The Tax Credit and Repeat Buyers: What Move Up Buyers Need to Know About New Loan Qualifications.

The Homeowner's Tax Credit Extension has been extended to include repeat and move up buyers. Buyers will be eligible for up to $6,500 tax credit if purchasing a new principal residence before April 30th. For frequently asked question about the tax credit and who qualifies click here: http://www.federalhousingtaxcredit.com/faq2.php

Mortgage financing has probably changed since you purchased your home. Here's a few things you should know about mortgage approval in today's world of short sales, bailouts, and foreclosures. Gone are the days of low down payments with no income or asset verification. Today's closing dates are targets due to the changing landscape of short sale approvals, bank review periods, and overwhelmed appraisers. The basic information needed for mortgage approval today includes:

* W-2's for last two years
* Pay stubs for thirty days
* Most recent Bank/Asset Statements
* Credit Report Review by qualified mortgage professional

Listed below are the differences of mortgage financing and qualifying with your current residence.

For VA buyers wishing to use your certificate of eligibility you can qualify one of two ways: with the current residence being converted to a rental, which ultimately will allow you to purchase more home because the monthly housing expense will count against you at a smaller monthly amount than the actual monthly mortgage payment. A written lease and a copy of the security deposit check will be required by your mortgage lender. Or you can qualify while counting the entire monthly cost against your income. So your debt to income ratio will include the house you currently own and the house you are looking to purchase. This can be complicated to figure out on your own please call me to discuss your specific situation.

For buyers seeking FHA or conventional mortgages the scenario gets more complicated. In order to count a lease on the current property owned the lease must be in place for at least the last 90 days with evidence of monthly payments from the tenant and utility bill in the tenant's name. New lease agreements (meaning once you vacate the property a tenant will move-in and has signed a lease with security deposit) will be accepted only if the current residence has thirty percent equity which will be determined by drive by appraisal and/or market valuation tool by the lender. Otherwise, move up buyers will qualify for new sales price with total current mortgage payment counting against the monthly debt load. This could substantially shrink buying power.

If you have decided it is time to move up then call me to discuss your options. It is a great time to take advantage of the gift from our government. However, it is more important to make a thoroughly informed decision.