A survey reveals new found prospect in the property market
The National Association of Realtors released last November 8 its latest Profile of Home Buyers and Sellers . The organization has noted that there has been an increase in the number of first-time home buyers during the period of July 2007 to June 2008. Its chief economist, Lawrence Yun was delighted to announce that the 41 percent increase from 39 percent YoY gives newbie buyers an optimistic prospect despite of the gloomy economy.
Benefits for the Economy
First-time buyers are significant in the stimulation of home sales. Since they enter the property market, credit firms can increase their lending given that borrowers have good FICO scores and financial standing in the future.
Now that we are merely in the brink of recession, they can consume a fraction of the glut in the market and contribute to a restoration of median price points. It is expected that these people can provide additional foundation to housing recovery along with beneficiaries of refinancing programs by the government for homeowners with foreclosed properties.
First-time buyers may not be considering any resale issues with existing properties but their qualification to receive credit in a tight market can be restrained by personal finance issues. Buyers need to consider up to 35 percent of their monthly salary to pay for the mortgage’s principal, monthly interest payments, and Private Mortgage Insurance. The series of job cuts in several sectors particularly banking and finance may hurt their chances of home ownership.
The rise in first-time buyers may be attributed to aggressive programs launched by the government to accelerate home sales. Buyers are offered opportunities to qualify for Federal Housing Association loans for first-time buyers that will allow low down payments of only three to five percent with higher allowable debt ratios than conventional loans. Those who are serving or have previously served with the military with plans of buying their first home may also avail of Veterans Administration loans that also offer very low down payment.
The Housing and Economic Recovery Act of 2008 has specific provisions for new buyers through the Housing Assistance Act of 2008. Real estate taxes will now be fully deductible in income tax equivalent to 10 percent or an estimated value of $7,500 of their home purchase. Check for additional prequalification guidelines here.