WHAT FICO®SCORE DO YOU NEED TO BUY A HOME?

Only 25% of the Americans have a FICO® Score between 740 and 800. Bob Idakaar of Weichert Realtors works with buyers to overcome the problems of getting a Mortgage.

Here is the breakdown according to Experian:
• 16% Very Poor (300-579)
• 18% Fair (580-669)
• 21% Good (670-739)
• 25% Very Good (740-799)
• 20% Exceptional (800-850)

There are many programs available with low or no credit score requirement. The Federal Housing Administration (FHA) now requires a minimum FICO® score of 580 if you want to qualify for the low down payment advantage. The US Department of Agriculture (USDA) does not set a minimum credit score requirement, but most lenders require a score of at least 640. Veterans Affairs (VA) loans have no credit score requirement.

As you can see, none of them are above 700!
It is true that the average FICO® score for all closed loans in January 2019 was 726, but there are plenty of people taking advantage of the low credit score requirements. Here is the average FICO® Score of closed FHA Loans since April 2012 according to Ellie Mae

Average FICO Score

As you can see, that number has been dropping for the last seven years. As a matter of fact, the average FHA Purchase FICO® Score reported in January 2019 was 675! One of the challenges is that Americans are unsure about their credit score. They just assume that it is too low to qualify and do not double check. Credit.com confirmed that only 57% of individuals sought out their credit score at least once last year. Bob Idakaar of Weichert Realtors and BobsHomes.net brings the right Mortgage professional into the transaction.

Here is the increase in the average US FICO® Score over the same period of time.

Bottom Line
At least 84% of Americans have a score that would allow them to buy a house. If you are unsure what your score is or would like to improve your score in order to become a homeowner, please let’s get together and see which kind of financing fits best.

My 21 years of experience will help you find the best house to go with what fits your budget and which town you’d like to cal Home!

 

Tax Time: Can You Still Reap Tax-Free Profits?

Taxpayers who sell their principal residence can pocket—tax-free—as much as $500,000 in profit if they file federal taxes jointly or $250,000 if they file singly. The property must have been owned and used as their principal residence for any two of the prior five years that end on the sale date. News Alert - it's Tax Time

Homeowners can shelter the profits on the sale of a home as often as once every two years. If the two-year use and ownership tests are not met, but the home is sold because of special circumstances (i.e., health problem, job loss, etc.), the exclusion is prorated. Otherwise, gains above $500,000 or $250,000 are taxed at current capital gains rates plus may be subject to an additional 3.8% surtax, depending on income.

Some More Complexities

In effect since January 1, 2013, the Net Investment Income Tax (NIIT) applies a 3.8% surtax to certain types of net investment income of individuals, estates and trusts that have modified adjusted gross income (MAGI) exceeding certain thresholds. For individuals, the MAGI threshold for a single filer or a person filing as head of household (with qualifying person) is $200,000; for married filing jointly or for a qualifying widow(er) with a dependent child, $250,000; and for married filing separately, $125,000.

The 3.8% tax is applied to whichever amount is less—your net investment income or the amount your income exceeds the applicable threshold. For example, if a couple’s net investment income is $200,000 while their MAGI is $300,000 ($50,000 above the applicable threshold), the 3.8% tax would be applied to the $50,000 in excess of the threshold.

For home sellers with MAGI above the applicable threshold, the 3.8% tax may be applied to their home-sale gains that exceed their home-sale gain exclusion ($500,000 for married joint filers, $250,000 for single filers). If your MAGI amount above the threshold is less than your un-excluded home-sale gains plus net income from certain other investments, you would only owe the 3.8% tax on the excessive MAGI amount (NIIT applies to the lesser of extra income or extra gains). You can still take either $250,000 or $500,000 in profits from your home sale tax-free.

Income from rental property, gains from the sale of a second home and gains from the sale of an investment property would be considered part of net investment income (and possibly subject to the NIIT) to the extent that gains are not otherwise offset by capital losses.

This is just an introduction to a complex financial topic. For more details on what you can or cannot deduct, consult a qualified financial professional.