Timing is everything. We’ve heard that throughout our lives, and this call to action is even more appropriate this month.  The interest rate for first-time home buyers, today, is now back to a very comfortable low of 4.5 percent on a 30-year fixed-rate loan. This means that if you buy a house, condo or townhouse, your monthly mortgage payment today will probably be lower than what you’re paying for rent.

An example, in plain numbers, would make any first-time buyer’s heart sing. You are considered a first-time buyer if you have not owned a primary residence for the past three years or have never owned your own place. Let’s say that with the help of an experienced Realtor (who can come in very handy for skillful negotiations) you find a home to purchase for $300,000. For a conventional loan, you would have to put down 20 percent – in dollars, $60,000. Your amount borrowed would be $240,000. At 4.5 percent, you would pay $1,216.04 per month. Most of you in Teton County pay at least that amount for a two-bedroom rental.

There’s only one problem.  How are you going to find your $60,000 down payment in the first place?  O.K., don’t lose hope so easily. In rides a big tall stranger called the FHA. That is the Federal Housing Authority.  Unlike the banks, the FHA is in the business of guaranteeing loans for home buyers, and it will allow you to make a much smaller down payment than banks require.  For the qualified buyer, the FHA will allow a down payment as low as 3 percent of the total cost of the home.  Using the above example, you would need $9,000, and the FHA will guarantee the rest of the loan amount of $291,000.00.

Does this sound too good to be true? That may be true for some of you, but the first- time buyer who has great credit and two years of tax returns showing a good steady income will stand a very good chance of qualifying for such a loan. The downside is that your payment per month on such a loan would be $1,474.45.  But there is always a silver lining.  You would own your own home, have the chance to build equity, and put money in your own pocket for a change. The interest on your loan is tax-deductible to boot.

Right now, there is even greater news.  The federal government is giving a one-time-only tax incentive of up to $8,000 to first-time home buyers who close on a home purchase before December 1, 2009.  Ask your banker or accountant exactly how this works.  There are many variables, and I want you to get competent financial advice before making any monetary decisions.

Please keep in mind that these are my opinions and observations, and do not represent the views of Diane Nodell Real Estate, Inc.

Jane Folgeman, Associate Broker
Diane Nodell Real Estate, Inc
240 E. Deloney
Jackson, WY 83002
307 732 0303 ext 11
307 413 5263 Jane’s cell

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