The best time for a firest time home buyer to buy a home is when most people aren't

Most Home builders don't like to talk about it, because it only makes it harder to sell houses. But because of an increase in the number of homes for sale, a majority of builders now offer incentives to close a sale.

In Sacramento, Calif., recently, Meritage Homes offered "Zero Closing Costs; Zero Payments for 3 Months." And another firm, Centex, advertised an "Offer You Can't Refuse," which meant up to $125,000 in savings. In Atlanta, a similar story: $5,000 toward closing costs.

With the number of homes on the market up 39 percent since last June — the highest level in nearly a decade — sellers offer plasma TVs and swimming pools to make a deal.

"I have builders who are advertising right now — 'make me an offer' — which is definitely scary," said housing analyst Ivy Zelman.

In the red-hottest markets, such as Phoenix and parts of South Florida, analysts said builders now rack up more contract cancellations than sales orders.

One culprit: rising interest rates.

In the past year, the average 30-year fixed rate mortgage is up more than a point from 5.6 percent to 6.7 percent. That has pushed mortgage payments up, making houses unaffordable for many buyers.

The other culprit in the downturn is that investors are rushing for the exits. Last year's hot market attracted lots of speculators. Now that it's cooling, they're looking to take profits, adding to the glut of "For Sale" signs.

All of a sudden, it's a buyer's market.

"People are going to have to come to the reality that if they want to sell their house, they're going to have to lower the price," Zelman said.

For now, many sellers seem to be resisting, which helps explain why the National Association of Realtors has seen 12 major cities suffer double-digit declines in sales last month, while only three showed double-digit increases.

First Time Home Buyers need to shop for better mortgage rates, or engage a mortgage broker to do it for them

First time home buyers do not have to accept the latest rate rise.
If they do they are nuts.
There are so many offers from so many lenders that they only have to negotiate a little to get a better deal. The problem is most people don't know how to negotiate, and if that's the case, then they should consider appointing a mortgage broker to do teh shopping for them.
A first time home buyer looking at a $300,000, 25-year mortgage can expect to pay about $50 a month more after the Reserve Bank increased interest rates to 5.75 per cent, the highest the cash rate has been since February 2001.
If you are seeking a mortgage of $500,000, the rate rise will add $81 to monthly repayments.
The effect of the rise is most immediately felt through the hip pockets of those with variable rate mortgages.
So you may want to consider a fixed rate mortagge option, and there are plenty of good deals out there.
You may also want to consider a basic home loan, because they offer a much cheaper rate than the standard variable and you don't normally need the flexiblity of the standard variable options, mainly because when you are starting out there won't be much money left over to pay down the mortgage to create the ability to make redraws etc.
Those nice to have features can be taken on with a refinance in a couple of years or so, Now what you need is to get the home loan to buy that first home, and see how the repayments impact on your lifestyle. Often big spending adjustments have to be made collectively known as tightening the belt. Most basic loans only allow you to make minimum payments, and what's wrong with that?
After a couple of years less money will be spent on the home, and if you are fortunate you'll have a couple of pay rises to ease the mortgage burden, and then you can look at early paydown options and redraws and the like, because there will hopefully be something by then to actually redraw if required.
Take home buying one step at a time. The first step, getting your foot on the first rund of the home ownership ladder is always the hardest step you'll ever take. It gets easier as you go, and the view is a lot better a few years in.

First Time home buyers need to know how to choose their home loan.

Selecting the best mortgage home loan for your circumstnces can pay dividends down the track. You need to take into consideration your situation, income and personal profile. For more information please vist the mrmortgage.com.au website.

• 120% home loans. These allow the home buyer to consolidate personal debt and also borrow all the costs of owning and buying property such as mortgage insurance, stamp duty and conveyance and closing costs. Clear credit essential.

These are for home buyers are have strong incomes but are poor savers and live for today. If you can't save money you are not normally able to own property. This product line gets you over your lack of discipline. Expect to pay more and have more barriers thrown up.

• 105% to 107% home loans. These provide the full loan amount and all the costs to buy and close the property sale.

Again big income and stable job but no savings disipline makes you a candidate for this type of loan. Clear credit essential.

• 100% home loans. So you can save your closing costs, or have then reduced by the State Government ownership concessions to first time home buyers. When you throw in the First home Owners Grant its a no brainer, as long as you have clear credit. You may be asked to pay a small premium in interest rate, but if it gets you out of renting and into home ownership its a small price to pay that will reap big rewards down the way.

Young home buyers taht need a kick start will love this program. Clear credit but modest earnings can be enough. [Remeber the first home is the starter program. Use thois opportunity to build equity in the home and you will never look back.

• Basic or "no frills" home loans. 5% deposit is normal here.
  A variable rate loan [adjustable rate mortgage, ARM] with a low interest rate, can be as much as .7% below te standard variable rate. Few if any features, but the low rate is the kicker.

Good starter program for young home buyer and anyone seduced by low numbers, but most people switch after 2 to 3 years as they find they want more out of their loans than a good rate. It lowers the monthly repayments but not "early pay out" friendly.

• Standard variable rate home loans
  These are variable rate loan at the standard variable rate. Most people have these becasue they have more fetures than lend themslves to flexibility throughout the loan term, including lump sum reductions of the debt, direct salary crediting, making deposit s and redraws as required. Things that make a less predictable life easier to cope with financially. Also the loan has portability so if you plan on moving a few times this may be a worthwhile option as it save the establisment fees on the next loan set up.
• Fixed-rate home loans
  These mortagges have an interest rate that is set for a particular term — usually one to ten years in Australia, but up to 30 years in the US so your repayments are set for that period. At the end of the term you can lock in another fixed rate, switch to variable or go for a split loan.

Because these loans are set at a rate that is higher, and they lock you in in that higher rate when the rate falls, as it has for most of the past eight years, only the overly cautious take these loans.

Maybe the next eightyears will be different. The one thing that this loan type can save you from is a sudden spike in interest rates as seen in the late 19980's to early 1990's.

This post will be continued
Rick Adlam is a mortgage referrer. He operates www.mrmortgage.com.au an informational website on mortgages and home loan finance.