More Homebuying Assistance

I participated in a homebuyers fair at the city of Brooklyn Park yesterday - there was quite a turnout, I would guess 200-300 people showed up!

This further confirms what I am seeing and hearing in the marketplace that the Minneapolis-St Paul housing market is turning. Still a buyers market but the numbers of homes for sale is down and sales are up--buyers are starting to purchase homes in increasing numbers.

The FHA downpayment assistance "gift" programs are going away as of October 1st. However, there are still quite a few programs available. One new program is a $7500 interest-free loan in the form of a tax credit, paid back over 15 years. This program would be great for downpayment assistance but you would have to get a loan from a friend or family member up front to buy the home and then take the tax refund when you file your next year's income taxes. See http://www.hocmn.org/ for more info.

Renovation loans such as FHA 203K and others can provide money to update or repair a distressed property after the closing - great for foreclosures that may need a little or a lot of help such as new flooring, siding, windows or more.

There are also first-time homebuyer, minority home-buyer and home-buying assistance plans available thru the state in the form of grants, low-interest and no interest loans. To learn more about these loans and which programs you will qualify for, talk with a participating lender in the Minnesota Housing Finance Agency (go to http://www.mnhousing.gov/ for more info or to find a participating lender).

There are some tremendous deals, lots of choices and downpayment assistance still available!

Lending Changing (again)
Zero down programs are tightening up.

A bill was just passed that will eliminate what was called charitable gifts. That is the seller of a home would gift an amount to a non-profit such as The Nehemiah Foundation who would then give the buyers a downpayment equal to the amount gifted by the seller. This process allowed the buyers to purchase a home using FHA financing which requires at least a 2.25% downpayment without having to come to the closing with the downpayment out of their own pocket.

There are still zero or low money down programs available such as private equity financing and special 1st time homebuyer programs. Also, for our military and prior military members, there are VA or DVA loans.

If you are interested in a low or no-down payment program, talk with a mortgage professional about your options. These new laws take effect around October 1, 2008.

Investment Strategies
I've had several people approach me lately and ask about investing in real estate. It seems that the current combination of interest rates, availability of homes and reasonable prices have captured investors and other buyer's attentions.
If you are thinking of investing in real estate, the first step is to talk with a lender to ensure the terms (interest rate, downpayment, ...) you could lock in for a mortgage on a "non-owner occupied" property would be agreeable to you.
What to look for in investment property:
- vacation homes near popular destinations (ski areas, lakes, etc.)
- rental property near college campuses
- rental property in your neighborhood
- developable land in the path of suburban sprawl
- land with desirable attributes for your future building (lake, river/stream, mountains)

VACATION HOMES near popular destinations can be used by you for vacations and also can be rented to other vacationers.

COLLEGE RENTALS can be very easy to rent provided the rent amounts are reasonable and there are enough bedrooms, bathrooms and parking space. Additionally, you may be able to use it for your children or kids of friends/family when they go to school and then havea live-in property manager.

LOCAL RENTAL PROPERTY would typically be easier to manage and also to keep a good relationship with the tenants.

DEVELOPABLE LAND near suburban sprawl like other investment strategies could be quite risky but if you plan it right by looking at urban development strategies, could also be quite lucrative.

LAND WITH FEATURES could be used by you for camping, hunting, fishing or other outdoor activities and possibly provide you or others with a future building site. Look for desirable features such as proximity to popular destinations or land with a high usable (high and dry) percentage, stream, river or lake frontage and possibly land with some developing already done such as driveway cleared and electricity or well installed.

Finally, talk with your tax advisor to ensure you understand the tax implications of any purchase before going too far down the road and seek out a local Realtor to utilize their market expertise.