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Much to my surprise...

By
Services for Real Estate Pros with Auto & Home & Life Insurance throughout North Carolina

... much of it began when the housing market crumbled.  This first-time home buyer phenomenon became an epidemic once again, yet this time it was/is different.

Sure, there are different motivations in getting the blood flowing, but borrowing guidelines today are much more stringent than recent years.  Knee jerk - yes.  Opposite extreme - of course.  Will it get back to some semblance of a common sense reality?  The cycle typically does the math for us.  I believe we are not so calmly near year three since all of the ruckus started in the first place.  Are we out of the woods just yet? Probably not.  But it has created quite the opportunity for budding homeowners.

There is demand.  There are more incentives for first-time home buyers right now than maybe ever before.  Here's the scoop:

  • There is an $8,000 Tax Credit available for first-time homebuyers.  And to distinguish misinformation with this particular clause, you are considered a virgin within the system if you haven't owned a home within the past three years.  So, you don't really have to be first time.  There just has to be some time in between ownership of a property.
  • 100% Financing is alive and well and living in certain parts of Rural Wherever.  The USDA Loan is back and not as rural as you may think.  You don't need chickens, pigs, cows, or the soul of Johnny Cash to qualify.  It's out there and funds in the sum of $10 Billion dollars have been allocated to it.  If I can get my paws on some of that, I'll walk the line;)
  • Larger Inventory has helped to create lower housing prices.  Do the math.  Supply and Demand.  Economics 101.  Or, if you want to keep it simple, I have a bunch of stuff that needs to sell, but can't be sold at the price I want sell it, at least right now.  Give me an offer, and if I can put it in the books... it's done. 
  • While interest rates still closely resemble the guy's score to the hundredth degree who got his name wrong on the SAT Exam, they are still lower than Gary Coleman doing a KFC Commercial on his knees. They (interest rates) are bound to go up, folks.  I've been saying that for way too long now.  Lucky for me and those who have already taken advantage of them, I've been dead wrong.
  • FHA Loans have picked up the slack and some of the common sense from Conventional Lending which has been ravaged with ridiculous rate hits and mortgage insurance payments from those lovely folks over at the Mortgage Insurance Companies.

All is not rosy in the land of first-time homebuyers, however.

  • Job stability seems to be an oxymoron in this atmosphere.  Folks may be afraid to take the plunge into such responsibility as owning a home for fear that they are next in line to receive the proverbial pink slip.
  • In certain areas around the country, home values are still declining.  This may or may not be construed as a bad thing if that is the case in your particular area.
  • In an age where money is tight for a lot of folks, a down payment may not be possible.  If you don't qualify for a VA Loan or USDA loan, this could be a pretty big stumbling block.
  • Underwriting Guidelines are tighter than Joan Rivers face. 
  • The required credit score for the majority of lenders has increased. The magic number is 620, though don't be shocked if that goes up eventually.

The overview of "Good News/Bad News" for first-time homebuyers right now is tilted slightly in the favor of more good than bad, in my opinion.  If you are even remotely considering taking the leap, talk to a trusted Mortgage Professional so you have a clear idea of all the options.  They can guide you, yet it will be you who takes that ride that is owning a home.  Make it a safe one.

 

About The Author: He is wide awake on hump day and feeling pretty good.  Jason Sardi typically doesn't like talking in the third person, but such is life.  He can be reached via email at jsardi@ihmci.com or on his cell phone at 610-653-0317.

 

 

Comments (27)

Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

And when Gary Coleman gets that google alert, won't he be surprised!

Aug 19, 2009 02:31 AM
Jennifer Monroe
Indigo Home Team powered by Compass - Charlotte, NC
Real Estate REALTOR®/Broker/Designer

I really enjoy working with first time home buyers and miss it very much. Though we do appear to be past the freefall into the economic abyss, I still think it would be wise to continue the 8k tax credit program past the end of this year. I hope that happens. The other piece of the puzzle will be when lending guidelines soften a bit and relax into a happy middle ground. The lending industry can only be paranoid for so long before it self-destructs completely.

LMAO @ Lise! Nice post Jason!

Aug 19, 2009 02:32 AM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Lisa - True that.  All that at no charge from yours truly.

My Jennifer -  Thank you baby!  I tend to side with you on extending the tax credit and you know how I feel about guidelines as they sit.  The paranoia needs to die.

Aug 19, 2009 02:34 AM
Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

dude...it's so much more in favor of the buyer than opposed.  But this isn't going to last all that long.  Not to say jump right now, but things do ebb and flow.  They need to take advantage of it while the pendulum is in their favor.  Good post.

Aug 19, 2009 02:50 AM
JL Boney, III
Coldwell Banker - Columbia, SC
Columbia, SC Real Estate

The job market has really hurt a lot of people out there and the fear of further job loss and cuts in pay way heavy on the minds of would be buyers.

Aug 19, 2009 03:37 AM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Jason - While the market is primed right now for first timers like it never has been before, the same can be said for investors too.  Around her (SoCA), the competition in the lower end market between first timers and investors is so fierce it's gotten down right insane.

LA's and their sellers (especially bank sellers) are now starting to take smaller all cash offers over higher financed offers, which just seems absolutely asinine to me.  For my first timers, it's been absolutely devastating to do everything right (great ficos, money in the bank and an aggressive offer) when some cash investor can swoop in, offer less money and get the prize.  WTF???

Aug 19, 2009 03:59 AM
Carol Smith
Casmi Photography - Mebane, NC

Jason - IMO the media has pretty much scared the crud out of most folks looking to buy a house.  And with the unemployment numbers ... I can see where some are hanging back.  And that's sad because there are SO many options out there.  If the doom-and-gloom spreaders were half as good at sharing GOOD news this whole thing would turn around much more quickly.

Aug 19, 2009 04:18 AM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Bettag - I couldn't agree more with you on that.

JL -  That's a fact.  That's one of the reasons I addressed just that, because it a very real reason why a lot of folks may be hesitating.

Donne - I'm not experiencing that out my way, but how interesting.  I suppose their mentality is that cash is more reliable that a borrower who is relying on a lending institution to finance the bulk of the purchase.  Sign of the times, I guess.

Carol - I watched the movie Natural Born Killers last night and one of the underlying philophies was that very entity, the media.  Scary, but true.

Aug 19, 2009 04:36 AM
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

Lending is a burning thing

And it makes a fiery ring

Bound by wild regulation

Lending is a ring of fire

Jason fell into a burning ring of fire

Rates went down, down, down

and the flames went higher

And it burns, burns, burns

The ring of fire

the ring of fire

The taste of ownership is sweet

When clients like Jason's I meet

He helps them like a child

Oh, but the desire went wild

Jason fell into a burning ring of fire

Rates went down, down, down

and the flames went higher

And it burns, burns, burns

The ring of fire

the ring of fire

 

My apologies to June Carter, she wrote the original!

Jason if three years of abstinence revirginizes you, any thing is possable!

Bill

http://www.youtube.com/watch?v=0lhf9U5Wf3Q

Aug 19, 2009 04:47 AM
Fran Gaspari
Patriot Land Transfer, Inc. - Limerick, PA
"The Title Man" - Title Insurance - PA & NJ

Jason,

Great presentation! You will look back on these days as those which forged your future and made you such a great mortgage professional...!!! Thanks,   Fran

Aug 19, 2009 02:07 PM
Sheldon Neal
Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ
That British Agent Bergen County NJ

... me thinks its definitely a good time for first timers !

And does the author ever just stand in front of a mirror and talk about himself in third person ??? Just askin' ...

 

Aug 19, 2009 03:06 PM
Brian Griffis
Realty Choice - Springfield, MO

We'll see what happens when the first time credit expires.  Eventually though, there has to be more than first timers. 

Aug 19, 2009 03:28 PM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Bill - If you weren't so damn astute at this gig, I would say that you missed your calling.

Erica- Who needs booze to make you dizzy when all you really need is a remote control and cable television.

Fran - Much appreciated, Sir!

Sheldon - The author does do that on occasion.

Brian -  True that.  I'm anxious to see when they become a little more aggressive (by no means 100% financing, though) for Real Estate Investors.

Aug 20, 2009 02:17 AM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Jason: I too am hopeful. It won't be a quick turnaround but the signs are encouraging and welcomed nonetheless. Take care.

Aug 20, 2009 03:17 AM
Eleanor Thorne
Equity Resources - Cary, NC
Advantage Lending 919-649-5058

Very cool!  We closed a first time homebuyer today who gets the $8000 - they are SOOO happy!!!

Aug 20, 2009 11:21 AM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Jason... I love first time homebuyers, because many are so appreciative when they close... and the e-mails of testimonials are great. I think it's a great time to buy as a first time homebuyer... in my opinion, it's one of the best times ever.  And in regards to the economy... in my opinion, we haven't hit bottom yet. Yes, some people are very busy now... and yes, many markets are local. But there are various reasons to why some are busy... besides, define busy.  ;o)

jeff belonger

Aug 20, 2009 02:14 PM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Paul - If it was a quick turnaround, then I'd be worried.  All good things take time, in my view.  Unless of course you play the lottery on a lucky day:)

Eleanor - I've closed a few.  I envy the bastards.  I want a piece of that $8000;)

Belonger - Busy (in our industry) is taking applications, registering loans, and getting them closed.  I went old school with cold calling about two weeks ago and I have no idea why I quit doing it over a year ago.  Perhaps it was a psychological lapse in confidence, bewilderment of what is going on in the industry, or just being a tad down on what and why I do what I do for a living.  Not sure, but I won't stop.  For one-time only, I will say that I'm way too good from the front end to the back end to be anything other than a guy who hits his bottom line of what he does for a living very freaking well.  That bottom line is closing loans and putting clients (people) in a better financial situation. 

Aug 20, 2009 03:15 PM
Diane Aurit
LKN Realty, LLC - Mooresville, NC
Lake Norman Real Estate

Tighter than Joan River's face...thanks for the laugh during an otherwise rather depressing glimpse at reality.  I see you have some UGG spam above.  I thought we had that behind us.  Anyway, here in my Lake Norman area we still have way too much inventory so declining prices are a good thing.  I have used USDA Rural loans in my last 3 transactions even though they are not what you would think of as "rural" areas.  All of Mooresville qualifies for these loans.  It will be interesting to see what comes next quarter!  Hi to Jennifer!

Aug 21, 2009 09:22 AM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Inthego - That may be the most astute comment of all-time.

Diane - Good for you to take advantage of the USDA Rural Loans!  Great product for a lot of people.  And I heart spam:)

Aug 21, 2009 11:15 AM
The Somers Team
The Somers Team at KW Philadelphia - Philadelphia, PA
Delivering Real Estate Happiness

A great list of pros and cons !  Especially the Joan Rivers analogy !  That cracked me up !!!  There is a lot of opportunity out there, that is for sure, but still a lot of stumbling blocks.   Especially for investors !  It is almost impossible to buy an investment property unless you put down 40 percent or something it seems.  Ugh !  Still, like you said, the scale is leaning more towards the positive now.  I will take it !

Aug 23, 2009 01:00 AM