Top 10 Tips For Buying Real Estate - #5

Tip #5: Fixed vs. Adjustable Rate Mortgages

Which type of loan fits your particular needs? If this will be your first home or a "transitional home" -- one you plan to own for a short time, an ARM may be the best type of loan. If it's going to be your dream home or one you plan to raise a family in, then you may want the stability of a fixed rate mortgage.

If you do choose an ARM, the index should be based on the Cost of Funds Index if rates are increasing, and Treasury Bills if they are decreasing. The COFI's are less volatile over time than T-Bills; make sure the teaser rate is understood and what the real rate would be. Personally, I would advise to avoid ARMs whenever possible. From experience many buyers end up staying longer than initially anticipated and get caught in the ARM scare.. In a soft market this can be troublesome when refinancing options aren't available. In today's market for example, where seller's aren't able to sell for what they had hoped, many are turning their first homes into investments. Sometimes this can work out well especially in the condo market. However, with fluctuating interest it can cut into potential profits. A locked in long term rate can prove to be better than an ARM.

Whichever loan you choose; make sure that you scrutinize all the closing costs. Typically in Hoboken, closing costs can be about 2 points of the purchase price. This can vary however depending on taxes, capital contribution, fees and a number of other factors. If you are required to have a mortgage escrow account and private mortgage insurance, make sure you understand the terms and cancellation procedures (your Real Estate Agent has publications to assist you). Also, make sure there are no prepayment penalties so that you can utilize an accelerated mortgage plan. A good mortgage reduction plan can save you tens of thousands in interest costs, and shorten your loan term, with only small extra principal payments. If you experience negative changes in your job, health, or marital status, you can revert to the standard payments in your mortgage contract.

Always look for referrals or recommendations of mortgage brokers/lenders that your friends or professionals have used. It doesn't hurt to share a Good Faith Estimate with your Real Estate Agent for some advice. I've been able to pick up excessive fees in some cases for my buyers and have referred them from their 'family' friend to a professional I trust.

Till tomorrow's tip!!

Time is running out on tax credit for 1st time Hoboken Real Estate buyers

According to a report from the Internal Revenue Service more than 1.4 million Americans have cashed in on their $8,000 tax credit and bought their first home. The figure doesn't say of those 1.4 million how many qualified for the full credit, however, this credit has proved to be much more valuable than the original $7,500 tax credit from the previous administration.

The $8,000 1st time home buyer tax credit has become an important tool in stimulating not only real estate sales but many sales transactions that affect many businesses and independent contractors because it is completely refundable allowing many to purchase furnishings for their homes, pay for closing costs, renovate a bathroom say, or apply the credit to pay down debt.

New tools available for buyers such as this new IPhone

APP provided by zillow.com to search for recent price reductions.

In a typical real estate transaction there are about 14 service professionals involved that all benefit from a sale. Not to mention the other service professionals involved from the seller's transaction as well. From a real estate attorney to the appraiser, from a moving company to a lock smith - many benefit.

Real Estate advocates including the National Association of Realtors, are urging Congress to extend the tax credit and make it available to all new home buyers in an effort to keep momentum going. According to CNN money there are 6 proposed bills in front of Congress that if passed would extend the tax credit.

While the tax credit has helped some markets stabilize, some economists predict that if the bill isn't extended it could soften the market when it's over.

On the other hand, if the credit is extended in the new year and becomes available to more Americans, then it's also possible that the real estate market could spike, causing depreciating real estate prices and under market value sales to halt and possibly rise.

On the mortgage side:

While the clock is ticking for first time home buyers looking to take advantage of this year's tax credit, FHA guidelines are becoming stricter making it more difficult for a home buyer to afford a home. New guidelines are set to take place November 1st after being pushed back from it's initial deadline of October 1st, so as not to put a roadblock for those looking to buy a home before time runs out.

In addition, appraisals can be an obstacle as well in closing real estate transactions. Because of current market conditions, some sellers have been forced to sell at prices slightly below market value to cause a sale. As these prices become recorded, appraisers and banks are forced to use the last - most recent sale - to appraise a home. Sellers will need to adjust their prices and buyers will need to be aware of this as well and adjust their offers accordingly.

It's unclear whether or not Congress will pass any of the proposed bills and extend the credit into the new year, and if so, it is also unclear as to what new restrictions will be in place for mortgage lenders. Therefor, it is important that your real estate agent is in tune to not only the real estate market but also has a good relationship with a reputable mortgage broker that is an expert in your area. Ask what guidelines you have to meet before shopping for a home and if these guidelines can affect your home wish list.

If you have a small down payment and are looking to buy a condo for example in the Hoboken real estate market, then time could very well be running out.

If you have 20% - 25% down and excellent credit, then you absolutely should be taking advantage soon. Whether it's for this tax credit or if another one comes on the scene. Sellers should fight over a buyer with excellent credentials if they are aware of the difficulties some buyers face in securing a loan today.

Bottom Line: Decide soon if this is your time to buy a home - then go for it.

Hoboken real estate sellers and buyers: Record low sales news article on CNN money

http://money.cnn.com/2009/08/12/real_estate/record_home_price_fall/index.htm

Hoboken Real Estate Expo Coming June 25th!

RE/MAX Gold Coast Realty is bringing you a FREE real estate expo to Hoboken! REAL ESTATE EXPO: Movin To The 'Burbs & 1st Time Buyers

A one night event with valuable information and opportunities to meet service professionals involved in your move. Attendees will have the chance to speak with professional real estate advisors from various towns across NJ. In fact there will be about 40 different neighborhoods represented at this event, including Summit, Morristown, Franklin Lakes, Montclair, The Jersey Shore points and many more. Not only will you be able to start a rapport with a real estate agent in a town that you're thinking about moving to, but you'll also be able to meet with professional real estate attorney's, mortgage brokers, and short sale specialists from the Hoboken area, so it's not limited. If you're thinking about buying Hoboken real estate there are great reasons for you to come as well!


The evening will have short educational sessions that you can listen to, topics covered are:

• First time buyers


• Stimulus tax credit


• Mortgages


• Selling your home while buying another


• Short sales


• Distressed property sales

And of course, RE/MAX Gold Coast Realty real estate agents will be there all evening to answer any questions.

If you'd like to attend please register online, or stop by my office. You can register that day at the door as well, but we strongly encourage those who'd like to attend to register prior to the event.

**First 150 to walk in, will take home a tote bag filled with goodies!

Visit www.NewJerseyRealEstateExpo.com or call me to put your name on the list. Hope to see you there!

Location: The Elks Club 1005 Washington Street Hoboken NJ

Date & Time: Thursday June 25th, doors open at 6:00pm

Cost: FREE

Hoboken real estate deals for 1st time buyers and entry level condo's!

Searching the MLS now to keep up to date on market conditions and inventory. Just looked for condo's for sale in Hoboken up to $349,000 - since that's where most 1st time buyers cap their price range - and I found 88!

There is a nice choice of 1 bedrooms downtown near the PATH for under $330,000 asking, like one on 2nd and Willow with a terrace for $339,000, a nice one on 2nd and Jefferson asking $315,000, 2 on 5th and Bloomfield for $313,000 and $323,000, one on 2nd and Bloomfield for $289,000! There are others too all around town and if you go west you'll find some great places at great prices. Rates just crept up as was much anticipated by better than expected results in the economy and hopefully they'll stay stable and not go back up again. But if you're on the fence I would keep an eye on rates and in the meantime get a rate lock now, this might be your chance while rates remain low.

Feel free to reach me if you want to a referral to a mortgage representative you can contact for some advice and to answer questions. Happy home search!

Entry Level 1st time home buyers there are deals in Hoboken!

Ok, maybe it won't buy you the majestic parliament building of Budapest seen here but for under $350,000 the Hoboken real estate market has about 80 condo's for you to choose from! If you're an entry level buyer, or a 1st time buyer, or maybe you're looking to invest in Hoboken now that prices are more reasonable you can pick from a studio sized at about 340 sq feet to even a 2 bedroom 2 bath at 872 sq ft!


Hoboken has seen softening of prices in the last 6 months there's no question. However believe it or not some units, if priced really well are getting multiple bids. My office had two this past week. Just keep that in the back of your head in case it happens to you.
However, some properties you might be able to negotiate between 5 and 10% under asking, if the situation works in your favor and the seller's are motivated. If you bid anything lower than that though you might not get a response. But you can be agressive! This is what you've been waiting for. And if you have good terms ie, large down payment and a short closing window with no property that has to sell then you have more leverage and you should use it to your advantage.


So is now a good time to buy? I would think so! With low rates and lots of inventory to pick from it sure seems like it. Yes, do your homework and make sure your agent does research on the property you want to bid on. And maybe you do decide to wait a few more weeks to see how things go... But remember, as soon as good news starts to creep into the media rates will also start to creep up.

Investors tip: try not to become too emotionally attached to a property. That way you can see the purchase as an investment. I know, easier said than done, after all, this will be your home and you could easily fall in love with a place. I'm confident you can find a home out there that you will love and make your own and you were savvy enough to score a good deal with an expert negotiator at your side. Heck, maybe you even negotiated closing costs paid for by the seller and got some fabulous window treatments and a plasma TV included too!


Now that's shopping!