Hello there and Happy New Year !!!

Thought I’d write a note with some information on the current home buying market. If you are thinking about buying a home, here’s some valuable information.

Mortgage rates are still at historic lows, but most analysts feel that as soon as the First Time Home Buyer rebate program expires, they will jump.

As a BIG FYI, no matter what/when you buy, for every 1% increase in interest rate you LOSE on average 9% of your buying power. So for example:
$300,000 purchase
20% down
5 % for 30 years (mortgage $224,000)
cost per month about $1289 (not including taxes and insurance)
That same loan at 6% would now be $1438 (again not including taxes and insurance)

Put another way to keep the basic payment at $1289:
6% interest rate (a 1% increase)
20% down (mortgage $215,000)
with a purchase price of only $269,000 or a loss of 9% in purchase power.

There are plenty of homes to choose from right now, and you can still take advantage of the tax rebate if you are a first time buyer, BUT you have to have a contract in hand ready to go to closing no later than April 30, 2010 and you MUST close on the house no later than June 30, 2010. Since it takes from 2 to 3 months to get from contract to closing, it’s getting close to that window to have a signed contract in hand.

There’s still plenty of ways to finance if you don’t have a major down payment and don’t qualify for a conventional loan.
In addition to FHA loans, which only require 3.5% down payment, there are also several government programs for first time buyers which are down payment/ closing cost assistance programs, and you can combine FHA with the other programs, literally having to put almost nothing out of pocket.
NJ Smart Start:
http://www.state.nj.us/dca/hmfa/consu/buyers/ownprg/smart.html (click on the Fact Sheet link for info)
Allows up to 4% of purchase price for use towards down payment and/or closing costs. If you stay in the house for 5 years or more it is considered paid in full.

Middlesex County American Dream Program:
Similar to the NJ Smart Start as it is a buyer assistance program, but has different guidelines, and below is the contact information.

Melissa Bellamy
732-745-2922
732-745-4117 (fax)
melissa.bellamy@co.middlesex.nj.usi
Since it takes about 6 to 8 weeks for the applications to be processed, and about 60-90 days to close on a home on average, you can see time is running out to take advantage of the Tax Rebate program.

I hope all this information helps you make a decision right for you, and when you do that you will call me to assist you in the process. I look forward to hearing from you. Maybe this New Year will find you in the house of your dreams !!

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