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Saturday-SundayDecember 6-7, 2008

If you’ve never owned a home, now may be the best time to purchaseBy Charles sCuttCTW Features

Wall Street may be reeling. Mortgage lenders may be tight-ening their belts. But despite these hallmarks of a real-estate lull and economic downturn, one prevailing thought is clear, say the experts: Right now may be one of the best times in mod-ern history for a first-time buyer to purchase a home.

“For those buyers who have done a good job of preparing for their first home purchase by saving and managing their cred-it, this is a wonderful time to make a purchase,” says H. Jude Boudreaux, director of financial planning at Bellingrath Wealth Management in New Orleans. “There are numerous bargains in the marketplace, and interest rates remain relatively low.”

“The last real buyer’s mar-ket we had was from approxi-mately 1988 to 1994,” says Bran-don Green, principal broker, Brandon Green & Associates in Washington, D.C. “During that time, inventories were very high and buyers had a lot of control in the marketplace. This market is very different because interest rates are much lower than in the previous buyer’s market, where 15-percent interest rates were excellent.”

Eileen Hamblin, broker/

owner at RE/MAX Heritage in Wakefield, Mass., says that at-tractive prices and low interest rates combine to make this “one of the best times to buy real es-tate in my 27 years in the busi-ness. For a qualified buyer with great credit, there are many opportunities, including short sales and foreclosures, if you have the stomach for these dis-tressed properties.”

Ask Joshua Blank, a broker with Robert Anthony Real Es-tate, St. Charles, Ill., and he’ll tell you that home prices today have receded to pricing from nearly 10 years ago.

“Supply is huge now, as there is just too much inventory,” Blank says. “For those buyers who can still get credit, however, there is an incredible opportu-nity to steal inventory.”

Indeed, excessive inventory,

combined with a large number of bank-owned properties “assures buyers a lot of choices and a lot of negotiating power in pushing prices down,” says Eric Jacobs, managing partner with Jacobs/Offir P.L. in Hollywood, Fla.

Jacobs says the current en-vironment is in some cases like a slow-moving reverse auction. “Sellers feel pressure to sell out before their neighbor does at an even lower price, resulting in a lower value of their home. As a result, sellers can be extremely flexible with regard to conces-sions including the possibility of seller financing,” he says.

What’s more, first-time pur-chasers can take advantage of a brand-new tax credit recently enacted by Uncle Sam. This al-lows any buyer who has not owned a home during the past three years and is a taxpaying

U.S. citizen to take a $7,500 tax credit, if they close on their new home before July 1, 2009 (visit www.federalhousingtaxcredit.com for more details and provi-sions).

“This federal tax credit helps, although it’s important to note that it’s effectively a zero-inter-est loan that is repaid over the course of 15 years or at the resale of the home,” says Boudreaux.

To increase your chances of securing mortgage financing, it’s a smart idea to work on im-proving your credit score first, Boudreaux says. “A smart, easy first step is requesting copies of credit reports to review for ac-curacy and to address any inac-curacies.”

Additionally, “prospective home buyers should make sure they document all of their in-come. Keep pay stubs, bank

statements and other evidence of income in one place to make the mortgage application pro-cess easier and the probability of getting a mortgage higher,” says Jacobs.

Buyers can better ensure landing the home they want “by doing exorbitant amounts of re-search to be able to recognize a great deal,” Green says. That means getting better acquainted with home sale prices in your chosen market and consulting with an experienced real estate agent.

“First-time buyers should be educated about every facet of a real-estate purchase,” Ham-blin says. “They should have a real-estate attorney, a good loan originator who is a trusted pro-fessional, a really good home inspector and a Realtor who is experienced, knowledgeable and honest. The buyer needs to be taught what is important in a house and what isn’t - what will cost pennies to improve and what will cost thousands. And buyers should try to remove some of the emotion from the process. It’s OK and advisable to ‘love’ a house, but keep practical advisers on your team.”

Jacobs adds that first-time buyers should also be cautious about understanding the true cost of home ownership. There are many expenses beyond the mortgage and interest that go into owning a home - includ-ing taxes, insurance and main-tenance - and “first-time home buyers often underestimate them and get themselves into trouble. Secondly, just because the market conditions are favor-able for buying property doesn’t mean that it’s the right time for

See FIRSTS, 2C

Are you catching that first-time fever?

C1

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Pete Mergens

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PAGE �� www.northfiEldnEws.�om sAturdAy-sundAy, dE�EmbEr 6-7, �008

C2

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From Page 1Cyou. If you aren’t in a fi-nancial position to own, then it’s not the right time, regardless of whether the mortgage lender says you can afford it.”

Jacobs says a good rule of thumb is that you can probably afford a home that is within 2.5 times your household annual income. Or “take your monthly income and divide it by four. If your income is higher than the mortgage payment, with taxes and insurance included, then you are probably ready to buy a home.”

If not, consider renting a property instead, save a little more and then try again when the time is right, says Jacobs.

Buyers in the right po-sition to purchase their first home may want to consider acting soon, how-ever, “because when the market shifts again, it will be abrupt, and the best op-portunities will be lost,” Green says. However, “do not buy if your time frame is less than five years or if the payments are not af-fordable.”

Blank notes that those who are buying now “view this as a huge sale. It’s like

buying summer clothes in the fall. You can be sure next spring that the prices will be back to where they once were. The $298 sum-mer sport coat is now $20. I’m not sure if it will be 2009 or 2012, but I know we’ll see double digit ap-preciation again. Why? In-flation will ultimately cre-ate appreciation in home prices again.”

(c) CTW Features

By KIT DAVEYCTW Features

Several years ago I in-vested in built-in storage cabinets for my garage. Two walls were outfitted with sturdy closets with shelving (you can see one of the white cabinets in the left of the Before pho-to). I was able to organize and stash records, power tools and other items that needed clean, long-term storage. Unfortunately, one wall of the garage had not been outfitted like the others, and instead we had installed our old kitchen cabinets there, thinking they might still be useful. Wrong!

I loved everything about the new built-in storage system: It was well made and tidy-looking, had ad-justable shelves, helped me keep organized, and hid unsightly items. But I hated the “undone” part of

the garage. The old kitchen cabinets were just plain ir-ritating. They had impos-sible-to-adjust shelving, so stashing tall things was a pain and the doors didn’t close properly anymore. Every time a certain some-one (not me!) took out a tool, he wouldn’t put it back; he’d just leave it out on the makeshift counter (an old board I painted to match the floor color). As an avid gardener I accessed the tools almost daily, and I was constantly bump-ing into the debris cans to get to them. And, this zone was just plain ugly: The wood cabinets clashed with the new white ones, and although I had paint-ed the rest of the garage, I had, for some reason I can’t remember, not paint-ed around the cabinets.

I got a quote from a ga-rage-cabinet company and was shocked to discover that the system I wanted

would cost more than $2,300. I didn’t want to spend that kind of money, so I began my search for an economical and func-tional system I could in-stall myself.

In order to design my own system, I first I took out everything from the cabinets, and purged and organized the contents. I determined how many lin-ear feet of shelving space I needed. I then went through my hanging tools and determined how many hanging devices I need. I wanted several big tools to stay on the ground, and I also wanted easy access to the bins, so I lined them all up and measured how much floor space I needed, and how tall they were. All of this helped me figure out the height at which to start the shelving, the space between each shelf and how long one could be. I knew that open shelving

made it easy to find things and put things away, but it can look cluttered. To cut down on the visual static, I figured match-ing plastic containers and nice labels would help. I grouped small items - such as screwdrivers, painting stuff and wires - into piles and figured out how many and what sized containers I would need. I did a scale drawing and took it with me as I shopped at several hardware stores for mate-rials.

Before• Ugly, ill-functioning

cabinets occupied impor-tant wall space in this busy garage. It was too much ef-fort to open the doors and put things back where they belonged.

• The unpainted section of the garage adds to its ugliness!

• Debris bins and bags blocked access to tools.

• The whole zone looks cluttered and messy.

• I wanted an efficient, attractive storage system at a reasonable price.

After• My husband and I re-

moved the old cabinets, dragged them out to the curb and attached a “free” sign to them; they were gone in two hours! I pur-chased plastic-coated, pre-cut shelving in the lengths I needed, shelf supports and a variety of hooks and hangers, along with plastic bins.

• I had several quarts of leftover paint from vari-ous projects that I com-bined and applied to the wood walls. Even though it turned out a different color, it is still bright and cheerful, and it was free!

• The cans and floor tools no longer blocking ac-cess to my hanging tools.

• Installing the shelving only took about two hours and it was easy to organize my tools by type and fre-quency of use. Using simi-lar bins and labeling the boxes also help cut down on clutter.

• The total for the new system, including the tubs: $200.

Now that my garage looks and functions bet-ter, I enjoy gardening and repair work much more. My husband actually puts the tools away when he’s done with them. Plus, I feel smug about how much money I saved!

Kit Davey, an interior

designer based in Red-wood City, Calif., helps clients redecorate their homes through the cre-ative use of their existing furnishings. Send your design questions to [email protected]

Makeovers: Kit’s garage goes glam

Firsts: A potential time to buyHealth & Wellness directorypublished every Saturday.

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By Peter G. MillerCTW Features

Q: i’m a long-time loan officer and disagree with your view that all borrowers should use fully documented mortgage applications. For instance, i have a borrower right now who is purchasing a $450,000 property with a loan of only $150,000. With that down payment, a credit score of 810 and a very long history of stable employment why do i need to document her income to the hilt?

A: You raise a fair point, the borrower surely seems well quali-fied and the down payment is so substantial that it’s difficult to see any risk to the lender. That said, the need for fully documented loan appli-cations has little to do with your borrower.

Underwriting standards have been so lax during the past few

years that lenders have a vast con-fidence and credibility gap. If we are to get investors worldwide to buy mortgage-backed securities, those investors must feel certain that the loans are good. The only way to do that is to make sure each and every loan is fully docu-mented.

The idea is not that every loan decision will be perfect or that foreclosures will never happen, rather it is to assure investors that every effort has been made to protect their interests - other-wise they may take their money elsewhere, something that would quickly raise mortgage interest rates.

No less important, no one wants foreclosures. Lenders and securi-ties investors certainly don’t want houses, they want principal and interest. Borrowers absolutely don’t want foreclosures; no sane person wants to lose their home. With full docs, borrowers have higher hurdles to cross, hurdles that will moderate the desire to buy too much house - and in some cases to claim income and assets that are simply not there.

Lastly, there’s another reason to get rid of stated-income loan

applications: Excess price ap-preciation. If someone can get a huge loan that is unjustified by their income, they can bid more for properties. Other buyers must now raise their bids to compete. The result is that home values are artificially inflated because big loans are available, mortgag-es that would not be possible if borrowers were required to fully document their income and em-ployment.

The betting here is that your supremely-qualified borrower is also well-organized and can dip into a file and instantly provide the paperwork you need. With full docs your borrower will be able to get financing at a reduced rate, a nice bonus with a real cash value for a little more effort up front.

Q: We’re thinking about buying a house online. it seems quick and simple and there’s no cost for a broker. How should we go about such a purchase?

A: I’m one of those people who like the Internet for all sorts of reasons, but buying a home online without physically seeing both the

property and the neighborhood strikes me as incredibly unwise.

The issue is not technology - there’s great technology online with house photos, videos and information. But a house is not a standardized widget; all homes are different. Photos don’t tell you about that strange smell in the basement, the floor that dips or maybe about the all-night gas sta-tion next door.

Is it OK to visit newspaper and broker Web sites to see homes? Sure. But that’s a starting point in the home-searching process, not an end.

Given the complex and local-ized nature of real-estate agree-ments purchasers are best served using an experienced buyer bro-ker - someone to represent their interests - who knows local prop-erty values and options and who has done real-estate deals before. Otherwise you’re on your own - and that can be a disaster if you don’t know about contracts terms, neighborhood trends or pricing.

Q: i’m a renter. Can i be re-quired to pay an inspection fee when the landlord picks the inspector and is really

the beneficiary of the inspec-tion?

A: Read your lease. If it gives the property owner the right to inspect the property and requires that you pay the bill, then you’ll need to write a check. There might be grounds for objection if the bill is not reasonable for the services performed, but this is an argu-ment you’re unlikely to win.

Q: Given our slowing local market is, this a good time to buy a new home from a builder?

A: If you need a new home, if it’s affordable, if you expect to be a long-term owner, and if sensible financing is available, then con-sider it. In other words, market conditions are just one part of the equation; you also have to look at your personal preferences.

Need real estate advice? Peter G. Miller, author of “The Com-mon-Sense Mortgage,” would like to hear from you. Send your questions to [email protected]. Due to the volume received, not all letters may be answered.