12,109 Homes Sold Yesterday

My most recent blog talked about the obstacles to getting a mortgage, but even with the banks tightening their wallets, now may be the best time in history to buy a home.

Consider this: On average, 12,109 homes sell EVERY day in the United States and 8,718 buyers receive a mortgage EVERY day!*

With interest rates at historic lows and home prices at or near the bottom, buying a home on Long Island is finally a reality for many first-time home buyers.  The real estate bubble during the past decade pushed many first-time home buyers out of the market. If you are one of the many people thinking of buying a home for the first time, here are some tips that can help you present a stronger mortgage application:

1. Assemble your income documents ahead of time.  Be prepared to hand over one to two months of pay stubs and the last two years’ tax returns (all pages).
2. Be prepared to explain any large deposits or gift money upfront.  If your parents are helping with the down payment, there may be additional  paperwork to complete.
3. Optimize your credit as much as possible.  Try to keep balances under 30% of your limit.  Do not apply for any new credit cards or loans.  Since older credit accounts enhance your credit score, do NOT cancel credit cards.
4. Shop for a home in your price range. Use online calculators to estimate your
   monthly mortgage payment including property taxes, mortgage insurance and home owner’s insurance. 

Home ownership is still a part of the American dream.  There may never be a better time than now.  According to David Stiff, chief economist at Fiserv, “Housing affordability has improved dramatically… The monthly mortgage payment for a median-priced single-family home is now $700, compared to $1,140 in 2006 – a decline of nearly 40%. Nationally, purchase mortgage payments now account for only 13% of monthly median family income, the lowest percentage on record (since 1971), and compared to 23% in the 1Q of 2006.” (Fiserv, 2011)

See how well you know your neighborhood. Can you correctly answer these multiple choice questions? The answers are at the end of this blog.

     1. How many homes are for sale in Suffolk County with a minimum 4   
         bedrooms and 2 bathrooms for less than $200K? 

        152                         406                         1193

    2. How many homes are for sale in Suffolk County with a minimum
        3 bedrooms and 1 bathroom for less than $150K?               

        67                           448                         995

    3. How many new construction homes are for sale in Suffolk County for
        less than $400K?
        
        89                           277                         560

    4. How many homes are for sale in Kings Park for $350K or less?

        2                              20                           88

Not only, have the prices come down on these homes, but the interest rate has fallen too.  If you had gotten a mortgage in 2003 for $250,000 at 5.88%, your monthly mortgage payment would be $1,478.84.  If you get a mortgage today for $250,000 at 4.00%, your monthly mortgage payment would be $1193.54.  You are saving $285.30 every month.  After 30 years, you have saved $102,708!  You are getting the same mortgage but the COST is less.

If you been on the fence about buying a home, don’t wait.  The opportunity is there!

Answers:

1.  406                   2. 448                    3. 277                   4. 20

*National Association of Realtors, Dec. 2011