Avalon at Seven Meadows is one of West Houston's most acclaimed golf course and water front communities. Taylor Morrison is the exclusive builder in Avalon's final phase - The Reserve. Only four more families will live behind the gates of this exclusive private reserve - and one of those families could be yours! As of September 10,2009 those are last new constructions in The Reserve:
23315 Two Harbors Glen - Ready in December - $875,000
5 Bed, 4 Bath - 4243 sf - Golf course Home site
Brick and Stone Elevation, 3 Car Tandem Garage, Sunroom, Covered Back Porch w/ Outdoor Kitchen for entertaining and enjoying your view.
23118 Two Harbors Glen - Ready in December - $852,000
5 Bed, 4 Bath - 4399sf - Golf Course Home Site
Stucco and Stone Elevation with rounded turret for the castle looking curb appeal. Island Kitchen, Large Media, "Secret" room, Step up Game room with Covered Balconly allows for great view.
23302 Two Harbors Glen- Ready in December- $830,000
5 Bed, 4 Bath - 4712 sf- Water Home site
Stone and Stucco Elevation with front Courtyard, Guest "Casita", Media Room, and Covered Patio and Balcony.
23311 Two Harbors Glen - Ready October - $867,000
4 Bedroom, 6 Bath - 4815 sf
Stucco with Tile Accents, Grand Foyer w/ spiral Staircase, Formal Living, Dining and Study, 6 Baths including pool bath with Shower, 3 Car Tandem Garage.
Please click here to view a full motion video of Avalon at Seven Meadows
Please click here to view a full motion video of a sample house in Avalon at Seven Meadows in Katy, TX.
Data not Verified/Guaranteed by Irena Gorski
Thursday, September 10, 2009
Wednesday, September 09, 2009
How important is video on the Web site?
"In one year if you don't have a video, an engagement object on your web site, you won't rank" - Bruce Clay
Friday, September 04, 2009
$8,0000 Tax Credit - Real Estate Cash for Action !
Cash for clunkers was a success in many ways. It helped the economy, it helped the environement, it helped many new car owners who took advantage of $4,500 offerred by this program. It is still helping and will help them saving money on fuel cost in years to come, when they are going to drive their newly purchased, more efficient cars. Thinking about Real Estate, the $8,000 Tax Credit, can be called Real Estate Cash for Action of buying first home. The action, which has to be taken by qualified, first time home buyers. If they want take advantage of this money, they should buy a house and close escrow by the end of November 2009. With low home prices and low interest rates, the first time home buyers should take action NOW! It is the beginning of September, so less than 2 months before this $8,000 Tax Credit will be gone. Timing is very important here, especially for first time home buyers with FHA loans, when home buying process may take 45 days or longer. But even with conventional home loans this process may take well over 30 days due to recent changes in Truth In Lending Act. If you are Houston area first time home buyer, talk to your Houston Realtor, who will help you find the right house and will walk you through complicated home buying process.
Tuesday, September 01, 2009
Flood of Foreclosures is coming
The new wave of Foreclosures Flood is coming due to growing unemployment
and economical problems.
and economical problems.
Sunday, August 30, 2009
More About Foreclosure Rescue Scams
Houston homeowners (and not only Houston homeowners), be aware of Foreclosure Scams!
In addition to my previous blog regarding Foreclosure Scams, here is a very good article regarding this topic http://bit.ly/hI0LE
In addition to my previous blog regarding Foreclosure Scams, here is a very good article regarding this topic http://bit.ly/hI0LE
Thursday, August 27, 2009
Houston Association of REALTORS® Becomes Largest Local REALTOR® Organization in the USA
Houston Association of Realtors has officially become the largest local REALTOR® board in the United States following a recent rise in membership and a decline in membership at the Long Island (New York) Board of REALTORS® (LIBOR).
HAR currently has a total REALTOR® membership of 23,354, surpassing LIBOR’s REALTOR® membership total of 23,236 by 118 REALTORS®. HAR and LIBOR are by far the largest local REALTOR® associations, as the Greater Las Vegas Association of REALTORS® is currently third with nearly 10,000 fewer members.
“The Houston Association of REALTORS® is thrilled about achieving this milestone, which demonstrates that our members are deeply committed to the real estate business and have been bolstered by the stronger greater Houston real estate market,” said HAR Chair Vicki Fullerton. “REALTORS® have also come to appreciate the tremendous value they derive through HAR membership, including a host of services such as free member Web sites, free member blogs, free agent newsletters, legislative support, award-winning communications campaigns, the pre-eminent local public real estate Web site, HAR.com, and a host of other offerings for which other associations either charge additional fees or do not offer at all.”
HAR currently has a total REALTOR® membership of 23,354, surpassing LIBOR’s REALTOR® membership total of 23,236 by 118 REALTORS®. HAR and LIBOR are by far the largest local REALTOR® associations, as the Greater Las Vegas Association of REALTORS® is currently third with nearly 10,000 fewer members.
“The Houston Association of REALTORS® is thrilled about achieving this milestone, which demonstrates that our members are deeply committed to the real estate business and have been bolstered by the stronger greater Houston real estate market,” said HAR Chair Vicki Fullerton. “REALTORS® have also come to appreciate the tremendous value they derive through HAR membership, including a host of services such as free member Web sites, free member blogs, free agent newsletters, legislative support, award-winning communications campaigns, the pre-eminent local public real estate Web site, HAR.com, and a host of other offerings for which other associations either charge additional fees or do not offer at all.”
Tuesday, August 25, 2009
Be aware of Foreclosure Rescue Scams
In a current real estate market, when people are not able to pay their mortgage on time,
scam artists prey on struggling homeowners and often target defendants named in foreclosure proceedings. Don't let them take advantage of you, your situation, your house or your money. The best way to avoid becoming a victim is to get informed and ask a lot of questions. If you receive an offer, information or advice that sounds too good to be true, it probably is.
Here are some tips based on http://www.fanniemae.com :
* Help is free! There is never a fee to get assistance or information from your mortgage company or a HUD-approved housing counselor.Beware of any person or organization that asks you to pay a fee in exchange for housing counseling services or modification of a delinquent loan. Do not pay—walk away! Call 1-888-995-HOPE (4673) for free housing counseling.
* Be aware of anyone who says they can “save” your home if you sign or transfer over the deed to your house. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
* Don't sign papers in exchange for a promise that someone else will pay off your mortgage. ALWAYS be sure to read and understand all paperwork before signing to ensure that you are not unknowingly giving someone else ownership of your home.
* Never submit your mortgage payments to anyone other than your mortgage company without your mortgage company's approval. Scammers might ask you to make your payments to them; however, they pocket your payments instead of sending them to the lender.
* Beware of anyone who says that you don't need a real estate professional or title company when selling your home. You should always have a real estate professional, attorney or a title company to help you with any transaction involving your home. Know the person you do business with.
* Before responding to any person or organization offering to "save" you from foreclosure, find out if the organization is HUD-approved. Check also with your lender.
Finding a Credit Counselor: Housing and Urban Development (HUD) is a U.S. government agency that provides assistance to home buyers and homeowners. HUD offers free or low-cost credit counseling throughout the country. To find the nearest counseling agency in your area, call (800) 569-4287.
scam artists prey on struggling homeowners and often target defendants named in foreclosure proceedings. Don't let them take advantage of you, your situation, your house or your money. The best way to avoid becoming a victim is to get informed and ask a lot of questions. If you receive an offer, information or advice that sounds too good to be true, it probably is.
Here are some tips based on http://www.fanniemae.com :
* Help is free! There is never a fee to get assistance or information from your mortgage company or a HUD-approved housing counselor.Beware of any person or organization that asks you to pay a fee in exchange for housing counseling services or modification of a delinquent loan. Do not pay—walk away! Call 1-888-995-HOPE (4673) for free housing counseling.
* Be aware of anyone who says they can “save” your home if you sign or transfer over the deed to your house. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
* Don't sign papers in exchange for a promise that someone else will pay off your mortgage. ALWAYS be sure to read and understand all paperwork before signing to ensure that you are not unknowingly giving someone else ownership of your home.
* Never submit your mortgage payments to anyone other than your mortgage company without your mortgage company's approval. Scammers might ask you to make your payments to them; however, they pocket your payments instead of sending them to the lender.
* Beware of anyone who says that you don't need a real estate professional or title company when selling your home. You should always have a real estate professional, attorney or a title company to help you with any transaction involving your home. Know the person you do business with.
* Before responding to any person or organization offering to "save" you from foreclosure, find out if the organization is HUD-approved. Check also with your lender.
Finding a Credit Counselor: Housing and Urban Development (HUD) is a U.S. government agency that provides assistance to home buyers and homeowners. HUD offers free or low-cost credit counseling throughout the country. To find the nearest counseling agency in your area, call (800) 569-4287.
Monday, August 24, 2009
What you should do if you become a victim of identity fraud
This is a very useful information I found on Bankrate.com.
As soon as you suspect that you've been victimized, taking these steps immediately will help you clear your name and your credit.
12-step program for ID theft victims:
1.Notify affected creditors or bank
If a bank account or existing credit line has been affected, shutting it down should be the first order of business. Working with the credit card company or the bank as soon as possible can save you money. In general, most credit cards have zero-liability policies, but the Fair Credit Billing Act specifies that your maximum liability for unauthorized charges is $50.
ATM or debit cards and electronic transfers from your bank account fall under the Electronic Fund Transfer Act. Under this act, consumers have to move fast. Reporting a lost or stolen ATM or debit card before any fraudulent transactions means the victim is off the hook for any that happen afterward.
But if purchases or withdrawals are made, consumers have a small window of two business days to report the unauthorized charges or transfers and get a $50 liability limit. After that, there is a $500 liability limit for up to 60 days after the statement reflecting the fraud is mailed. After 60 days, consumers are exposed to unlimited liability.
Consumers should also notify banks of any lost or stolen checks.
2. Put a fraud alert on your credit report
"Contact any one of the three credit reporting agencies and request a fraud alert. By doing so, a fraud alert will be put on all three of your credit files," says Steven Katz, director of consumer education for TransUnion's TrueCredit.com.
The fraud alert will last 90 days. After you've filed a police report or filled out the ID theft complaint form from the FTC, you can put an extended fraud alert on your credit file which will last seven years.
"Filing a fraud alert is probably the best step for someone who is unsure if they are a victim," says Katz.
A credit freeze will provide more protection but can be restrictive when applying for credit.
3. Check your credit reports
After installing a fraud alert in your credit file, you'll automatically receive a free credit report from each of the three agencies and you will be opted out of preapproved credit card and insurance offers. After you receive your reports, make note of the unique number assigned to your account. This will be valuable in all your communications with the agencies.
Check your reports for signs of fraud -- new accounts you didn't open, hard inquiries you don't recognize, payment history you can't account for, an employer you never worked for and personal information unfamiliar to you. Pull each of your credit reports at least once over the course of the next year to check for fraudulent activity. Use an identity theft report to get fraudulent information removed from your reports.
4. Consider putting a credit freeze on your reports
"A credit freeze is a good thing to do if you know you're a victim, as it will completely lock down all your credit information," says TransUnion's Katz.
A credit freeze prevents the credit-reporting agencies from releasing your credit report to new creditors. The cost is $10 in most states to place a freeze at each bureau, and is usually free if you can prove you're an ID theft victim.
5. Contact the FTC
Contact the FTC at (877) 438-4338. While federal investigators only tend to pursue larger, more sophisticated fraud cases, they monitor identity theft crimes of all levels in the hopes of discovering patterns and breaking up larger rings.
More importantly, fill out the ID theft affidavit at the FTC's Web site, make copies and send them to your creditors. The agency also has an online complaint form. After filling it out, print out the ID theft complaint form for your records. Together with a police report, it serves as your ID theft report, which will help you dispute fraudulent accounts.
According to the FTC Web site, an ID theft report is more comprehensive than a police report alone. Your local police department may incorporate the ID theft complaint form into its report or they might have another way of providing the full details needed for an ID theft report.
6. Go to the police
Alert the police in your city. You may also need to report the crime to the police departments where the crime occurred.
Securing a police report is of utmost importance. But not all states have legislated that local law enforcement must take a police report on identity theft from consumers. A report released in November 2007 by the Identity Theft Resource Center, "The Aftermath," found that 24 percent of the victims of identity theft who answered the survey could not get the police to take a report.
The FTC provides a cover letter to give to local law enforcement which stresses the importance of police reports for consumer victims.
Make sure the police report lists all fraud accounts. Give as much documented information as possible and give them a copy of the ID theft complaint form from the FTC.
If the police cannot give you a copy of their report, request that they sign your FTC complaint form and provide the police report number in the "Law Enforcement Report" section. Keep the phone number of your police investigator handy on a contact sheet for future reference.
7. Send creditors a copy of your ID theft report
Notify creditors in writing that you have been a victim of fraud and include a copy of your ID theft report.
Further, ask each affected creditor to provide you and your investigating law enforcement agency with copies of the documents showing fraudulent transactions. You may have to fight to get this documentation, but don't give up. You'll need these to help track down the perpetrator.
Informing creditors of the fraud should get them to stop reporting the information to the credit reporting agencies.
"We always advise that you contact the creditor first because they will continue to report that information that they have. But we take steps on our end to make sure that the fraudulent information doesn't show up on the credit report," says Katz.
8. Contact credit reporting agencies
By sending a copy of your ID theft report to the consumer reporting agencies, fraudulent accounts should be blocked from appearing on your credit report.
Nonetheless, consumers must keep a close eye on credit reports to make sure that erroneous information doesn't get added again. Watch related video
The Identity Theft Resource Center's report, "The Aftermath," found that 43 percent of victims questioned had bad information added back onto their credit reports, and 39 percent found that the credit reporting agencies would not remove the information.
"Often the bad information that they thought they had cleared up mysteriously reappears," says Ed Mierzwinski, U.S. PIRG consumer program director.
9. Change all account passwords
If an account doesn't have a password, put one on it. Avoid using obvious passwords such as the last four digits of your Social Security number or your birth date.
10. Contact the Social Security fraud hot line
Notify the Office of the Inspector General if your Social Security number has been fraudulently used. Ask for a copy of your Personal Earnings and Benefits Statement and check for accuracy.
11. Get a new driver's license
You may need to change your driver's license number if someone is using yours as an ID. Go to the Department of Motor Vehicles to get a new number.
12. Contact your telephone and utility companies
They need to be alerted in case an identity thief tries to open a new account in your name, using a utility bill as proof of residence.
As soon as you suspect that you've been victimized, taking these steps immediately will help you clear your name and your credit.
12-step program for ID theft victims:
1.Notify affected creditors or bank
If a bank account or existing credit line has been affected, shutting it down should be the first order of business. Working with the credit card company or the bank as soon as possible can save you money. In general, most credit cards have zero-liability policies, but the Fair Credit Billing Act specifies that your maximum liability for unauthorized charges is $50.
ATM or debit cards and electronic transfers from your bank account fall under the Electronic Fund Transfer Act. Under this act, consumers have to move fast. Reporting a lost or stolen ATM or debit card before any fraudulent transactions means the victim is off the hook for any that happen afterward.
But if purchases or withdrawals are made, consumers have a small window of two business days to report the unauthorized charges or transfers and get a $50 liability limit. After that, there is a $500 liability limit for up to 60 days after the statement reflecting the fraud is mailed. After 60 days, consumers are exposed to unlimited liability.
Consumers should also notify banks of any lost or stolen checks.
2. Put a fraud alert on your credit report
"Contact any one of the three credit reporting agencies and request a fraud alert. By doing so, a fraud alert will be put on all three of your credit files," says Steven Katz, director of consumer education for TransUnion's TrueCredit.com.
The fraud alert will last 90 days. After you've filed a police report or filled out the ID theft complaint form from the FTC, you can put an extended fraud alert on your credit file which will last seven years.
"Filing a fraud alert is probably the best step for someone who is unsure if they are a victim," says Katz.
A credit freeze will provide more protection but can be restrictive when applying for credit.
3. Check your credit reports
After installing a fraud alert in your credit file, you'll automatically receive a free credit report from each of the three agencies and you will be opted out of preapproved credit card and insurance offers. After you receive your reports, make note of the unique number assigned to your account. This will be valuable in all your communications with the agencies.
Check your reports for signs of fraud -- new accounts you didn't open, hard inquiries you don't recognize, payment history you can't account for, an employer you never worked for and personal information unfamiliar to you. Pull each of your credit reports at least once over the course of the next year to check for fraudulent activity. Use an identity theft report to get fraudulent information removed from your reports.
4. Consider putting a credit freeze on your reports
"A credit freeze is a good thing to do if you know you're a victim, as it will completely lock down all your credit information," says TransUnion's Katz.
A credit freeze prevents the credit-reporting agencies from releasing your credit report to new creditors. The cost is $10 in most states to place a freeze at each bureau, and is usually free if you can prove you're an ID theft victim.
5. Contact the FTC
Contact the FTC at (877) 438-4338. While federal investigators only tend to pursue larger, more sophisticated fraud cases, they monitor identity theft crimes of all levels in the hopes of discovering patterns and breaking up larger rings.
More importantly, fill out the ID theft affidavit at the FTC's Web site, make copies and send them to your creditors. The agency also has an online complaint form. After filling it out, print out the ID theft complaint form for your records. Together with a police report, it serves as your ID theft report, which will help you dispute fraudulent accounts.
According to the FTC Web site, an ID theft report is more comprehensive than a police report alone. Your local police department may incorporate the ID theft complaint form into its report or they might have another way of providing the full details needed for an ID theft report.
6. Go to the police
Alert the police in your city. You may also need to report the crime to the police departments where the crime occurred.
Securing a police report is of utmost importance. But not all states have legislated that local law enforcement must take a police report on identity theft from consumers. A report released in November 2007 by the Identity Theft Resource Center, "The Aftermath," found that 24 percent of the victims of identity theft who answered the survey could not get the police to take a report.
The FTC provides a cover letter to give to local law enforcement which stresses the importance of police reports for consumer victims.
Make sure the police report lists all fraud accounts. Give as much documented information as possible and give them a copy of the ID theft complaint form from the FTC.
If the police cannot give you a copy of their report, request that they sign your FTC complaint form and provide the police report number in the "Law Enforcement Report" section. Keep the phone number of your police investigator handy on a contact sheet for future reference.
7. Send creditors a copy of your ID theft report
Notify creditors in writing that you have been a victim of fraud and include a copy of your ID theft report.
Further, ask each affected creditor to provide you and your investigating law enforcement agency with copies of the documents showing fraudulent transactions. You may have to fight to get this documentation, but don't give up. You'll need these to help track down the perpetrator.
Informing creditors of the fraud should get them to stop reporting the information to the credit reporting agencies.
"We always advise that you contact the creditor first because they will continue to report that information that they have. But we take steps on our end to make sure that the fraudulent information doesn't show up on the credit report," says Katz.
8. Contact credit reporting agencies
By sending a copy of your ID theft report to the consumer reporting agencies, fraudulent accounts should be blocked from appearing on your credit report.
Nonetheless, consumers must keep a close eye on credit reports to make sure that erroneous information doesn't get added again. Watch related video
The Identity Theft Resource Center's report, "The Aftermath," found that 43 percent of victims questioned had bad information added back onto their credit reports, and 39 percent found that the credit reporting agencies would not remove the information.
"Often the bad information that they thought they had cleared up mysteriously reappears," says Ed Mierzwinski, U.S. PIRG consumer program director.
9. Change all account passwords
If an account doesn't have a password, put one on it. Avoid using obvious passwords such as the last four digits of your Social Security number or your birth date.
10. Contact the Social Security fraud hot line
Notify the Office of the Inspector General if your Social Security number has been fraudulently used. Ask for a copy of your Personal Earnings and Benefits Statement and check for accuracy.
11. Get a new driver's license
You may need to change your driver's license number if someone is using yours as an ID. Go to the Department of Motor Vehicles to get a new number.
12. Contact your telephone and utility companies
They need to be alerted in case an identity thief tries to open a new account in your name, using a utility bill as proof of residence.
Friday, August 21, 2009
Why home sellers will not accept buyers with FHA loans?
There are few reasons why sellers will either not accept buyers with FHA loans. First reason is that this is much longer and more complicated process than with conventional loans. Second is the risk which home sellers are facing of taking house off the market for a month or longer
(with recent regulations effective July30, 2009 it is recommended to have closing date of at least 30 days from effective date of the contract.For FHA loans it may take even 2 months) and if house is not sold then home sellers lost not only valuable time, but also have no any recourse toward home buyers, because accepting buyer's offer with FHA loan, home sellers are obligated to sign FHA/VA Amendatory Clause which says " It is expressly agreed that, nothwithstanding any other provisions of this contract, the purchaser shall not be obligated to complete the purchase of the property described herein or to incur any penalty by forfeiture of earnest money deposits or otherwise unless the purchaser has been given in accordance with HUD/FHA or VA requirements a written statement issued by the Federal Housing Commissioner, Department of Veterans Affairs, or a direct endorsement lender, setting forth the appraised value of the property of not less than $..... (here goes the sales price of the house). The purchaser shall have the privilege and option of preseeding with the consumation of the contract without regard to the amount of the appraised valuation....."
(with recent regulations effective July30, 2009 it is recommended to have closing date of at least 30 days from effective date of the contract.For FHA loans it may take even 2 months) and if house is not sold then home sellers lost not only valuable time, but also have no any recourse toward home buyers, because accepting buyer's offer with FHA loan, home sellers are obligated to sign FHA/VA Amendatory Clause which says " It is expressly agreed that, nothwithstanding any other provisions of this contract, the purchaser shall not be obligated to complete the purchase of the property described herein or to incur any penalty by forfeiture of earnest money deposits or otherwise unless the purchaser has been given in accordance with HUD/FHA or VA requirements a written statement issued by the Federal Housing Commissioner, Department of Veterans Affairs, or a direct endorsement lender, setting forth the appraised value of the property of not less than $..... (here goes the sales price of the house). The purchaser shall have the privilege and option of preseeding with the consumation of the contract without regard to the amount of the appraised valuation....."
Thursday, August 20, 2009
Wednesday, August 19, 2009
Home Listings on Google Maps
Google Maps includes all the are homes for sale. You can simply go to Google Maps, enter in a zip code and/or name of the city and you will see the map of the local area including all the home for sale. Below is a sample of this map. The only thing is that I checked and found out that information about houses for sale in many cases is outdated. When I checked on HAR MLS some of the houses shown on Google Map, I found out that some of them either have pending status, some of hem went off the market months ago. So if you would like to get the most current information about houses for sale, my advice is: check with local real estate agent. If you are looking to buy or sell a house in a greater Houston area, please check Houston real estate web site.
View Larger Map
View Larger Map
Sunday, July 12, 2009
On July 30, 2009, New Government Regulations May Impact Closing Dates
On July 30, 2009, new amendments to the Truth In Lending Act (TILA)will go into effect. They require all mortgage lenders and mortgage brokers to help prevent deceptive lending practices and protect customers by helping them become more informed.
Most of the changes will be very important to the Homebuyers, Real Estate Agents, Builders, and Settlement Agents. It means that we all need to prepare for this impact, the process and time lines for mortgage financing, because it could impact closing dates.
Right now Homebuyers and sellers can still agree on a closing date, and then service providers – including lenders – will work as best they can toward meeting that date.
Mandatory 7 days waiting period is required.
With the new regulations, purchase contracts can still be written with a specific closing date in mind, but all parties need to take into account that the earliest time any home purchase transaction can close is 7 business days after the homebuyer is issued his or her initial mortgage disclosures from the lender.
What is considered a business day
A Business Day is defined as a calendar day except Sunday and legal public holidays (New Year's Day, MLK Day, Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, and Christmas Day)
Fee restrictions.
With new regulations upfront fees cannot be collected by the lender (except for a credit report fee) until the initial disclosures are received. If the disclosure is mailed, fees can not be collected 3 days after mailing. If the disclosures are overnighted, they are considered “received” the next business day—(excluding Sundays and Federal Holidays) allowing the fees to be collected on the following business day after shipping. If the disclosure is issued in person, fees can be collected immediately.
The homebuyer must receive a copy of his or her appraisal a minimum of 3 business days prior to closing.
Revised disclosure and waiting period
An increase of more than .125% in the Annual Percentage Rate (APR) from the initial APR, the Truth in Lending Disclosure (TIL) requires the TIL disclosure to be revised and reissued to the homebuyer. The homebuyer must receive a revised TIL disclosure at least 3 business days before closing, providing the homebuyer with the time required to determine if the homebuyer is comfortable with his or her loan choice. If mailed, the TIL disclosure is considered “received” 3 business days after mailing. It means that this will add an additional 7 business days to the timing.
If the change is less than .125%, then no re-disclosure is required.
It is wise though, to plan on a minimum of 30 days to close, as well as to lock in the rate and fees as soon as possible.
Most of the changes will be very important to the Homebuyers, Real Estate Agents, Builders, and Settlement Agents. It means that we all need to prepare for this impact, the process and time lines for mortgage financing, because it could impact closing dates.
Right now Homebuyers and sellers can still agree on a closing date, and then service providers – including lenders – will work as best they can toward meeting that date.
Mandatory 7 days waiting period is required.
With the new regulations, purchase contracts can still be written with a specific closing date in mind, but all parties need to take into account that the earliest time any home purchase transaction can close is 7 business days after the homebuyer is issued his or her initial mortgage disclosures from the lender.
What is considered a business day
A Business Day is defined as a calendar day except Sunday and legal public holidays (New Year's Day, MLK Day, Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, and Christmas Day)
Fee restrictions.
With new regulations upfront fees cannot be collected by the lender (except for a credit report fee) until the initial disclosures are received. If the disclosure is mailed, fees can not be collected 3 days after mailing. If the disclosures are overnighted, they are considered “received” the next business day—(excluding Sundays and Federal Holidays) allowing the fees to be collected on the following business day after shipping. If the disclosure is issued in person, fees can be collected immediately.
The homebuyer must receive a copy of his or her appraisal a minimum of 3 business days prior to closing.
Revised disclosure and waiting period
An increase of more than .125% in the Annual Percentage Rate (APR) from the initial APR, the Truth in Lending Disclosure (TIL) requires the TIL disclosure to be revised and reissued to the homebuyer. The homebuyer must receive a revised TIL disclosure at least 3 business days before closing, providing the homebuyer with the time required to determine if the homebuyer is comfortable with his or her loan choice. If mailed, the TIL disclosure is considered “received” 3 business days after mailing. It means that this will add an additional 7 business days to the timing.
If the change is less than .125%, then no re-disclosure is required.
It is wise though, to plan on a minimum of 30 days to close, as well as to lock in the rate and fees as soon as possible.
Tuesday, September 19, 2006
Send Free "Thank You" Postcard to U.S. Troops Overseas
I just found the website LetsSayThanks.com. From this Web site you can send a
free printed postcard to U.S. soldiers deployed overseas thanking them for their
service and showing your support and appreciation for their service to our country.
Once again it is FREE because XEROX and Give2TheTroops® have teamed up to
print and sent these postcards.
They (postcards) are based on children, ages 6-14, designes. So, if you have a child, or work with children, consider having them submit their artwork for new postcards.
Our troops need to know that we support them and appreciate their services.
This is the least we can do to show them how much we care about them.
It only takes a minute to send a card. Just choose a design, choose ont of the prepared
messages, or create one of your own, click "Submit", and you are done! No personal
information is required from you.
Send a card today - and tell others!
free printed postcard to U.S. soldiers deployed overseas thanking them for their
service and showing your support and appreciation for their service to our country.
Once again it is FREE because XEROX and Give2TheTroops® have teamed up to
print and sent these postcards.
They (postcards) are based on children, ages 6-14, designes. So, if you have a child, or work with children, consider having them submit their artwork for new postcards.
Our troops need to know that we support them and appreciate their services.
This is the least we can do to show them how much we care about them.
It only takes a minute to send a card. Just choose a design, choose ont of the prepared
messages, or create one of your own, click "Submit", and you are done! No personal
information is required from you.
Send a card today - and tell others!
Tuesday, September 12, 2006
Preparing Home for Sale - First Impressions
First impressions make a significant impact on a buyer's decision-making process! Once your home goes on the market, it becomes a product. Home Styling or Staging simply allows you to highlight the best of your home and de-emphasize its flaws. It's not about decorating, but actually turning your home into a model, to appeal to the broadest range of prospective buyers. The goal is to make people feel like they could live there, and the best way to do this is to "neutralize" the surroundings.
Try out these helpful styling tips taken from Setting the Stage - REALTOR® Magazine Online. They've compiled the best tips from stagers and real estate pros—things you can do for little or no expense—to put a home in prime showing shape.
* Clear out closets and clutter—sellers can give away or pack up toys, linens, and
small kitchen appliances to store offsite. Buyers are also forgiving of storage
boxes neatly tucked away in a garage or basement.
* Focus most on the most visible areas—the foyer, kitchen, living room, master
bedroom, and family room.
* De-personalize the home by removing photos, mementos, and dated items.
* Use plants in colorful pots or inexpensive wicker baskets to fill in empty spaces.
* Look to home catalogs for little details on beautifying the home. For instance,
group books, pictures, and objets d’art appealingly on bookcases.
* Try angling one or two pieces of furniture slightly and move furniture 4 inches to
6 inches from the wall to create more interesting room spaces.
* Put away large collections— porcelains, plates, and so on.
* Remove valuables, prescription medicine, collectibles, and breakables.
* Trim trees, prune shrubs, and make sure the lawn is mowed and watered regularly.
* In summer, turn on the sprinklers for five minutes, 30 minutes before the open
house. It makes the lawn and driveway sparkle.
* Refrain from cooking anything that leaves a distinctive odor, such as fish,
garlic, or cabbage.
* Hire a professional service to clean the home, including the carpets and the
windows.
* Set the dining room table with attractive linens, dishes, and stemware.
* Arrange fresh or silk flowers (choose those good quality) throughout the home.
* Light a fire in the fireplace in fall and winter.
* A mirror in a pretty frame can make a small room feel more open.
* Use as much natural light as possible. Add extra lamps in dark rooms or corners.
* Place candles with nice smell, like vanilla or pumpkin spice
* Make functional repairs—fix dripping faucets, sticking doors, and broken fences.
* Bring in another pair of eyes—even if it’s not a professional stylist. The person
may see problems you have missed.
Try out these helpful styling tips taken from Setting the Stage - REALTOR® Magazine Online. They've compiled the best tips from stagers and real estate pros—things you can do for little or no expense—to put a home in prime showing shape.
* Clear out closets and clutter—sellers can give away or pack up toys, linens, and
small kitchen appliances to store offsite. Buyers are also forgiving of storage
boxes neatly tucked away in a garage or basement.
* Focus most on the most visible areas—the foyer, kitchen, living room, master
bedroom, and family room.
* De-personalize the home by removing photos, mementos, and dated items.
* Use plants in colorful pots or inexpensive wicker baskets to fill in empty spaces.
* Look to home catalogs for little details on beautifying the home. For instance,
group books, pictures, and objets d’art appealingly on bookcases.
* Try angling one or two pieces of furniture slightly and move furniture 4 inches to
6 inches from the wall to create more interesting room spaces.
* Put away large collections— porcelains, plates, and so on.
* Remove valuables, prescription medicine, collectibles, and breakables.
* Trim trees, prune shrubs, and make sure the lawn is mowed and watered regularly.
* In summer, turn on the sprinklers for five minutes, 30 minutes before the open
house. It makes the lawn and driveway sparkle.
* Refrain from cooking anything that leaves a distinctive odor, such as fish,
garlic, or cabbage.
* Hire a professional service to clean the home, including the carpets and the
windows.
* Set the dining room table with attractive linens, dishes, and stemware.
* Arrange fresh or silk flowers (choose those good quality) throughout the home.
* Light a fire in the fireplace in fall and winter.
* A mirror in a pretty frame can make a small room feel more open.
* Use as much natural light as possible. Add extra lamps in dark rooms or corners.
* Place candles with nice smell, like vanilla or pumpkin spice
* Make functional repairs—fix dripping faucets, sticking doors, and broken fences.
* Bring in another pair of eyes—even if it’s not a professional stylist. The person
may see problems you have missed.
IRS Owes You Money on Your 2006 Federal Tax Refund
I'm not sure if all of us are aware that on 2006 Tax Return we will be eligible for the refund of federal excise tax paid on long distance telephone bills.
The excise tax on telephone services was first imposed in 1898 to fund the Spanish American war. Back then only the wealthy had telephones, the U.S. had no income tax and we relied on excise taxes to fund the war. You see this tax on every local, long distance and cell phone bill you paid or are paying and it is clearly marked EXCISE TAX. The current rate is 3% of the charges billed for these services.
Taxpayers will be eligible to file for refunds of all excise tax they have paid on long-distance service billed to them after Feb. 28, 2003 and before August 01, 2006.
You can claim the refund of actual amount of the excise tax you paid, or standard amount. The standard amount (safe harbour amount) includes interest. In order to qualify for the standard amount refund you aren't required to submit or keep any documentation to support your refund request. To use the safe harbor amount, you must (1) have paid all taxes billed by your long distance telephone service provider after Feb. 28, 2003, and before Aug. 1, 2006; (2) have not received a credit or refund of these taxes from this service provider, and (3) either have not requested a credit or refund from the service provider or have withdrawn any such request but you have to make sure that you paid Federal Excise Tax after February 28, 2003 and before August 01,2006. IRS announces that the standard amounts for telephone excise tax refunds will range from $30 to $60 and will include interest rate. The standard amounts, which are based on the total number of exemptions claimed on the taxpayer's 2006 federal income tax return, are:
* $30 for a person filing a return with one exemption
* $40 for a person filing a return with two exemptions
* $50 for a person filing a return with three exemptions
* $60 for a person filing a return with four or more exemptions
It is up to you whether to use the standard amount or the amount of tax you actually paid. To take the standard amount, you don’t need to do anything now, but you have to make sure that you did pay excise tax. You can figure it when you fill out your 2006 return. If you decide to claim the actual amount of the excise tax you paid, you need to have copies of your phone bills showing this tax charged for each month and receipts, canceled checks, or other evidence that the tax was actually paid. The refund will be treated as a one-time payment on a taxpayer's 2006 return. It will reduce the amount that a taxpayer otherwise owes on his return or increase the amount of his refund. As explained in "Telephone Tax Refund Questions and Answers" on IRS's web page "taxes paid on local-only service are not eligible for the refund. In general, federal excise taxes paid on other types of service qualify". "It is available to anyone who paid long-distance taxes on landline, cell phone or Voice over Internet Protocol (VoIP) service".
The Government estimates the amount refunded to individuals will be about $10 billion.
Businesses and nonprofits must fill out the new Form 8913 and base their refund requests on the actual amount of tax they paid. The IRS is considering an estimation method that businesses and nonprofits could use for figuring the tax paid and is asking for public suggestions on potential methodologies that are both accurate and relatively easy for taxpayers to use. Comments should be e-mailed to Telephone.Tax@irs.gov and must be received by Sept. 15, 2006.
As always, consultation with a tax advisor is recommended.
You can click on the links below to get more information regarding the above matter:
http://www.treasury.gov/press/releases/js4287.htm
http://www.irs.gov/newsroom/article/0,,id=157706,00.html
http://www.irs.gov/newsroom/article/0,,id=161506,00.html
The excise tax on telephone services was first imposed in 1898 to fund the Spanish American war. Back then only the wealthy had telephones, the U.S. had no income tax and we relied on excise taxes to fund the war. You see this tax on every local, long distance and cell phone bill you paid or are paying and it is clearly marked EXCISE TAX. The current rate is 3% of the charges billed for these services.
Taxpayers will be eligible to file for refunds of all excise tax they have paid on long-distance service billed to them after Feb. 28, 2003 and before August 01, 2006.
You can claim the refund of actual amount of the excise tax you paid, or standard amount. The standard amount (safe harbour amount) includes interest. In order to qualify for the standard amount refund you aren't required to submit or keep any documentation to support your refund request. To use the safe harbor amount, you must (1) have paid all taxes billed by your long distance telephone service provider after Feb. 28, 2003, and before Aug. 1, 2006; (2) have not received a credit or refund of these taxes from this service provider, and (3) either have not requested a credit or refund from the service provider or have withdrawn any such request but you have to make sure that you paid Federal Excise Tax after February 28, 2003 and before August 01,2006. IRS announces that the standard amounts for telephone excise tax refunds will range from $30 to $60 and will include interest rate. The standard amounts, which are based on the total number of exemptions claimed on the taxpayer's 2006 federal income tax return, are:
* $30 for a person filing a return with one exemption
* $40 for a person filing a return with two exemptions
* $50 for a person filing a return with three exemptions
* $60 for a person filing a return with four or more exemptions
It is up to you whether to use the standard amount or the amount of tax you actually paid. To take the standard amount, you don’t need to do anything now, but you have to make sure that you did pay excise tax. You can figure it when you fill out your 2006 return. If you decide to claim the actual amount of the excise tax you paid, you need to have copies of your phone bills showing this tax charged for each month and receipts, canceled checks, or other evidence that the tax was actually paid. The refund will be treated as a one-time payment on a taxpayer's 2006 return. It will reduce the amount that a taxpayer otherwise owes on his return or increase the amount of his refund. As explained in "Telephone Tax Refund Questions and Answers" on IRS's web page "taxes paid on local-only service are not eligible for the refund. In general, federal excise taxes paid on other types of service qualify". "It is available to anyone who paid long-distance taxes on landline, cell phone or Voice over Internet Protocol (VoIP) service".
The Government estimates the amount refunded to individuals will be about $10 billion.
Businesses and nonprofits must fill out the new Form 8913 and base their refund requests on the actual amount of tax they paid. The IRS is considering an estimation method that businesses and nonprofits could use for figuring the tax paid and is asking for public suggestions on potential methodologies that are both accurate and relatively easy for taxpayers to use. Comments should be e-mailed to Telephone.Tax@irs.gov and must be received by Sept. 15, 2006.
As always, consultation with a tax advisor is recommended.
You can click on the links below to get more information regarding the above matter:
http://www.treasury.gov/press/releases/js4287.htm
http://www.irs.gov/newsroom/article/0,,id=157706,00.html
http://www.irs.gov/newsroom/article/0,,id=161506,00.html
Friday, September 08, 2006
How to make your home secure, outside and in.
Your property should be secure at all times, whether you're home or not.
Adequate security can prevent thieves from being tempted to target your house.
Follow these few easy tips so your house becomes a bad choice for a burglar:
* Remove any plants or shrubs that obscure the front of your property
* Plant thorny bushes such as roses, bougainvillea etc., under windows and
along fences
* If you have a fence on theside of the house that leads to the rear of the
property, make sure there is a secure latch on the gate door. For night
protection or added security, place a padlock on the inside of the gate latch.
* Do not leave ladders or tools next to the house. A ladder leaning against
the house or a tool left by a window is quite helpful to the burglar trying to
enter your home.
* Install sensor lights around the perimeter of the reisdence.
* Install 1 inch deadbolts on all entrance doors.
* Put locks on all windows.
* Have some type of covering on all windows.
* Designate and fully equip a "safe room".
* If you don't have a dog in the house, get a tape recording of a really loud,
scary bark that can be played if an unwanted solicitor comes to your door.
* Install an alarm system in the house.
Adequate security can prevent thieves from being tempted to target your house.
Follow these few easy tips so your house becomes a bad choice for a burglar:
* Remove any plants or shrubs that obscure the front of your property
* Plant thorny bushes such as roses, bougainvillea etc., under windows and
along fences
* If you have a fence on theside of the house that leads to the rear of the
property, make sure there is a secure latch on the gate door. For night
protection or added security, place a padlock on the inside of the gate latch.
* Do not leave ladders or tools next to the house. A ladder leaning against
the house or a tool left by a window is quite helpful to the burglar trying to
enter your home.
* Install sensor lights around the perimeter of the reisdence.
* Install 1 inch deadbolts on all entrance doors.
* Put locks on all windows.
* Have some type of covering on all windows.
* Designate and fully equip a "safe room".
* If you don't have a dog in the house, get a tape recording of a really loud,
scary bark that can be played if an unwanted solicitor comes to your door.
* Install an alarm system in the house.
Monday, July 17, 2006
5 Homeownership Tax Myths
I found this really good article in Broker Agent News written by Kay Bell,
which many homeowners may find interesting:
Owning a home tops the dream list for most Americans, and for plenty of good reasons. It's a shelter for your family, a gathering place for your friends and a good long-term investment.
Tax breaks are also frequently cited as motivation for moving from renting to owning, and there are many ways a home can cut your tax bill.
But, as is often the case with the U.S. tax code, homeownership tax benefits are not always clear-cut. That frequently leads to some bad information floating around.
While myths, half-truths and misconceptions may abound, we've narrowed it down to five that, if you buy into them, could cost you.
1. My mortgage interest will reduce my tax bill.
This is true for the majority of homeowners, but not for all. And this tax break won't work forever.
To take tax advantage of your home loan's interest, you must itemize and come up with a total that exceeds your standard amount. On 2006 tax returns, the standard deductions will be $5,150 for single taxpayers, $7,550 for head of household filers and $10,300 for married couples who file jointly. These amounts increase a bit each year to account for inflation.
"Given home prices these days, most owners are itemizing," says Mark Luscombe, principal tax analyst with CCH Inc. of Riverwoods, Ill. By the time they count mortgage interest, property taxes and other nonhome deductions, such as state taxes and charitable gifts, their itemized totals easily surpass their allowable standard deductions.
But most is not all.
Taxpayers who buy a home late in the year, for instance, might find the standard deduction is more beneficial, at least initially, says Kathy Tollaksen, a CPA at Sikich LLP in Aurora, Ill. In these cases, where you make only a few payments in a tax year, depending on your loan you might not pay much interest, at least not enough to exceed standard amounts.
Timing also could reduce or eliminate other home-related tax breaks.
"Quite a few states have real estate taxes that are calculated in arrears. That is, they have already been paid or mostly paid (by the seller) by the time you buy," says Tollaksen. "In the first year, you're seeing taxes that are someone else's responsibility so you're not getting the full tax value of your real estate taxes."
The benefit of mortgage interest also could be a myth if you've lived in your home for a long time. In this case, you likely are paying more toward your loan's principal instead of interest. So homeowners at the end of a loan term don't get much, if any, from this tax break. Or, as Bob D. Scharin, senior tax analyst and editor of Warren, Gorham & Lamont/RIA's monthly tax journal "Practical Tax Strategies," puts it, "Every deductible expense you incur may not produce a deduction."
2. All costs related to my home are deductible.
There are no two ways about this one. It's flat-out false.
"Some buyers think, hope, they can write off everything connected with the house," says Tollaksen. "Not so. Association fees and property insurance costs are not deductible."
Neither is private mortgage insurance, which your lender probably required if your down payment was less than 20 percent.
And you can't deduct basic maintenance, repair or home improvement costs either.
Tollaksen says, "I've had people say, 'I put a new roof on my home; can I deduct that?' No."
If you try to write off these expenses, expect to hear from the Internal Revenue Service and to pay a higher tax bill (and possible penalties and interest) after you refigure your taxes without the disallowed deductions.
However, you still need to keep track of these expenses.
"If you convert the home to rental property or sell it," she says, "these costs will affect the property's tax basis."
A home's basis is critical when it comes time to sell (more about that below). And selling is also a tax area in which many people fall for myth No. 3.
3. I must use money from my home sale to buy another residence.
This used to be the only way to get around a tax bill on a home sale. Even then, you were only able to defer taxes by purchasing a new residence of equal or greater value with the profits from your other house. When you sold your final house, you'd owe those long-deferred taxes you had rolled over throughout the years. Home sellers age 55 or older were allowed a once-in-a-lifetime tax exemption of up to $125,000 in sale profit.
But on May 7, 1997, home-sale tax law changed. Still, almost a decade later, many homeowners are confused about the tax implications of selling.
"I recently heard some neighbors talking about having to buy another house when they sell to avoid the taxes," says Scharin. "If the last time you sold the house was before 1997, you're thinking of those old rules."
Don't worry. Most taxpayers still get a nice break. Now, if you live in the house for two of the five years before you sell, the IRS won't collect tax on sale profit of up to $250,000 if you're single or $500,000 if you and your spouse file a joint return.
"The law change has really affected people's behavior," says Luscombe. "Before, it didn't really matter much whether you sold frequently or held onto your home for a long term. You, basically, could roll over the gain into a larger home and people could avoid tax until they sold for the final time without putting it into a replacement home."Now the law rewards people who sell frequently. In this current market, people who sell every couple of years can get and keep their gain," Luscombe says. "But people who buy and hold might find they have reached the point where the gain exceeds the exclusion."That means they face unexpectedly high tax bills, even at the lower 15-percent capital gains rate. The profit could also push them into a higher overall tax bracket, meaning they would make too much to claim some deductions, credits or exemptions. They also might even end up owing alternative minimum tax.
Another problematic consequence, says Luscombe, is that when the new rules took effect, people basically quit keeping records related to their homes."They thought: Since we're never going to be taxed on the sale, there's no need to keep track of what we paid and what improvements we made," he says. The improvements add to your home's basis, which you subtract from the sale price to determine your profit and whether any of it is taxable.
"Now with inflation in the housing market, a lot of people are selling homes in excess of the gains without any way to show that their tax bill should be less," says Luscombe.
4. Putting my child on my home's title is a smart tax move.Worries about taxes on a residence sometimes lead homeowners to fall for this myth. It's a particularly tricky one, because it combines confusion about residential taxes with the even more complex estate-tax area.
"Sometimes we'll hear about taxpayers who, in doing some quick back-of-the-envelope estate planning, decide to put their home in the children's names," says Tollaksen. "The thinking is: My son or daughter won't have to worry about this when I die."
The goals: Avoid probate, keep the home in the family and get the property out of the parent's estate for those tax purposes. Such a move, however, could produce other tax problems for your children. Unless the child moves into the newly deeded house with the parent and lives there long enough (two of the previous five years) to make the house the child's main residence, too, says Tollaksen, the son or daughter won't get the $250,000 or $500,000 residential tax break when the child later decides to sell. Without establishing primary residency in the house, either before or after the parent passes away, the child's ownership is viewed as an investment property.
Other parents opt to simply add a child's name along with theirs on the title to the house, known legally as a joint tenancy. It doesn't mean that all the owners live in the home, but simply that two or more people hold title to the property.
This, too, can produce tax complications. Generally, when someone inherits a property, its value is stepped up. That means when the owner dies, the property becomes worth its fair market value that day.
But if the child co-owns the property with his parent, the child doesn't get to fully use stepped-up basis. Tax law considers the addition of the child's name to the title as a gift. And, along with that half of the home, the child receives half the basis that his or her parent has in the property.
This is known as the property's carry-over basis. And it could be costly.
Consider, for example, that you bought your house many years ago and your basis in the property is $50,000. You add your daughter to the title. When you die, she inherits your half of the home, which by then is worth $250,000. A buyer offers $300,000 for the home.
Pretty good deal, right? From a real estate perspective, yes. But not when it comes to your daughter's tax bill on the sale.
Tax bill on the sale
Rather than owing taxes on just $50,000 more than the house's stepped-up market value, your daughter will owe on three times that amount. Here's the math:
1. Parent owns home with a basis of: $50,000
2. Parent adds child to title, "giving" child carry-over basis of: $25,000
3. At parent's death, house is worth $250,000, producing on the
inherited half a stepped-up basis of: $125,000
4. Home subsequently sells for: $300,000
5. Child's total adjusted basis (number 2 plus number 3) is: $150,000
6. Taxes due on sale profit (line 4 sale price less line 5 basis) of: $150,000
What had been done with the best parental intention turned out to carry a big price because of this homeownership tax myth.
5. If I take a capital loss when I sell my home, I can write it off.
This myth, like No. 2, was probably started by wishful homeowners. Sorry, it's just as wrong.
It is true that real estate, like any other asset, has the potential to go down as well as up in value. But unlike most of those other holdings, you cannot write off any loss you suffer if you must sell your main residence for less than what you paid.
That's because your residence, under tax law, is considered personal property.
"When you sell your home for a loss, it's not like other capital items," says Scharin. "You don't get to deduct personal property that you sell for a loss."
"It's the same as any personal property that declines in value," says Luscombe, "like that old TV you sold to the neighbor kid so he could take it to college. You sold it for much less than you paid, but you can't take a loss."
You do, however, have to pay tax on gains you make when selling personal property.
But at least you now know the difference between fact and fiction when it comes to your residential property, which will help you make appropriate real estate and tax decisions in the future.
which many homeowners may find interesting:
Owning a home tops the dream list for most Americans, and for plenty of good reasons. It's a shelter for your family, a gathering place for your friends and a good long-term investment.
Tax breaks are also frequently cited as motivation for moving from renting to owning, and there are many ways a home can cut your tax bill.
But, as is often the case with the U.S. tax code, homeownership tax benefits are not always clear-cut. That frequently leads to some bad information floating around.
While myths, half-truths and misconceptions may abound, we've narrowed it down to five that, if you buy into them, could cost you.
1. My mortgage interest will reduce my tax bill.
This is true for the majority of homeowners, but not for all. And this tax break won't work forever.
To take tax advantage of your home loan's interest, you must itemize and come up with a total that exceeds your standard amount. On 2006 tax returns, the standard deductions will be $5,150 for single taxpayers, $7,550 for head of household filers and $10,300 for married couples who file jointly. These amounts increase a bit each year to account for inflation.
"Given home prices these days, most owners are itemizing," says Mark Luscombe, principal tax analyst with CCH Inc. of Riverwoods, Ill. By the time they count mortgage interest, property taxes and other nonhome deductions, such as state taxes and charitable gifts, their itemized totals easily surpass their allowable standard deductions.
But most is not all.
Taxpayers who buy a home late in the year, for instance, might find the standard deduction is more beneficial, at least initially, says Kathy Tollaksen, a CPA at Sikich LLP in Aurora, Ill. In these cases, where you make only a few payments in a tax year, depending on your loan you might not pay much interest, at least not enough to exceed standard amounts.
Timing also could reduce or eliminate other home-related tax breaks.
"Quite a few states have real estate taxes that are calculated in arrears. That is, they have already been paid or mostly paid (by the seller) by the time you buy," says Tollaksen. "In the first year, you're seeing taxes that are someone else's responsibility so you're not getting the full tax value of your real estate taxes."
The benefit of mortgage interest also could be a myth if you've lived in your home for a long time. In this case, you likely are paying more toward your loan's principal instead of interest. So homeowners at the end of a loan term don't get much, if any, from this tax break. Or, as Bob D. Scharin, senior tax analyst and editor of Warren, Gorham & Lamont/RIA's monthly tax journal "Practical Tax Strategies," puts it, "Every deductible expense you incur may not produce a deduction."
2. All costs related to my home are deductible.
There are no two ways about this one. It's flat-out false.
"Some buyers think, hope, they can write off everything connected with the house," says Tollaksen. "Not so. Association fees and property insurance costs are not deductible."
Neither is private mortgage insurance, which your lender probably required if your down payment was less than 20 percent.
And you can't deduct basic maintenance, repair or home improvement costs either.
Tollaksen says, "I've had people say, 'I put a new roof on my home; can I deduct that?' No."
If you try to write off these expenses, expect to hear from the Internal Revenue Service and to pay a higher tax bill (and possible penalties and interest) after you refigure your taxes without the disallowed deductions.
However, you still need to keep track of these expenses.
"If you convert the home to rental property or sell it," she says, "these costs will affect the property's tax basis."
A home's basis is critical when it comes time to sell (more about that below). And selling is also a tax area in which many people fall for myth No. 3.
3. I must use money from my home sale to buy another residence.
This used to be the only way to get around a tax bill on a home sale. Even then, you were only able to defer taxes by purchasing a new residence of equal or greater value with the profits from your other house. When you sold your final house, you'd owe those long-deferred taxes you had rolled over throughout the years. Home sellers age 55 or older were allowed a once-in-a-lifetime tax exemption of up to $125,000 in sale profit.
But on May 7, 1997, home-sale tax law changed. Still, almost a decade later, many homeowners are confused about the tax implications of selling.
"I recently heard some neighbors talking about having to buy another house when they sell to avoid the taxes," says Scharin. "If the last time you sold the house was before 1997, you're thinking of those old rules."
Don't worry. Most taxpayers still get a nice break. Now, if you live in the house for two of the five years before you sell, the IRS won't collect tax on sale profit of up to $250,000 if you're single or $500,000 if you and your spouse file a joint return.
"The law change has really affected people's behavior," says Luscombe. "Before, it didn't really matter much whether you sold frequently or held onto your home for a long term. You, basically, could roll over the gain into a larger home and people could avoid tax until they sold for the final time without putting it into a replacement home."Now the law rewards people who sell frequently. In this current market, people who sell every couple of years can get and keep their gain," Luscombe says. "But people who buy and hold might find they have reached the point where the gain exceeds the exclusion."That means they face unexpectedly high tax bills, even at the lower 15-percent capital gains rate. The profit could also push them into a higher overall tax bracket, meaning they would make too much to claim some deductions, credits or exemptions. They also might even end up owing alternative minimum tax.
Another problematic consequence, says Luscombe, is that when the new rules took effect, people basically quit keeping records related to their homes."They thought: Since we're never going to be taxed on the sale, there's no need to keep track of what we paid and what improvements we made," he says. The improvements add to your home's basis, which you subtract from the sale price to determine your profit and whether any of it is taxable.
"Now with inflation in the housing market, a lot of people are selling homes in excess of the gains without any way to show that their tax bill should be less," says Luscombe.
4. Putting my child on my home's title is a smart tax move.Worries about taxes on a residence sometimes lead homeowners to fall for this myth. It's a particularly tricky one, because it combines confusion about residential taxes with the even more complex estate-tax area.
"Sometimes we'll hear about taxpayers who, in doing some quick back-of-the-envelope estate planning, decide to put their home in the children's names," says Tollaksen. "The thinking is: My son or daughter won't have to worry about this when I die."
The goals: Avoid probate, keep the home in the family and get the property out of the parent's estate for those tax purposes. Such a move, however, could produce other tax problems for your children. Unless the child moves into the newly deeded house with the parent and lives there long enough (two of the previous five years) to make the house the child's main residence, too, says Tollaksen, the son or daughter won't get the $250,000 or $500,000 residential tax break when the child later decides to sell. Without establishing primary residency in the house, either before or after the parent passes away, the child's ownership is viewed as an investment property.
Other parents opt to simply add a child's name along with theirs on the title to the house, known legally as a joint tenancy. It doesn't mean that all the owners live in the home, but simply that two or more people hold title to the property.
This, too, can produce tax complications. Generally, when someone inherits a property, its value is stepped up. That means when the owner dies, the property becomes worth its fair market value that day.
But if the child co-owns the property with his parent, the child doesn't get to fully use stepped-up basis. Tax law considers the addition of the child's name to the title as a gift. And, along with that half of the home, the child receives half the basis that his or her parent has in the property.
This is known as the property's carry-over basis. And it could be costly.
Consider, for example, that you bought your house many years ago and your basis in the property is $50,000. You add your daughter to the title. When you die, she inherits your half of the home, which by then is worth $250,000. A buyer offers $300,000 for the home.
Pretty good deal, right? From a real estate perspective, yes. But not when it comes to your daughter's tax bill on the sale.
Tax bill on the sale
Rather than owing taxes on just $50,000 more than the house's stepped-up market value, your daughter will owe on three times that amount. Here's the math:
1. Parent owns home with a basis of: $50,000
2. Parent adds child to title, "giving" child carry-over basis of: $25,000
3. At parent's death, house is worth $250,000, producing on the
inherited half a stepped-up basis of: $125,000
4. Home subsequently sells for: $300,000
5. Child's total adjusted basis (number 2 plus number 3) is: $150,000
6. Taxes due on sale profit (line 4 sale price less line 5 basis) of: $150,000
What had been done with the best parental intention turned out to carry a big price because of this homeownership tax myth.
5. If I take a capital loss when I sell my home, I can write it off.
This myth, like No. 2, was probably started by wishful homeowners. Sorry, it's just as wrong.
It is true that real estate, like any other asset, has the potential to go down as well as up in value. But unlike most of those other holdings, you cannot write off any loss you suffer if you must sell your main residence for less than what you paid.
That's because your residence, under tax law, is considered personal property.
"When you sell your home for a loss, it's not like other capital items," says Scharin. "You don't get to deduct personal property that you sell for a loss."
"It's the same as any personal property that declines in value," says Luscombe, "like that old TV you sold to the neighbor kid so he could take it to college. You sold it for much less than you paid, but you can't take a loss."
You do, however, have to pay tax on gains you make when selling personal property.
But at least you now know the difference between fact and fiction when it comes to your residential property, which will help you make appropriate real estate and tax decisions in the future.
Monday, May 08, 2006
Sellers Earn 16% More by Using an Agent
WASHINGTON, D.C. – Technology is transforming how Americans buy and sell homes in unexpected ways, including how they work with real estate agents and brokers, according to one of the largest surveys of real estate consumers ever conducted. The study was released by the National Association of Realtors®.
Nine out of 10 home buyers use a real estate agent in the search process, but use of the Internet to search for a home has risen dramatically over time, increasing from only 2 percent of buyers in 1995 to 77 percent in 2005; it was 74 percent in 2004. The next largest source of information for buyers is a yard sign, mentioned by 71 percent of buyers.
When asked where they first learned about the home purchased, 24 percent of buyers identified the Internet, up strongly from 15 percent in 2004 and only 2 percent in 1997. Although most buyers use an agent to complete the transaction, 36 first learn about the home they buy from a real estate agent and 15 percent from yard signs; five other categories were 7 percent or less.
The 2005 National Association of Realtors® Profile of Home Buyers and Sellers, based on more than 7,800 responses to a questionnaire mailed to a large national sample of consumers located through county deed records, is the latest in a series of surveys evaluating demographics, marketing and other characteristics of home buyers and sellers.
NAR President Thomas M. Stevens from Vienna, Va., said the findings underscore the complexity of the home-buying process. “Buyers who use the Internet in searching for a home are more likely to use a real estate agent than non-Internet users, and consumers rely on professionals to provide context, negotiate the transaction and help with the paperwork,” said Stevens, senior vice president of NRT Inc.
“The real estate industry today bears little resemblance to the way we did business 10 years ago. It is hard to find another industry that has adopted technology so readily to its customers,” Stevens said. “Realtors® have invested a lot of time and money in building information technology, and because of these efforts, more consumers than ever are using the Internet in their home search.”
The survey shows 81 percent of buyers who use the Internet to search for a home purchase through a real estate agent, while 63 percent of non-Internet users buy through an agent; non-Internet users are more likely to purchase directly from a builder or an owner they knew in advance of the transaction.
“We find that the level of for-sale-by-owners is on a sustained decline and is now at a record low. In addition, a growing share of FSBO properties are not placed on the open market – they’re private transactions,” Stevens said.
A clear downtrend in FSBOs has been seen since that market share experienced a cyclical peak of 18 percent in 1997. Only 13 percent of sellers conducted transactions without the assistance of a real estate professional in 2005, and 39 percent of those FSBO transactions were “closely held” between parties who knew each other in advance, up from 32 percent in 2004. The FSBO market share was at 14 percent in both 2003 and 2004. NAR began tracking the FSBO market in 1981; the record was 20 percent in 1987.
“In reality, the term ‘FSBO’ is a misnomer when used to broadly describe homes sold directly by owners. Since two out of five of these transactions are between related parties, and those properties are not placed on the open market, we believe that ‘unrepresented sellers’ would be a much more accurate term to describe this segment,” Stevens said.
The median home price for sellers who use an agent is 16.0 percent higher than a home sold directly by an owner; $230,000 vs. $198,200; there were no significant differences between the types of homes sold. “While many unrepresented sellers are motivated to save on paying a commission, we think the price difference speaks for itself,” Stevens said. “Owners without professional assistance also have problems in understanding and completing paperwork, prepping the home for sale, getting the right price and selling within the time planned.”
Survey data don’t explain the price difference, but Stevens offered some context. “Agents know best how to prepare a home and maximize value, agents provide broader exposure to the market and are more likely to generate multiple bids, and the portion of sales that are between private parties are likely to be at a lower price than those on the open market.”
“The housing market today contrasts sharply with predictions a decade ago that the Internet would ‘disintermediate’ real estate agents, including speculation that NAR membership would fall in half. In reality, it’s grown dramatically – selling real estate is not like selling a book or buying an airline ticket,” he said.
Realtor.com was the most popular Internet resource, used by 54 percent of buyers, followed by multiple listing service (MLS) Web sites, 50 percent, real estate company sites, 38 percent, real estate agent Web sites, 31 percent, and local newspaper sites, 15 percent; other categories were smaller.
Based on National Realty News
Nine out of 10 home buyers use a real estate agent in the search process, but use of the Internet to search for a home has risen dramatically over time, increasing from only 2 percent of buyers in 1995 to 77 percent in 2005; it was 74 percent in 2004. The next largest source of information for buyers is a yard sign, mentioned by 71 percent of buyers.
When asked where they first learned about the home purchased, 24 percent of buyers identified the Internet, up strongly from 15 percent in 2004 and only 2 percent in 1997. Although most buyers use an agent to complete the transaction, 36 first learn about the home they buy from a real estate agent and 15 percent from yard signs; five other categories were 7 percent or less.
The 2005 National Association of Realtors® Profile of Home Buyers and Sellers, based on more than 7,800 responses to a questionnaire mailed to a large national sample of consumers located through county deed records, is the latest in a series of surveys evaluating demographics, marketing and other characteristics of home buyers and sellers.
NAR President Thomas M. Stevens from Vienna, Va., said the findings underscore the complexity of the home-buying process. “Buyers who use the Internet in searching for a home are more likely to use a real estate agent than non-Internet users, and consumers rely on professionals to provide context, negotiate the transaction and help with the paperwork,” said Stevens, senior vice president of NRT Inc.
“The real estate industry today bears little resemblance to the way we did business 10 years ago. It is hard to find another industry that has adopted technology so readily to its customers,” Stevens said. “Realtors® have invested a lot of time and money in building information technology, and because of these efforts, more consumers than ever are using the Internet in their home search.”
The survey shows 81 percent of buyers who use the Internet to search for a home purchase through a real estate agent, while 63 percent of non-Internet users buy through an agent; non-Internet users are more likely to purchase directly from a builder or an owner they knew in advance of the transaction.
“We find that the level of for-sale-by-owners is on a sustained decline and is now at a record low. In addition, a growing share of FSBO properties are not placed on the open market – they’re private transactions,” Stevens said.
A clear downtrend in FSBOs has been seen since that market share experienced a cyclical peak of 18 percent in 1997. Only 13 percent of sellers conducted transactions without the assistance of a real estate professional in 2005, and 39 percent of those FSBO transactions were “closely held” between parties who knew each other in advance, up from 32 percent in 2004. The FSBO market share was at 14 percent in both 2003 and 2004. NAR began tracking the FSBO market in 1981; the record was 20 percent in 1987.
“In reality, the term ‘FSBO’ is a misnomer when used to broadly describe homes sold directly by owners. Since two out of five of these transactions are between related parties, and those properties are not placed on the open market, we believe that ‘unrepresented sellers’ would be a much more accurate term to describe this segment,” Stevens said.
The median home price for sellers who use an agent is 16.0 percent higher than a home sold directly by an owner; $230,000 vs. $198,200; there were no significant differences between the types of homes sold. “While many unrepresented sellers are motivated to save on paying a commission, we think the price difference speaks for itself,” Stevens said. “Owners without professional assistance also have problems in understanding and completing paperwork, prepping the home for sale, getting the right price and selling within the time planned.”
Survey data don’t explain the price difference, but Stevens offered some context. “Agents know best how to prepare a home and maximize value, agents provide broader exposure to the market and are more likely to generate multiple bids, and the portion of sales that are between private parties are likely to be at a lower price than those on the open market.”
“The housing market today contrasts sharply with predictions a decade ago that the Internet would ‘disintermediate’ real estate agents, including speculation that NAR membership would fall in half. In reality, it’s grown dramatically – selling real estate is not like selling a book or buying an airline ticket,” he said.
Realtor.com was the most popular Internet resource, used by 54 percent of buyers, followed by multiple listing service (MLS) Web sites, 50 percent, real estate company sites, 38 percent, real estate agent Web sites, 31 percent, and local newspaper sites, 15 percent; other categories were smaller.
Based on National Realty News
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