About Town with Brian X. Murphy

The Seventh of Ten Reasons Why RIGHT NOW is the Best Time for Home Buyers

Lenders have been burnt “ badly “ by mortgage defaults and they™re tightening their lending standards. Yesterday™s solid credit score might not be enough to qualify you for the best rates tomorrow. A smart buyer planning on purchasing a new home in the near-term will buy it NOW before lending standards get even tighter.

The recession we™re in now was caused by easy lendng practices prior to autumn, 2007. It seemed that anyone with a pulse could get a mortgage. Documentation of income and employment was not necessary. It got so bad that many in the mortgage industry began calling them œno-doc loans or œliar loans. It was common to get a mortgage with no money down.

Today, every œi must be dotted, every œt must be crossed and 100% financing is a thing of the past. Borrowers must have a solid credit score just to qualify for an average interest rate. Loans guaranteed by Fannie Mae or Freddie Mac will need a credit score of 620 beginning in January, 2010. That™s tighter than today™s score of 580. You won™t qualify for the best rates unless your score is over 700.

Further tightening has been introduced in a bill to the House of Representatives by Rep. Scott Garrett (R-NJ) and supported by Fed Chairman Ben Bernanke that would raise the down payment requirement for FHA loans from 3.5% today to 5%. It would also prohibit the financing of closing costs (H.R. 3706).

Lenders are very skittish about who they lend money to. Things happen that can lower your credit score. Something as innocent as high mail volumes during the holiday season could make your credit card payment late by a day and that might be the difference between a GREAT RATE and an OK one.

Turnover in the job market is another issue. If you™re in an industry heading for trouble, lenders might take that risk into consideration when they set your interest rate.

Layoffs are a problem. Many borrowers who have been laid off have been lucky enough to find another job. Unfortunately, their short work history indicates an instability that lenders frown upon.

Some of the things you do during the course of everyday living can affect your credit score:

Opening accounts, both when you apply for it and for as long as a year afterward.

• Transferring credit card balances.
• Settling debts.
• Using œlimitless cards.
• Incurring library fines, parking tickets or other penalties seemingly unrelated to credit.

The longer you wait to buy your house, the harder it can become to maintain your credit score. Smart buyers know that the best time to buy is when the have they money “ and the credit. They know that they™ll be just as much œout on the street if they can™t pay the mortgage as they would be if they couldn™t pay the rent. Smart buyers don™t let fear get in the way. They strike when opportunity knocks.

Have you heard of anyone getting an increase in their credit card rates or had their credit limits lowered? That™s all part of lenders clamping down on their risk. Write a comment and start a conversation.

The Sixth of Ten Reasons Why RIGHT NOW is the Best Time for Home Buyers

Financial advisors will tell you that time is your friend when it comes to investing. It™s all about time IN the market, not timing the market.

Equity is nothing more than the difference between the current value of your home and what you owe on all outstanding mortgages, loans, liens, and other obligations secured by it. You build equity by paying down the mortgage or increasing the value of the home.

When you first bought your house and took out a mortgage, that house was used as collateral. This means that if you don™t pay the loan, they take the house. But, as you pay down the mortgage, you owe less to the bank. In this case, the bank doesn™t take the whole house, just enough of it to cover the rest of what you owe them. When they take the house and sell it, the proceeds are split between you and the bank. What you get back is your equity.

Most homeowners let time build their equity. Home prices generally increase over time. If the house were sold for more than what you bought it for, you™d be earning a profit. When you gave the bank back what you owed on the house, you™d keep all that equity. That™s the difference between what the house is now worth minus what you owe the bank.

You don™t necessarily have to sell your house to use the equity in it. The difference between what you owe to the bank and what the house is worth can be used as collateral to make a loan against. If, say, you needed $10,000 dollars to put a pool in your backyard, you could ask the bank for a loan in that amount. If you didn™t repay the loan, they™d sell the house for what it™s worth today. The proceeds would be used to repay the bank for what™s left on the mortgage plus the additional $10,000 dollars they lent you for the pool. They™d give you back anything that™s left over: Your equity.

Long-time homeowners will tell you that they™re glad that they bought when they did. They™ve had many years of building equity and even after only 10 years, they can still sell their house and walk away with a tidy profit, even AFTER the worst slump in home prices in history!

Instead of waiting for THE best time to buy, get your home TODAY and start building your equity. Home prices are at their lowest during the holiday period. Even a savings of $5,000 to $10,000 dollars goes a long way toward building equity “ and paying for a pool. Buy for less during the holiday season and enjoy the run-up in prices during the springtime.

Smart shoppers are buying today instead of paying someone else™s rent tomorrow.

What would you do with an extra $10,000 dollars in equity? Leave a reply below.

The Fifth of Ten Reasons Why RIGHT NOW is the Best Time for Home Buyers

If you don™t agree about when the absolute market bottom is, can you at least agree on one thing?: In 6-12 months, prices will be higher than where they are today.

Predicting the short-term is hard. PREDICTING THE LONG-TERM IS EASY! It™s HARD to know what the weather will be like tomorrow. It™s EASY to know what the weather will be like in six months: HOT!

Old-timers can remember when they paid more for their car than they did for their first home.

According to the U.S. Census Bureau, the median home price in 1970 in Massachusetts was $20,600. That figure is not adjusted for inflation. It™s what they paid back then. In 1980, it was $48,400.

Today, the median home price in Massachusetts is around $300,000 according to the Boston Globe.

Real estate has always been a great investment. It will always be a great investment. 20 years from now, this œhousing crisis will just be a blip on a mountain chart at Investment Tools.

Nobody has a crystal ball. There will always be a Chicken Little saying that the sky is falling. But, as it was discussed in Can™t Predict the Bottom, you can get a little bit of insurance against falling prices by buying your new home during the holiday season. It™s this time of year when prices are at their lowest for the current market cycle. And, it™s at this time of year when you can strike your best bargains as was discussed in No Competiton.

If you agree that prices are going up, what are you waiting for: higher prices? Smart buyers are not fretting over minor fluctuations. Smart buyers are focused on the long term and acting on it.

Are you bullish on real estate? Do you side with the bears? Post your comments on which way you think real estate prices are heading. Don™t forget to mention your time frame!

The Fourth of Ten Reasons Why RIGHT NOW is the Best Time for Home Buyers

Lately, the news has been all about the “housing market crisis.” But, what they DON’T TELL YOU is that they’re reading yesterday’s news! All the talking heads, the “experts,” are looking at last quarter’s numbers and telling you that prices are plunging and foreclosures are soaring. Notice: they say, “plunging” and “soaring” not, “trending up” or “heading down.”

If elevators had buttons that said, “soar up” or, “plunge down,” nobody would get on! By the time you see a news report about a car accident, with any luck, those involved are back home with their loved ones.

You see, the news is always late. What you’re reading in the papers is YESTERDAY’S news. Not what’s happening today.

Today, when you go out shopping with your Realtor ^®, you’ll wonder where all the good bargains have gone. You’ll ask what happened to those great foreclosure deals. Those deals were last quarter. In fact, those deals happened during the first and second quarters of 2009. Today, what’s left are not “fixer-uppers.” What you’re looking at are “contractor specials.” These are homes that can only be tackled by skilled tradesmen, not a home handyman.

It’s not too late, though! Today’s foreclosure is tomorrow’s comparable property. Foreclosed properties tend to drag down the price of surrounding homes. But, when they’re gone, they’re gone. Properties that are artificially depressed due to a one-time sale next door won’t stay that way for long. All properties will tend to naturally rise to their fair market value. Your task, however, is to get them while the getting is good.

THIS holiday season is your best time to buy. Good homes are coming on the market but are priced with last quarter’s numbers in mind. That’s because everybody reads the news and believes what they’re seeing in black and white. A smart buyer will consult an experienced Realtor ^® to separate the good homes from the bad. They’ll steer you away from the distressed homes and point out the ones that are simply mis-priced.

Finding a great deal takes a little time, a little work, a little patience. But, during the slow months of the holiday season, an experienced Realtor ^® has the time to work with you.

Today, in the Merrimack Vally overall, the market is about equally balanced between buyers and sellers. Prices for starter homes are rising while prices for the higher-end homes are stabilizing. In the more affluent areas, high-end homes are moving up while starter homes are having a hard time attracting buyers. In less fortunate areas, prices are flat and on the low side. Smart buyers are playing the middle ground of solid communities and picking their price range. An experienced Realtor ^® will help you determine where it’s better for buyers and where it’s better for sellers.

Post a comment about your own pricing experiences and see what other readers are saying about their own pricing experiences.

The Third of Ten Reasons Why RIGHT NOW is the Best Time for Home Buyers

It™s understandable that you don™t want to buy your next house when prices are at their highest. Many buyers find themselves shopping themselves to death but never buying because they™re afraid they™ll overpay for their house. Buying during the holiday season ensures that you™re getting a great deal during any given market cycle.

If full-time professionals “ the œexperts “ can™t agree on when the market hits bottom, what makes you think you can predict it? Try an exercise: Google œhousing market bottom and write a comment with your results. Is the bottom right now or will it come next month? Has it already passed? On which date are you prepared to make an offer?

It was discussed in No Competiton that home sales are done out of necessity. You™re thinking of buying a house because you need to. You™ve decided that it™s unwise to continue renting and paying someone else™s mortgage. Perhaps the tax deduction for mortgage interest has become attractive. Maybe the kids have moved out and you need to downsize or a baby has been born and you need more space. Whatever the reason, you need to buy a new home very shortly.

The housing market cycle begins in the springtime with a vengeance. It slows somewhat during vacation time in the summer and picks up again after Labor Day. After Thanksgiving and into the December holidays and the cold winter months of January and February, people are simply waiting for warmer weather. It™s precisely this time that smart buyers know that this is the absolute market bottom for the current market cycle.

Unsold inventory is ready to be marked down. Even low-ball offers will at least be entertained because it™s likely the only one on the table. Smart buyers have picked over the inventory to see if there™s anything they™re interested in and, most importantly, they™re waiting for fresh stock to arrive. When the new stuff hits in the winter, you know you™ve got a motivated seller. It™ll come on the market priced aggressively “ as they usually do “ but when the owner faces a lack of interest, it™s only a matter of time that the price is reduced.

Since you can™t predict a market bottom over a long period of time and you need to buy a home very shortly, buying during the slow holiday season ensures that you™ve at least bought at the market bottom for the current market cycle.

If you™re interested in how to predict the market bottom over the long-term, ask about the œClock Face Graph. It™ll highlight the best time to buy and will absolutely help you get off the fence and into the market. Either that or do a Google search for œbest time to buy and share your research in a comment.

The Second of Ten Reasons Why RIGHT NOW is the Best Time for Home Buyers

The winter months are always a slow time in the real estate market but the houses are out there and the sellers are getting nervous. A house coming on the market in October is starting to lose traffic come November and Thanksgiving. In December, it just gets worse.

Like death and taxes, houses come on the market all the time. It can’t be helped. A baby is born and a homeowner needs a bigger house. Young adults move out and the parents need to downsize.

Buying and selling a house is mostly done out of necessity, not out of impulse. Don’t believe it? Ask yourself why you’re in the market today. Is it because you want to treat yourself to something nice or are there bigger motives?

For sellers, the slow winter traffic makes them nervous. They NEED to sell or they would have waited. They could have waited for warmer weather or higher prices. They could have waited for their children or grandchildren to be secure enough to buy it from them. Whatever. The house is for sale because it no longer meets their owner’s needs.

A smart buyer will strike while the sellers are nervouse because YOU’RE the only game in town.

As the only buyer out there, you can afford to be picky. You can look at more houses. You don’t have to worry as much about a house being snatched away while you make a decision. You’ll get more attention from your Realtor ^®. Your lender will be there to pick up the phone when you call. You’ll be coming from a position of greater strength even though your cash position hasn’t changed. This is   because there won’t be as many competing offers when you make yours.

The holiday season is just a fantastic time for a home buyer. You’re the one with the money and cash is king! It’s great to be a customer.

Why not get some MORE attention? Post a a comment and see how quickly you get a reply! All the “tire-kickers” have lost their focus and you’re in the company of serious home buyers and sellers. A great question to ask other buyers is if this is their first home or have they done this before. Ask them if they’ve bought during the peak times and whether they’re noticing more attention during the slower holiday season.

The First of 10 Reasons Why RIGHT NOW is the Best Time for Home Buyers

Successful companies know that it’s smart business to grab market share while the competition is sleeping. Likewise, smart buyers know that they should prepare themselves NOW to take advantage of an opportunity when it comes knocking. Lazy buyers wouldn’t even know what an opportunity looked like.

While everybody else is focused on the holidays, smart shoppers are getting a feel for the market. You have to know which way home prices are trending: up or down. You also want to know which cities and towns are more or less expensive than the others. If you’re sharp, you’ll know which neighborhoods are more or less expensive than the others. Most importantly, you’ll want a feel for whether it’s a buyers market or a sellers market. This will give you a sense of how much negotiating room you might have when you make an offer.

During this slow period in the real estate market, if you’re smart, you’ll decide on what kind of house you want to live in. If you don’t like stairs and would rather buy a one-story building, look for a Ranch-style house. If you need the most space possible, you’re probably looking for a Colonial. How about something cute and easy to maintain? That’s a Cape Cod-style house every time.

Finally, smart shoppers will start working with a Realtor ^® TODAY. Seeking the advice of a professional is smart because you’re researching what is probably your most important and valuable asset: Your home.

A good Realtor ^® knows the difference between someone who’s just doing their homework and someone who’s ready to “get serious” about buying a home. During the homework stage, you’re not ready for a phone call every time something interesting comes on the market. You’re not ready to jump in a car and go looking at houses. It’s the holidays! You want to relax and get advice in the mail or by email — at YOUR convenience.

Be honest with your Realtor ^® and let them know that you want their help now so that when you’re ready to go shopping, you want to be armed with all the information you’ll need to make informed decisions.

If you’re serious about your holiday homework, post a comment. Ask homeowners what they like or dislike about the house they’re living in now. Maybe you want to know about different neighborhoods. How about asking how to find a good deal on your new home. It’s easy to get a conversation started: just start typing!

It’s the holiday season and everybody is focused on family and friends. That’s good and proper except that YOU want to buy your next home!

The Outline
There are 10 important reasons why you should buy your next home during the slow winter months instead of waiting until you and your competition are more comfortable in the springtime temperatures.

Today, the outline is presented. Over the next couple of weeks, however, each reason is explained in depth. If you’re SERIOUS about getting a great deal on your next home, you dare not miss this important series of articles written specifically for the North of Boston area in the Merrimack Valley and Southern New Hampshire.

Your thoughts and questions are encouraged. Other readers and business partners will respond immediately.

• Holiday Season
• No Competiton
• Can’t Predict the Bottom
• Late News Cycle
• Prices Are Going Up
• Build Equity
• Tight Credit
• Fantastic Inventory
• Great Rates
• Tax Credit

There’s no better time to sell than right now. The buyers are out there and the inventory is getting tight.

In the Merrimack Valley and Nashoba Valley areas, single-family home sales are up 8% in the third quarter this year over the same period last year. In the meantime, available inventory shrank by 22%.

I’ve been sensing this for the past couple of months. I’ve worked with at least three buyers who thought they could buy a dream home on the cheap but got way too picky. The more they looked, the less homes were available in their price range. They eventually got priced out of the market and gave up.

I uttered the words, “Seller’s Market,” for the first time last weekend. The Mass. Northeast Assoc. of Realtors ® press release with statistics bears this out.