Realtors: Three Reasons Why State’s Home Buyers ‘Can’t Afford to Wait’

EDISON — New Jersey residents might have heard a lot about waiting for the real estate market to “bottom out” lately from real estate speculators and financial pundits, but before deciding to wait on the sidelines, home buyers need to first consider three timely reasons why waiting can end up costing them.
“No one can time the market perfectly,” said 2008 New Jersey Association of REALTORS President, Drew Fishman in a release. “We really won’t know when home prices have officially ‘bottomed out’ until they start to go up. That’s why interested home buyers who are financially capable can’t afford to let these opportunities pass them by.”
• The Federal Housing Administration (FHA) will require a higher down payment percentage after January 1, 2009. The Housing and Economic Recovery Act passed by Congress in July raised the down payment requirement on FHA loans to 3.5 percent, up from the current requirement of 3 percent.
• FHA, Fannie Mae and Freddie Mac mortgage loan limits will drop after January 1, 2009. The February 2008 Economic Stimulus Package temporarily raised the FHA loan limit to $729,750 in high cost areas through Dec. 31, 2008.
According to the Department of Housing and Urban Development (HUD), beginning January 1, 2009, FHA will insure single-family home mortgages in New Jersey up to $417,000 in low cost areas and up to a maximum of $625,500 in high cost areas.
Buyers purchasing homes in Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex and Union counties will be affected by the new lower maximum loan limit.
Loan limits in the remaining New Jersey counties will vary based on the median home price indicator used by FHA. Depending on the area, some buyers in these counties may also face lower limits. Fannie Mae and Freddie Mac insured loans will also drop down to the lower limits as of January 1, 2009, according to the Federal Housing Finance Agency (FHFA). More information is available at www.fha.gov and www.fhfa.gov.
• First-time home buyers can only take advantage of a $7,500 tax credit until July 1, 2009. The 2008 Housing and Economic Recovery Act (HERA) became law last July and included a new, temporary tax credit for buyers who have not owned a home in the past three years.
To qualify, buyers must purchase a principal residence on or after April 9, 2008 and before July 1, 2009 to qualify for the tax credit when filing their federal tax returns. Individual buyers with an adjusted gross income of less than $75,000 and joint filers with income no more than $150,000 are eligible. Individual buyers with income of up to $95,000 and couples with income up to $170,000 are eligible for a partial credit. The credit is repaid in 6.67% increments over 15 years making it, essentially, an interest-free loan. For an overview of the tax credit, visit
http://www.njar.com/government_affairs/issues/federal/pdf/tcchart.pdf.