Are You Ready To Buy A Home In UTAH !

Every day someone in our Real Estate office, asks someone either in person or on the phone"are you ready to buy a home in Utah"? Are you tired of sitting on the sidelines, thinking things might get better? (or worse depending on the situation).

Thats the subject of this weeks presidents message. Is now the time to buy, and how do you know?

With the passage of the newest economic stimulus bill and the implementation of an $8,000 tax credit for first-time buyers, more people are weighing their options to decide whether home buying makes sense. In fact, the National Association of Realtors estimates the tax credit will spur approximately 300,000 additional home sales as on-the-fence buyers decide now is the time to make a move.

With such strong financial incentives in place for first-time buyers, now is the perfect time for anyone who has considered homeownership to calculate whether buying makes sense. In fact, taking time to do the analysis now will be especially beneficial since many of the current incentives, such as the tax credit and possibly the super-low mortgage rates, will not be available next year. 

                While there are many great reasons to make a home purchase, buying is a long-term commitment that isn't right for everyone. Consider the following questions as you determine whether you're ready to buy.

Can you afford homeownership?

                Through the combination of lower home prices and cheaper mortgage financing costs, homeownership has become considerably more affordable over the past year. In fact, interest rates on a 30-year fixed-rate mortgage are one full percentage point lower today than they were a year ago, according to Feb. 19 numbers from Freddie Mac. That means you would save more than $45,000 during the life of a $200,000 mortgage or you could increase your buying power by 10 percent.

To see whether buying makes sense for your budget, start by determining how much a home in your estimated price range will cost, and make sure to factor in mortgage principal payments, interest payments, mortgage insurance (if you have less than 20 percent down), homeowner's insurance and property taxes. The general guideline is that you shouldn't spend more than 28 percent of your income on your housing costs, and your total debts should not exceed 36 percent of your income. If you need help calculating these costs, contact a mortgage professional.

Keep in mind, however, that mortgage interest and property taxes can be tax-deductible so these costs may actually be lower. Assuming a 28 percent tax bracket, you can make a mortgage payment - including taxes and insurance - that is approximately one-third larger than your current rent payment for the same amount of money because of the tax deductions, according to the National Association of Realtors. But make sure to consult your tax professional regarding the deductibility of any homeownership-related expense.

Along with determining the costs of homeownership in relation to your income, you need to assess your down payment funds and your credit score. While there a still a couple programs out there that will provide 100 percent financing, most lenders require some sort of a down payment. FHA loans require 3.5 percent, and conventional loans typically require at least 5 percent. For an FHA loan, your credit score should be at least 620. For a conventional loan, it shouldn't be lower than 700.

How long do you plan to stay?

                In general, the longer you plan to stay in a home, the more financial sense it makes, with the rule of thumb saying you should keep the home at least five years. That's because there are a number of transaction costs involved in buying or selling real estate. The longer you stay, the more these costs are absorbed, and the greater the opportunity for your home to increase in value.

The New York Times has a useful calculator that will help you determine how long it will take to reach the break-even point. Visit NYTimes.com and search for "Is It Better to Buy or Rent?" to access the calculator.

Have you considered the intangibles?

                Of course, home buying isn't just about the numbers. There are considerable intangible benefits that should be considered as well. Like the fact that you won't have to get your landlord's permission to remodel or worry about losing your deposit if you pound a nail in the wall.

Homeownership also creates stability for your family. In one study by the Harvard Joint Center for Housing Studies, the children of owners achieved math scores up to 9 percent higher than the children of renters, reading scores up to 7 percent higher and reductions in behavioral problems of up to 3 percent. Other studies have linked homeownership to lower crime rates and greater community involvement.

For more information on homeownership or to learn about the home-buying opportunities in your area, contact your local Realtor or visit www.UtahRealtors.com.

So there you have it, a basic primer of the questions you need to answer, before you ask the big question on everyones lips nowdays. "Are you ready to buy a home in Utah"?