I recently wrote Marsha Blackburn to let her know my concerns and this is how she replied.

Dear Mrs. Agnew:

What a pleasure to hear from you. Thank you for contacting me to share your support of the National Association of Realtors (NAR) four-point legislative plan as part of a potential second stimulus package. Hearing from constituents on issues of concern is important to me and our office as we work to represent our district.

As you may know, the Economic Stimulus Act of 2008, passed the House of Representatives by a vote of 385-35 on January 29, 2008 and provided rebate checks to taxpayers, between $300 and $600, based on their 2007 Adjusted Gross Income level and filing status. As the stimulus package passed the House I was promised that its swift enactment would sufficiently respond to economic indicators suggesting an increased risk of a recession in early 2008. Prior to the vote, Federal Reserve Chairman Ben Bernanke testified that action was needed to stimulate the economy through targeted government spending and tax incentives. Unfortunately, the benefits from the initial stimulus package quickly wore off, the credit crisis worsened, and Congress proposed a $700 billion bail out package for failing financial institutions at the urging of Treasury Secretary Henry Paulson that has also failed to stabilize the financial markets.

As you mentioned, the National Association of Realtors has proposed a four-point plan focusing on stimulating the housing market. The plan would extend a non-repayable $7,500 tax credit to all home buyers of a primary residence; make permanent the loan limit that was established in the Economic Stimulus Act of 2008 (Public Law 110-185); use a portion of the recent $700 billion bailout for price stabilization for housing; and finally, permanently prohibit banks from entering into real estate brokerage and management.

Like you, I believe the housing market is critical to improving and strengthening the American economy. I fully support transparent and fiscally responsible methods for promoting homeownership and stability for small business owners and families across Tennessee. As Congress continues to debate the most appropriate methods for stabilizing the economy you can be sure I am considering the Realtor proposal, and will only take action in the best interest of Tennessee taxpayers.

Please know that I appreciate both your interest and time in contacting us on this issue. As the discussion moves forward on this and other issues, please feel free to visit our website at www.house.gov/blackburn where you can sign-up for our email update, learn about constituent services, and find the latest legislative news and critical information that affects and concerns the people of Tennessee.

Sincerely,

Marsha Blackburn

Member of Congress

Well, that is not true.

VA is one of the easiest loan to qualify for. You must have a minimum of a 580 credit score. If your score is between 580 and 619, you are going to get a slightly higher interest rate, but still better than most other loans. For example, if today’s interest rate is 5% and you have a credit score of 600, you would probably get about 5.5%. You can’t beat that! Also, VA does not require a down payment.

For a VA loan you must:

Have VA eligibility….

If you are on active duty, you must have serviced at least 90 days active duty. If you are no longer in the active service, you must have served a minimum of 2 years and have an honorable discharge. If you are National Guard or Reservist, you must have served 6 years to be eligible for a VA loan.

Have a minimum 580 credit score.

If your score is below a 580, there are ways that we can improve the score.
Have 2 years since the discharge of a bankruptcy with no additional derogatory credit following the bankruptcy.
Have all judgments satisfied.
Have an acceptable debt to income ratio.
VA also prefers no late payments in the last 12 months.
Any recent collections might be required to pay off.

It sounds like a lot of information, however, the process can be done just by making a 15 minute phone call. Call today to see if you qualify for a VA loan.

(931) 980-3999 and mention Last Train To Clarksville for a special!

Credit Repair

Have you had recent credit problems and have been turned down when trying to buy a home? There are a lot of “credit repair” companies out there that will charge you to give you advice on how to fix your credit. Often times, you spend a lot of money paying these “credit repair” people using money that you really need to be using actually fixing your credit. When you apply for a mortgage and get turned down, your loan officer should be able to give you good advice (free advice) on how to improve your credit. You should not have to pay anyone to help you fix your credit.

Helpful suggestions for credit repair:

• When paying off a collection, pay the full amount, do not try to settle for less than the full balance. Sometimes by settling the account, your credit scores will actually go down instead of up.

• Close any credit cards that you are not using. Even if you have a balance, close the account and then just continue to pay the account as required.

• If you are going to keep a credit card, keep a major credit card (master card or visa) not a store credit card.

• Try to avoid any account becoming over 30 days past due.

• Try to pay more than the minimum required on credit cards.

All of these things will help your credit to improve over time. For faster results you can send proof of payoff of accounts to the three major credit bureaus (Transunion, Exquifax, and Experian) and request that they update you credit file.

For any help or advice, please contact me and we will start you off on the right foot!

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The credit, however, acts more like a no-interest loan because it must be repaid to the government over 15 years.

Frequently asked questions and answers:

Q: What is the credit?

A: The First Time Homebuyer Credit is a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008. The credit acts as an interest free loan because it must be repaid over a 15-year period.

Q: How much is the credit?

A: The credit is 10 percent of the purchase of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing a joint return; $3,750 for married persons filing separate returns.

Q. Which home purchases qualify for the first-time homebuyer credit?

A. Only the purchase of a main home located in the United States qualifies. You must buy the home after April 8, 2008, and before July 1, 2009.

Taxpayers who owned a main home at any time during the three years prior to the date of purchase are not eligible for the credit. This means that first-time homebuyers and those who have not owned a home in the three years prior to a purchase can qualify for the credit. If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 (or amended 2008 return) or 2009 return.

Q: When must I pay back the credit?

A: You must begin repaying the loan the second year after claiming the credit. For example, if you properly claim the maximum available credit of $7,500 on your 2008 federal tax return, you must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on your 2010 federal tax return. Normally, $500 will be due each year from 2010 to 2024.

Q. How is the credit repaid?

A. The first-time homebuyer credit is similar to a 15-year interest-free loan. It is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. You may need to adjust your withholding or make quarterly estimated tax payments to ensure you are not under-withheld.

Some exceptions apply to the repayment rule:

• If you die, any remaining annual installments are not due. If you filed a joint return and then you die, your surviving spouse would be required to repay his or her half of the remaining repayment amount.
• If you stop using the home as your main home, all remaining annual installments become due on the return for the year that happens. This includes situations where the main home becomes a vacation home or is converted to business or rental property. There are special rules for involuntary conversions.  Taxpayers are urged to consult a professional to determine the tax consequences of an involuntary conversion.
• If you sell your home, all remaining annual installments become due on the return for the year of sale. The repayment is limited to the amount of gain on the sale, if the home is sold to an unrelated taxpayer. If there is no gain or if there is a loss on the sale, the remaining annual installments may be reduced or even eliminated. Taxpayers are urged to consult a professional to determine the tax consequences of a sale.
• If you transfer your home to your spouse, or, as part of a divorce settlement, to your former spouse, that person is responsible for making all subsequent installment payments.

Q: Can I apply for the credit if I bought a vacation home or rental property?

A: No. Vacation homes and rental property do not qualify for this credit.

Q: Who is considered to be a first-time homebuyer?

A: Taxpayers who have not owned another home at any time during the three years prior to the date of purchase.

Q: When would I have had to buy a new home?

A: Only purchases of a main home located in the United States qualify, and the home must have been purchased after April 8, 2008, and before July 1, 2009. For a home you construct, the purchase date is the date you first occupy the home.

Q. Are there income limits?

A. Yes. The credit is reduced or eliminated for higher-income taxpayers. The credit is phased out based on your modified adjusted gross income (MAGI). For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000.

This means the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.

Q: Can a person with an ITIN, who qualifies as a resident, take this credit?

A: Resident aliens with an ITIN are eligible to take the credit.

Q: I don’t owe taxes and did not have taxes taken from my paycheck, do I qualify for the credit?

A: Yes, the credit is fully refundable, and you can claim the credit even if no taxes were withheld from your paycheck.

Q. Who cannot take the credit?

A. If any of the following describe you, you cannot take the credit, even if you buy a main home:

• Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
• You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
• You stop using your home as your main home.
• You sell your home before the end of the year.
• You are a nonresident alien.
• You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year.
• Your home financing comes from tax-exempt mortgage revenue bonds.
• You owned another main home at any time during the three years prior to the date of purchase. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another main home at any time from July 2, 2005, through July 1, 2008.

If you are interested in anything you have read above, please contact me and we will schedule to give you a personalized financial assessment.

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Beware of refinance solicitations.  When interest rates start to go down,

loan officers come out of the wood work trying to get you to refinance.  Majority of these low interest rate offers will involve paying discount points or other fees.  Sure, it sounds great if you have a 6.5% rate now and are offered a rate of 4.5%.  That is a two point difference.  Most advice I have ever heard is refinance if you can lower your interest rate by 2% or more.  However, beware of the cost to do the refinance.  You may go down 2% on the interest rate, but the costs rolled into your loan could raise the balance of your loan by $5000-$10,000!!

The loan officers will tell you:

• We can lower your interest rate.
• We can lower your monthly payment.
• We can help you to skip one or two months of mortgage payments.

What they will not tell you is:

• $5,000-$10,000 will be added to what you owe on your home if you roll in the costs of the loan.
• If you try to sell your home within a few years of the refinance, you may not have enough equity causing you to have to bring money to closing.
• The rate is actually 5% and you are paying fees to get to the 4.5% or 4%.

It is so important to be fully informed when considering a refinance on your current home.

Remember that all owner occupied refinance loans have a three day right of recession.  What that means is, if you sign the closing documents to refinance your home and then you realize that it is not in your best interest to do the loan or you have been misinformed, you can cancel the loan in the first 3 days following the closing.

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This is a common question asked by potential homebuyers.  Is it safer to rent a home instead of buying a home?  Well, ultimately, that is a question that can only be answered by each individual person.  However, each person must be informed and educated as to the differences. 

If you rent a 3 bedroom, 2.5 bath home with around 1600 square feet, what will you pay in rent?  After making a few calls to some rental agencies, I came up with anywhere between $850 and $1200.  It really depends on the age and condition of the home.  So, let’s look somewhere in the middle and base our numbers off of $1000 per month rent.  So, over a 12 month period you have paid the owner of the home $12,000 out of your pocket.  There are no tax deductions for you and you do not own the home.  You would also want to insure the contents of your home by getting renters insurance.  That will run you around $20 per month.

If you purchase a home for $150,000 using your VA eligibility you will finance $153,225 if this is your first time to use your VA.  Based on an interest rate of 6% your principle and interest payment would be $919.35 per month.  Now, you still have to consider property taxes and homeowner’s insurance.  A good estimate for property taxes based on this amount should be about $135 per month.  Homeowner’s insurance should be around $45 per month.  Both of these items will be included in your monthly mortgage payment.  So, your total estimated mortgage payment would be $1099.35. 

Renting would be a cost of around $1020 per month and buying would be only $80 more per month based on these figures. 

Here are some benefits to homeownership:

In some cases you can buy a home with no down payment compared to paying 1 month rental deposit and first months rent.

You would need around two months of rent up front when renting a home.  When buying, you don’t make your mortgage payment until a month after you buy it.

Your monthly interest paid from your mortgage payment is tax deductible.

Typically your house will increase in value over time building your equity in the home.

You are investing your money in something you own….not in your landlord’s pocket.

Be sure and check with your bookkeeper or accountant regarding other possible tax deductions involving homeownership.

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For more information on Mortgage Loans & Options, please contact Amanda Dusenberry.