Liz's Havasu Lifestyle Blog: October 2009

There are still many people across the country who are considering buying a home for the first time.  And, with the $8,000 federal tax credit getting ready to expire on November 30^th, many of them are on a time crunch. At the same time, every consumer still wants to successfully buy their first home.  Therefore, if you are considering taking the plunge to buy your first home, I have some advice on what you need to know to help it be a successful purchase.

Although home prices have declined, purchasing a new home can still be more challenging than it was a year or two ago.  Because of one of the biggest housing market crashes in history, lenders are now tighter than ever with their lending standards, which makes it more difficult for buyers to get the financing they need.

For those who are still ready to make that big step, here are some helpful tips on what you can do to be a successful homeowner:

Do a careful inspection of your credit report to learn what your credit score currently is and to find out if there are any bad marks you need to know about.  Lenders will check your credit report to see if you have the means to pay the mortgage on the home you want to purchase.  The higher your credit score, the more favorable an interest rate and terms you will receive on your mortgage loan.  You can check your credit report and score through many online companies for free.

Become familiar with mortgage conditions and terms.  A mortgage is a legal and binding agreement between the buyer and lender of a property.  Being familiar with all the conditions and terms before you sign any legal documents, even a mortgage, will help you know that you are not being pressured into signing something you don't completely understand.  If you need assistance understanding the legalities of mortgage terms and conditions, you can seek assistance from an attorney or a real estate professional.

Hire a real estate professional to help you through the entire process.  Buying a home will most likely be the biggest financial transaction you will ever make in your lifetime.  Finding a trusted real estate professional to help you through the process will help you feel less overwhelmed.  A realtor will help you understand everything from beginning to end and help you feel more confident in your purchase.  They will also be most useful in dealing with the complexities of purchasing a home.

Following these tips can help your home buying process go more smoothly.  Just be sure to seek any advice needed when having difficulty understanding anything about the home buying process.

Just Call Realtor® Liz Miller for All Your Lake Havasu Real Estate Needs

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Baby Boomers' preferences in real estate are different than their predecessors.  We won't talk about age here.  BUT if any of this applies to you, well, we won't tell anyone.

The Baby Boomers, who are currently age 45 to 63, have had an impact on society, starting with their childhood to their transition into retirement.  Recognizing the importance of this influential generation on the housing industry, the MetLife Mature Market Institute (MMI) and the National Association of Home Builders (NAHB) embarked on a research project that closely examined the 55+ population (the "Boomers" as well as older cohorts) preferences in homes and communities as well as the housing industry's response to consumer demand.  The end result is "Housing for the 55+ Market: Trends and Insights on Boomers and Beyond", one of the most comprehensive reports dedicated to this segment.

One of the most interesting items in the report was that they want smaller homes that are easier to take care of.  The preferred size of those surveyed is 1,903 square feet.

Other key findings:

• The majority of 55+ households do not live in age-restricted (also called age-qualified) or other 55+ communities.  Yet, that number is on the rise.  Residents in this type of community registered the highest satisfaction rates.  However, most 55+ respondents indicated they were happy with their current homes.

• The main reasons for moving to a 55+ owner-occupied community were family or personal reasons, financial or employment reasons and the desire to have a higher quality home.  In multi-family communities, family was the number one reason.  But, reducing costs and increasing quality were also top priorities.

• Within the community, design and looks were most important to 55+ single-family home buyers.

• The share of all 55+ buyers of newly built homes using a mortgage has increased significantly in the past six years.  However, for other 55+ communities, there was a decline from 54% in 2001 to 40% in 2007.

• Even though we would expect home value and home size to be related, this does not appear to be the case in 2001-2005.  The overall rapid price appreciation across homes of all sizes during this period appears to be driving these results.

Liz Miller, Just Call Liz for your Lake Havasu real estate needs

Have banks gone too far in tightening their hold on lending practices?  There was a real-head-scratcher in the LA Times last week written by David Lazarus, one of their most able real estate observers.

Here's some of it:

"One reason we got into our current economic mess is because banks handed out home loans to pretty much anyone with a pulse, regardless of their ability to, you know, actually make mortgage payments."

Banks have subsequently tightened their lending practices, which is a good thing.  But have they gone too far?

Glendora residents Angie Trujillo and Carl Heinzen think so.  They're still trying to figure out why they got turned down for a refinancing of their mortgage.  Before we get any deeper into their story, you should know that Trujillo, 61, is no stranger to the world of banking.  She worked for Bank of America for nearly 40 years, rising from switchboard operator to assistant vice president.  Trujillo was shown the door in March, not long after BofA announced that it would be sacking as many as 35,000 employees over three years to cope with the recession.

Trujillo and Heinzen, who are married, applied for a refi several weeks before she lost her job at the bank.  Considering Trujillo's long history with BofA and the fact that their loan was already with BofA, they figured the refi would still go through without any difficulty.  But in August, they learned it had been rejected.  The reason, according to the letter they received from the bank: "Income insufficient to support expenses."

Apparently BofA decided not to take into consideration the $58,000 severance package Trujillo received from BofA along with her pink slip.  Or her $377,000 BofA pension.  Or her $156,000 in savings at BofA. Or the $10,000 she and her husband deposit at BofA monthly for rental properties they own and manage.  Not to mention the $450,000 value of their house, as appraised by BofA for their current BofA loan of $280,000.

Oh, and let's not overlook that Heinzen's FICO credit score was 809 at the time of their refi application and Trujillo's was 764, placing them among the least-risky loan seekers in the country.

Kind of makes you wonder: If people like Heinzen and Trujillo can't get a home loan, even for just a refi, who can?

Liz Miller, Just Call Liz for your Lake Havasu real estate needs

According to a Zillow survey, many prospective first-time home buyers say that extending the $8,000 federal tax credit will heavily influence their decision to buy a home before the end of 2010.  This would make up an additional 334,000 buyers between December 2009 and next year; 2010, if it is extended.

In the survey Zillow did, they queried adults who would qualify as first-time home buyers.  They asked them if their plans to buy a home before the end of 2010 would be influenced if the federal tax credit was extended.  18% said yes, it would be their primary influence, 25% said it would be a significant influence,  27% said it would have some influence on their home buying decision and 31 % said it wouldn't have any influence on their decision at all.

In Zillow's analysis of the current real estate market trends, it shows that, if the credit were extended and everyone took advantage of the full $8,000, there could be up to $14.86 billion dished out.  The suggested 334,000 additional homebuyers that could be seen if the credit is extended could mean the difference between a healthy annual increase in home sales for next year and a negative home sales year.

Not many will disagree that extending the tax credit will boost demand at the margin.  It can even help to make it easier to work down the high inventory levels the real estate market currently has of existing homes.  The $8,000 first-time buyer federal tax credit is going to expire on November 30, 2009, which is very close.  Those who qualify are buyers who do not currently own any property or have not owned any property for the past three years as a primary residence.  So, don't miss out just in-case the credit is not extended.

Just Call Realtor® Liz Miller For All Your Lake Havasu City Real Estate Needs.