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1. Know what you can afford.

Review your monthly spending plan to estimate what you can afford to pay for a home, including the mortgage, property taxes, insurance, and monthly maintenance and utilities. Make sure you save for emergencies. Plan ahead to be sure you will be able to afford your monthly payments for several years. Check your credit report to make sure that the information in it is accurate. A higher credit score may help you get a lower interest rate on your mortgage.

2. Shop around--compare loans from lenders and brokers.

Shopping takes time and energy, but not shopping around can cost you thousands of dollars. You can get a mortgage loan from mortgage lenders or mortgage brokers. Brokers arrange mortgage loans with a lender rather than lend money directly; in other words, brokers sell you a loan from a lender. Neither lenders nor brokers have to find the best loan for you--to find the best loan, you have to do the shopping. For more information on mortgage shopping, see Looking for the Best Mortgage--Shop, Compare, Negotiate.

3. Understand loan prices and fees.

Many consumers accept the first loan offered and don't realize that they may be able to get a better loan. On any given day, lenders and brokers may offer different interest rates and fees to different consumers for the same loan, even when those consumers have the same loan qualifications. Keep in mind that lenders and brokers also consider the profit they receive if you agree to the terms of a loan with higher fees, higher points, or a higher interest rate. Shopping around is your best way to avoid more expensive loans.

4. Know the risks and benefits of loan options.

Mortgages have many features--some have fixed interest rates and some have adjustable rates; some have payment adjustments; on some you pay only the interest on the loan for a while and then you pay down the principal (the loan amount); some charge you a penalty for paying the loan off early; and some have a large payment due at the end of the loan (a balloon payment). Consider all mortgage features, the APR (annual percentage rate), and the settlement costs. Ask your lender to calculate how much your monthly payments could be a year from now, and 5 or 10 years from now. A mortgage shopping worksheet (33 KB PDF) can help you identify the features of different loans. Mortgage calculators can help you compare payments and the equity you could build with different mortgage loans.

5. Get advice from trusted sources.

A mortgage loan is one of the most complex, most expensive financial commitments you will ever assume--it’s okay to ask for help. Talk with a trusted housing counselor or a real estate attorney that you hire to review your documents before you sign them. You can find a list of counseling resources at NeighborWorks and on the U.S. Department of Housing and Urban Development's (HUD) website or by calling (800) 569-4287.

Fla. – July 23, 2009 – Florida’s existing home sales rose in June – the 10th consecutive month that sales activity showed gains in the year-to-year comparison, according to the latest housing data released by the Florida Association of Realtors® (FAR). Statewide sales in June also increased over the previous month’s sales level in both the existing home and existing condominium markets. And, for the second month in a row, the statewide median sales price for existing homes was higher than the previous month’s statewide median.

Existing home sales rose 28 percent last month with a total of 15,850 homes sold statewide compared to 12,339 homes sold in June 2008, according to FAR. Statewide existing home sales in June increased 13.8 percent over May’s statewide activity.

Florida Realtors also reported a 39 percent rise in statewide sales of existing condos in June; existing condo sales last month rose 8.3 percent over the total units sold in May.

Sixteen of Florida's metropolitan statistical areas (MSAs) reported increased existing-home sales in June and 14 MSAs also showed gains in condo sales. A majority of the state’s MSAs have reported increased sales for the past year (12 consecutive months).

Florida’s median sales price for existing homes last month was $148,000; a year ago, it was $205,300 for a 28 percent decrease. However, the statewide existing home median price in June increased 2.49 percent over May’s median price; it also was higher than the statewide median price reported each month since the start of 2009. According to housing industry analysts with the National Association of Realtors® (NAR), sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in May 2009 was $172,900, down 16.1 percent from a year earlier, according to NAR. In Massachusetts, the statewide median resales price was $284,000 in May; in California, it was $267,570; in Maryland, it was $265,724; and in New York, it was $189,000.

NAR’s latest housing industry outlook notes the $8,000 tax credit for first-time homebuyers is boosting the sector. “Strong activity by entry level buyers is helping to absorb inventory and allow some existing owners to make a trade,” said NAR Chief Economist Lawrence Yun. “However, the increase in sales is less than expected because poor appraisals are stalling transactions. The big question is how much the appraisal issue will impact the ability of contracts to go to closing.”

In Florida’s year-to-year comparison for condos, 5,241 units sold statewide compared to 3,771 units in June 2008 for a 39 percent increase. The statewide existing condo median sales price last month was $112,900; in June 2008 it was $180,400 for a 37 percent decrease. The national median existing condo price was $173,800 in May 2009, according to NAR.

Interest rates for a 30-year fixed-rate mortgage averaged 5.42 percent last month, down significantly from the average rate of 6.32 percent in June 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s smaller markets, the Punta Gorda MSA reported a total of 216 homes sold in June compared to 196 homes a year ago for a 10 percent increase. The existing home median sales price was $145,600; a year ago, it was $141,000 for a 3 percent increase. The market’s existing condo median price last month was $140,000; a year earlier, it was $160,000 for a 13 percent decrease.

© 2009 FLORIDA ASSOCIATION OF REALTORS

Florida’s $8K program effective – Florida created a program to help first-time homebuyers get their federal tax credit early, allowing them to use up to $8,000 toward a downpayment. The effective date for the program is July 1; however, it will probably be another few weeks before the funds are available. As a result, some Realtors struggling to help homebuyers find the system confusing.

While most first-time homebuyers qualify for the tax credit (given by the government as an income tax rebate regardless of tax owed), they once had to buy a home first, submit the info to the IRS through their tax return, and wait for the $8,000 rebate. To help these buyers get the money early enough to use it as a downpayment, the State of Florida created a program of bridge loans, the Florida Homebuyer Opportunity Program (FLHOP), where money can be borrowed from the state and then paid back after the new homeowner receives his tax credit.

Under a different federal program, the Federal Housing Administration (FHA) has done something similar, yet with a significant difference: The federal program applies to FHA loans only, and buyers must still come up with a minimum downpayment of 3.5 percent.
 
“FAR’s Office of Public Policy has been getting a lot of questions from across the state regarding downpayment assistance for those who qualify for the federal first-time homebuyer tax credit,” says Florida Association of Realtors (FAR) Vice President of Public Policy John Sebree. “Given that there is a state downpayment plan and a federal downpayment plan (and at least one special exemption), it definitely gets confusing, and details have been slow to emerge. Many Florida Realtors say local housing authorities don’t have all the information they need to move forward with the state program, and some Realtors report that bankers are steering clear of the downpayment assistance programs altogether.”

Florida Homebuyer Opportunity Program (FLHOP)

The Florida Legislature created the state program during the recent legislative session, and it’s part of the 2010 budget effective July 1, 2009. Many details remain sketchy, but Sebree reports the following:

• Money for homebuyers may not be available until the first week of August. Lawmakers funded the program through doc stamp taxes applicable in the new fiscal year rather than through a lump sum commitment; and since today is the start of the new fiscal year, the program won’t be fully funded until the state collects new doc stamp taxes.

• Florida’s downpayment loan program can work with FHA loans. Florida Housing Finance Corporation (FHFC) – the state agency that funnels housing money to local housing agencies – received confirmation from FHA that borrowers who access the $8,000 tax credit through a state or local government program may use it to make up the required 3.5 percent downpayment, unlike the FHA downpayment loan program through private lenders.

• Florida’s local housing administrators will oversee the downpayment funds at the local level. (To find the administrator in your area, go to: http://apps.floridahousing.org/StandAlone/FHFC_ECM/AppPage_SHIPLGContacts.aspx). For local housing authorities, the program is similar to the SHIP program (State Housing Initiatives Partnership) with one major difference – the income limits. Currently, SHIP uses Area Median Income (AMI) and those are typically lower, and calculated differently, than the federal tax credit limit of $75,000. The $75,000 for a single income tax filer ($150,000 for joint filers) will be used for FLHOP.

• Realtors can start to promote the program to potential homebuyers. It takes time to close on a home, and local housing authorities should be taking applications now.
 
• FHFC says they’ve trained local administrators on procedures for the Florida downpayment program. Local housing authorities will have flexibility over the $8,000 loan, be able to include penalties, and create a structure dictating how the new homebuyer will pay back the money.

“It’s important to note that this money is a bridge loan to buyers; but once it’s repaid, local governments and housing authorities can keep the money and use it locally for affordable housing projects,” Sebree says. “This is a win/win for them. If the offices seem unwilling to work with Realtors, they probably don’t understand the program themselves yet.”

For specific questions about the $8,000 tax credit, homebuyers should consult a tax professional.

Resources for understanding the tax credit and bridge loans

FAR’s Homebuyer Center: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfm

NAR’s The Basics: 2009 First-Time Home Buyer Tax Credit: http://www.realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit?lid=ronav0019.

© 2009 FLORIDA ASSOCIATION OF REALTORS®