• Extended the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
• Expanded the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.
• First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
• Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

Who Qualifies for the Extended Credit?

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000.

The maximum allowable credit for current homeowners is $6,500.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

How is a Buyer's Credit Amount Determined?

Each home buyer’s tax credit is determined by two additional factors:

1. The price of the home.
2. The buyer's income.

 Price

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

 Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009,  single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

http://activerain.com/blogsview/938562/Economic-Stimulus-Act-Signed-Into-Law-What-does-it-mean-for-homebuyers

So what does the package contain for the average homebuyer?

$8000.

Section 1006 (page 54 of the conference report) describes changes to Section 36 of the Internal Revenue Code modifying the previous homebuyer credit that had been enacted in October of 2008.  Specifically, the following important changes have been made:

• Credit has been increased: the original credit was limited to $7500 or 10% of the home's purchase price; this has been upped to $8000 or 10%. 
• Credit no longer requires repayment: a significant criticism of the original 2008 credit was its repayment requirement, as those taking the credit would be required to repay it over 15 years. That has been addressed in the new law so that repayment is now required only if the home is sold within the first 3 years. 
• Credit is now allowable for buyers using "revenue bond" funded mortgages: many state and local entities offer first-time homebuyer mortgage programs that sometimes offer terms more favorable than government or conventional mortgages. Previously those buyers had been prohibited from accepting the credit, however they may now claim it.
• Time to purchase extended: the original credit was due to expire June 30th; the revision extends that to November 30th

Meanwhile, many components follow the original wording instituted last fall, specifically:

• Credit is refundable: this means that a homebuyer who would otherwise owe no tax may still claim this credit and receive it as part of a tax refund
• Credit is for first-time homebuyers only: sorry, move-up buyers, but you won't receive this credit; do expect many more first-time homebuyers to be looking at your house, which should help you sell more quickly, if you're priced correctly
• Credit is income-limited: the legistlature didn't see fit to modify the terms of this program to allow all homebuyers to benefit, only those who haven't owned in the past 3 years

Finally, certain components are still somewhat unclear:

• Credit may be retroactively claimed: the prior credit offered the option to claim as if the purchase took place 12/31/2008 even if it closed in the early parts of 2009. The final bill's language appears to replace this paragraph (page 122, Stat 2981, section 36 subsection g) with something unrelated, which may mean buyers will need to wait until 2010 to claim the credit.

Overall, this program does a lot to change current programs by making them significantly more attractive to homebuyers. The removal of repayment requirement makes the credit much more attractive than the previous offer that had been made. The other changes are more semantic than meaningful, but the most significant thing accomplished by enactment of the bill is this:

Clarity

At least now, we can stop guessing, and start working towards improving the housing market.

So now that we have a new economic stimulus I hope this answers some of your questions and that the above numbers will help you in making a decison.

Have a great weekend and enjoy this great weather.

Jacque

I know that my stock broker always tells me that when the market is down is the best time to buy not when companies are going along at gang buster pace. So when I take that into the real estate field I can not think of a better time to buy then now when  the market is down and there is an overage on the MLS. We are seeing increased calls and more of our listings are selling. So if you are sitting on the fence I would encourage you to jump off and jump in.

Jacque

The flight to quality will remain in place for quite a while. Possibly six months maybe longer. What prompted the tightening was a semi-annual report published Tuesday. This report stated that delinquency rates spiked in the previous six months,  for loans with borrowers having mid FICO scores of below 620. This in turn spooked investors who hold warehouse lines of credit for other investors. They will no longer tolerate any more of these loans on their books.

Rates have moved upward again. The 30 year fixed is now at 5.5% PAR for a 30 day lock. 10 and 15 year terms have moved to 5.25%, fully amortized.

3/1 and 5/1 ARM's still remain under the 5% threshold. 3/1 money is at 4.375% with the 5/1 ARM going to 4.75%.

He goes on to state that your debt to income ratios are going to become very important. That if you have credit card debt that you will not want to have more then 50% of the limit used.

Several banks here in town have just stopped doing mortgages. I know for a fact Atlantic Southern has and today I heard Security Bank announced they are putting a hold on all home mortgages.

It is a very unusual market that we are experiencing, and I really don't see a change coming for the next six months. So my advice would be to keep your credit steller, don't be late on payments, and try and get your debt ratios down below that 50% mark. Typically the other industries like auto and credit follow suit on credit guidelines. So we may see changes in those markets as well.

As for the good new this Friday, home sales have risen and in the Warner Robins area we actually saw an increase of a little over 2%. So maybe all the doom and gloom is not going to be around for a whole lot longer.

Have a great weekend

Jacque Applegate

Thanks to Greg for the loan information.

Greg Brown

BuckHead Home Loans

1455 Old Alabama Road  Suite  195-A

Roswell, Ga. 30076

Office: 404-303-7411

Cell: 678-943-0423

gbrown@buckheadhomeloans.com

We had black eyed peas and rice in the south we call it Hoppin Jon. For a little trivia question do you know what Hoppin Jon is called when you have it as left overs the next day? My daughter Jaime informed me it is referred to as Skipping Jane. That was my small fact to learn today. One I did not even have a clue of. Along with Black eyed peas I had to make a concession on the cabbage that I grew up eating and hating I might add because I have learned in the south it is not cabbage but Collard Greens as the symbol of choice. I guess the greens symbolize money so after this year being so crappy I forced the greens down. The rice is a food that has long been know as a lucky food so of course we had that also and we vectored away from the hog jowls, some things I just can't do so we had pulled pork another concession I have made from my Northern roots.

Food, family friends and football what more could you ask for on the first day of a New Year.

If you would like to read more about the traditions of New Years check out this link, has some fun facts to know and learn. http://wilstar.com/holidays/newyear.htm

I wish you blessing and joy in 2009! And remember as always Real Estate is still a strong investment and always a great place to invest your money. The highest complement you can ever pay my team is the referral of family and friends.

This is impressive news following upon Business Week naming Warner Robins as one of the best places to raise your kids.

Below is an excerpt from the press announcement from the Warner Robins Little League website.

With back-to-back world champions and a strong passion for Little League, I cannot imagine a better place than Georgia for the Southeast Region Headquarters," Gov. Perdue said. "Little League is a great program that I was proud to be a part of during my youth, and we will be honored to host the regional playoffs each year as the Southeast representative to the Little League World Series is determined. Little League is a world-class organization and I am proud to welcome them to Georgia."

the entire article can be found at

http://tinyurl.com/5g5xwl

This is definitely something for us to be proud of since our boys showed such great sportsmanship to the young men from Japan in the final playoffs of 2007. I must say that at the end of that game I had tears in my eyes. I have known many of these young man and have watched them grow during our time here in Georgia and it was a very humbling moment when our boys went and hugged the young boys from Japan. It's what we as parents hope to install in our children and that game showed that many parents and coaches had met the mark.

So once more our small town is brought into the headlines and with this honor we will be forced to improve what many of us feel is already a great sports program. An interesting fact that the above article stated is

Little League Baseball and Softball is the world's largest organized youth sports program, with more than 2.6 million players and 1 million volunteers in every U.S. state and 75 other countries.

I must say that I had no clue that the sport was that huge. That even makes it bigger news when you recognize those facts.

So if you are ever in our area please don't hesitate to pull off I-75 and check out our little news worthy town. You know you will always be welcomed! Have a great day!

Over the next few weeks, the powers that be will choose between us and Morganton, N.C., to replace the St. Pete, Fla., suburb that has been the home of the regional offices and qualifying tournament for the Little League World Series.

This would be a great money maker for our city and community. So keep your fingers crossed for Warner Robins and maybe the next thing we will get will be a Soccer Tournament, since we all know I am partial to soccer having invested a ton of money in the sport over the years. (And no none of my kids are still playing)

Have a great weekend!

Jacque

And since the economy stinks right now it is no wonder that stores are closing their doors. It piqued my curiosity enough to make me do a couple of searches on the INTERNET to see what I could validate and exacly what the truth was.

I checked the website www.truthorfiction.com and www.snopes.com  and both had a lengthy list of stores that were scheduled to close.

Since we are entering the Christmas season and the buying frenzy is due to start I figured I would go ahead and share with you the links so you can check your gift cards. Just a note that Snopes actually had a more recent update.

Hope you find this useful! Have a wonderful weekend.

http://www.truthorfiction.com/rumors/g/gift-cards.htm

http://www.snopes.com/politics/business/storeclosings.asp

 Jacque

The article that was published on Monday put Warner Robins first and Marietta and Athens as Runner-ups.

I have not read anything about this in the Houston Home journal or the Telegraph. So I am posting the  Chamber newsletter. Some good info. Sorry the click feature is disabled I could not find an embedded link to use.

November 2008
Welcome to a new report on regional business issues affecting members of the Warner Robins Area Chamber.
This newsletter will also frequently contain survey links and additional background information on Chamber initiatives.
Your regular weekly Chamber newsletter, now named Click & Connect, will continue to be published each Friday.
 
Centerville Proposes 27% Tax Increase!
 Recently, the City of Centerville unveiled a proposal that would increase property taxes. Although it has happened quickly, the proposal has been the issue of much discussion within the business community.  In case you missed it, here is some recent news coverage on this issue:
Centerville Tax Proposal Draws Heat From Business Community (From Houston Home Journal)
Centerville Council to Raise Property Taxes from The Telegraph
While the Chamber has not as of this time taken any position in favor or in opposition to the proposed tax increase in Centerville, it is important, as the region's largest business association, that we seek the input of our members.
Register Your Opinion Now!
Click here to respond to our Centerville Tax Increase Survey.  Even if you feel that you are undecided on this issue because perhaps you have not had an opportunity to learn more about it, we would appreciate you letting us know this when you take the survey.
Attend The Public Hearings
Public hearings on the proposed tax increase will take place on Monday, November 3 at 10:00 a.m. and Monday, November 3 again at 4:00 p.m. at the City of Centerville at 300 East Church Street.  A third hearing is scheduled for November 10 at 6:0 p.m.

 
STRATEGIC PLAN GUIDES CHAMBER'S GROWTH AND       DEVELOPMENT
 Throughout 2008, while many of the Chamber's hard-working committees have been busy planning and staging high-profile events, another committee, chaired by Past Chairman Paul Hibbitts, has been working equally hard developing our Strategic Plan for the next five years. While it may have appeared more low-key than some of our other projects, it involved 10 months of work and countless hours of analysis and input from various stakeholders in the community, including chamber leaders, staff, ex-officio leaders in the fields of government, education, health care, regional development, and more. After several rounds of fine-tuning, the plan was approved at the September Board meeting.
Why is the Strategic Plan Important
It will guide our goal-setting and planning efforts each year for the next five years. Each year the Chamber prepares its annual Program of Work highlighting goals and objectives. Think of the Program of Work as our “road map”. Then think of the Strategic Plan as our “beacon” casting light and "compass” providing direction for our “road map”.
Read the Strategic Plan
It's now on our website at http://www.warner-robins.com/strategic-plan

 
CHAMBER COMMUNICATIONS PLAN FINALIZED
 At last year's Goals Conference, a consensus arose that the Chambers' Number One Goal for 2008 should be he the development of a comprehensive Communications Plan to improve the Chamber's communication with its members, elected and appointed officials, non-members, the local media, and others. Chamber Board Member Dick McCoy convened a committee of our chamber's finest communications minds and over a 10 month period they developed a strategy for meeting this goal. Many of the changes you have seen in the past few months were inspired by the work of this committee, including our popular Speed Networking events, webcasts, surveys, and expanded newsletters. There is more to come in 2009.

 
BRANDING PROCESS TO PLAY A REGIONAL ROLE
 Your Chamber is a large organization encompassing businesses in several counties of the Robins Region. We are no longer a “North Houston” organization nor are we an exclusively “Houston County” one. With over 200 of our members located in Peach and Bibb Counties, and more joining each month, our role as a regional leader has been on the rise for many years. There are many organizations that we partner with to help promote this great region. Our Branding Committee, Chaired by Brad Fink, spent 2008 preparing for a major push that will begin in January of 2009. In cooperation with the MBA program at the J. Whitney Bunting School of Business at Georgia College & State University, the Warner Robins Area Chamber is about to embark on a major branding initiative that will help us identify, target, and promote our chamber and our community. The goal is for our brand to be a useful tool not only for the Warner Robins Area Chamber, but for the many other organizations that promote the Robins Region as a destination for business, industry, tourism, education, and health care. To become involved in this exciting effort, please call Chamber President Ed Rodriguez at 478.922.8585.

 
SCHOOL ACCREDITATION GOOD NEWS FOR BUSINESS
 The Houston County School System has completed a district accreditation visit by the Southern Association of Colleges and Schools (SACS). A 10-member SACS Review Committee performed a Quality Assurance Review (QAR) Oct. 27 through Oct. 29. This review sought substantiation that the school system meets standards, engages in continuous improvement and implements methods that provide for quality assurance. The visit culminated with an exit report and a recommendation for district accreditation.
Of course, none of this comes as a surprise to the Warner Robins Area Chamber. Our Education Committee has been touting the virtues of our local schools for years. We certainly didn't need an accreditation to tell us we have one of the finest school systems in the nation. However, school accreditation IS important because it provides additional opportunities and opens up more doors to success for students. We're proud of the many Chamber leaders who participated in one or more aspects of this accomplishment, including Past Chairman Steve Williams, Vice Chair Shaw Blackmon, Past Board Member Linda Dykes, Ex-Officio Board Member Megan Smith, and others.

 
AEROSPACE SYMPOSIUM ON TRACK FOR SIXTH SUCCESSFUL YEAR - ENORMOUS ECONOMIC IMPACT FOR ROBINS REGION
 Imagine 700 to 900 aerospace, governmental, and military leaders coming together for several days to learn more about doing business with the Air Force, its requirements, new developments, and more. Now imagine those 700 to 900 people coming right here to the Robins Region for such an event. You don't have to imagine because this reality is now in its sixth year! In November, the Aerospace Industry Committee of the Warner Robins Area Chamber, in conjunction with the Warner Robins Air Logistics Center, will play host to leaders from throughout the United States and Canada for this annual event, to take place at the Georgia National Fairgrounds & Agricenter in Perry. AIC Symposium Chair Gary Cox and his hard-working team have been working hard to put the finishing touches on this event. Not only does this Symposium play an enormous role in the development of the Robins Region's largest industry, it generates a huge economic impact on the lodging, services, restaurant, and other businesses in Perry, Warner Robins, and the rest of our region.   For more information on the Aerospace Requirements Symposium, click here.

 
DOWNTOWN REDEVELOPMENT
 Earlier this year, the Warner Robins Area Chamber encouraged its members to participate in the planning process for the redevelopment of downtown Warner Robins. Some great planning sessions took place and our members joined hundreds of others in the community providing ideas and input. That process continues this month and we hope you will turn out for the next stage of planning on Thursday, November 13 at 7:00 p.m. The City of Warner Robins and its design consulting team will seek and record your input on their design recommendations. Please make plans to attend. Click here to view a flyer with more information.

 
EDUCATION COMMITTEE SEEKING SPONSORSHIP ASSISTANCE
 “Champions of Education” is one of the platform planks in the Chamber's newly-adopted Strategic Plan. Whether it is the STAR Student Program, Teacher of the Year, or any of the other great programs of our Education Committee, the students of our community benefit greatly. Chamber Vice Chairman Shaw Blackmon heads up this year's Educational Affairs Division. The programs of this division cost money and the committee must raise every penny in order to continue its work.
How You Can Help:
During the next few weeks, a member of our Education committee may be contacting you to participate in sponsoring the work of this group. We hope you will say yes. The benefits to local business are enormous. To view a recent report on some of the work of this committee, click here.

 
PARADE
 We can't have a business report at this time of year without mentioning the 51st Annual Warner Robins Area Chamber of Commerce Christmas Parade, coordinated by our Community Affairs Committee (Vice Chair, Randy Randall) in conjunction with our friends at the City of Warner Robins and hundreds of other local community organizations and citizens.
Why It's Important:
The regional impact of this event is sizeable.   The parade attracts thousands from throughout Middle Georgia on a busy holiday weekend, where they spend their holiday dollars in the Robins Region.
This year's Grand Marshall:  Major General Polly Peyer!
A gentle reminder: time is running out for reserving your space in this event. Contact April Mouton today at 478.922.8585.
We are also seeking some sponsors, who will enjoy recognition not only during the vent, but also during the broadcast and webcasts on WMAZ.    A parade sponsorship is a great way to increase your company's exposure during the competitive 2008 shopping season.  Contact Katie Dobbins at 478.922.8585 for sponsorship information.

  CHAMBER HOME PAGE  |  JOIN A COMMITTEE  |  CONTACT STAFF  |  GET MORE BENEFITS
LOOK UP A MEMBER  |  LOG IN TO YOUR CHAMBER ACCOUNT  |  SIGN UP FOR A CHAMBER EVENT
 

 Warner Robins Area
Chamber of Commerce
1228 Watson Boulevard
Warner Robins, GA 31093
478.922.8585
www.warner-robins.com

While reading the news online I read an artice by the Associated Press about Alan Greenspan being questioned about the current state of the economy, and he is quoted as saying that our current crisis is a "Once in a Century Tsunami" Really?

http://www.foxnews.com/story/0,2933,443737,00.html Greenspan said that he felt that the banks would have had more concern for the shareholders and investors then they did. Is it not surprising that even the banks were swept by this Tsunami? I actually think verses the word Tsunami we should replace it with greed.  Because wasn't it actually greed that caused this?

My main issue I have with this whole topic is that here they are questioning Alan Greenspan the Former Chairman of the Federal Reserve why are we not questioning the Leaders of Freddie Mac and Fannie Mae? Why is it they are not being held accountable for what has happened? When we talk greed, they walked with millions but no one is screaming for justice from them. Yet when Enron happened we sent those men to jail. Is it because Freddie and Fannie were government back enterprises?

Greenspan stated that "there was a flaw in the model.... that defines how the world works." A flaw? I think not I think it is greed. We had banks lowering standard to make shareholders and investors happy because the mortgages were a good money makers. So to make more money they lowered minimum credit scores, they became creative in their lending. We were putting home buyers in homes they could ill afford. We were doing that by interest only loans or No money down loans? Is it any wonder that when they got a rate adjustment on those ARMS and interest only loan home owners got a shock?

Living in a military community I have had the unfortunate opportunity on more then one occasion to go to a listing appt and have to tell the home owner "Even in the beat case senairo you wil have to bring money to the table." It is never a good or comfortable listing appointment and this was all caused because someone put these homeowner into a mortgage that they did not either understand or it was not explained to them in true detail.

As REALTORS we have a responsibility to educated our customers and clients to the best of our ability on all the features of different loan programs. The market says consumer beware but when you have knowledge that will benefit another is it not right to share the knowledge to the betterment of the buyer? Even we as REALTORS got greedy in the market, We stopped doing what we knew was right and we did not always have the best interest of our clients in the forefront of our daily actions. I am not saying all of us but I know of many in our town who only did interest only loans, that was the only program they sold. But I deter from my original point sorry.

So my main question here is?

Where were the head of Freddie and Fannie when s*#@ hit the fan? Where are the men who took so much money from the industry? Why are we not questioning them? Why are we not hearing anything from them? Is there no contrition?

A critical pillar to market competition and free markets did break down," Greenspan said. "I still do not fully understand why it happened." Well let me education you Mr Greenspan. A critical pillar did break down but I am not sure the free market broke down. I think greed was the pillar but I believe free market was the doorway through which the pillar tumbled. By living in a society where we have free enterprise we allow the green eyed monster of greed to take over when we allow it to go unchecked.

So I ask you will there be justice? Or are we afraid to ask the question of those who were key figures in the downfall of this free society?  Where are they and why are we asking Alan Greenspan the tough questions but not the heads of Freddie and Fannie??? Inquiring minds wanna know.

With my personality I like the ability to check out things and compare different site before I commit to purchase something. (Must be why I am such and ebay fan).  This seems to also be true of a lot of my on-line clients they like the anonymity of the Internet. The ability to check out other company websites and look at houses through sites such as Realtor.com or MLS.com and find what they desire before contacting an agent.

I know that when I make contact with someone as a result of our site that they are serious lookers and interested in either selling or buying. Maybe not right this minute but they are gathering information and preparing themselves with knowledge so when they do choose their agent they will have some ideal of their background and market area.

Does this bother us as agents? Not a bit it actually makes our job a whole lot easier. We have had customers comment on our photos of the dogs or other such things and it makes a connection for us. It is an ice breaker many times upon first meeting.

By using the Internet as a marketing tool we have the ability to update and change listing instantly. If we take pictures when a homeowner is moving out we can then go back and update when they are totally moved out. It does not have to go through a third party just us. We are able to stay on top of our inventory and serve our clients better.

Does it bother me that customers  check out several other sites? Heck no! When they choose us we know they have looked over the competition and we placed. Thats a good thing, and we expect it.

So to go back to the start of this post do we embrace the Internet as a buying tool for homes in todays market? Of course we do, We have actually sold several homes site unseen over the Internet. ( A little scary  but true). We just take tons of pics and upload them on a site for the buyer to check out and then we go back and take more where needed. We now have the ability to do a veri sign and our contracts are all done on the Internet, They just have to show up for closing.  There are a lot of investors who buy and never see the property they are buying based upon our recommendation and pictures and the mls info. The Internet makes this easy and accessible  when in the past it was snail mail.

So don't be afraid to check us out or or competition! We love what the Internet can do for you as a buyer or a seller. It is a great tool and one that almost all home owners go to first.

Well enough of my rambling just thought I would post. Have a great weekend

• The credit is $3,750 for married couples filing separately. Unmarried people who jointly purchase a home will be able to divide the $7,500 credit.

• This program is actually a loan, which home buyers must repay over 15 years at zero percent interest beginning in the second year after they purchase the home. A home buyer who qualified for the whole credit would pay $500 for 15 years or about $41.67 per month.

• The credit applies only to homes purchased on or after April 9, 2008, and before July 1, 2009.

• High-income home buyers don’t qualify: Eligibility begins phasing out for single filers with adjusted income of more than $75,000 and $150,000 for joint filers. It completely phases out at $95,000 for singles and $170,000 for married couples filing jointly.

Jacque

Click Here to Learn More About CreditCRM

It's surprising how many consumers make the same credit scoring mistakes over and over again. In an effort to educate consumers on credit and credit scoring, we've compiled 5 common credit scoring mistakes into a list that defines each mistake and explains why they are bad and how to avoid them:

Credit Mistake #1: Closing Credit Cards Accounts

This is probably THE biggest credit mistake that consumers make. What you may find surprising is that closing credit card accounts can hurt your credit score almost as badly as missing a payment.

Not only is this the number one on the top five credit scoring mistakes, it's also number one on the list of credit myths.

Ironically, most consumers make this mistake based on poor advice from a mortgage lender as a strategy for improving their credit scores. A word of advice people, when you're dealing with something as sensitive as your credit and credit scores, make sure you do your homework before trusting some of these so called 'industry experts' before following through with their advice.

There are two important reasons why you should not close credit card accounts:

Why would this be a bad thing?

It's simple - you never want to get rid of old, positive information in your credit reports. This information actually helps your credit scores.

Credit scores want to see this positive account information. They want to see your long, perfect history of making your payments on time because this information significantly helps your credit scores.

This information significantly helps your credit scores so why would you ever want that history to disappear? You wouldn't! Here's an analogy for you: let's say you made straight A's in high school. What if the record of that perfect scholastic accomplishment were permanently deleted seven years after you graduated? Would you ever want that history deleted? Of course you wouldn't. The same is true for the credit reporting environment.

So, what should you do with old credit cards that you don't use any longer?

What you don't want to do is to let the account become inactive. When this happens, the credit card companies aren't generating any revenue for your account.

Eventually they'll close the unused account because you're more of a liability than an asset. You can prevent this from happening by using the card every few months for low dollar purchases like dinner or a tank of gas.

When the bill comes in, just pay it in full. If you do this, it will ensure that the account will never be closed and you'll always get credit for your good payment history.

So how will closing unused credit cards hurt your credit score? When you close an account, the amount of available credit decreases, which could result in a higher revolving utilization and lower your score.

Let's use the example from above and close the second unused credit card account. When you close the account, you remove it from any utilization calculation and now you're stuck with one open credit card account with a $1,000 limit and a $500 balance.

This caused your utilization to go from 25% to 50%.

Remember, you divide the total balance by the total available limit so $500 divided by $1,000 is .50 or 50%. As this percentage increases, your credit score decreases.

When you're talking about several unused credit cards with high limits, you can just imagine what closing credit card accounts could do. I've seen consumers go from a 10% utilization to almost 100% utilization because they closed all of their credit card accounts except the one they were currently using.

Big mistake.

Credit Mistake #2: Missing Payments

It doesn't take a credit scoring expert to tell you that missing payments is a bad thing. The only reason I made missing payments second to Closing Credit Card Accounts is because this one is a no brainer.

It shouldn't take a credit expert to tell you that missing payments is bad. Common sense should tell you that missing payments is bad. Credit scores are designed to predict how likely you are to miss payments in the future.

This means that they look at your credit history to view how you've managed all of your credit obligations.

Missed payments is the most powerful predictor of future late payments. The FICO score evaluates previous late payments in three different layers:

How Severe - How severe is the late payment? It doesn't take a statistician to tell you that a 30-day late isn't as bad as a 90-day late. The more severe the late payment, the more damaging it is going to be to your credit scores.

Consumers who have missed payments by a few weeks and then bring their accounts current score much better than consumers that have gone 90+ days past due. In fact, a 90-day past due is the threshold that will wreak havoc on your scores.

If you are unable to avoid a late payment, the next best option is to get those accounts current as quickly as you can.

How Recent - How long ago did the late payment occur?

If you've read some of my previous articles on credit scoring, you'll know that the last 24 months of your credit history are critical because the FICO score places more emphasis on your recent credit patterns.

This means that a late payment 6 months ago is going to carry much more weight than a late payment from 4 years ago. To recover from late payments it's important that you get current and stay current.

How Frequent - How often have the late payments occurred? Consumers that miss payments frequently are penalized much more severely than those that have missed a payment here or there in their past.

If you have a tendency to make late payments your credit scores will reflect your bad habits. Make your payments on time and you'll never have to worry about losing points in this category.

Credit Mistake #3: Settling Accounts

One of the most common mistakes consumers make is assuming that 'settling' with a lender is a great way to save a little cash.

Unfortunately, they don't realize what that a 'settled' indicator in their credit reports is actually derogatory.

"Settling" is a term used in the consumer credit industry that means accepting less than the amount you owe on an account. For example, if you owe a credit card company $5,000 but you can't pay them the full amount then they will likely make you a deal for less than that full amount. They have "settled" for less than the full amount, which is likely much less than you contractually owe them.

This may seem like a good idea because you save quite a bit of money but as far as the credit scoring models are concerned, this is just as negative as other severe late payments.

The only way to avoid the damage to your credit scores is to arrange a deal with the lender to report the account as 'paid in full' as opposed to 'settled'. If they don't agree then it's in your best interest to figure out how to pay them in full or else be prepared to suffer the damage to your credit for the next 7 years.

It's also important to understand that if the account has already made it to the collection phase, the damage is already severe and settling won't really make a difference. Settling is only an option if the account has already made it to a severe delinquency state. 

Credit Mistake #4: High Revolving Utilization on Your Credit Cards

Most consumers believe that making your payments on time is all it takes to have good credit and earn great credit scores.

What they don't realize is that almost a third of your score is determined by how much you owe on your credit card accounts. If you have high balances on your credit card accounts, you're credit scores could be severely impacted by your revolving utilization.

In order to score the most possible points in this category, I advise keeping your revolving utilization at 10% or less.

Don't be fooled when you hear some of these celebrity experts telling you that 50%, 30% or even 25% is best.

While 30% is considerably better than 50%, 10% or less is ideal. The lower the utilization percentage, the better your score will be. (*To read more about revolving utilization and how it's calculated, please read the revolving utilization bullet in Mistake #1.)

Credit Mistake #5: Excessively Applying for Credit

Whenever you apply for credit your application gives the lender permission to access your credit reports. When they pull your credit reports, it automatically posts an inquiry in your credit record. This inquiry is a record of who pulled your credit report and the date it occurred. 

Credit scoring models use inquires to determine if and when you shop for credit. Statistics show that consumers who have more inquiries are higher credit risks than those with fewer inquiries.

It is for this reason that the more inquiries you have, the more points you lose in the credit score calculation.

The exact point value of inquiries is a much argued topic and is impossible to give an exact point value because it really depends on all of the other information included in your individual credit file.

The best strategy would be to only apply for credit when you absolutely need to.

This means that you should avoid those in store offers of "10% off" in exchange for applying for a store credit card. This may sound like a great idea but the reality is that while you may save a few bucks on your purchase, those inquiries could end up costing you a lower credit score which could result in higher interest rates on auto or mortgage loans in the future.

There you have it. Now that you know the top 5 credit mistakes, you can avoid making the same mistakes that so many other consumers make.

Have a great week and give us a call if you have any questions.

By: Hanley Wood

Fannie & Freddie on Rocks
Fears of a meltdown in the financial system have sent shockwaves across the markets in the past several days.  Financials are still reeling from the effects of the meltdown in the mortgage markets.  These issues have now brought into question the stability of the two large government-sponsored enterprises, Fannie Mae and Freddie Mac, which back or own nearly half of all outstanding national residential mortgage debt.  The collapse of the two would be near catastrophic but is also highly unlikely.  The real issue is if they have enough capital to ride out the current storm or will the Federal Reserve need to intervene in order to keep the two afloat. 

While the Fed played a key role in the JPM acquisition of Bear Stearns, the question is whether they should OR can continue to bail out these faltering financial institutions.  In the case of Fannie and Freddie, it’s reasonable to assume the federal government will not allow them to fail, but the ramifications in terms of regulation and fiscal burden for taxpayers could be significant.

Pending existing home sales figures released by the National Association of Realtors continued to show weaker conditions in the housing market.  With the current distress in the financial markets, heightened inflationary pressures and the weakening economy, we can expect to see more downward pressure on housing in the near-term.  After plunging over $9/barrel over a two-day period earlier in the week, crude prices rebounded on Friday to trade at new all-time intraday highs of over $147/barrel due to geopolitical concerns in Brazil and Iran.  The markets seemed poised for a rough second half of the year as rising food and energy costs, stumbling housing and financial markets, and geopolitical concerns surround the upcoming Presidential election.

The Economy
The economy continued to shed jobs in June as non-farm payrolls have no declined in all six months so far this year.  There was a seasonally-adjusted 62,000 jobs lost in June while payrolls have dropped by 438,000 since the beginning of the year.  Non-seasonally adjusted total non-farm employment in June was 167,000 lower than in June 2007.  Currently, non-seasonally adjusted total non-farm employment shows a figure of 138,624,000, a loss of 0.12% from over June 2007.  The unemployment rate remained unchanged from the previous month at 5.5%.

Final estimates for first quarter gross domestic product were revised slightly higher to 1.0% from the preliminary figure of 0.9%. First quarter growth was revised higher with each estimate during the first three months of the year. Many had expected the economy to contract during the first quarter due to the credit crunch and the continued troubles in the financial and housing markets.  Slight positive revisions to both consumer and government spending along with increased exports helped to improve economic expansion during the quarter.

Housing Market
National average mortgage rates increased slightly to 6.37% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on July 10th.  Rates have now posted weekly increases in six out of the past seven weeks.  In the week ending July 4th, the MBA’s seasonally-adjusted Purchase Index increased to 365.8 from 342.8 in the previous week.  This is the second straight week that purchase applications have increased while reaching their highest levels in a month.  The latest figure reflects a 6.71 percent increase from last week but a 19.41 percent drop from the same period last year.

New and existing home sales moved in opposite directions again in May but it was the existing home market that showed improvement while new home sales faltered.  New home sales declined in May after posting its first monthly gain since October 2007 last month.  Sales fell 2.5% in May to a seasonally-adjusted 512,000 homes, down from a revised April figure of 525,000.  At the current sales pace, there are 10.9 months of new homes supply on the market.  New home inventory declined to 450,000 which is the lowest it has been since May 2005.  In May, median new home prices fell back to their lowest levels since March to $231,000 after posting a strong rebound in the previous month.  Lower prices helped to increase the new home affordability ratio to 48.8% in May.

Annualized sales of total existing homes in May increased for the first time since February, rising 2.0% from April levels to 4,990,000 units.  Sales of existing homes are still down 15.9% from the 5.93 million units in May 2007.  Median existing home prices in May increased for the third straight month to $208,600 from a revised $201,200 in April.  This is the highest median existing home prices have been since November 2007.  The number of existing homes for sale declined 1.4% to 4.485 million units in May.  At the current sales pace, there are 10.8 months of existing homes supply on the market.  Existing home affordability declined for the third straight month due to increases in both mortgage rates and existing home prices in May.

Hanley Wood: Hanley Wood Market Intelligence is the housing industry’s leading independent real estate research firm providing residential construction information and analysis for real estate development and new-home construction. Builders, developers, lenders, and manufacturers turn to Market Intelligence products and services to fuel their strategic decisions. The Key Indicator newsletter is a free publication to over 25,000 industry professionals and provides an overview of recent economic trends and analysis. Visit us at www.hwmarketintelligence.com or call 1.800.639.3777

When you see the Stars and Stripes displayed, son, stand up and take off your hat. Somebody may titter. It is in the blood of some to deride all expression of noble sentiment. You may blaspheme in the street and stagger drunken in public places, and the bystanders will not pay much attention to you; but if you should get down on your knees and pray to Almighty God, or if you should stand bareheaded while a company of old soldiers marches by with flags to the breeze, some people will think you are showing off.

But don't you mind! When Old Glory comes along, salute, and let them think what they please! When you hear the band play "The Star-Spangled Banner" while you are in a restaurant or hotel dining room, get up even if you rise alone; stand there and don't be ashamed of it, either!

For of all the signs and symbols since the world began there is none other so full of meaning as the flag of this country. That piece of red, white and blue bunting means five thousand years of struggle upward. It is the full-grown flower of ages of fighting for liberty. It is the century plant of human hope in bloom.

Your flag stands for humanity, for an equal opportunity to all the sons of men. Of course we haven't arrived yet at that goal; there are many injustices yet among us, many senseless and cruel customs of the past still clinging to us, but the only hope of righting the wrongs of men lies in the feeling produced in our bosoms by the sight of that flag.

Other flags mean a glorious past, this flag a glorious future. It is not so much the flag of our fathers as it is the flag of our children, and of all children's children yet unborn. It is the flag of tomorrow. It is the signal of the "Good Time Coming." It is not the flag of your king?it is the flag of yourself and of all your neighbors.

Don't be ashamed when your throat chokes and the tears come, as you see it flying from the masts of our ships on all the seas or floating from every Flagstaff of the Republic. You will never have a worthier emotion. Reverence it as you would reverence the signature of the Deity.

Listen, son! The band is playing the national anthem?"The Star-Spangled Banner!" They have let loose Old Glory yonder. Stand up?and others will stand with you.

This tribute to the flag is offered to the country in appeal to all men and women of all races, colors and tongues, that they may come to understand that our flag is the symbol of liberty and learn to love it.