Lower Rates, Incentives Benefit Homebuyers

The economy grew at a healthy 3.3% in the second quarter, according to the Bureau of Economic Analysis. Existing home sales ticked upward slightly, posting a 3.1% increase in July, according to the National Association of Realtors.

Time to celebrate? Maybe, maybe not.

The added boost to the nation's gross domestic product may have resulted from a weaker dollar and the springtime stimulus checks. What's more, home sales are still down 13.2% from July 2007. But the news offers hope, and prospective homebuyers might want to take notice.

"Buyers who've been on the sidelines should take a closer look at what's available to them now in terms of financing and incentives," said Richard Gaylord, NAR president and a broker for Re/Max in California. The housing bill signed into law recently provides many of those incentives, including a $7,500 tax credit for first-time homebuyers.

It's still a little harder to qualify for a mortgage than it has been as banks have tightened restrictions and are requiring loan applicants to provide proof of income before forking over cash. But it may be worth the extra effort. Mortgage rates continue to drift downward, with rates on 30-year fixed rate mortgages averaging 6.40% with 0.6 points, according to the latest primary mortgage market survey from Freddie Mac. That's down from an average of 6.47% with 0.7 points a week earlier, and an average of 6.52% with 0.7 points the week before that. The drop in rates isn't huge, but could be a welcome shift for those looking to buy a home.