It's a buyer's market and if you've been thinking about buying a home and have good credit, now is the time to take that plunge, according to local real estate officials. In fact, these days Realtors and lenders say despite the downturn in the economy, it is "the golden age for first-time home buyers."
Home prices have fallen drastically from their peak levels in many areas of the state and nationwide. Rates on 30-year fixed-rate mortgages, already close to 5.5 percent at the beginning of December, dropped to a record low as the Federal Reserve announced Tuesday it would lower rates by at least three quarters of a percentage point.
"This is an incredible opportunity for buyers," said Leannah Hunt, president of the Silicon Valley Association of REALTORS® (SILVAR), and a REALTOR® with Coldwell Banker in Palo Alto. "It's a buying opportunity of a lifetime for those who qualify for a mortgage."
Hunt listed more incentives for first-time home buyers, in addition to the low interest rates. They include the 2009 conforming loan limit of $625,500 in high cost areas like San Mateo and Santa Clara counties, and the $7,500 federal tax credit, which works like an interest-free loan, and is available only until June 30.
Caroline Wolf, SILVAR's 2009 affiliate chair, who is with Princeton Capital in Palo Alto, said homeowners should not be discouraged with home prices falling. She stressed a home cannot strictly be equated with a stock portfolio.
"A home is a long-term investment, and still the best way to build long-term wealth," said Wolf. "Unlike a stock portfolio, a home is a roof over your head, a place where you can entertain friends, and where you can come home to every single day. Most investors have lost a large percent of their lifetime stock portfolios, but your house keys still work and you still have a roof over your head."
But Wolf said the basics are back for homebuyers with regard to mortgage loans. "Lenders are stricter these days. There are no exceptions. Your credit needs to be solid. We are back to common sense lending," Wolf said.
Wolf advises potential buyers to spend no more than 28 percent of your pretax income on mortgage payments, taxes and insurance; improve your credit score because it may take several months to get it above the 720 level that qualifies you for many of the best mortgage rates; and pay down credit cards months before you apply for a loan.
"The bottom line is any time you can afford to buy a home is a great time," said Wolf. "The greatest thing impeding many buyers is fear itself. Things do not just happen. They are made to happen. Doing nothing is a choice. Look and see what's out there, you may be pleasantly surprised."
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.