Janet Lyness

Here is the low down on the new tax rebates the house is due to vote on today.

For the $8000 tax rebate-You must have a signed purchase agreement by April 30, 2010 and close by June 30, 2010. If you have a buyer who has a current contract and you had told them because of the Nov 30, 2009 deadline that they would not qualify for the tax rebate they are about to get a nice surprise.

Current homeowners tax rebate-If they have lived in their current home for the past five years they qualify for up to a $6500 tax rebate. Here is where I get to say "I never get a break" because we sold our home in Florida and bought here two years ago. Yes the market was down and we took a hit on the house in Florida, yes we would have bought here anyway, but I feel the need to whine just a little. What about those of us who kept the market moving before all the tax breaks we placed into law?

Moving on---Income limits? Yes there are still income limits and the credit will be phased out if an individual has a annual income above $125000. For joint filers the income will be phased out if the annual income is above $225000.

Nice note-The credit is being extended until June 30, 2011 for members of the military serving outside of the US for at least 90 days.

UPDATE 11/6/09 HOUSE PASSED THE BILL - OBAMA TO SIGN INTO LAW TODAY

If you have questions feel free to contact me jlyness.fml@gmail.com or 865-748-5542

Here is the low down on the new tax rebates the house is due to vote on today.

For the $8000 tax rebate-You must have a signed purchase agreement by April 30, 2010 and close by June 30, 2010. If you have a buyer who has a current contract by you had told them because of the Nov 30, 2009 deadline that they would not qualify for the tax rebate they are about to get a nice surprise.

Current homeowners tax rebate-If they have lived in their current home for the past five years they qualify for up to a $6500 tax rebate. Here is where I get to say "I never get a break" because we sold our home in Florida and bought here two years ago. Yes the market was down and we took a hit on the house in Florida, yes we would have bought here anyway, but I feel the need to whine just a little. What about those of us who kept the market moving before all the tax breaks we placed into law?

Moving on---Income limits? Yes there are still income limits and the credit will be phased out if an individual has a annual income above $125000. For joint filers the income will be phased out if the annual income is above $225000.

Nice note-The credit is being extended until June 30, 2011 for members of the military serving outside of the US for at least 90 days.

A FHA loan from start to finish should take approximately thirty days. Is yours taking longer?

FHA loans are one of the easiest loans to process if your mortgage broker is familiar with the process. The most common errors are submission errors and you can have a hand in avoiding them. It is not your mortgage brokers responsible to ask for paperwork over and over again. When we ask for documents it's because the lender will need them (really!). I will start at the beginning-Sign and date all your documents. Supply your broker with all asked for paperwork. If you have only lived at your current address or worked at your current job for less then two years you need additional home or work information. Close is not good enough. The lender wants two years and one year ten months is not close enough. Calls will be made and the lender will come back asking for more information. Guess what?....you have now slowed down the loan. You can count on adding another four to six business days just because you thought (or your broker thought) you could just say two years on your application.

Most everything else is out of your hands. Your mortgage broker should know to include the appraisal with pictures, building permits, amendatory clause, title information including the deed description, etc. Everything should be legible if it is in your loan package. The most important thing you can do is choose your mortgage broker with care. Don't be afraid to ask questions until you are comfortable with the broker. If something doesn't feel right go elsewhere. If they don't answer your calls find someone who will.

I read an article this morning that made me wonder how many borrowers have no idea how to mange their FICO score. It also made me wonder how many Realtors, Brokers, etc give out bad information. Below is some information for your borrowers when it comes to managing their credit scores. Hopefully borrowers are thinking ahead so when they want to buy a home they have acceptable credit scores as well as the finances needed to purchase.

-I don't know how many times I have had a Realtor say to me " I told them to close any credit card accounts they don't use". They believe this will help with the DTI. The borrowers debts can account for as much as 33% of the FICO score. Keep in mind I am talking about the amount of debt against the credit limit.

-Which brings me to -- Do not have high balances on the credit cards you do have. Even if you place large charges on a card and pay it off every month the FICO system just reads that you have high balances each month. It doesn't"see" the large payment. This will hurt your score if you are above 49% of your credit balance.

-Don't just let the cards sit in your wallet. If you have them use them periodically. In today's credit envirnment lenders are likely to close the account on you and this hurts your score. I tell my clients not to do anything! Don't charge, don't payoff, don't pay down (other then monthly payments), etc... I had a first time home buyer who didn't take my advice and she paid two credit cards way down and one of the lenders reduced her credit limit. This lowered her credit score and she was no longer eligible for a loan.

-This tidbit goes hand in hand with the above information. Don't open any new charge cards. Again....this will lower your credit score at least in the short term.

-Pay your debts! This includes water, electric, cable, cell phone, etc. These companies may not report on a monthly basis to FICO but if you don't pay them they go to a collection account. Guess what happens? Yup..your scores go down.

-Missing payments or paying them late is a no brainer. Lenders are looking for at least 12 months of clean credit reporting.

-Everyone can now check their credit reports so dispute any errors. Don't wait until the month before you want to purchase a home to do this. It can take months to have errors removed and get your credit score corrected.

-Lastly, I frequently hear borrowers say "I had another company tell me not to give my SS# to anyone else when I am shopping for a mortgage". That's bull! If you are shopping for a mortgage you have 45 days to get as many quotes as you want. There will be the original "hit" to your credit and that should be it.

The FICO system is not out to get us and for the most part it is common sense. If your borrower follows good credit management they should be fine.

Being in love with the USDA rural program drives me to educate others about it. The program is designed to allow buyers up to 102% financing which is based on the appraised value of the home. This is an advantage for the seller because he/she may opt to not help with sellers concessions. A buyer low on cash can still get help with closing cost by utilizing the 102%. There are many many homes that qualify as rural even in areas like Knoxville. This year income limits were raised allowing even more buyers to qualify for the program. A single person who is looking to purchase can now earn up to $70750.00 per year. The income for all people in the home is counted not just the person who is applying for the loan. Unlike an FHA loan gift funds are not allowed. But like an FHA loan you can use alternate trade lines if the buyer doesn't have enough on the credit report. Lenders are looking for 12 month trade lines or longer. Any money that suddenly appears in a buyers account will need to be explained to the lenders satisfaction. This program has been around since 1993 and was funded again for this year-I don't see the program going away any time soon so if you are unfamiliar with the program get educated, it's worth it.

Bring on your buyers!! This is a great program!