. The opportunity for buyers didn’t end when the tax credit expired. In fact, in most cases it has improved.

You can follow Jake Stanton on Twitter @JakeStanton.

photo credit: Dano

Have more questions about moving to the Des Moines area? There are definitely more answers.

Feel free to connect with me via Facebook, Twitter, Text, Email, or by cell. I’m happy to help.

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As we near the end of the tax credit deadline buyers are scrambling to get their contracts written by the April 30, 2010. Buyers are pre-approved and are ready to roll. Don’t waste time by looking for a home that you can’t purchase because you are limited by your loan.  Be sure to take the extra time to research and be ready!

Looking for an FHA approved condo or townhome?

Many buyers are choosing a loan with FHA terms and therefore need a condo or townhome that is FHA approved.  You can find what you need by going to the US Department of Housing and Urban Developments website and doing a search. Enter the zip code and name of the development and you should have your answer! The site is up and running between 8am and 9pm

Good luck!

The clock is ticking…remember that if you want to take advantage of the first time homebuyer tax credit you MUST have your offer finalized by April 30, 2010 and close before June 30, 2010.

Wondering what questions to ask when buying a condo or townhome?

Have more questions about Des Moines? There are definitely more answers.

Feel free to connect with me via Facebook, Twitter, Text, Email, or by cell. I’m happy to help.

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Thinking of using the $8000 tax credit?

Time is running out! The media is pushing hard to let everyone know that the deadline for closing on a home is November 30, 2009 if you plan on using the $8000 tax incentive. But you need to know there is a PROCESS!

CLOSING TAKES TIME

To be sure you allow for enough time for the closing process (think processing your loan & clearing title and abstracting). Right now we are writing offers for FHA approved buyers with a minimum of 45 days for closing.  If you closed November 30th, you would need to have your offer ACCEPTED by October 16, 2009. You also need to give your self a few days for negotiating your offer. So, by my count, you would need to write your offer by October 14th.  That’s only 41 days from now!

GET OUT THERE!

There is a good supply of first time homes available out there! Get out there, have fun, and enjoy!

Have more questions? There are definitely more answers. Feel free to connect with me via Facebook, Twitter, Text, Email, or by cell. I’m happy to help.

asalmon@firstrealtyhomes.com

Photo credit: josterpl

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