Monday, October 18, 2010

Pending home sales are up for the second month in a row

First-time homebuyers can make the purchase rewarding with careful planning and financial honesty

A glimmer of positive movement surfaced in the real estate market this week–­pending home sales increased for the second straight month. Low interest rates make purchasing a home very attractive now.

For first-time homebuyers, the process can be intimidating, but breaking down the steps brings the experience into perspective. Here are some hints to make your home purchase as smooth as possible.

Determine a budget–Be honest about how much you can spend. Factor in expenses not directly included in the actual purchase price, such as closing costs, inspections, repairs and mortgage insurance. Also think about long-term expenses–in addition to the mortgage payments, utilities, insurance, small and large disasters and maintenance can eat up a large chunk of your monthly income.

Just because you’ve been pre-approved for a $200,000 loan at $2,000 a month doesn’t mean it’s a good idea to spend that much. By pushing your financial limits, you could be “house rich and cash poor” or even houseless should your income be severely diminished.

Find a reliable lender–­This is important and will avoid unpleasant surprises down the line. For starters, discuss your potential mortgage with a loan officer at your bank and get some basic figures. Ask your real estate agent for referrals. Loan officers who have a good working relationship with real estate agents will be fair and get the loan closed on time. (By the way, there are no referral fees; that’s illegal and a good agent would never do that.)

Be competitive and fair–In a slow moving market, some homebuyers feel that sellers are so desperate to sell their home that they will take any lowball offer just to move on. That can be very insulting to a seller, who may not wish to deal with you. Of course you want the best price possible, but the process entails mutual respect, a reasonable starting bid, and fair market value.

Choose your agent carefully–Not only should professionalism and a great sales record be a choice for an agent, but personality plays a part too. Interview several agents and, all being equal at the end, decide which agent you would best work with on a personal level.

Plotting a methodical, sensible course to home buying with your dream house as the prize at the end will make the process less stressful and more rewarding.

Tuesday, October 12, 2010

Tax breaks are available to homeowners

Buying a home comes with some tax perks if you’re willing to file the IRS long form

April 15 may seem like a long time away, but if you’ve just bought a home, you can make tax time less stressful now. Proper tax planning now may reap deduction benefits next year. Tax breaks are available for property owners, but only if you itemize your deductions instead of filing the short form.

Tax breaks for property owners include:

  • Mortgage interest­–For most homeowners, the biggest portion of your house payment goes to interest. All of the interest is tax-deductible. In the beginning of your loan, a much smaller part begins repaying the debt.
  • Real estate taxes­–Also known as property taxes, this is the annual tax that most state and local governments charge on the assessed value of your real property.
  • Points–These are lender fees associated with getting a mortgage. Each point equals 1% of the loan principal. Points can add up to thousands of dollars, with one to three points common on most home loans. You can deduct points in the year you paid them if the loan is to purchase or build you main residence.
  • Moving expenses–You could deduct moving expenses if you are self-employed or an employee, if your move is related to starting work at a new job location.

You also have a new address and to make life a lot simpler before tax time, you need to notify several agencies, including the Internal Revenue Service, the U.S. Postal Service and your employer. If you’ve had a name change too, notify the Social Security Administration so that your Social Security number will match when you file your tax returns.

The IRS requires that you file Form 8822. That form is downloadable at or by calling 800.829.3676. If you’ve had a name change, it’s necessary to filed Form SS-5, which is an application for a new Social Security card. That form is returned to your local Social Security office.

With a bit of advanced planning, tax deductions can make your home sweet home sweeter than ever!

Monday, October 4, 2010

Older Americans are willing to downsize homes and work longer to maintain lifestyle

Boomers have also redefined what are necessities instead of luxuries.

One of the most influential groups in modern history–the Baby Boomers–changed the fabric of American life and are in the forefront again, in housing and what they define as basic needs.

More than 35 million Americans are age 65 or older and the home ownership rate is 80 percent, according to the Aging In Place Initiative. Older Americans are willing to downsize their homes to maintain a certain lifestyle.

Rather than moving to warmer climates, most want to stay in the communities where they live, work and raised their children. MainStay Investments found that 47 percent of older Americans surveyed would downsize their home and work longer to maintain what they consider basic needs.

Traditionally those would be food, clothing and housing. Now, those basic needs include a far more eclectic mix. Eighty-four percent of those surveyed reported having an Internet connection is a basic need, and 66 percent felt that shopping for birthdays and special occasions is a necessity.

Pet care is considered a necessity for 51 percent of respondents while 50 percent feel that taking a vacation once a year is a need, not a luxury. The list also includes weekend getaways, professional hair care, education and dining out.

Many of these needs do make sense; because families can be spread all over the country, the web helps keep them connected with each other’s lives. Pets have become another source of emotional support when families no longer have a local connection.

But the age of excess is over and older Americans, never very good at saving, must continue to re-evaluate what is important and make adjustments for a future in an uncertain economy.