Congress is mulling over new tax credits to lure homebuyers to get into the mix and purchase a home in today’s oversaturated housing market. The initial $7,500 tax credit was revamped into the $8,000 tax credit, and then changed again so you can use that as part of your down payment. Now even more changes are being discussed, which is more good news for those looking to buy a home.

Doubling the tax credit to $15,000

$7,500 wasn’t good enough, $8,000 isn’t doing it currently, so why not go to $15,000? Makes sense, but how about a sliding scale? $15,000 is not chump change, but in California its just a drop in the bucket when you are looking at the house prices in LA and San Francisco. I think it would make sense to modify the credit to be a percentage of the purchase price rather than arbitrarily increasing the total amount.

Expand the pool of eligible homebuyers

Currently there is a large loophole that as long as you haven’t purchased a home in the past 3 years, you are still considered a first time homebuyer. Lawmakers want to expand this even further to include “any buyer of any home”. I like this move, particularly in conjunction with an increase in the tax credit. This casts a much wider net and entices anyone to get back in the housing market.

Extend the timeline of the tax credit

The current deadline for the tax credit is the end of the year. There are various proposals to extend the deadline to at least the middle of 2010. This makes sense, as there is no reason to end the credit at the end of the year with most housing markets seeing a glut of home inventory and very few qualified borrowers.

$3,000 Refinance tax credit

This bill would give a similar tax credit to those who refinanced the mortgage on their primary residence. This additional $3,000 would be available to anyone who refinances. This credit doesn’t make as much sense to me on paper. Those people who have been able to refinance, are doing it to fix their mortgage rate, or potentially save money on their payments by refinancing. They have done this already, or will do this regardless of a $3,000 credit. Refinancing your home simple to benefit $3,000 on your taxes is not a wise choice. The refinance makes sense or it doesn’t, a $3,000 tax credit shouldn’t affect that decision for most borrowers. This type of credit could bring back some of the shady loan practices that were prevalent during the housing boom.

Overall, anything that will encourage prospective homebuyers to get into the market will be beneficial. Increasing the tax credit won’t hurt, expanding the amount of eligible homebuyers won’t hurt, and extending the deadline won’t hurt. The question remains, will all of these things put together finally get the housing market back on track?

If you bought coffee at Starbucks over Memorial Day weekend with a credit card you should go back and double check your credit card bill. A glitch in their credit card processing system charged approximately one million debit and credit card customers twice their bill. This involved over 7,800 Starbucks across the nation. Starbucks did notice the discrepancy a few days later and contacted the bank to begin reconciliation of these double charges. A spokesperson for Starbucks released a statement apologizing to its customers for the inconvenience and confusion.

This type of glitch illustrates how even well known and reputable companies still have hiccups, and that it’s up to you, to maintain and watch over what you are charged on your credit card. Macy’s experienced a similar error during the 2008 holiday season. However, Macy’s did not disclose the amount of duplicated charges and how many customers it affected.

While this type of credit card error would most likely not set off a fraud monitoring system, it provides an example of how things beyond your control can still affect your credit report. If you only take a cursory glance at your credit card bill when it comes in, you make yourself susceptible to these types of accounting errors. Worse, if you are not diligent on checking your credit card statements, you can find yourself victim of credit card or identity fraud.

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We just had a big rollout the other night and you can now view your Credit Report Card on Credit Karma. For those of you are already members, just log into your account and click on the “Report Card” link on the top navigation.

One thing to note, in order to protect your identify, we ask 4 questions regarding your credit file. These questions can vary from the amount of mortgage owed, to the payment amount on a student loan. Sometimes these questions may require you to look up some information, as you will need to be accurate in your responses to gain access to your Credit Report Card.

Credit Karma has compiled data from your most recent credit report, as well as data from our user base, to provide a relevant comparison of your credit profile against a national average. You will be given a grade and some additional information on each of the following credit dimensions:

• Credit Card Utilization
• On-Time Payments
• Age of Open Credit Lines
• Total Number of Accounts
• Number of Hard Credit Inquiries

Additionally, Credit Karma will also show you your total debt reported on the credit report, and if you enter your monthly income, will calculate your Debt to Income ratio. This ratio is one of the major factors that lenders are examining when underwriting your loan. These two factors are not graded, but are provided to show your current credit scenario accurately.

You can click on the “Grade Details” and we will show you where you rank among existing Credit Karma users. If you’d like to learn more about each section, you can click on the title or the “more details” link. These pages will show your exact breakdown and provide additional tracking on your status of these categories.

Its interesting to see what debt and account totals, specifically clicking on the “more details” to see the cumulative results of your credit history. This new functionality gives more transparency to our users on what affect their credit, and how they compare to everyone else. This is the type of information that helps consumers accurately monitor their credit, and provides feedback as to where improvement is needed. So check out your Credit Report Card and see how you stack up!

There has been a good amount of speculation regarding the $8,000 First Time Homebuyer Tax credit to be modified to allow you to use that money as part of your down payment or your closing costs. The U.S. Department of Housing and Urban Development announced on Friday that this will become reality, as they are taking steps to finalize this offer. Previously, you had to wait until you filed your tax returns before you could take advantage of this tax break.

This is good news for those looking to buy or sell their property, as every incentive helps to move the large inventory of available homes. As expected, there are certain requirements that will need to be met in order for you to apply the $8,000 to a down payment or closing costs. Your loan must be FHA approved and will also need to file an IRS form 5405 which allows the government to pull and audit your tax returns. As a way to require borrowers to have some “skin in the game”, you must pay at least 3.5% of the home value as a down payment. You can still receive this money as a gift from relatives, but this is a way the government can avoid 100% financing.

If you take advantage of this benefit, your lender will provide this money to you at closing for a nominal fee. This amount is expected to be no larger than 2.5% of the expected credit amount. So if you expect the full $8,000, it will cost you 2.5% of that ($200) to receive those funds to apply towards down payment or closing costs. That’s not a bad price to pay for $8,000 at closing.

It will be interesting to see if this new modification will cause an up tick on home purchases. When the $8,000 tax credit was announced, it was expected to stimulate homebuyers, but evidence of an increase is hard to pinpoint to the credit. Similarly, this new measure is expected to increase home buying activity, but it can be argued that many potential buyers are still waiting until the market shows more signs of improvement. This change will help those who are already in the market for a purchase, but may not provide enough benefit to cause a significant increase in home sales.

Mortgage rates have skyrocketed recently, jumping nearly a full point from last month’s low to this month. In Freddie Mac’s recent survey of mortgage rates, the benchmark 30 year fixed rate averaged 5.29%; compare that to last week’s 4.91%. This is the highest average rate since December 2008. The 15 year fixed rate was 4.79%, up from 4.53% the previous week. Freddie Mac chief economist stated, “the 30-year fixed-rate mortgage rates caught up to the recent rise in long-term bond yields this week to reach a 25-week high.”

These higher rates may mark the end of the current refinancing boom. The current boom is being fueled by borrowers with high credit scores and low loan to value; as they are the few that are qualifying for loans. Obama’s Making Home Affordable plan is predicated on the fact that the homeowner is gainfully employed. As unemployment numbers stay high, more and more potential borrowers are being squeezed out by either high rates, or failure to qualify based on income for the federally backed programs.

The Fed needs to keep interest rates low in hopes of stimulating the housing market, but their rate cuts and other efforts to buy up bad debt are not having as much impact on the end mortgage rates as they were earlier in the year. The Fed will continue to try to keep rates low, but we may have seen the lowest of the low rates last month.

Last week saw mortgage rates jump up a half point or more on Tuesday and Wednesday, startling many mortgage professionals and causing borrowers who waited to lock their loans to lose out on their low mortgage rates. When you are financing your home, for either a purchase or a refinance, you will be given the chance to ‘lock your loan’ after a preliminary review of your application. While additional underwriting and paperwork is processed, you can choose to “float” or “lock” your loan.

Floating your loan is betting that rates will get no worse than they are today, and hopefully will go down while your loan is in process. When rates go down, borrowers are very happy that they choose to float. If you choose to lock you loan, you will be securing the rate for your mortgage while the paperwork is completed. You won’t lose out if the rates go up, and if they dip, you’ll be stuck with the higher rate you locked in.

A good mortgage professional will advise you of the current rate you are qualified for and present your options. It is a no-win situation for them to advise borrowers on whether to lock or float. If they tell their customers to float, and rates go up, they will be upset. If they tell their customers to lock, and then rates go down, they will be upset. Most brokers do not like to predict rates for their borrowers; they will give clients their options, and then allow them to make an educated decision for the best course of action.

Of course there are unscrupulous brokers who will claim they locked your own, but in actuality are floating; hoping for better rates so they can make some additional yield spread as commission. If the rates go up, you’ll be in for a surprise when the interest rate is delivers. In some cases, the rate may rise enough that your refinance no longer saves enough money a month to be worthwhile. In order to prevent these types of interest rate surprises, always make sure to get a copy of the lock confirmation from your mortgage professional to ensure you have locked in the rate you expect. Lenders will provide a lock confirmation sheet for your peace of mind.

Overall, it should be interesting to see how the rates move in the next few months. Rates have been so low for so long, it seems like the only way is up. However, home sales are still sluggish, condo sales look like they won’t be getting better any time soon, total employment numbers haven’t improved, and Fannie/Freddie and the mortgage lenders are still tinkering with their risk-based adjustment fees. These factors should keep interest rates low, but 50 year all time low rates may be gone for a long time.

Condominiums are becoming more difficult to purchase as lending guidelines are changing to offset what Fannie/Freddie are calling a higher risk of lending to those looking to buy a condo. These new risk adjustments for condo specific loans are part of a larger effort for Fannie/Freddie to limit their exposure in an area of real estate that has been hit particularly hard by the housing downturn.

I currently own a condo, and am hoping to weather this downturn long enough to make a profit when I sell in a few years. These new higher loan fees and regulations do not make buying a condo more appealing to prospective buyers, thus hurting my chances to sell at a higher price. Fannie/Freddie are imposing higher down payment amounts on purchases, requiring at least 20% down, as well as adding additional risk fees to the loan. These risk adjustments will cause a buyer to have to pay additional closing costs, or take a higher mortgage rate than he would typically receive if he were to buy a single family residence.

The reasoning behind these adjustments is that just a few condo foreclosures in a building can affect the entire complex’s value. Also a factor is the condo fees which typically go unpaid when a condo is foreclosed on; these fees will pile up and cause additional debt for the complex that will affect their ability to manage the property in a fiscally sound manner.

These changes seem very problematic in terms of re-energizing the housing market. Most first-time homebuyers look to condos as a viable way to enter the market with condos’ lower prices and lower maintenance. If someone is qualified to receive a loan, it seems unfair to penalize that person for wanting to buy a condo instead of a single family home. Having a 20% down payment is a huge barrier-to-entry, and then enforcing higher loan fees and rates will cause prospective buyers to forgo complicated condo financing and continue to save for a larger home.

Fannie/Freddie are playing a dangerous game right now; their loans are being modified with government assistance into below market terms, while they raise standards and rates on incoming purchases and refinances to offset their increasing losses. With these new regulations, there will be drop off in the amount of condominium sales which will stagnate the housing market as condos make up a significant portion of the housing market in many metropolitan areas.

Today we put together a list of questions that we frequently receive regarding mortgages, refinances, credit requirements and other related inquiries that pertain to the home mortgage industry. Today, we’re lucky to have Jeff Chin, owner of a boutique brokerage, Independent Mortgage, to answer your questions.

1. What is your background, your mortgage experience, and your current position?

I’m a recovering engineer turned Mortgage Advisor. I started originating loans in 2002, quickly found a liking to it as a profession and with my business partner, we founded Independent Mortgage, LLC in 2004. As a principal, I still originate residential and commercial mortgages. In my spare time, I hold credit management workshops for people to help them understand how scores are formulated and how to improve on them.

2. There is a lot of talk of loan modifications, new programs, new loan limits, and overall change in the mortgage environment. What do you see as the biggest difference in the mortgage environment in the past few years?

The days of liberal lending has definitely left us. Today the climate is one of tremendous suspicion. Lending guidelines are consistently tightened, where a borrower’s profile is under tremendous scrutiny. A borrower’s income, assets, and credit score are checked numerous times. Property values, in a similar fashion, are reviewed in multiple passes to assure that ambiguous issues are not gleaned over. The common sense factor has really disappeared. In our office, we can only shake our head in frustration and try to help our borrowers understand.

3. What do you recommend for borrowers looking to take advantage of these low rates?

The climate remains incredibly favorable for borrowers. Although we (Mortgage Originators) are very busy, looking into a refinance is well worth that 5 or 10 minutes to initiate the process. All things considered for mortgage refinancing currently, a borrower should check his/her credit score to see if it sufficient to get qualify. Currently a 620 credit score is the bare minimum to “talk turkey”. With so many programs, it would be to a borrower’s advantage to select a good mortgage professional to work with. Program guidelines are rapidly changing, so a borrower should “stick with it” until refinancing will not become beneficial.

4. I’m looking to buy a home and I’ve heard about several new programs that are out there. What experience do you have with them, and where should I start?

Today, there’s a lot excitement with the $8,000 tax credit that can be used as a downpayment. I would advise a homebuyer to seek out a knowledgeable Realtor and Mortgage Advisor in tandem. A borrower should know what loan amount they are qualified for, but, just as important, the type of property that are within their qualifications. Unfortunately, Condominiums are on the “highly suspicious” list, so there are lots of prohibitive lending issues in their purchase. Multi-families are also assessed with risk adjustments.

5. My lender has changed several times, and I’m not sure who I should speak to about a loan refinance. What are my options?

You can try to continuously contact the servicer or contact a mortgage broker. Both options are valid and sound, but a broker’s responsibility to place a borrower with the best program that multiple lenders have to offer.

6. What advice do you have for someone that has fallen behind on their payments? What’s the best course of action for them?

Falling behind does not mean they are shut out of getting help. The best option is to contact their servicer to explore their options. If the circumstances are that their income isn’t adequate to continue with their program, then they should have a solid hardship case. Explore the support groups that are available for mortgage distress. Otherwise, a good Mortgage Advisor should be able to offer some guidance.

7. How important is credit score in qualifying for a loan?

It is monumental… I am seeing the minimum score for programs continue to creep up.

8. What is the minimum credit score, or other requirements to get the best rates in today’s market? What’s the minimum score needed to qualify for a loan?

A score over 740 gives a borrower the most leverage, little or no adjustments on rate. Anything between 740 and 620 means that there will be considerations to rate. As of this writing, there are no mainstream programs for people with credit scores under 620. There are some FHA programs that exist for borrowers with scores as low as 580, but in practice, they require much stricter underwriting conditions as well as numerous letters of explanations. I have not been very successful in getting these loans approved, and from what my other collogues have told me, no one has. It is another case of the government promising false hope.

Hopefully you have found these question and answer session helpful for those looking to take advantage of these low rates to purchase or new home, or refinance to help lower and stabilize monthly costs. Keep the questions coming and we’ll continue to post answers to popular questions.

If you would like to contact Jeff directly about your specific mortgage situation, please visit his blog.

Homebuilders are offering significant discounts on interest rates to sell surplus housing inventory. These interest rate “buy-downs” can drop your rate considerably, sometimes as much as a point. At today’s rates, you could be able to get a home loan as low as 3.5%.

These discounts aren’t new, but are gaining popularity for large volume home builders as a way to entice buyers for their completed, but unsold, new construction homes. The home builders are essentially paying points on your loan in order for the lender to lower the interest rate. For those homebuilders large enough to have a partnership or relationship with a lender, this becomes more beneficial as they can get better deals and pass them on to prospective buyers.

These loans discounts are available for high credit quality borrowers only. Also, these discounts are subject to each builder’s set of rules and requirements. Often times these discounts will lower house payments enough to help certain borrowers’ debt to income ration meet qualifications for a loan.

Remember to read the fine print; most of these buy-downs are good for the life of the loan, but some modifications only last for an initial few years, then adjust into a new, higher fixed rate. If you are in the market for a new construction home, its worth checking out what discounts are available through local builders. The savings on payments may allow you to get into a home you typically might not qualify for.

If there is one thing in your life that you are simply never going to have control over, no matter what you do or how hard you work, it is the unchangeable fact that everyone grows old. Consistently changing in age is one thing that simply cannot prevent from happening. As every year passes, we grow a little bit older, and if we are not worrying about our futures, then we are not doing something right. If you have not already begun to think about your future, then it’s time to start doing so, no matter what age you are. Whether you are a teenager and just starting your first job, or an adult with a family of your own, there are many considerations that you need to make that will allow you to better prepare for your future and you eventual retirement.

Many people figure out how to enjoy their life to the fullest, but they never put any real consideration into planning for the future, adulthood and their retirement. What many people never really realize is that the earlier you begin to think and plan about your retirement, the more chances you will end up having to enjoy your old age to the fullest rather than finding yourself stressed out because you lack the financial stability to enjoy your senior years. One of the most important aspects that you should consider when it comes to planning for retirement is that you need to secure your financial needs as well as you can in order to enjoy peace of mind later on in life.

Retirement financial planning is an important concept that any wise person should put serious consideration into. The younger you are when you figure out your retirement plan, the better off you will be. When you start to consider your financial needs for your retirement, it is important to set a target figure so that you can work toward that figure through the years. Financial goal setting is vital when it comes to retirement planning and beginning to put away money for your retirement years.

Now that you have a financial figure that you can keep in your mind, the next most logical step is to begin planning on how you can reach that goal. There are several different methods on how you can reach your target financial figure, slowly and effectively. However, one of the easiest ways that you can start reacting your target figure is to begin to save money immediately. Saving money is one of the surest ways that you can plan for your future retirement. For some people, one of the best ways that you can begin to save for your financial future is to begin saving, watching your money grow slowly in the process.

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