Yes, you might be better off buying now than when the tax credit was in effect. The reasons are very simple. A historic drop in interest rates and less competition if you are buying residential property under $400,000. If you were taking out your mortgage today, your interest rate would probably be around 4.5% for a thirty year fixed rate mortgage.   Rates in April were right around 5.25%. You would be spending $135 less on your monthly payment, for an annual savings of $1,620 per year.

Home sales hit a wall with the expiration of the tax credit, reminiscent of how "Cash for Clunkers" sucked up a lot of future demand for car sales. One advantage of the current market situation is that lower interest rates and housing prices are available to everyone purchasing residential real estate, whether homeowners or investors. I have noticed an increase in savvy investors buying real estate to "fix and hold". They are saying the drop in demand after April has enabled them to get lower offers accepted.

Do I wish a tax credit would come back for everyone, not just first time homebuyers? Of course I do. Do I think it will with our record deficits? Not likely. If you purchased back in April, congratulations. You are making yourself rich instead of a landlord.  Hopefully you went with a zero or low cost loan. If so it might make sense to refinance now, saving a lot of money. As always, have your mortgage professional do the numbers.

Remember that unless you are Warren Buffet, you can not time the market. I have missed a lot of great deals because I thought prices were going to go a little lower. Feel free to call or email with any questions.

Next Week: Update on FHA negative equity refinance program

Best

Chip

Chip Allen

Crestline Mortgage Bankers

A Division of Universal Lending Corp

Direct: 303.947.2109

Fax: 303.987.0676

Loanchip@hotmail.com

Your Lender for Life!

When people you care about need a mortgage,

for purchase or refinance, please do not keep me a secret.

Click here to Get started searching for YOUR Colorado Dream Home. 

Elizabeth Duke, a governor on the Federal Reserve board, reported last month that credit for both consumers and businesses continues to tighten. Banks tighten credit by raising credit score requirements, reducing credit limits, and/or increasing requirements for "skin in the game". "Skin in the game" refers to a larger down payment for a mortgage or car loan, or increased collateral for commercial loans. For a variety of reasons both strong and weak banks are cutting back on lending. An uncertain economic outlook as well as concerns about government intervention are commonly cited. 

What can you do?

The importance of a good credit score can not be overstated. The higher your credit score, the better your chances of getting any type of loan, as well as a lower interest rate. Check your credit score to see if any erroneous reports are pulling your score down. Be sure to pay your bills on time and keep revolving credit balances as low as possible. Being too close to your credit limit will have a negative impact on your credit score.  

Consumers are reporting more flexibility and better results by using credit unions for credit cards. A mortgage banker with several different investors has more options for a mortgage than a bank. If a bank or credit union turns you down for a car loan see if the auto dealer can help. Like a mortgage banker they often have multiple sources for financing.

Check the financial rating of a financial institution at www.bankrate.com. If a bank has a five star rating they are in a better position to lend than a bank with a one star rating.

Always interested in your comments or questions.

Good luck,

Chip 

Chip Allen

Crestline Mortgage Bankers

A Division of Universal Lending Corp

Direct: 303.947.2109

Fax: 303.987.0676

Loanchip@hotmail.com 

Your Lender for Life! 

When people you care about need a mortgage,

for purchase or refinance, please do not keep me a secret. 

As most of you know, the end of the tax credit is just a few short weeks away on April 30, 2010. Under the guidelines, you have to be “under contract” by April 30, and then close the transaction by June 30, 2010 in order to receive the either $8000 First Time Buyer credit or the $6500 Move Up Buyer credit. The tax credit was extended back in November of 2009 at a time when home values and prices were continuing to fall and our government was trying to help solve that problem. I believe we did the best we could at the time.

For personal reasons as a loan originator (and my own checkbook) it would be great to have the tax credit extended and extended again. However when we “over incent” people to do things it will ultimately come back to bite us. By having extra incentives like the tax credit, our federal government is incurring tremendous debt in order to accomplish this. The national debt will ultimately have to be repaid by us as tax payers through higher federal income taxes which will in turn slow our economic recovery because we have less money to spend. In addition, when the tax credit is gone there is a risk that demand for homes will fall off significantly and we will see property values reduce in value again. A concept known as the “double dip”. So despite our government’s efforts to ease the drop in property values, ultimately the markets will determine if they succeeded or not.

The tax credit was good but it is time for us to stand on our own feet. There are enough incentives already for being a homeowner through the interest and points tax deduction, property tax deduction, and the potential for your property to appreciate in value. The tax credit although needed at the time needs to end.

Ok, here we go again. We are roughly 45 days away from the Federal Tax credit expiring for would-be home buyers. It seems like we just went through this the other day and in fact, it was just last October when we were writing articles just like this. It’s mid-March and at the end of April, the tax credit for home buyers and first-time home buyers will expire. The question is did you take advantage of it?

I hope you did and if you didn’t, there is still time, but a word of warning to all the procrastinators out there. I do not feel confident this time around that it will be extended. Am I sure about this? No, and I reserve the right to be wrong, but there are just too many things in play right now to lead me to believe that it won’t be extended. I don’t have enough room in this column to express all of my thoughts on the subject, but I will share a few things that lead me to this conclusion. First, it’s an election year and all bets are off on how a Senator or Congressman will vote once they are up for re-election. Second, the economy shows signs of improvement, but that could be a double edge sword. If it continues to improve, Washington will make an argument that there is no need to continue the program. If the economy falters, Washington could make the argument that the money needs to be better spent elsewhere to stimulate jobs. Third, since the deficit seems to be a hot topic among lawmakers, I have a hard time believing that there will be a lot of support to spend more money on this program, but then again, I could be wrong.

So where does that leave the home buyer…about 45 days from missing out on $8,000 or $6,500 in cash. There is still time to find a house, get under contract, and close. Remember, you don’t have to close until the end of June; you just need to be under contract by the end of April to get the money. Getting the loan in place, finding an agent, a house, and getting it under contract can be done in the next 45 days; but you have to start now. To find out how, check out http://www.taxcreditforeveryone.com or http://www.firsttimehomebuyerdenverco.com.

Dan Polimino is a Realtor with Fuller Sotheby’s International Realty. He can be reached at DPolimino@fullerproperties.com and http://www.coloradodreamhouse.com/denverpost

There is now a tax credit for everyone and an extension for first time home buyers!

Today is GOOD NEWS for those of you thinking about buying a home or a first home.  The House and Senate have finalized a version of the tax credit extension for first time buyers and created a credit for all buyers. The current proposal will extend the current $8000 first time home buyer tax credit that expires on November 30, 2009 to April 30, 2010.   In addition, there will be a clause that allows you to close beyond that point (to June 30, 2010) provided you are under contract by April 30^th.  The House and Senate are also expanding the tax credit not to just first time home buyers. Existing homeowners looking to “move up” from their current property can receive up to a $6500 tax credit incentive.  There are certain guidelines that must be followed.  Feel free to contact us directly for this information.             

So you folks that have procrastinated  about  getting your finances in order, improving your credit scores, getting pre-qualified, saving for a down payment, talking to a lender or real estate agent, or just had a tough time finding a property this is your golden opportunity. For those of you who want to move up and buy a new home this is great news and a great deal. Housing prices are low, interest rates are low and now you get money from the government for buying a home.  Don’t let this one slip away.

Visit http://www.firsttimehomebuyerdenverco.com for more information and your chance to win $250,000 dollars toward your next home. Feel free to contact Dan, Andy or Gary to get started today moving into a new home.

Sincerely,

Dan Polimino, Gary Lohrman and Andy Jorgensen.