Basic Information on the Stimulus Payments
You've heard about it. Now find out how to get yours.
What is it? It's an economic stimulus payment that more than 130 million households will receive starting in May. It's not taxable, and it won't reduce your 2007 or 2008 refund or increase the amount you owe when you file your 2008 return.
Are you eligible? The vast majority of people who file a 2007 income tax return qualify, and many who don't regularly file a tax return may qualify as well. You're eligible if you have a valid Social Security Number (SSN), can't be claimed as a dependent on a tax return and have either an income tax liability or "qualifying income" of at least $3,000. Qualifying income includes any combination of earned income and certain benefits from Social Security, Veterans Affairs or Railroad Retirement. Additional information is below, and a full legal description is available in Revenue Procedure 2008-21.
Both people listed on a "married filing jointly" return must have valid SSNs to qualify for the payment - if only one has a valid SSN, neither can receive the payment.
Can you use an ITIN instead of an SSN? Taxpayers with an Individual Taxpayer Identification Number (ITIN) instead of an SSN are not eligible to receive a stimulus payment. Both people listed on a "married filing jointly" return must have valid SSNs to qualify for the payment - if only one has a valid SSN, neither can receive the payment.
Not eligible at the current time? If your circumstances change and you become eligible after you file your 2007 federal tax return, you can always file an amended return using Form 1040X. File the form after April 14, 2008, and allow 8-12 weeks of processing time before making any inquiries about your payment. See a sample with instructions.
If you're not eligible this year but you become eligible next year, you can claim the economic stimulus payment next year on your 2008 tax return.
How do you get it? Just file a a federal tax return for 2007, even if you normally don't have to because your income usually doesn't meet the filing threshhold. You can't get it if you don't file.
How much will you get? The actual amount depends on the information contained on your tax return. Eligible individuals will receive between $300 and $600. Those who are eligible and file a joint return will receive a total of between $600 and $1,200. Those with children will get an additional $300 for each qualifying child. To qualify, a child must be eligible under the Child Tax Credit and have a valid Social Security number. We have various examples for you check out.
The payments phase out at certain income levels, so those with higher incomes may receive a reduced payment or even no payment.
Can you estimate your payment? The IRS has created an online calculator that will allow you to answer a few questions and get a quick estimate of your payment amount.
How will you receive the payment? Be sure to choose direct deposit when you file your tax return, even if you aren't due a regular tax refund on your tax return. That way, the stimulus payment will go right to your bank account. Otherwise, we'll mail you a check.
When will you get your payment? Starting May 2, payments will be electronically transmitted to direct deposit accounts. Paper checks will be mailed starting May 16. The payments are based on the last two-digits of the mail filer's Social Security number. The IRS has issued a schedule for payments as direct deposits or paper checks.
Economic stimulus payments will be issued according to the last two-digits of the main filer's Social Security number. People who use direct deposit also will be among the first to receive the payments starting May 2. Paper checks will be put in the mail starting May 16.
PAPER CHECK
Last two SSN digits: | Payments will be mailed by: |
00 through 09 | May 16 |
10 through 18 | May 23 |
19 through 25 | May 30 |
26 through 38 | June 6 |
39 through 51 | June 13 |
52 through 63 | June 20 |
64 through 75 | June 27 |
76 through 87 | July 4 |
88 through 99 | July 11 |
People who file a return after April 15 will receive their economic stimulus payment, but probably about two weeks later than the schedule shows. A return must be filed by October 15 in order to receive a stimulus payment this year. See the online calculator for an estimate of the amount you will receive.
For more information go to:
http://www.irs.gov/newsroom/article/0,,id=179211,00.html
Hope this answers a few questions.
The Five Factors of Credit Scoring
There are five factors that comprise the credit score. They are listed below in order of importance, just as an underwriter would look at the score:
Remember, a computer that's not taking any personal factors into consideration calculates these scores. When a credit report is generated, it is simply today's snapshot of the borrower's credit profile. This can fluctuate dramatically within the course of a week, depending on the individuals own activities. The borrower should be made aware of this when they enter into the loan process, and know that it's not in their best interest to go out on a shopping spree. They need to make sure they are not creating a negative impact on the score while the lender is reviewing their file.
Just a note on perspective for some of the foreclosure news you are seeing.
Is it rough out there? Well consider this, in a news article today, there are apparently frightening numbers on forclosure rates - " U.S. Foreclosures Jump 57%" . Awful state of affairs - right? How about this headline for the same article - "99.8% of U.S. Households NOT in Forclosure" Amazing? Can't be true? Check the math.
Use the numbers provided in the article - "More than 234,000 properties were in some stage of foreclosure, or one in every 538 U.S. households... ". Pull out your calculator and work out the percentage - .001859 or .1859% (1 divided by 538). Yep - that is LESS than two-tenths of one percent.
Well that is the This is not to diminish the real pain and financial peril faced by tens of thousands of homeowners in or facing foreclosure. There is a serious financial and market correction underway in housing and the broader economy. But it is not the end of the world. If you really want to see what a crisis is all about check the numbers from the Great Depression. Nearly 1 in 10 owners was in foreclosure in 1932 and 1933.
In 2008 there is no doubt we face a tough and challenging market. Is success still possible? YES. It will take very consistent, very focused, and very hard work to produce results. You CAN do this! But not if you let the headlines drag you down.
About the author:
Cheryl Bowers is a Naperville, Plainfield Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of real estate in Naperville IL., Plainfield IL., or any place in the country. Cheryl has created a team of professionals throughout the Plainfield, Naperville IL. area and the country to ensure that you enjoy a smooth transition to your new area. Please visit www.CherylBowers.com for your real estate needs. Please give me a call if you have questions about the Naperville, Plainfield IL. Area real estate market.
Cheryl Bowers, REALTOR® 630-712-1921
(Copyright © 2008 By Cheryl Bowers, All Rights Reserved.)
Is there a difference between a Mortgage Pre-Qualification letter and a Mortgage Pre-Approval letter?
The reality is that most all buyers need to obtain a mortgage loan to purchase a home. Since mortgage approval is such an integral aspect of a home purchase, wouldn't it make sense that REALTORS® have a better understanding of the mortgage pre-approval process, since so few buyers are able to buy a home and pay cash.
These terms appear to be similar, but can be quite different. Not only do they cause confusion for home buyers, there seems to be many interpretations from those in the real estate and mortgage industry as well.
Speaking as a REALTOR®, the difference is in documentation and verification. In other words, is the buyer providing copies of income paystubs and bank account statements to the Mortgage Lender or is the Mortgage Lender simply relying on verbal information provided by the buyer? More often than not, the difference between the two terms is that one is issued without any verification of information and the other starts with the buyer providing written documentation of all information provided. While neither is a considered to be a mortgage commitment, nor a written mortgage guarantee, obtaining a Mortgage Pre-Approval letter is more preferred than obtaining a Mortgage Pre-Qualification letter.
Mortgage Pre-Qualification is generally a process where a buyer contacts a Mortgage Lender/Mortgage Representative, often on the telephone, who then asks the buyer to provide some information. The information requested involves a current address and how long living there, a social security number and permission to order a credit report, annual income and hopefully the amount of down payment.
After the credit check is ordered and received by the Mortgage Lender, the Mortgage Rep then estimates the amount of mortgage the buyer can afford and sends (via fax or email) a letter to the buyer with the title Congratulations, You Are Pre-Qualified, for a mortgage loan in the amount of $__ or Congratulations, You Are Pre-Qualified, for a mortgage loan in the amount of $__ and a purchase price of $__. This is usually done within a half hour or so of the initial phone call, and at best can be described as an estimate of potential mortgage ability and purchasing power, and not Mortgage Pre-Approval.
The pre-qualification letter always includes varying type disclaimer information, such as: Subject to a formal mortgage application and payment of an application fee, subject to verification of employment, subject to verification of assets, subject to credit review, subject to mortgage underwriting guidelines, interest rate to be the prevailing rate of interest for the mortgage type applied for, among many other "subject to"-like statements. In other words, we will give you a mortgage when we see that the information you provided is correct and meets certain qualifying standards.
What problems could arise when a formal mortgage application is submitted by a buyer after they've obtained a Mortgage Pre-Qualification letter like that? The mortgage application process involves somewhat standard underwriting criteria and guidelines for each particular type mortgage, whether the mortgage is VA, FHA or Conventional. The varying underwriting criteria involves guidelines, whether Fannie Mae, Freddie Mac or the Lenders specific qualifying criteria, for verification of income, income qualifying ratios, verification of down payment, cash reserves after closing, credit check scores and work history, among others.
Yes, it is possible that the buyer provided correct information, and will obtain a mortgage commitment when a mortgage application is submitted. However, there are many circumstances where even though the information verbally provided is accurate, certain other details are not mentioned which may have a negative impact on the mortgage approval process. Details like income being received off the books, down payment being borrowed (not gifted from a family member), and savings for the down payment but no other assets for closing costs or inconsistency in work history, to name just a few situations that can cause problems in obtaining mortgage approval.
While Pre-Qualification letters like the previous example are common, not all Mortgage Lenders provide them in that manner. Many Mortgage Lenders require a more thorough process in providing Mortgage Pre-Approval. In addition to obtaining a credit report, many Lenders require the buyer to provide proof of two years of work history, pay-stubs or income tax forms, copies of bank statements for source of funds verification and copies of charge card statements.
When the documentation is provided, it is then submitted to the Mortgage Underwriter for review and approval. The Mortgage Pre-Approval letter is worded something like this: Congratulations, You Are Pre-Approved for a mortgage loan in the amount of $__ and a purchase price of $__ subject to a Contract of Sale and a satisfactory Bank Appraisal on the home being purchased. While more time consuming than the previous pre-qualification practice discussed above, it is more thorough and more reliable, shortens the formal mortgage application and approval process and provides the ability for a fast closing if one is desired.
Consider the advantages of this type Mortgage Pre-Approval. First of all, the buyer and REALTOR will have confidence in a price range and confidence in obtaining mortgage approval. In submitting offers, sellers will know they have a serious buyer who has taken the time to arrange for mortgage financing first. And just as important, the buyer will be more relaxed in spending money to hire an Attorney for contract review, providing the earnest money deposit, hiring a home inspector to perform the home inspection, termite inspection, radon inspection plus any other required inspections and paying for the mortgage application and appraisal fee. Why? They are concentrating on the home they have purchased, and not worrying about the mortgage approval process.
Needless to say, I can't even count the number of real estate transactions I've noticed fall apart after a buyer has paid all those fees for the home they hoped to purchase, only to find out they were not able to obtain mortgage approval, even with a Pre-Qualification letter. These are the financial ramifications for a buyer, but what about the ramifications for the others involved in a lost real estate transaction, the selling agent, the listing agent and the seller. Consider the time, energy, emotional strains and on and on. Real estate is a people business, a service business. Not much good can occur when a real estate transaction is cancelled for mortgage denial, especially when it occurs a month or so after contract acceptance.
Provide better service to your buyer clients, review their Mortgage Pre-Qualification letter with them, and don't be afraid to ask questions. Provide better service to your seller clients, read the Mortgage Pre-Qualification letter the selling agent is providing at the contract presentation, and don't be afraid to ask questions. Better yet is require a Pre-Approval letter when you receive an offer for your seller. Believe me in this market today it is very difficult to obtain a mortgage, so ask for the pre-approval up front.
About the author:
Cheryl Bowers is a Naperville, Plainfield Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of real estate in Naperville IL., Plainfield IL., or any place in the country. Cheryl has created a team of professionals throughout the Plainfield, Naperville IL. area and the country to ensure that you enjoy a smooth transition to your new area. Please visit www.CherylBowers.com for your real estate needs. Please give me a call if you have questions about the Naperville, Plainfield IL. Area real estate market.
Cheryl Bowers, REALTOR® 630-712-1921
(Copyright © 2008 By Cheryl Bowers, All Rights Reserved.)
The following information is from www.yourillinoishome.com. A great resource for home owners.
How to Avoid Foreclosure
If you are a homeowner at risk of foreclosure you need to know there are programs and services that can help. It's important to act quickly and before you are three months delinquent on your mortgage payment, says Beth Llewellyn, CEO of the Partnership for HomeOwnership and a U.S. Housing and Urban Development (HUD)-certified homeownership counselor with over 12 years of experience helping lower-income families achieve homeownership.
"Foreclosures in Illinois are a nine-month judicial process but after 90 days the lender will turn the delinquent loan over to foreclosure attorneys and then the fees really start to mount up," says Llewellyn. "The key is to not ignore letters from your lender. There are ways to work through a bad situation if you act quickly. A certified foreclosure intervention counselor can also negotiate with a lender, servicer or private mortgage insurance provider to restructure the loan if it can be determined the homeowner has the financial wherewithal to keep the home in the future."
Other options for people facing foreclosure include:
"Forbearance" whereby a lender lets a borrower pay less than the full amount of the mortgage or skip a few payments if there is a reasonable plan to become current on the loan.
"Reinstatement" is another option if the homeowner is able to make a payment that covers all of the previous late payments.
A "repayment plan" from a lender will allow a borrower who has fallen behind to make additional payments each month until the amount past due is paid.
To address the current wave of foreclosures, some state and local governments and nonprofit organizations are offering financial assistance. At-risk homeowners are encouraged to ask a local REALTOR® or a HUD-certified financial counselor to find out where to go for help. Llewellyn recommends the following:
Some homeowners may be eligible to refinance with Federal Housing Administration (FHA) insurance if they are falling behind in their mortgage payments with a new program called "FHASecure." Homeowners can qualify for this option if they meet the following five criteria: 1) a history of on-time mortgage payments before the borrower's teaser rates expired and loans reset; 2) interest rates must have or will reset between June 2005 and December 2009; 3) three percent cash or equity in the home; 4) a sustained history of employment; and 5) sufficient income to make the mortgage payment. See http://www.fha.gov/ for more details.
Another option for the homeowner is to sell the home. Oftentimes in these situations the sale will be a "short sale in lieu of foreclosure." A "short sale" is an industry term for when the owner of the home does not have enough equity in the property and not enough cash or liquid assets to be able to sell the property, pay off liens and selling expenses (e.g., property taxes, transfer taxes, real estate commissions) and provide a clear title to the purchaser. Many consider a "short sale" better in the long run for the homeowner because it avoids foreclosure which will damage a person's credit score and make it much harder for the owner to buy another home in the future.
According to Llewellyn, a foreclosure will stay on the credit report for at least 10 years as it is a court action similar to bankruptcy. However, foreclosure does even more damage to a credit report than bankruptcy. Ultimately, if you attempt to get a home loan in the future you must prove to the lender that the foreclosure happened due to something beyond your control such as job loss or illness.
"It's ideal if the homeowner who chooses to sell can work with a professional REALTOR before they are delinquent three months," says Llewellyn. "Within this short window of time, a professional REALTOR can negotiate with the lender to place the property on the market and possibly save the buyer any equity left as well as prevent a foreclosure on their credit file."
Things to remember for Illinois foreclosures:
Don't ignore letters from your lender. Some of the information will include foreclosure prevention options.
Address the problem immediately and BEFORE YOU ARE THREE MONTHS DELINQUENT on your mortgage payment when the loan is turned over to foreclosure attorneys and fees mount up.
Find your mortgage paperwork and read it to understand the terms.
Contact a HUD-certified counselor who is trained to help and provide information on foreclosure prevention options, 1-888-569-4287 or the Neighborhood Works America Center for Foreclosure Solutions at 1-888-995-HOPE (4673).
Learn more from Illinois Legal Aid, http://www.illinoislegalaid.org/
Know that you may qualify for options such as working with the lender to restructure the loan or a repayment plan.
Find a professional REALTOR to help you negotiate with the lender to place the property on the market if selling your home is the option you choose.
Foreclosure should be your action of last resort since it will stay on your credit report for at least 10 years and greatly affect your ability to obtain a home loan in the future. 
About the author:
Cheryl Bowers is a Chicagoland Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of real estate in Plainfield, Naperville, Aurora Illinois or any place in the country. Cheryl has created a team of professionals throughout the Chicago suburbs to ensure that you enjoy a smooth transition to your new area. Please visit http://www.cherylbowers.com/ for your real estate needs. Please give me a call if you have questions about the Plainfield, Naperville, and Aurora real estate market.
Cheryl Bowers, REALTOR® (630) 712-1921
(Copyright © 2008 By Cheryl Bowers, Realtor. All Rights Reserved.)
Cheryl is an innovative realtor for todays innovative real estate market. Visit me at http://www.CherylBowers.com or Call Now 630-712-1921
Cheryl grew up in Naperville, Illinois. Her parents lived in Ashbury subdivision located in South Naperville and she attended Waubonsie Valley High School. Cheryl met her husband while working at her first job, McDonald's. (The one off Weber and Boughton in Bolingbrook.) She and her husband rented an apartment in Naperville for about a year before buying their first home in North Plainfield. Cheryl and her husband, Bruce welcomed their first child in the winter of 2007.
Cheryl truly enjoys being a realtor. She believes:
"WHEN YOU DO WHAT YOU LOVE...
...PEOPLE LOVE WHAT YOU DO"
Cheryl Bowers is a real estate professional who brings buyers and sellers together to achieve their ultimate dreams. A few areas she excels in are:
Whatever your real estate need, you will be happy Cheryl assisted.
Patricia C. - Aurora, Illinois In April of this year I had the opportunity to receive a promotion at work which would take me to the ChicagoLand area. Having never been to the area I was as you can imagine a bit nervous and anxious about finding a place to live. Prior to coming for my house hunting trip I had been on the internet looking at homes with my children when we saw a few we liked in the Aurora area. We sent severeal emails to different realtors listed and Cheryl was the first and I might add only one to contact us very quickly. She asked us very specific questions spending quality time over the phone with us about what we needed and said she would be ready to meet us when we arrived. When we arrive from Florida Cheryl had prepared a wonderful packet which she had left for me at the hotel detailing information about the area including medium income, school district info, things to do, articles from publications about the area etc. The next day we met Cheryl and she spent all day with us taking us to visit homes which would fill our needs. Every single home was exactly what I had been looking for and after just one day of looking we were able to identify a home we would want to purchase. Cheryl very quickly took care of our contract, put me in contact with someone locally who could be of assistance for the morgage loan, and stayed in constant communication with me on where we were with the process. All of this was done via e-mail, phone and fax as I was in Florida which was extremely kind and thoughtful. I was able to purchase the home I wanted and am happy to say I am enjoying the area immensely. Cheryl not only assisted with the process but has kept communication also offering help and sharing information about the local market. Her professional attitude, local knowledge and communication skills were outstanding and I would recommend her to anyone and or of course use her myself some day if needed. Hope you enjoy her services as much as I did. Jamie and Michelle N. - Aurora, Illinois We just wanted to thank you for your help in selling our home. You were recommended to us by a friend and we were amazed by the results you produced. We called you in the middle of winter, told you we needed to sell our home, and that we wanted it done as quickly as possible. 30 days was the goal. You did it and exceeded all of our expectations!! You were professional, organized, knowledeable, and fun. You always answered our phone calls and made a very stressful time in our life a breeze. You gave us weekly recaps, provided us with prospective buyer comments, and helped us remain patient. At our initial meeting you actually talked us into increasing our listing price. In retrospect, the decision saved us an additional $5,000. Thanks again for everything, Cheryl. You are more than just a realtor to us, you're a friend. If we ever move back to Chicago, you will be our first phone call. Joyce M. - Rockford, Illinois
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