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Tax credit brings buyers 'out of the woodwork'
Peggy Meatyard-Rice of Dauphin Realty just sold a home to first-time buyers who qualified for an $8,000 federal tax credit and has four more couples eager to use the tax break as they eye homes in the low $100,000s.
"They are coming out of the woodwork," she said.
President Barack Obama's $787 billion economic stimulus package, passed by Congress last month, provides first-time homebuyers an $8,000 tax credit. It defines a first-time buyer as anyone who has not owned a home for the past three years.
Meatyard-Rice said the majority of her buyers are financing their homes with FHA loans at mortgage rates of 3.5 percent, and buying homes in the low $100,000s or below.
She predicts the values in that price range will increase as more buyers use the tax credit.
"People are going to pay a lot closer to full price and eventually start getting into bidding wars," Meat yard-Rice said.
Fixed-rate mortgages were below 5 percent last week, prompting more homeowners to refinance and moving some people from house hunters into buyers, according to area lenders and Realtors.
The 30-year fixed-rate loans averaged 4.85 percent, and 15-year rates averaged 4.58 percent, according to Freddie Mac. New and existing home sales rose 5 percent nationally in February, and first-time buyers accounted for half of all existing home sales, according to the National Association of Realtors.
"We're busy with purchases right now, which is a good sign," said Sharon Thompson of Mortgage America in Mobile. "I'm doing about 30 percent refis and 70 percent purchases." Most of her buyers are using the tax credit, she said.
Lenders say there are still not as many people buying as might be expected, considering the attractive rates and the inventory selection. They blame, in part, the tougher underwriting market.
Fewer investors are purchasing mortgages, and "those investors that are left are cherry-picking the ones they approve," said Tim Wilkes of Magnolia Mortgage in Mobile....
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