Now seems like the perfect time for the first-time buyer to step up to the plate and take advantage of the cooling market. A cooling market does not mean a bad market, just a return to a more normal market. Houses will continue to be sold .... sellers will sell, buyers will buy, and homes will appreciate over time. All of this will just happen at a more normal pace as compared to the 2000 - 2005 time periods.
A normal market means that home buyers have more time to look around, compare homes, and make informed decisions. This was a non-existent phenomenon during the boom years. Many first-time buyers could not react quick enough to secure the house of their dreams. The quickened pace of home sales did not allow inexperienced first-time buyers to comfortably evaluate potential homes and make a decision in their best interest. Now sellers are giving more incentives and concessions to potential buyers. In addition, many first-time buyer and income-based programs are available to be taken advantage of; this makes it easier than ever to make that first purchase.
Good programs for first-time buyers include:
Federal Housing Administration (FHA) Mortgages: which allow as little as 3% down and offer low interest rates. This program makes exceptions for borrowers with limited income, limited savings, or poor credit.
MyCommunity Mortgages: which are sponsored by Fannie Mae and is designed to assist low and moderate income families, public service employees, and disabled people to realize their dream of owning an affordable home. This program allows for 100% financing and little to no money required into the transaction for those who qualify.
Expanded Approval Mortgages: this is also sponsored by Fannie Mae and is designed for borrowers with less-than-perfect credit. This program takes a broader view of a customer's situation and allows a reduction in interest rate in exchange for timely payments (usually 24 consecutive months). Low to no money down is required for this mortgage program for those who qualify.
Most of these programs allow down payment to come from family and friends as a gift. Currently the average interest for a 30 year fixed mortgage hovers around 6.18%. These programs can reduce your interest rate by .25% as well as require no money down by the borrower. Why not take advantage of such government programs available to you? In addition, I always suggest offering 15% less than the asking price on a home, especially if it has been on the market for 90 days or more. This is a good starting point and can help you secure the best deal.
Consult a mortgage professional for more details on these and other beneficial government programs.
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