There is a very important deadline fast approaching that every new home buyer needs to be aware of! The last day to buy AND CLOSE on a house in 2009 to receive the $8,000 tax credit is November 30th. The 1st Time Home Buyer Tax Credit was introduced as part of the American Recovery and Reinvestment Act of 2009 (otherwise known as the “2009 economic stimulus plan” or “government stimulus package”).

If you wish to take advantage of this tax incentive you must take action in 2009, time is running out! The last day you can buy a house and still qualify for this tax credit is November 30, 2009.

Under the Obama administration’s stimulus plan, buyers who haven’t purchased a home in the past three years may be eligible for a tax credit of 10 percent of the purchase price of a home up to $8,000. But buyers must close on the house before November 30th 2009 to qualify.

If you have already purchased, and filed a 2008 Form 1040 in early 2009 you do not have to wait until next year to claim the $8,000 first time home buyer tax credit.  Your original 2008 tax return can be amended immediately. You are also welcomed to wait to file with next year’s taxes.

If you or anyone you know wants to take advantage of the tax credit, there is still time. Please call or email me to discuss the possibilities.

One of the most confusing things about a home buying is what you are supposed to do and when.  It can be difficult to pinpoint an exact timeframe for home buying since it can vary depending on the market and your present situation.  Generally, you can expect it to take about 3 to 4 months to find a home.  This timeline is based on that time frame. However home purchase can be done in as little as 30 days.

Three Months

1. Come up with a checklist of things tasks to be completed in the home buying process.  This checklist should include all the steps you need to take from educating yourself about the real estate transaction to shopping for the home to the closing.  The checklist will serve as your guide throughout the home buying process.
2. Get pre-approved for a mortgage.  This will give you a price range to work with throughout the home buying process.  Make sure that you are getting pre-approved.
3. Start getting your loan application documentation together to provide to your lender.  These will include, past tax returns, bank statements, w2s and pay stubs.  The lender may require other information, but these are the basics.
4. Start shopping for a real estate agent to assist your home buying.  Use references from family and friends to find a reputable real estate agent that will have your best home buying interests at heart.
5. Begin the search for your home.  Come up with a list of things you need and want from a home.  Your real estate agent will be able to help you find homes that fall within your criteria.

Two Months

1. Start your search process.  Your agent will provide an email with many homes.  It will be up to you to narrow the list before hitting the streets.
2. Evaluate the houses that you are considering.  Work with your real estate agent to come up with a method to scorecard or analyze the houses that you are strongly thinking about purchasing.
3. Decide which home you would like to purchase.  Work with your agent to make an offer to the seller on the home.  Once you make an offer it is wise to stop shopping around for homes.
4. Once the seller has accepted your offer and you have signed the sales contract, have the home inspection completed. Your earnest money is needed at this time.
5. Make arrangements for the closing.

Six Weeks

1. Purchase homeowners insurance and provide proof of the policy to your lender.  This must be done prior to closing.
2. Make your moving arrangements.
3. If necessary, begin the process for school transfers or registration.

Four Weeks

1. Alert necessary parties of your change in address.  You can also have your mail forwarded through the postal service by putting in a request at your local post office.
2. Make arrangements for utilities at your new home.  If you will be working with the same providers you can simply put in a request to have your services transferred at a certain date.

Two Weeks

1. If you are having your items professionally moved, verify the arrangements with your mover.
2. Check with your lender to finalize the mortgage for the home buying process.
3. Pack your belongings unless you have arranged a full pack and move with the mover.

Closing Date

1. Bring your driver’s license for identification purposes.  Your down payment is due at this time.  Also bring any home buying closing costs that you are responsible for paying.
2. Keep in mind that this is a general home buying timeline.  You can adjust the time depending on how long it takes you to find a home you like.

Everyone’s timeline may be different.  This is a general timetable, work with your agent in a timeframe that suits you best.

If you have any questions about this timeline or the homebuying process, fell free to contact me here.

Home inspections are extremely important. A home inspection accomplishes two important goals. First, it gives you a chance to determine the condition of the house, its structural soundness, and the condition of its mechanical systems. Second, it brings any problems to the buyer’s attention at a time when they can be resolved before closing a sale.

A comprehensive inspection includes a visual examination of the structure from top to bottom, including the heating, air conditioning systems, the interior plumbing and electrical systems, the roof and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement and visible structure.

Following the examination, the inspector will provide a report that not only points out possible defects or areas of concerns, but also the positive aspects of the structure as well as the type of maintenance that will be necessary to keep the home in good shape.

As good inspection can cost you anywhere from $200 to $500 depending on the size of the property. It is your responsibility to get a home inspection not the seller. It is up to you to do your due diligence. Purchase and sale contracts often have a due diligence period for you to get the inspection done.

Don’t wait until you have placed an offer on a house before you begin the search for a home inspector. There will be a time limit in the contract designating when the inspection must be completed (typically between 7 and 10 days). If you start trying to find an inspector at that point, and cannot find an acceptable one to schedule it in that time frame, you will only have two choices: go with an inspector that is not your first choice, or run the risk of running past the deadline for the inspection (which could void any chance having the seller take care of repairs).

Bottom line, an inspector is your friend.

In your journey to purchase a home, you may have heard the terms FHA and HUD. Confused as to what they mean? In 1965 the US Government formed the Department of Housing and Urban Development (HUD), within HUD operates the Federal Housing Administration (FHA), which has the primary responsibility for administering the government home loan insurance program. This program allows buyers who might otherwise not qualify for a conventional home loan to obtain one because the risk is removed from the lender.  The risk is reduced by FHA because it insures the loan for the lender.

Current FHA loan programs for home buyers require the buyer to come up with 3.5 percent for a down payment.  FHA loans allow the buyer to receive a gift from a relative, non-profit organization, or government agency for the downpayment.

The main advantage to a FHA home loan is that the credit criteria for a home borrower are not as strict as conventional loans sold to Fannie Mae (FNMA) or Freddie Mac (FHLMC). Someone who may have had a few credit problems or no traditional credit should not have a problem obtaining FHA financing.
Forms of alternative credit that FHA may use include:

• To be eligible for a FHA loan you must have at least two lines of credit. Lines of credit does not necessarily mean credit cards.  Forms of credit for FHA loans may be a utility or cell phone bill. In some cases, the FHA may accept other forms of credit that do not appear on your credit history. A college degree can be one of these. If you do not have a credit history, it is to your benefit to establish some type of credit and make the payments on time. This will improve your credit score and show a history of timely payments that the FHA needs to approve you for a loan. Check out my blog on http://www.rachelmbrown.com/2009/02/18/understanding-credit-and-home-buying/
• Late payments may be overlooked by FHA. Generally ontime payments are preferred, but the FHA understands that sometimes financial difficulties occur and may overlook a period of late payments. However the FHA may request letters of explanation for hiccups on your credit profile.
• Foreclosures must be three years or older.
• If you have any delinquent federal debt such as student loans or tax liens, you are not eligible for a FHA loan.  If you have a “Federal Tax Lien” that is in a repayment agreement, you do not have to pay it off in full but you must be able to qualify with the monthly payment of the repayment agreement.  “State Tax Liens” typically must be paid in full prior to closing your FHA loan.
• If you have judgments against you, those judgments must be paid before closing.
• If you have items that are in collections, you still may still be eligible for a FHA loan if your credit history and income requirements meet FHA requirements.
• If you have filed for a Chapter 7 bankruptcy, you still may qualify for a FHA loan if the bankruptcy has been discharged for a minimum of two years. Borrowers must show stable employment and re-established good credit. If you are married, these conditions also apply to your spouse.
• If you have filed for a Chapter 13 bankruptcy, you must have made your payments on time and adhered to a payment plan for at least one full year to qualify for a FHA loan. You must re-establish your credit and be in good standing, maintain a stable job and meet income requirements.   A written explanation of why the bankruptcy occurred must be submitted with your loan application. The bankruptcy court trustee must give written approval.

Don not rule yourself out of qualifying for FHA loan to buy a home or refinance your existing mortgage because of credit issues until a mortgage professional has reviewed your credit.

FHA loans are not only available to first time home buyers.   FHA loans are available to anyone, whether your first or fifth home and can be used to purchase a home or refinance a home.

The greatest disadvantage of FHA home loans is that FHA limits the loan size that a borrower can borrower.   FHA loan limits in the Metro Atlanta area just increased to $346,250.

Budgeting is the single most important step to buying and keeping a home. Many Americans are at a financial edge that will drive them into foreclosure if a slight imbalance occurs. An overwhelming 43% of American households spend more than they earn each year, some 52% of employees live paycheck to paycheck and nearly 42% of all American households do not have enough liquid financial assets to support themselves for at least three months!  These are some scary statistics.  But guess what?  All these situations can be avoided by one word, and that word is budgeting.

Begin by completing a personal budget.  A personal budget profile will let you know if you are one of tens of millions of Americans that are spending more than they make. Simply laying out a budget and knowing where you stand can help you see clearly where improvements are to be made.

Why budget?
A personal budget will give you an accurate overview of your financial position. It is the single most important tool in dealing with your personal finances, especially if you are dealing with debts. Once you have completed your personal budget you will be able to:

1. See where you have money coming into your household
2. See where you have money going out of your household
3. See the total extent of your debts
4. Prioritize your spending to meet your essential needs, and if possible get out of debt
5. Handle your finances responsibly
6. See whether or not further borrowing is affordable or not.

Before you start completing your personal budget, ensure that you have any bills, statements, or any other documents that relate to your finances close to hand and in order. It is important to get the figures in your budget right so that you have an accurate picture of your income and expenditures.

Set aside some time when you know you won’t be interrupted. My husband and I have a routine we adopted, we pay bills together. If you live with a partner and you share your expenses, consider completing the budget together. Sharing the decisions could reduce the stress levels.

Sort out the bills and statements so that you know which is the most recent. What you eventually see on your budget maybe good news or not so good news. Either way, this budget allows you to face your current situation and do something about it.

Now that you know how much disposable income you have, you need to determine how much of that you want to put towards a mortgage. Disposable income can be defined as the income you have left over after all monthly living expenses; secured debt and unsecured debt are paid. The mortgage payment you choose may be higher than your current rent or lease purchase. It is recommended that you leave 5-10 percent disposable income.

So you have chosen you dream home, turned in all your paperwork to the loan officer, and your closing date is set.  You are nervous and excited because this is the last step before you get the keys to your new home.

You have understood all the processes that have taken you to this point, but now you have no clue what to expect at closing.  Closing is where you sign on the dotted line for the home as well as the mortgage. And the final transfer of keys and money. Closings typically take place at an attorneys office.

The following is a brief guide to get you through your big day and make all the legal and financial information sent your way, more understandable.

As you have heard, closings are a lot of signing, what you are signing is what I am about to explain.  When you close you are actually signing for two things: paperwork that has to do with your mortgage loan and paperwork that has to deal with real estate.

Here is a list of loan documents you will see at closing:

Truth in lending statement, also known as Regulation Z. The Truth in Lending statement details all the numbers and terms related to your loan.  It discloses your interest rate, annual percentage rate, amount financed and the total cost of the loan over its life. Make sure these numbers are in line with what the mortgage lender quoted you during you loan application process. One key term to look out for and ask is whether or not you have a pre-payment penalty. A pre-payment penalty is a fee they charge if you decide to pay off your loan early.  Ideally you do not want a prepayment penalty.

Itemization of amount financed. This document is like an addendum to the Truth in Lending statement. It summarizes the finance costs. It includes your amortization schedule.  The amortization schedule shows how debt is reduced over the life of the loan.

Monthly payment letter. This document reveals the break down of your monthly payment into principal, interest, taxes, insurance and any other monthly escrows. Again, look for any surprises. This should be in line with what the mortgage lender quoted you during your loan application.

Note. This is a very important document. The Note is where you’re actually borrowing the money – and giving your personal guarantee to pay it back.

Mortgage. This paper puts a lien on the house as security for the loan — allowing the bank to foreclose if you default on the note mentioned above.

Mortgage Application. You may have seen this document before, have no fear; they are just making you sign one in person as part of the closing package.

Here are the real estate documents that you will sign to make the house yours:

HUD Form 1 or Disclosure/Settlement Statement. Pay close attention to this form.  It states where all the monies exchanged in the transaction come from and go too. A good agent will work with you to make sure all your numbers are correct.  This is typically the first document the attorney presents to you.
Warranty deed. This is the document that includes the names of the buyer, the seller and a description of the property. The warranty deed also guarantees that the seller has the right to sell the property. With the signatures of the seller and buyer, this piece of paper transfers the title of property.

Name affidavit. This may seem like irrelevant, but this document certifies that you are who you say you are.  You may see several variations of your name; the names originate from your credit report.
Hand over the money, in some cases you have to bring money to the table.  The attorney who conducts the closing may require money to be wired or brought in certified funds.  All certified funds need to made out to yourself from yourself.  You should get an estimate of funds to close from your lender.

Now that you know what documents you expect to see at closing, relax, the house is nearly yours!  Feel free to ask any questions if you do not understand something.

Congratulations!

Thank you again for your trust in me during your real estate transaction.  As you may already be aware, Georgia allows homeowners to claim a Homestead Exemption as a tax benefit that can amount to considerable annual savings.

To qualify for the exemption, the homeowner must occupy the residence and file for the Homestead Exemption before the deadline.  To file for the exemption, you will need certain paperwork that varies by county, such as a copy of the recorded warranty deed, social security numbers of all persons on the deed, the mortgage holder, and the amount of the mortgage.  Please also note that several counties require a copy of the closing statement and proof of age for the senior citizen discount.

For your convenience, please find below a table consisting of links to homestead information on county websites in the metro area, tax commissioner office phone numbers and county deadlines for filing.  Many counties allow you to file online, while others give directions on how to file in person.

It is a privilege to continue serving you in your new home!

Bartow 770.387.5111 Deadline March 1, 2009

Cherokee 678.493.6120 Deadline April 1, 2009

Cobb 770.528.8600×400Deadline April 1, 2009

Clayton 770.477.4311DeadlineApril 1, 2009

Dawson 706.344.3590DeadlineApril 1, 2009

Dekalb 404.298.4000Deadline March 1, 2009

Douglas 770.920.7272 Deadline April 1, 2009

Fayette 770.461.3611Deadline March 1, 2009

Forsyth 770.781.2101Deadline March 1, 2009

Fulton 404.612.6440Deadline April 1, 2009

Gwinnett 770.822.8800Deadline March 1, 2009

Hall 770.535.8288DeadlineMarch 1, 2009

Henry 770.288.8180DeadlineApril 1, 2009

Jackson706.367.6330DeadlineMarch 1, 2009

Paulding 770.443.7606DeadlineMarch 1, 2009

Rockdale 770.929.4152 Deadline April 1, 2009

Walton 770.267.1335DeadlineApril 1, 2009

Our parents teach us many things, how to tie our shoe laces, how to ride bikes etc. but one very important thing they sometimes do not teach us is about having and maintaining good credit. In some homes, good financial responsibilities maybe taboo subjects or just not spoken about.

According to the Mortgage Bankers Association of America, 1 in 200 homes was foreclosed on in 2008. With foreclosure rates increasing by double figures annually, good fiscal management should be addressed before and after a home purchase. This first article is focused on understanding credit and your financial picture.  This will help you make the right decisions before and after a home purchase.

Know what is on your credit report.

First thing to do is get a copy of your credit report.  A copy of your credit report can help you to make certain that there are no discrepancies or problems in your credit history.   A credit report summarizes your financial picture. It shows your total debt, your monthly responsibility and your bill-paying history.  This data is used to generate something called your FICO score, named after the firm that pioneered this work, Fair, Isaac and Company.

Everyone from your landlord, employer, insurers and lenders use your FICO score to predict your credit worthiness and honesty. This credit worthiness is what drives your FICO score.  The higher your FICO score the lower the interest rate you will be charged on loans. A low FICO score can cost you to get charged higher rates, as well as get rejected for a loan.  Have no despair if your FICO is low. There are things you can do to raise the score.

The range for FICO scores are 300 to 850, and the higher the score the better your chances to get request for credit approved.

It’s a good idea to review your credit report once a year, and before you apply for a loan. This can be done by contacting the three reporting companies:
Equifax at 800-685-1111         (www.equifax.com)
Experian at 888-397-3742       (www.experian.com)
Trans Union at 800-888-4213 (www.transunion.com)

Improving Your FICO® Score (Tips courtesy of www.myfico.com)

We have all seen the signs on the side of the street “Free Credit Repair! Call Now!”  We have all wondered if they were legitimate establishments or not.  Word of caution before you call one of these companies, and that is, there are NO QUICK FIXES TO CREDIT.  Repairing your credit or improving your score is a slow process that you have to commit to.  Your best option is the start to handle credit wisely and continue to do so over time. Here are a few tips that can help you raise your score.

Payment History Tips

1. Pay your bills on time. Delinquent payments and collections can have a major negative impact on your score. If you have missed payments, get current and stay current. The longer you pay your bills on time, the better your score.
2. Be aware that paying off a collection account will not remove it from your credit report. It will stay on your report for seven years.
3. If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor. This won’t improve your score immediately, but if you can begin to manage your credit and pay on time, your score will get better over time.

Amounts Owed Tips

1. Keep balances low on credit cards and other “revolving credit”. Experts recommend you keep balances under 30-40% of the available credit total. High outstanding debt can affect a score and reflect negatively. Pay down high balances on all “revolving credit” accounts. Simply paying down balances to under 30% may increase your score by 50 to 100 points.
2. Pay off debt rather than moving it around. Moving it around does not eliminate it. The most effective way to improve your score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score.
3. Don’t close unused credit cards as a short-term strategy to raise your score.
4. Don’t open a number of new credit cards that you don’t need, just to increase your available credit. This approach could backfire and actually lower score.

Length of Credit History Tips

1. If you have been managing credit for a short time, don’t open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your score if you don’t have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.

New Credit Tips

1. Do your rate shopping for a given loan within a focused period of time.  FICO® scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
2. Re-establish your credit history if you have had problems.  Opening new accounts responsibly and paying them off on time will raise your score in the long term.
3. Note that it’s OK to request and check your own credit report.  This won’t affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.

Types of Credit Use Tips

1. Apply for and open new credit accounts only as needed. Don’t open accounts just to have a better credit mix - it probably won’t raise your score.
2. Have credit cards - but manage them responsibly.  In general, having credit cards and installment loans (and paying timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
3. Note that closing an account doesn’t make it go away. A closed account will still show up on your credit report, and may be considered by the score.

I hope these types bring you closer to your dreams.

I recently attended the Atlanta Magazine Best of Atlanta Party, a food and drink sampling of the best restaurants Atlanta has to offer. Restaurants like Fogo De Chao, Mary Mac, Rathbun and Stats - to name a few were there in full effect!  If you have any been to any “Taste of”- the concept was the same. You walk around the room sampling food on tiny plates - which dozens of restaurants have to offer. We had food from all walks, from clam chowder to wings, mac and cheese all the way to steak.

I was invited to this event by the Scotts, past clients as well as friends, and I asked my favorite loan officer Emily Duggan to join us.  Sometimes we girls have to let our hair down, let loose and have some fun!

After we sampled as many restaurants as possible, we happily visited the Captain Morgan booth to wind down.  The highlight of the night was the www.wowphotobooth.com, where we got to take goofy pictures.

We definitely recommend this event as a get to know Atlanta must do. Proceeds from the event were contributed to Camp Twin Lakes.

See me and Emily’s goofy photo booth pictures below.

Home buyers had hoped for a $15,000 tax credit to buy a new home, but will have to settle for $8,000.  The Senate reduced the buyer credit from a proposed $35 billion credit to support home sales for a more modest $2 billion to $3 billion provision.

The proposal would eliminate the repayment requirement in an existing tax credit for first-time home buyers, and raise the credit to $8,000 from $7,500.

The $8,000 homebuyer tax credit does not need to be paid back, unlike the original $7,500 first-time homebuyer tax credit. To qualify, the purchase has to be made between January 1 and August 31, 2009 and you have to stay in your home for three years.

The stimulus bill is expected to be signed by President Obama on February 17th 2009.