City of Anchorage with the Chugach Range backdrop

Obviously, if a person doesn’t have the down payment or have a workable credit score, they won’t be able to seize this opportunity.  If a person is concerned about losing their job, that would be a valid reason for not buying now.  If you are planning on relocating in the next year or two, maybe now isn’t the time to buy.

On the other hand, if a person doesn’t own a home, has good credit and job stability, they should seriously consider capitalizing on this unique combination of opportunities. 

The Top 10 Reason’s to Buy  A Home NOW!

1. Interest Rates are incredibly low – rates are at near historic lows, often spiking below 5%.  Interest rates play a huge part in the cost of hosing together with the price and shouldn’t be overlooked.

The average interest rates for the past four decades were:  1970′s 8.9%; 1980′s 12.7%; 1990′s 8.1$; 2000′s 6.3%

2. Lower prices. Recent price adjustments have made good values that haven’t been available in some situations for years.

3. Selection is still good.  Home inventories in most real estate markets and in certain price ranges are higher which allow buyers better choices.

4. Negotiate financing concessions – FHA, VA and Conventional loans allow for the seller to pay some closing costs that traditionally would be a buyer cost.  This market may allow a buyer to get closing cost assistance.

5. Costs for FHA loan going up.  The annual MIP for FHA loans will probably be going up this year which will incrase the montly payment.  Buyers who get in now will pay lower fees.

6. Interest and property tax deductions- The U.S. is one of the few countries in the world that allow an interest and property tax deduction for homeowners and taxpayers.

7. Capital Gain exclusion- the U.S. allows qualifed homeowners to make a profit on their home without having to pay tax on the gain.

9. Borrowing against your equity is  non-taxable event. taking money out of the equity in your home does not require you to recognize capital gains income.

10. The combination of reasons to buy a home may never be stronger than right now!

Interest rates are going up;  it’s just a matter of when.  Inventories are starting to be absorbed by current demand.  Prices have begun to climb in many U.S. markets.  Real estate inventories are beginning to decline.

A basic rule of investing is to buy low and sell high.  There will be some buyers who take advantage of he current opportunities and will look back and remark how fortunate they were to act when they did.  Th3ere will be others who look back on these conditions and say “We should have bought then.”

Hindsight is always 20/20.  Evaluating the present and acting takes equally clear vision.

A prototype of a real estate sign of the future!

Greg, my friend, said “wouldn’t it be cool to get a monitor on the curb so interested people could see a photo slide-show and even possibly virtual tours?”  I said, “yeah, that would be slick!” 

Greg brainstormed it a bit and came back to me with some drawings and a concept.  I agreed to fund the construction of a prototype. 

Greg built the sign in the photo and I have the sign planted at my listing on 4100 Caravelle Drive.  Not only is sign very attractive on the front of the house, it also has more benefits!

Look up at the top, see the angle piece?  It is a solar panel.  It charges a battery located in the base of the sign.  See the monitor?  Currently it is a slide-show of photographs from the backside of the home and interesting features inside the home. 

Right now Greg is monitoring the battery life to see if the solar panel produces enough energy to keep the battery charged, which keeps the 10 x 10 monitor working. 

Future plans include virtual tours on the screen.  The technology exists to link the sign to a lender or even to the realtor.  Stay tuned for future updates on the “high tech” real estate for sale sign!

There is little doubt the tax credit program helped

With the Federal home buyer tax credit behind us, real estate agents are asking, “What will happen now?”.  “Will the number of sales slow down?” and “Did we “borrow” tomorrow’s buyers in the first quarter of 2010 as buyers hustled to buy a home by April 30?” 

 Personally I have yet to run across a home buyer that bought solely because of the tax credit, but it certainly helped to get first time home-buyers off the fence and out looking.

 Most real estate professionals believe those who bought were going to buy anyway, although you can’t argue with the statistic that 44% of all homes sold nationally in the first quarter of 2010 involved the tax credit.

Also nationally, housing starts (new construction building permits) increased to the highest rate of increase in 16 months. The level of existing home sales rose 6.8% in March! 

Note there are special provisions for members of the U.S. armed services, as well as intelligence service and Foreign Service personnel, including an extended deadline to take advantage of the credit. Those who are on qualified extended duty and out of the U.S. for a 90 day period during any part of 2009, have an additional year of eligibility. In order to qualify for the tax credit, qualifying armed service personnel must sign a contract by April 30, 2011 and have until June 30, 2011 to close on that contract.

I received an interesting comment from one of our house buyers this weekend. This buyer has been steadily trying to buy a home for months. They tried to remain un-emotional (not fall in love with only one house) on each property and focused on “getting a good deal.” 

Can you "price to sell" even in Anchorage buyers market?

This buyer always offered less than the listed price and asked to get some of their closing costs paid on each offer. They made five offers over five months on homes they thought they could live with. They did get one offer accepted and then later the offer failed when a repair item couldn’t get negotiated successfully.

Finally, after five months, they decided to make an offer that would get accepted, just so they get their life settled.

The comment the buyer made at the end of the home buying adventure was “What we found, is that this isn’t a buyers market!”

What is amazing to me, is that from meeting with sellers often, I keep hearing things like “I’m not going to give my house away“, or “I want to sell, but I don’t have to sell.” These statements indicate that the sellers believe the market is low and that if I’m correct in my pricing, the market is too low.

This is contrary to the buyers comment that we aren’t in a “buyers market”. Interesting. It’s the old debate about whether the market is half full or half empty! Isn’t perspective an interesting thing?

From the perspective of a real estate professional, it is important to point out that any property can be priced well and will sell for full price, if the seller really priced the home to sell. 

A real estate market changes at various price points.  In Anchorage, AK a million dollar home might be a great buy, but at that price point, only 2 or 3 sell each month so it make take months to be seen by the right buyer.  At the $250,000 price level, there are many more buyers and sales every day.

Check it out and get a laugh!

Step 1:  Decide to Buy!   Above all else, when done right, home ownership can help lay the foundation for a life of financial security. If you are renting and have a stable job with some savings, and a credit score in the upper 600 range, you can likely qualify for a FHA or conventional financing. 

An interesting tree root washed up in Cook Inlet

Very few people can afford to buy their dream home when they buy their first home.  In fact, according to the National Association of Realtors, 69 percent of first-time home buyers compromised on some features of their first home.  So you make some compromises, buy your first home, and start building equity.  This approach takes you further and faster down the road to bring able to own your dream home than if you hadn’t purchased a home at all.

Step 2:  Hire Your Agent.  Your agent will educate you about the market, analyze your wants and needs, guide you to homes that fit your criteria, coordinate any needed professionals, negotiate in your behalf, and all the while check and double-check your paperwork and solve any problems that may arise.

Step 3:  Secure Financing.  Your lender will approve you for a loan amount, but ultimately, YOU will decide what you are comfortable paying every month.  In other words, you don’t have to get a loan as high as you qualify for…you are the boss.  When you pre-qualify for a loan, both you and your agent know you aren’t just wasting time; if you find the right property, you can move forward on it.

Step 4: Find Your Home!  Your real estate agent will help you sort this out.  Which is more critical, size or location?  Are you interested in a condo?  A duplex?  Do you need a yard?  You’d like a 3 bedroom, but will two bedrooms work if everything else is good?

Step 5:  Make an Offer.  This is done in writing on a proper “purchase money agreement”.  Your agent will help you decide what a fair offer is.  An offer includes several important things such as the price you are offering, when you want to close, a home inspection, who pays what closing costs as well as what things go with the sale like refrigerator or window blinds.

Step 6: Due Diligence. Very few homes are absolutely perfect.  This is where you hire a professional to inspect your home, hopefully with you in attendance.  The inspectors job is to check for code compliance and for construction problems – large and small. 

Step 7:  Closing on your home.  You’ll need to get home owners insurance and put utilities in your name.  Your real estate agent will check your work schedule and look for available appointments with the loan closer.  In our market, you sign one day and “record’ the transaction the next day which is the official day you own.

Step 8:  Protect Your Investment  Learn to give your new home the love and care it needs.  you will need to learn to perform routine maintenance on your home’s system, depending on it’s age and condition.  A good rule of thumb is to watch for signs of leaks, damage and wear.

Cold morning three sided cabin logs

Lenders and Realtors have been pitching selling the small condo and upgrading to another home to get the tax credit.  But, let the record show, you can move up, move down or move sideways;  It doesn’t matter!  Which ever direction you move, financially, you may still qualify for the new tax credit available to current homeowners! 

The credit has too often been characterized as a credit for “move-up” home-owners.  The phrase implies that the new home must cost more than the sale price of the former one.

Even the White House Press Release on November 6th said the credit would be available to qualified home-owners who “wish to step up to a new home”, when, in fact you qualify if you change your residence smaller or larger.

Pine cones on cold Anchorage morning

The required form is written very plainly & simply and should be easy for anyone to read and understand.  The good faith estimate actually has columns built into the form to allow consumers to compare ”loan one” with at least three other loan types.  You would log individual loan details such as loan amount, loan term, interest rate and other details such as whether or not the interest rate can change and at what intervals.

In addition to the new Good Faith Estimate there is a new Settlement Statement to be used when you close the loan at your real estate purchase.

The new form is still called a HUD-1, but the look is different.  There are similarities to the old HUD closing form, but is easier to read and written in a much simpler form so everyone will be able to understand the detail on the form.  The HUD-1′s purpose is to show all the costs of obtaining the loan, all the bills paid on the transaction and to re-iterate the loan program you are closing on.

There are more rules that lenders and loan closers must follow.  Lenders have been scrambling to understand the new reporting requirements which are dictated by Washington D.C. and are effective immediately.  As usual, it will take some time for everyone to understand the form and exactly how to implement it. Lenders and loan closers will interpret the new rules very strictly and cautiously as they learn to comply with Federal requirements.

At closing,  charges from repairs and other things come to the closing to be paid out of the closing.  The new form will require the bills get to the lender early and the documents be prepared early to get buyer and seller three days to review the documents prior to closing. 

Many times documents for a loan closing are being prepared as the buyers are sitting in the lobby waiting to close on their property.  In the beginning, the new forms will undoubtedly slow down a transaction as title company closers allow more time intended for buyers and sellers to review loan terms.

Evening in Down-town Anchorage

you’d have to pay for things like title insurance, flood certification fees, recording fees, and attorney document fees.  You may or may not need a new appraisal which can cost between $600 and $750 in Alaska.

On a loan refinance, the closing costs and settlement costs can easily add up to more than two thousand dollars, depending on the size of the loan being refinanced.

On a no cost mortgage refinance, the lender foots the bill for these expenses without increasing your loan balance.  The reason the lender can make these type of loans is that they charge a slightly higher interest rate that will reimburse the lender for the upfront closing costs.  The higher rate averages a half percentage point, again depending on the amount of the loan.

There will be some costs, however, that the lender cannot cover. Typically, a no cost refinance lender won’t pay amounts associated with homeowners’ insurance, property taxes or monthly interest proration.  Prepaid interest arises when the old mortgage is paid off other than the last day of the new month; you’ll have to pay for the interest that will accrue since the last payment.

Most people refinance to decrease their monthly mortgage payment or to pay the loan off quicker.  For example, if you have a loan balance of $250,000 at 9% interest for 30 years, your monthly “P & I” or principal and interest payment would be about $1,835.  If rates fell to 5% interest, your choice would be to lower your payment by $500 per month with a new 30 year loan, or to shorten the loan term to 15 years to pay the loan off sooner and with a similar payment as you already have, or actually $1,757 in this example.

Basically, if the lender pays the closing costs, they may charge you 5.5% and you only have to pay for proration’s to interest, taxes and insurance to close the deal.

Some lenders may offer the option for the buyer to get the lower interest rate and add the costs back on top of the existing loan amount as an option for the buyer.

Moon-rise over Downtown Anchorage

The new law will extend the $8,000 credit for first-time home buyers for contracts entered into by April 30, 2010 and closed by June 30, 2010.  

Further, it has been expanded to include a new $6,500 credit for owners of existing homes who are purchasing a new principal residence. An existing home owner can claim the $6,500 tax credit if they have been residing in their principal residence for five consecutive years out of the last eight years.

Additionally, the income eligibility limits to claim the full credit amount for both groups of home buyers have been raised to $125,000 for individuals and $225,000 for married couples.

If you or anyone you know are looking to buy their first home while prices are good and interest rates are still good, the time may never be better! 

If you already own a home and have lived in it for at least five years, you may qualify for a $6,500 tax credit if you sell your existing home and buy a new one before May 1, 2010!