With more and more people looking to buy a new home the topic of a down payment comes up pretty frequently - especially with first time home buyers.

Even with the programs out there that offer low down payments and even down payment assistance doesn't mean you can come to the closing table empty handed.

Bankrate.com has provide a nice article (even though it was written a year ago) showing ways to save money; and you might not even feel it! Click here to view the full article.

The last tip is my favorite and probably the most important one. Move your low earning savings account to a high yeild online savings account. You could be earning 2-3 times (or more) the interest that you are now by moving. Moving your savings does 2 things:

 

1. You are making more money-and really not doing anything for it or even realizing it!
2. By moving your savings online it takes a couple of days to get the money from one account to the other meaning you are making it just that much more difficult for you to dip into your savings without thinking - causing you to keep more in your savings account. I've been doing it for years and on more then one occation it has stopped me from buying those 'must have' shoes...

 

 Make your money work as hard for you as you do for it! 

 

KC has been named #26 on Forbes' Best Cities for Young Professionals. Last year it barely made the list - this year we jumped 13 spots beating out cities like Orlando, Las Vegas, and Phoenix!

You can see the full article HERE .

On that note, Kansas City has many young professional groups including one that I administer. Join us atwww.kcyoungprofessionals.com

 

Ok, maybe that’s a fib. There is no real ‘quick fix’ for a poor credit score but this little trick might help you to boost your credit score; especially if your score is right on the cusp of average and excellent (or poor and average).

Every time you receive a pre-approved credit card application in the mail your credit score is pulled to verify that you should receive the ‘great offer’. Although these small hits to your report are not detrimental, if you receive many of these types of applications in a short period of time they can add up – and even reduce your credit score by several points.

There’s a quick and easy way to remove yourself from these pre-approved application lists.

Step 1:

Go to www.optoutprescreen.com and scroll to the bottom to click on the ‘Click Here to Opt-In or Opt-Out’ Button.

Step 2:

Chose between the following options:

• Opting-In will put you back on the list if you have previously removed yourself.
• Opting-Out for 5 years is a quick (about 15 minutes) online form. Personal information such as social security number and date of birth is needed for both Opting-Out forms.
• Opting-Out forever requires you to print out the form, fill it out, and mail it in.

Step 3:

Complete the form.

See - super easy!

It will take a little bit of time for this to show any improvement to your credit history and score, the current offers need to have time to cycle of your credit history – and like I said before, it won’t move your credit from poor to excellent – but it may be just that extra little push you need to get a better interest rate on your next home.

Another upside to opting out: Less junk mail!

 

Congress has approved a new first time home buyers tax credit. All it needs now is a signature from the President.

The credit has been increased to a maximum of $8,000 and is now a true credit with no repayment plan.

This website will continue to be updated once the President has signed the bill into law.

 

Did you get an economic stimulus payment from the Internal Revenue Service in 2008?

If you didn't receive a payment from the IRS or you didn't receive the full $600 per person ($1,200 per married filing jointly, $300 for each qualifying child) there is still the chance to do so.

Click here for a link to the IRS website.

For more information on how to receive this credit check the instuctions of the 1040 form you file.

 

How about super low interest rates? 

The Washington Post is reporting that the Treasury Department is  strongly considering getting involved with the mortgage industry to drastically push down interest rates to stimulate the market.

Click here to view the full article.

These lower interest rates would only be for a short period of time so be ready to act.  Call The Heritage Home Team to set up an appointment and have us start looking for your perfect home!

 

In case the low home values and the low interest rates haven't enticed you enough into looking for your first home here is another incentive to add to the mix.

The first-time home-buyers credit is part of the Housing and Economic Recovery Act of 2008 and is available through mid 2009.

Any homebuyer that purchases their first primary residence between April 9, 2008 and July 1, 2009 is eligible for up to a $7,500 tax credit (both spouses, if married, have to be first time home buyers). Even if you've owned a home in the past (but not in the last three years) you are still eligible.

So, how does it work? This is a tax credit; it is taken on your federal income tax return, and directly reduces the amount of tax you owe in the year that you buy your first home. This credit is refundable so you may even receive a check!

The amount of credit you receive is based on the purchase price of your new home. It is 10% of the purchase price, up to $7,500. This credit can also be limited by your adjusted gross income (AGI). The credit is phased out after your AGI is above $75,000 ($150,000 if you are married filing joint). For a more specific breakdown of the amount of credit you will receive please consult your tax adviser.

Ok, free money - what's the downside? This tax credit is similar to an interest free loan from the government - there is a payback period. Two years after you claim the credit on your tax return you begin paying back this ‘loan' so that the full amount is paid back in 15 years ($500 per year). If you sell your home within those 15 years the remaining amount of the loan is immediately payable.

So why claim this credit if I just have to pay it back? Don't forget about the time value of money! One dollar today is not worth $1 a year from now. So, when you have to start paying back the loan in 2 years, that $500 is ‘worth less' than it is worth today.

Confused? So am I, here's an example:

In April of 2009 you buy a $200,000 home and get the full $7,500 tax credit. You live in the house for 6 years (2015) and then sell the house for a profit. Starting in 2011 you begin paying back your ‘loan'. Here's a chart to show that you actually receive a benefit for taking the tax credit (assuming a 6.5% discount rate)

 

House held for 6 years and credit is repaid in full
Repayment	Nominal Value	Value in 2009 Dollars
2011	$500	$441
2012	$500	$414
2013	$500	$389
2014	$500	$365
2015 (remaining amount)	$5,500	$3,769
Total	$7,500	$5,378
Tax Benefit	(7,500-5,378)	$2,122

This shows that you receive a benefit of just over $2,100 for taking the first-time home-buyers tax credit.

Here's another example:

In April of 2009 you buy a $200,000 home and get the full $7,500 tax credit. You live in the house for 17 years and then sell the house for a profit. Starting in 2011 you begin paying back your ‘loan'. Here's a chart to show that you actually receive a benefit for taking the tax credit (assuming the same 6.5% discount rate)

 

House held for 17 years and credit is repaid in full
Repayment	Nominal Value	Value in 2009 Dollars
2011	$500	$441
2012	$500	$414
2013	$500	$389
2014	$500	$365
2015	$500	$343
2016	$500	$322
2017	$500	$302
2018	$500	$284
2019	$500	$266
2020	$500	$250
2021	$500	$235
2022	$500	$221
2023	$500	$207
2024	$500	$194
2025	$500	$183
Total	$7,500	$4,414
Tax Benefit	(7,500-4,414)	$3,086

What if you sell your house for a loss? In most cases, you will not have to repay any amount of the loan. (Again, speak to your tax adviser for more specific information.)

I want to do some more research. Where can I go? Here are some websites that you can use to determine if buying your first home is for you:

http://www.realtor.org/home_buyers_and_sellers/preparing_for_homeownership

http://finance.realtor.com/homefinance/guides/buyers/

http://www.hud.gov/buying/

http://www.freddiemac.com/corporate/buying_and_owning.html

And, of course, The Heritage Home Team is here to help you through your entire home buying process! Please contact us with any questions or to set up an appointment to see homes.

 

Some people don't fully understand the importance of having a good credit score. A poor credit score can effect many areas of your life. It can determine the interest rate you can get on a house, car, and credit cards - it can even keep you from getting a good rate on your insurance. Your credit rating is a way for businesses to determine how likely you are to pay back the money you owe it. The lower the number the less likely you are to pay it back.

Credit scores range from 300 to 850; anything under 620 is considered 'subprime' and normally represents people with a blemished or insufficient credit history. A good credit score is anything above 750. Assuming you could get a loan in the current market; having a 'subprime' credit score can really cost you - about 1.5%!

Let's put that into perspective. Say you have a 'subprime' score and purchase a $200,000 home. Your mortgage payments will be about $200 higher a month than someone with a 750 credit score (pure interest). That's $2,400 a year!

So, how is your credit score calculated you ask? FICO (Fair Isaac Corporation) determines your score based on 5 factors:

• Payment history - Having good 'credit behavior' will increase your score. Pay your full payment due, pay on time, don't have more then a couple of late payments on your report. Your payment history accounts for 35% of your overall score.
• Amount owed to total available credit - This is the amount of debt you have compared to the amount of credit you have been given. The best way to explain this is by looking at your credit card. Your credit card has a limit of $10,000 and you've spent $3,000 on the card. Thirty percent of your available credit is being used. That is better then spending $9,000 but not as good as only spending $1,000. This accounts for 30% of your total FICO score.
• Credit history length - The longer you've had credit the better your score will be. This is 15% of your score.
• New credit - The more credit you've apply for recently (like a credit card) shows that you need money and can lower your score. Shopping around for a good mortgage rate will not effect your credit as negatively as shopping around for new credit cards - just remember to do it in a short time frame. New credit is 10% of your score.
• Type of credit - You need a mix of 'good' and 'bad' credit; installment (mortgages and loans) and revolving credit (credit cards). This is 10% of your FICO score.

So, to have a good credit score pay your bills on time and in full, don't max out your credit cards or lines of credit, and stay away from applying for a whole bunch of new credit cards because you get a free t-shirt.

Knowing your credit score when you decide to start looking for a house is very important (you can buy a lot more house for an extra $200 a month). But it's not important only when you're ready to make a big purchase. You should monitor your credit score annually. Annualcreditreport.com is a great resource to do just that. It is a free service mandated by the government. Every year you are allowed to get a copy of your credit report from the three reporters (Experian, TransUnion, Equifax). These reports will not give you your credit score (however you can pay a small fee to get your credit score) but it will get you what others see when you have your credit 'pulled'.

Spend some time looking over your credit report for accuracy. If you see something that is not correct, report it. All the information should be found on the report itself or on the website of the agency. Wrong credit information can hurt your credit score just as much as right credit information.

And when you've taken a look at your credit report and decided it was time to buy your new home remember to come to The Heritage Home Team!

 

With the economy the way that it is these days sometimes bad things happen to good people.

 

Short selling a house is an alternative way to sell a home. A short sale, also known as a pre-foreclosure sale, happens when a lender accepts a lower amount for the house than the mortgage the house has against it. These sales are not easy to complete and it does require a knowledgeable team on your side to help you, but is becoming more and more common.

 

There are qualifications that have to be met in order for your home to be sold through a short sale:

• You are in default or near default status with your mortgage
• The value of your home has dropped
• You have fallen on hard times.
• You have no other assets to pay the difference of the short sale

 

This is a good alternative to foreclosure. There are still credit ramifications because it does appear on your credit report – but it’s not a foreclosure. And, sometimes, when you are able to sell your house in a certain manner, you may be able to purchase another house within a couple of years – this is something you definitely can not do with a foreclosure.

 

Most people aren’t even aware that this opportunity exists. This option is not ideal – losing a home never is – but it can help preserve dignity through a stressful situation.

 

The Heritage Home Team would like to work with you to help sell your home through a short sale. If you have reached a point where your mortgage payments are hard to make every month and you are moving towards default status on your loan contact The Heritage Home Team to discuss your options.

 

Also, make sure your friends and family are aware of this home selling alternative. They may not know that there is a way to get ‘out from underneath’ their home. This is a wonderful alternative to the bright orange and green stickers stuck to the front door and windows of a foreclosed home.

 

The Heritage Home Team continues to be here to work with our clients to find the best possible solution for their housing needs, in good times and in bad.