Home Purchase: On the Fence……………Time to Plan That Jump!
For many Hoosiers across the state, sitting on the fence and waiting to start looking to buy a home has been what their plan. However, now may be the time that Hoosier residents start to plan jumping off that fence and looking into buying that new home. We say that because:
* Mortgage rates really are at historic lows!
* Home values in Indiana have not been falling dramatically as they have in other parts of the country
* New federal legislation will encourage home buying with a tax credit of $8,000 for first-time homebuyers on home purchased by August 31st
* Plans for Indiana to utilize $151M in federal funds will be finalized shortly that include up to $15,000 for down payment, closing costs and renovation of foreclosed and abandoned homes, many in nice neighborhoods across the state
Recently, home mortgage rates dipped to approximately 5%, for 30 year fixed loans, the lowest since the 1970s, and they are still being offered near that. At these rates, potential homeowners are able to afford mortgage $ much greater than earlier. For example, a mortgage amount of $100,000 at 6.5% for 30 years has a payment of 632.97$. At 5.25%, that payment goes to $552.20, $80.77/month less! This makes the purchase of that home much more affordable and provides for many, additional monies monthly to cover other home ownership needs.
Since 1980, housing appreciation in Indiana has been 158%*, ranking the state 44th in the country. Closer to today, Indiana’s housing appreciation has been 11.27%* for the five years ending 9/30/08. This has kept home purchases in Indiana a very affordable option. Also, this has also helped current homeowners maintain their equity as Indiana has moved up to 19th in home appreciation nationally while values are going down significantly in other states.
The 2009 stimulus bill includes a provision for an $8,000 tax credit (not deduction) for first-time homebuyers who close on a home purchase by August 31st. This will provide a real financial incentive for many to start looking now to take advantage of this in 2009!
As part of the Housing and Economic Recovery Act of 2008, $3.9B in federal dollars ($151M for Indiana) was set aside for the Neighborhood Stabilization Program (NSP). Further, from this, approximately $33M has been allocated for Hoosiers to buy foreclosed and abandoned properties throughout Indiana, utilizing up to $15,000 per house for down payment, closing costs and renovation.
With all of the above happening in the market right now, perhaps it’s time for many Hoosiers to get off the fence and start the process of finding out options for financing and homes for sale. You can do so by starting out at www.southsidehousingalliance.com, the web site for the Southside Housing Alliance, a group of the leading housing industry associations that includes mortgage bankers and brokers, real estate agents and builders, working together to make home ownership on the Southside of Indianapolis a great opportunity for all!
Written by: Alan Thorup – Executive Director
Indiana Mortgage Bankers Association
*Office of Federal Housing Enterprise Oversight
The new law defines “first-time home-buyer” as a buyer who has not owned a principal residence during the three-year period prior to purchase. For married taxpayers, the law tests the home history of both the home buyer and his/her spouse. If one does not qualify, then the married couple does not qualify.
Any home purchased by an eligible first-time home buyer will qualify for the credit, provided the home will be used as a principal residence and the buyer has not owned a home in the previous three years. This includes single-family detached homes and attached homes like condos and townhomes.