Real Estate Blogs Online

Choose Your Deduction

colin — Mon, 30 Jan 2012 17:48:49 +0000

One third of all U.S. households, 75% of households with more than $75,000 income and most homeowners itemize their deduction on their federal income tax returns. It makes sense because the interest paid on their mortgage and their property taxes probably exceeds the allowable standard deduction.

However, with interest rates as low as they have been in the last two years and the price of homes having come down considerably, it is possible that the standard deduction may be the better choice.

Each year, the taxpayer can compare the total of the itemized deductions to the standard deduction to select which method will result in the most benefits. The 2011 standard deduction is $11,600 for married couple filing jointly and $5,800 for single filers

Deductible Is the Point – 1/23/2012

colin — Mon, 30 Jan 2012 17:43:58 +0000

Points refer to prepaid interest on a home mortgage and can be fully deductible by the buyer in the year paid if the right conditions exist. The points must be used to buy, build or improve a taxpayer’s principal residence but not all fees charged by the lender are necessarily deductible.

According to IRS Publication 936, “The term ‘points’ is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. A borrower is treated as paying any points that a home seller pays for the borrower’s mortgage.”

If you purchased a home in 2011, have your tax professional evaluate your closing statement to see if there are loan fees that may be used as a deduction on your tax return regardless of whether you or the seller paid them.

Refinancing a principal residence or purchasing an investment or income property require that points must be deducted ratably over the term of the mortgage rather than deducting them fully in the year paid. Borrowers in these situations should consider the benefits of lower interest rates from paying point to higher interest rates without points.

This article is meant to provide information that can be discussed with your tax professional about your specific situation and is not to be considered tax advice.

The IRS And The Surviving Spouse Home Sale

colin — Fri, 06 Jan 2012 18:16:12 +0000

Sale by Surviving Spouse

The IRS has given special consideration regarding the sale of their jointly-owned principal residence after the death of a spouse. If the surviving spouse does not remarry prior to the sale of the home, they may qualify to exclude up to $500,000 of gain instead of the $250,000 exclusion for single people.

The sale needs to take place after 2008 and no more than two years after the date of death of the spouse
Surviving spouse must not have remarried
Both spouses must have used the home as their principal residences for two of the last five years prior to the death
Both spouses must have owned the home for two of the last five years prior to the death
Neither spouse may have excluded gain from the sale of another principal residence during the last two years prior to the death

If you have been widowed in the last two years and have gain in your principal residence, it would be worth investigating the possibilities. Contact your tax professional for advice about your specific situation. Contact me to find out what your home is worth in today’s market. See IRS Publication 523 – surviving spouse.

Waiting To Buy Might Cost More In Future!

colin — Thu, 05 Jan 2012 01:34:10 +0000

Waiting Might Cost MORE!

The housing market has been in a downward trend for four years. There is some speculation that inventories will not reduce any time soon which will be necessary for prices to rise. However, there are other factors that can increase the cost of housing, specifically mortgages. FHA accounts for a large percentage of the current housing loans and is expected to be even more prominent when the Qualified Residential Mortgage Guidelines go into effect next year.

Rising rates are almost certain, due to looming inflation fueled by higher gas and food prices and the enormous amount of deficit spending
FHA loan limits have been reduced – they are lower than conventional limits in most markets and FHA has suggested that they might be reduced further.
FHA might increase the down payment to 5% or higher in an effort to have a more secure loan that will have less likelihood of going to foreclosure.
FHA might decrease the amount of seller contributions in a similar move to require the buyer to have a larger investment in the home and therefore be a more “qualified” borrower.
Congress may decide to increase the up-front MIP to build up the FHA reserves. The annual MIP has been adjusted twice since October 2010 when the Up-Front MIP was actually reduced.
Due to tougher conventional requirements, demand for FHA loans could exceed maximum annual insurable limits. If Congress is having a hard time raising the limit on national debt, they might not even consider raising the limits for FHA.

In an effort to solidify the lending industry, qualifying is becoming harder for the buyer and more expensive at the same time. Many of the rules changes could go into effect next year. In addition, market factors could easily play a role in increasing buyer’s costs. Waiting will very probably require a larger up-front investment for buyers in the future.

FHA Waives Anti-Flipping Rule Through Year End To Speed REO Sales!

colin — Thu, 05 Jan 2012 00:15:24 +0000

By: Carrie Bay

The Federal Housing Administration (FHA) is extending the temporary waiver of its property anti-flipping rule through the end of 2012.

FHA rules typically prohibit insuring a mortgage on a home owned by the seller for less than 90 days. In 2010, however, the agency waived this regulation, and later extended the waiver through 2011.

The new extension announced late last week will permit buyers to continue to use FHA-insured financing to purchase HUD-owned and bank-owned properties, no matter how long the homeowner has held the title, through December 31, 2012.

FHA says the waiver will allow homes to resell as quickly as possible, helping to stabilize real estate prices and revitalize communities experiencing high foreclosure activity.

“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” said Carol Galante, FHA’s Acting Commissioner. “FHA remains a critical source of mortgage financing and

stability and we must make every effort that to promote recovery in every responsible way we can.”

According to FHA, the waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers.

Among these conditions, all transactions must be arms-length, with no link between the buying and selling parties.

In addition, in cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will apply only if the lender meets specific conditions, and documents the justification for the increase in value.

FHA’s property-flipping waiver is limited to forward mortgages, and does not apply to the agency’s Home Equity Conversion Mortgage (HECM) for purchase program.

Since the original waiver went into effect on February 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.

The agency says its own research has found that in today’s market, acquiring, rehabilitating, and reselling foreclosed properties to prospective homeowners often takes less than 90 days.

As a result, FHA says prohibiting the use of its mortgage insurance for a subsequent resale within 90 days would adversely impact the willingness of sellers to consider offers from potential FHA buyers, namely because they would be required to cover holding costs and the risk of vandalism that comes with allowing a property to sit vacant over a 90-day period of time.

You Being The Lender To Family Or Friends…

colin — Thu, 05 Jan 2012 00:02:00 +0000

Family & Friends’ Mortgages

It all seems perfectly reasonable: one person is not satisfied with what he can earn currently in the market and another wants to find the most attractive mortgage to purchase their home. It can be a good match but the IRS has specific rules that govern the transaction.

The loan must be done in a business-like manner with a written note specifying the loan amount, interest rate, term and collateral. IRS requires that the mortgage be a recorded lien in order to allow the interest deduction.

Sometimes, these friends and family situations have a less than normal interest rate on the mortgage. However, the rate charged in the note is regulated by the minimum applicable federal rate which is published monthly by IRS according to current Treasury securities. For October 2011, the rate is 2.95% for terms over nine years.

The seller must report the interest paid to them along with the name, address and Social Security number on schedule B when the buyer uses the property as their principal residence.

A mortgage between family and friends can be good for both parties. It may allow the borrower a slightly lower rate without the expenses of a traditional lender while giving the note holder a higher rate than they can earn in available investments. Your tax professional can guide the transaction whether you’re a buyer or seller and your real estate professional can help arrange to have the documents drawn and filed.

Refinancing Gets Even More Attractive!

colin — Wed, 04 Jan 2012 23:47:04 +0000

By AnnaMaria Andriotis | The Wall Street Journal – Mon, Jan 2, 2012 1:49 PM EST

Homeowners who have resisted the urge to refinance their mortgages until now could be rewarded for their willpower. Mortgage rates have fallen to new lows—and banks are rolling out incentives to win business.

Economic uncertainty in Europe and slow growth in the U.S. are prompting investors to pile into ultrasafe U.S. Treasurys. That, in turn, is pushing down mortgage rates, which are tied to Treasurys.

The average interest rate on a 30-year mortgage fell to 4.05% for the week ended Dec. 23, the lowest in 60 years, according to HSH Associates, a mortgage-data firm. And rates on jumbo mortgages—private loans that in most parts of the country are larger than $417,000—also have hit new lows, averaging 4.61%.

“It’s hard to argue rates will get much lower than they are today,” says Stuart Gabriel, director of the Ziman Center for Real Estate at the University of California, Los Angeles.

That’s good news for homeowners. A person who refinanced a $400,000 30-year mortgage in February would pay an interest rate of 5.04% on average, according to HSH Associates, and fork over $2,157 a month; at the current rate of 4.05%, he’d save $236 per month, or $2,830 per year.

[More from WSJ.com: The Investing Landscape for 2012 Could Be Rough]

What’s more, demand for refinancing is declining, since many homeowners already took advantage of lower mortgage rates. Applications for refinancing are 17% below this year’s peak in September, according to the latest data from the Mortgage Bankers Association.

That and other factors have prompted some lenders to offer incentives to win new business—particularly regional and community banks, which are focusing more on jumbo mortgages, says Stu Feldstein, president at SMR Research, which tracks the mortgage market.

The discounts can be sizable. Regional bank Valley National Bank charges homeowners in New Jersey and eastern Pennsylvania a flat fee of $499 for closing costs on mortgages as large as $1 million. Since average closing costs on a refinance run about 2% of the total loan amount, a person with an $800,000 mortgage could save about $15,500.

[Click here to check home equity rates in your area.]

A spokesman for the bank says it is aggressively marketing the discount in part to bring in more customers.

While many lenders don’t refinance mortgages that are larger than about $2 million, Union Bank—which has branches in California, Oregon and Washington—refinances up to $4 million at no extra cost. (Many banks that refinance multimillion-dollar mortgages tack up to an extra quarter of a percentage point on the interest rate.)

Since November, Union Bank has also allowed borrowers to roll the costs of a refinance, like the appraisal fee and loan processing fee, into the mortgage. And borrowers whose original mortgage is from Union Bank don’t have to provide all of the income documentation that other customers do in order to refinance.

In part, the bank’s goal is to develop relationships with high-net-worth clients, says Stuart Bernstein, national production manager of residential lending at Union Bank.

Despite the incentives, many would-be applicants remain sidelined because they can’t meet the long list of qualifications.

[More from WSJ.com: Aging and Broke, More Lean on Family]

The home-equity requirement is one of the toughest hurdles, says Mr. Feldstein. Homeowners with at least 10% home equity make the cut, but people with less have a tougher time.

Borrowers with 10% to 19% equity in their home usually have to buy private mortgage insurance, whose cost varies based on many factors, including their credit score. A borrower with 15% equity and a FICO credit score above 720 could pay 0.44% of the total loan amount, says Keith Gumbinger, vice president at HSH Associates. On an $800,000 loan that would be $3,520 a year—eating into the potential savings of a refinance.

In December, the federal government rolled out a revamped version of the Home Affordable Refinance Program with relaxed home-equity requirements, to allow more borrowers to refinance. To qualify, the current mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae, and borrowers need to be mostly current on payments.

For regular refinancing, applicants need a FICO credit score of at least 740 to get the best rates, says Mr. Gumbinger. And they must provide copious documentation, including at least two years’ worth of tax returns and proof of income as well as recent statements for assets such as retirement and brokerage accounts.

After clearing those hurdles, you might wait about 60 days for refinancing to be completed, says Mr. Gumbinger—longer than the typical 45 days. While some lenders are offering 60-day rate locks for free, others charge a quarter of a percentage point of the total loan amount for the service. On an $800,000 mortgage, that’s $2,000.

Or you could opt to take your chances with a free 45-day lock and hope rates don’t spike between day 46 and the date your loan closes. With the euro zone still in economic crisis and global investors rushing to the safety of U.S. Treasurys, housing-market analysts say it could be at least six months before rates rise significantly.

Write to AnnaMaria Andriotis at AnnaMaria.Andriotis@dowjones.com

The “Right Size” Home

colin — Wed, 04 Jan 2012 22:51:20 +0000

The “Right Size” Home – 1/3/2012

Work hard, buy a home, start a family and continue to upgrade your home until everyone has enough room. This has been the blueprint for lots of homeowners for the last fifty years but there is certainly a shift in thinking that could change all of that.

Interestingly, Americans live in much larger homes than most people in other countries throughout the world. The U.S. Census reported in 2006 that the average single family home completed had 2,469 square feet which was 769 feet more than in 1976.

Once the children are grown and have moved out, homeowners are finding they have too much room. Even if their home is paid for, they have higher property taxes, insurance, utilities and maintenance on the larger home than they’d have if they were living in the “right size” home.

Some homeowners state thaty they’re keeping their larger home because it has luxury features that smaller homes don’t have. There’s a movement that seems to have started in the United States to find the “right size” home with the amenities and convenience that homeowners want.

This philosophy has been expressed by Sarah Susanka in her book Creating the Not So Big House. It proposes a house that “values quality over quantity with an emphasis on comfort and beauty, a high level of detail, and a floor plan designed for today’s informal lifestyle.”

This Year I’m Going To…

colin — Wed, 04 Jan 2012 22:39:46 +0000

“This Year I’m Going To…” – 12/29/2011

Every year, it seems like the same things are on the list but this could be the year you really do invest in a rental home.

Rents are climbing, home prices are cheap and mortgage rates are low for even non-owner occupied properties. A $125,000 home with 20% down payment can easily have a $300 to $500 monthly cash flow after paying all of the expenses.

There are lots of investment strategies that work but one that is easy to understand and execute is to stay with below average price range homes in predominantly owner-occupied neighborhoods. These properties will appeal to the broadest range of tenants while you hold them and buyers when you’re ready to sell.

Single family homes offer an opportunity to borrow high loan-to-value mortgages at fixed rates for long terms on appreciating assets with tax advantages and reasonable control

This is the year to make some real progress on your resolutions. First, invest some time learning about rental properties by attending a FREE webinar on January 4th at 7:00 PM Central time by national real estate speaker Pat Zaby. Click here to register

The Ridge at Rock Creek, New Homes In Marysville WA.

colin — Tue, 13 Jul 2010 21:40:39 +0000

By Harbour Homes

Harbour Homes build their properties to the highest standards of design and craftsmanship, and pride themselves on dedicating developments that reflect the natural beauty of the environment.

The Ridge at Rock Creek in Marysville offers ten new properties in a much sought after area ranging in price from $229,950 through to $319,950.

Harbour Homes build neighborhoods where there’s a variety of home styles that have beautiful streetscapes in order to create a pleasing and happy atmosphere.

The excellent standard features in their homes include high efficiency gas heating, reinforced foundations and front yard landscaping. The best quality cabinetry and vinyl windows are also fitted as standard.

When deciding on a move, your lifestyle influences where you choose to live. The time you have to spend travelling to and from work will be an important issue to consider. Location of the nearest appropriate schools and the availability of shops, restaurants and recreational facilities in the area are all things to be considered.

Harbour Homes provide prospective purchasers with a list of lenders who provide excellent customer services, competitive rates and loan programs. You’ll be guided through the process thus enabling you to choose the best program for you based on your individual financial needs.

All new homes come with a limited new home warranty which is administered by the Residential Warranty Corporation.

Marysville is a city which encompasses beautiful parks and gardens, beach and water sports, golf courses, restaurants, arts and entertainment, museums, zoo’s and aquariums, and much, much more.

There are shopping malls with a small town atmosphere and friendly shop assistants where you can buy anything you need for your new home.

The neighborhoods created by Harbour Homes are all situated within easy reach of all these facilities, together with excellent hospitals and health clinics.

The new homes built at The Ridge at Rock Creek range from 2 bedrooms up to 4 bedroom properties and all offer the very best facilities with the option of choosing preferred fixtures and fittings.

Situated in beautiful surroundings it’s an opportunity for first time buyers and families to live in an area where you have the luxury of a clean and spacious environment, but the convenience of being within a short distance of all the normal family necessities.

Properties within the area are much sought after, and any investment made today can only appreciate in value. This is particularly true of new properties which, generally speaking, need little or no maintenance in the future.

Please send me a reply if you would like to review floor plan choices and layouts or just need any additional information.