The recent normalization of the real estate market has created a strong buyer's market, particularly for first time buyers and real estate investors who don't have to wait for their home to sell before taking advantage of lower prices and increased choices.
New Tax Credits for First Time Buyers
First time home buyers, defined as those who haven't owned a home in three years, are eligible to receive up to $7,500 in tax credits.
Interest Rates are Low
Thirty year fixed rate mortgages have been hovering around 6% for the past several years, representing the most stable period for interest rates in the past 40 years.
Refinancing Remains Popular
Freddie Mac reports that home loan refinances account for approximately 60% of total loan applications. Since 2001, the average age of a home loan before refinance was 2.7 years.
Loans Remain Available
Although underwriting guidelines have changed and will most likely continue to do so, lenders are still making loans. The best advice is to:
- Reduce or eliminate all credit card debt (Note: 30% or lower debt to credit ratio is ideal).
- Avoid high interest rate loans on consumer purchases.
- Build your cash reserves as much as possible.
- Raise your credit score as high as possible to get the bestl oan rates. (Note: Only credit card holders will have their credit score affected by activity. "Authorized Users" on credit cards will no longer be considered.
- Be prepared to document your income and assets.
Read the entire newsletter here
If your home has an FHA mortgage, you may be able to refinance to a lowerinterest rate. If your FHA laon is current and your aren't looking to take out equity, your monthly principle and interest payments can be lowered by streamlining your mortgage.
A 'no-cost' option will result in a slightly higher interest rate but with no out of pocket expenses. You may also be able to fold the closing costs into the new mortgage amount.
For more information on refinancing or getting a loan as a first time buyer, read the entire newsletter here.
