Low rates + tax credits = good deals?

Good news still can be hard to find in the local real estate market, but it appears there's something positive shining through the darkness.

Thanks to a government incentive of $8,000 and interest rates below 6 percent, first-time homebuyers are finding themselves in the right place at the right time.

"The more people learn, the more interest there is," said Gloria Frazier, owner of ERA American Realty of Northwest Florida. "Prices have come down to where affordability is excellent."

A 30-year, fixed-rate mortgage of 5.5 percent means there's an opportunity to be seized.

"In the late 1990s we had the same housing affordability, but I don't think there have ever been incentives like these," Frazier noted.

Numbers from local lenders appear to bolster that claim.

At Northstar Mortgage in Fort Walton Beach, the percentage of first-timers securing home loans rose from 8.9 for the first five months of 2008 to 52.6 this year. According to Northstar's Sue Botelho, 14 percent of first-timers range from 21 to 25 years old and 50 percent are 26 to 34.

Perhaps the biggest surprise, Botelho said, was that about 25 percent of all first-time homebuyers are single women who are qualifying with a median income of $37,400.

Bart Swan, who recently merged Superior Home Loans with Baker and Lindsey, offered slightly different numbers.

In the first 5 months of 2008, 53 percent of all home loans closed at Baker and Lindsey were for first-time buyers. In the first five months of 2009, that number was 41 percent.

Swan says not enough people know enough about the opportunity.

"It appears the $8,000 first-time homebuyer tax credit isn't getting people out of bed to buy a home, despite the fact that it should be," he wrote in an e-mail.

But Swan can also point to 24-year-old Ashley Davis. She recently bought a four-bedroom, two-and-a-half bath home with 1,900 square feet just south of Interstate 10 in Crestview.

For the record, it was a "short sale" in which the holder of the previous mortgage was settling for something less than the original asking price.

The selling price was about $150,000.

And because Davis put 6 percent down on a 30-year fixed USDA Rural Home Loan at 5 percent interest, Davis' total monthly payment (including taxes and insurance) is about $1,000 a month.

She also could get the $8,000 in the mail from the federal government if she amends her 2008 tax return. Otherwise, she can take an $8,000 credit when she files for 2009. And if she lives in the home for three years, she does not have to pay it back.

The mother-daughter team of Kathy Campbell and Kelly Shephard from the Key Group at Century 21 Wilson Minger helped Davis buy the house and she secured her loan through Swan. Everyone involved said a key first step was checking to see what Davis could afford.

"She was the epitome of the smart first-time buyer," Shephard said. "The first step needs to be going to see a lender. ... I would never tell anybody go outside their comfort zone on what they could afford."

Campbell agreed.

"There's nothing worse than finding something you love, then finding out you can't afford it," she said. "After that, everything else doesn't look so good. You need to know what you qualify for."

Davis is a 2008 graduate of the University of Central Florida in Orlando. She began planning even before she earned a degree in Applied Mathematics and landed a job as a cost analyst with defense contractor Qualis Corp.

"It was just the next step, to move out on my own ... time for me to be the adult," she said. "My idea was to move in with my parents (Michael and Rhonda Davis) for a little while and save up enough to get going on my own."

Prep work started with checking out the Multiple Listing Service provided by the Emerald Coast Association of Realtors. Davis then used an online mortgage calculator on Eglin Federal Credit Union's Web site.

With Swan's help, she found she qualified for a home that would cost up to $165,000.

"I was thinking in the $130,000s," she said. "Because I know what my bills are, plus I wanted to keep putting money in my savings account."

Davis and her real estate agents looked at about 30 homes in a month. A few were in Niceville, but most were in Crestview.

"More house for your money," Davis said. "It just needed to be south of I-10."

She found a brick house and had a "relatively flat lawn ... that was important, because I'm the one who's going to me taking care of it," Davis said. "When you walk in through the front door it's very open ... it has a vaulted ceiling and there's a second story."

A previous offer for the house had been accepted. But the situation changed with the first prospective buyer and Davis didn't waste any time.

"I looked at it Saturday morning, and I knew there was somebody else looking at it Saturday afternoon," she said. "So I made an offer, and three days later it was in contract."

The sale was closed at the end of May.

It all took planning, discipline and knowledge of what the numbers mean and how they work.

"I think it goes back to building a foundation in order to be prepared for largest purchase of your life," Davis said. "The age that I am, and the housing market way it is, it just happened that I was at the right place in my life and the right time in housing market with the interest rates the way they are."

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Want to learn more?

ERA American Realty will host a First-Time Home Buyer Fair from 4 to 5:30 p.m. Monday through Thursday of next week at all five of its local offices. Visitors can discuss financing options with lenders, learn more about the new federal tax credit and discuss what they need and want with real estate professionals.

No appointment is needed. For more information, call 850-609-4640 or go to www.era-american.com.

Keller Williams Real Estate Emerald Coast has been hosting a monthly First-Time Home Buyer Seminar. The next one is from 5:30 to 6:30 p.m. July 9. Keller Williams is located at 151 Regions Way in Destin across from Bass Pro Shops. For more information, call 850-654-2900.