Now can be a good time to purchase a home
JANESVILLE — Now can be a good time to buy a house.
"If you are a well-qualified credit buyer, there are a lot of good deals out there. Interest rates are good, too," said Carrie Clark, housing financial and rehabilitation specialist for the city of Janesville.
If you're in the market for your first home or are looking to buy again after not owning for three years, Congress is giving you an added incentive—the $8,000 first-time home buyer credit—to become a homeowner, according to Wiscon sin HOMEBUYER.org.
If you qualify and buy a home after Jan. 1, 2009, and before Dec. 1, 2009, you could receive up to the full $8,000 tax credit that you won't have to repay. Any home bought for $80,000 or more qualifies for the full $8,000 amount. If the house costs less than $80,000, the credit will be 10 percent of the cost.
There also are some restrictions, including payback provisions, income limits, effective dates for the tax credit, tax credit refund, and types of home that qualify for the tax credit. For more information visit www.wisconsinhomebuyer.org.
Clark also is in charge of the first-time homebuyers down payment assistance program—taking in applications, determining eligibility, coordinating inspections, working with lenders, handling property condition issues and coordinating the closing.
Clark offered these tips on how to buy a house during today's market:
-- Preparation—Educate yourself and realize that the process won't be perfect.
To get started, Clark suggested enrolling in a workshop for first-time homebuyers. The city contracts with Community Action to teach part of this eight-hour class.
"It is open to anybody, and classes are free," she said.
Upcoming workshops are scheduled for 9 a.m. to 1 p.m. Saturdays, July 25 and Aug. 1; 6:30 to 8:30 p.m. Tuesdays, Sept. 8, 15, 22, and 29, and from 9 a.m. to 1 p.m. Saturdays, Oct. 31 and Nov. 7. To enroll, call (608) 755-3065.
-- Get preapproved. Talk to at least one bank before you start looking at homes. Don't let the bank tell you how much you can afford to borrow.
"The bank doesn't take into consideration other expenses—gas, groceries, day care, medical or any other hobby you may have that you still want to be able to afford. Your mortgage payments should be where you can comfortably afford living expenses and then some," Clark said.
Ask about closing costs and be honest about your credit.
-- Find a realtor you can trust. Align yourself with an agent and stick with him or her.
"Once you establish a relationship, they get to know you and your housing preferences that can result in a less exhaustive search," Clark said.
-- Get a buyers agency agreement. Without such an agreement, real estate agents work for the seller. With a buyer's agency agreement, agents are better able to negotiate on behalf of the buyers.
-- Be willing to compromise. Your first home probably won't be your dream home.
"Buy deciding what you must have versus what you need or want," Clark said.
-- Hire a private home inspector. This will cost you between $200 and $300 but will be money well spent.
"They can give you a detailed report of property condition plus any other structural issues you may not see," Clark said.
Additional inspections for radon and termites also can be done.
"Without them, you may be buying a home and may not know what you're getting into and what you have to budget for," she said.
The bottom line, Clark said, is to expect the unexpected.
"Even if you've done your part, expect delays from the seller and lender. But don't let it get you down. It's a process that can be exhausting but well worth it in the end."
Jun 12, 2009 at 3:15 p.m.
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One thing that non-landlords here probably don't realize is that the net (after-tax) income from a property will decline over time even if there is no inflation. The tax deductions from mortgage interest and depreciation are on sliding scales, both pointed down. I won't even go into complexities such as passive loss carryover, but while there are a number of advantages to being a landlord, there is still usually a good business case for raising rents a modest amount (say, 2.5%) on lease renewal.
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All that said, with Janesville's job market, this is and properly should be a renter's market (one reason the government is coming up with incentives for buyers), and rents are probably declining overall. They have certainly declined in markets like Manhattan.
Jun 12, 2009 at 1:18 p.m.
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I agree with you 110%. You are correct, when people leave, we do raise the rent to make it like the rest of the places we have which is basically $650. We do have places that we are loosing money on though, don't get me wrong. When our payments and taxes go up and the duplex is still being rented out for $450/month each side, it does get rather tight when it barely covers the cost of insurance and taxes and then to have repairs on top of that. But our philosophy is if they pay on time or talk to us if they have problems, we would rather have people there than none at all. It was especially difficult this past year when we had to replace the roofs, etc on a few of the places, but our tenants actually helped out with the cleanup, etc. Sort of makes the loss easier to swallow when we know that they will help us out in return. We know there a lot of slumlords out there and it really ticks us off that those poor people who are renting don't get told that they can do something about it when things don't get fixed. Luckily, we have tennants that are electricians, plumbers, etc. that can help us out if we get into a bind so that things get fixed ASAP and get a break in their rent to boot for helping us out! Too bad there are so many crooked landlords out there that give the few good ones a bad name.
Jun 12, 2009 at 1:06 p.m.
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genrene-What would you have charged for that duplex 10 years ago? Would you be making enough to pay the bills if the tenants rented ten consecutive years without an increase? My point is your costs have gone up and you are forced to up the rent on places when new tenants move in. That being said, I commend you for being a good landlord. unfortunately there are many who are not and that makes renting all the more difficult in the long run for most.
Jun 12, 2009 at 12:32 p.m.
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I've been reading about what some of you are saying about landlords that raise the rent on their tennants. Sorry to hear that you had to have crappy landlords like them. We have it in our signed lease agreements that rent will never go up for them as long as they live in that particular house/duplex/condo. We also treat everyone's place they live in as their home. We call it their home. We do allow them to paint but do need to check out the color beforehand. (believe it or not we have had a request for black before, that we did turn down)If the color is an easy color to cover when they move out, why not let them paint? By law the unit has to be painted before someone else comes in anyway, so what is the big difference? All of our places are at least 1000 square feet plus a basement. We don't buy anything that we would not live in ourselves. This may sound like an out and out lie, but we would rather have happy people than empty units, especially in times like these. By the way, our most expensive house is a 3 bed 2 bath 2.5 car garage for $750 in Milton.
Jun 12, 2009 at 11:36 a.m.
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Look at the inflation factor as well. Every year my house payment stayed the same while my income went up. It even went down when I refinanced. A $550 payment in 1989 was a $480 payment at the end of 13 years. In that time my income nearly tripled. I could have rented a duplex for $450 in '89 but if I was still renting today it would be $1300 and much smaller than my house. Rent goes up as the taxes and maintenance go up. Math says she doesn't want to pay taxes and maintenance but SHE IS paying it. The landlords just keep passing their higher costs to renters.
Jun 12, 2009 at 11:16 a.m.
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I agree with justsaynotomath, the thought of paying for maintainence, repairs, and taxes is daunting. It is hard to find nice houses to rent in this area, and I'm sick of moving around all the time. We currently live a in a nice little house near Briarcrest, but the landlord has told us she is going to sell it, meaning that we would have to move out soon. Owning a home is a scary prospect for me. My boyfriend seems to be ready to buy though because real estate is so cheap. I'm on the fence, even though I'm more comfortable with renting for the time being but I don't want to pass up a good opportunity!
Jun 12, 2009 at 11:03 a.m.
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Buy a house below your means. It is a place to live, not a status symbol. The taxes are lower, maintenance is lower (especially if you do it yourselves). I bought my house with money down and took out a 15 year mortgage. When I went to pre-approve financing the lender gave me figures showing I could borrow 3 times as much and do a 30 year mortgage to lower payments. That is insane. I refinanced for a lower rate a couple of times and paid it off early. If I wanted to rent it today it would cost me $1200 a month vs. the $350 property tax and some minimal maintenance.
Jun 12, 2009 at 10:35 a.m.
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Well, it is rarely popular to say so, but renting does make better economic sense for many people. There is too much emphasis placed on the magical properties of owning a home. As you say, there are taxes and maintenance and keeping them up does take work. But it should be viewed as a home, and not as an investment, which is the approach that got us into the housing crisis. If people are straining their finances to own, they probably should be renting.
Jun 12, 2009 at 10:33 a.m.
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That is your opinion, math. Owning your own home is much better than renting. It is an investment and the place is YOURS, why continually pay for something that isn't yours?
I, on the other hand, couldn't imagine renting again. Maybe you didn't live in the right area, maybe you don't qualify to own??
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