<p>Although much of the news in these down times is concentrated on the ‘bad’ aspects of the housing market (namely those in over their heads and depressed sellers), we often forget that even in a down market someone ends up winning… generally those buying cheap. </p>
<p>Anyway, the market for first time home-buyers is about to get a really nice boost thanks to a little talked about item in the housing bill that Congress just passed during today’s rare Saturday vote (and Bush says he’ll sign it this week).</p>
<p>In short, a first time home-buyer that purchases a home between April of this year and June of next year will get a $7,500 check from Uncle Sam come next year’s tax returns. </p>
<p>Technically this works out to be an interest free loan that’s paid back via your taxes over the next 10 years. Interest free loans work out great because not only do you not pay interest, but with inflation you literally end up paying back less than you borrowed to begin with. </p>
<p>The basic idea is that you put the money towards your new mortgage principal and thus you end up saving thousands. (eg instead of paying $7,500 of mortgage over those ten years you’re paying back $7,500 of an interest free loan… depending on your mortgage rate, that saves you about $2,500 or more in interest payments). </p>
<p>This shouldn’t be an excuse to just purchase $7,500 more in home, but for first time buyers a great window of opportunity just got even better!</p>
<p>You still need decent credit and be able to put down a realistic down-payment. The days of 100% mortgages and no-doc loans (aka lier loans) are over, but that’s ultimately a good thing.</p>
<p>Under the GI benefits that were in effect when H and I left the Navy, we were entitled to two zero down VA mortgage loans. So far, we’ve only used one of those. Are we still entitled to the second? does the new GI bill negate the one that applied to us when we got out? Does anyone know the answer to this question? If it still does, I wonder if we would also be eligible for the 75 hundred dollar deal rocketman speaks of:rolleyes:</p>
<p>I and our son is in no position to purchase another home. </p>
<p>I was at Lincoln City, OR, last week helping a good friend cleanup his lot in exchange for his help on our coast property. We both were amazed on the number of homes and sites available for rent and for sale that had beach frontage or a block or two from the beach. We have a long way in reducing the housing inventory, especially when we currently have enough “homes” to shelter everyone who wants shelter.</p>
<p>I would imagine that those who bought coastal property in the last 4 years, did so because of the attractive but unsustainable interest rates and terms. That those who bought second homes were the upper middle class. Now that lending conditions are more normal, the pool of potential buyers is very more reduced because they already have a second home regardless of their loan covenants. So the answer becomes, how we can make the imbalance, balanced. Can a $7500 incentive work?</p>
<p>I suspect a lot of first time home buyers are not in the market due to worry about losing their jobs, lack of down payment, and concern market will continue to fall.</p>
<p>i think there is a ways to go yet at least in many western markets.</p>
<p>LongPrime I am 5 years from retiring to Oregon. I hope the prices stay down.</p>
<p>In those markets where the bubble has burst big time I don’t think this latest deal of $7,500 of free money from Uncle Sam is really going to help much. </p>
<p>Properties will still need to sell for what they’re worth and an inflated price is still an inflated price. The areas where this is the biggest problem seems to be areas where too many new homes were being built. </p>
<p>In some of the more established housing markets in the Northeast, where the building of new inventory has long since essentially stopped, prices haven’t exactly shot up in the last year but they also haven’t plunged either. There are also some sectors of the market where foreclosures are almost unheard of. For example, in and around the NYC metro area there’s the whole system of co-op apartments. In those cases, perspective buyers have always been put through extensive checks before being allowed to purchase including strict down payment requirements, extensive financial background analyses and often even an interview with the co-op board. Consequently, the foreclosures that have plagued much of the market are almost unheard of. The rest of the market is only now coming to this realization that unless you only allow those that can actually truly afford the property to buy, you’re setting yourself up for huge market problems later. </p>
<p>In those markets where things have stabilized offers like the free money from the fed can convince those on the fence that now is the time to take the plunge and buy a bit of property. </p>
<p>The addition of the free money offer for first time buyers also helped sweeten the deal for those who resented that this bill would have been mainly targeted at helping those that screwed up and got in over their heads by being a bit greedy. In some markets, those players still need to get washed out of the system either through foreclosure or short-selling before those markets can get back on track. In any local market, so long as there are those sellers desperate to sell to avoid going under and foreclosures left and right, prices will keep dropping.</p>
<p>Poet you can always reuse it,but you will now pay a higher funding fee, I believe it is 3% for the scond time. Also you can only reuse if you did not allow your VA to be assumed. If it was assumed than you are out of luck until they sell it or refi it.</p>
<p>If one has undergone extensive background checks, insuring that one is well able to afford the property, as well as “extensive background financial analysis”, what would be the purpose of requiring an interview with the co-op board?</p>
<p>I hate to show my ignorance in such matters B&P, but what does it mean to have a mortgage “assumed”? We took out a second mortgage to replace a heating system, but I don’t think that had anything to do with the VA Loan.</p>
<p>Sometimes there might be questions about something that came up in the background checks.</p>
<p>The boards, being private entities, are also allowed to turn anyone down for any reason. So they generally want to meet the buyer in person before they’re given the OK to buy. Richard Nixon had a lot of trouble finding a place in NYC after he resigned because none of the boards wanted a disgraced ex-president living in their building. I’m not suggesting that similar power be given to those overseeing traditional house purchases… but I think there’s a lot to be leaned from maintaining strict financial standards for those wanting to purchase.</p>
<p>The sad thing in some markets is that the reason prices shot up so much during the previous bubble was because demand was artificially inflated by banks coming up with shady schemes to lend massive sums to those who couldn’t afford it (and the people they lent to either didn’t take the time to know, or didn’t care that they couldn’t really afford it). Now we’re in a state in some markets where those that are financially responsible have been priced out of the market… however as they’re the only ones that are being allowed to buy at the moment they’ll be the ones that set the new prices.</p>
<p>So they can refuse to sell to someone strictly on the basis of that person’s race or religion, even if the practice is normally prohibited by law, just because they are a private entity? How convenient…:rolleyes:</p>
<p>Essentially yes, although apart from a few buildings it’s not really an issue. Although if they reject someone they never say why, and don’t have to. </p>
<p>The most common reason for being turned down is because they have issues with your financial history. Allowing unqualified buyers to purchase units not only causes potential headaches to the building down the line, but ultimately hurts the value of the property (as the rest of the market is finding out the hard way now). </p>
<p>They could also reject the buyer because the board thinks the sales price is too low and thus would hurt the value of other units in the building… they have that veto power. Whereas if your neighbor sells their house cheap, the value of your house goes down and there’s nothing you can do about it.</p>
<p>You will also almost certainly be turned down if you want to rent out the unit. Co-op boards only want the people that own the apartment living in the apartment. Again, normally if your neighbor decides to rent out their property to a bunch of dirty noisy students there’s not much you can do but that would essentially never happen in a co-op. </p>
<p>The boards themselves though are formed of elected residents in the building and thus, in theory, represent the interests and desires of the building’s resident-owners. It’s essentially a little mini-government that gets to set it’s own rules and regulations.</p>
<p>Most boards of established coop buildings dont allow anything other than very short term rentals. If you’re moving, you have to sell. </p>
<p>They generally don’t like high profile celebrities because of the risk of nuisance.</p>
<p>Regarding the financial hurdles, many require proof of “excessive” assets…however, if you ever suggest as a board member that you simply assess the members to pay for a new roof or whathaveyou instead of borrowing it, they look at you as though you’ve done something nasty on the table. Its an interesting process and insight into human nature. There is a great deal of hypocrisy and ignorance, and an agenda to fit everyone.</p>
Yes… the buyer should be assessing the building and board just as the board’s assessing the buyer. Some boards maintain healthy reserves and rarely, if ever, hit up the shareholder owners for project assessments, whilst others are hitting up the owners left and right.</p>
<p>Assuming a mortgage means that when you sell, you allow the purchaser to take over your VA loan. They pay the difference in value of the house and the loan value to you, and they continue making the same payments under the same loan as you did.</p>