HUD Announces First-Time Homebuyers Can Use $8,000 Tax Credit as Down Payment

HUD announced today that the Federal Housing Administration (FHA) will allow homebuyers to apply the Obama Administration's new $8,000 first-time homebuyer tax credit toward the purchase costs of a FHA-insured home. This is GREAT news for first-time buyers! Read more about the program here.

With falling prices and low interest rates, there has never been a better time to purchase a home.....and this news makes it even better! If you have been considering purchasing your first home, now is the time to act. This tax credit has only been approved for home purchases in 2009, so don't miss out on this amazing opportunity!

As always, if you or someone you know is thinking about making a purchase, I would love to help!

Simple Tips for Better Home Showings

"You only have one chance to make a first impression"

A cliche, but so very true, especially with regards to selling your home. In a tough market like this one, where there is plenty of competition out there, it is even more important to wow buyers as soon as they walk in to your home. I can tell you from personal experience on both the buying and selling side what a difference a nicely staged home makes, which is why I spend a lot of time with my sellers to prepare their home before we put it on the market. (I spend an equal amount of time with my buyers trying to get them to look past decor and cosmetic issues with a poorly staged home) You can pick up lots of great ideas and get a feel for what a nicely staged home looks like from watching one of the many related TV shows on HGTV, but what I tell my clients is that we want their home to feel something like Pottery Barn does when you walk in: clean, uncluttered, simple lines and understated elegance. That does not mean you need to go out and buy new furniture or decor! Usually it is as simple as de-cluttering and rearranging pieces you already have.

Here are 18 tips for getting your house in tip-top shape before the first buyer walks through the door:

1. Remove clutter and clear off counters. Throw out stacks of newspapers and magazines and stow away most of your small decorative items. Store away personal photos and remove everything from the front of the fridge.  All flat surfaces should be cleared and empty of anything other than a few well-placed decorative items. Put excess furniture in storage, and remove out-of-season clothing items that are cramping closet space. Don’t forget to clean out the garage, too.
2. Wash your windows and screens. This will help get more light into the interior of the home. Along these same lines, make sure your blinds & drapes are always open to let in as much natural light as possible when you have a showing!
3. Keep everything extra clean. A clean house will make a strong first impression and send a message to buyers that the home has been well-cared for. Wash fingerprints from light switch plates, mop and wax floors, and clean the stove and refrigerator. Polish your doorknobs and address numbers. It’s worth hiring a cleaning service if you can afford it. 
4. Get rid of smells. Clean carpeting and drapes to eliminate cooking odors, smoke, and pet smells. Open the windows to air out the house. Potpourri or scented candles will help.
5. Brighten your rooms. Put higher wattage bulbs in light fixtures to brighten up rooms and basements, and make sure every light in the house is on during a showing. Replace any burned-out bulbs in closets. Clean the walls, or better yet, brush on a fresh coat of neutral color paint.
6. Don’t disregard minor repairs. Small problems such as sticky doors, torn screens, cracked caulking, or a dripping faucet may seem trivial, but they’ll give buyers the impression that the house isn’t well-maintained.
7. Tidy your yard. Cut the grass, rake the leaves, add new mulch, trim the bushes, edge the walkways, and clean the gutters. For added curb appeal, place a pot of bright flowers near the entryway and on any patio or deck. Get rid of that old swingset in the backyard.
8. Patch holes. Repair any holes in your driveway and reapply sealant, if applicable.
9. Add a touch of color in the living room. A colored afghan or throw on the couch will jazz up a dull room. Buy new accent pillows for the sofa.
10. Buy a flowering plant and put it near a window you pass by frequently.
11. Make centerpieces for your tables. Use brightly colored fruit or flowers.
12. Set the scene. Set the table with fancy dishes and candles, and create other vignettes throughout the home to help buyers picture living there. For example, in the basement you might display a chess game in progress.
13. Replace heavy curtains with sheer ones that let in more light. Show off the view if you have one.
14. Accentuate the fireplace. Lay fresh logs in the fireplace or put a basket of flowers or large pillar candles there if it’s not in use.
15. Make the bathrooms feel luxurious. Put away those old towels and toothbrushes. When buyers enter your bathroom, they should feel pampered. Add a new shower curtain, new towels, and fancy guest soaps. Make sure your personal toiletry items are out of sight.
16. Send your pets to a neighbor or take them outside. If that’s not possible, crate them or confine them to one room (ideally in the basement), and let the real estate practitioner know where they’ll be to eliminate surprises.
17. Lock up valuables, jewelry, and money. While a real estate salesperson will be on site during the showing or open house, it’s impossible to watch everyone all the time.
18. Leave the home. It’s usually best if the sellers are not at home. It’s awkward for prospective buyers to look in your closets and express their opinions of your home with you there.

Remember, a home that is staged to sell is most likely not the way you would typically live in it.  It means putting the coffee maker away every morning after using it and not leaving the mail sitting on the dining room table.  It is a little more effort and probably a bit of an inconvenience, but it will make a HUGE difference to potential buyers and get your home sold faster and for more money.  That makes it worth the effort in my opinion!

FAQ: Buying a Home

Q: Speaking of down payments, do I need one? 

A: I hesitate to even answer this question as the lending laws seem to be changing on almost a weekly basis but the short answer is YES. The days of 100% financing and interest-only loans are in the past. As of today (4/14/09) the best option for most people is an FHA loan, which allows you to only put 3.5% down and typically has the best rates. However, FHA loans have more stringent requirements for both the borrower and the house so not everyone qualifies. If you cannot do an FHA loan, your next best option is a conventional 30-year fixed, which requires at least 10% down. 

Like I said, the requirements are constantly changing which is why it is SO important for you to work with a really good lender. The are the most up-to-date on what is currently going on and the good ones will work their tail off to find you the best possible scenario. I have several great lenders that I work with a lot which I am happy to recommend to you, just ask!

You can find out more info about FHA requirements here.

FAQ: Buying a Home

Q: What is earnest money and why do I need it?

A: Think of earnest money as a deposit to show the seller you are serious about buying their place. Earnest money is typically 1% of the sales price and not less than $1000, but the more earnest money you put down, the stronger your offer is. This is your money and it gets subtracted out of your down payment at closing, it is not in addition to any funds you need to close. You do not lose your earnest money unless you default on the contract. If that were the case then the seller would get to keep your earnest money (again, like a deposit) as recompense for the time they took their home off the market and made it unavailable to other potential buyers....similar to the way hotels take a deposit for a room and only credit it back to you if you cancel within a certain time frame. 

You submit the earnest money in the form of a check made out to either the listing or selling broker along with your initial offer. Once you and the seller reach an agreement on terms and have a binding contract, the earnest money is deposited into the broker's escrow account and held there until closing. If you terminate the contract within your specified Due Diligence period - for any reason - you get your earnest money back in full. If you terminate after the Due Diligence period, in most cases the seller will get your earnest money since you likely would be in default of the contract. There are very specific laws regarding earnest money, escrow accounts, and what happens to that money. 

For you numbers oriented people, an example: You are purchasing a $250,000 home with 10% down. A typical earnest money amount would be $2500 (1% of the sales price) which would be deposited immediately into the broker's escrow account as soon as you have a binding contract (which means you need to have this money in a liquid account before you start house hunting). If all goes well, at the closing table you would need to bring $22,500 for your down payment and your $2500 earnest money would go towards the balance. 

Let's say things don't go well and something comes up in your inspection that makes you want to terminate the contract. As long as you do so within your Due Diligence period (which is typically about 14 days) you get all your earnest money back. 

If your Due Diligence period ends and then 2 days later your financing falls through, or your job decides to transfer you to Timbuktu, or you just decide you no longer want the house.....you can terminate the contract but you will lose your earnest money. 

I have never had that final scenario happen, luckily!

FAQ: Buying a Home

Q: Do I need to get pre-qualified?

A: Yes! This should be your first step in the home-buying process and I am happy to recommend a good lender to you. The pre-qualification process is important for a few reasons. 

First, it lets you know how much house you qualify for and what that equates to in a monthly payment. Note that what you qualify for and what you feel comfortable paying on a monthly basis may not be the same. Often you will qualify for more house than you feel comfortable with. A good lender will create a GFE (good faith estimate) which breaks down a potential home price into a monthly payment, taking into account things like your down payment, property taxes, homeowners insurance, and HOA fees. This is what you need to pay attention to. Once you figure out what monthly payment you are confortable with, let me know the price point that corresponds with so we can make sure you are only seeing houses that you can afford. It is no fun to look at $300,000 houses only to find out that you only feel comfortable with a monthly payment that equates to a $250,000 house! 

Second, we will need your pre-qualification letter in order to submit an offer, especially if the home is a foreclosure or short sale. With the mortgage business the way it is right now, we want to show the seller in every way possible that you are the most qualified buyer possible so they are more likely to accept your offer.

I have a list of lenders that I know and trust, whom I would prefer that you work with. If you have a lender you have worked with before and trust, that is fine. But I have had too many clients get burned by bad lenders that promised things they could not deliver, which causes a lot of undue stress. My preferred lenders are all fabulous and very good at what they do.....and most of all, they are honest. They don't hide fees, they don't promise something they cannot deliver, they will let you know if you can get a better deal somewhere else, and most of all: they get my clients to the closing table quickly, easily, and great service! (and no, unfortunately they do not pay me to say this!)

Thanks guys!