Mortgage Rate News

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The first time home buyer tax credit has been extended — and expanded. The $8,000 credit has been extended by six months, and there has been an expansion to include current home owners who want to buy. Current home owners can get a $6,500 tax credit when they look for a new home. This is along the lines of the tentative agreement reached last week. Bible Money Matters offers a great summary of the main points for the new $6,500 tax credit:

• The credit is available for homes that go under contract by April 30, 2010 and close by June 30th, 2010.
• Current homeowners can claim a $6,500 credit as long as the property they are vacating has been their primary residence for at least five consecutive years out of the last eight years.
• Income limits: $125,000 a year for individuals, $225,000 a year for married couples. (these are higher limits than before)
• Homes that cost more than $800,000 aren’t eligible for the credit.
• $6500 tax credit is not retroactive.  (from the language of the bill: “shall apply to residences purchased after the date of the enactment of this Act.”)

Sadly, I don’t qualify. Which is okay, I suppose. We weren’t planning on moving any time soon, so it’s not like we would use it anyway. But it would still be nice to know that if we wanted to take advantage of such a great deal, we could. It’s not $15,000, but it’ll do. It’s better than nothing.

However, the tax credit extension is also expected to help keep home prices higher. The Wall Street Journal reports on the first time home buyer tax credit and its results:

Goldman Sachs estimates that the credit resulted in 200,000 sales this year, but that many of those sales were front-loaded—driven by a surge in sales shortly after the tax credit took effect. The simple extension “should result in fewer incremental first time purchases than the first round of the credit did,” writes Goldman economist Alec Phillips.

While the tax credit won’t reduce excess inventory, the incentives could keep prices up because “potential sellers are likely to incorporate a fraction of the credit amount in their sale price—with the knowledge that the majority of buyers will qualify for either the first time or move-up credit,” writes Mr. Phillips.

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When it comes to buying a home, it is important to consider your options. And it is important to be aware of some of the main issues associated with buying a home. This is especially true if you want to purchase a home that is in foreclosure. Buying a foreclosure can be a tricky proposition, and you need to be careful. There are definite advantages and definite bargains to be made. But if you aren’t careful, you could get way more than you bargained for. And not in a good way.

Real Estate Pro Articles offers these helpful guidelines to use when buying a foreclosure:

1. Finance: Real estate calls for huge investments, so check the availability of finances. See how much you have and how much will you need approximately. Ascertaining that, get yourself pre-qualified for securing a loan.
2. Look for available foreclosure homes: Search carefully for foreclosure listings available on various websites, real estate magazines and advertisements in newspapers. Contacting banks to get information is also a good idea, as banks are the most common lenders who sell foreclosed properties.
3. Know what you want: Be clear about what kind of a property you are looking for. This will help in choosing a property among the various available properties which matches your requirements the best. Think on parameters like, size, expected rate, locality, amenities, etc.
4. Knowledge about foreclosure laws: Buying foreclosed properties has its own intricacies, so it is very essential that you gain proper knowledge as to the laws and procedures governing foreclosures in your State.
5. Consulting a realtor: If you are not sure about how to go about making the investment in foreclosure homes, then consulting a realtor who has the requisite experience in dealing with foreclosed properties is a good idea as he will guide you and help in getting the right kind of property.
6. Thorough inspection: Examine the property that you wish to buy very carefully as there will be repairs that may be needed and for which you will have to pay. This will help you to negotiate better.
7. Closing the deal: Once you have made the offer and the seller accepts it, then on making the payment and finalizing the deal, carefully ascertain that all legal compliances are done with, necessary documents are in order and that you get a clear title to the property. Seek assistance from attorney if you feel the need.

It is still a good time to buy a home. Mortgage rates are low, and so are home prices. And if you are interested in something that is an uncommon deal, you might consider buying a foreclosure. Just make sure you are careful, and you know what you are getting into.

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Right now, many people are find it a rather tempting proposition to get a HELOC or some other type of home equity loan. After all, rates are quite low, and you can get a good deal. In some cases, you can get a HELOC for 1% below prime. And the prime rate is quite attractive right now. But you should be aware that in many cases you are getting an adjustable rate, and that means it is likely to go up soon.

Indeed, now that economists are saying that the recession is over, it is likely that you will see an increase in interest rates in the coming months. While it probably won’t be until well into next year before the Fed raises rates again, there is a likelihood that things will start picking up in the next couple of years. Which means that you need to be prepared. When the interest rate on a HELOC changes, it does so much like a credit card. No warning, no grace period, no caps. So you will have to make the new payment immediately.

If you have a HELOC right now, it is time to start considering your options. In some cases, it might be worth it to get a fixed rate mortgage when rates start to climb. You will have to prepare ahead of time by saving up money for closing costs and other expenses. Additionally, you will want to have good credit, so you will need work on seeing that your credit score is in good shape.

It is always a good idea to keep an eye on your finances, and this includes watching your interest rates, and understanding how they can affect your payments. A rise to your interest rate can suddenly make things difficult for you in terms of affording your payments and on other things. It is vital that you know how this works, and that you understand the implications of an adjustable rate, and how it can affect your finances.