Government Homebuying Incentives at End, but Guardian Mortgage Advises Market Still Attractive

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Company expects interest rates to climb later this year.

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There has been a flurry of activity in the first-time home buyer price range of $250,000 and less, with many of our clients making offers on properties that are getting multiple full-price offers from other potential buyers

Time has run out if you were counting on government help with buying a new home. The huge tax-incentive programs from last fall and this spring have expired, but interest rates remain at historic lows – for now – so buying a home during the next few months is still attractive.

The two popular federal programs, which offered buyers between $6,500 and $8,000 in tax savings, stimulated activity in many mortgage markets across the nation and specifically in North Texas.

“There has been a flurry of activity in the first-time home buyer price range of $250,000 and less, with many of our clients making offers on properties that are getting multiple full-price offers from other potential buyers,” said Marcus McCue, vice president of sales at Guardian Mortgage Company, Inc. “This has increased the activity and closings for real estate agents, increased volume for lenders and title companies, and done much to stabilize prices in markets with homes priced in this range.”

The most recent government-backed incentive program required buyers to lock in a contract for a home’s purchase by April 30 and to secure a mortgage to complete the deal by June 30. McCue urges those who have a purchase contract to move quickly to secure financing.

“Underwriting standards are tougher, federal disclosure rules can be confusing, and appraisal regulations are some of the hurdles buyers will face in today’s lending climate,” he said.

In the past it was routine for closings to happen 45 days or less, but for some buyers in the market now it can take longer. McCue suggests that those still seeking credit with the intention of using the incentive program should step up their review of potential lenders and get their applications underway.

But even without the government cash, the real estate market remains favorable to buyers, he says.
“Interest rates have not increased as quickly as expected, so there is still great opportunity for buyers to secure loans in the lower 5 percent range, however that will probably not be the case when we get into the fall,” McCue said.

Most analysts and economists expect rates to rise to near or just above 6 percent by the end of the year. This would still be quite reasonable given that normal rate levels are in the 6 percent to 7.25 percent range, but McCue says, “It is hard for many buyers who had mortgages before to remember that, because rates have remained below 6 percent in much of the past decade.”

When rates start to increase, it is typical for buyers to sit on the sidelines waiting for them to come back down.

“This time, most in our business do not expect rates to drop after they begin to increase, so those buyers caught waiting will finally realize that rates aren’t dropping and they must decide whether to proceed with the purchase given their budget constraints at the higher rates,” he said.

Home prices also remain relatively low thus making the current real estate market one of the most attractive for buyers in recent years, McCue says.

About Guardian Mortgage

Headquartered in Richardson, Texas, Guardian Mortgage Company, Inc. has been in the mortgage lending and servicing business since 1965. It is an independently owned and managed company that specializes in origination and servicing residential mortgages. Guardian has almost $2 billion dollars in its servicing portfolio – which translates to over 17,000 current satisfied customers. In addition to offices in Plano, Richardson and Arlington, Texas, it also has offices in Grand Blanc, Mich. More information can be found at: http://www.guardianmortgageonline.com.

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Craig McDaniel

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