PROview - December 2008 - (Page 7) home buyers, but you as REALTOR® must stay informed of changes in the lending industry.” So, is it time to head out the door with your prospective clients once a lender has told you they’re pre-approved? Not so fast. “It’s essential to have a firm understanding of the specifics of any given financing program for a client.” Franklin says that knowing the details of a client’s home financing program provides him the necessary guidelines as to the buying power and negotiation strengths he’ll have when representing the buyer. “I wouldn’t go to the mall without knowing how much money I have to spend. Similarly, I wouldn’t work with clients without knowing how much they’ll qualify for.” Another reason for having an in-depth conversation with the lender, according to Franklin, is that many times customers may misunderstand a particular part of a financing program. “While those who have purchased a home before may know exactly what’s out of pocket and what’s included in the closing/loan, first-time homebuyers may not.” Franklin stresses the importance of educating first-time home buyers early in the home buying process. Many, he says, may not completely understand that they’ll need to pay for a home inspection, appraisal, termite inspection, and especially a home owners insurance policy before closing. “Their ability or inability to pay upfront expenses will largely determine the structure of closing costs I will negotiate for them.” Government Response to the Housing Crisis Earlier this year two major initiatives by the federal government were undertaken to help strengthen the housing market. By introducing higher loan limits and a temporary tax credit for first-time home buyers, the government essentially aimed to improve the muchailing housing market. Additionally, changes were made to FHA loans. In July, President Bush signed a major housing bill into law. As part of the bill, Congress created a new, temporary tax credit to provide an incentive for firsttime homebuyers. The $7,500 tax credit is available for a purchase of a principal residence that was made on or after April 9, 2008 and before July 1, 2009. Tax credits reduce income tax liability on a dollar for dollar basis, claimed on an individual’s income tax return. As a way to enable new loans in a struggling housing market, FHA loan limits were increased. For Pinellas County, FHA loan limits are now $292,500, $374,450, $452,600 and $562,500 for one to four family homes respectively. Additionally, the down payment requirement on FHA loans, effective on January 1, 2009, will be 3.5 percent, up from the traditional requirement of 3 percent. Tieman stresses that staying on top of news such as the introduction of new laws is essential for anyone wanting to work with first-time home buyers. Franklin agrees. “You may have customers who are saving for their first home and any changes to government program guidelines will likely affect the timeline for when they will be able to buy.” Both Tieman and Franklin recommend that for those REALTORS® who want to break in to the first-time home buyer niche, consider partnering with someone who has the right knowledge and experience. Once you’ve gone through the process a few times you will, they say, become an expert on your own and ready to work independently. (See FIRST-TIME BUYERS, page 18) PINELLAS REALTOR® ORGANIZATION December 2008 7
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