Take Advantage of the “Sleeper” Tax Credit

Most of us have heard that the first-time buyer $8,500 federal tax credit has been extended until June 30, 2010. But did you know that if you are a homeowner now, and you buy another house, and you fit certain easy criteria, you can qualify for a $6,500 tax credit on the spot? That’s right. And that means that potentially hundreds of thousands of Americans are eligible for it … right now.

How can you qualify?

1. You have to have owned and used your current home as your principal residence for five consecutive years out the past eight
2. Your adjusted household annual income cannot exceed $125,000 if you file taxes as a single, or $225,000 if you are married and file  jointly.
3. You need to sign a contract to purchase a replacement residence before next April 30, and close the transaction by June 30, 2010.

 

Reduce the Tax You Owe by $6,500

This is  huge for all of us who never thought we would qualify for a tax credit under any circumstances, because we’ve owned our home for years.

 

By the way, although the new program has been called the “move up” tax credit, there is no requirement that you buy a more expensive home. You can downsize if you want and still get the credit.

Want to know how this will effect you? Cal me now 415.300.0432, or mail me at Jack@mmsmarin.com.

Distressed Marin Owners Hammered by Credit Bureaus

Marin County homeowners who find themselves struggling with mortgage payments and unsure how to handle the situation—short sale, foreclosure, or walk away—are advised to consider the impact of each on their credit scores.

According to the L. A. Times, loan modifications that roll late payments and penalties into principal debt owed on the house can actually increase borrowers’ scores modestly, while refinancing underwater mortgages may have little or no negative effect on credit scores, according to Vantage Solutions, a scoring company created by the three national credit bureaus.

Short sales on the other hand can trigger large declines in credit scores, according to researchers. For example, a Mill Valley homeowner with an excellent credit score might see a 120 to 130 point decline after a short sale. Homeowners who choose to walk away from the home and stop payments altogether should expect their credit scores to fall 140 to 150 points, plus negative marks on their credit bureau files for up to seven years.

People filing for bankruptcy protection covering all their debts will get hit with an average 355- to 365-point drop in their scores. Bankruptcies remain on borrowers’ credit bureau files for 10 years. But there is good news.

Marin homeowners facing financial stress can experience minimal declines to their scores if they contact their loan servicer or lender when they first discover that they may have trouble making their monthly payments. Questions? Call me right away at 415.302.7787 or JMcLaughlin@FHAllen.com. Expert in workouts and short sales.