is this your dream house?
With the news that the tax credit for first time home buyers and the new tax credit for existing home owners, has been extended, realtors around the country are reporting the phones are ringing again, and home buyers are out in big numbers.
With increasing numbers of buyers, home values are also on the rise in many areas of the country. Home buyers, in general seem to continue to be in bargain hunt mode, looking predominantly for short sales and foreclosed homes.
House hunters looking to take advantage of the tax credit must have a purchase deal under contract by April 30, 2010, at the latest, and must close by June 30th.
Mortgage rates remain fantastic at just below 5% on the 30 year fixed rate mortgage, for those buyers with good credit and cash for a down payment. For now, with the value of the dollar at such historic lows, and the Feds holding over night lending rates at 0% - .25%, it is expected that rates will probably remain low for a while.
Currently, the Feds are also helping to keep mortgage rates low by purchase of mortgage backed securities. However, those purchases are scheduled to end at the end of the first quarter next year. Almost all analysts expect mortgage rates to begin to rise about the time the tax credit expires next year. It is being forecast that mortgage rates could climb as high as 5.5% - 6% by the end of 2010.
The median price of homes across the country has fallen approximately 17% nationwide in 2009. There are areas of the country where values have dropped almost 50% since this housing crisis began, such as Southern California. Realtors in that area are now reporting that prices appear to have stabilized, and in fact, are rising.
Another area that has been hard hit by the housing crash is Florida. Realtors there are reporting a 20% increase in sales since the implementation of the tax credit, and expect that trend to continue at least as long as the credit is available.
Of course, there are still a huge percentage of home owners who cannot sell because their home values are so far underwater. It is hoped that the tax credit will help those home owners pay off existing mortgages so they also can take advantage of the new low home prices across the country.
Other hopeful home buyers who do not have adequate cash for traditional loans at this time, are finding ways to cash in on the lower home values by finding sellers willing to do "lease with option to sell" deals. Generally these lease options require an option fee in order to lock in the sales price, in addition to rental payments for the term of the contract. These home buyers will not qualify for the tax credit, but if home values continue to rise, they will at least lock in the low home prices.
For more details about the tax credits, you might be interested to read:
Details on the home buyer tax credits
Be sure to also read More updates on the existing home buyer tax credit for answers to some of the questions raised after the first article was published.
Rising mortgage rates forecast for 2010
Will FHA increase down payment requirements?
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