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Did You Know Your Paycheck Gets Bigger When You Buy a House?
Amazing, but true. Buying a home adds to your "take home" income – possibly by several hundred dollars or more – simply by increasing the number of federal income tax withholding allowances on Form W-4. 
- Here’s how it works.
New home buyers generally find that their pre-purchase withholding rate will result in overpayment of taxes, if they don’t adjust their withholding allowances. That’s because they haven’t reduced their withholding to compensate for reduced taxes caused by deductions for mortgage interest and property taxes – items that are currently deductible at income tax filing time.
- See for yourself.
A first-year homeowner who paid $9,000 in interest and real estate taxes, and who itemized deductions in a 28% tax bracket, would have overwithheld and would get a large refund next year. In this case, $2,520.
- Enjoy your bigger paycheck.
Increasing the number of withholding allowances, on the other hand, reduces the amount withheld to pay future taxes – which puts your tax refund in your paycheck today, not at the end of the year. With the additional cash in your hands instead of in the government’s, you’ll have more cash to meet payments and live on.
- Be sure to check the tax rules.
The rules for claiming allowances are simple. Working couples filing jointly figure withholding allowances on combined wage income and may allocate them between employers. On separate returns, the allowances must be figured separately. And if you work for two or more employers at the same time, you may claim withholding allowances from only one employer. Please e-mail or call us with questions about your specific real estate situation.
Your Home Is Still One of Your Best Tax SheltersWhile you build equity in your home by paying off your mortgage, many of the expenses of maintaining the dwelling provide you with several tax deductions. The higher your income, the greater the limits placed on the deductions, and some requirements must be met before they take effect. Here are some examples of deductible expenses: 
- Interest paid on your mortgage, as long as the acquisition mortgage amount does not exceed $1 million.
- Interest paid on home equity loans – not more than $100,000 is deductible.
- Casualty losses from fire, storm, flood, earthquake or other such incident. The loss after your insurance reimbursement must exceed $100 and 10% of your adjusted gross income.
- Home-office costs that qualify.
- Local real estate property taxes paid on a principal residence or second home.
For details about the many tax breaks for homeowners and assistance with your tax return, be sure to consult your tax advisor. We’ll be happy to help you with all your real estate needs.
Do You Know What’s Included In A Sales Contract?Because a signed presentation of an offer is binding on all concerned, the contract includes a number of specific items, such as: 
- Date, name and address of seller and buyer, and the property’s legal description.
- How much money was paid on deposit and kept by a third party in an escrow account.
- Purchase price.
- Amount of down payment, and how the buyer will finance the rest of the purchase price. The buyer usually states the highest interest rate the buyer is willing to pay. If the buyer cannot secure financing at this rate or less, the buyer often retains the right to cancel without penalty.
- Date of projected occupancy. If the seller cannot vacate and thereby becomes the temporary tenant of the buyer, a daily rent-back arrangement should be made for "post settlement occupancy."
- Contingencies, if any, such as review by attorney, structural inspection, appraisal, or contingency for sale of buyer’s present home.
- Other important provisions, including the list of items that convey with the sale, stipulation that title must be free and clear, and who is to pay various settlement costs.
Whether you are buying or selling, we can help you obtain the best sales contract for your particular situation. Call or e-mail us today for assistance on all your real estate needs.
5 Basics for Building Wealth Through Investing in Rental PropertyWith a relatively modest amount of capital and income, you can profit from real estate investing – once you recognize the chief elements of the rental-property marketplace: 
- Taxes may be inevitable, but they are also controllable. In rental properties, you currently benefit from cash deductions for financing, management and operating costs as well as non-cash deductions for depreciation. You also benefit from possible lower long-term capital gains tax rates or tax deferral.
- Leverage involves multiplying your profits by financing as much of your investment as possible and reducing your down payment, thereby limiting the amount of cash tied up and increasing your tax deductions.
- "Positive cash flow" means income either before or after taxes. A savvy investor knows how to turn "negative cash flow" into positive, by maximizing rent through various strategies and through depreciation deductions.
- Appreciation ,the result of selling at a higher price than you bought, appears to be a trend that shows no signs of abating. In investing, the important thing is to choose property in a location where prices are rising more than in other areas.
- Equity,the difference between the property value and the remaining loan balance, brings a profit either through refinancing or sale. Timing is a key consideration in maximizing equity profits, since the longer you own property, the fewer tax breaks available to you.
If you’re thinking about investing in your future through real estate, call or e-mail us for professional assistance in finding the right property for your situation.
10 Tips Smart Condominium Shoppers Should ConsiderThere may be no such thing as a perfect condominium, but you can probably come close to your ideal. With the help of an experienced real estate agent, you can check out the following criteria to locate the right condo at an affordable price:  Look at common areas:
- A condo situated in a neighborhood on the upswing, not the downslide; convenient to shopping, cultural and recreational facilities and good schools. (Even if you have no children, you may someday have a potential buyer who does.)
- Ample parking areas, as invisible as possible – especially from the front entrance.
- Whether high-rise or two-story, a structure that is sound and attractive.
- All public and private entrances equipped with double-lock systems. Electronic surveillance, where possible.
- Convenient and discretely placed laundry facilities, community rooms, saunas, locker rooms, game rooms, individual storage spaces and spots for trash.
Consider the private areas:
- Well-placed air-conditioning and heating units.
- Soundproofed walls, ceiling and floors.
- Well-padded, good-quality carpeting.
- First-rate kitchen and bathroom appliances and facilities.
- A kitchen equipped with an exhaust fan for cooking fumes.
If you’re thinking of looking at condominiums, e-mail us or give us a call. We’ll be glad to help show you what’s available in our area.
Do You Understand Radon Gas and What to Do About It?Radon is a radioactive gas that occurs naturally as a by-product in the decay of uranium, which is found in small amounts in rocks and soil in most parts of the United States. The gas is odorless and colorless. Here are some facts about radon that you’ll want to know when you look for a new home:
What does radon do?
Outdoors the gas passes off into the air relatively harmlessly. Indoors, however, it clings to dust and smoke, which can be inhaled. Inhaled in large quantities over a long period of time, it is believed to damage lung tissue and cause cancer.
How does radon get into homes?
Radon seeps into homes through cracks and holes in foundation walls and floors, through ventilators, sump pumps and other ground connectors.
How do experts tell if there is radon in a home?
Within the next two years or so, homes in many neighborhoods may be spot-checked by state and federal agencies. Some states provide radon test kits for homeowners to do their own testing, at little or no cost. Private firms also sell radon testing kits; the reliability of such firms can be ascertained by referring to the EPA’s radon-testing report (free by calling (800) 541-6442 or (800) 334-8571 or by writing to Radon Quality Assurance Coordinator, Research Triangle Institute, P.O. Box 12194, Research Triangle Park, N.C. 27709).
What can be done if radon is found in a home?
Steps include repairs as simple as sealing foundation cracks or methods as complex as installing ventilation systems that divert the gas, keeping most of it out of the house. Probably the best bet is to hire a contractor trained in radon treatment. Some situations may require the installation of a special vapor barrier under a new basement floor.
Where can someone find out more about radon?
The Environmental Protection Agency has recently completed two free information booklets on radon gas. "A Citizen’s Guide to Radon" is a basic 14-page introduction booklet that explains what radon is, what it does, the type of detectors used to monitor radon and the health risks associated with different concentrations of the gas.
An illustrated, 24-page booklet, "Radon Reduction Methods," offers somewhat more detailed explanations on how to combat radon. Both booklets are available free from any regional EPA office listed in the phone book.
If you want to be sure that you know about other things you should consider when buying a home, e-mail us for more information.
Here Are Some Cool Moves for Buying a Home in a Hot MarketWhere homes are selling as fast as they come on the market, you might try one or more of the following ways to beat the competition to the front door: 
- Bid realistically
(near listing price) instead of hoping your seller will cave in to a low offer.
- Make your offer
without strings (sale of previous home, home inspection, etc.) but only if you’re certain your old home will sell quickly or the property is in move-in condition.
- Be flexible
(within reason) to a seller’s conditions concerning conveyable property, dates of closing and occupancy. Giving in a little may gain you a lot. We can help you find the best home for you in your price range, and we can start as soon as you’re ready. E-mail us with details of your dream home now.
Do You Know How To Choose A Building Site That's Worth The Investment?There are three types of land you can buy for a house you want to build: 
- Undeveloped land: raw turf; no streets, gutters, sewers; no gas and electric lines; no grading; no surveyed lots.
- Developed land: everything but the house is on hand; probably owned by a developer-builder who typically sells lots to be built on under the builder’s management.
- Spot lots: unused property in an established neighborhood.
Whatever kind of property you propose to buy, get professional advice on the feasibility of building the kind of home there that you have in mind. A poor site choice can adversely affect your ability to get a loan. Here are a few other things to check out:
- Zoning laws. Will they permit the kind of home you expect to build? Read covenants carefully.
- Water and sewage. In buying developed land or a spot lot, find out (from county offices) where the water line is located. Check to see if there is a sewage line and if newcomers are permitted to hook into it. If not, check into septic system rules and costs.
- Gas and electricity. Are they available and at what cost?
- Taxes. How much are they and how do they compare to taxes on similar property in other areas?
- Surrounding property. Check maps (at county offices) to find out what plans (highways, power lines, etc.) may be in the offing for woods, fields, open spaces near the property.
If you’d like to look over properties for your special home plans, e-mail us or give us a call. We’ll be glad to show you all your possible choices.
12 Free Services That Pay Off For BuyersTo buy a home, you need to see things clearly. Knowledge and experience can sharpen your vision, and that’s why it pays to shop with real estate professionals. Buying, of course, involves much more than driving around neighborhoods and looking at homes. As experienced real estate professionals, we can offer you the following 12 services (and many more) to make your house hunting a successful and satisfying process. We will: 
- Go over your present and future housing plans to help you decide what kind of home will best suit you.
- Go over your budget, to help you arrive at a realistic, affordable price range.
- Explore with you all the suitable homes for sale in the Multiple Listing Service.
- Acquaint you with the area, the variety of neighborhoods, shopping spots, and educational, social, religious and recreational facilities.
- Explain the differences within each neighborhood, to help you decide which is most compatible with your interests and investment plans.
- Show you any home listed by our office, by any other MLS Realtor, or any home advertised by any agency’s yard sign.
- Help you evaluate the advantages and/or drawbacks among the various homes you examine.
- Provide you with the specific information you need about area taxes, government, and laws.
- Guide you concerning the various financing plans currently available for home purchase.
- Present your offers during offer and counter-offer negotiations.
- Assist you through the process of home inspection and buyer/seller agreement concerning responsibility for property condition and conveyances.
- Counsel you throughout settlement procedures, to make sure that your interests are well protected.
These are only a dozen of the services we provide to home buyers. To get started, simply give us a call. We’ll help you determine what price you can afford and explain how different financing plans can save you money in monthly payments.
How About That Second Home You’ve Been Wanting?Now that tax reform has cleared the second-home roadway of tax inhibitions, you may find this an ideal time to buy a second property. Mortgage rates are continuing to make all kinds of home buying affordable.
The keys to buying a second home hardly differ from those applied to the purchase of your primary home: 
- Consider why you want to buy a second home. For frequent visits to a retreat that's close to home? As a gathering place for family and friends? As a rent-free escape from everyday life? As the ultimate retirement haven?
- Evaluate the potential use of your second home. Will you be renting it out part of the time? If so, check out tax consequences, local zoning regulations and rental-management availability. Perhaps a condominium will best suit your needs.
- Choose a second home as carefully as your first, for location, construction, energy efficiency, and all the other things that make for a smart purchase.
- Examine your financing options. Will you go it alone in a purchase? Will you team up with friends or relatives to split your expenses and vacation times?
We’ll be glad to help you explore the possibilities of fulfilling your second-home dreams. Please call or e-mail us.
Eight Money-Savers Every Home Buyer Should KnowBuying a home may be the biggest purchase of your life. However, the costs are minimized when you realize how home buying actually puts cash in your pocket. Here are just a few ways to save: 
- Stop paying rent. Come out ahead at tax time by deducting for property taxes and mortgage interest while building equity savings.
- Buy now. Prices aren’t standing still; save now, compared to tomorrow’s higher prices.
- Choose a good neighborhood or one on the upswing.
- Buy a home that is likely to appreciate in value, and watch your "savings" increase.
- Cut back on down payment requirements with an FHA or VA loan, if you qualify. Or take out private mortgage insurance, and save on out-of-pocket costs.
- Deduct closing costs (property tax, "points," etc.) Be sure to consult your professional tax advisor before filing any claims.
- Deduct moving expenses allowed if your movie is job-related, saving your tax dollars.
- Pay off the loan principal regularly or in installments over the life of your loan, thus saving thousands in interest payments.
These are just some of the ways your home purchase saves you cash. One of your best cost-saving moves – in either buying or selling – is to take advantage of our professional real estate services. We know the area, the financial establishment and the real estate market. We can help you make your best and least costly move. We’ll welcome your call or e-mail.
Can You Name Buyer’s Typical Closing Costs? Depending on where you live, the price of your home, your lender’s terms, the distribution of fees charged to buyer and/or seller, and other factors, your closing costs on the purchase of a home may range anywhere between 3% and 7% of the home price, sometimes more or less. Typical buyers’ closing charges include:
- Loan origination fee, usually 1% of your mortgage amount
- Discount point (or points), each usually 1% of your mortgage amount
- Assumption fee (if you assume the seller’s old mortgage)
- Title search fee
- Lender’s title insurance fee
- Owner’s title insurance fee (optional, but advisable)
- Survey fee (if applicable)
- Two fees that may have been paid when you applied for your loan:
- Appraisal fee
- Credit report fee
- Lender’s inspection fee
- Recording fees
- Prepaid interest on your mortgage, covering the time between settlement and the first regular monthly payment
- Prepaid mortgage insurance premium
- Property tax, possible reimbursement to seller and/or payment on future taxes
- Assessment, possible 1-to-3-month local improvement charge or association fee (especially applicable to condominium buyers)
- Lawyer’s fees (if applicable)
Your lender must, by law, supply you with a pre-settlement "Good Faith Estimate." It will not necessarily identify all actual costs. At settlement, however, you receive a "Settlement Statement" that contains all the specific actual charges. Since occasional unexpected costs may surface at settlement, it is well to be prepared for possible $200 or $300 in extras at your closing. Extra costs usually involve partial payments for items you had not previously considered but, at closing, wish to pay for: fuel oil left in the seller’s tank, firewood, continuation of lawn service, or the purchase of a major appliance. Since actual costs vary, call or e-mail us for typical figures in your area. Your calls and e-mails are always welcome.
Do You Know How to Choose the Street Where You Live? When you’re looking for a home to buy, remember: Where your house sits is as important as what the house is like. Here are some of the questions we always ask when we’re checking out a new listing. Naturally, we pass what we know about properties on to people shopping for homes, but you, too, can have these considerations in mind:
- What is the traffic like on the road where you’d like to live? What are future plans for road development, if any?
- What are the plans for surrounding property? (answers are sometimes common knowledge, but often they must be looked up in the town hall offices where maps, charts and proposals are available.)
- Where is the nearest public transportation?
- How far is the house from schools, shopping, recreation, religious and cultural centers (depending on individual preferences)?
- How far is the house from a particular place of work and what kind of commute is available?
- What do local taxes (state, county and town) amount to and how are they calculated?
One of the best ways to "get the feel" of various neighborhoods is to drive through them, noting the kinds of homes, yards and people. Knowing the territory as well as we do, it’s a pleasure for us to guide prospective homebuyers on comparative neighborhood shopping trips. If you’d like to learn more about our area, send an e-mail or give us a call.
Inspection Is A Must For Home Buyer’s Protection A professional home inspection protects a home buyer against disappointment and unexpected expense after a home has been purchased. A pre-purchase inspection tells what major and minor flaws exist in a home, what difficulties are apt to occur later (the replacement of equipment, etc.), and what it will cost to eliminate problems. In general, an inspection covers:
- Basic home structure, inside and out (testing for soundness and durability)
- Plumbing, heating and electrical systems and equipment (including costs of operation)
- Kitchen equipment (including life expectancy of appliances)
- Insulation and other energy features
- Detection of toxic substances
- Detection of water problems
To locate an inspector, consult the Yellow Pages, under "Building Inspection Services," or call us. We have worked with highly reliable home inspectors and will be happy to recommend someone.
An Owner’s Best Title Protection Is Recording Plus Insurance Your property has a unique past, present and future, and when you buy a home, you become part of its recorded history. The record of your "free and clear" ownership protects you and future owners of your property from being deprived of rightful ownership. As accurate as the recording system is, there are times when your ownership may be challenged. Perhaps a "legally-dead" previous owner turns up and lays claim. Maybe a case of mistaken identity or even forgery occurred in the past and rises to haunt you. The only way to be assured that your right to own your property can’t be taken from you in some unforeseen way is to take out title insurance. Title insurance secures your part in the history of your home. Working with reputable professionals is another way you can head off trouble down the line with a sale or home purchase. Call or e-mail us for more helpful information.
Do You Know How to Do Your Own Pre-Purchase Inspection?Buying a home wisely means taking a cool look at what you’re about to invest in. Here are four major items to check out before you write your check.
- Sills, beams.
- Possible defect: Rot caused by moisture or boring insects.
- Check method: Poke wood with knife for spongy spots, especially near the foundation. Request certification of most recent termite inspection.
- Windows and Doors.
- Possible defect: Sticking, poor weather stripping.
- Check method: Try all openings and note kind and condition of weather stripping.
- Plumbing.
- Possible defect: Aging, leaking pipes; inadequate water heater or water pressure.
- Check method: Note kind of pipe (copper is best); compare heater’s capacity with family needs; try faucets while flushing for steady faucet flow.
- Electricity.
- Possible defects: Insufficient voltage; too few outlets.
- Check method: Compare number of amps to appliance requirements; count outlets.
Our professional staff is waiting to help you find the home of your dreams. Call or e-mail us to find out more.
Do You Know The Importance Of Title Insurance Coverage? Title insurance protects homebuyers and lenders, not from future hazards, but from problems of the past. With owner’s title insurance, a buyer is free from worry about:
- An old forged deed that turns up.
- A long-lost heir that lays claim to the property.
- A misreading of an old will.
- Lost documents that come to light.
- A mix-up of names or marital status of past owners.
Also, a title insurance company will probably pick up the tab on any court costs involved in defending the homeowner’s case. That’s well worth the cost of the insurance – plus the peace of mind. The most economical way to buy an owner’s title insurance policy is to purchase it at the same time as the lender’s policy (Mortgage Title Insurance). For your continued peace of mind, call or e-mail us to handle your home sale or purchase.
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Thursday, September 09, 2010
