Late last Thursday night, announcements that the Cash for Clunkers program had run out of money sent car dealers scrambling to submit their applications. The following day, Friday, the House of Representatives approved a bill that would allocate an extra $2 Billion to keep the Cash for Clunker program going.
The bill, which draws the extra funds from a U.S. Department of Energy program, still needs to be approved by the Senate, which is expected to vote on it this week.
With its additional $2 Billion budget, the Cash for Program would be slated to continue until its November deadline or the funds run out again.
The Cash for Clunkers program originally set aside $1 Billion to provide an incentive for Americans to purchase a new car. The program allots up to $4,500 to people who trade in an old car for a new one with improved gas millage. Dealers all over the country quickly signed up for the program and by the end of July had expended the $1 Billion Cash for Clunkers Budget.
There has not been an official tally yet, but it is estimated that around 250,000 applications have been submitted to the Cash for Clunkers program, with each of these applications representing the purchase of one new vehicle.
Pundits on both sides of the aisle have been quick to draw conclusions from the Cash for Clunkers expended budget. Some claiming that it is evidence that the government could not handle a healthcare program. However, this conclusion is based more off of a need to find faults with nationalized healthcare, than with an actual correlation between healthcare and the Cash for Clunkers Program.
The purpose of the Cash for Clunkers program was to get Americans spending again, purchasing new cars from struggling auto dealers and that is exactly what the program has done. This economic stimulus program preformed just as expected and in fact exceeded most expectations, generating quite literally hundreds of thousands of new car sales at a time when the auto industry needed it most. A budget was created that had a time limit on it and the budget was simply expended before the time limit was up.
While there are a great number of conclusions that could be drawn by the expenditure of the Cash for Clunkers Budget, not all of them positive, to assert that it is an indication that the government can not run a healthcare program is disingenuous at best and an outright lie at worst.
According to reports, the Cash for Clunkers Program could be running out of money, although the White House denies claims that the clash for clunkers program is being suspended.
The Cash for Clunkers program is designed to provide an incentive for people to trade their older vehicles for a new more fuel efficient car. Those that trade in a car that is 4mpg for fuel efficient receive $3,500 and $4,500 is provided for a 10 mpg increase. As part of the program, the traded in vehicle must be destroyed.
The Cash for Clunkers program was slated to run until November 01, 2009 or until its $1 Billion budget had been expended. However, it has become very popular and by July 28, around 16,000 dealers had signed up for the program.
If each of the dealers currently participating in the Cash for Clunkers program were to submit only 18 applications, the program’s budget would be completely depleted and there are reports that some dealers have already submitted more than 250 claims.
At midnight on Thursday, the Department of Transportation reported that the Cash for Clunkers program was being suspended, but these claims were later refuted by the White House Press Secretary Robert Gibbs who said, “We are working tonight to assess the situation facing what is obviously an incredibly popular program.”
Gibbs went on to say, “Auto dealers and consumers should have confidence that all valid cars transactions that have taken place to date will be honored.”
Reports that the Cash for Clunker program had been canceled fueled an increase in nighttime purchases by car dealers. To date, $150 million has already been paid out as part of the Cash for Clunkers program and $850 million is slated for pending applications.
Both Congress and the White House are reportedly looking for ways to continue funding for the Cash for Clunkers program, as it has proved an effective means of increasing new vehicle purchases and upgrading to more fuel efficient vehicles.
**Update November 6, 2009: President Obama has just signed a new law extending this tax credit until April 2010. Under the new law, most of the requirements remain the same, but the income cap has been raised to $125,000 or $225,000 for couples and the home must be priced under $800,000 to qualify. An additional $6,500 tax credit was also added for existing home owners, providing they have owned the home for at least five years. **
Today, there are many incentives for new home buyers. It is possible to get some great deals on homes, as home values are at a historic low. There are many foreclosures as well, which can be a great way to save money, and mortgage interest rates are also the lowest they have been for many years. There is also an $8,000 first time home buyer tax credit available to Americans, which does not have to be repaid.
The First Time Home Buyers Tax Credit is part of Obama’s American Recovery and Reinvestment Act, which was passed in 2009. This tax incentive is designed to help jump start the economy and help make homes more affordable for first time home owners. This is not the first time a tax incentive has been offered to new home owners, however the Obama housing tax credit is different because it will not need to be repaid.
*Under the extension, as long as you have a binding sales contract in place before April 30, 2010, you have until June 30, 2010 to actually close on the home.
The Obama First Time Buyers Tax Incentive can be applied towards many types of homes, including mobile homes, manufactured homes, single family homes, condominiums, house boats, multi-family homes, and even new constructions.
The Federal housing tax credit for first time home buyers provides for 10% of the value of the home, up to $8,000.
The $8,000 stimulus check does not need to repaid, providing you live in the home for at least three years. If the home is sold or is no longer used as your primary residence in the first three years, the $8,000 will need to be repaid.
The 2009 First Time Home Buyers Tax Credit can be claimed on either your 2008 or 2009 tax return. It is necessary to complete an IRS Form 5405 and submit it with your regular tax return.
If you have already submitted your 2008 tax return to the IRS, it is possible to file an amended tax return, to receive your money early. An amended tax return usually takes between 6 to 8 weeks for the IRS to process and will mean you can receive your stimulus check early, without having to wait.
If you owe the IRS money, then the stimulus check will be used towards this balance, with the remaining funds returned to the first time home owner.
Those that do not owe the IRS any money will receive the full balance of the stimulus check. This is true even of those who do not pay any income tax.
You would not qualify for Obama’s First Time Home Buyers Tax Credit, but there is a different tax credit available.
For those who purchase a home between April 8, 2008, and Dec. 1, 2009, an $8,000 no interest loan is available. This loan is provided as part of the Housing and Economic Recovery Act of 2008 and will need to be repaid starting in 2010.
The First Time Homebuyers Credit has most of the same requirements as Obama’s Tax Incentive.
The 2009 Federal Housing Tax Credit for first time home owners is a new tax credit that can make buying a new home much more affordable. This tax credit is part of the American Recovery and Reinvestment Act of 2009 and is available for up to $8,000.
One of the things that sets this tax credit apart from other home buyers tax incentives is that it does not need to be repaid. As long as you keep the home as your primary residence for at least three years, the tax credit there is no obligation to repay this tax credit. Previously, the government has offered tax credits for new home buyers that were simply no-interest loans, but Obama’s First Time Home Buyers Tax Credit is offered as a one time payment.
There are several requirements that must be met to be eligible to receive Obama’s First Time Home Buyers Tax Credit. The main requirement is that neither you or your spouse has owned a primary residence in the last three years. The home must also have been purchased in 2009 between January 01 and December 01. Those who purchased a home in 2008 are also eligible to receive a tax credit, but this credit needs to be repaid.
The first time home buyers tax credit is based upon 10% of the homes selling price, up to $8,000. Even people who do not owe anything in income tax can receive this tax credit, providing they meet the other requirements.
There is an annual income level set at $75,000 for single home buyers and $150,000 for married couples. However, those who have an income higher than this may still be able to receive a partial tax credit.
In addition to traditional single family homes, Obama’s 2009 Tax Credit for first time home buyers can be used on mobile homes, condominiums, new construction, manufactured homes, and even house boats. However, the home can not be a gift from a family member.
Claiming the first time home buyers tax credit is very easy and can be done on either your 2008 or 2009 tax return. There is only one extra form that must be completed and even if you have already filed your 2008 tax return, it is possible to file an amended tax return and receive your tax credit check within 8 weeks of submitting your amended tax return.
This Federal Housing Tax Credit is mainly available to those who are American Citizens, although exceptions may be made for non-residents with valid visas.
Obama’s tax credit is designed to help stimulate the housing market and offer an incentive for first time home owners. This tax credit can be a great way for those applying for their first mortgage to help offset the cost of the down payment or to greatly increase the equity in their home. It is, however, important to note that if you currently owe the IRS money on your taxes, they will use the tax credit to pay this balance and refund you the difference.
Credit scores are a numerical value between 300 and 850 that is based upon a persons credit report. The credit score is intended to provide prospective lenders with a way to evaluate a persons creditworthiness, with credit scores between 760 and 850 being classified as the best. Credit scores are used by many different types of lenders, with the mortgage industry usually relying very heavily upon credit scores. Having a high credit score can be very important when applying for a mortgage and getting a good interest rate, especially in today’s market where lenders are much more careful about who they lend too.
There are several companies that offer credit scores, including each of the three different credit reporting agencies, but the credit score compiled by Fair Isaacs Corp, called a FICO score, is the standard in the lending industry.
While credit scores have been around for over fifty years, it was not until 2003 that the average consumer could easily and inexpensively view their credit score. This came as part of the Fair Credit Reporting Act of 2003, which required all credit reporting agencies to provide individuals their credit reporting score at a fair price. Now, credit scores are available for between $6 and $16.
Credit scores are based upon the information in a persons credit report, so it is not possible to directly change your credit score if there is a problem. Instead, it is necessary to fix problems with your credit report, which will in turn raise your credit score. This is why it is so important to regularly check your credit report for errors and fix them as soon as possible.
As a consumer, it is also important to pay all bills on time and not max out your credit lines. This is because credit scoring agencies place more emphasis on your payment history than they do on your level of debt. Late payments, especially those sent to a collection agency, can have a very negative impact on a credit score.
Requesting new lines of credit too frequently can reduce your credit score, so instead it is better to try to limit your requests for new credit to as short of a time period as possible. This is especially important when trying to repair bad credit, because many people will begin applying for each credit card offer they get, but this actually lowers a persons credit score.
It is also important to balance your debt in a smart and efficient manner. In another words, pay off debts that have higher interest rates or less favorable terms first and try to avoid transferring debt among credit lines too often.
Since a big part of having a good credit score involves using your credit responsibly, most loan officers suggest using your credit, but not exceeding 30% to 50% of your credit limit. Of course, this should be taken with a grain of salt, because it is in their best interest for you to use credit.
Another factor that goes into a credit report is the length of your credit history. Rather than canceling credit cards you are not using, it is typically better to simply destroy the credit card so you can not use it, but keep the account open. This way you can extend your credit history, without actually using it. Instead, begin using debit cards, which offer the same functionality as a credit card would, without the extra fees.
Having a high credit score can mean the difference between getting a good interest rate and getting a great interest rate. A low credit score can quite literally cost you a great deal of money, so it is important to take measures to improve and maintain a healthy credit score.
There are usually a number of factors that a lender will consider when deciding whether or not to offer someone a mortgage. For many lenders, a persons credit score is a very important consideration. Credit scores are a number between 300 and 850, which represents how credit-worthy the individual is.
Lenders and merchants have been using credit reports for thousands of years, which is basically information about a persons borrowing and spending habits that is shared among businesses. However, the credit score was not developed until 1958, when the Fair Isaac Corp implemented a system to analyze credit reports and rate them on a numerical scale.
As is the case with a credit report, credit scores are intended to provide a non-discriminatory means of evaluating a persons creditworthiness, so race, gender, and religion do not come into play.
Since the development of the Fair Isaac Corp credit scoring system, which is called a FICO score, several other companies have developed their own credit scoring system, but none have become more popular than the FICO Score.
While each of the three credit reporting agencies are required to provide a free copy of your credit report every year, there is no such requirement for your credit score. Instead, consumers must purchase their credit score, which typically costs between $6 and $16. Each of the credit reporting agencies also offer a proprietary credit score, but these scores are different than the credit score offered by the Fair Isaac Corp.
There are a number of different factors that go into a FICO credit score, which is based off of information from a each of the three credit reporting agencies. A persons FICO score considers several different factors and rates people on a scale between 300 and 850, with 850 being the highest credit score possible.
The following factors are considered when generating a credit score:
Payments:
Length of Recorded Credit History:
Different Types of Credit:
How Much is Owed:
New Credit Lines:
Each of the above factors is considered by the Fair Isaacs Corp when they generate a persons credit score. Since there are so many different factors, it is very easy for a mistake on a credit report to result in a lower credit score, which is why it is so important to regularly check your credit score for errors.