February 25, 2009

First Time Buyers... Great Incentives but be Responsible in Your Choices

Posted to Steve Randall

There is no question that in Northern Utah now is the time to buy a home. The government is doing what it can to stabilize the market, reduce foreclosures, and help people stay in their homes. The fact remains that with interest rates low and inventory plentiful, buyers have a great opportunity to buy very affordable homes. The new $8,000 tax credit being offered right now is also additional incentive to make the move this year. The market is focused on getting fist time homebuyers to move from the sidelines and get into the game.

Even though we are excited for all the new programs to help first time buyers, we don’t want to recreate the situations of the past that lead to this mortgage meltdown. Here are some words of wisdom from our clients, lenders, and title companies:

1. Be a responsible mortgage holder and be committed to being a homeowner. Owning a home is a great investment over time but lenders want to know that you can pay your mortgage. Sit down with your employer and ask for an honest evaluation of your work situation to make sure you are not going to be one of the next to be laid off. Loss of employment will certainly lead to a lack of ability to make your mortgage payments. Mortgage rates are very low right now (see image above) so buy at the right price and you will be surprised at what you can buy for the money.
2. Be self-reliant. It is good to have the government offer incentives or to have family who can help with down payments…but don’t count on those sources being available all the time. Live within your means and don’t let your debt get out of hand. Most lenders will want your total debt (house, care, credit card) to be 25% to no more than 42% of your gross income. Most people currently in foreclosure got there because they bought more house than they could afford. As prices dropped, they now cannot sell them except at a loss. Use the available programs to get into a home but don’t add additional debt or home equity lines that will cut into your cash flow and burden the equity in your home. The peace that comes from living within your means will far exceed the extra square footage that will unnecessarily add to your debt.
3. Finally, take the time to maintain and update your home as you live in it. A home maintained and updated will increase in value. A home that deteriorates will lose value. Take the time to care for your home and property.

All that being said, here is a great link that explains the new $8,000 tax credit and how it works. For more information please contact me directly.

Posted By: Steve Randall

Tagged With: $8000, first time home buyers, low interest rates and tax credit

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