Tuesday, January 30, 2007

Points are Deductible

"Points” paid to secure a home loan to buy or improve your principal residence are tax deductible; even if the Seller pays them for you, according to the IRS. A mortgage discount point is equal to 1% of the loan amount. Points are sometimes paid to get a more favorable interest rate and can be paid by either the Buyer or the Seller in a transaction.
Discount points are deductible in full in the year paid if they meet the following criteria:
· They are paid to buy your primary home.
· Your settlement statement identifies the amount as points.
· The amount is computed as a percentage of your loan.
· The amount is not more than is generally charged in your area for a similar size loan. Any additional amount will be treated as interest paid in advance and not deductible.
You may also choose to amortize the discount points over the life of the loan. They are immediately deductible even if financed over the life of the loan.

Points paid to refinance your existing home must be deducted over the life of the loan.

Always consult a tax specialist before taking these deductions.

Wednesday, January 24, 2007

Expedite the Sale of Your Home

There’s a buyer for every home. Sometimes this is hard to believe if the buyer for your home remains elusive. What can you do to expedite the sale of your home?

The first step is to enlist the help of a professional Realtor® who knows your area well and has a great marketing plan. With his or her assistance, your home will have the greatest possibility of finding the buyer for your home. A Realtor® will use various advertising and marketing techniques to reach the greatest number of prospects in the least amount of time.

The second step is to price your home realistically. While you undoubtedly want the most for your home, knowledgeable buyers will not consider an overpriced home. When setting a sales price, rely in the CMA (Comparative Market Analysis). The analysis will provide valuable information on current listings and recent solds.

Call Teresa today for professional advice on selling your home.

Thursday, January 18, 2007

A look at home warranties

A home warranty is a contract that guarantees that certain systems in the home are in good working order. If they fail, the warranty company will repair or replace them.

Home warranties can provide added security and peace of mind for all parties involved. Before buying a home warranty be sure that you review the list of all components that are insured. Most programs cover major systems such as heating and cooling, plumbing, electrical as well as built-in appliances and water heaters. Most contracts do not include the roof, foundation or structural components.

Be sure to find out the cost as well as the deductible amount for any repairs. Some programs limit the amount of service calls permitted. There may be a cap on the dollar amount the company will spend on a contract, as well as limiting the replacement cost.

Home warranties are great tools. Their effectiveness depends on a clear understanding of how they work.

Wednesday, January 17, 2007

Q: How do I choose between renting or buying?

A: Owning a home offers tax benefits, as well as the freedom to make decisions about where you live. Homeowners, unlike renters, can secure a fixed-rate loan and lock in their monthly payments, so they can make investment plans knowing their expenses won't change substantially. Renters are at the whim of their landlord, who can raise the rent each year without a renter's input. Homeowners, on the other hand, are in control of their property and decide whether they allow pets, decorating, or permanent improvements.
Q: Should I buy first, or sell first?

A: The answer to this question lies squarely with you. Do you need the equity that's built up in your present home to complete the purchase of a new home? If so, you either need to sell first or consider a bridge loan or house sale contingency. If not, you may choose to buy first and sell later. Before making a final decision, give me a call to discuss this question. We will touch on every aspect of what it may mean for your particular situation.

Tuesday, January 16, 2007

How to buy a new home before you sell the one you have now

It's a good time to trade up to a home that suits your circumstances better than the one you have now. Before interest rates go up any more, you will be able to afford a larger mortgage, and your present home will be affordable to a larger group of people.
If you want to buy before selling, you have to decide how to do it before your home equity is available to you. That could be tricky. Here are some ways to do it:

* Some home builders offer plans that allow up to 100 percent of the purchase price to be financed by a qualified buyer. If you take this route, financial advisors suggest taking a short-term adjustable rate mortgage (ARM) with an eye toward refinancing when you receive the proceeds of your home sale.

* You could take a second mortgage on your home to cover the down payment.

* In some cases, you can take a first mortgage on the new home and second mortgage to be paid off when you sell the one you have now. Any second mortgage should be a low-rate ARM.
In all cases, it's important to be realistic about the amount of cash your home will generate. It's better to plan on the low side of what the proceeds may be than to be overly optimistic about the amount of money the sale will bring.