Right Time to Buy a Home?

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Although economic pundits predict the country’s recession could last until late into next year, this could be an opportune time to start looking for a home to buy in the greater Salt Lake area and the rest of the nation — depending on where you live. If you are a first-time home buyer, generally considered someone who has never owned a home, or a previous home owner who has not owned a primary residence in the last three years, the current housing market provides great incentives from the U.S. government and the state of Utah.

“The gay and lesbian community is no different from anybody if they can qualify for a home,” said Babs De Lay, Salt Lake’s quintessential spokesperson for Utah’s real estate industry and also owner and principal broker of Urban Utah Homes and Estates. De Lay, perhaps Utah’s first “out” lesbian real estate agent, also employs a large number of gay and lesbian agents at Urban Utah.

“In 25 years in this business, there is nothing more rewarding than helping someone find their first home,” she said.

The Obama administration has recently instructed the U.S. Treasury to purchase $300 billion in long-term Treasury securities and billions of dollars of mortgage-backed securities. This purchase will continue to drop current mortgage interest rates and thus help home buyers save money on interest on a 30-year mortgage, which is currently around 5 percent. Interest rates on loans could drop as low as 4 percent. The Treasury is also offering an $8,000 first-time home buyers’ 2008 or 2009 tax credit, if they qualify. Income limitations for individuals are at $75,000 ($150,000 for couples) if they buy before the end of November 2009 and if they live in the residence for three years after the purchase. The tax credit will be applied to 2008 or 2009 tax returns in the form of a tax refund.

“First-time home buyers have a better experience using a Realtor because they educate the buyer and help in networking with housing inspectors,” said Julie Silveous, a real estate agent who works at Urban Utah with De Lay. “I have seen a large increase in first-time home buyers interested in the Utah grant and the Obama tax credit.”

Silveous is referring to steps taken by the Utah legislature, Governor Jon Huntsman, and the Utah Housing Corporation during this past month in offering some of Utah’s federal economic stimulus money to new home buyers and those who previously owned a home. In this program, called The Home Run Grant Program, Utah residents can get a $6,000 grant applied to the purchase of a new home. Although the grant may be taxable as income under both state and federal tax codes, the UHC is currently requesting a review by the Internal Revenue Service and a ruling is expected soon.

“Of course, with any grant or government program, there are many stipulations,” said Tony Fantis, owner and principal broker at the boutique real estate brokerage Fantis Group. “The home or condo must be new. A total of $10 million has been set aside for 1,666 buyers in Utah with the grants being issued on a first-come, first-served basis, which is expected to be determined at the time of final underwriting.”

“Any two, or even three, people can buy a home together,” Fantis continued. “They don’t have to be married.” To determine the risks involved with the loan, a lender will use the lowest credit score of the duo or group, look at how much of the available credit is being used, and what percentage of income goes to paying bills. But the lender will combine income from all buyers when considering their loan approval.

The loan must be a 30-year, fixed-rate with most common loan types qualifying, and the application must be made by a licensed Utah mortgage lender through Utah Housing. The new home must be occupied as the buyer’s primary residence within 30 days of closing. Further, this grant program can be combined with the Obama administration’s $8,000 first-time home buyer tax credit. The same income requirements apply to the Home Run Grant program and the $8,000 federal tax credit.

“Loans have not dried up as the media would like us to believe. People who qualify can still get 100 percent financing, but may pay a slightly higher interest rate,” said Fantis. “FHA loans are once again one of the best ways to finance a home. The buyer will need 3.5 percent down, but that money can come from an immediate family member, a 401(k), employer, or non-profit organization.”

According to De Lay and Silveous, the average age of a first-time home buyers is in late twenties and early thirties. “Ninety percent of first time buyers are getting FHA or VA loans,” said Silveous.

An FHA loan is given through the U.S. Department of Housing and Urban Development. The department insures the loan, so a lender can offer lower down payments, lower closing costs and an easing of credit requirements. FHA loans require that the property or home is FHA approved. Veterans Affairs loans are available to veterans of U.S. military service. The Community Development Corporation of Utah also offers zero percent-down, home loans to qualifying, low-to-moderate income families.
A Buyer’s Perspective

Dana Clark, in his mid-forties with a full time job and active in Ski OUT Utah and Lambda Hiking Club, is in the process of buying a home in the Salt Lake Valley area. He qualifies as a first-time home buyer in Utah even though this will be his third home. Three years ago, Clark relocated to Salt Lake City after his company moved their headquarters to Park City, and has been renting ever since.

“I can’t remember in my lifetime when there were so many foreclosures and short sales,” said Clark. “There are better opportunities now because you can take your time and look.”

Clark considered purchasing a home when he moved here from Burlington, Vermont, but held off to make sure he was going to enjoy living in Utah. Thankfully, the state’s skiing, snowboarding, hiking and camping opportunities fit into his active outdoor lifestyle. In fact, Clark’s sporting interests are influencing his choice in home.

“I am interested in buying a condo, as I am not really a yard perso because of my busy schedule at work and my interest in spending my weekends outside,” he said.

Clark said he wasn’t specifically looking for a gay neighborhood, but did want to live near Salt Lake City rather than in smaller Park City, because the capital’s culture allows for more socializing within the gay community. Clark met real estate agent David Culp socially, liked him, and enlisted him to help find the right place. Culp, who is openly gay, is an agent with Blakemore Real Estate and a member of the Park City and Salt Lake City Board of Realtors. This means he is able to show and sell homes in both areas.

“Condos have a tendency to go up or down in price depending on economic pressures,” noted Clark, who looked at 20 or more properties with Culp and has now put a bid in for a condo in the Holladay/Midvale area. “It is a short sale, and I am just waiting for the bank to approve the loan.”

The condo’s current owner will sacrifice the initial down payment, as a short sale means that a home is about to go into foreclosure unless the bank approves Clark’s offer.

“It was already discounted 25 percent from the original asking price, so the bank may be losing some money on the deal,” said Clark. “I don’t know where the market will go and it may have bottomed out.” Clark added he has seen good value out there, but some sellers are still being a bit unrealistic about their properties, or are just riding out the current economic downturn in the housing market. Regardless, Clark decided to take advantage of the deals to begin looking for his first Utah home.

It’s All About Relationships

De Lay and Silveous report that opportunities for homes exist throughout the Wasatch Front.

“Gay people are relocating from all over the country to Herriman, Ogden, Sandy, Holladay and Saratoga. You should be able to live where you want to live and feel comfortable,” said Silveous. “I make friends with buyers and sellers. It is my job to listen, to see what either wants to accomplish.”

De Lay stressed the Code of Ethics each broker and Realtor must abide by in working with either buyers or sellers. “I work with everyone, Mormon, gay or lesbian, first-time home buyers and repeat buyers and sellers,” she said. “If you live in Utah, then you are aware of the culture, or you learn about the culture pretty fast.”

There may be economic turmoil in the U.S. economy at this time, but now may be the best time to get the best deal on buying a home in Utah. For more information on the Home Run Grant program, go to utahhousingcorp.org/HomeRun.

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