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Special Report: Real estate provisions
in ‘fiscal cliff’ bill

WASHINGTON – Jan. 2, 2013 – Yesterday, the House and Senate passed H.R. 8, legislation to avert the so-called “fiscal cliff.” Following are real estate-related provisions of the bill, which President Obama plans to sign into law today:

Mortgage Forgiveness Debt Relief Act extended to January 1, 2014. In place since 2007, the act provided a tax break for homeowners who struggled through financial hardship such as a foreclosure, and were granted mortgage debt forgiveness. In the past several months,

Deduction for mortgage insurance premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012.

The 15-year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012.

The 10 percent tax credit (up to $500) for homeowners for energy efficiency improvements to existing homes is extended through 2013 and made retroactive to cover 2012.

“Pease limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be re-instituted for high-income filers. “Pease” limitations will only apply to individuals earning more than $250,000 and joint filers earning more than $300,000. The thresholds are indexed for inflation so will rise over time. Under the formula, filers gradually lose the value of their total itemized deductions up to a total of a 20% reduction.

First enacted in 1990 and named for Ohio Congressman Don Pease, who proposed the idea, the limitations continued throughout the Clinton years. The limitations were gradually phased out starting in 2003 and eliminated in 2010. Re-institution of these limits has far less impact on the mortgage interest deduction than a hard dollar deduction cap, percentage deduction cap or reduction of the amount of mortgage interest deduction that can be claimed.

The capital gains rate remains at 15 percent for individuals earning less than $400,000 per year and couples earning less than $450,000. Any gains above these amounts will be taxed at 20 percent. The $250,000/$500,000 exclusion for the sale of principle residence remains.

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ANY open permits and or code violations need to be fully addressed and resolved by the potential home buyer, prior to closing. Failing to do so can be very costly for a homeowner.

Open permits remain with the property, despite any change in ownership. Failure to uncover any open permits prior to closing means that these permits become the responsibility of the new owner. Requirements to remedy an open permit can include fines, fees, and completion of pending work and removal of work that does not meet building requirements. Open permits can be quite costly and time consuming.

Q. What is an open or expired permit?

An open or expired permit is a permit which has been issued by a County or Municipal building department but has not been formally finalized in accordance with established guidelines, typically by means of a final inspection, within the time provided. Once the time has lapsed for the permit to be closed by the issuing department it is referred to as open or expired.

Q. Why do I need an open permit search?

One of the biggest obstacles for home sellers these days is the issue of open permits. Since many Counties have declared war on open permits, homeowners are finding themselves at the mercy of county inspectors when the time comes to close on the sale of their home. Attorneys and title companies may recommend that buyers not close if a permit search reveals open permits

Q. Will title insurance cover open or expired permits?

A good title company or real estate closing attorney will take care of this for you but you have to ask for it because it normally is not done. Title companies can close the sale on a property with an open permit on it, and most will never even conduct an open permit search; it’s not the same as a lien search. You should order an Open Permit Search at the same time you schedule your inspection.

This is a service that I provide for my Buyers. I usually go to the Building Code department of the town or municipality where the home is located and pull the record on all permitted activity on the home. If there is work that has been done that has not been permitted that is an issue that should be addressed by the home inspector.

Q. Will my closing agent check for open or expired permits?

Oftentimes the person selling the home or their listing agent has no idea about his or her own permit situation. They may have had some work done and their contractor told them everything was good to go and somewhere down the road they will find out that the permit is still open and if you are the new owner this is now your problem to deal with. Sometimes work was done before the current owner bought the home and they have no idea anything could still be open.

The best way to protect yourself is to do an open permit search. If you are selling your home it is a good idea to make sure your home has all of its permit issues in order because nothing can kill a deal faster than when a buyer finds out there are open permits. If you are the buyer, take care of it before you face a potential issue in the future.

Q. Who is responsible to close an open permit?

Open permits can be grounds for the title company to balk or the lender to renege on financing. Uncovering open permits and closing them typically falls on the shoulders of the SELLER. Every State of Counties standard contracts vary. Make sure you understand the terms and conditions involving permits in whatever contract you are using. It often can be grounds for terminating a contract.

Q. Is it really that important? What is the worst that can happen?

If open and/or expired permits exist and are not closed prior to closing, these permits become the responsibility of the new homeowner. The new owner will be responsible for paying all fees and/or fines and will be forced to complete the pending work. If the permit is not properly closed, the building department may be able to order the removal of the work on the property.

Q: Found an open permit. Now what?

If there are any open permits on your home the Building and Zoning Department can provide you with the name and contact information for whomever pulled the permits. You can then contact the contractor to get the permit closed.

Q: What if the contractor is no longer in business?

If your contractor is no longer in business, you have a couple of options:

You can close the permits yourself. This involves contacting the Building and Zoning Department; arranging for any missing inspections; following up with inspectors and the department to make sure that the permit is closed on the computer. Or, you can contact a local permit expeditor to close the open permits for you.

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1. It is not a tax on all properties. It is a tax on SOME investment income from interest, dividends, rents and capital gains.

2. It is not a tax on all people. Only individuals with an Adjusted Gross Income of $200,000 and couples with AGI over $250,000 will be included.

3. It is part of Health Care reform.

4. It is not a transfer tax, it is an income tax on investment income.

5. It does not affect the capital gain exclusions on the sale of a principal residence.Currently the first $250,000 of gain for a single person and $500,000 on a married couple is exempt from capital gains. The tax does, however, apply on amounts over the exemption.

6. What real estate does it apply to? For those taxpayers whose AGI is above the limits , the sale of a principal residence when the gain is over and above the exempt amounts, the sale of second homes and invest property and the income derived from investment property.

7. There is a separate tax for high wage and self employment business income. When investment property income qualifies as business income and not property earnings, the 3.8% does not apply, however a new tax of .9% is due.

EXAMPLE

Capital Gain: Sale of a Principal Residence

John and Mary sold their principal residence and realized a gain of $525,000. They have $325,000 Adjusted Gross Income (before adding taxable gain).

If John and Mary had a gain of less than $500,000 on the sale of their residence, none of that gain would be subject to the 3.8% tax. Whether they paid the 3.8% tax would depend on the other components of their $325,000 AGI.

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Any home has the potential of containing RADON!

Radon is a toxic gas which is radioactive, invisible, tasteless and odorless. It is produced by the naturally occurring breakdown of uranium under the surface of the earth and can be found in soil, rocks and water.

HOW DOES IT GET INTO A HOME?

Radon can enter your home through cracks in the foundation, openings around sump pumps and drains, cracks in walls, and crawl spaces. Radon is typically most concentrated in the lowest level of a home.

WHY SHOULD I WORRY ABOUT IT?

Indoor radon is the second leading cause of lung cancer. Elevated levels of radon in homes were not recognized as a potential public health threat until the 1980’s. Your chances of getting lung cancer from radon depend on how much radon is in your home, the amount of time you spend in your home, and whether you are a smoker or have ever smoked.

HOW DO I FIND OUT IF I HAVE RADON?

The Environmental Protection Agency (EPA) website, recommends that all homes in the United States be tested for Radon because it has been found in high levels in all states.

Professional radon testers and mitigation specialists should be employed to perform the detection tests. Many licensed home inspectors can also provide the testing service for an additional fee in combination with the home inspection that is performed during the sale/purchase of a home. Additionally, Accu-Star certified Do It Yourself (DIY) kits are also available at home stores for a nominal fee. These kits require you to place test containers in the lowest area of your home for a designated period of time. Once the test sample has been obtained, it is then sent by you to a designated company to read/report the test results for your home.

WHAT DO I NEED TO DO IF RADON IS DETECTED IN MY HOME?

Lowering high radon levels requires the technical knowledge and special skills of a Radon Mitigation Specialist. These professionals will be able to help you determine which system is right for your home. Mitigation may include sealing cracks in floors and walls and/or installing a “sub-slab depressurization” system, which uses pipes and fans. The cost of making repairs to reduce radon varies depending on where you live and the type of system you choose to install.

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This article was written and published by:

Tara-Nicholle Nelson
Inman News

In life, and in real estate, there are decisions that, if we had them to do over again, we might do x, y or z differently. But all in all, we are not too upset about how things turned out. “C’est la vie,” as they say.

Then there are the decisions and actions we actively regret, worrying over their long-term consequences, wishing we could have a cosmic do-over, stewing and ruminating over what we did wrong. (In truth, it’s a sign of emotional maturity to see every experience as an education, and to be free from ruminating over even the worst of our regrets. But I digress).

Contrary to popular belief, my experience shows that the vast majority of homebuyers commit what they see as the first type of mistakes, but not those deep, dark regrets. However, those that do have serious regrets can lose many hours of sleep and many thousands of dollars trying to remedy them. Their only gain? Experience and gray hairs.

Here are the top 5 true, deep regrets of homebuyers and some insights for how to prevent them from taking over your own life:

1. Premature buying. This is not at all about timing the market or making sure you get in at the “just-right” moment. There’s not much you can or should do about that. But buying before your life or your finances are ready for homeownership is a transgression that ends up causing serious, long-term regrets for those who end up doing it. Premature buying takes several forms, the most common of which includes jumping the gun and buying before you’ve saved as much as you really need, or before you’ve paid your debt down to the level you really needed to.

Another pervasive form of premature buying is to buy before you’ve truly, deeply, seriously run all your own personal financial numbers, which puts you in the position of forced reliance on what the bank, lender or someone else thinks is affordable, which is often wrong.

Similarly, buying because you feel pressure to get in while the market is keeping prices and interest rates low, rather than because you want and can afford a home, is a surefire path to real estate regret.

2. Buying too small of a house. People who buy too large of a home often realize, several years in, that they simply aren’t using all of their rooms and many either sell and downsize or find ways to put the extra space they have to better use. People who buy too small of a home, on the other hand, are acutely aware of it from the moment their children start fighting, they find themselves and their energy levels deactivated by clutter or they end up realizing that there is no room at the inn for the family members or friends they’d like to house, short or long term.

Buying too large of a home is potentially wasteful of the money spent maintaining, heating and cooling the place; buying too small a home is uncomfortable and frustrating, sometimes intensely so, on a constant basis — hence, the regret it can create.

Avoid this regret by starting your house hunt with a visioning exercise: What do you want your home life to look like in 10 years? Who will live with you? Do you entertain or have overnight guests? What activities do you want or need to be able to do there? Do you want to practice yoga, crafts, have kid-sized homework spaces, work at home, collect classic cars or move your parents in? If so, seek to buy a home that can comfortably fit all these people and their activities, even though they might not all exist — yet.

3. Buying a home you can’t truly afford. You might think that one of the top 5 regrets of homebuyers would be buying at the top of the market. But that’s not the case — I know plenty of buyers who bought at the top, paid top dollar and are still upside down on their homes, yet are still happy with their homes because they can well afford the payment and bought homes that will serve their families very well for the very long term (which will allow their home’s value to recover).

It is much more problematic to simply overextend yourself on a home — no matter what the market dynamics are at the time you buy. People who both bought at the top of the market AND overextended themselves made up the large majority of folks who lost homes, as the mortgage gyrations they went through (i.e., taking short-term, interest-only, adjustable-rate mortgages) in order to qualify for the home in the first place also caused them to be utterly unable to sustain the mortgage once the market declined and their mortgages weren’t able to be refinanced.

If you can’t foresee being able to make the mortgage payment on your home 10 years in the future without refinancing it, that’s a sign you might be approaching the unaffordability danger zone.

4. Incompletely resolving co-buyer conflicts. Many co-buyers are couples, but I’ve also seen parents buy homes with their children, siblings buy homes together and even good friends team up to co-buy a home. Any time there is more than one buyer, there is a chance that the co-buyers will have one or more disconnects in their wants, needs and priorities. Often these are resolved almost effortlessly by the realities of the homes that are on the market (e.g., neither party’s dream home turns out to actually exist, or pricing realities require everyone to compromise); other times, people simply work things out like mature individuals, seeking first to understand their co-buyer’s position, then working out a compromise that works for everyone involved.

But in still other cases, the conflict is never truly, deeply resolved; even on closing day, one side feels completely misunderstood, or caves in for the sake of avoiding conflict, or someone simply throws a tantrum, insisting that they get their way. In these cases, it’s common for the party who feels undermined and trampled on to ruminate on it as they live in the property every single day, ending up with great resentment and anger over the years.

5. Taking on fixing beyond their skill, patience and resource level. It can be heartbreaking to tour one of the many homes on the market that was clearly the subject of a previous owner’s fixer-upper dream but was abandoned in the middle of a remodel. Often, these abandonment’s happen because the owner simply underestimated what the project would take and ran out of time, energy or, most commonly, money to get the remodeling completed. But it’s even sadder to tour the home of a frustrated fixer whose owner and family still lives in a half-done, very dysfunctional property, and who are getting more and more disgruntled with their situation every time they make a mortgage payment.

Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com.

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2012 Real Estate Hurricane Preparedness Guide

History teaches that a lack of hurricane awareness and preparation are common threads among all major hurricane disasters. By knowing your vulnerability and what actions you should take, you can reduce the effects of a hurricane disaster.
Hurricane hazards come in many forms: storm surge, high winds, tornadoes, and flooding. This means it is important for your family to have a plan that includes all of these hazards. Look carefully at the safety actions associated with each type of hurricane hazard and prepare your family disaster plan accordingly. But remember this is only a guide. The first and most important thing anyone should do when facing a hurricane threat is to use common sense.

Know Hurricane Terms:

Hurricane Watch – A hurricane is possible within thirty-six hours. Stay tuned for additional information.
Hurricane Warning – A hurricane is expected within twenty-four hours. You may be advised to evacuate. If so, evacuate immediately.
Storm Surge – Storm surge is simply water that is pushed toward the shore by the force of the winds swirling around the storm. This advancing surge combines with the normal tides to create the hurricane storm tide, which can increase the mean water level 15 feet or more.

Ask your local emergency preparedness office about evacuation plans. Learn evacuation routes.

• Plan a place to meet your family in case you are separated from one another in the hurricane.
  Assemble a disaster supplies kit ( See information below)
• Board up windows. Permanent storm shutters offer the best protection. Also, you can use 5/8″ marine plywood. Tape does not prevent windows from breaking.
• Know how to shut off utilities.
• Make a record of your personal property( take digital photos or video tape the contents of your home and/or business and keep in a waterproof with you along with your homeowners insurance policy)
• Be sure trees and shrubs around your home are well trimmed.
• Clear loose and clogged rain gutters and downspouts.
• Determine how and where to secure your boat.
• Consider flood insurance and purchase it well in advance

30 Days To Hurricane Season: Time For Flood Insurance

The Atlantic hurricane season starts June 1 – 30 flood days from now. Since flood insurance takes 30 days to become effective after a homeowner applies, today marks your last chance to get flood insurance by the June 1 debut.

“Past hurricane seasons have shown that storms can form as early as the beginning of June, so property owners can’t afford to wait to buy flood insurance,” says Ed Connor, acting federal insurance administrator and acting assistant administrator, FEMA Mitigation Directorate.

Many homeowners still wrongly believe that their property insurance policy will cover all damage from a hurricane.

“Homeowners insurance doesn’t cover flood damage and, without flood insurance, property owners may have to absorb the financial losses on their own,” says Connor. “Just a few inches of water can cost thousands of dollars in repairs and, in this economy, few can afford that potential drain on their savings.”

Flood insurance is available through about 85 insurance companies in approximately 20,600 participating communities nationwide. National flood insurance is available to renters, business owners and homeowners, even if it is not required by the terms of a mortgage. While the average flood insurance policy costs about $540 a year, homeowners can protect their properties in moderate-to low-risk areas with lower cost Preferred Risk Policies (PRPs) that start at just $119 a year.

Individuals can learn how to prepare for floods, how to purchase a flood insurance policy and the benefits of protecting their properties against flooding by visiting Floodsmart.gov (http://www.floodsmart.gov) or calling (800) 427-2419.

Have a Place To Go:
Develop a family hurricane preparedness plan before an actual storm threatens your area. If your family hurricane preparedness plan includes evacuation to a safer location for any of the reasons specified with in this web site, then it is important to consider the following points:

If ordered to evacuate, do not wait or delay your departure. If possible, leave before local officials issue an evacuation order for your area. Even a slight delay in starting your evacuation will result in significantly longer travel times as traffic congestion worsens.

Select an evacuation destination that is nearest to your home, preferably in the same county, or at least minimize the distance over which you must travel in order to reach your intended shelter location. In choosing your destination, keep in mind that the hotels and other sheltering options in most inland metropolitan areas are likely to be filled very quickly in a large, multi-county hurricane evacuation event.

If you decide to evacuate to another county or region, be prepared to wait in traffic. The large number of people in this state who must evacuate during a hurricane will probably cause massive delays and major congestion along most designated evacuation routes; the larger the storm, the greater the probability of traffic jams and extended travel times.

If possible, make arrangements to stay with the friend or relative who resides closest to your home and who will not have to evacuate. Discuss with your intended host the details of your family evacuation plan well before the beginning of the hurricane season.

If a hotel or motel is your final intended destination during an evacuation, make reservations before you leave. Most hotel and motels will fill quickly once evacuations begin. The longer you wait to make reservations, even if an official evacuation order has not been issued for your area or county, the less likely you are to find hotel/motel room vacancies, especially along interstate highways and in major metropolitan areas.

If you are unable to stay with friends or family and no hotels/motels rooms are available, then as a last resort go to a shelter. Remember, shelters are not designed for comfort and do not usually accept pets. Bring your disaster supply kit with you to the shelter. Find Pet-Friendly hotels and motels.

Make sure that you fill up your car with gas, before you leave.

Preparing Your Pets for Emergencies Makes Sense.Get Ready Now.

If you are like millions of animal owners nationwide, your pet is an important member of your household. The likelihood that you and your animals will survive an emergency such as a fire or flood, tornado or hurricane depends largely on emergency planning done today. Some of the things you can do to prepare for the unexpected, such as assembling an animal emergency supply kit and developing a pet care buddy system, are the same for any emergency. Whether you decide to stay put in an emergency or evacuate to a safer location, you will need to make plans in advance for your pets. Keep in mind that what’s best for you is typically what’s best for your animals.
If you must evacuate, take your pets with you if possible. However, if you are going to a public shelter, it is important to understand that animals may not be allowed inside. Plan in advance for shelter alternatives that will work for both you and your pets.
Make a back-up emergency plan in case you can’t care for your animals yourself. Develop a buddy system with neighbors, friends and relatives to make sure that someone is available to care for or evacuate your pets if you are unable to do so. Be prepared to improvise and use what you have on hand to make it on your own for at least three days, maybe longer.

Disaster Supply Kit:
I personally prepare a hurricane closet in May with all the needed supplies and materials so that there is never a last minute rush to the store when the shelves have been cleaned out.

Water :

• Plan on one gallon of water per person per day for at least 3 days, for drinking, washing, cooking, and sanitation. Extra water for pets
• Store as much as possible in plastic containers such as soft drink bottles.
• Avoid using breakable containers, such as glass bottles or mason jars.
• Fill bathtubs with water for bathing and washing dishes

Food :

• Store at least a three day supply of non perishable food.
• Choose foods that do not require refrigeration or cooking.
• Choose foods that are healthy and high nutrition type. (Canned meats fruits and vegetables,protein or fruit bars, dry cereal or granola, peanut butter, dried fruit, nuts, crackers, canned juices, non-perishable pasteurized milk, high energy foods, vitamins, food for infants and pets, comfort/stress foods)

Supplies and Equipment:

• A battery operated radio with extra batteries
• NOAA Weather Radio with tone alert and extra batteries
• A flashlight with extra batteries
• Blankets or sleeping bags ( store in trash bags to keep dry)
• Paper plates and utensils, including a non electric can opener
• Candles and matches in a waterproof container
• Plastic sheeting and duct tape to shelter-in-place
• Toothbrushes, toothpaste, soap, moist towelettes, and other personal grooming items
• Paper towels and toilet paper
• First aid kit and medicines ( ask your pharmacist or drug supply company for a one month hurricane supply and store in water proof container)
• Fire extinguisher
• Wrench or pliers to turn off utilities
• Cell phone and plug in battery operated charger
• Infant formula and diapers
• books, games and toys to keep kids occupied ( remember those batteries)
• Important family documents such as copies of insurance policies, identification and bank account records in a waterproof, portable container
• Complete change of clothing including long sleeved shirt, long pants and sturdy shoes
• Insect repellent and sun-screen
• Paper and pencil
• Local Maps

Business Preparedness:

* Have an emergency communication plan in place before the storm hits. How will co-workers stay in contact if the physical location of a business is damaged?
* Turn off all non-critical work devices before the storm hits.
* Alert a third party about business evacuation plans in case a storm makes it impossible to get to your place of business.
* Protect important business documents that you may need quickly, such as property insurance policies.
* Have cash on hand to pay employees or contractors after the storm.
* Know which employees are certified in CPR, EMT, etc.
* If possible, disconnect a building’s main electrical feeds.
* Have a plan to notify all employees, post-storm, about damage and how you’ll move forward.
* Review contracts that are date sensitive and have a backup plan in place to handle potential problems.
* Assess all functions that could be impacted by a lapse in business – cash flow, bills, budgets and any upcoming events.

Useful Links:

General Hurricane Information:
National Hurricane Center
NWS Hurricane Awareness site
NOAA Hurricanes site
Frequently Asked Questions
FEMA Hurricane Info
FEMA for kids
NCDC: Hurricanes

Hurricane Safety Information:
American Red Cross
FEMA
EPA – Drinking Water, Waste Water, and other Hurricane Hazards

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Buying a home is the single largest investment that most people will make in their lifetime. It is important that you shop around for the best loan for your circumstances. You should be speaking with more than one lender or mortgage broker.

Before you start to shop your loan make sure you review your finances so that you have a good understanding of what you on-going fixed expenses are ( car payment, school loans, credit card debt, living expenses)b and then get estimates on what the additional costs of owning a home will entail ( homeowners insurance, taxes, HOA fees, etc.) Check your credit score, organize your financial documentation, and do not forget to factor in the cash you will need for a down payment AND CLOSING COSTS.

The following are some key questions that you should be asking to determine which is the best loan for you.

1. What is the interest rate on this mortgage?

To determine exactly what you’ll pay over the term of the loan, you need to know the rate. Rates change quickly, and if your credit is less than perfect, you may not be offered the lender’s lowest figure.

To effectively compare different lenders’ programs, ask for the annual percentage rate (APR) of the mortgage interest, which is generally higher than the initial quoted rate because it includes some fees.

2. How many discount and origination points will I pay?

Lenders may charge prepaid mortgage interest points to lower your interest rate or other points that have no benefit to you at all. Find out how many you’ll be expected to pay and which kind of points they will be.

3. What are the closing costs?

Mortgages come with fees for services provided by lenders and other parties involved in the transaction. You want to know what those fees will be as early as possible. Lenders are required to provide a written good faith estimate of closing costs within three days of receiving a loan application. ASK FOR IT AND MAKE SURE YOU GET IT!!!

4. When can I lock the interest rate and what will it cost me to do so?

Your interest rate might fluctuate between the time you apply and closing. To prevent it from going up, you may want to lock the rate, and even points, for a specified period. Ask your lender if lock fees apply. In addition, do some homework and find out what the experts are expecting rates to do in the near future.

5. Is there a prepayment penalty on this loan?

There may be a prepayment penalty on your loan. Some penalties are 1 percent of the loan amount, others are equal to six months’ interest, some apply only when you refinance or reduce the principal balance by more than 20 percent, and some kick in if you sell your home. Find out the duration of any penalty period and how the penalty is calculated. Some lenders offer lower interest rates to buyers who accept prepayment penalties.

6. What is the minimum down payment required for this loan?

The rate and terms of your loan will be based on a down payment figure, typically 3 to 20 percent of the purchase price. If you can put more money down, you may be able to lower your rate and improve your terms; if you come up short, you may be required to get private mortgage insurance (PMI).

7. What are the qualifying guidelines for this loan?

These requirements relate to your income, employment, assets, liabilities, and credit history. First-time homebuyer programs, VA loans, and other government-sponsored mortgage programs typically offer easier qualifying guidelines than conventional loans.

8. What documents will I have to provide?

Most lenders will require proof of income and assets before approving your loan, and may require other documents as well.

9. How long will it take to process my loan application?

The answer will depend on several variables. When the loan business is brisk, underwriters get backed up, verification takes longer, appraisals move slower, and other bottlenecks develop along the loan pipeline. Lenders may say two weeks, but 45 to 60 days is probably more realistic in most cases. You should determine what is a conservative estimate so that you do not contractually obligate yourself to a closing date that you cannot meet.

10. What might delay approval of my loan?

If you provide the lender with complete, accurate information, the loan process should run smoothly. If the underwriter discovers credit problems, there could be delays. Make sure you notify your lender if you change jobs, increase or decrease your salary, incur additional debt or change marital status between the time you submit an application and the time the loan is funded.

Once you have these answers you can start to compare loan products and determine which lender and loan are the best for you.

Filed under: Blog by Kim Bregman
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Hurricane season has just begun and will last until the end of November; it is important for homeowners to have an awareness of what their insurance policy covers and what their hurricane deductible is. This is particularly true for first time home buyers or for homeowners that have relocated to coastal states from non-coastal regions and have not had hurricane coverage in the past. The hurricane deductible will determine the amount of money you must pay out-of-pocket before your coverage kicks in if there is damage to your residence due to a hurricane. Hurricane deductibles are clearly listed in your policy. Eighteen coastal states allow insurers to incorporate hurricane deductibles into their homeowners policies: Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, Texas and Virginia. While traditional, standard homeowners deductibles for fire, theft and other disasters listed in the policy are usually a flat dollar amount, such as $500 or $1,000, hurricane deductibles are generally calculated as a percentage and typically vary from 1 to 5 percent of a home’s insured value.

Hurricane deductibles are triggered only when certain criteria are met. The hurricane deductible triggers vary by state and insurer and usually apply when the National Weather Service (NWS) officially names a tropical storm, declares a hurricane watch or warning, or defines a hurricane’s intensity. Due to these differences, homeowners should check their policies and speak to their agent or insurance company representative to learn exactly how their particular hurricane deductible works. In some states, coastal homeowners insurance policyholders may have the option of paying a higher premium in return for a traditional dollar deductible, depending on how close to the shore their residence is situated. In high-risk coastal areas, insurers often require the inclusion of a hurricane deductible before selling a homeowners insurance policy. Homeowners who have questions about their insurance policy should contact their insurance agent or company representative.

For more information on hurricane insurance, please visit the Hurricane Insurance Information Center at http://www.iii.org/

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Looking to squeeze the most from your home insurance dollar? Try these practical steps.

1. Shop around for home insurance quotes:

Check with several different home insurance companies to get rate quotes. An independent insurance agent can provide rate quotes from multiple companies. Ask around: Do your friends and family like their home insurance company?

2. Raise your home insurance deductible:

The deductible is the amount of money you have to pay toward a loss before your insurance kicks in. Typically, home insurance deductibles start at $250. The Insurance Information Institute (III) estimates that if you increase your deductible to either $500 or $1,000, you can realize double-digit decreases on your premiums. For example, an increase to $1,000 can save you up to 25 percent. However, make sure you can afford to pay the higher deductible out of pocket if something should happen.

3. Buy your home and auto insurance policies from the same insurance company:

Most companies will give a multiline discount if you buy both home insurance and auto coverage from them. It’s one of the more significant discounts you can garner.

4. Consider insurance when buying a home:

If you’re looking at buying a home, think about the cost of it. A newer home’s electrical, heating and plumbing systems and overall structure are likely to be in better condition than those of an older home. This can lead to lower premiums.

You’ll also want to consider the construction of the house and where you live. If you live on the Atlantic Coast, you’ll want the house to be able to stand up to wind damage, while on the Pacific Coast, you need to keep earthquakes in mind. Home insurance does not cover these perils; instead, you need to buy windstorm or earthquake coverage separately, adding to your insurance cost.

5. Insure your home, not the land:

While your home and its contents are at risk from fire, theft, windstorms, and other perils, the ground your home sits on is not. Don’t include the value of the land when deciding how much homeowner insurance you need to buy in order to rebuild your house. Your insurance agent can help you assess the right coverage level.

6. Improve security and safety:

Items such as dead bolt locks, burglar alarms and smoke detectors can usually bring discounts of 5 percent each, depending on the company. Your insurance company may also offer a significant discount of 15 or 20 percent if you install a sophisticated home-security system. If you’re thinking about buying such a system, check with your insurer to see which systems qualify for a discount.

7. Stop smoking:

Smoking accidents account for almost 23,000 residential fires every year, according to III. Some insurers offer to reduce premiums if no one in the home smokes.

8. Look for senior discounts:

Retired people stay at home more and spot fires sooner than working people. Older people also have more time for maintaining their homes. If you’re at least 55 years old and retired, you could qualify for as much as a 10 percent discount. However, it really depends on the insurer and some companies don’t offer the discount.

9. Look for group coverage:

Large employers and business associations often work out deals with an insurance company, which includes a discount for employees and members.

10. Stay with a home insurance company:

If you’ve kept your coverage with a company for several years, you may receive special consideration. Several insurers will reduce your insurance rates by 5 percent after you stay with them for three to five years; and some companies will discount you as much as 10 percent after six years.

11. Check your coverage annually:

You want your policy to reflect the value of your home and belongings. If you review your policy every year, you will be able to make the necessary adjustments. If, for example, you just sold a valuable painting, you won’t need the same amount of personal property coverage. But if you’ve added a room to your home, you’ll need to increase your dwelling coverage.

12. Look for private home insurance first:

If you live in a high-risk area – one that is especially vulnerable to coastal storms, wildfires or crime – and think you’ll be forced to buy home coverage from your state’s high-risk insurance pool, check first with an independent insurance agent. You may find that you can still buy insurance at a lower price in the private insurance market than from your state’s insurer of last resort.

13. Make EFT payments:

Many companies now charge $5 or more for mail payments, so having your payments automatically deducted will help shave off excess cost. Often your payments can come automatically from your credit card.

14. Maintain a good credit history:

Many insurers now check your credit and can adjust your price based on your level of “risk” as judged by your credit history, where allowed by state law. Make sure your credit is in good shape when you apply for policies.

15. Consider actual cash value vs. replacement cost:

Actual cash value coverage reimburses you for the value of your property at the time of damage or loss, minus your deductible. If you buy this option, you need to account for depreciation of your property, which may result in a lower claim payment than you expect.

Replacement cost coverage reimburses the full value of the item lost – after you purchase the new item and submit your receipts. The up-front premium is higher, but you receive full compensation for your possessions

Filed under: 20 Blogs, Blog by Kim Bregman
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Many tax breaks accompany homeownership, and noting each can add thousands of dollars to an IRS tax refund.

There are a wide variety of tax breaks available to existing homeowners and first-time homebuyers, says Mark Steber, chief tax officer, Jackson Hewitt Tax Service, Inc. Speaking with a local, knowledgeable tax preparer can help ensure taxpayers take advantage of all the home ownership-related credits and deductions for which they are eligible.

There are several tax breaks available covering home-related areas:

Mortgage Interest:

The amount of mortgage interest paid on a principal residence or second home is deductible and generally reported on Form 1098. Taxpayers can also deduct all the points paid to purchase or refinance the residence, even if the seller has paid some.

If certain requirements are met, the points may be deducted in full in the year paid. Otherwise, they may be deducted over the life of the mortgage. Seller-paid points that taxpayers claim as an itemized deduction reduce the cost basis of the home.

Home Basis:

Most of the expenses incurred when buying a home are not deductible. However, there are certain closing costs that can be added to the basis of a residence. Keeping track of the basis is important because, when selling, it’s needed to calculate any gain or loss.

Property Taxes:

Taxpayers may deduct real estate property taxes in the year paid. Taxpayers may also be able to deduct some of the taxes paid during closing. The taxes must be the responsibility of, and paid by, the taxpayer.

Energy Credits:

Taxpayers get energy credits available for making energy efficient changes to a home. For 2011, the credit is limited to 10 percent of the cost of improvements, up to a lifetime total of $500. The credit will be further limited for each category of Improvement.

Home Improvements:

Home improvements are not generally deductible on a tax return. However, the cost of improvements is added to the basis of the home and helps keep any gain, at time of sale, below the $250,000 ($500,000 if married filing jointly) exclusion amount.

Short Sales and Foreclosures:

There are also tax breaks for owners facing a foreclosure or short sale. Foreclosures and short sales are treated as both a home sale and a canceled debt. When the house is a taxpayer’s primary residence, and they have lived in and owned the home for two of the last five years, any gain up to $500,000 on the disposition is tax-exempt. In addition, the canceled debt (mortgage still owed) is excluded from taxable income for 2011, as long as it is less than $2 million and is for the taxpayer’s principal residence.

It is best to consult with your tax professional about which deductions you can claim for this year.

Filed under: Blog by Kim Bregman
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