IT'S TAX TIME! TAX BENEFITS FOR THIS TAX SEASON!

April 15 - filing of tax deadline is just around the corner. With less than a week left until the filing deadline, everyone should have all the needed paper works ready by now.  For home owners, there are some additional tax benefits that they can enjoy. Here are some of them:

1. Mortgage Interest Deduction 

Mortgage interest are paid during the first few years of the mortgage term.  Through the home mortgage interest deduction, home owners are allowed to reduce their taxable income by deducting the amount of interest paid on the loan which is secured by their principal residence.  On a mortgage of up to $1 million, they can deduct the interest they've paid at settlement if they itemize their deductions on Form 1040.  

2. Property Taxes 

Property tax paid to the local municipality are deductible. The new home owner do not need to pay income tax on money that was spent on property taxes.  However, money held in escrow for the purpose of paying property taxes are not deductible - until the money is actually taken out of escrow and paid the property tax.

3. Selling Costs

Selling costs on the sale of a home can be claimed as tax deductions.  Closing fees, repairs, capital improvements costs, broker's fees and dvertising/marketing expenses required to sell their home will be deducted on the gain on sale of their home. Provided that the repairs were made within 90 days of the sale.  Maintenance items such as painting the home and changing the carpet are usually not considered as capital improvement.

4. Mortgage Insurance Premiums Deduction

Home owners that paid less than 20% down payment on their homes are required to pay Mortgage Insurance Premiums or MIP to protect the lender in case the borrowers default on the loan.  MIP payers can deduct those insurance payments as tax deduction when they file their returns. 

5. Energy Efficient Upgrade/Repair Deduction

The cost of the building materials used for energy efficient upgrades can be deducted on the total tax payable, not just a reduction in the taxable income.

6. Home Office Deduction 

Home owners can deduct a percentage of their mortgage, utilities and repair bills dedicated their office space. However, the home office must be the primary office location of the business or it is used as storage area for your business (i.e. samples, inventory, etc)

7. Construction Loan Interest Deduction

If a home owner has borrowed money to build a home, he/she may qualify to deduct the interest.  The interest deduction will only be applicable for the first 24 months of the loan even if the actual construction takes longer.  

Tax day is SOON! Do not delay, it's better to file even if you are not able to pay the taxes.  Just file and pay what you can.

Let me know if you have any more questions, I will be glad to help.  We have strong business relationships with CPA's and Tax Professionals that we would be happy to refer with any additional questions.  

Real Estate: Think Out of the Box

Real estate is bouncing back again after suffering for a few years.  Home buyers are interested in buying again, but they are faced with a big inventory deficit. Meaning there are limited homes for sale.  Some buyers make 3-4 offers on homes but other buyers keep snatching it from them.

In this challenging market, home buyers must get creative in looking for their home.  Looking for a house may not only mean searching in the for sale section.  Here are other ways of looking for your new home:

1. Check out 'expired' and 'withdrawn' listings

A lot of homes home owners failed to sell because buyers thought that it was overpriced.  Other homes in the same location with the same features may have been priced better than that home.  Chances are, the owners are still looking for a buyer for their home.  

2. Check rental listings 

There are a lot of reasons why a house was put up for rental by the owner.  He/she might have a job transfer, divorce or other things. He/she might have thought of selling, but judging from the past housing situation it was not a good idea for the owner because he/she would lose his investment.  Now that housing prices have improved, he might think of selling that house again.

3. Check out for Off-market or pocket listings

Some home owners want to sell their home but they do not want to list or can't list it.  These people want to sell their homes but do not want to do the leg work.  This is true for luxury market, some home owners do not want to publicly list their home in the market. 

In practice, realtors network with each other for potential deals.  Also, brokerage firms release upcoming listings to their agents a few weeks before they hit the MLS.  Well connected agents will be able to show buyers homes that are not even in the market yet.  Buyers will have less competition.

Most buyers prefer to look for their homes the traditional way. There are other ways that will guarantee successful house hunting if they just think out of the box. It is very important to work with a realtor who has a wide connection. The realtor who have access to expired, withdrawn and off market listings.  The listing might not be for sale, but it can still be a good deal, especially in this current market.

If you are looking to buy your dream home, I will be able to help!  I have a vast network and resources to help you find your perfect home. In James Team Real Estate, we are dedicated on exceeding your expectations.

Buying - 44% Cheaper than Renting According to Study

Trulia study shows that buying a home is in the average of 44% cheaper as suppose to renting in the 100 largest Metros in the US.    In 2012, buying a home was 46% cheaper than renting.   According to Freddie Mac, from February of 2012 to February 2013, the 30-year fixed rate dropped from 3.9% to 3.5% though rates have been increasing in March. 

Mortgage rates are still at historic lows.  Purchasing your own home would be 44% cheaper than renting at 3.5% mortgage, while buying at 4.5% mortgage rate will only be 39% cheaper than renting and only 33% cheaper at 5.5%. Low mortgage rates are helping to keep buying more affordable for home buyers.  Higher interest rates mean a higher cost of owning.  Experts believe that mortgage rates are NOW at its lowest.  So if you're thinking of buying your new home - NOW is the best time to move!

 Buyers are willing to buy. But where are homes for sale?  Potential sellers are eyeing the home prices   very carefully.  They're playing the waiting game. They want to see how high can a home appreciate before they consider selling their home. But  some experts say that they are missing out on huge sale opportunity by doing so.

Daren Blomquist, Vice President of Realty Trac says that home owners that bought their home 2-3 years ago may find that in  2013 is the perfect time to sell.  

"If you're selling one house just to move up to another, it does you no good to wait for prices to rise - the price of the move-up home will increase faster than the price of the place you're leaving behind." says Redfin CEO Glenn Kelman.  In addition to that, Mortgage Bankers Association predicted that mortgage rates are expected to increase from 3.5% range to 4.5% in the next year.  This means that the increase in mortgage rate will increase the costs of financing for your next home. 

Both scenarios indicate that NOW is the best time to buy or sell your home - before it gets too expensive.  So, my advice is to move in the market now, before prices go up.  If you're planning to buy or sell your home, I can help.  Just give me a call or visit my website at www.jamesteamrealestate.com

SPECIAL MARKET REPORT

April 1 will not just be April Fool’s day but it will also mark the beginning of more expensive housing for new home buyers.  New home buyers will NOW only have few more days to take advantage of the cheaper housing programs set up by the government designed to assist people in fulfilling their AMERICAN DREAM of purchasing their OWN home.

Effective April 1, 2013, FHA or Federal Housing Administration will raise its annual Mortgage Insurance Premium by 10 basis points or 0.1% - on most of the mortgage it insures.  For example, a borrower has a $200,000 FHA mortgage, pays about $2,500 per year or $208 a month for mortgage insurance, after the increase, the borrower would have to pay $2,700 a year or $225 per month in mortgage insurance.

FHA will also increase the premiums on jumbo mortgages ($625,000 or more) by 5 basis points or .05% up to the maximum allowed annual mortgage insurance premium.

The premium increase does not include some streamline refinance transactions.

FHA will also once again require borrowers to continue paying the annual Mortgage Insurance Premiums for the remaining balance of their loan.  In 2001, FHA has cancelled the required MIP once the principal has reached 78% payment of the original principal balance.  However, FHA remains responsible for insuring 100% of the outstanding loan balance until the loan is fully paid.  

FHA is also set to propose an increase in down payment for loans above $625,000.  The agency will require a minimum down payment from the old 3.5 to 5 percent. 

MORTGAGE INTEREST RATES

Mortgage interest rates have hit historical lows during the country’s economic crisis and have remained so until the first few months of the year 2013, but experts believe that this may change SOON! National Association of Realtors economist Lawrence Yun predicts the rates will reach 4% during the summer and 4.5% by 2014’s first half as the US economy continues to improve. 

HURRY! If you are thinking about buying a home with FHA financing then YOU need to MOVE quickly or YOU will PAY higher down payment and an increase in monthly payment over the terms of the loan.

MORTGAGE OPTIONS

Some mortgage companies offer flexibility in mortgage rates.  You can lock a rate without submitting a property address.  This will give you more time to search for the perfect home while locking in that best rate possible.  The lock in rate is valid for 60 days.  Take note that experts predicted that interest rates are about increase.  So it’s best to lock down the current low interest rates! (You can contact me for details)

3% DOWN PAYMENT CONVENTIONAL LOAN PROGRAM

Another mortgage company is offering conventional 3% down payment program.  Mortgage insurance is less than FHA, however if the borrower wants to enjoy lower pricing then he/she must have at least a 680 credit score.  Here are the highlights of 3% Down Payment Conventional Loan Program:

·         Minimum credit score of 680 or better (Mortgage Insurance Requirement)

·         DU “Approve/Eligible”

·         Conforming Fixed Rate loan only

·         One Unit Primary Residence, includes PUD and Condo

·         3% contribution from borrowers own funds required

·         Max seller contribution = 3%

·         Gift allowed for closing costs, prepaids, only after borrower has made 3% contribution

·         Full appraisal required – no drive by, no AVM

·         Multi-family homes are not eligible for the 3% down payment conventional loan program.

HUD 184 UPDATE

On March 8, 2013, the Housing and Urban Development (HUD) released a memorandum about the suspension of Section 184 Indian Housing Loan Guarantee Program effective March 28, 2013 due to lack of availability of fund resources.  Section 184 program is a home loan product offered by HUD specifically catered to native Americans and Alaska Natives.  The program allows consumers to take on a loan with low down payment of at least 1.25% for loans under $50,000) at competitive interest rates, while cancelling the monthly mortgage insurance (no MIP).  Due to the suspension of HUD 184, former eligible borrowers and lenders will now need to look for other financing option which is going to be more expensive.

From a selling perspective, these changes can greatly impact the buyers that can afford to purchase the home and it can impact the selling price.

NOW is the best time to close that deal! Starting April 1, 2013, purchasing a new home will be more expensive! Have a chat with me if you’re planning to buy or sell your home, and I assure you I will save your hard earned money and your valuable time.

Tax Credits for Energy Efficient Home Improvements

The increasing energy prices and the growing concern about the effects of climate change are factors why home owners are opting for a well designed, energy efficient home.  An energy efficient home reduces energy bills and helps clean the environment. Additional plus side of having an energy efficient home is the tax credits applied on energy efficient home improvements.  The tax credits are deducted from your tax bill and if your credit is larger than your tax due, you can get a refund. On the other hand, deductions are deducted from your income, so there's less income to tax.

Renewable energy source tax credits for wind, solar and geothermal improvements are available through 2016.

Replacing windows, doors and skylights will give you a 10% credit up to $200 on windows and $500 for doors and skylights on the cost of materials only. Installation excluded.  

Insulation will give you 10% credit up to $500 on the cost of the materials only. Installation excluded. 

Tax credit for non-solar water heaters is a $300. Qualifying waters can include gas, oil, propane and electric heat pumps.  Using normal water heaters can add up to 25% of the energy used in your home.

Solar energy systems, small wind turbines and geothermal heat pumps get you a tax credit of 30 percent off the cost of the system, including installation, with no ceiling on the amount of the tax credit. (Source: www.realtytimes.com)

It's not difficult to cut on energy costs in your home. By making minor changes in your home, you can make significant savings.  Over time, those savings will add up while being environment friendly.  Not to mention, the government rewards on the energy 

efficent improvements done to your home.

For more information on how to make your home more energy efficient

http://www.akenergyefficiency.org/energy_assessment.

If you want to know more about rebates and tax credits you can benefit from, you can visit http://www.energysavvy.com/rebates/ and http://energy.gov/savings?rebate_eligibility=0&rebate_savings_for=0&rebate_provider=0&rebate_state=7879

What Home Buyers Want

Price and proximity to work are top considerations for 1st time home buyers, while trade-up buyers tends to be concerned on the design and the neighborhood, based on "Characteristics of Home Buyers", an analysis of the recently released 2011 American Housing Survey (AHS).  The survey is the most comprehensive national housing survey in the United States.

According to the survey, "38% of the 1st time home buyers said that price is their primary reason for selecting a particular home.  While 30% said that proximity to work was the most frequently cited reason for choosing a specific neighborhood", said David Crowe, National Association of Home Builders (NAHB) chief economist.

On the other hand, Crowe said that, "The majority of trade-up buyers (36 percent) cited the design of the home as the primary reason for selecting a particular house, with 28 percent citing the looks and design of the community as the reason for choosing a specific neighborhood". (Source:www.nahb.org) 

Another point in the survey was, most (55%) home buyers prefer to purchase a new home rather than an existing home.  The reason behind for that preference is that new homes give home buyers options on how their new homes would look like based on their tastes and preferences.

Also the latest trend in home buying is to choose a home with energy efficient features that would permanently lower utility bills rather than buy an existing home without these features with only 2-3%  price difference.

The Characteristics of Home Buyers report is available on

http://www.realtor.org/sites/default/files/reports/2011/profile-of-home-buyers-and-sellers-2011-highlights.pdf 

Join the bandwagon, opt for brand new energy efficient home in centralized location! Save time and energy, choose a home that's close to your office while saving on energy cost (both on gas expenses and utility bills)! Contact me for more information.

Reasons Why You Should Refinance Your Mortgage Before 1st of April

If you're having thoughts of refinancing then NOW is the perfect time to apply for one! Improving housing market condition, increase in Premium Mortgage Insurance and potential mortgage rate increase are some of the factors why it would be more expensive to refinance your mortgage in the future.

1st Reason - Changes in Mortgage Insurance Premiums (MIP)

Effectve April 1, 2013, FHA will raise its annual Mortgage Insurance Premiums or MIP by 0.10% on all forward mortgages.  

The agency will once again require borrowers to continue paying the annual Mortgage Insurance Premiums for the remaining balance of their loan.  In 2001, FHA has cancelled the required Mortgage Insurance Premiums or MIP once the principal has reached 78% of the original principal balance. However, FHA remains responsible for insuring 100% of the outstanding loan balance until the loan is fully paid.  Due to billions of dollars revenue loss, the automatic cancellation policy will no longer apply.

2nd Reason - Potential Mortgage Rate Increase

Mortgage Professionals say that refinancers and home buyers who have not taken advantage of the historically low rates shouldn't waste time! 

Mortgage interest rates have hit historical lows during the country's economic crisis and have remained so until the first few months of year 2013, but experts believe that this may change SOON!  National Association of Realtors economist Lawrence Yun predicts the rates will reach 4% during the summer and 4.5 by 2014's first half as the US economy continues to improve.

3rd Reason - Benefits of Refinancing Before Filing of Tax Deadline

One benefit of refinancing during tax season is that you can prepare the same documents for your taxes and your refinancing application.  

If you wait after April 15th, it will take about 4 to 6 weeks to get an IRS verification that you have filed your taxes because other people will also be filing their taxes on the due date.  

Home owners that refinance could see hundreds of dollars in savings each month.  They will have more disposable income to pay bills, more money to spend in shops and restaurants in their communities, or more money to save for their children's college tuition or new car.  Since there's a need to fill the jobs that will support the demand, there will be more employment opportunities that will contribute to the growh of the US economy. 

    If you are looking to list or sell your home, whether it is a condo, single family, or mutlifamily   
    home now is the time to go on the market with record low inventory levels and fewer buyer 
    concessions being offered.  It is a sellers market!!