Berlinnhrealestateblog.com: January 2009

What is a Good FICO Score in This Economy?

Reader Question: I have heard that the "rules" about credit scores and home buying have changed because of the economic crisis. What is a good FICO score to have these days, if I want to apply for a mortgage loan and buy a home?

For the benefit of all readers, let me start by explaining some terminology. FICO stands for Fair Isaac Corporation, a company that does data analysis and "decision management" stuff. They created the FICO scoring model that is used to convert your credit report into a score.

This scoring system is used by Experian, one of the credit-reporting companies in the United States. There are two other companies who generate consumer credit reports -- Equifax and TransUnion. They each use a different scoring model to convert their reports into scores.

Actually, while writing this response to your question about good FICO scores, I checked out the websites of these companies to get some updated information. It seems that Equifax is now using the FICO system is well, but TransUnion is not. It can be a bit confusing, but don't worry ... here's what you really need to know:

When you hear somebody refer to a good FICO score they are talking about the score produced through the scoring model we just discussed. There are other types of scores generated through different systems (like the one you could get through TransUnion), but the FICO score is the one most commonly used by mortgage lenders. Most lenders will also consider one or both of the other scores as well. This is also why you will see offers for a "3-in-1" credit reports and scores -- you are being offered access to all three of your reports and scores.

Having a good FICO score will help you qualify for a home loan, because it's the number most commonly used by mortgage lenders in the U.S. And this brings us up to the question you started with -- What is a good FICO score in the current economy?

It's true the definition of "good" has risen because of our economic crisis. You need a higher score these days if you want to qualify for the best interest rates on a mortgage. The FICO range goes from 300 to 850. I define a good credit score as one that allows you to (A) qualify for a mortgage loan and (B) get a decent interest rate on that loan.

There's a lot of flux in the mortgage industry right now (for obvious reasons, so it's hard for me to say where the qualification standard lies. But I can give you some insight into the score needed to get the best rates on your loan...

A couple of years ago, you probably could have qualified for the lowest interest rates on a mortgage loan with a FICO score of 650 or above. Today, however, that is no longer the case. In the current economy [and who knows what will happen six months from now], you would probably need a FICO score above 750 to qualify for the best rates on a loan.

Sure, you can probably get approved for a loan with a score between 650 and 750 right now, but you won't get the lowest rates. That means you'll be paying a bigger mortgage payment each month. So if you can boost yourself up above 750 before applying for a mortgage, you'll be in much better shape.

So what is a good FICO score in the current economy? I would say a 700 or above is a pretty good score and should allow you to get financing for a home. A 720 or above is even better. And if you can clear the 750 FICO range you'll be in great shape because you'll qualify for the best interest rates the mortgage lender has to offer.

How to Raise Your Credit Score Fast in 2009

Reader Question: I plan to buy a home in 2009 and will need a mortgage loan to pay for it. My credit score is a little below the national average. How can I raise my credit score fast so I can get qualified for a good loan next year?

You are not alone in your situation. Many home buyers will need to raise their scores in order to get financing next year. And like you, most of these people want to do it as fast as possible.



How to raise a credit score fast will be a hot topic in 2009. There are two main reasons for this. For one thing, you'll need good credit to get a mortgage loan in 2009 -- more so than in the past. Because of the housing / foreclosure crisis, most lenders have become stricter with their lending practices, and this includes the credit score needed to qualify for a home loan.

When you combine this with the fact that millions of Americans have bad credit, you can see the writing on the wall. A lot of home buyers will face qualification obstacles in 2009.

How to Boost Your Credit Score Fast

And with that little overview behind us, we can address the heart of your question. How can you raise your score fast in order to qualify for a home loan next year? What can you do here in the present to pave the way for future home-buying success? Here are four things you should focus on more than anything else.

1. Eliminate Bad Habits

If you have credit problems right now, they are probably the result of bad financial habits. For many people, this includes a history of not paying bills on time, maxing out credit cards, acquiring too much debt, etc. So before you move on to the other items on this list, you need to identify and eliminate any bad habits you have. This is crucial if you want to raise your credit score as quickly as possible. You have to stop the source of the problem first.

2. Review Your Credit Reports

If you have erroneous information on your credit files, it could be dragging your score down lower than it should really be. Unfortunately, data mix-ups are common within the three companies who produce credit reports -- Equifax, Experian and TransUnion. They would probably argue with me on this point, but I'm here to tell you it happens all the time. So your next step in raising your score as fast as possible is to order copies of all three reports and review them for errors.

You should also make sure that negative (but accurate) information is removed from your credit reports when the time comes. Most negative information has to come off after seven years, while bankruptcies can stay on there for up to 10 years. So if you see an item that shouldn't be on your report anymore, but it is ... you need to dispute this with the company that produced that report.

I can't stress the importance of this enough. Your credit score is based on the information within these documents. So if you want to raise your score fast you need to start by ensuring the accuracy of your reports. And you should start this review process ASAP, because it can take some time to get it sorted out.

3. Reduce Your Credit Card Balances

Credit utilization is one of the "ingredients" that will contribute to your overall score. This is an industry term that refers to the percentage of your available credit that you are currently using. If you have one or more credit cards that are near their limits (or cards that are maxed out already), then you'll have a high credit-utilization ratio ... and this is a bad thing.

On the other hand, if you have a couple of credit cards with very low balances (relative to the amount of credit available on the cards), you'll have a lower utilization ratio. So by paying down the balance on cards that are near their limits, you can raise your credit score even more.

Notice I didn't say you should cancel your credit cards / accounts. This could actually hurt your score, because the utilization ratio is an average of all your accounts. So, for example, if you cancel a card that has a really low balance, you could hurt the overall average of your credit-utilization ratio. On top of this, if you close your oldest account, you could inadvertently shorten your credit history -- and this too can hurt your score. This is why I recommend keeping the accounts but reducing the balances (in most scenarios).

4. Pay Bills on Time

You've probably heard this before, but it's a critical item -- one of the most important considerations when trying to raise a credit score fast. So it's part of my 4-part plan for boosting your score as quickly as possible.

Most mortgage lenders today use the FICO score when reviewing an applicant's financial history. There are different scoring models in use, but FICO is the one most commonly used in the mortgage industry. Your payment history on all of your bills makes up around 35% of your score, so it gets more weight than any other single item!

So if you want to raise your credit score as fast as possible, you need to combine this with the other items I've listed above. Creditors will usually send you a late-payment notification after 30 days, followed by a stronger warning after 60 days. In most cases, they will report the missed payment to the credit reporting agencies after 90 days past-due, and that's when it can show up on your report and affect your score.

So pay your bills on time! And if you are late on a payment, be sure to pay it as soon as possible. This can prevent it from showing up on your credit file.

I hope you have enjoyed this guide to raising a credit score fast, and I hope it answers your question in a helpful way. Good luck with your home buying process next year!

Four bedroom home with amazing mountain views and located on the Androscoggin River. Nice yard surrounded by shrubs for maximum privacy. 4 bedrooms, eat in kitchen, livingroom, garage, mountain and water views! A great getaway or year round home! Seller says "Sell!" Priced well under assessed value!  $44,500!

A wonderful Cape Cod style FOUR bedroom home with TWO baths, TWO car garage, PROPNANE FURNACE, 100amp circuit breakers, dining room, large livingroom w/hardwood floors, eat in kitchen, large corner lot, all appliances included, 3 seasoned front porch, vinyl siding, ample closet and storage space, spacious laundry room on first floor and more! $99,900!

DOWNSIZING? Immaculate must see home with a fantastic recently added sunroom for extra living space! Located in Brae Burn Village which is a adult community (age 55 and over). Enjoy one floor living with easy access to downtown Gorham. The back patio overlooks a slow moving brook, enjoy the sounds and views of the water from the home. $49,500!

For more information on the above homes or other homes that are for sale in Gorham, NH please don't hesitate to contact Matt Martel from RE/MAX Northern Edge Realty (603) 723-0521 or email me matthewmartel@remax.net . Visit me online at Ask 4 Matt Martel.com Vist RE/MAX Northern Edge Realty online at TEAMNER.com

01-05-09 Laidlaw Completes Acquisition of Berlin, New Hampshire Pulp Mill Facility and Closes Related Financing for 66 Megawatt Biomass Energy Project ...

Pretty much anywhere you drive in the city of Berlin, N.H., this single smokestack is visible. It was once part of the Fraser Pulp Mill that was almost completely knocked down in 2007. The lone stack has sat idle since. But recently, the Laidlaw Energy Group out of New York bought the facility and has plans to turn it into a biomass plant to produce energy. It would create 40 new jobs on site and possibly hundreds throughout the logging industry.

For more information on Laidlaw Energy Group Berlin, NH Project please CLICK HERE:

Video of the Mill stacks coming down.

Video of Berlin, NH

A new tax credit for first-time homebuyers is included in the recently enacted Housing and Economic Recovery Act of 2008 (H.R.3221). This tax credit will be available for a limited time only.

Eligible taxpayers will claim the credit on new IRS Form 5405. This form, along with further instructions on claiming the first-time homebuyer credit, will be included in 2008 tax forms and instructions and be available later this year on the IRS Web site.

Qualifying for the Credit

Only the purchase of a main home located in the U.S. qualifies and only for a limited time. Vacation homes and rental property aren't eligible. You must buy the home after April 8, 2008, and before July 1, 2009. For a home you build, the purchase date is the first date you occupy the home.

Taxpayers who owned a main home at any time during the 3 years prior to the date of purchase aren't eligible for the credit. This means that first-time homebuyers and those who have not owned a home in the 3 years prior to a purchase can qualify for the credit.

If you make an eligible purchase in 2008, you can 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.

Credit Amount

The credit is 10% of the purchase price of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing jointly. The limit is $3,750 for a married person filing a separate return. In most cases, the full credit will be available for homes costing $75,000 or more. Important note: Whatever the size of the credit a taxpayer receives, the credit must be repaid over a 15-year period.

Income Limits

The credit is reduced or eliminated for higher-income taxpayers.

The credit is phased out based on your modified adjusted gross income (MAGI). MAGI is your adjusted gross income plus various amounts excluded from income (i.e. foreign income). 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.

Those That Don't Qualify

If any of the following describe you, you can't take the credit:

• 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 3 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.

Repaying the Credit

The first-time homebuyer credit is similar to a 15-year interest-free loan. Normally, it's repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. The repayment amount is included as an additional tax on the taxpayer's income tax return for that year.

For example, if you properly claim a $7,500 first-time homebuyer credit on your 2008 return, you will begin paying it back on your 2010 tax return. Normally, $500 will be due each year from 2010 to 2024.

You may need to adjust your withholding or make quarterly estimated tax payments to ensure you don't owe come tax time.

However, 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. Consult a tax 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. Consult a tax 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.

People Who Read This Also Read

Please click on the link for more detailed information on the $7,500 tax credit for first-time homebuyers.

Tax Credit Information

The full answer is a little complicated. If you are a first time home buyer (defined by the IRS), you have an income of less than $75,000 ($150,000 if married filing joint), and you bought a new home between April 9th, 2008 and July 1, 2009 you are eligible for the Federal Housing Tax Credit for First time Home buyers.

The $7,500 credit is called a refundable credit. This means it will first be applied towards any money that you owe the IRS. Whatever is left over will be given to you.

However, it must be paid back over the next 15 years (that's $500 a year). If you sell the house during that time, the remainder of the $7500 must be paid back from the gain on the sell of the home. If you sell the home for a loss, the debt is canceled!

For more information please contact Matt Martel from RE/MAX Northern Edge Realty (603) 723-0521 or email: matthewmartel@remax.net

It's a great time to buy a home! Low interest rates, tax credit, low prices, instant equity! Contact Matt today!

First-time home buyers -the government enacted a benefit to help you make your first home purchase? The incentive gives first time home buyers a federal income tax credit up to $7,500. Part of the "Housing and Economic Recovery Act of 2008″, creates a temporary, federal tax credit to provide incentive for first-time home buyers to purchase a home. 

 Rob Dietz, economist for the National Association of Home Builders (NAHB) points out, the effects of the credit may extend far beyond the first-time home buyer; as first-time home buyers purchase homes, many home sellers will be able to move up and invest their sales profits into new homes as well.

Since the money must eventually be paid back, the tax credit essentially acts as a no-interest loan that reduces your tax liability for the year it is claimed.  For instance, home buyers who close on a new home purchase in 2008 (after April 9) can claim the credit on their 2008 tax return.   If their tax liability for the year is $5,000, applying the $7,500 tax credit would cover their tax bill and provide a $2,500 refund.  Any taxpayers already due a refund would still receive the full amount, plus the $7,500 tax credit for buying a home.

First-time home buyers who claim the tax credit are expected to begin repayment starting in the second tax year after they close on their home and continue the pro-rata payback on their federal taxes for a 15-year period.  For home buyers who claim the full $7,500 credit, the payments would amount to $500 a year.

If the buyer sells the home before the 15-year period, the remaining credit would be due from whatever profit was made on the sale.  In cases where profits from the sale were less than what was owed for the credit repayment, the remainder would be forgiven.

Consider this illustration given by the NAHB: at 7% interest, a $7,500 loan would cost the borrower about $4,200 in interest over a 15-year period.  To finance the $7,500 through your 30-year mortgage at a 7% interest rate, a homeowner would pay $8,100 in interest over the life of the loan.  If you have already closed on a new home since April 9, 2008, the tax credit is retroactive back to that date, so you may be eligible to take the tax credit this year.

Here are some quick facts to determine if you qualify for the first-time home-buyers tax credit:

First Time Home Buyers - to be eligible, an individual must not have owned a primary home for the past three years, but may have owned a home prior to that.

Taypayers - U.S. citizens and resident aliens who file income taxes qualify for the tax credit.  Non-resident aliens are not eligible.

Income Range - to qualify for a full tax credit of $7,500 (or 10% of the cost of the home), someone filing their taxes as single or head of household can earn no more than $75,000.  Couples who file a joint return must earn $150,000 or less.

Individuals whose incomes fall between $75,001 and $94,999, or married couples who file jointly with incomes from $150,001 and $169,999, are still eligible for partial credit.

Taypayers earning more than $95,000 (single) or $170,000 (joint) are not eligible for this credit.

What do you have to do to claim the tax credit? If you meet the criteria, you have to do is request the credit on either your 2008 or 2009 federal tax return that will be amended for that purpose. 

 Home buyers who close in 2008 can take the credit on their 2008 return.  First-time home buyers who purchase a new home in 2009 before the July 1 cut-off can choose to file an amended 2008 return or request the credit on their 2009 tax return. Please not this is not tax advise. consult your on tax person for all the details of the bill and how it relates to you.

For more information contact Matt Martel of RE/MAX Northen Edge Realty 603-723-0521 or email matthewmartel@remax.net

C21 Discontinues TV Ads; RE/MAX to Debut 3 New Spots

By Deborah Ball, RE/MAX Times Associate Editor

While some competitors are limiting - or even discontinuing - national television advertising, RE/MAX has a campaign that's alive and well.

In fact, three new RE/MAX TV ads reflecting the opportunities consumers have in today's market will debut in February, says David Rea, RE/MAX International Executive Creative Director.

Realogy Corp. subsidiary Century 21 announced this week that it will stop running its national television spots amid current economical woes, according to Inman News.

Century 21 says it is shifting focus from TV to online advertising due to changing consumer patterns, but acknowledges that the company's shrinking budget as a result of the housing downturn played a role in the decision.

For its part, RE/MAX plans to continue promoting the brand and the Associates behind it.

"The economy has led a lot of our competitors to cut back on services to their franchisees and agents, but RE/MAX believes its Affiliates need all the support they can get in times like these," Rea says. "That's why we'll continue our industry-leading TV and radio advertising, as well as our ever-growing presence on the Internet.

"RE/MAX agents don't have to choose between media; they'll continue to get both. The president of C21 says it himself: 'The main benefit of TV advertising is name recognition.' As RE/MAX TV advertising has increased, so has our name recognition - and we've become the undisputed leader."

Download this graph to see the most recent RE/MAX Share of Voice data in national TV advertising.

RE/MAX has led in national TV share of voice for the past seven years, Rea adds. He also notes that the television campaign helps drive traffic to remax.com, which drives more leads to RE/MAX agents and offices through LeadStreet.

"We get more hits to the Web site when we're running TV commercials," Rea says. "Consumers spend more time watching TV (followed by radio and the Internet) than any other medium. Our media mix reflects consumer consumption. RE/MAX out-delivers other top brands on a regional basis, too, with more locally placed media than any of our competitors."

Berlin NH like most towns, cities & states have inventories of foreclosures that are for sale. If your looking for a deal or should I say steal it's a great time to buy a home.

1) Low interest rates. The lowest in years!

2) Instant equity!

3) A $7,500 tax credit for first-time homebuyers on homes that are $75,000 or higher.

4) Loan programs that allow no money down!

5) My newest website: NH Foreclosed Homes.com

6) Buyers market!

7) Sellers willing to work with buyers!

8) RE/MAX Northern Edge Realty

9) Matt Martel Associate Broker with RE/MAX Northern Edge Realty