Home-buying tips

September 26, 2009 5:24:07 AM PDT
If you're looking to buy a home, especially if you're a first-time buyer, now is the time to act, according to the National Association of Realtors. Judy Appleby, the president-elect of the New Jersey Association of Realtors, joined us with tips for buying a home. What makes now a good time to buy a home?

Affordability in the New Jersey market, combined with low interest rates and a remarkable $8,000 tax credit for first-time home buyers, make for a prime opportunity for financially sound buyers to purchase.

How does the $8,000 tax credit work?

It is open to buyers who have not owned a principal residence during the three-year period prior to the purchase are eligible. Unlike the credit that was available last year, this does not have to be repaid at all. Obtaining the credit is easy. You can claim it on your federal income tax return.

There is another great opportunity to consider too, related to the credit -- if you're buying in New Jersey, you have a chance to get some of that credit up front to help cover the down payment or closing costs. The New Jersey Housing and Mortgage Finance Agency (known as the HMFA) is offering up to a $5,000 "Prefund" advance on the tax credit for first-time purchasers who utilize HFMA financing.

How much longer is the tax credit available?

As of today (the 26th), there are only 65 days for first-time buyers to take advantage of the tax credit. In order to qualify, the transaction must close before 11:59 p.m. on November 30, 2009.

The real estate transaction is a complex process that typically takes a couple of months from beginning to end so we are right upon the time needed to close before expiration of the credit.

Why is it important to act with urgency now when the deadline is more than two months away?

When you consider all of the facets of the home buying process: shopping for and securing a mortgage, finding a REALTOR®, searching for a home, settling on a home, presenting an offer, obtaining a home inspection, shopping for homeowners insurance, and more - it is important to get started soon in order to close in time to qualify for the tax credit.

How can buyers take advantage of affordability?

With prices lower than they were a year ago, affordability has increased significantly. Consider this: 56 percent of households in New Jersey can afford to buy an entry level home, compared to 45 percent of households a year ago. Source: National Association of REALTORS®.

How do interest rates impact buyers in today's market?

Mortgage rates have been creeping up from the record-low levels encountered recently. Waiting to buy may cost you thousands of dollars. Locking in a rate now will secure low payments for years to come. A few tenths of a percentage might not seem like a lot, but over the course of a 30 year mortgage, that could lead to tens of thousands of dollars in savings.

Do you have any other advice for buyers?

It is vital to contact a REALTOR® to get a better understanding of what is truly happening in your local market. REALTORS® can help explain and demystify complex housing trends and can help you navigate what could be some pretty confusing roads to home ownership in the short time that's left to claim the tax credit.

Buying a home is a difficult task, and to do it in 65 days in time to claim the $8,000 tax credit is especially so. A REALTOR® knows the ins and outs of the process and can help expedite things so that you can close in time and claim your credit.

NJAR® launched its Get the Real Story® campaign, a public education campaign that encourages consumers to take a closer look at local market conditions, state or regional economic factors, and their own personal circumstances when making a decision about buying or selling property in today's market.

Are there any other resources out there for buyers?

The website at www.REALstoryNJ.com is a real resource for consumers. There, they can get tips on buying and selling from real people who they can relate to, and can learn more about the unique opportunities available to them in the current market. Beyond New Jersey, consumers can visit www.housingmarketfacts.com or the New York State Association of Realtors at www.nysar.com to learn more.