Special offer

$8000 Tax Credit - Mortgage by Randy Newsletter - July 2009

By
Services for Real Estate Pros with Marketing Advisor & Squeeze Mortgage NMLS# 377413

Mortgage by Randy

monthly update to our clients, colleagues, family & friends

By: Randy Mitchelson, July 2009

========================================================================================================================= 

 

In Issue 16 We Touch On:

$8,000 First-Time Homebuyer Tax Credit

Credit Tips for Divorcing Couples

Private Mortgages

 

As we enter the "dog days of summer" our thoughts are on family outings and reunions, fishing trips, lakeside campfires and the beach.  Personally, I am not participating in any of those fun things, but I hear about them through my "grapevine".  Collectively, we are still saving our pennies, lowering our credit card spending and moving forward cautiously.  As troubled as our own economy is reported to be, let's count our blessings that we do not face as tough a challenge as so many other countries.  Debt is a much bigger problem in other countries compared to the US and inevitably there will be consequences to pay for that....the question is, how will the issues in these other countries impact our attempt at recovery here at home?  On to the news....

The current newsletter and all prior newsletters are archived at the MortgageByRandy blog. Bookmark it and share with your friends and family.  You can make your own comments and feedback as well.  Time for the news...

Mortgage Market: First-Time Homebuyers Have 8,000 Reasons To Jump In To Real Estate

A lot of government programs have been rolled out in the past 12 months in an attempt to stimulate the economy and help rescue the real estate market.  One good program that has been implemented rewards first-time homebuyers with a tax credit of 10% of the purchase price, up to $8,000.   A tax credit is much more valuable than a tax deduction because it reduces the amount of taxes you owe dollar for dollar.  If you purchase a home for $250,000, then your tax credit would be $2,500.

You qualify as a first-time homebuyer if you have not owned real estate property three years prior to the purchase of a primary residence.  There is a broad definition of primary residence, but it must be a residence you live in most of the time. It can be a house, houseboat, housetrailer, cooperative apartment, condominium, or other type of residence.

To qualify for this tax credit the home purchase must happen between January 1, 2009 and December 1, 2009. The current combination of lower home prices and lower interest rates makes for an amazing opportunity to buy real estate. Add to that this $8,000 gift from the government, and renting a home just doesn't make much sense in many cases.

Personal Credit: Divorce Is Messy Enough - Manage Your Credit Correctly During the Unwind

Unfortunately, divorce rates are not improving in the United States.  Judges and attorneys are keeping busy dividing up the assets in a marital estate.  When a judge issues a ruling which documents who gets what, divorced couples are often in a hurry to embark on the new phase in their life.  However, what some people do not realize is that despite what a judge declares, it does not get reflected in the credit reports.

For example, a judge may declare that an automobile belongs to the wife.  If the loan for that car was done in both husband and wife, it will remain on both of their credit reports even though they are divorced.  If the wife misses car payments, it will harm the ex-husband's credit even though he has nothing to do with that asset per the judge's decision.

To overcome these risks, divorcing couples must take responsibility to close all joint creditor accounts as soon as possible and get new credit established in their individual names.  This includes credit cards, department store cards and any type of loan.  In addition, I recommend that divorced couples monitor their credit reports more closely than normal and even consider registering for real-time credit monitoring service.  That way, if any unintended fall out happens, they will be alerted to changes in their credit in real-time via email or text message.

Economy & Financial Insights: More Legislation Enacted To Curb Foreclosures

HOPE For Homeowners is a federal program launched in the final months of George W. Bush's term.  It was trumpeted as a solution to save as many as 400,000 American families from losing their home.  In fact, the program attracted about 50 (that's not a typo) applicants.  The qualifications were just too tight.

In May, President Obama signed new legislation which bolsters HOPE For Homeowners and allows more people to qualify for help in getting a loan modified.  The overriding philosophy behind this plan is that loans be based on a family's ability to repay the mortgage.  Qualifications include:

-Loan must have originated on or before January 1, 2008;

-Owner cannot afford their current loan (maybe due to job loss for example);

-They must have made a minimum of six full payments on their existing first mortgage and did not intentionally miss mortgage payments;

-They do not own a second home;

-Their mortgage debt-to-income must be at least 31 percent;

-They did not knowingly or willfully provide false information to obtain the existing mortgage;

-Homeowners must agree to share both the equity created at the beginning of their new HOPE For Homeowners mortgage and any future appreciation in the value of their home.

Question of the Month: I Have Good Credit & Downpayment Money and Bank Still Said "No"

As far as the pendulum swung a few years ago to loosen the availability of credit to almost anyone, we are now seeing the exact opposite effect.  Banks are turning good borrowers away strictly out of fear and overreaction of making another mistake.  Applicants with high credit scores are being turned down for the slightest of reasons.  Other borrowers who have enough liquid cash to buy a property outright are also being turned away.

The solution to this challenge can sometimes be found using private lenders or what is also called "hard money" lenders.  There are pros and cons to this type of lending.  The positives include fast-track applications with minimal paperwork, availability of smaller loan amounts (as little as $10 thousand), and common sense decisions.  On the other hand, this type of financing is expensive.  Rates are double-digit and fees are high.  For certain borrowers, it is a good solution.  Contact me for more information.

Giving Back: Supporting Our Communities - STEM Program Will Inspire Kids 

STEM stands for science, technology, engineering and mathematics.  Although the term has been around for many years, it has become a popular buzzword lately.  Our country has a need to graduate more kids that pursue careers in these fields.  Many higher paying jobs happen to be in these fields.  In order to excite kids about these subject areas, it requires exposure at a young age, even first grade.

STEM runs a unique program that builds partnerships between government, schools, universities and corporations.  It takes pressure off our teachers and delivers measurable results at a low cost.  To learn more about STEM or to become a volunteer, give me a call at 239-851-6738.

Need volunteers? Do you have a fundraising event upcoming?   Do you have a personal web site where you are raising donations for your cause?  Submit the information to randy@mortgagebyrandy.com by the 5th day of each month and we will do our best to include your information in the next issue.

Traveling to Nashville tonight for the annual Michelle's Angels Tribute Concert!  Then to Orlando at the end of July before heading north to New York in early August for a family visit, my high school reunion and a tradeshow in Manhattan.  Keep those loan scenarios and questions coming in !

Randy

Mortgage by Randy newsletter, Copyright 2009 Randy Mitchelson.  All Rights Reserved.

Randy Mitchelson is a licensed mortgage professional. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Randy Mitchelson.  Recommendations may change and readers are urged to check with their financial advisors before making any decisions. Opinions expressed in these reports may change without prior notice. Mitchelson can be reached at 239-851-6738.

___________________________________________________________________________________________________________________________________________

You have permission to publish this article electronically or in print as long as the following is included:

Randy Mitchelson, of Estero, Florida, is a business professional, entrepreneur and author with over 15 years experience in financial services.  Mitchelson has served in leadership roles for Global & Fortune 500 firms like Bank of America, KeyBank and CIBC.

 As a member of National Association of Mortgage Brokers, Randy has earned the Lending Integrity Seal of Approval.  He educates both individuals and groups about credit scoring by conducting personalized credit report reviews, action plans and one on one consultations. He is author of the free monthly newsletter, Mortgage by Randy as well as the Daily Dollar newsletter. A licensed mortgage professional, Mitchelson also founded Trinity Home Financing, LLC.

He is owner of Estero, Florida based National Web Leads, LLC, an internet lead generation service matching consumers with lenders for auto, cash advance and other loan products.   Through its network of partners, National Web Leads delivers innovative Web 2.0 software solutions such as lead generation platforms and real time desktop widget and mobile reporting tools for lenders and internet marketers.

Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY.  He is a founding member and Finance Chairman of the Southwest Florida Regional Technology Partnership Inc. and Vice President for the Michelle's Angels Foundation Inc.  He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.

Posted by

Comments (0)