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Admittedly, the real estate market these days is a bit slow. It's a buyer's market, as they say. There are more houses on the market than there were at this time last year, and those houses are sitting on the market a little longer.

No one has really put their finger on the reason for this, according to a local real estate broker. The economy in Buffalo remains relatively strong in the face of some national upheaval, and mortgage rates are holding between 9.5 percent and 11 percent, depending on the points you want to pay. Those are pretty attractive numbers compared to a few years ago.

This is a great situation for first time buyers, said Mary Ellen Randall of the Greater Buffalo Association of Realtors. Most houses are priced realistically (if they aren't, they just aren't going to sell), and sellers are a little more flexible in their approach to negotiating a deal.

Tina Jankowiak, loan officer for the Goldome Realty Credit Corporation, said she sees enough variety in home prices to appeal to many first-time buyers; the mortgage products available for these buyers are excellent.

"Typically, for many properties we're looking at (a purchase price of) the $70s and $80s, but there's still a lot of $50s, and in the city the prices are all over the board," she said. "There is something out there for most buyers, although you may be looking at a fixer-upper."

The most likely mortgage products for first-timers and low-income buyers are those supported by the federal government -- FHA and VA loans -- Jankowiak said, "which allow you to get into the home without the 5 percent down payment required by conventional loans."

"VA and FHA are not limited to first-time buyers, and both allow 100 percent gifts (as part of the down payment), which helps those with lower incomes", she said.

"This feature is particularly helpful for young couples starting out, who may be running low on cash when it comes to closing costs, but who have parents that can help them out."

With FHA financing, you can select the interest rate and the number of points you want to pay, with higher interest rates tied to low or no points. The mortgage, the interest rate and the number of points you choose to pay should be tied to the goals you have in mind, according to Larry Schiavi, loan production manager for Spectrum Home Mortgage Corporation.

The less time you plan to live in the house, the less time you will have to recoup the monies you have paid out in points. If you are buying a starter home and will only be there a few years (the market says you will stay in your starter for three to five years), you should try to pay few or zero points, and pay a higher interest rate. When you think you will be in a house a long time, however, you will want to pay more points and keep the interest rate low.

With a VA mortgage, the buyer pays one point and the seller pays the remainder, which can be a sticking point, Jankowiak said. But again, in this market most sellers are a little more willing to negotiate.

Both VA and FHA allow you to finance the mortgage insurance, (although there is a discount for cash at closing), and both give a more lenient qualifying ratio -- on FHA it's 2 9/4 1 (mortgage payment to debt ratio). This helps some people who have large outstanding monthly debts, Jankowiak said.

"The guidelines have changed for FHA, though," Jankowiak said. "You do need a two-year work history, and it used to be that if you had credit problems in the past, you would still qualify. Now your credit history has to be pretty good."

With a VA or FHA mortgage you can get into a home with as little as $2,500 or $3,000 down on a $50,000 home, Schiavi said, but your payments may be a little high, and if that is a concern, you may want to consider a SONYMA loan.

SONYMA has the cheapest interest -- 8.5 percent -- but they require 5 percent down and that you pay all your closing, escrow and points up front," he said. "It will cost about $7,000 to get into the same price home."

Many people confuse FHA and SONYMA, Schiavi said, and in comparing the two you must take into account your long term plans, including how long you plan to live in the house.

This is, Schiavi agreed, a good time to buy -- "there's a surplus on the market."

All things considered -- 1990 is the first year the tax laws allow us to deduct only home mortgage interest from our income taxes, the current buyer's market, and the fact that relatively inexpensive mortgage money is available -- the time is ripe for first time buyers to take that step and get into their own home.

Jeffrey Freedman is a Buffalo attorney who handles real estate closings, bankruptcy filings, Social Security Disability and personal injury claims.

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