1. Don’t stop making your mortgage, rent, auto or any other payment!!  If you have a late payment, even on a silly $10 a month credit card it could mean the difference between “yes” and “no”.
2. Don’t buy or lease an auto!!  Lenders look carefully at your monthly debt obligations.  A large payment such as a car lease or purchase can greatly impact those rations and prevent you from qualifying for a home loan.
3. Don’t move assets from one bank account to another!!  These transfers show up as new deposits and complicate the application process, as you must then disclose and document the source of funds for each new account. It’s a paperwork nightmare.  Wait until after close of escrow to consolidate accounts.
4. Don’t change jobs if you can help it!!  A new job may involve a probation period, which must be satisfied before income for the new job can be considered for qualifying purposes.  If you job is part-time or temporary, please let your mortgage broker know as it affects your approval.
5. Don’t run a credit report on yourself or have anyone pull your credit!!  This will show as an inquiry on your lender’s credit report and could lower your credit score 7-10 points per credit inquiry!
6. Don’t buy new furniture or major appliances for your new home!!  If new purchases increase the amount of debt your are responsible for on a monthly basis, there is the possibility this may disqualify you from getting the loan.
7. Don’t attempt to consolidate bills before speaking with your lender!!  Moving around credit balances can destroy your credit score!  Ask your lender first before you change any balances around.
8. Don’t pack or ship information needed for the loan application!!  Important paperwork such as W-2 forms, divorce decrees and tax returns should not be sent with the movers along with your other household goods.  Duplicate copies take weeks to obtain and could stall the closing date on your transaction.

HAPPY HALLOWEEN!!!!

There is another LOAN PROGRAM available now that again rewards first-time homebuyers in the Portland area.  And, remember if 1^st-time homebuyers purchase then 2^nd time homebuyers move on and 3^rd time homebuyers get an opportunity to move up.  Hopefully, it’s a “trickle up” effect and can be another way to stimulate the local housing market!!  The definition of “first-time home buyer” for this particular program is not having owned a home in FIVE YEARS.  This interest rate coupled with the $8000 tax credit for first-time buyers plus lower housing prices should make a real estate purchase look very attractive:

Up to 80% loan-to value (in other words:  20% down or more)

$417,000 maximum loan amount ($521,250 purchase price)

3.75% initial fixed rate for two years

5.75% fixed rate for years 3 – 30

Prepayment penalty if the property is refinanced within 1^st 4yrs

NO prepayment penalty if home is sold in 1^st 4yrs

Minimum credit score of 700

Single-Family homes and Duplexes only.

No manufactured homes or new-construction

For 80-85% loan-to-value  (in other words:  15-20% down)

Add 0.50% to rate for mortgage-insurance

Mortgage Insurance (required by lenders if less than 20%down) falls off after value is 80% or less (minimum 12mo from purchase date)

Obviously, this would mean you would definitely have one year (the 3^rd year) of an (at present) over market interest rate of 5.75% (they’ve presently been hovering plus or minus 5%).  In my mind, this would only be prudent if you knew this was a short-term purchase due to a known move OR plans to move up OR move down due to expanding/contracting family plans, etc.  Otherwise, if you had that kind of money for a downpayment and a credit score of 700 (or better), you’d do better obtaining a typical conventional loan with an interest rate of around 5%.  But, it could make a short-term difference for a first-time buyer struggling to purchase their first home with plans to move onward & upward.  And, of course, you could refinance without penalty after 4 years or sell the home anytime within that 4 year period (but , we don’t know what interest rates will be in 4 years).  Call or write for more info OR just to brainstorm…..jj

The “FIRST-TIME HOME-BUYER CREDIT”    (AND WHAT IT MEANS TO YOU, A FRIEND OR FAMILY MEMBER)!  

PLEASE pass the information to someone you know who might be in the market for their first home!!!

Q:  How much is the tax credit?

A:  The tax credit would be $8,000 or 10% of the purchase price, whichever is less. 

Q:  Who is eligible?

A:  Similar to the $7,500 tax credit included in the Housing and Economic Recovery Act of 2008, the $8,000 tax credit (included in the 2009 Economic Stimulus Plan) is available for the purchase of the primary residence by first-time homebuyers.

Q:  What defines a “first-time home buyer”?

A:  According the IRS, any taxpayer who has not owned a home during the 3 years prior to the date of purchase can qualify for the credit.

Q:  Do I have to repay the $8,000?

A:  No.  Unlike the previous $7,500 tax credit that did have to be repaid (which made it essentially an “interest free loan”), the $8,000 does NOT have to be repaid, UNLESS the home is sold within three years of purchase.  If the home IS sold within that 3 years period the credit is simply reversed.

Q:  What if I have no tax liability?

A:  The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

Q:  Are there any income limitations on the tax credit?

A:  Yes.  The tax credit is strictly for individuals with adjusted gross income (AGI) of under $75,000 or $150,000 for joint filers.  AGI is total income for a year minus certain deductions, but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4.

Q:  If my AGI is a bit more than the designated $75,000 or $150,000 respectively, can I still claim the credit?

A:  It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose AGI exceeds the phase-out limits. 

Q:  What is the difference between a tax credit and a tax deduction?

A:  A tax credit lowers your tax bill dollar for dollar. A deduction shaves money off your taxable income, so the value depends on your tax bracket. For example, if you’re in the 25% bracket, a $1,000 deduction lowers your tax bill by $250. But a $1,000 credit lowers the bill by the full $1,000, no matter which bracket you might be.

Q:  What type homes qualify for the tax credit?

A:  Included are single-family detached homes, attached homes like townhouses and condominiums, manufactured homes or mobile homes and houseboats (as long as all other criteria are met).

Q:  What is the time frame for completing my purchase to be eligible for the “First-Time Homebuyer” credit?

A:  This tax credit applies to properties purchased on or after January 1^st, 2009 and before December 1^st, 2009 (so there’s still lots of time).  First-time home buyers who purchased a principal residence on or after April 9^th, 2008 and before January 1, 2009 may qualify for the former $7,500 tax credit (which must be repaid, but operates like a zero interest loan).  Purchase date refers to the date you closed escrow on the property.

Q:  What if I am eligible to participate in another state or local first-time homebuyer mortgage program? 

A:  You may now claim the credit (previously this credit was prohibited if you participated in any other first-time homebuyers initiatives).

Q:  What if the home is a short sale or foreclosure?

A:  The credit does apply.

Q:  What if the home is in disrepair and I’m willing to do the work but worried about getting the home financed?

A:  There are two possibilities for financing:  the FHA 203k loan and a conventional “Purchase & Renovate” loan (more to follow on those forms of financing).

I’ve been approached through the Portland Metropolitan Association of Realtors to participate in HGTV’s show “MY FIRST PLACE” .  My First Place, HGTV’s hit series, is coming back for a seventh season and is looking for first-time homebuyers in the greater Portland area.  They are looking for fun, high-energy people who are just starting the home-buying process for their first place.  Ideal candidates will be enthusiastic buyers with a great story to tell and a desire to share their experiences.  They will be shooting 17 episodes in the Portland area through the winter of 2009.  If you know someone who would like to take advantage of:

·         Low, low interest rates now available (they’ve been hovering around 5% both + and -)

·         Increased inventory

·         Some of the best prices we’ve had in years

·         The first-time home buyer tax credit

·         And, an opportunity to participate in the HGTV show

·         Bonus:  they get to work with me as their Realtor  J

Please contact me right away for an application form….thx, jj