Time is running out. Only about 1 1/2 optimal months left to find a home and get it under contract to take advantage of the $8,000 tax credit. For those of you who have not owned a home within the last 3 years, NOW is the time to get started on owning your own home. After November 30, 2009, that free tax credit may not be available. There has been talk of an extension but no official evidence yet.
Watch this short video to learn more details about the tax credit and the required timing:
(Click on the link right next to the red arrow)
I hope this helps,
Melanye Phipps
Your Castle Real Estate
303.913.5325
Did you know the following?
There are some important changes to the FICO credit scoring model that will affect your credit scores!
The three credit bureaus (Equifax, TransUnion, and Experian) should be implementing the new FICO 08 model sometime around this spring or summer. They are running late from '08.
Changes to be aware of:
Positive: The new model will ignore small collections under $100. Things such as library fines, parking tickets and those extremely frustrating small medical bills used to appear on credit reports causing incredible damage to scores. With the new model, any of these under $100 will still show up on the report but they will no longer be factored into the scores. The new formula will include some authorized user accounts. Adding a spouse or child to a credit card will still benefit them.
The Not So Positive: Closing accounts will hurt your score (but that's always been the case). If you have more closed accounts then open accounts you could see a significant decline in your credit score. Use your accounts to keep them active. Charge a tank of gas or any small item and then pay it off.
The FICO 08 model also puts more emphasis on a mix of credit, revolving and installment loans. If you have only credit cards your score will be lower than someone who also has some sort of installment loan, like a mortgage or auto loan. (Now is an incredible time to buy a home for so many reasons... I never imagined that improving your credit score would be one of them. But hey, it's great!)
The Negative: High balances on credit cards have always been an issue and now they will carry even more weight. It used to be that keeping a balance below 50% of the high credit limit was good and below 30% was great. With the new model, below 30% is good and below 10% is great. With so many credit card companies feeling the credit crunch, some of them are decreasing credit limits - sometimes as much as by 50%, which could be detrimental to a credit score because it could portray the idea that you are close to your limit.
What are your thoughts on these new changes?
1. Eight grand, new buyers: The tax credit included in the economic stimulus legislation is much narrower than the $15,000 proposal, but it's still great. This credit is equivalent to 10 percent of the purchase price of the home--although it's capped at $8,000--and applies only to first-time home buyers and principal residences. But unlike an earlier $7,500 home buyer tax credit, this one does not have to be repaid.
2. First time buyers defined: For the purpose of this legislation, a "first-time home buyer" is someone who hasn't owned a principal residence for three years before buying a house. That means if you've owned a vacation home--but not a principal residence--within the past three years, you would still qualify for the credit.
3. 2009 buyers only: Only those who purchase a home on or after January 1 and before December 1, 2009 are eligible for the credit. Anyone who bought a home last year won't be able to take advantage of it (but can get the $7,500 credit).
4. Income limits: The tax credit is subject to income limitations. Single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, that's $150,000 for married couples. Those earning more than these thresholds may be eligible for reduced credits.
5. Refundable: Because the tax credit is "refundable," qualified buyers can take advantage of it even if they don't have much tax liability.
6. Recapture: Buyers have to own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)
It's a pretty great deal! Take it a step further and find out what putting $8,000 towards the principle on your mortgage does to the life of your loan. It's crazy! The tough part is resisting that new big screen tv.
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