Good news Americans, now really may be the best ever time to buy a home for a multitude of reasons. They go far beyond the typical reasons why buying a home anytime is highly desirable, like increased privacy, better neighborhood and having something to pass on to the children. Sure the home is the gift that keeps on giving tax deductions, shelter, warmth and freedom from the noisy neighbors on the top, bottom, left and right. Sure you can look forward to a paid off mortgage some day before retirement if you are lucky or smart. However right now in 2009, I am officially declaring it open season for home buyers and here is why:
40% Discounts are widely available in many markets on existing homes and some developers in financial distress are giving similar discounts on new homes that are not selling instead of continuing to pay the carrying costs for those homes in their inventory.
There is a huge inventory of homes on the market.
Home loan rates are at record lows, and the government needs to keep them that way for a while to encourage economic recovery. After all real estate and related industries account for approximately 20% of our Gross Domestic Product annually. This is why a resurgence in real estate has often led the U.S. out of severe recession.
Sellers are eager to please, or as eager to please as they will ever be right now. Would you like the seller to pay half or even all of your closing costs? Hallelujah, now is the time.
Upgrade instantly from a starter home to a larger three or four bedroom because now you can afford to. Alternatively upgrade from a Condo to a real home or a deluxe home with a built in pool or tennis court. Even better upgrade to the location of your dreams and watch your home appreciate faster later on.
Golfers you are hereby notified the holy grail of homes right near your favorite golf course is available.
The Government has provided the ultimate incentive with an $8,000 tax credit for new home purchases that is roughly equivalent to cash if you qualify. Most average Americans will qualify, but wealthy individuals may not, nor will investment homes, "jumbo" homes, second homes or vacation homes. An example on how this works would be if your income tax liability is less than $8000 you would be able to get a treasury department check refunding you the difference if you qualify and purchase a new home by November 30th, 2009
Veterans be aware that you still qualify for this amazing benefit even with your Veteran's Administration loan benefits and terms already being among the best available in the market.
If you ever wanted to lock in real future gains in equity now would be the time to buy right, while the market is still at the low. This way you benefit in two ways. First, you enjoy the value escalation as real estate is cyclical and will rebound given time. Second, you will never have to refinance to get a lower interest rate saving thousands more in future closing costs that you now can avoid. Remember 1981 when 17.5% was the lowest rate around even for A1 credit and it was for an adjustable rate loan too?
FHA loans require a 3% down payment, sufficient documentable income, passable debt to income ratios, documentable employment and a housing payment history with no late payments (past 30 days) and low consumer debt levels. Notice how I didn't mention a high credit score? That was intentional. Now that sounds very reasonable right?
For further illustration, let us consider the swing difference in a reasonable analysis of the new $8000 government tax credit for new home buyers. Steve Brown buys a new home now and later while doing his taxes concludes he has a tax liability of $8000 for the year 2009. Fortunately for him he would normally be paying out $8000 from his savings account, now he gets to keep it there, because his closing was finalized before November 30th, 2009. (This date could be extended but don't bet on it) The full impact of this government tax credit can be measured by first realizing he normally would have paid this $8000 out. Now, he avoids this liability entirely and gets to keep this $8000 to do with as he pleases. Realistically, the swing value impacted him by a total of $16,000 because a debt was cancelled and he kept the funds formerly destined to pay the debt.
So, as a right thinking American, either start your house shopping now or pass on this good news to your family and friends so they may take advantage of the blessing.
Good News! 2009 May Be the Best Ever Time to Buy a Home