No matter the market, Visionary Agents will always believe that over time a home can be one of the most gratifying & practical investments you can make and among some new fundamentals in this market, you really have to make sure its affordable. By affordable we mean not only being able to meet the monthly mortgage payments & expenses, but also being able to make those payments for no fewer than ten months if you don’t have a consistent, regular income. Consider this Pre-Qualifying Calculator. First time buyers must keep in mind that in addition to your base mortgage, you’ll also have to pay property tax, home insurance and if your down-payment is less than 20%, private mortgage insurance (PMI). You also have to pay for all repairs & maintenance costs because you’re now the landlord! If you sum up all those other non-mortgage costs, your monthly bill is often 30% to 40% greater than your basic mortgage. So, if you were taking on a $1000 mortgage, then your monthly housing costs would be closer to between $1300 & $1400 a month. Although, it’s true that you’ll get a tax write-off as a homeowner; the interest on your mortgage payments is tax-deductible. That’s helpful, but not a viable solution. Let me refer you to a mortage specialist to figure out how much you can afford or go to this calculator and it’ll figure out the base mortgage amount. Next add approx 30% to that amount & ask yourself if you can really bear that cost. If not, ask us to find you a less expensive home to buy. The point is to afford a home cozily, not to reach, gamble and fret. So first-time buyers must understand that paying $1000 a month in rent does not mean you can afford a $1000 a month mortgage.

REALITY CHECK: If affording a 10% down payment isn’t possible, then you probably can’t afford to buy in 2009. This is your reality and if down payments had been required of homeowners to date we wouldn’t be as deep in this mess as we are. We’re back in the times when you have to make a significant down payment to mitigate risk to your lender which signals that you are going to be a financially responsible homeowner. So, if you can’t afford to make a down payment, then you can’t afford to buy a home. Keep in mind though that there are some federal loan programs (i.e FHA) requiring down payments that are less than 5%, but if you want a traditional mortgage, lenders this year are insisting on down payments of 10%, & in many instances 20% in order for you to be offered the best possible interest rates. The days of no down payment loans are gone, & with hope never to return.

The timing to buy is good in 2009, but only if you intend to stay in your new home for at least five years. No matter the deal you get, it doesn’t make sense to buy a home today if you may move in a few years. This housing recovery is going to be a slow one, possibly years so if you buy today, prices may not go up that much over the next few years; in fact, they are likely in some areas to go way down. Also remember that with such small appreciation, if any, depending on how hard hit your area is, when you go to sell you’ll be responsible for paying an agent a sales commission of 5% – 6%, paying hidden and actual moving costs, never mind the turmoil of moving, all of which could erase any appreciation you might see over the next two or three years anyway. So, put on your seatbelt and ride this downturn out, and if you must have action short of buying a home then move towards making appreciative modifications to your existing home.

Don’t entertain the notion of buying if you have yet to accumulate at least 10% of the purchase price for your down payment. Actually, 20% is even better because it reduces Lender’s doubts. And while there are some government programs requiring smaller down payments (more below), the new reality is that most homeowners won’t qualify for a regular mortgage unless they can make a solid down payment. Potential buyers should also only buy your home with a standard 30-year, fixed-rate mortgage. No “betting” on an adjustable-rate loan in these uncertain times, that you’ll have enough equity in three or five years to refinance. It’s better business to stay with a 30-year fixed rate so you never have your payment rising. ASK ME ABOUT “Streamlined Modification Programs,” aimed at mortgages owned or guaranteed by Freddie Mac and Fannie Mae.

BRIGHT SIDE: The Housing & Economic Recovery Act (July 2008) gives a credit no higher than $7,500 for first-time buyers purchasing a home from April 9, 2008 to July 1, 2009. Individuals having income below $75,000 & married couples having income below $150,000 are eligible for this program. The credit is an interest-free loan. You claim it on your federal tax return & then repay the amount of this credit over a 15-year period.

We could go on and on. But here’s where we ask you to call us if you are ready to get serious because if you want to buy or sell, then it probably can’t wait and we are here to make it fast and easy.

Here you will find a wide variety of useful informtion and resources designed to help you buy or sell a home more effectively in LA.

We hope you feel you’ve found the right resource for all of your real estate needs. From information on the local community, to advice about finding a mortgage or preparing your home to sell, it’s all available here on our website.

Your search begins by answering the question, “What’s a home in L.A. Worth?” So, start by clicking here for your personalized MLS Market Snapshot to request a monthly report that includes the prices of similar homes that recently sold or are currently for sale in the Greater Los Angeles Metropolitan Area or CLAW/MLS area. The report reveals the values of current listings matching your dream home or current home in today’s market with detailed descriptions and photos which may be complemented with a Community Reports generation as well.

Look into our market with these complimentary tools: MLS Market Snapshot and The Community Report. Taking a look at these links helps us fulfill your vision.

Feel free to contact us and we will be happy to help you with all your real estate needs and concerns.

Related articles

• Mortgages: More Takers for 15-Year Loans (nytimes.com)
• Looking for a Mortgage? Check Out the F.H.A.’s Rules (nytimes.com)
• Mortgage rates inch downward (money.cnn.com)
• The $8,000 First-Time Home Buyer Tax Credit Program Expands: 5 Things to Know (usnews.com)

Filed under: Current Events, Money-Saving, Real Estate Market, Tax Issues