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It's a Great Time to Buy

This fall could be a particularly great time for first-time or buyers long out of the market to jump in, say a variety of real estate professionals.

Here are the reasons why:

Prices are probably as low as they are going to go as the market stabilizes, thanks to the government takeover of Freddie Mac and Fannie Mae.

Interest rates are likely to decline as Freddie and Fannie get government help.

The Federal Housing Administration recently boosted its loan limits to $729,750 in expensive areas. It's going to take some of that back come Jan. 1, when the loan limit will shrink to $625,500.

The FHA allows down payments of as little as 3 percent, but that will rise to 3.5 percent as of Oct. 1. People scraping dollars together for a down payment should try to set their closing for the end of this month.

The tax credit will shave $7,500 off a first-time buyer’s federal tax bill due April 15. Buyers who don't owe tax, will get the money as a refund.

The government's definition of a first-time buyer is anyone who hasn’t owned a home in the last three years.
1. How do I know how much house I can afford? Answer
2. What is the difference between a fixed-rate loan and an adjustable-rate loan? Answer
3. How is an index and margin used in an ARM? Answer
4. How do I know which type of mortgage is best for me? Answer
5. What does my mortgage payment include? Answer
6. How much cash will I need to purchase a home? Answer

Q : How do I know how much house I can afford?
A : Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Give us a call, and we can help you determine exactly how much you can afford.
 
Q : What is the difference between a fixed-rate loan and an adjustable-rate loan?
A : With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest changes periodically, typically in relation to an index. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.
 
Q : How is an index and margin used in an ARM?
A : An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).
 
Q : How do I know which type of mortgage is best for me?
A : There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. Diversified Funding and Asset Management can help you evaluate your choices and help you make the most appropriate decision.
 
Q : What does my mortgage payment include?
A : For most homeowners, the monthly mortgage payments include three separate parts:
  • Principal: Repayment on the amount borrowed
  • Interest: Payment to the lender for the amount borrowed
  • Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.
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    Q : How much cash will I need to purchase a home?
    A : The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:
  • Earnest Money: The deposit that is supplied when you make an offer on the house
  • Down Payment: A percentage of the cost of the home that is due at settlement
  • Closing Costs: Costs associated with processing paperwork to purchase or refinance a house
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    Flying the Empty Nest

     

    Selling a family home is never an easy decision. If you are thinking of downsizing, use the experience and knowledge of a Seniors Real Estate Specialist® (SRES®) to carefully guide you through your transactions.

     

    SRES® designees are REALTORS® who have demonstrated the knowledge and expertise to counsel senior clients through the major financial and lifestyle transitions involved in relocating, refinancing, or selling a family home.

     

    A REALTOR with the SRES designation can also refer you to other professionals such as a C.P.A., estate planner, or attorney who also have a specialty interest in senior clientele issues.

     

    linda@dfami.com

     

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