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>Homes Are More Available and Less Expensive

>The Orlando Sentinel is featuring a story about how great it is to buy a house NOW. It’s entitled:

“Now may be The Right Time To Take The Plunge”

Jerry Jackson says first-time homebuyers squeezed out of the market by the 2004-06 housing-price surge may want to consider taking the plunge now.

Everyone knows prices are lower than they’ve been for several years. But the important thing is that we really don’t know how low they will go. That isn’t stopping many people who are picking up a foreclosure or two. My friend Merrill Roberts has a world of experience in foreclosures. He owns several houses that he knows must be fixer-uppers before they can be sold.

If you’re in the market for a price about half of what that home previously went for, start investigating. You can go to the County Clerk’s office. They will send you a list of foreclosure candidates. In Florida, attorneys make a living on foreclosures because the law is definite on the amount of time a bank has to notify a delinquent “owner.” We might not want to use that word, owner, because in most cases these homes have gone down in value so much that the Bank now owns the home because the purchaser stopped making payments months ago.

Just drive by some of these homes. They will be vacant, with browned out lawn and shrubs. Once a person can’t make his mortgage payments it doesn’t make sense for him to continue to keep up the exterior.

Or does it? If that home is in a gated community that person will have received a notice to clean up his yard, turn on the water, and start making improvements. If he can’t, and if he knows he can’t possibly save the home, it will go back to the bank. Many speculators contact banks and mortgage companies and try to buy a package of homes for huge discounts. They fix them up and turn around and try to sell them, making a neat profit.

But home prices are still falling nationally and we have a huge inventory of houses and condominiums for sale — a mix that should spark more sales by year’s end, Realtors say.

Jackson says some buyers are still reluctant. “Stunned by the subprime-lending debacle, banks and thrifts want higher credit scores and bigger down payments.”

The newspaper offers some tips for newcomers:

Q: Is it true that no one is getting approved for home loans these days?

A: Home loans are being made every day, even to first-time buyers. Yes, lenders have raised the bar during the past year, but not that high. After all, they make money lending money, and a small army of private corporations and public agencies works full time at selling homes or promoting the benefits of homeownership.

Q: But my credit history is not so good. Do I have to keep renting forever?

A: Renting is a good option for many people. But for those who expect to stay in one location for at least a few years and want to try to build some financial equity, weak credit is not an insurmountable barrier.

Mitchell Harlee, 39, recently became a first-time homeowner in Orange County, fulfilling a lifelong dream despite some past bill-payment problems. “I had credit issues,” he said. A single father raising two daughters, Harlee improved his credit score by working closely with an east Orlando Century 21 real-estate agent, Michele Guzman, who specializes in first-time buyers. Harlee attended Guzman’s free seminars and followed her advice for about a year — and finally was able to buy a spacious, four-bedroom, two-bath home in Pine Hills for $150,000. He got a 30-year, fixed-rate mortgage with an interest rate of 5.9 percent from First National City Mortgage.

Better still, “I didn’t have to put a penny down,” he said, because he qualified for an Orange County down-payment-assistance program that Guzman told him about. “I couldn’t have done it without the help,” Harlee said.

Q: What kind of credit score do you need to qualify for a mortgage? Isn’t it really high now?

A: A couple of years ago, buyers with credit scores as low as 500 could still get a home loan, under some circumstances. Now the minimum is more like 560. But that’s still not a tough score to reach, credit experts say, if you make an effort to pay bills on time, clean up your credit record and control your debt load. To qualify for down-payment-assistance programs such as those run by various local counties and cities, credit scores typically have to be 630 or better — still in the moderate range.

Q: Housing prices still seem over the top to me. Aren’t homes unaffordable except for the wealthy?

A. The good news is affordability is starting to make a comeback. At the peak of the market frenzy in July 2006, the typical first-time buyer in Central Florida was earning only 59 percent of the annual income needed to qualify for the median-priced starter home, which sold at that time for $216,655, according to Orlando Regional Realtor Association records. Since then, the median price for a starter home has dropped to $179,350, as of April, and the typical first-time buyer now earns 77 percent of the annual income needed to buy such a home (assuming a 10 percent down payment). Also, mortgage rates in mid-2006 averaged about 6.4 percent for a fixed, 30-year loan. Now the average fixed rate is 5.77 percent.

Q: What if I don’t have a 10 percent down payment?

A: Loans insured by the Federal Housing Administration are making a comeback, and those loans typically require only 3 percent down. FHA-insured loans, made through regular lenders such as SunTrust Mortgage and others, have been around for years, but they were overshadowed during the housing frenzy, when buyers could get higher-interest subprime loans with little or no money down and little or no income documentation.

“If you could walk and chew gum, you could get a home loan,” recalled Re/Max Associates agent Mike Williams in Deltona. Now, he said, “You’ve got to be working and have decent credit. But decent credit is still attainable.”

Q: What about new homes?

A: There are so many out there, sitting empty, that builders are cutting deals and even paying Realtors to help move the inventory. Mary Gibson recently became a first-time owner in DeLand by buying a new house from a builder’s inventory in a deal she found with Williams’ help. Gibson applied to the Volusia County first-time homebuyer program, which uses state money to help qualifying buyers with their down payments.

“Plus, the builder actually brought $14,000 to the table,” said Williams, an agent in the Deltona area since 1987. “That doesn’t happen often, but the builder wanted to get this out of the inventory. There’s a lot of inventory out there,” he noted, which gives buyers added leverage when negotiating.

Q: Where can I go for free advice and information?

A: The U.S. Department of Housing and Urban Development has lots of advice on its Web site, much of it helpful for first-time buyers. HUD recommends people check out free or low-cost counseling outfits that can help lay the groundwork for getting that first home.

In the Orlando area,http://www.hud.gov/ HUD-recommended groups include the Consumer Credit Counseling Service of Central Florida, the Metropolitan Orlando Urban League, and the Housing and Neighborhood Development Service of Central Florida (known as HANDS). Links to their Web sites and phone numbers are at the HUD.gov Web site. With a nonprofit group such as HANDS, which is supported financially by Wachovia Corp., Bank of America and the Dr. P. Phillips Foundation, among others, consumers can get one-on-one counseling, learn about homebuying seminars, and even see a list of homes for sale that qualify for various down-payment-assistance programs.

Realtors can help, and mortgage brokers can, too — though they both make money off their services one way or another when a sale is completed. That means consumers should learn as much as possible before turning to the paid professionals, who have a financial stake in the outcome.

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