New FHA Rules
Prior to this calendar year FHA guidelines required a minimum credit score of 530 in order to obtain a loan with 3.5 percent down. As of 2013, the minimum credit score is 580. The guidelines allow the potential purchaser to buy a home either using their own funds or a gift from a family member for the down payment.
The guidelines allow a buyer with the minimum credit score to use up to a 6 percent seller’s concession. The seller’s concession must be in the contract. The hitch for homeowners is that it raises the selling price, which could affect the appraisal, meaning that the house has to appraise for a higher price than the buyer is actually intending to purchase the home for.
If you are a home buyer and have a credit score that is below 580, the FHA will require that you put 10 percent down instead of 3.5 percent. Additionally all the funds for the down payment must belong to the buyer. There are no family gifts or seller’s concessions allowed.
It’s Tax Time!
It’s inevitable. As they say the only things in life that are guaranteed are death and taxes. The good news is that as a homeowner you are entitled to some deductions that are unavailable to renters. I always like to file early. That way, if I’m getting money back, I get it sooner, and if I have to pay, I know how much and can delay the payment for a few months.
Here is short list of the documents you’ll want to bring to your accountant:
- IRS form 1098: This is the mortgage interest statement that your bank should be sending you. The interest you pay on your mortgage is tax deductible. And if you’ve either purchased or refinanced your home last year, points are also deductible.
- Property and school tax statements from your town. Yes, these are deductible.
- HUD statement: If you bought your home in the past year, check your HUD-1 form. You should be able to deduct prorated taxes and interest, and closing costs.
- Moving expenses: You have to meet some very specific guidelines for this one. If you work full time and your new home is at least 50 miles further from your workplace than your old home was, you could be entitled to a deduction. There is more to it than that, so be sure to enquire about it. Keep all receipts involved in your move and ask your accountant what you qualify for.
- Home office utility statements: Now this is particularly tricky. Your home office has to be in a dedicated room. Not in the den. The room has to be used exclusively as a home office. Some accountants will tell you not to do this as it may open up a can of worms.
- Contractor receipts: If you have had energy-efficient home improvements done to your home, there is a list of deductible upgrades, including insulation, double-pane windows, energy efficient boiler and other appliances. This is a non-business energy tax credit.
- Rental receipts: If you own a rental property, you’ll need income and expense statements (also look into energy tax credits for businesses).
If this is the first time you are doing your taxes as a homeowner, it might be in your best interest to contact an accountant who can help you decipher what you can and can’t do. He/she will hopefully be able to steer you clear of an audit as well as maximize the deductions you are entitled to.
As always, feel free to send me any questions and I’ll address them in my next column.
Cathy Vingelli, Licensed Realtor
Hal Knopf Realty