The credit crunch, the credit squeeze, the credit crisis... You've seen the headlines. You've heard about the government's $700 billion rescue plan to deal with it. But what does it mean to those looking to secure financing and take advantage of lower home prices? Can someone still get a mortgage in today's volatile market?

The answer is yes, absolutely! While the credit markets have certainly tightened compared to two years ago, nearly $2 trillion of residential mortgages will have been funded in the US by the end of this year, according to the Mortgage Bankers Association. This means there is plenty of money available to potential borrowers who know how to properly position themselves for success.

Get Back to the Basics

It's true. Just a couple of years ago, the mortgage process was incredibly simple, and it seemed mortgage funding was available to everyone. All you had to do was pick up the phone, put in an application, and wait until closing. That was it. And unless your credit rating was horrible, you didn't even need any documentation to get your loan approved.

While a lot has changed in the last two years, getting a mortgage today can still be a simple process, if you plan ahead. This means understanding documentation requirements, your credit history, minimum down payment requirements, and how to structure your mortgage with smaller down payments. It also means working with an experienced mortgage professional who knows what lenders are looking for.

In others words, the mortgage market of today looks a lot like it did ten years ago, long before the proliferation of the exotic and unconventional mortgage products that flooded the market from 2000 to 2006 – risky products that are now being blamed for some of the financial woes we're facing today. Fortunately, these products are no longer available. Unfortunately, this means you'll need to do a bit more work to get a mortgage than you might have had to a few years ago.

This means being prepared to supply income and asset documentation to support what is on your application. This could include your most recent pay stubs and bank statements, W-2s for the previous two years, and tax returns if you are self-employed or have non-salaried income.

If you want the best interest rates and the lowest costs, you'll need an excellent credit score as well – 720 or higher. You can, however, even with FICO scores in the low 600s, get a lower interest rate on a home loan guaranteed by the Federal Housing Administration (FHA) - but you'll need a minimum investment of approximately 3% (please consult your mortgage professional for your required minimum investment.) This is a great option for you if you don't have the 10% or even 20% you might otherwise need to qualify for a low-interest fixed-rate mortgage.

Two years ago, yes, you probably wouldn't have needed a down payment at all, as 100% financing was commonplace. But this is no longer the case. To qualify for 100% financing today, you'll have to qualify for either VA or USDA loans from the government. The Veteran's Administration (VA) and the US Department of Agriculture (USDA) have special programs that allow 100% financing for those who qualify. What is particularly attractive about both of these loans is that monthly mortgage insurance is not required and interest rates are very competitive.

Other than being a Veteran, there are few restrictions involved in securing a VA loan. To qualify for a USDA loan, however, there are some income limitations and the property you're purchasing needs to be located in a designated "non-metro" area. Ask your mortgage or real estate professional if your area qualifies. You'd be surprised how many areas actually do qualify for this valuable government program, so it's definitely worth investigating.

If you're not a Veteran and you can't qualify for a USDA loan, FHA is the way to go. The down payment requirement is minimal. One other benefit is that FHA financing is available, through some lenders, with FICO scores in the 500s, so you don't need perfect credit. There are, of course, loan limit restrictions, but for many parts of the country, these limits have increased recently, making FHA loans comparable to conforming loan limits in many cases. For first-time home buyers (that's anyone who hasn't owned a home in the last 3 years), the government has also created a special tax credit of up to $7,500 for those who qualify. And while you can't use the money as a down payment, this temporary credit can help lower your overall costs. Be sure to ask your lender about this special tax credit.

In the end, no matter which mortgage you choose, the best path for anyone buying a home today is to get yourself pre-approved – not pre-qualified. With a pre-approval in hand, you won't have to worry about the credit crisis. You will know exactly what you qualify for, and by getting pre-approved, your real estate agent will typically have the ability to negotiate either better terms or a lower price for you. And that puts you in the driver seat to take advantage of some great real estate opportunities in a buyers' market.

Joe Long Mortgage Consultant First Choice Mortgage Phone: 608-838-6600 x4 Fax: 608-838-0606 joelong@fcmortgage.com www.fcmortgage.com/joelong

April 15th may be months away, but you know what they say about time flying by. And, considering that most of us will file our returns before the actual deadline, tax season is pretty much right around the corner. In the tradition of keeping our readers one step ahead of things, we thought it would be a good idea to inform you of some of the new tax laws.

Help solving your IRS Tax Debt Problems

Returning for his yearly tax advice is Trevor Rice, a certified public accountant and shareholder with Stern, Kory, Sreden and Morgan in Santa Clarita, California. According to Mr. Rice, there are a few new laws designed to benefit individuals, as well as businesses.

New IRS Tax Laws for Individuals
Rice says, "Due to the recent housing crisis, some relief has been provided." In the past, if you were to have lost your principal residence due to either foreclosure or a short sale, you could have paid taxes on the difference of what you owed on the loan.

For houses lost in 2008 and extending through 2012, Rice says that a forgiven debt up to $2,000,000 will generally be tax-free. While it may not completely ease the pain of losing a home, this new tax law will allow people to move on with their lives much more quickly.

Another new tax law that will benefit individuals applies to first-time home buyers, or anyone who has not owned a home within the last 3 years. According to Rice, if you fall into either of these categories, you may be eligible to receive a refundable tax credit for ten percent of the price of the home, up to a maximum credit of $7,500. There is a catch however.

Starting in 2010 and over the 15 years that follow, you will have to repay this credit to the government. Before you start shaking your head, understand that, at most, this would mean $500 a year would be deducted from your tax refund, or added to the taxes you owe.

Help solving your IRS Tax Debt Problems 

New IRS Tax Laws for Businesses
The first law, says Rice, came about with the Economic Stimulus Act of 2008. It carries two main benefits in the form of deductions for any equipment that was purchased for a business in 2008.

In the past, if you purchased business equipment, there was the possibility of deducting up to $125,000 of the total cost for that year. You could then deduct a prorated portion of the assets' worth in the years that followed. The amount of years you could do this was based on the type of equipment purchased.

Rice says, "The first bit of good news is that the deduction has been increased to $250,000," adding that it makes 2008 an optimal year for reinvesting in your business in the form of equipment and related assets. He went on to say, however, that the real benefit of this new law is in the flexibility it provides.

If the $250,000 deduction doesn't make good tax sense, Rice suggests looking into "Bonus Depreciation", a portion of the new tax law that allows you to deduct up to 50 percent of the cost of any equipment purchased in 2008. The remainder would then become deductions over the course of the predetermined "life" of the equipment.

Adding that in some cases it may be possible to use both tax laws simultaneously, Rice urges that you consult with a qualified tax professional about the possibilities for taking advantage of them while they are still here - they each expire at the end of 2008.

Another change has to do with the amount you can deduct for the purchase of a luxury car for business purposes. According to tax law, a luxury car constitutes any passenger car that was purchased for around $15,000 and up. In the past, you could deduct $3,060 in the year it was purchased. Rice says that for this year only, the amount of the deduction will jump to $11,060!

Help solving your IRS Tax Debt Problems

Parting Shots
When asked if he had any advice for next year's tax planning, or for finances in general, Rice offered up a few suggestions.

"Start your tax planning with a professional now," he says. Tax laws frequently change. Some laws expire and need to be taken advantage of this year, while other credits and deductions are better to be deferred. Rice maintains that by acting now, a qualified tax professional can give you the best advice for your situation and more importantly, give you a head start for next April.

In terms of one's personal finances, Mr. Rice says that since the stock market is down, it's traditionally thought of as a good time to buy. Understanding that the market will eventually turn around, Rice is in line with this thought, but says there's a little more to the picture. He suggests that you stay very much on top of your portfolio, with a focus on keeping it diversified. This, he says, is the best way to successfully ride out a volatile market.

Due to this volatility, Rice also suggests that anyone nearing retirement should look at how they are invested and consider the prospect of moving their money into more conservative investments. A qualified financial planner would be a good person to talk to about this.

Lastly, Rice cautions all of us that in terms of taxes, state law does not have to conform to federal law. What this means is that you cannot necessarily count on these new credits also applying to your state taxes. He says, "Check your state laws, or better yet, ask your accountant what he or she has to say."

Trevor Rice has been a practicing CPA for the past eleven years. A graduate of California State University at Northridge, Trevor also holds the title of CVA (Certified Valuation Analyst.) He currently practices at Stern, Kory, Sreden and Morgan in Santa Clarita, California where he is also a shareholder. Trevor specializes in both individual and business taxation. He can be contacted via email at Trevor@SKSM.com

Help solving your IRS Tax Debt Problems

Joe Long Mortgage Consultant First Choice Mortgage Phone: 608-838-6600 x4 Fax: 608-838-0606 joelong@fcmortgage.com www.fcmortgage.com/joelong