Details of Obamas 6500 “move up” home buyer tax credit in Minnesota

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Homeowners who want to take advantage of a new home tax credit worth up to $6,500 when they buy a new place have until April 30, 2010, to get a deal under way. Is it time for you to get moving?
Before you decide, see if you can answer “yes” to these four questions.
1. Are you already in the market? – Let’s assume you qualify for the tax break. That means you’ve been in your current home for at least five of the last eight years consecutively, you’re purchasing a new principal residence — not a vacation home — that costs no more than $800,000, and you meet the income threshold — $125,000 for individuals and $225,000 for joint filers — to get the full $6,500 credit.

The tax credit is yours unless you sell or stop using the home as your principal residence within three years after the date of purchase. Qualified homebuyers also can take the tax credit on their 2009 or 2010 income tax returns.

But the decision to go after it hinges on other factors. For instance, if you were already planning to move, the tax credit can help you recoup some of those repairs you’ve been putting off to get your home ready for sale. Another reason could be the desire or need to upsize or downsize, to move closer to family or to make room for an aging parent are also ideal candidates for this tax credit.
 
2. Do local market conditions look favorable? – There are three reasons that now is the right time to upgrade your home.  First, interest rates are as low as they’ve ever been in our lifetime.  Second, prices are very competitive, and you can buy a lot more home today than you could three years ago. And thirdly, because of the first-time buyer tax credit, the first-time buyers are eating up the good inventory that’s affordable, and that’s good news for sellers. 
 
3. Can you sell your house in time? – You’ll have to close on your new home by June 30, 2010 and those in the military get an extra year. Because you certainly don’t want to be carrying two mortgages at once, a lot hinges on how fast you can sell your current home. Again, that depends a great deal on where you live.   Make sure you do your research before taking the plunge. Take a look at the recent history of how long it takes to get a “sold” sign up in front of other homes near you.
 
4. Can you close the expense gap? – While the tax credit can help offset expenses like home repairs and the seller’s commission, $6,500 will only stretch so far. If you are upgrading, you need to make sure you have enough equity and available cash to cover the down payment.  If you’re counting on the tax credit to cushion the higher mortgage cost of your new home, that’s a red flag.  The main reason is that in this economy, nothing is certain.  If you lose your job, the increased mortgage payments could throw you under. 
 
While the tax credit can be a financial boost to many homeowners who are ready to buy again, the purchase of a home should never be a tax-based decision. Look at this $6,500 as a cherry on a sundae.  The sundae is the historically low home prices, substantially low interest rates and sellers willing to bargain.

Increase in Upfront Premiums for FHA Mortgage Insurance for Minnesota Home Loans

This is a letter copy and pasted from HUD.

w.hud.gov espanol.hud.gov

FHA is upping their mortgage i…

FHA is upping their mortgage insurance premium from 1.75% to 2.25% for loans originated after April 5. Get off the fence first time buyers!

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Just listed myself at http://localtweeps.com. List yourself to Find and Get Found by tweeps near you!

Scheduling loans to close and …

Scheduling loans to close and taking new applications.

Check out Groupon’s daily deal…

Check out Groupon’s daily deal – huge discounts on the coolest stuff in your city. http://bit.ly/8owR9U

How good of a credit score do you need to refinance in MN?

A few years ago, a score of 620 or higher was good enough. That increased to 680 in early 2008. Then it jumped to 720 in April last year and 740 in August.  In the past, any score of 700 or higher would get a double thumbs-up from credit experts. Now, rate adjustments begin kicking in at 740, with every 20-point drop adding another adjustment.
In other words, many people who were taking pride in their credit habits either must pay significantly higher or try to make quick changes to nudge their scores upward.

The road to new scoring

How did we get to this new reality?

The nation’s two largest mortgage lenders, Fannie Mae and Freddie Mac, suffered major losses in the market last year and then redefined risk, announcing price adjustments for borrowers with FICO scores below 720. And, in case you were wondering – these fees have nothing to do with your mortgage company or its various products and cannot be negotiated away. It is what it is.

All mortgage bankers, brokers and credit unions must comply with the higher interest rates and delivery changes in all traditional mortgages. Only entities intending to hold the mortgages in their own portfolios can follow their own guidelines.

Worse news may be on the horizon. There are many factors, including proposed legislation and regulation that continue to change the mortgage lending landscape. In the near future, it is more likely that this standard will continue to rise than fall.

Taking action on your score

What can a homeowner who wants to refinance do with a good FICO score that’s not good enough?
Virtually everyone can raise their scores by at least 10 (points) to 20 points, sometimes significantly more in 30 days.  Here’s what to do.

1. Find out what might have gone wrong. Applicants should know their credit score, understand what it means to their loan rates and ask their loan officers to use credit analysis on their behalf. Credit analysis tools are a simple way to identify key score influencers by scrutinizing the information contained in each of an individual’s three credit reports to look for inconsistencies, errors and omissions that may artificially depress the score.

2. Correct any inaccuracies. Although consumers can improve scores on their own, credit agencies offer services to mortgage brokers to help consumers raise their credit scores if something is reported inaccurately and there is proof of a discrepancy.

3. Decrease the percentage of available credit used. This can be done by paying down balances or increasing credit limits. Ideally, this means keeping balances as close to zero as possible, and definitely below 30 percent of the available credit limit, experts say.

4. Move things around. If one income can be used to qualify for the loan, transfer accounts to “park” the debt in the other party’s name.

5. Get a rapid rescore. It’s the only way to find out fast if an attempt to improve a score was successful. It’s done through your lender and a rescoring company. The process takes about a week, but it can get the loan process back on track. The downside is it costs a few hundred dollars.
In a perfect world, anyone contemplating a refinance or a new mortgage anytime within the next year or so would start working on getting the ideal credit score now.

Got questions?  Just give me a call right now at 651.210.9593.

Archer is top notch

Archer is top notch

Are you ready to own a new home or condo in MN?

Home ownership means you no longer pay monthly rent to a landlord for the roof over your head. By paying a mortgage – this means you own that roof over your head.  You can do what you want with your house – within reason of course and when you leave, you can sell it to recoup the purchase price and – with any luck – earn a profit too.
Home ownership comes with a slew of responsibilities and work so before going any further, consider whether your lifestyle and finances make home buying a smart move.

Are you prepared to stay put?  High costs mean you should. Except in a roaring real estate market, it usually doesn’t make sense to buy a home you’ll own for less than three or four years. The reason is the high transaction cost of buying and selling property means you could lose money on the deal. If you do make money, you’ll pay capital gains taxes if you’re in the house less than two years.
 
Right now – it is a buyers market.  There are homes available at very reasonable prices due to the recovery of falling home prices.  Combine this with below average interest rates and tax credits – the money and the sense of it all – home ownership is a great idea.
 
Before you begin, you need to determine how much house you can afford. You can start with one of the Web’s many calculators for a brief calculation.  But for a more accurate figure, ask to be pre-approved by a lender, who will look at your income, debt and credit to determine the kind of loan that’s in your league.
The rule of thumb here is to aim for a home that costs about two-and-a-half times your gross annual salary. If you have significant credit card debt or other financial obligations like alimony or even an expensive hobby, then you may need to set your sights lower.

So do you think you are ready?  If yes, take the first step and give me a call at 651.210.9593 right now!

New Years Resolutions include biking for fitness?

As many of you know, I’m a big fan of biking and cycling.  In the past I have rode the MS 150 race from Duluth to the Twin Cities.  Lately I’ve been hitting up the spin class Amara Kamara puts on at LA Fitness.  No matter what your biking goals or objectives are you need to check out my friend Ryan’s site at www.globlacyclingsupply.com for all your biking gear.  Ryan’s a good guy and a serious biker (way more so than I am!) and knows what’s up when it comes to the right gear for you.