The first step Michael and Felicia Sparks took toward buying their first home came months or even a year before they signed the closing papers in early May.
“We both had our bills and we knew we weren’t going to be able to (buy a home),” said Michael Sparks, who as a Marine sergeant, completed his second tour of duty in Iraq in June 2007.
So the couple concentrated on paying their bills, which “brought up our credit scores and that helped a lot.”
That is the first piece of advice lenders and real-estate agents tell would-be first-time home buyers, many of whom now are racing to beat a Nov. 30 deadline to find, arrange financing and close on a house to receive an $8,000 credit on their federal taxes.
The credit and other incentives, coupled with tentative signs of an improving economy, have drawn a steady stream, if not a flood, of new home buyers into the offices of lenders and real estate agents, especially in the last two or three months as buyers became aware of the credit and its deadline.
Sales data from the Santa Fe Area Realtors Association show that sales of homes priced below $275,000 — likely the price level for first-time buyers — climbed from 18 in January of this year to 54 in August.
Association president Mary Schroeder said that about 460 homes are currently available in that price range. “There is plenty of inventory, and obviously now is the time to buy,” Schroeder said.
Also demonstrating the increase in first-time sales, said Olga Chavez, an associate broker at Barker Realty and the Sparks’ agent, is the fact that in August 2008 only nine of 38 housing units that sold were under $250,000. A year later, 28 of 39 homes that sold were under $250,000, a 48 percent increase.
Though the bounce in sales is welcome, figures from Alan Ball, a former real estate agent who publishes a monthly newsletter on market trends in Santa Fe County, keeps it in perspective.
In July and August of this year, there were 183 sales in the city and core county area (not including Pecos or Española) of homes $300,000 or less, compared with 168 a year ago and 170 in 2007. But that’s still far from the
337 sales during the same months in 2005 or 391 in 2002 of homes $300,000 or less, according to Ball’s analysis.
Sparks said the couple had been planning on buying a home for some time. “I just got tired of renting,” Sparks said, even though the $1,500 monthly payment is about twice what they were paying in rent. Much of that, however, will be made up through deductions for taxes and improvements, plus the $8,000 credit. Sparks said he wasn’t even aware that he could qualify for the credit until well into the buying process. “That was a big surprise.”
He said the couple will use the money to make major repairs to Felicia’s car, and for home improvements including a new entertainment sound system.
He said they paid $269,000 for the three-bedroom, two-bath, 1,600-square-foot home (with a two-car garage) near Airport Road and the Santa Fe Country Club. As an active member of the military, Sparks qualified for assistance through the Veterans Administration, which eliminated the need for a down payment.
A Marine infantryman, Sparks said he spent much of the time in Iraq, from 2003 to 2007, “kicking in doors.” He is being treated for post-traumatic stress disorder.
He said that the process of buying a house was stressful. Signing the papers, “I kept saying, ‘What am I doing. What am I doing?’ But both he and Felicia find comfort and a sense of permanence in setting down roots in their own home as they begin planning a family.
Sparks said he began the home-buying process by searching newspaper ads and through a home-search Web page on the Internet.
But going it alone seemed overwhelming. “I didn’t know what I was getting into, and how to go about it.” Chavez, referred to the Sparks by Michael’s mother, “made the process a lot easier,” Sparks said.
The Sparks acquired the 5 percent, 30-year-loan from Charter Bank after a six- or seven-month search.
“I didn’t want to jump into anything,” Sparks said. The couple looked at
20 homes before they bought.
Alejandra Seluja, a loan officer and branch manager of Guadalupe Credit Union, said potential buyers often feel that anything a less than sterling credit rating will prevent them from buying a home.
“We look at a lot of different things,” Seluja said. “Maybe something happened a year ago, say a divorce.” She said she looks at what happened before and after that. We will also look at how they have handled (financial) responsibility. Have they been making their car payments?”
Seluja said that in evaluating home-loan applicants, she also attempts to see whether they are really prepared in a number of ways to take on the hefty responsibility of a 30-year mortgage.
“We try to make (first-time home buyers) understand that this is not a two-year loan. It’s long-term responsibility.”
To qualify for a $250,000 home, depending on the amount of the down payment, a buyer generally would need a household income of about $4,000 a month, Seluja said.
Chavez said buyers need to act quickly if they intend to take advantage of the $8,000 tax credit because it normally takes 45 to 60 days to close a loan.
9/13/2009
