Homebuyer’s imporant information on mortgage loan approval!

First of all, you should at least be aware of the extension of the First-Time Homebuyer $8,000 Tax Credit and the new addition of the “Repeat”, “Move-Up”, “Step-Up”, “Current” homebuyer $6,500 Tax Credit. If not, please read my previous blog posts for details or simply google it or go www.irs.gov.

Next, see if you can qualify for a loan. Lenders are lending! Interests rates are still low!

These are the most common questions a mortgage lender (banker) will ask to get you qualified:

• Work History.  (More than two years the better) – If you just recently started a job, they will more than likely need a letter from your employer verifying your employment and income. Will require your W2/1099 – preferably last two – three years.
• Self-Employed (Woosh) This is a hard one. For conventional loans or lets say bankable loans they require two years of tax returns. Some may be a more lenient depending on your business. If you can’t get a conventional loan, there are other solutions.
• Your credit history. If your credit score is at least a 680 you have a very good chance of receiving a loan. If it’s less don’t fret. Fix your credit!  Often times, you can fix it yourself and see a dramatic increase in no time. Just move forward! ** For example, try to keep your balance of your credit cards at 30% or below. In addition, make sure you read the fine print on the rates and minimum payments. Recently, my minimum payment tripled!
• Have any Assets? Real Estate, 401k, stocks/bonds, etc.
• Have any Debts? Credit cards, car payments, loans, etc.
• Savings. The more money you have saved up in your bank the better it looks to the banks.
• Foreclosure/Bankruptcy: If you have foreclosed on a home recently, you must wait at least three years to be considered for a conventional loan. Otherwise you may have to look at other alternatives such as owner fiancing and wrap around loans. **Do you research before agreeing to owner financing or wrap around loans.

The above information are the mere basics of what the lender/broker will ask from you.  Really try to see if you can capitalize on owning home right now or in the near future with all the available buyer incentives. Tyr to at least check and see if you can get approved for a mortgage loan. If you don’t, it’s okay. Take action and make the changes you need to qualify. Always keep  moving forward and set a plan of action to acheive home ownership.

Austin Home Sellers – Tricks to sell your home faster!

We have seen some home prices decrease about 5% across the board as well in the Austin, Texas Metropolitan Area.  There are few neighborhoods such as SoCo, Brushy Creek area, Steiner Ranch to name of few that seem to be steady and in some cases demand the purchase price.

However, right now sellers need to be conscious of what is currently going on in the their own neighborhood. Otherwise, they will miss the boat and buyers will buy their competitor’s home.

So for Sellers here are some tricks to sell your home!

• Advertise the heck of the Tax Credits
• Set realistic prices (if you want to sale faster)
• If you are using a Realtor, make sure to ask what their Marketing Plan entails (anyone can put a sign in front of the yard!)
• De-clutter your space! Maybe have a garage sale or even an estate sale – If you haven’t used it in over a year, why bother? Anyways, do you really want to take junk with you to your new place?
• Maybe some touch ups here and there – Don’t make a hole in your wallet by doing too much! – Take care of the cosmetic work (That’s easy)
• It’s nice to have a pre-inspected home too – This avoids any major pains during contract negotiations
• Take care of the yard, yes the backyard needs to look good too
• This is hard, but try to de-personalize the home – You want to attract the majority of the buyer pool
• Actually look at your competition! Compare notes.
• If you feel that your list price is questionable and/or there are not enough comps to support you list price, get a home valuation
• Still on home valuation – take a moment and go to www.hvccpetition.com - Sellers have been negatively affected with the new appraisal rules – Some of my clients have been affected by the new rules
• If you have pets, please try to crate them, better yet have someone else take care of them.  I know it’s extremely hard as I am a huge dog lover and owner of three adorable black labs. Unfortunately, pets are a distraction and often times “stink”.
• Use social media like www.facebook.com - My personal favorite. Let your friends share the news you are selling the home! Let it go viral!
  If you have time or better yet if your Realtor can do this…make a www.youtube.com video! Stand out and share it with others. Make it memorable!
• Instead of having an open house, have a party! Sorry, but open houses are a waste of time. You will get some attendance if you are lucky, but your are not going  get the HGTV open house offer!
• Whew I am on a roll and I hope this is helping you.
• There is plenty more, but at least this list already sets you apart from others selling their home. Just ask?

I hope this helps you when you sell your home. Remember the less time it sits on the market the better for you!  If you need to be pointed in the right direction, need help or resources, or just about anything, please let me know. I love sharing information.

Homebuyer Tax Credit Extended with some extra perks! WOHOOO!

I am glad the government did not wait less than 24 hours of the November 30th deadline to let us know if they were either going to extend the tax credit or not.   Not only did they extend the $8,000 Tax Credit for First-Time Homebuyers, they added a $6,500 Tax Credit to “Repeat”, “Move-Up”, or “Step-Up” homebuyers. They also increased the income limits as well as the home purchasing limits.

What does this mean? Buyers start buying! Interest rates are still low! Here in the Austin, Texas Metropolitan Area there are plenty of home to choose from. There are currently over 9,000 homes for sale.

My good friend and colleague, Richard Moore from Land Mortgage, emailed me the skinny on the changes of the $8,000 Tax Credit and the new $6,500 Tax Credit that I am sharing with you below:

The last official hurdle with the Homebuyer Tax Credit extension was crossed this morning when President Barack Obama signed the bill that was overwhelmingly passed by the House of Representatives and Senate yesterday.

The current measure extends and expands the scope of the homebuyer tax credit. Included in the expanded portion is a program for Current Homeowners. This new $6,500 tax credit is designed for current homeowners interested in buying a new primary residence. Eligible current homeowners must document that their sold home or home being sold was used as a principal residence consecutively for 5 of the last 8 years. The modifications to the original measure become effective December 1st.  A summary of the changes follows:

First-Time Homebuyer Tax Credit Details/Changes ($8,000)

• To qualify the purchaser must not have owned a home in the last 3 years. Purchaser must owner-occupy the home.
• The tax credit is equal to 10% of the purchase price of the home, not to exceed $8,000.
• Qualifying maximum income limits effective on December 1st, 2009:

$125,000 Adjusted Gross Income for Individuals
$225,000 Adjusted Gross Income for Married Couple

• This is an increase from $75,000 and $150,000 respectively from the previous version of the tax credit
• If a taxpayer owes less than the tax credit, the government will send a check for the difference.  If the taxpayer is due a refund, the reimbursement will be the refund due + the tax credit.
• Recapture provision: The tax credit is not required to be repaid unless the home is sold within the first three years of ownership.
• Binding Contract Provision: To qualify for the tax credit, the purchaser must have a binding contract effective on or before April 30, 2010 with the closing happening before July 1st, 2010.

New - Limitation on Cost of Purchased Home – The price of the home cannot exceed $800,000.
New – Purchase by a Dependent – The home cannot be purchased by a dependent. This rules the transaction ineligible.
New - Anti Fraud Rule – The purchaser must attach documentation of purchase to tax return.

• The purchaser is eligible to claim the credit on their 2009 or 2010 tax return. They should discuss the details of how to file for the credit with their CPA.

Move-Up, Repeat, Step-Up, Current Homebuyer Tax Credit ($6,500)

• This program becomes effective December 1st, 2009.To qualify the purchaser must document that their sold home or home being sold was used as a principal residence consecutively for 5 of the last 8 years. Purchaser must owner-occupy the home.
• The tax credit is equal to 10% of the purchase price of the home, not to exceed $6,500.
• Qualifying maximum income limits as of December 1st:

$125,000 Adjusted Gross Income for Individuals
$225,000 Adjusted Gross Income for Married Couples

• If a taxpayer owes less than the tax credit, the government will send a check for the difference.  If the taxpayer is due a refund, the reimbursement will be the refund due + the tax credit.
• Recapture provision: The tax credit is not required to be repaid unless the home is sold within the first three years of ownership.
• Binding Contract Provision: To qualify for the tax credit, the purchaser must have a binding contract effective on or before April 30, 2010 with the closing happening before July 1st, 2010.
• Limitation on Cost of Purchased Home – The price of the home cannot exceed $800,000.
• Purchase by a Dependent – The home cannot be purchased by a dependent. This rules the transaction ineligible.
• Anti Fraud Rule – The purchaser must attach documentation of purchase to tax return.
• The purchaser is eligible to claim the credit on their 2009 or 2010 tax return. They should discuss the details of how to file for the credit with their CPA.

For more details about the tax credits contact a mortgage lender, mortgage broker, Realtor, CPA, to name a few. Really, don’t miss the boat on this if you can take advantage of the government giving you money.  See if you can get approved right now. You maybe surprised as I know some of my friend and family have been surprised.

If you get approved, start shopping! – Hint: Remember, just because you get approved for $500,000 does not mean to buy a $500,000 home.  First ask yourself what monthly mortgage payments can you afford that includes Principal, Interest, Taxes, Insurance, and often times Mortgage Insurance (Private Mortgage Insurance).

Take action now! Good luck!

Tax Credit Extension: It’s Official News from Richard Moore at Land Mortgage November 6th, 2009 The last official hurdle with the Homebuyer Tax Credit extension was crossed this morning when President Barack Obama signed the bill that was overwhelmingly passed by the House of Representatives and Senate yesterday. The current measure extends and expands the scope of the homebuyer tax credit. Included in the expanded portion is a program for Current Homeowners. This new $6,500 tax credit is designed for current homeowners interested in buying a new primary residence. Eligible current homeowners must document that their sold home or home being sold was used as a principal residence consecutively for 5 of the last 8 years. The modifications to the original measure become effective December 1st.  A summary of the changes follows: First-Time Homebuyer Tax Credit Information · To qualify the purchaser must not have owned a home in the last 3 years. Purchaser must owner-occupy the home. · The tax credit is equal to 10% of the purchase price of the home, not to exceed $8,000. · Qualifying maximum income limits effective on December 1st, 2009: $125,000 Adjusted Gross Income for Individuals $225,000 Adjusted Gross Income for Married Couples This is an increase from $75,000 and $150,000 respectively from the previous version of the tax credit. · If a taxpayer owes less than the tax credit, the government will send a check for the difference.  If the taxpayer is due a refund, the reimbursement will be the refund due + the tax credit. · Recapture provision: The tax credit is not required to be repaid unless the home is sold within the first three years of ownership. · Binding Contract Provision: To qualify for the tax credit, the purchaser must have a binding contract effective on or before April 30, 2010 with the closing happening before July 1st, 2010. · New – Limitation on Cost of Purchased Home – The price of the home cannot exceed $800,000. · New – Purchase by a Dependent – The home cannot be purchased by a dependent. This rules the transaction ineligible. · New – Anti Fraud Rule – The purchaser must attach documentation of purchase to tax return. · The purchaser is eligible to claim the credit on their 2009 or 2010 tax return. They should discuss the details of how to file for the credit with their CPA.

Current Homebuyer Tax Credit Information · This program becomes effective December 1st, 2009. · To qualify the purchaser must document that their sold home or home being sold was used as a principal residence consecutively for 5 of the last 8 years. Purchaser must owner-occupy the home. · The tax credit is equal to 10% of the purchase price of the home, not to exceed $6,500. · Qualifying maximum income limits as of December 1st: $125,000 Adjusted Gross Income for Individuals $225,000 Adjusted Gross Income for Married Couples · If a taxpayer owes less than the tax credit, the government will send a check for the difference.  If the taxpayer is due a refund, the reimbursement will be the refund due + the tax credit. · Recapture provision: The tax credit is not required to be repaid unless the home is sold within the first three years of ownership. · Binding Contract Provision: To qualify for the tax credit, the purchaser must have a binding contract effective on or before April 30, 2010 with the closing happening before July 1st, 2010. · Limitation on Cost of Purchased Home – The price of the home cannot exceed $800,000. · Purchase by a Dependent – The home cannot be purchased by a dependent. This rules the transaction ineligible. · Anti Fraud Rule – The purchaser must attach documentation of purchase to tax return. · The purchaser is eligible to claim the credit on their 2009 or 2010 tax return. They should discuss the details of how to file for the credit with their CPA. We’re here to be a valuable resource and server you better. All we ask for is the opportunity to earn your business. Please let us know if you have any questions. Sincerely, Richard Moore at Land Mortgage Related Tax Credit News: Bloomberg · New York Times · Wall Street Journal

Confused on the $8,000 First-Time Home Buyer Tax Credit and using it as a downpayment?

Have you heard in the news by a friend, family member, or even your pet about the $8,000 Tax Credit and using it as a downpayment? Whew…I would not be suprised if you have been so confused and how to receive and apply for the $8,000 Tax Credit and how use it as a downpayment.

As the ever changing mortgage guidelines change, new progams are created at a faster pace than one could digest and understand.  The $8,000 Tax Credit is absolutely a great opportunity to for “first-time home buyers” to get $8,000 from the government free and clear. However the downpayment is not what you think.

You still need to come up with your own downpayment to purchase a home.  The $8,000 can not be used for the first 3.5% down payment with FHA.   The 3.5% down payment must still come from the borrower or as a gift from family.  You can use the $8,000 tax credit  for an additional down payment on top of the 3.5% and/or for closing costs.  Since this is so new to everyone, lenders haven’t figured out how to structure this logistically.

Quick Snap Shot of  the $8,000 Tax Credit (TAKE ADVANTAGE OF THIS) if you are eligible:

• Purchaser and purchaser’s spouse may not have owned a principal residence in the last three years
• Gross Income Individual ($75,000) and ($150,000 on joint return)
• Must purchase home before December 1, 2009
• If home sales within three years of purchase, entire amount of credit is recaptured at sale

Also, even if you already filed for your taxes, you can still receive your $8,000 Tax Credit this year

If you haven’t aready, go to www.irs.gov and read the 8,00o Tax Credit.  Information below.

First-Time Homebuyer Credit
Overview First-time homebuyers may be able to take advantage of a tax credit for homes purchased in 2008 or 2009. The credit: Applies to purchases that close after April 8, 2008, and before Dec. 1, 2009. Applies only to homes used as a taxpayer’s principal residence. Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar. Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed. The credit is claimed using Form 5405. For 2008 Home Purchases The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year. For 2009 Home Purchases The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1. For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer’s main residence within a three-year period following the purchase. First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return. News release 2009-27 has more information on these options. Questions and Answers More information is available in the question and answer section. Return to Tax Provisions in the American Recovery and Reinvestment Act of 2009.

What is a FICO score (Credit Score)?

As we continue to see and hear the news about the credit crunch and mortgage crisis, I have had a lot people confused about what makes up their credit score (FICO score).

Lending now a days are stricter in lending than ever. That means your weight on your credit score will be very high in order for you to get a loan.  Lenders are not only looking at your FICO score, but your whole financial structure.

I took a class on FICO scoring and TurnKey Solutions gave us some great information I would like to share with you. The following information will talk about what a FICO score entails and how much weight is put on each factor.

Definition of FICO -  FICO is an acronym for Fair Isaac Credit Organization, the company that developed the system. A standard credit score which makes up a substantial portion of a credit report that credit bureaus sell to lenders so they can asses an applicant’s credit risk and whether to extend them credit.

The FICO (credit score) has five factors that affect your score:

1. Your Payment History (35% weight on your score)
Make sure you pay your any credit accounts ontime. Late payments, bankrupties, foreclosures, etc. can affect your score dramatically.

2. How much you owe (30% weight)
FICO scores look at the amounts you owe on all of your accounts, the number of accounts with balances, and how much available credit you are using.  You do not want to max out your credit or go over your credit limit as that will also lower your score.  The best policy is to owe only about 30% or less  from your credit limit. For example if you have a credit limit of $1000, having a balance of $300 is good vs having a higher balance. You also want to make sure you pay that balance off every month.

3. Length of Credit History (15% weight)
The longer you have credit history the more you credit score will increase. However, even though you may have a short credit history, as long as the rest of your credit report shows responsible credit management you can get a high credit score.

4. New Credit (10% weight)
If you have recently applied for or opened a new credit accounts, your credit score will weigh this fact against the rest of your credit history. FICO scores distinguished between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur. If you need a loan, do your rate shopping within focused period of time, such as 30 days, to avoid lowering your FICO score.

5. Other Factors (10% weight)
Several minor factors also influence your score. For example, having a mix of credit types on your credit report-credit cards, installment loans such as a mortgage or auto loan and personal lines of credit-normal for people with longer credit histories and can add slightly to their scores.

I hope this information helps you to review your credit score and make the changes if needed for a better credit score.

Credit is all around us and we are “judged” by our credit score. Having a healthly financial management will help you with budgets, credit, and ultimately control of your finances.

Laura Valentino Romero