FHA Home Buyers Seminar

Written May 12th, 2008

Two of Kitsap County’s finest Real Estate/Mortgage professionals have teamed up to offer a “Home Buyers Information Seminar.” Please join Sara Maddux, Associate Brokerwith Reid Real Estate in Silverdale, Wa. and Michelle Garcia, Branch Manager and Mortgage Professional with Indymac Bank located in Silverdale, Wa. for a FHA educational class for Home Buyers. They will share information regarding how easy it is to finance FHA & the possibility of using gift funds as down payment & negotiating with sellers to pay buyers closing costs. Not only for first time home buyers, previous homeownership okay too.

Only 8 seats available, please call Michelle at (360) 692-2892 to reserve your spot today! The FHA Home Buyers Seminar will be held May 31st & June 28th from 10:00 am – 12:00 pm.

About Sara Maddux: In the course of a diverse 22 year real estate career working in mortgage, title, escrow and sales, Sara Maddux, has proved to be an all around skilled real estate professional. .Sara holds an Associates Broker license in real estate and is a Washington State appointed Notary Public. She is a designated Home Staging Professional (ASR) and also a member of Realtors and IAFSP (The International Association of Home Staging Professionals). She can be reached at (360) 509-5710 (direct) or at (360) 692-4175 (office). You can view her listings HERE.

Should I Continue Renting?

 It still makes sense to buy versus rent. The benefits outweigh the negatives. Plus, what a fantastic time to take advantage of so many homes to choose from!

Nearly a full third of households are still renting…but if you are one of them, you could be paying a hefty price. Additionally, the children of the baby boomer generation are close to or at the home buying age, but these “echo boomers” could mistakenly decide to put off the purchase of a home because of all the noise about a “bubble” in home prices.

Is there a “bubble”? The simple answer is “no”. Even if interest rates move a bit higher, it won’t be enough to cause a nationwide slide in home prices. The key to a healthy housing market is the job market. If the payment on a new home might be slightly higher due to increased interest rates, it generally won’t stop someone from purchasing the home of their dreams…but if they feel their job is in jeopardy, it might be enough to stop them from making a move. So with the currently low levels of unemployment and the beefy gains in job creations, it looks like the housing market will remain vibrant. Although it will be difficult to sustain the double-digit gains that much of the country has seen, price declines are highly unlikely. Expect a more moderate rate of appreciation, perhaps closer to the historical 6-7% range, which is still very good.

It is important to note that housing tends to be localized. So if the job market in your area is weak, housing prices could under perform the rest of the country.

But this talk of a housing bubble has been going on for a few years now, and those who were unfortunately victimized by continuing to rent instead of purchasing a home are painfully mulling over their missed opportunity. But is it too late? Even with the more moderate levels of appreciation expected…procrastinating on that home purchase could cost you a bundle.

Let’s look at an example. If you are paying rent at $1,500 per month and your landlord increases your payment by a modest 5% each year, you would wind up paying just about $100,000 over a 5-year period! Worse yet, after forking over $100,000, you still would have nothing to show for it.

And speaking of having nothing to show for it – how about any improvements you might make to a rental property? It’s not uncommon for renters to freshen up the paint, install new light fixtures or plant some nice flowers outside. But guess what…all your efforts, labor and the benefit of that improvement belong to the landlord, not to you.

With the extensive variety of programs to help buyers obtain a mortgage with little to even zero down payment, the very same money could have been used towards home ownership. Even using a standard 30-year fixed program, a mortgage of $300,000 could be obtained with a total monthly mortgage payment – including property taxes and insurance – of around $2,200. Assuming a 25% tax bracket, this would be equivalent to the average amount spent on rent during the same period after your tax benefit.

And the benefits of home ownership are quite considerable. Because the mortgage is being paid down each month, equity is being built. After 5-years, the $300,000 mortgage would be reduced to $279,000, adding $21,000 to your net worth. Home appreciation can add an even bigger chunk. If your home appreciates at a modest 5% per year, the value of a $300,000 home would increase to $383,000 after 5-years. Subtract the remaining mortgage of $279,000 and you have a whopping $104,000 of additional net worth! Even if the appreciation level were at 3.5% or half the historical norm, the result would be $77,000 of additional net worth.

But if laying out the initial increase in monthly payment and having to wait for your tax benefit to show up next April is a tough nut to crack, the IRS wants to help. Instead of waiting to file for the tax benefits derived from your new home purchase, you can simply adjust the amount of your withholding. This allows you to have less tax withheld from each paycheck so you can handle the new mortgage payment more comfortably throughout the year. In essence, you are taking your tax refund as you go instead of letting Uncle Sam hold it all year, interest free.

Visit www.irs.gov and use the IRS withholding calculator. This very handy tool can quickly show you the effect a change in withholding will do to your net paycheck. Remember to balance this with the expected refund and it is always a good idea to check with your tax advisor.

Don’t be victimized by the bubble hype. Buying a home is a big step, but it is almost always one in the right direction.

How great is the Stimulus Package really?

After researching the Median Home Prices and doing a little math I was unpleasantly surprised. As usual, the media has done it’s job of blowing things way out of proportion and has blasted us with the hopes of a FHA Loan Limit increase to $730,000. I knew it was too good to be true but technically, if you are in the major metropolis of California or live in Hawaii you are pretty much good to go.

So how do we in the Puget Sound Region fare? Take a good look:

H.R. 5140 – Increased Loan Limits
State	CBSA/MSAD Code	CBSA/MSAD Name	Estimated Median Value	Adjusted Conforming Limits: 125% of max median price and <= 175% *current conforming limit
WA	42644	Seattle-Bellevue-Everett, WA	$394,700	$493,375
WA	45104	Tacoma, WA	$394,700	$493,375
WA		San Juan County	$381,884	$477,355
WA	14740	Bremerton-Silverdale, WA	$380,000	$475,000
WA		Jefferson County	$350,000	$437,500

Is this a bad thing? I think not. No matter what we will be able to help clients of ours with the slightly increased limits. Stop by and take advantage of our FREE Mortgage Analysis and see if we can save you some money!

NOTE: THESE ARE NOT THE OFFICIAL GUIDELINES FROM HUD. THE OFFICIAL CHART OF LOAN LIMITS WILL NOT BE DELIVERED BY HUD UNTILL 30 DAYS AFTER THE PASSAGE OF THE LEGISLATION.