I met with some folks the other evening to discuss buying their first home, and here are some thoughts that rang through my head as we reviewed numbers, the $8,000 first-time home buyer tax credit, and the current real estate market in Northern Virginia. Yes, pre-season camp is starting for the Redskins and, like coach Jim Zorn, I am reviewing the basic playbook so we are on the same page.
Mortgage Interest Rates:
Rates have dropped in the past couple of weeks, and I was seeing the FHA rate at 5% with 1 point on July 21. Rates and points go up and down depending on consumer demand so having a “float-down” option is an especially good idea. Keep in mind that rates change daily. In my book, it is essential that you have a pre-approval letter from a mortgage company before you head out the door house hunting.
The first-time home buyer tax credit:
The qualification cap for an individual is $75,000 in annual income. The qualification cap for married/ joint filers is $150,000 combined annual income. In my book, you need to “close” by the end of November. Yes, they say December 1st in the government fine print but, if there is a delay caused by a technical difficulty, car accident, or some other unexpected issue then you are out-of-luck, baby cakes!
The current market:
Buyers in our area are much more motivated especially for homes that are in decent condition. Stories of multiple offers on a new listing or escalation clauses included with offers are getting to be common. In June, one of my clients was out-bid on two properties. In my book, take your search seriously and when you see a home you like then put in a well prepared offer… because if it appeals to your picky standards then someone else probably likes it too!
Having a buying strategy makes the process much more effective and enjoyable. That is why I sit down with clients to review the process, closing costs and mortgage options right from the start. To me it is a natural sequence that yields the desired results of finding the right house and actually buying it.
Down, set, hike!