Effective December 12, 2009, Fannie Mae begins implementing new, tightened lending standards.

Among the new guidelines, borrowers who are putting at least 20% down will need to have a minimum credit score of 620 (the current score is 580). The new cutoff for total debt cannot exceed 45% of borrower's monthly income.

Why the tightened standards? On average, loans to borrowers with less than a 620 credit score are approximately nine times more likely to go into default.

In the past, it has not been common practice to give a buyer's credit score on a lender's pre-approval letter. In light of these new guidelines, it may be a good idea to request the score be stated on the letter.

This new bill was signed effective November 7, 2009 and expires April 30, 2010. It truly has proven to be a shot in the arm for the real estate world here in Outer Cape Cod. The activity in Wellfleet, Truro and Provincetown has been tremendous. There have been some wonderful additions to this bill including the raising of income limits and eligibility for existing home owners, not just first home Buyers! Check out the details of the Tax Credit Bill below.

Highlights are as follows:

* The first time homebuyer tax credit remains at: $8000

* First time buyer definition of eligibility: must not have owned a principal residence for 3 years prior to purchase

* Repeat homeowner tax credit: $6500

* Current homeowner definition of eligibility: Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years

* Binding contract rule: purchaser will have until July 1, 2010 to close as long as they have a written, binding contract in effect on April 30, 2010

* Limitation on cost of home: it was zero, now it is $800,000

* Income limitations have gone up as well: single, from $75,000 to $125,000 and married, from $150,000 to $225,000

* Purchase by a dependant: went from n/a to ineligible

* Anti-fraud rule: went from none to must attach documentation of purchase to tax return

*** Remember, there aren't any restrictions on the type of financing the buyer obtains. Real Estate Investors! Get creative with this...think about owner financing and lease-options closing prior to July, 2010.

Once this homebuyer credit expires, interest rates will begin to climb again as we recover from the recession. This should indicate to buyers that now is a great time to purchase a home.