$7,500 Home Buyer Tax Credit

The U.S. House of Representatives recently passed the American Housing Rescue and Foreclosure Prevention Act bill. In that bill there’s a provision that will help to spur home buying by targeting first time home buyers. A first-time homebuyer can take advantage of a refundable tax credit that works like an interest-free loan of up to $7,500. A first time home buyer is classified as someone who hasn’t owned a home in the pass three years.

 

To qualify for the tax credit:

 

• A homebuyer needs to have purchased a home on or after April 9, 2008 and before July 1, 2009.
• A single homebuyer needs to have an income of up to $7,500 to qualify for the full tax credit
• A married couple needs to have an income of up to $150,000 qualify for the full tax credit
• The interest free loan must be repaid over a 15 year period

For more specific questions, I encourage you to consult with a qualified tax advisor about your specific situation, or go to Federal Housing Tax Credit for more information.

Ways to Improve Your Credit Score

It’s always a good idea for anyone buying a home to first check their credit report. That’s a good way to see if there are credit issues that needs to be addressed or resolved. Having unresolved credit issues, such as clerical errors could end up costing you thousands of dollars more in mortgage payments each year. The smartest thing for a buyer to do whenever possible is to improve their FICO score before applying for a loan, which can be done once every 12 months. Anyone with a credit history is entitled to a free credit report from each of the three major credit reporting agencies. To get your free annual credit report, go to FREE CREDIT REPORT or call 877-FACTACT. Order all three reports from here; DO NOT go to the three individual agencies to order your free report. Check the reports very carefully for errors and make corrections when necessary. Any credit issues reflecting over seven years should be removed from the report, except for foreclosures which will be on your report for ten years. In time your credit issues will be removed from the report. If you can’t wait for seven years, I’ve written down some simple ways for you to improve your credit scores.

1. Don’t give anyone the authority to check your credit score unless it’s absolutely necessary. Too many unnecessary inquiries can negatively affect your credit score. However, personal inquiries should not affect your credit score.

2. Pay-off as much outstanding debt as possible, new as well as old, because the less money you owe, the better your credit score will be.

3. Try not to have more than 30% of your credit cards limit outstanding.

4. Add a family member or someone with good credit standings to your credit card accounts

5. If nothing else, make sure your house payments or rent is ALWAYS PAID ON TIME. This can directly determine the conditions of your home loan.

6. Don’t open a lot of new credit card accounts, especially if you haven’t had credit for very long. Having too much available credit can lower your credit score.

7. Don’t close out any unused or old credit card accounts, instead cut up the unused cards and try to bring your balance down to $0. The length of individual credit history is important when figuring your FICO score. When you close an account, it terminates that outstanding history.

8. If you are rate shopping among various lenders, do all your credit inquiries within a short 45-day period. This tells the credit agencies that you are shopping for rates, instead of opening a lot of new accounts.

9. Wait 12 months after credit difficulties to apply for a mortgage. You’ll be penalized less for problems after a year.

10. Make sure negative information more than 7 years is not reported

11. If you have a negative mark on your credit report that is an error or you feel should be different, write in and tell your side of the story.

Don’t pay for credit rebuild service these are steps that you can do on your own!

What Home Buyers Should Avoid

Buying a house is a financial obligation that can be overwhelming for first time homebuyers. There are many things to consider when buying a house, there’s a need to: come up with the down payment, figure out how much or how little to borrow, get approved for the home loan, figure out how many years you are intending to live in the house for, come up with the closing costs, look for insurance, get an inspection and much, much more. During these daunting times, it’s easy to understand why so many first time home buyers are susceptible to mistakes. That is why I’ve put together a list of common mistakes that first time home buyers should avoid.

1.  Doing it on their own – A Realtor’s service is FREE for home buyers. When you work with a professional buyer’s representative buying a house can be exciting and satisfying.

2.  Exceed their financial limits –Borrowing the maximum loan amount and having high outstanding credit card debt is not a good way to enter homeownership.

3.  Did not get the financing together –Many first time homebuyers start looking at homes long before they check-out their borrowing leverage.

4.  Buying what they want instead of what they need – Buyers are driven by their emotions when making a decisions to buy a home.

5.  Understand “re-sale-ability”- A common mistake made by first time home buyers is failing to understand the importance of re-sale-ability when purchasing a house. Most buyers insist on having certain features when they buy a home. If the home being purchased today doesn’t have features that the majority of buyers look for then they’ll have trouble selling at a later date.

6.  Being too picky – Buyers tend to overlook some great buys in the early stages before realizing that there’s no such thing as a “perfect home”.

7.  Failed to research the area –Unforeseen issues can get over-looked when a buyer gets emotionally attached to a house. Due diligences is on the buyer to find unforeseen problems. It’s important to consult with a Realtor before buying a house.

Are You Ready To Buy A Home?

Buying a home is the largest purchase most people make in their lifetime. According to the National Association of Realtors, about 63% of all Americans are homeowners.Still many Americans don’t realize that homeownership is within their grasp. Home ownership is one of the best ways to realize the American dream. There are some disadvantages to owning a house, but in my opinion the advantages far outweigh the risk and efforts required in obtaining one’s own house. Here’s a list of the advantage of owning your own home: pride of ownership, borrowing power, appreciation, stability, mortgage interest deductions, property tax deductions, capital gain exclusion, building equity, and equity loans. The biggest advantage is that it can create a security blanket for your family and you can pass your home down to your children, and their children, creating security for generations to come

 My own personal story is evidence as to why I believe home ownership gives you an advantage in life. At age twenty three I purchased my first home for a whopping $55,000. I lived in that house for over 10 years and during that time I took advantage of most of the benefits that comes with home ownership. My wife and I thought the time was right to move into a bigger house, because the house we lived in at that time was too small to raise a family. In late 2005 when the real estate market was changing we sold that house for $280,000; that was a $225,000 profit in 10 years! One of the best part was that after living there for 10 years we were only paying a couple of hundred dollars a month on mortgage payments. We took the profit we received from the sale along with some savings we had and paid down our next mortgage. Now we live in a better neighborhood, bigger house, which is structurally sounder and our children will have more room to grow. I truly believe that being where I’m at today would never have been possible without owning that house. I encourage anyone I can to purchase instead of renting and the sooner you get started, the sooner you can reap the benefits.

 To find out if you are ready to buy a house, I’ve written down some pre-qualifying questions that you can ask yourself:

Am I ready to buy a house?

1.  Have I been with the same employer for the past two years? A steady source of income superceeds the two year employment requirements. 

2.  Have I been self-employed for the past two years?

3.  Do I have a credit history?

4.  Do I have 3% to 6% of the homes purchase price saved for the closing cost?

5.  Do I have at least 5% for down payment?

 If you answered, “yes” to all the questions above than you are ready

 Where do I begin?

 Start by checking your credit history for errors that can negatively affect your credit score. You can get your FREE credit report once every twelve months from each of the three major credit companies by going to www.annualcreditreport.com

How much can I afford?

To answer that question you’ll have to sit down with a mortgage lender. Before you do so, I suggest you purchase your FICO/Beacon score from the three major credit companies which are:

Experian

TransUnion

Equifax

Bring a copy of your FICO score in with you when you sit down with a mortgage lender to get pre-approved for a loan. The Mortgage Banker/Broker will be able to help you figure out how much house you can afford. Make sure that you receive a pre-approval letter from the Banker/Broker before you leave, you’ll need it when you submit an offer.

How to find a real estate agent?

First, I would suggest to call family and friends to see if any of them knows or have used a good Realtor recently. Other than the obvious which is experience, I would look for a Realtor that you can trust and can easily communicate with.

A good place to interview agents is to stop-by their open house. Don’t let them know they’re being interviewed. Check your local newspaper on week-ends for the location of open houses in your area.

I wish you a good hunting trip!