Federal tax credit draws home buyers

Nashville home sales are getting a boost from the federal tax credit for first-time home buyers. That’s one sign of improvement in an industry that took a nose-dive after the sub-prime lending bust.

In January the Greater Nashville Association of Realtors reported sales down 42 percent compared to last year. This June, sales were still low, but they had closed to 19 percent down. Many in the industry attribute that to the first-time home buyer’s tax credit.

The credit effectively saves a new home-buyer up to $8 thousand in taxes. But to qualify, a would-be buyer has to meet more stringent requirements – typically a higher credit score, less debt, and more income. Secretary Lorena Brandon says she’s hoping to improve her credit score and take advantage of the program before it ends this fall.

“Especially with the deadline being November 30th, it’s like, oh gosh, you really have to get up off your butt, and get something done. You don’t want to run out of time. I really want that tax break of $8 thousand – That’s my incentive.”

Homebuyers can improve their credit scores by paying down debts, and in some cases get alternative credit with references from apartment owners or utility companies. Some lenders are now also offering classes on improving credit-worthiness.

WEB EXTRA:

Link to the federal site about the credit.

Gayle Kindig, mortgage manager for Regions Bank, says roughly 3 in 10 applicants are immediately credit worthy by current standards. She says the remaining seven applicants probably need six months to a year of preparation.

“We are partnered with a lot of nonprofit organizations such as Woodbine Community Center, Affordable Housing, the Housing Fund, and they have education programs where you have to do 16 hours of classroom-setting education. We go through ‘What is a Budget?’, ‘How Much Can You Afford?'”

Kindig says the classes also help people find ways to improve their credit standing.

“If you don’t have a credit score, we can turn to alternative credit, such as a cell phone; if you rent, your rental; if you pay your electricity bill; you pay your gas bill; then we can actually get a credit reference from what we call non-traditional credit sources, and put those on your credit report and kind of build that credit report for you.”