Interest rates will rise

Yup....you are hearing it here, but did you know that as economies improve the Fed will be forced to increase interest rates? Used as part of the "toolbox" available to market regulators, interest rates tend to increase when inflation is on the rise. Inflation occurs when there is too much money chasing too few goods.(It is actually more convoluted than that...) People are afraid that the Fed has put too much money out there for the volume of goods being produced.
However, unemployment is still high, so the Fed is artificially keeping rates low for the time being, in an effort to assist businesses in getting affordable credit to create jobs. If people go back to work, more goods are produced and consumer demand increases......well, you get the general picture.

Eventually, rates will need to increase, or be increased, to remove money from the system. The hard part for homebuyers is that mortgage rates will increase , also, as the rates are tied to long term treasuries. For every quarter point of a rate increase, the homebuyer's monthly payment increases. This can limit the price of a house one can afford.

Why wait?? House prices are LOW, mortgage rates are LOW! A buyer can get the best deal seen probably since...........this writer doesn't know when!

NOW IS THE TIME!!!

The Perfect Storm

October is the month of crazy weather changes and conditions that led to the October Atlantic storm giving rise to the conditions that were featured in the book and movie of the same name. This October is a perfect brew of conditions that are the most favorable that homebuyers have seen in a long, long time!



First time buyers in particular should be out searching actively for their perfect home. Not only can they take advantage of an $8000 tax credit (money in your pocket), but in Maine can possibly qualify for another $5000 towards closing costs through the Green Money program at Maine State Housing. Combine this with rates near and below 5%.......well it should be a no brainer.



If your credit score is above 640 and you have some money saved, get out there. The house you choose must be closed by December 1, 2009. It takes 4 to 6 weeks to close.....

Update on MSHA program

I have done a little more research and have talked to a lender who is as familiar with the program as can be at this point. It is actually a credit of UP TO $5000 but no more than 4% of the loan amount. The borrower must contribute 1% of the loan amount. Under programs such as MSHA/FHA this can be a gift. The program ends November 30, 2009. Hope that is more clear!

I strongly encourage any borrower to consult with a loan officer regarding whether or not this makes sense.

There are income limits ,also, that apply!

Maine State Housing Offers $5000 to 1st Time Buyers

I just learned today that MSHA (Maine State Housing) has finally launched their "Gift of Green" program. This program offers $5000 that can be put towards closing costs, down payment, or escrow funds. There are also coupons for up to $500 for energy audits. The money is limited to approximately 500 buyers. There are upper income linits. This is in addititon to the $8000 tax credit being offered by the Feds. For more information go to www.mainehousing.org.

Where did the time go or Tempus Fugit!

I have been extraordinarily busy with first time homebuyers in the past week. They are all smart as heck to be out there looking and putting houses under contract while the sun is shining and the rates are still low. My little Wall Street prognosticator friends say all signs point to higher rates, sooner rather than later as the economy bumps and jolts out of its latest swoon.

As I have repeated frequently, there is $8000 out there waiting for you if you have not owned a house in three years. Why not take advantage of that? If you need to work out the credit blues, get hooked up with folks who can help you raise the scores. Believe it or not, you can get a 100% loan with a 640 score through RD guaranteed. Find someone who knows how to find out if you qualify!

The sun is out. Summer is around the corner........the time is NOW!

Who is working for you?

When teaching first time buyer classes, I am frequently asked "How do I find a broker?" The search is simple.

Get the names:

1) Ask other people whose opinion you value whom they would recommend. Make sure their recommendation is based on their own experience!
2) Attend open houses and check out the agents holding them Ask anyone of interest if you can make an appointment to interview them. After all you are looking for someone to hire!
3) Go online and check out websites.

Got the names? Then interview your choices. Any agent worth their salt will be happy to arrange a time for an interview. If not, scratch them from the list!

At the interview, ask the agent how many transactions they have closed in the last twelve months. You want someone with transactional experience in this market! If they don't close at least one deal a month, I would want to know why not?

Another critical factor is their knowledge of the financing options out there. If they have no experience with the intricacies of FHA, don't know about spot financing, or have no clue about how short sales work, move on!!

Finally, how well do you "click"? You will be entrusting this person with one of the largest financial transactions you will ever make. Are they up to the task?

Ask for references if need be then decide who will be the best fit for you! And, importantly, don't let anyone sign you into anything before you are ready. It is ok to ask to get back to them later. A high pressure sales person is probably NOT the best choice for an buyer agent. You want the choice of house to be something you are comfortable with, NOT something you felt pressured to buy.

Good luck! By the way, we specialize in first time homebuyers and would be pleased to interview with you for this job!

Is There Blood On The Street ???

I believe that it was Rockefeller who said that one should buy when there was blood on the street (Wall Street). Warren Buffet believes the same. In other words, buy when things are low, sell when they are high. Hello..........it is a BUYERS MARKET!! If you have decent credit and a little bit of money saved, why aren't you buying?

This same edict works for sellers. If you have equity and have owned your house for awhile, why not buy the house of your dreams when you can get a great deal on it?

Interest rates are low, banks are lending (believe it or not!), sellers are willing to be creative. The world is NOT coming to an end.

I have posted the most recent stats for the rolling quarter July to September 2007 compared to the same period 2008 in the prior post. While sale numbers have declined and prices have also come down, this means one thing for buyers - housing is becoming more affordable. As we move into the traditionally slower Fall market, the smart buyer is out looking for that perfect house at the perfect price. Watch the absorption rates, as they move closer to 6 months supply demand will begin to pressure prices up and there will be less deals to be made. Watch for my entry on the absorption rates for Portland, Maine!

Buyers--------get out there!!!!!