Time is running out on the first time homebuyer tax credit.  You will need to act soon if you want to take advantage of this program.  This incentive applies to qualified home purchases completed before December 1st of this year.  The program is actually a credit up to 10% of the cost of the home or a maximum$8,000. 

You must be a first time homebuyer which means that you cannot have owned a home in the last three years.  The credit also does not apply to high income tax payers and begins to phase out for married couples with adjusted gross incomes above $150k and for unmarried taxpayers with AGI above $75k.

The credit is available on a taxpayers 2009 return or amended 2008 return.  On FHA insured mortgages, the credit can be monetized in order to pay for closing costs or additional down payment.  A homebuyer still must come up with the FHA minimum down payment of 3.5% on his/her own.

If you don’t have the minimum 3.5% down, there are other government agencies that can help.  Go to www.5280HomeMarket.comand click on the first time homebuyer tab.  You can also call Adam at 303-668-6490 to get more information.  With the Denver Metro home market so strong and rates so good, now is truly a great time to buy!

So far I have written about keeping your balances low and having Length of history, or as we in the biz call it, “seasoning.”  Three more items worth mentioning to keep a good score is: types of credit, new credit and inquiries. 

Types of credit in use makes up 10% of your credit score.  A better way to say this might be the “mix of credit sources.”  The scoring system will penalize you for going to a finance company rather than using other sources of more responsible, less costly debt.  Finance companies have always been bad news to consumers. 

New credit also makes up 10% of your score.  As I have mentioned before, opening new accounts will lower your score.  My advice to my clients is to stick with just a few cards and then keep those cards for as long as possible.  A Visa, Mastercard, Discover or American Express is pretty much accepted everywhere.  There is no reason to have a card for every store in the mall.

Inquiries also can affect your score, specifically when you apply for credit.  The reason an inquiry can affect your credit score is because as you apply for credit, it shows that you are trying to increase the amount of credit that you have, therefore increasing the risk of default.  There are different types of inquiries and some affect your score negatively, while others do not.  Inquiries that do not affect your score are Promotional inquiries and Account Management inquiries.  Once, I witnessed a clients score drop over 100 points just for letting about 10 auto dealers pull his credit.  Because of his car shopping excursion, he could no longer qualify for the mortgage loan to purchase his home.

The bottom line is being careful.  Keep a few good cards, keep low balances, and of course pay on time.  Very simple and very affective!

I am always available to help with any questions you may have regarding this subject or any other Denver Metro Real Estate question.  Call me anytime with your feedback.  Direct/Text at 303-668-6490.  I am here to help you make sense of the 5280 home market!