Thoughts on the Washington, DC, and Northern Virginia Real Estate Market » Buyer Resources

Is the First Time Home Buyer Credit Coming Back?

Katie Wethman — Mon, 30 Aug 2010 13:12:23 +0000

With the precipitous 27% drop in July housing sales, the first time home buyer credit is getting renewed interest from some heavy hitters in Washington, including Secretary of Housing and Urban Development Shaun Donovan, according to The Hill. Though admitting that just one month of numbers was too little data to say whether the credit will be revived…

“In an interview on CNN, Donovan said the administration is “concerned” about the path of the industry. He defended the Obama administration’s record on supporting the housing market, amid new signs that the market is struggling alongside the broader economy.
Donovan did not rule out a further homebuyer tax credit to support the market.”

While plenty of blogs out there are again predicting real estate Armageddon, personally, I don’t think that the huge drop in July sales really should have been ‘unexpected’ at all. But no one wants to read a meh headline like “Home sales drop as expected in July as would be normal following any artificial force on a market.” (OK, I’m sure editors would shorten that headline, should it ever exist.)

Think about all the second half 2010 first time home buyers who pulled forward so that they could close before June 30 to get their extra $8000. We essentially ‘used up’ the first time buyer segment for at least a few months, and probably the remainder of 2010. By the Spring 2011 market there will be a new crop of buyers. Unless Congress intervenes first, that is.

Note to Congress: Spring is NOT the time to have a first time buyer credit expire. It was a double whammy…end of the usual Spring market–giving a credit to buyers who were going to purchase those homes anyway–PLUS the expiration of the credit. Next time, make the credit active in the late Fall and through February so that buyers are buying up the old inventory and foreclosures that otherwise would be sitting.)

And here’s another tip…if you want to jumpstart home sales with a buyer credit, don’t start hinting around about it to the press…Secretary Donovan essentially just wiped out what few first time home buyers there currently are, who are now all going to wait to see if there’s another credit.

Stay tuned.

Tweet This Post

$8000 First Time Home Buyer Extension and New $6500 “Move Up” Buyer Credit Details It’s officially passed the House and Senate, and is now...
Is the $8000 First Time Home Buyer Tax Credit Going to Be Extended? Alas, my crystal ball is in the shop. But I...
Why is the $6500 home buyer tax credit important? By this time, most people are aware of the extension...

Related posts brought to you by Yet Another Related Posts Plugin.

Free First Time Home Buyer Seminar in Arlington

Katie Wethman — Fri, 27 Aug 2010 02:01:23 +0000

Monday, September 20, 2010 from 7:00 – 8:15
Arlington Central Library
1015 N Quincy St 2nd floor meeting room
Ballston (Orange Line)

Though there is no cost to attend, you must contact us to register for the First Time Buyer Class since seating is limited and so that materials are available.

Educating Home Buyers to Enable Better Decisions

Our first time home buyer classes are educational sessions designed to give an overview of current market conditions and the home buying process. We cover a recap of the market, current trends and market stats including days on market, average sales prices, and inventory levels. We’ll also discuss the impact of the banking system collapse and bailout, the home purchase process and common pitfalls, financing basics and a how to get started checklist.

Specific topics covered:
- Northern Virginia, DC, and Montgomery County market analysis
- Mortgage basics: rates, points, fees
- Financing basics: FHA, Conventional, Conforming, and “Jumbo” loans
- Calculating the tax benefits of homeownership
- Short Sale, Foreclosure/REO/Bank Owned basics
- Search tips
- Fees and closing costs
- Buyer agency and choosing an agent

Tweet This Post

Free First Time Home Buyer Class in Arlington, VA Are you a first time buyer thinking of starting your...
Is Buying a Home One of Your 2010 New Year’s Resolutions? Get started by attending a free, no obligation first time...
$8000 First Time Home Buyer Extension and New $6500 “Move Up” Buyer Credit Details It’s officially passed the House and Senate, and is now...

Related posts brought to you by Yet Another Related Posts Plugin.

Property Tax Rates

wethmangroupadmin — Fri, 20 Aug 2010 18:18:27 +0000

Recently, I was approached by someone who will soon be moving to the metro Washington, DC, area. Their first question: What are the property tax rates for the various jurisdictions? Having been unable to find a single source for such information, I set off in search of the tax rates for our area. So, faithful readers, here they are…the 2010 tax rates for the greater Washington, DC, metro area.

Jurisdiction	2010 Tax Rate
Arlington County, VA	$0.865/$100 value
Alexandria City, VA	$0.978/$100 value
Fairfax County, VA	$1.09/$100 value
Fairfax City, VA	$0.955/$100 value
Falls Church City, VA	$1.24/$100 value
Loudoun County, VA	$1.245/$100 value
Prince William County, VA	$1.212/$100 value
Stafford County, VA	$1.10/$100 value
Montgomery County, MD	$0.683/$100 value
Prince George’s County, MD	$0.96/$100 value
Washington, DC	$0.85/$100 value

This information is deemed reliable but is not guaranteed.

Tweet This Post

Just how important are today’s low interest rates? I work with a lot of first time buyers, who...
Mortgage Rates Hit Historic Lows: Should I Refinance? Back in 2008, I wrote a blog post about refinancing,...
Reasons to Sell Your Investment Property in 2010 Attention Investors: I’m about to give you 8.8 reasons to...

Related posts brought to you by Yet Another Related Posts Plugin.

Just how important are today’s low interest rates?

Katie Wethman — Thu, 12 Aug 2010 16:13:07 +0000

I work with a lot of first time buyers, who often ask me “How do we know the market won’t drop further? I think I should wait to buy.” My answer is always the same: I don’t have a crystal ball, but I look to the job market as a reliable leading indicator for the housing market, and also keep a close eye on interest rates.

The DC area has the lowest unemployment of any major metropolitan area in the U.S., and has for some time now. Where there are jobs (and especially high-paying white collar jobs like we have in this area), there will be people moving here to claim those jobs. And where there are people, there is a need for housing, whether it’s rental or purchase.

But can market prices drop? Of course they can. We just went through that in the past few years after the run up in local prices from 2002-2005(ish). But if you believe that we’re near the bottom, it may not be worth it to wait any longer because any gains you make via lower prices you’ll lose in purchasing power because of interest rates.

Interest rates, in case you hadn’t noticed are now at 50 year lows, hovering in the mid-4% range. Let’s take a look at a $400,000 loan, which would be typical for a first time buyer in our area. When we compare a 4.5% interest rate to even a slight increase to 5.0%, the principal and interest portion of a mortgage payment jumps from $2027/month to $2147/month–a hike of $120 a month. That’s $120/month OUT of your pocket if prices stay the same.

Another way to think about it is to figure out how big a price drop you would need to see in order to make up that 1/2% interest rate difference. It all depends on the loan amount, of course. In our example of a $400,000 loan, a buyer would need the loan amount to drop by an additional 5% to make up for the 1/2% interest rate jump (it’s not exact…actually a buyer would still pay $13/month extra, but it’s close enough for our illustrative purposes.)

So buyers, don’t get so obsessed with the tree that you miss the forest. Prices are low, interest rates are ridiculously low. Which is more likely: another severe drop in prices in our area, or a slight increase in 30 year interest rates? Plan accordingly.

If you need help starting your home search, contact us or attend a free first time home buyer seminar.

Tweet This Post

Mortgage Rates Hit Historic Lows: Should I Refinance? Back in 2008, I wrote a blog post about refinancing,...
Why is the $6500 home buyer tax credit important? By this time, most people are aware of the extension...

Related posts brought to you by Yet Another Related Posts Plugin.

FHA Loans Getting More Expensive – Again

Katie Wethman — Tue, 10 Aug 2010 15:55:38 +0000

Bill HR 2981 was passed by both the House and Senate, paving the way for higher charges for FHA borrowers. The majority of FHA loans are 30 year mortgages with a loan-to-value of at least 96.5%, which will see an increase in the monthly fee from 55 bps to a whopping 90bp, but on the flip side will see a reduction in the upfront mortgage insurance premium (UFMIP) from 225 basis points down to 100 basis points.

So in other words, the up front fees (this amount is often rolled into the loan balance) will go down, but the monthly charge goes up, hampering the monthly affordability for many borrowers.
The change is due to go into effect September 7, 2010.

Tweet This Post

Potential Extension of June 30 Settlement Deadline & FHA Loans About to Get More Expensive–AGAIN! Senate Majority Leader Harry Reid has co-authored a proposal to...
VHDA Loans Allow Financing of Down Payment The Virginia Housing Development Authority has extended its Homebuyer Tax...
Will the New FHA Rules Kill Arlington Condo Sales? On February 1, HUD and FHA rolled out major changes...

Related posts brought to you by Yet Another Related Posts Plugin.

Breaking News: Closing Date Deadline on First Time Buyer Credit Extended to 9/30/10

Katie Wethman — Thu, 01 Jul 2010 13:29:44 +0000

Late Wednesday, the Senate voted to approve the extension of the settlement date for eligible first time buyers to “before October 1, 2010.” The House had approved the measure earlier in the week, and it’s expected to be signed into law imminently.

This is great news for anyone who had a lender that dropped the ball and couldn’t close the loan on time, and may even help out a few patient buyers of short sales who ALWAYS have delays, but unless you were already under contract by April 30, this extension does nothing for the rest of the buyers out there.

Still, better late than never–thanks Congress, for extending the deadline, even if you had to wait until the evening of June 30 to get it done.

Tweet This Post

Potential Extension of June 30 Settlement Deadline & FHA Loans About to Get More Expensive–AGAIN! Senate Majority Leader Harry Reid has co-authored a proposal to...
Is the $8000 First Time Home Buyer Tax Credit Going to Be Extended? Alas, my crystal ball is in the shop. But I...
$8000 First Time Home Buyer Extension and New $6500 “Move Up” Buyer Credit Details It’s officially passed the House and Senate, and is now...

Related posts brought to you by Yet Another Related Posts Plugin.

Potential Extension of June 30 Settlement Deadline & FHA Loans About to Get More Expensive–AGAIN!

Katie Wethman — Mon, 14 Jun 2010 15:49:05 +0000

Senate Majority Leader Harry Reid has co-authored a proposal to extend the June 30 settlement deadline for the first time buyer credit until September 30 to give lenders more time to process the incredible volume of contracts trying to close. The surge in loan volume has created delays around home appraisals and the usual delays associated with short sales are also creating headaches for buyers hoping to take advantage of the credit. Of course, savvy buyers know that many short sales will NEVER close, so the extension may not help them at all. Read more about why short sales never close here.

The House also passed legislation this week granting the Federal Housing Administration (FHA) the authority to raise the annual fees it charges borrowers to help shore up the agency’s dwindling cash reserves. The fee is currently capped at 0.55 percent of the value of the loan. The bill raises the cap to 1.5 percent. FHA Commissioner David H. Stevens said it wants to raise the fee for new borrowers to 0.9% next year to help raise capital and also make the fees more consistent with private mortgage insurers. FHA has certainly been a good deal for buyers recently, with very competitive rates and low insurance charges, which resulted in FHA’s share of purchase loan market from 3% in 2006 to 30% recently. As the agency raises those fees, it plans to somewhat lower the upfront fees it charges borrowers.

Buyers: FHA is still a great option in 2010–low rates and fees, and only 3.5% down. If you’re interested in starting your Northern Virginia home search, contact us.

More: Attend a free first time homebuyer class in Arlington.

Search: See homes for sale in Northern Virginia and Washington, DC.

Tweet This Post

VHDA Loans Allow Financing of Down Payment The Virginia Housing Development Authority has extended its Homebuyer Tax...
$8000 First Time Home Buyer Extension and New $6500 “Move Up” Buyer Credit Details It’s officially passed the House and Senate, and is now...
Why is the $6500 home buyer tax credit important? By this time, most people are aware of the extension...

Related posts brought to you by Yet Another Related Posts Plugin.

FHA to cut Seller Contribution to Closing Costs to 3% of Sales Price

Katie Wethman — Fri, 04 Jun 2010 15:33:04 +0000

Within the next few months, it’s going to get a little tougher for FHA buyers. Starting sometime this summer, FHA will make official its announced policy of limiting the seller contribution to buyer’s closing costs (aka “seller subsidy”) to 3% of the purchase price, down from 6%.

What fees make up the buyer’s closing costs?

The fees vary by jurisdiction, broker, and settlement attorney, but a good way to categorize them would be:

Prepaids – These are generally required by the lender, and may include prepaid insurance, prepaid property taxes, and prepaid interest. Another common prepaid item is condo/HOA fees. These vary based on the day of the month that you close, since they are pro-rated between buyer and seller.
Points – A point represents 1% of the loan balance and are charged by lenders. This, along with the fees, can easily amount to thousands and thousands of dollars, so it’s important to discuss this with your agent and your lender.
Fees – These are fees charged by real estate brokers, settlement attorneys, and lenders, and are the toughest to judge for “reasonableness” without experience. These vary widely, particularly among lenders. Some real estate agents will pay their broker’s fee on your behalf—be sure to ask them. For lenders, whose fees can be substantial, it’s important to know early in the process what they’ll charge. Broker’s and attorney’s fees are scattered throughout the closing statement sections.
Title Insurance – This is paid by the buyer and, depending on the policy, can amount to thousands of dollars. It’s a one time charge that covers you in the event of a problem with the chain of ownership. See my post on how to save some money with title insurance here. This is in the 1100 section.
Government and Transfer Charges – Paid to the local jurisdiction. These can be quite substantial—for example, in the District of Columbia, the transfer (paid by the seller) and recording taxes (paid by the buyer) are 1.1% each. Northern Virginia sellers just had big increase (from $1 per $1000 in value to $5 per $1000) in their transfer taxes.

In our local DC and Northern Virginia area, traditionally closing costs have run about 3% anyway, so the impact will likely be minimal for most buyers in our area. But for those buyers who are struggling to come up with cash for the down payment AND closing costs, this reduction could put a last minute wrench in their purchase. Plan accordingly.

Foreclosure Properties: A Good Investment?

Katie Wethman — Thu, 27 May 2010 15:17:23 +0000

The nation’s housing market is bracing for another wave of foreclosures. The past few years saw waves driven by subprime loans, but inventory was partially mitigated by the temporary demand created by the first time buyer credits. Now experts are concerned about the “shadow inventory” that banks allegedly have been holding back, and new waves are potentially on the horizon, this time driven by option ARM loans and owners making the decision to ‘strategically default’ on their severely underwater homes by simply walking away.

If you’re in the market for a new house, you should look at foreclosed homes being held by banks. Here’s why…

Click here to continue reading the article, posted at http://singlemindedwomen.com

Tweet This Post

Reasons to Sell Your Investment Property in 2010 Attention Investors: I’m about to give you 8.8 reasons to...
From the Archives: Foreclosure Risks-Bank Addenda I get a lot of questions on foreclosures. How could...
Risks of Buying a Foreclosure Risks of Buying a Foreclosure (click the links to read...

Related posts brought to you by Yet Another Related Posts Plugin.

When’s the Best Time of Year to Buy a Home?

Katie Wethman — Mon, 17 May 2010 14:50:45 +0000

Potential home buyers always ask me “When Should I Buy?” or variations on the theme such as “I’ve heard it’s better to buy in winter.” The answer to when is the best time of year to buy depends on your goal. Are you trying to get the best selection? Are you trying to maximize your negotiating power? Are you trying to minimize your cash outlay?

Take a look at this graph of inventory levels in Northern Virginia:

You can fairly easily see the pattern in inventory levels–they rise in the Spring, drop over the Summer, and have a second, smaller bump in the Fall before dropping off in the Winter. For the most part these seasonal trends can be explained by the school year. Families try to be settled in time for September start dates, which means a move over the Summer, which translates to a Spring listing date (not to mention the psychological effect of springtime renewal, time for change, etc.)

So if a buyer is trying to maximize their options (as is often the case given the recently low inventory levels in our area), then Spring is the time to search. Sellers know that’s when the majority of buyers will be out, so their preference is to list then–it’s basic supply and demand. BUT, what happens when a home doesn’t sell in Spring….or in Summer…or in Fall. Then the Seller either pulls it off the market to try again next year OR it still sits for sale. Most buyers cocoon for the Winter, so demand drops even more than supply. In Winter, the balance of power tips towards buyers for properties that have been sitting on the market since earlier in the year. BUT be warned…there’s usually a reason they’ve sat on the market unsold. Consider it the picked-over inventory. So while your buyer negotiating power might be higher, you may not have any interest in the homes that are actually available to you.

Buyers also need to factor in their own timing: When does your lease expire? Are you due for a raise that will enable you to purchase a home that you won’t outgrow as quickly? Are you able to save more money for a down payment in the next six months? Can you even find a home that meets your criteria or are your expectations unreasonable for the price range?

I advise my clients to start their search as soon as they’re financially stable and theoretically would buy the right house if they found it. There’s no guarantee you’ll even find a home you like, and it may take you much longer than you think anyway. And it never hurts to start getting familiar with the inventory so that you’ll “know it when you see it.” There’s no easy answer to the question, but if you focus on finding a home, rather than trying to time to market, that’s a step in the right direction.

Get started with your home search by attending a free First Time Home Buyer Class.

Search the Multiple Listing Service for Northern Virginia and DC homes for sale.

Contact us for help with your Northern Virginia or DC home search.

Tweet This Post

Related posts:

$8000 First Time Home Buyer Extension and New $6500 “Move Up” Buyer Credit Details It’s officially passed the House and Senate, and is now...
Fairfax County, VA Inventory and Median Sales Price This chart shows inventory vs median price for single family...
Why is the $6500 home buyer tax credit important? By this time, most people are aware of the extension...

Related posts brought to you by Yet Another Related Posts Plugin.