When's the last time you checked out your credit scores? A lot of us don't think much about our credit until it's time to purchase a home and then it may be too late. Avoiding these five common financial fiascos can save you money and headaches.
5 Financial Fiascos To Avoid When Buying A Home
1. Not knowing your credit history.
2. Not getting a written estimate.
3. Not having a seasoned downpayment.
4. Thinking that 100 percent financing means no money out of pocket.
5. Thinking that your bad credit will stop you from getting a home
1. NOT KNOWING YOUR CREDIT HISTORY
"Not investigating whether the credit problem is accurately reported on the credit report; 95 percent of them aren't," said John Ramsay, Senior Loan Officer at Mortgage Partners Inc.
ankruptcy, for instance, is hardly ever reported correctly. Bureaus will frequently still report that a person owes money, even if it was paid off in the bankruptcy, but somehow it was filed incorrectly.
Ramsay said, "If you have a credit problem, fix it if you can."
2. NOT GETTING A WRITTEN ESTIMATE
When borrowers are shopping around loans, one of the biggest mistakes they make is not asking for a written estimate. It's hard to compare loan programs if you don't have them in writing.
"It's a bad sign if they won't give it to you in writing ... If you get three written estimates you can compare apples to apples," Ramsay said. Otherwise clients may not be able to ask the exact same questions so that they can compare different sources.
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First Time Homebuyers Credit
The first-time homebuyer credit is a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008. For homes purchased in 2008, the credit operates like an interest-free loan because it must be repaid over a 15-year period.
The credit was expanded in 2009 for homes purchased in 2009, increasing the amount of the credit and eliminating the requirement to repay the credit, unless the home ceases to be your principal residence within the 36-month period beginning on the purchase date.
The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 ($8,000 if you purchased your home in 2009) for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns. The full credit is available for homes costing $75,000 or more ($80,000 if purchased after Dec. 31, 2008, and before Dec. 1, 2009).
If you meet all first-time homebuyer eligibility requirements, see Form 5405, for more details:
Form 5405
For further detail visit:
http://www.irs.gov/