Financing a home in today’s market still seems to be quite a dilemma.  With all that is going on with the government and bank bail outs you’d think that getting a loan would be easy.  Not so it seems.  Government is also dictating much higher standards for loan qualification than has been experienced in the past.  Not that I would advocate for going back to the sub-prime lending, stated loans, and the inflated appraisals of the past; but there seems to have been a swing in the opposite direction that has gone to the other extreme.  Hopefully this will change soon.

The programs for first time home buyers however, are much better. First of all there is a new $8,000 tax credit for individuals who are first time home buyers or for those who haven’t owned a home in the past three years.  This is a true tax credit and does not have to be repaid to the government. That is terrific news.  That money can be used to make a few payments on your new home or used for a down payment and closing costs in certain circumstances. 

Both FHA and IHA (Idaho Housing) are offering to allow the tax credit to be applied to your down payment.  They essentially lend you $7,000.00 at a rate of 3% until the tax refund is received next year after you file your income taxes.  The other $1,000 can be used for the interest etc. Not a bad deal.  Especially for those who are having trouble coming up with the money for a down payment.  The down payment for either FHA or IHA loans is 3.5% of the purchase price.  Consider this; you are purchasing a home for say $130,000.  That is the price for a typical starter  home or town home in Madison County right now.  There are also condominiums available for as low as $79,000 right now. The 3.5% down payment on $130,000 is $3,900.  That leaves another $3,100 to use for closing cost which includes appraisal fees, loan origination fees, home inspection costs, and the fees to the Title Company handling the closing.  Given this scenario you could get into a home with very little down as long as your credit scores are in good shape and your debt to income ratios are in line.  This alone would make it a good tome to buy right now. But there is more.

Another good reason for considering a purchase right now is the interest rates.  There are loan rates out there right now for as little as 4.75%.  That is the lowest rate that I can remember in my life time (nearly 60 years).  “So interest rates are low”, you might ask, “but what is the big deal about that?” Well let’s take a look at the figures.  Assuming our $130,000 loan at an interest rate of 6% from just a year or so ago, the payment on a 30 year mortgage would be $780.21 plus taxes and insurance.  Lower the rate to 4.75% and the payment would be only $679.15.  That is just over $100 a month difference.  I’m not sure about you but $100 a month is a significant amount for me.

Another thing to look at is the difference between the mortgage payment and what you are paying for rent.  Rent on a 3 bedroom town home is around $900 a month.  Purchase that town home for $130,000 and you can see that buying may make more sense than renting.  Of course you will have to look at other factors such as how long you expect to remain in the home and the condition of the present purchase. 

 In times like these, owning a hard asset like a home makes a lot of sense me.

Talk with your accountant and a local realtor® today to discuss your options.

Mortgage applications continue to rise as rates slide. The weekly mortgage application index compiled by the Mortgage Bankers Association rose 3 percent last week to 1,194.4 from 1,159.4 on a seasonally adjusted basis.

On an unadjusted basis, the index increased 2.9 percent compared to the previous week and was up 68.8 compared to the same week last year.

The refinance share of mortgage activity is driving the increase, rising to 79.1 percent of total applications, up from 78.5 the previous week.

Fixed rates are at or near record lows:

● 30-year fixed-rate mortgages decreased to 4.61 percent from 4.63 percent.
● 15-year fixed-rate mortgages decreased to 4.45 percent from 4.48 percent.
● 1-year ARMs decreased to 6.20 percent from 6.22 percent.