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Credit Woes But Good Job? Why Now Is The Best Time For Homeownership
One of my colleagues shared an article from SmartMoney about why the 2009-2010 federal tax credit of 8,000 USD for new home purchases turned out to be a loser. The tax credit was designed to incentivize people to buy homes, which they did. However, the premise of the article is that the tax break turned out to be a loser for many homebuyers. This is because home values have continued to drop since the tax credit ended. For example, although you may have received an 8,000 USD tax credit from buying a home in 2009 or 2010, your home may have lost 15,000 USD in house value since then so based on the math, chasing the tax credit two years ago hurt you compared to buying today without a tax credit.
Hindsight is 20/20 Although the pure math makes sense, there are other things at play here that have to be considered. First, the article has the benefit of 20/20 hindsight. Looking back in time to report what happened is easy. No one could say with certainty what would happen to home values in 2009. Some people thought they were stabilizing (and in some markets they were) while others argued that deeper home value drops were coming. It is really no different than the stock market and trying to time the dips you just can't do it without losing more than winning.
Lesson From My Grandmother One of the lessons my grandmother taught me when I was in college was to never refuse money when it is offered to you. You never know if that might be the last time it's offered and you never know if you'll really need it tomorrow. So even if you don't spend it, take it and stash it. When the government hands out a gift, it's natural that people will take it. Remember the Cash For Clunkers program a few years ago that was designed to spark the auto industry? The money for that program was burned through in just days arguably one of the most successful government programs to quickly redistribute money in history.
Foreclosure Bailout Money Sits Unused Government handout and tax perk programs often fail. To this day, there are hundreds of millions of dollars just sitting unused because of failed government assistance programs to help struggling homeowners refinance expensive mortgages and prevent foreclosure. So few people can qualify for the funding for they've given up trying.
Do You View A House As A Home? In addition to the 20/20 hindsight, another factor to consider in this "loser homebuyer tax credit" story is the fact that people should have the mindset that they are purchasing a home, not a stock. If you purchased a place that you envisioned raising kids in or growing old in, then it's your home. Who cares what the value is? You are living there for the long haul and aren't going to make a rash decision to walk away just because zillow.com says it's worth 5,000 USD less today than last year. This information is irrelevant to people who bought a home, a safe place to create memories for the family, not an asset that you walk away from during a down year.
Real Estate Values Stabilize Over Time The fact is that over a longer period of time (let's say 10 years or longer) the value of most real estate, although it may experience short term rises and dips, always reverts back to a steady 2-3% growth in value, similar to the inflation rate. There are always exceptions to the rule, especially major metro areas like Manhattan or San Francisco but more the vast majority of the United States, you can use this rule of thumb.
Never A Better Time To Buy A Home There might not be a fancy tax credit available today for homebuyers, but one thing remains true historically low interest rates, depressed home prices in most markets, and the availability of FHA mortgages for people with some credit report challenges, but otherwise have good income and job history, modest debt, all add up to a wonderful time to buy a home and qualify for a mortgage. Want to learn more about FHA mortgages and see if you fit in to their model? Visit Lending Tree and submit a single loan request and Lending Tree will put you in touch with multiple competing lenders. No one can say for sure when these crazy low interest rates will start cranking up but take this to the bank the interest rates can't go lower, so now it's just a matter of time.
Author Resource:-
Nathan Randall, editor, Daily Dollar Newsletter provides free daily advice on money matters plus coupons and discount codes. FYI...you can now access the Daily Dollar Newsletter via iTunes podcast, YouTube video, and on Facebook and Twitter too.
While you purchase a home, you'll probably be making most significant purchases in your lifetime. Because buy a home is such a significant financial endeavor, you will have to keep in mind essential factors that go into shopping for a new home.
For most of us, buying a home is our biggest life investment. As a result of a new house being such a major purchase, you will have to consider all the important fundamentals about what is a must to do to buy a mortgage and get the appropriate mortgage you can afford.
Bottom line is that housing is much more affordable today than three years ago. This is causing downward pressure on inventory. Add to this that the pipe line is not being filled with new foreclosures as fast as it was even two years ago and you will see price appreciation.
It's not an easy decision to make as to whether you lease or purchase your business premises. Your company buildings such as offices, factories and warehouses may be your most expensive business venture, but they can also turn up to be the largest business investment too. It is therefore advisable to take some time to think over this huge decision.
My potential buyer was looking at the home with an eye to renovating it. She told me she would be buying this home without any financing. I almost said to her, "I can't not get you financing, you will have to buy it without something else." But I just smiled and told her that I felt sure this house would go quickly for cash. (most of our REO inventory sells for cash).
For the past three months Gail and I have been looking for a home to buy. Every few days I would check out new listings in the area we chose. We toured a few homes a week. We made an offer on a home on Wednesday. The offer was accepted. We still need to qualify for the mortgage and complete our home inspection, but I foresee no obstacles t a successful close
Here are the reasons we bought now...
During the current market environment, numerous people are looking for ways to save cash, and one avenue that is becoming very effective, is to benefit from refinancing mortgage. Home loan refinancing is basically exchanging an active loan deal and its connected interest rates with another mortgage.
Mortgages facilitate Canadians to pay for homes, lower the rate of interest on homes they previously have, and tap otherwise untouched house equity and exploit it for home improvements. Devoid of the favorable influences of mortgage loans, it would have been compulsory to buy that home with money. Home mortgages are a lot more than mere property loans.
Home mortgages are a lot more than basic property loans. With the help of refinancing, you will be able to benefit from better rate of interest, longer or shorter pay off time, or save for old age! With the help of a home equity line of credit, you can consider that spare funds for those unpredicted emergencies which come about.
The number of houses in foreclosure has escalated to more than 13 million houses across the nation. While no homeowner wants to have their property foreclosed upon by the bank, many have no other option. Mortgagors that want to avoid foreclosure have to be very proactive the second they cannot afford their loan installment.
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