The Federal Housing Administration and HUD released on Friday, May 29th, details of their plan to let qualifying buyers  get an advance on the current tax credit set up for 1st time home buyers.

The plan guidelines outline some requirements to help reduce abuse of the new program by borrowers and lenders. The advance is only available to borrowers who qualify for FHA loans. Borrowers cannot use the tax credit advance for the 3.5% downpayment required to secure an FHA loan. The lender is required to contact the borrower’s employer to confirm there are no garnishments on the borrower’s wages and tax returns must be reviewed to ensure no IRS obligations are currently owed by the borrower.

The fees and costs that approved lenders can charge for advancing the tax credit should be within reasonable limits. Fees and costs in excess of 2.5% of the credit amount would be considered unreasonable by the FHA.

Among the new guidelines unveiled on the 29th is the requirement that the tax credit check be sent only to the taxpayer, not to any third parties. This requirement may derail Washington State’s measure to offer loans based on the 1st time buyer tax credit. Approval of the Washington State measure currently relies on lenders being able to receive the borrower’s tax credit payment directly from the IRS.

Do you have questions about the 1st time home buyer credit and these latest guidelines unveiled by the FHA and HUD? Would you like to know more about what programs are available to King County first time home buyers? Diane Rae Jones and Donna Cowles will be hosting another Home Buyer Seminar on Monday, June 15th, 6pm to 7pm. The seminar will be held at the Windermere Mercer Island office, located at 2737 77th Ave SE Mercer Island, WA 98040. Please call 206.406.5232 for more information.

Aubrey Cohen, of the Seattle PI, tackled recently the affordability of homes in King County, comparing two conflicting  reports. The Center for Housing Policy(CHP) published the report Paycheck to Paycheck, which lists Seattle as the 13th most expensive housing market in the nation. On the flip side, Washington Center for Real Estate Research, (WCRER) published a Housing Market Snapshot for First Quarter 2009 which paints a more positive image for home affordability in King County.

Cohen responded to his own article with a blog post, where he discusses the differences between the reports, as well as data particulars, as pointed out by his readers and his own investigation. When looking at the affordability of homes in King County, as reported by HCP and WCRER, it’s a bit like comparing apples to oranges because of the report data variables. In addition, WCRER is a local entity comparing a smaller market; while the CHP compiled national data from multiple markets, which is a larger, more difficult project.

Cohen’s article and blog post present much information to contemplate. Many questions may come to mind as you think about the current affordability of homes in King County. Is now the best time to buy, if I’m a first time home buyer? If I’m looking to sell, should I wait? Or, should I sell now so I can afford the home I want purchase?

It may help to look at where mortgage rates are currently. Freddie Mac reported earlier in the week that for the 9th straight week, interest rates have been below 5%. That’s for 30 year fixed and 15 year fixed mortgages. A year ago, mortgage rates were at 6.01%.  Chances are  high that current mortgage rates will not be around for long term.

A realistic view of your whole financial picture is also helpful when contemplating a real estate transaction. MSNBC’s article 5 Costs of Buying a Home You Didn’t Consider alerts first time home buyers of the concrete costs of a home purchase, like loan fees, a down payment and inspection feeds. It also discusses how your credit score can effect the costs of a home purchase  and how home maintainence is important to factor in when looking narrowing down your mortgage target range.

Attending a home buyer seminar may help answer questions you have about the affordability of homes in King County, as compared to your life situation. Real estate agents Diane Rae Jones and Donna Cowles will be conducting another Home Buyer Seminar on Monday, May 18th, 6 pm, at the Windermere Mercer Island office. The office is located at 2737 77th Ave. SE Mercer Island, WA 98040 .

Affordability isn’t a cut and dry issue when it comes to home purchases. Meeting one on one with an agent is also a good strategy whenever you are contemplating a real estate transaction. Agents have many tools that can help answer your questions, and they can help you create an action plan to prepare to list your home. If you’d like to meet with an agent, we’d be happy to help you; please call the Windermere Mercer Island office at 206-232-0446.

Wonderful news! The Northwest Multiple Listing Service reports pending real estate sales in April 2009 were 11.4 percent higher compared to April of 2008.  When compared to pending sale figures for March 2009, the April ’09 stats were 21.3 percent higher.

More optimistic news from the NWMLS:  real estate inventory in our region is shrinking— it’s 18.3 percent smaller than a year ago.  Also, sale prices are showing indications of stabilizing in the more affordable ranges in our market.

In the Million-Plus range, sales are still slower when compared with statistics from a few years ago. However, it appears that it may be due to the limited availability of jumbo loans.  With the recent surge in availability of  jumbo loan mortgages, it will be interesting to see the sale stats for homes priced over $1 million in coming months.