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January 2015     






Tax Tips: Make your home work for you

Few people look forward to the beginning of tax season. However, like it or not, we are faced with it every year. When you next meet with your tax advisor, be sure to ask about the tax benefits of home ownership.

There are numerous federal and state tax policies and programs designed to encourage homeownership by providing tax relief. For full details on these programs you will want to speak with a tax advisor; however I have included some ideas in order to get you asking the right questions.

Sellers - The Taxpayer Relief Act of 1997 allows couples who sell their home to keep up to $500,000 in profits tax-free and let’s single filers keep up to $250,000. In order to qualify for this break the home must have been the filer’s primary residence for two of the past five years.

Buyers - Mortgage Interest Deductions allow you to save on money that you spend on the interest of your home loan.

Buyers and Sellers – If you meet certain qualifications you could deduct direct moving costs from your income tax. In order to be eligible you must have changed job locations and your new job site to be at least 50 miles further from your old home than was your old job location. Also, you must have worked full time for at least 39 weeks of the 52 weeks after the move.

For more information on how your home can save you money you should speak to your accountant or let me know and I will point you to a source for more information.

Home Buying Don’ts

There is no doubt that the home buying process can get a little hectic. There are so many homes to look at, factors to consider, and papers to sign that even experienced home buyers can get a little overwhelmed. The tips below should help you get into that home of your dreams with the least amount of headaches and worries.

  • Do not go it alone. Make sure that you have a trained and experienced real estate agent working for you. A good agent will keep track of the day to day details of your transaction and make sure that you have all the paperwork taken care of.


  • Do not change jobs unless it is necessary. Lenders like stability. If a lender sees that you have a stable employment history there is less likely to be any trouble with your application.


  • Do not give an earnest money deposit directly to a for sale by owner seller. Your good faith deposit should go into a trust account. Some for sale by owner sellers don't understand that funds are to be applied to your expenses at closing.


  • Do not forget to switch utilities. That sounds simple, but you'd be surprised how many people forget to apply for utility service at their new home. Call the utility companies as soon as you have a contract.


  • Line Up Your Hazard Insurance. Make sure that your home is covered in case of any disaster that might occur. This is doubly important because your lender will want to see an insurance binder demonstrating that your new home is covered.
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Your money

Tips for Trimming Remodeling Costs

When it comes to home improvement it is easy to think big. As you look into your yard you can already envision the perfectly manicured lawn, breathtaking landscaping, renovated patio area, and a new outside BBQ area. However, when you look at the budget you have to work with your vision starts to slowly fade away and you begin to concentrate on more realistic goals.

How is it possibly for you to create that dream home on a tight budget? In many cases you are going to need to make some small sacrifices in square footage, quality, and special features. The following tips should provide you with plenty of ideas on how you keep your home improvement budget on track without compromising results:

Prioritize your needs. Determine what features are critical and which features you are willing to compromise on. Can you settle for vinyl flooring if it means you get a higher grade of cabinets? Once your priorities have been set, you can research less costly options on those features you are willing to compromise on.

Avoid costly construction tasks. If possible, don't move bearing walls, alter a roofline, restructure a floor, install new windows, or make involved changes to plumbing and electrical. Save money by working within the existing exterior walls and roof. Plan bathrooms and kitchens where they can share major drains, vents, and supply pipes.

Use moderately priced materials. The most costly building material and fixtures is not always the best option when you are working on a budget. For example, if stock cabinets can achieve the same effect as custom ones, why pay the premium?

Pay attention to highly visible work. This is the part of the renovation that everyone is going to immediately notice so make sure you do not cut any corners.

One last thing that you will want to remember is that home improvement projects do not always pay off in the end. There are numerous cases of homeowners over-developing their home for the market that they live in and thus not recouping their investments in the home.


Market

Existing-Home Sales Lose Momentum in November

After hitting their highest level of the year, existing-home sales slid in November as housing supply showed some tightening, according to the National Association of Realtors®. All major regions experienced a decline in sales compared to a month earlier.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 6.1 percent to a seasonally adjusted annual rate of 4.93 million in November from a downwardly-revised 5.25 million in October. Sales dropped to their lowest annual pace since May (4.91 million) but are above year-over-year levels (up 2.1 percent from last November) for the second straight month.

Lawrence Yun, NAR chief economist, says sales activity was choppy throughout the country in November and housing inventory began its seasonal decline. "Fewer people bought homes last month despite interest rates being at their lowest levels of the year," he said. "The stock market swings in October may have impacted some consumers' psyches and therefore led to fewer November closings. Furthermore, rising home values are causing more investors to retreat from the market."

Total housing inventory at the end of November fell 6.7 percent to 2.09 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace – unchanged from last month. Despite the tightening in supply, unsold inventory remains 2.0 percent higher than a year ago, when there were 2.05 million existing homes available for sale.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage in November dropped to 4.00 percent, its lowest level since May 2013 (3.54 percent), and down from 4.04 percent in October.

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