Who do you trust for homebuying advice?

My friend Sara at the office shared the following today:

Los Angeles economist Gary Watts gave a talk to the Orange County California Realtors where the main message was - keep news about housing in perspective. The popular press has called an end to housing for some time, says Watts:

"The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house today costs about $28,000." Business Week, 1969

"The median price of a home today is approaching $50,000 ... housing experts predict price rises in the future won't be that great." National Business, 1977

"The golden age of risk-free run-ups in home prices is gone." Money Magazine, 1985

"A home is where the bad investment is." San Francisco Examiner, 1996

Property is always a great long-term investment, and can benefit some in the short-term. Talk to a qualified Realtor to know what is going on in an area, and to learn what the media doesn't know yet.....

How foreclosures affect your neighborhood

I had a buyer ask me the other day about a problem in their current neighborhood. The house next door is going into foreclosure. Unfortunately, the husband and wife divorced, the wife got the house, and she could not keep up the payments.

Foreclosures are more of a concern in these recent months, due to sub prime loans. My mother said that in our hometown paper in Georgia there are pages of foreclosure notices. The big question: how does it affect your home's value?

I did some research to see what the experts say. The response: the price of your home may decrease by 1.5% if there is a foreclosure in your neighborhood.

How do you decrease the risk? If you are friends with your neighbor, and they express concern about making their house payment, encourage them to seek out a Realtor. Make sure they are trained on how to handle families in this crisis. Ask them if they are familiar with "short sales." If they are not familiar with the term, ask them to refer you to someone in their brokerage that is familiar with them. I can provide assistance in locating someone who can help them.

When this problem strikes, it is easy for someone to want to stick their head in the sand. This is not the time for that particular action. Quick action must be taken, to insure the homeowner, the bank, and the neighborhood is protected.

Are you ready to buy?

With all the discussions about sub-prime loans and home prices, many of the people I talk with are concerned they can't afford a home. You do need savings to be a good homeowner, for maintenance and emergencies.

But how much is too much to spend on a house?

The rule of thumb is 33%. Your monthly housing costs, including principal, interest, taxes and insurance should not be more than 33% of your gross income. With all your other loans and credit cards, your total debts should not be more than 38% of your gross income.

If you have any additional questions about affording a home, give me a call.

A one year tax break for 2007 homebuyers

Although it is considered to have limited applicability, the President signed in new legislation that gives some home buyers another tax break this year. The deduction allows borrowers paying a monthly mortgage insurance premium to treat the amount as mortgage interest.

However, there are several qualifiers.

The provision only applies to mortgage insurance policies issued in 2007 for homes purchased in 2007.

The deduction is only available to people with less than $100,000 in adjusted gross income on a joint or single tax return ($50,000 for married filing separately). The provision phases our by 10% for each $1000 of adjusted gross income over $100,000, so there is no deduction for individuals or families with adjusted gross income above $110,000.

The home owner is supposed to receive a statement from either the lender or the mortgage insurance provider stating the proper amount of the deduction. To find out if this provision applies to you, speak to your tax specialist.