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Posts Tagged ‘credit counselor’

Time Running Out On Home Buyer’s Tax Credit

March 10th, 2010 by Matthew C. Keegan | 2 Comments | Filed in Home Buying

April 30, 2010 is a date circled in red on the calendars of some home shoppers. That is the last day when prospective home buyers can enter into an agreement to purchase a home in order to enjoy an extra special benefit: a federal home buyer tax credit of as much as $8000.

Tax Credit

new homeThough home buyers still have until the end of June to close on their homes, a binding sales contract must be in hand on April 30 in order to be eligible for the credit. That credit has limitations including a salary cap of $125,000 for single home buyers or $225,000 for married couples filing joint returns.

Even if you already own a home, you may qualify for a $6500 tax credit. In either case the value of your home, which is to be your primary residence, cannot be above $800,000.

Credit Advice

So, are you ready to take the plunge? Not so fast! At least that is the opinion of some credit counselors who are concerned that potential buyers could be pulled into the market thanks to lower home prices and generous tax credit.

“Many people are able to benefit from this tax credit, but that does not always mean buying is a good option for them,” said Lindsay Alston, a credit counselor with CESI Debt Solutions. “You have to look closely at your income to see if the numbers work.”

Alston went on to say that buyers should make sure that their annual costs including mortgage, insurance, association fees, and property taxes should not exceed more than 30 percent of your gross income. That means if you make $40,000 annually than your home related costs should be no higher than $12,000.

Extra Costs

Lots of home buyers fail to consider other expenses related to owning a home including lawn upkeep; replacement of appliances; roofing and gutters; windows and doors; and other maintenance expenses.

“The tax credit is a great incentive for people who are financially in good shape and planning to buy a new home anyway,” said Alston. “But if you don’t think you can make the numbers work without it, you should probably wait and continue to save, even if it means missing out on the tax credit.”

If you aren’t certain that you should buy a home, ask an objective party such as a financial adviser whether your should buy now or pass on the tax credit. Friends, family members, real estate agents and mortgage brokers may encourage you to jump in, but if you aren’t adequately capitalized you can find yourself battling to keep up down the road.

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What To Ask of a Credit Counselor

October 13th, 2009 by Matthew C. Keegan | 3 Comments | Filed in Consumer Tips

Consumers who are in a financial bind may end up turning to a credit counselor for guidance. This can be an effective way to help beleaguered Americans get their finances in order, perhaps avoiding bankruptcy in the process.

Credit Counselor Guidelines

past dueThe Federal Trade Commission (FTC) in cooperation with the Department of Justice’s U.S. Trustee Program has issued guidelines to help people find a credit counselor. Those guidelines include asking professionals certain questions in advance of retaining their services including the following (with my tips included after each question):

What services do you offer? A credit counselor may be able to guide you, but you to need to ask if they provide all of the services you want. If not, you may need the help of a second professional – that gets expensive!

Will you help me develop a plan for avoiding problems in the future? Overcoming a current problem is important, but you need to know what steps you can take now to keep yourself from repeating the problem.

What are your fees? Will you be charged per hour, per visit or will one set fee be assessed?

What if I can’t afford to pay your fees? Find out if you can be charged on a sliding scale, based according to your ability to pay.

What qualifications do your counselors have? Are they accredited or certified by an outside organization? What training do they receive? These questions are important – you need to learn if your state certifies people who set up shop as credit counselors. Learn what their background is; you may not be able to get references, but you should be able to uncover their reputation.

What do you do to keep information about me (including my address, phone number, and financial information) confidential and secure? No information about yourself should be shared with third parties without your permission. Your credit counselor may contact your creditors on your behalf (with your knowledge), but they shouldn’t be sharing information about you without your authorization.

How are your employees paid? Are they paid more if I sign up for certain services, if I pay a fee, or if I make a contribution to your organization? Some credit counselors work for non-profit organizations while others work for for profit enterprises. Learn if there are some sort of incentives in place for counselors to steer you to other products.

Full Disclosure: A Must!

Credit counselors help thousands of Americans every week get back on financial track. Only use counselors whose track records are proven and who offer full disclosure on their services.

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