KATHY FITCH 910-964-0104 Email your questions ? kathyfitch101@yahoo.com |
| FYI NEW INFORMATION MONTHLY |
Opportunity of a Lifetime for First-Time Buyers For aspiring home owners who find their goal stubbornly elusive, newly enacted legislation providing a tax credit of as much as $7,500 for first-time home buyers might just be the opportunity of a lifetime. But like so many of the good things in life, time is of the essence for buyers who want to take advantage of this outstanding opportunity. Only homes purchased on or after April 9, 2008 and before July 1, 2009 are eligible. Use the links below to learn more about the tax credit.www.federalhousingtax.com Boost your curb appeal over the weekend If you’re selling your home soon, ensure that prospective buyers will want to come inside by sprucing up the exterior before they drive by. Don’t worry, this doesn’t have to be a time-consuming project. Here are some easy improvements you can make to boost your curb appeal – all in just one weekend. Paint or stain your front door. You probably won’t even have to take it off the hinges. Installing a metal kick plate is another inexpensive way to freshen your entrance – it will cover years of wear. Polish door hardware. Consider replacing the hardware if it’s really worn or flaking. Don’t forget the doorbell and lighting fixtures. Replace worn welcome mats. A new welcome mat in a cheery complementary color can boost the front entrance welcome factor. Install outdoor lighting. Consider solar garden lights to line a walkway, or a bright new porch light. This will make your home look more inviting in the evening when most buyers have the time to drive by. Kill mold and mildew. Use a pressure washer to easily blast the siding, roof, deck and driveway clean. Mow the lawn. Trim around flower beds and other stationary objects. Make sure your lawnmower’s blades are sharp for a clean cut. Get rid of weeds. Replace with blooming flowers and add new bark or gravel for a fresh look. Trim shrubs and tree branches. Cutting overgrown shrubs can open up your home’s exterior. Be sure branches aren’t creeping onto the roof. Show off appealing architectural elements by trimming around columns and windows. Add a hanging flower basket. Install a stylish but discreet hook on your front porch and add an inexpensive hanging plant. Clean gutters. If the downspout is badly damaged, consider replacing it with a decorative rain chain, which allows water to run down ornamental funnels into the ground drain. Clean windows. Use an industrial cleaner to make your windows sparkle from across the street. Don’t forget to wash the screens. You don't get a second chance to make a first impression. Spending just one weekend to prepare your house for the market can pay off big in a big way. A great first impression can mean the difference between a quick sale versus having your home sit on the market for months. TAX ADVANTAGES OF HOME OWNERSHIP THE TIME TO THINK ABOUT TAX BENEFITS IS NOW, NOT NEXT APRIL. THAT WAY YOU CAN START KEEPING TRACK OF YOUR RECEIPTS FOR NEXT YEAR'S TIME PAYMENT TIME. THE LEGAL SYSTEM IN THE USA BASICALLY FAVORS HOME OWNERSHIP, AND THAT IS ESPECIALLY EVIDENT IN THE FEDERAL TAX CODE. THERE ARE MANY WAYS TO PARLAY A REAL ESTATE PURCHASE INTO TAX SAVINGS, WHETHER YOU ARE SIMPLY BUYING A STARTER HOME OR YOUR A PROFESSIONAL INVESTOR INTERESTED IN BUYING A PORTFOLIO OF RENTAL PROPERTIES. NOBODY LOOKS FORWARD TO TAX TIME ESPECIALLY DURING TIMES OF ECONOMIC UNCERTAINTY, RISING INTEREST RATES, AND SHRINKING JOB MARKETS. BUT FOR THOSE WHO UNDERSTAND AND TAKE ADVANTAGE OF THE TAX BENEFITS OF OWNING REAL ESTATE, THE BURDEN OF PAYING TAXES CAN BE SUBSTANTIALLY REDUCED. INTEREST ON REAL ESTATE MORTGAGES IF YOU BORROW MONEY TO PAY FOR A HOME, THE INTEREST AND ''POINTS'' YOU PAY ON YOUR MORTGAGE MAY BE ENTIRELY DEDUCTIBLE. IF INTEREST RATES RISE, SO DO YOUR TAX BENEFITS, AND THIS WILL NOT ONLY OFFSET THE IMPACT OF RISING RATES BUT CAN ALSO PROVIDE ONE OF THE BEST TAX DEDUCTIONS AVAILABLE. TALK TO YOUR LOCAL TAX PLANNER AND YOU MAY BE HAPPY TO LEARN THAT THERE ARE MANY TAX INCENTIVES THAT REWARD REAL ESTATE OWNERSHIP. Even though every nook and cranny of the housing market is draped in doom and gloom, it may be a good time for potential buyers to take a contrarian look. I'm not minimizing the risks in the housing market, because they're very real. Nor am I predicting any sort of miraculous turnaround in the next six months. But I'm still a believer in the long-term viability of housing as a solid investment if you buy at the right price. This has me thinking that the current shakeout is in fact creating an interesting sweet spot for first-time home buyers to at least start checking out the market. Take a new look Right now, some of the markets that were hot a few years ago are full of overextended builders looking to unload unsold inventory. First-timers tend to focus on existing homes rather than more expensive new construction, but they should look at new homes as well. All those stressed-out developers are motivated to make deals. That can mean sharp price discounts or great offers to help with your mortgage financing. But be careful, too -- you don't want to be the only owner on a block where half of the homes haven't even been finished. Know what price is right In today's market, it's crucial to load up on as much data before you bid on a home. Get at least three to five recent comparable sales, known as "comps," from your real estate agent. You want to know the differential between the initial list price and the sale price for those homes. The size of the gap, and whether it's been trending lower or higher, is what will determine your aggressiveness in bidding. Keep updating your market analysis every few weeks. In today's market, being patient and bidding correctly are crucial. Don't be afraid to go for it. If you see a house you want and it's been on the market for some time, you have nothing to lose by going in and bidding 50% lower than the asking price. Don't be afraid to insult someone. Remember, 50% of something is better than 100% of nothing. If they counter at a higher price, be careful -- you can't afford to overbid to meet an unrealistic seller's price. Besides, there are plenty of other homes to choose from. Consider your time frame If you anticipate relocating anytime soon, it's probably smart to keep renting instead of buying. Remember that once you're an owner, it's going to cost you a 5% to 6% sales commission when you decide to sell, should you use a Realtor. To have a decent chance of selling with some equity left in your pocket -- even after paying the commission -- you probably need to stay put for at least five years. Shore up your score Before you look at a single house, check your FICO. FICO is a credit score developed by Fair Isaac Corporation. It is used by many mortgage lenders who use a risk-based system to determine the possibility that the borrower may default on financial obligations to the mortgage lender. Home buying is the one time you want to pay for your credit score, because many lenders base the interest rate you're offered on a calculation that takes the scores into account. If you're applying for a mortgage with someone else, make sure both of you have strong FICO credit scores. Some lenders will base the rate you're offered on the lowest score between the two of you. If your scores aren't in the top range of 760 to 850, chances are you'll be given a higher interest rate on a loan -- and that can make all the difference in whether you can afford to buy or not. If one or both of you has low FICO scores, focus on getting them into the 760-or-higher range. Not only will it save you a lot in mortgage costs, it's also an important step in making sure you have the financial discipline to take on such a huge commitment. Lowdown on down payments During the housing boom, lenders were all too happy to dole out mortgages that didn't require a down payment. That's coming back to sting many lenders -- and crippling the entire credit system -- as homeowners who never had to put equity into their homes are now walking away from them when their outstanding mortgage is more than the current value of the home. The upshot is that to have any chance of getting a mortgage in today's tight lending market, you need to come to the loan table with a down payment. A 20% down payment will speed up your loan approval, but not many people have that right now. One possible remedy is the recent change in FHA limits. FHA-insured loans require just a 3% down payment, but up until recently these loans maxed out at $362,790 in high-cost metro areas. The economic stimulus package signed into law in February authorized the FHA to raise those limits for the rest of 2008. The new top loan limit for high-cost metro areas is as much as $729,750. Ideally, you can scrape together your down payment from savings. But if that's not going to cover everything, you can withdraw up to $10,000 from your IRA. The typical 10% penalty for early withdrawals made before age 59 1/2 is waived when the money is used for a down payment on a first-time home purchase. If your money is in a traditional IRA, you'll still owe tax on the withdrawal. But you can pull out money you contributed to a Roth IRA with no penalty or tax. Any Roth earnings you withdraw for the down payment are also tax-free as long as you've had the account for at least five years. |
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