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The past few weeks have showcased numerous signals that the real estate market is on the rise. Recent statistics point to an industry turn around, including a 15 percent rise in housing starts in September; a surge in builder confidence in October, an increase in mortgage applications, and a slew of regional market improvements across the country.

According to sales numbers reported in September, August’s existing home sales increased 3.5% vs. July’s results to a 5.03 million home annual run rate. The weakest region was the West with a 13% year over year decline in prices and the strongest region was the South with a 0.8% decrease.

Wall Street Journal & Forbes recent articles claim that It’s Time to Buy A Home

In a recent article entitled It’s Time to Buy That House, the WSJ told their subscribers:

It’s an excellent time to buy a house, either to live in for the long term or for investment income Houses aren’t the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.

MarketWatch.com (the on-line blog for WSJ) told their readers:

Now could be the best time in history to buy a home.

Feature on Forbes.com

In a report to their subscribers, Capital Economics reported that:

The previous declines in house prices and the more recent drop in mortgage rates to record lows have created an unusual situation in which the median monthly mortgage payment is more or less the same as the median rental payment.

Why is this important? Last week, Forbes explained to their readers:

If rents simply kept up with inflation at a 3.2% annual increase, a $1,500 rent payment would cost that renter nearly $900,000 over the next 30 years. The same $1,500 payment made to their mortgage would be only $540,000 (because the payments don’t increase with inflation).

They went on to explain the advantages of homeownership during retirement:

Even with a dismal 1% growth rate over 30 years, a $300,000 property would appreciate well over $100,000 giving the homeowner an additional nest egg for retirement

Filed under: Blog by Kim Bregman
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I was sent this via email and thought I would share it with you. I did try a couple of them and they worked, so you might want to print this out and keep it in your wallet or car.

There are a few things that can be done in times of grave emergencies. Your mobile phone can actually be a life saver or an emergency tool for survival.

Check out the things that you can do with it:

FIRST (Emergency)

The Emergency Number worldwide for Mobile is 112. If you find yourself out of the coverage area of your mobile network and there is an Emergency, dial 112 and the mobile will search any existing network to establish the emergency number for you, and interestingly, this number 112 can be dialed even if the keypad is locked. Try it out.

SECOND (Hidden Battery Power)

Imagine your cell battery is very low. To activate, press the keys *3370#. Your cell phone will restart with this reserve and the instrument will show a 50% increase in battery. This reserve will get charged when you charge your cell phone next time.

THIRD (How to disable a STOLEN mobile phone? )

To check your Mobile phone’s serial number, key in the following Digits on your phone:

A 15-digit code will appear on the screen. This number is unique to your handset. Write it down and keep it somewhere safe.

If your phone is stolen, you can phone your service provider and give them this code. They will then be able to block your handset so even if the thief changes the SIM card, your phone will be totally useless. You probably won’t get your phone back, but at least you know that whoever stole it can’t use/sell it either. If everybody does this, there would be no point in people stealing mobile phones.

And Finally….

FORTH (Free Directory Service for Cells)

Cell phone companies are charging us $1.00 to $1.75 or more for 411 information calls when they don’t have to. Most of us do not carry a telephone directory in our vehicle, which makes this situation even more of a problem. When you need to use the 411 information option, simply dial:

(800) FREE411 or (800) 373-3411
without incurring any charge at all. Program this into your cell phone now.
This is sponsored by McDonalds.

Filed under: Blog by Kim Bregman
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What do you do when the appraisal on the dream home you want to buy comes in below the price in the offer the seller has accepted even as much as 10 to 20 percent below?

Chances are that raising the cash for your down payment and closing cost has tapped you out. Finding thousands more to make up the difference between the appraised value and the contracted amount is out of the question.

You’re not the only buyer who has hit the low appraisal snag. This past June and July, 16 percent of real estate pros reported a cancellation in a sale, mostly due to a large number of low appraisals.

However, you don’t have to walk away. In fact, some real estate professionals and economists say that low-ball appraisals are pushing home values down and undermining the housing recovery.

You can fight back. You have options, and chances are you can find a way to make the deal work without increasing your down payment.

Appraisals are largely based on prices recently paid for comparable local properties. Over the past decade, finding comps that accurately reflect values has been a challenge as values rose quickly during the boom and fell just as fast during the bust. Discounts paid for foreclosures and short sales have created a dual price structure between normal and distress sales.

Finally, today many buyers rely on popular online valuation tools, called AVMs or automated valuation models, instead of a comparable market analysis from a real estate professional. AVMs give fast property value estimates, but they often differ greatly from appraised values because they are determined by algorithms using available local price data, not actual inspections of the property. During this time of record low home values, it’s no wonder that more and more appraisals are coming in below prices that buyers and sellers have agreed on.

It may seem ironic that buyers would want the homes they want to buy to appraise for as much or more than they are willing to pay. Remember, the purpose of the appraisal is not to help you get a better price, but to protect your lender should you default. The lender wants assurance that your home will be worth enough to recoup their investment.

Even if you have a great job, sterling credit, an adequate down payment and money in the bank, your lender will still want a conservative appraisal. In light of losses they have taken on the millions of foreclosures in recent years and the tough times many banks have had on Wall Street, lenders are taking no chances these days. They are more interested in protecting themselves from a loss than they are in giving you a loan.

Here are five steps you can take to save your dream home:

1. Get the seller to lower the price. By far, this is the easiest solution, especially if your appraisal comes in less than 10 percent of the contract price. Obviously, a lower price is a great idea for the buyer, but why would a seller go along? In July, 2011 the average home in America took about 88 days to sell. Demand is soft and time is money. Your seller, particularly if they are selling to buy another home, could be in a real bind if you are forced to back out and they have to put the house on the market again. After all, there is no guarantee that if you walk away, the seller won’t receive a low or even lower appraisal from the next buyer’s lender. Today, many buyers are offering incentives to sellers, such as payment of some or all closing costs. Lowering the price might be a cheaper option for the seller in order to get the deal done on time. Sometimes a bird in the hand is best.

2. Ask the seller to offer to carry a second mortgage for the difference. This solution doesn’t cost the seller anything but the buyer incurs greater debt. If the buyer really wants the home but cannot come up with the difference in cash, making payments or a lump sum payment at a later date to the seller is an option. After the escrow closes, sellers often retain the right to discount the second mortgage, and can sell it for less than face value to an investor.

3. Do your research and dispute the appraisal. Is the contract sales price a fair assessment of the property value based on a well-prepared comparable market analysis (CMA) from your real estate agent as opposed to an online AVM? Was the appraisal done by an appraisal management company that may have used a less-than-expert or out-of-town appraiser?

Disputing the appraisal may sound a little aggressive but you might be the victim of a poorly prepared appraisal. Do some research first and go to war if you have the ammunition.

You have the right to get a copy of the appraisal from your lender and to find out who did it. What is the appraiser’s reputation? Have any complaints been filed with your state appraisal licensing agency? Where is the appraiser based? Did they perform an appraisal in a housing market that they may not know well? Did the appraiser have adequate information about the subject property? If your appraisal was conducted by an out-of-town appraiser unfamiliar with your market, you have every right to demand a new appraisal.

What comparable did they use? Ask your agent and the seller’s agent to put together a list of recent comparable sales that justify the agreed-to sales price. Submit that list to the underwriter and ask for a review of the appraisal. Also, ask the agents to call the listing agents of pending sales to try to find out the actual sales price of those properties. Listing agents do not have to disclose the sales price, but many are happy to help because they could find themselves in the same situation. Pending sales are more current and are not closed, so the original appraiser would not have access to them.

The key to a successful dispute is data. You will need as much data you can get to back up your dispute.

4. Ask the lender for a new appraisal. Should you find that you have a good case that the appraisal wasn’t fair or accurate, ask your lender for a new appraisal, which you may be charged for.

Another strategy is to get two additional, unbiased appraisals and use the average of all three to arrive at a fair price. This is a risky strategy, in light of the fact that another appraisal might not come in higher than your first; it might even be lower if values have fallen.

Depending on how convincing your argument is, your lender has the ability to override the appraisal estimate, which is unlikely, or to order a new appraisal, which is more likely. If a new appraisal is ordered, talk with your agent about somehow splitting the cost with the seller. Perhaps the listing agent and selling agent will split the fee so the buyer does not have to incur additional costs associated with the transaction. Appraisals cost around $400 or so.

5. Get your own, independent appraisal. If you order your own appraisal and your loan is an FHA loan, ask the lender for a list of approved appraisers. Usually the bank will review your appraisal and ask the previous appraiser if they agree or disagree with the newly submitted one.

If the first appraiser disputes your appraisal, the bank may request a third appraisal done by another appraiser, or they may just reject your appraisal.

However, if the first appraiser agrees with the disputes you present, they may adjust their original appraisal and you may get a better price.

If these tactics fail and you cannot make up the shortfall in the appraised value, you may find yourself moving on. If so, be sure that you were protected by a contingency clause in the sales contract, stating that the transaction can be terminated if the home doesn’t appraise at, or above, the sales price.

Filed under: 20 Blogs, Blog by Kim Bregman
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Below is a list of some of the most common issues that arise when applying for a mortgage:

Taxes & Insurance – make sure to find out what the lender is using for taxes, insurance, and association dues when looking at properties to ensure accuracy. If they come in higher than what is being used the loan can be denied.

Seller Seasoning – Some lenders require that the Seller own the property for at least 90 days unless it was a bank disposition company. On an FHA loan if the property is being sold between 91-180 days for more than 100% of what the seller acquired it for a 2nd appraisal is required.

Condos – if the building’s delinquencies are over 15%, there is pending litigation, one investor owns more than 10% of the units, there is not enough Fidelity Bond Coverage, not enough in reserves, over 50% of the units are investment properties, etc., it may make the condo ineligible for financing.

PUDs – if the property is located in a PUD ( planned urban development) lenders may require a copy of the master insurance policy with $1 million in coverage.

Kitchens – most lenders want the kitchen to contain kitchen cabinets and a sink. The underwriter will look to see if the borrower has sufficient assets to purchase the appliances needed and if they don’t the underwriter may require them to exist in advance of closing.

Deposits – Lenders need to prove where any and all deposits came from so if your deposit is presented in cash and you cannot document where it came from…don’t use it. For the most part if it is  not from your compensation, a gift from a relative, or a transfer from another account you have, don’t apply for a loan.

Declining Income – Lenders tend to income average commissions, overtime pay, bonuses, and self-employment income over 2-3 years. However if your most recent tax return shows declining income from the previous year then the lender will qualify you based on the lesser of the two.Â

Paystubs – if there are payroll deductions that are not reflected on the credit report it could create another reduction in income.

Credit – don’t pay off, pay down, take on new debt, or do anything with your credit unless speaking first with your mortgage professional.

Lastly, the 4 C’s are always needed – Credit, Cash (Assets), Capacity (Income, & Collateral (the property). You cannot have one without the other. The borrower must qualify with the first 3 C’s and the property must qualify too.

Filed under: Blog by Kim Bregman
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There is good news for military personnel who own Florida real estate. Voters in the sunshine state approved a constitutional amendment during the November elections that will allow service members to save on their property taxes.

According to a Jacksonville.com, article, service members deployed outside the U.S. who are part of Operation Enduring Freedom, Operation Iraqi Freedom or Operation New Dawn may take advantage of the tax exemption. In order to receive the benefit, military members must file with their county’s property appraiser. It is reported that approximately 150 Duval County residents have applied for the exemption as of mid-June.

The amount saved is correlated with the amount of time the service member spent deployed the previous year; the longer one’s deployment was, the greater their exemption will be. For example, service members who served overseas for six months during 2010 will save 50 percent on his or her tax bill. The exemption is also in addition to the homestead exemption available to all Florida residents.

The law stipulates that the balance of the money saved is applied to the next year’s bill, so residents will see the credit applied to their 2011 property taxes.

Filed under: Blog by Kim Bregman
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Below is a list of some of the most common issues that occur when applying for a mortgage:

Taxes & Insurance – make sure to find out what the mortgage person is using for taxes, insurance, and association dues when looking at properties because this can cause a loan to be denied if they are higher.

Seller Seasoning – If the seller hasn’t owned the property for at least 90 days some lenders will not allow that on FHA or Conventional loans unless it was a bank disposition company. Also, on an FHA loan if the property is being sold between 91-180 days for more than 100% of what the seller acquired it for a 2nd appraisal is required.

Condos – if the delinquencies are over 15%, there is litigation, one investor owning more than 10% of the units, not enough Fidelity Bond Coverage, not enough in reserves, over 50% are investment properties, etc. it could make the condo ineligible for financing.

Attached PUDs (Attached Housing) – many banks now require a questionnaire on them so we may see some issues that condos have happen on a PUD when getting a Conventional mortgage.

PUDs – if the property is located in a PUD we will need a copy of the master insurance policy with $1 million in coverage.

Kitchens – most banks want the kitchen to contain kitchen cabinets and a sink but that’ s not every bank. Also, the underwriter will look to see if the borrower has sufficient assets to purchase the appliances needed and if they don’t may require them in advance of closing.

Unpermitted Additions – it is best to convert them back to their original use however FHA does state that “An unpermitted addition or modification to the subject property should comply with local building code and zoning. FHA does not require enforcement or verification of compliance with local building codes but holds the DE Lender and Underwriter responsible for making sure the property is safe, secure and structurally sound in accordance with HUD’s Minimum Property Requirements.” Make sure to check with your lender

Bank Overlays – each bank has their own rules and during the loan process something may arise where it no longer meets their guidelines. The benefit of a Mortgage Bank is that their underwriter can underwrite it to another banks guidelines and approve the deal instead of denying it and the borrower having to start all over again.

Deposits – we need to prove where any and all deposits came from so if it’s cash or you can’t document it don’t deposit it. For the most part if it’s not from your pay, a gift from a relative, or a transfer from another account you have, don’t do it.

Rental Income From Current Primary – if a borrower is vacating their current primary, buying a new on, and needs to use the rental income from their current primary they need to document 25% equity with an FHA loan and 30% with a Conventional loan. There are other requirements that go along with that such as reserves needed.

Unreimbursed Employer Expenses – these can be found on Schedule A of your tax return and are brought over from Form 2106. If a borrower has these we have to deduct that amount from their income. There is only one way to find out about this type of expense, review the tax returns from day 1.

Business Loss – many borrowers will have a side business in addition to their full time job and due to trying to reduce their taxable income they show a loss. There is only one way to find out about this type of expense, review the tax returns from day 1.

Depreciation/Amortization – if you don’t get a copy of a borrower’s corporate tax returns since Fannie Mae technically only calls for the personal returns in most instances it could limit the borrower on the amount they can borrow since this income can be added back in, increasing their income.

Declining Income – most times with commission, overtime, bonus, and self-employed income it will be income average however if the most recent tax return is less than the previous year we no longer average it and go off of the lesser of the 2. Make sure to make as much money as you can during your loan.

Paystubs – if there are payroll deductions that were not on the credit report it could create another debt that no one was aware of.

Credit – don’t pay off, pay down, take on new debt, or do anything with your credit unless speaking with your mortgage professional.

Lastly, the 4 C’s are always needed – Credit, Cash (Assets), Capacity (Income, & Collateral (the property). You cannot have one without the other. The borrower must qualify with the first 3 C’s and the property must qualify too.

Filed under: Blog by Kim Bregman
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Most people don’t give much thought to their homeowner’s insurance policy unless a tree punches a hole in their roof or they come home from vacation to find that the basement has been flooded.

While 96 percent of homeowners have insurance, 64 percent of homes are undervalued for insurance purposes, according to a 2008 study by Marshall & Swift, a research firm. You should review your policy periodically to make sure you could recover from a catastrophe (tornado, flood, hurricane, earthquake) and that your policy covers these types of natural disasters. Typical homeowners coverage falls into three categories:

Replacement Cost:

This covers the cost of repairing or replacing your home, based on a set dollar limit. The problem is that it may not reflect increases in the cost of construction and labor since you took out your policy. If a disaster strikes your entire community, as was the case in Joplin, Missouri, Â higher demand could push up the cost of building materials and labor, says Amy Danise, managing editor of Insure.com.

Extended Replacement Cost:

In this case, the insurer agrees to pay a certain percentage above the replacement cost to account for inflation, Danise says. For example, if your replacement cost is $250,000, extended replacement cost coverage would pay up to 120 percent of that, or $300,000. Even with this adjustment, you could come up short, particularly if it has been a long time since you updated your coverage. There are several online tools you can use to calculate the current replacement cost of your home. You can get an estimate at AccuCoverage.com for $7.95.

Guaranteed Replacement Cost:

This coverage will pay the total cost of replacing your home, no matter how much prices have increased since you took out the policy, Danise says. This type of coverage is more expensive and increasingly difficult to obtain because insurers want to control their costs, she says.

In addition to these levels of coverage, many policies include an inflation guard provision that automatically adjusts your coverage limit when you renew your policy to reflect increases in construction costs. Some policies include this as part of standard coverage; for others, it costs extra, says Jeanne Salvatore, spokeswoman for the Insurance Information Institute.

Replacing Your Belongings

Most homeowners policies also cover lost or damaged possessions. Typical coverage ranges from 50 percent to 70 percent of the amount of insurance you have on the structure of your home. For example, if your policy provides up to $250,000 to rebuild your home, you could get an additional $125,000 to $175,000 to replace your belongings.

Again, though, there are different levels of coverage. You can insure belongings for their actual cash value, or the replacement cost. Actual cash value means what it says: If you lose a 10-year-old TV, your payment would be based on the value of a 10-year-old TV. Replacement cost coverage would get you enough money to buy a new TV.

Replacement coverage costs about 10 percent more, but it’s worth it, Salvatore says, because most household items depreciate quickly.

All homeowners should do an inventory of their belongings to figure out how much insurance they need and make it easier to file a claim, Salvatore says. Photos and video are highly recommended since it is difficult for you to recall everything you own once it is destroyed. A photo record is also a valuable tool to demonstrate to the insurance company that you actually owned what you are claiming without having to produce receipts. Store a record of your inventory on a secure website, in a safe deposit box or with a relative or friend outside of your general geographic area.

Filed under: Blog by Kim Bregman
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This second wave of foreclosures combined with the fact that many people’s 401(k)s have bounced back with the stock market, and most economists agree that the bottom of the recession has hit means that competition for these foreclosed homes is, in many cases, fierce. There’s a renewed, final dash to get in on what some perceive as the best real-estate deals they’ll get in awhile. But how do you know which foreclosure is a good buy, and which to walk by? Here are some tips to help guide you through the selection process:

Get it checked out by a pro. Banks sell properties in a strictly as is condition. If you look at a foreclosure and it needs substantial work to make it livable, don’t expect that the bank will make these repairs prior to closing. Anything short of an environmental or health hazard will ultimately be the buyer’s responsibility. Perhaps the most essential point: Never go by looks alone as an indicator of whether a foreclosure is a good buy. A $2 million mansion may look gorgeous on the surface but might have toxic mold hiding beneath, which will require extremely pricey, lengthy repairs. On the other hand, a property may look dilapidated but may have excellent bones and can be repaired at reasonable cost. A certified professional home inspector must be contracted to check out a property at the BUYER’S EXPENSE before finalizing a contract. If the bank will not accept a contract contingent on inspection walk away! A buyer needs to determine what repairs need to be done so that you can truly assess whether the home is worth the investment. Use an Exclusive Buyer Broker’s recommendations on which firms to use for inspection. Don’t rely solely on previous inspections that may have been ordered by the lender, even if relatively recent a vacant home can deteriorate quite a bit in a short time, especially in an area with climate extremes.

Don’t abandon common real-estate logic. “Real Estate Disclosures” – There aren’t any! The bank has never seen or lived in the property and has zero knowledge of the history, prior or existing defects, or the surrounding areas. Typically a Sellers Disclosure is obtained by a buyer prior to submitting an offer. Don’t expect any from a bank. Too many people, when shopping for a foreclosure, abandon their real-estate sense and focus on price alone. Remember, things like a sub-par location, poor light, terrible view, below-average school district, high local crime rate and other negatives might be part of the reason why a home went into foreclosure in the first place. Don’t assume that financial problems of the previous owner are the main reason for every foreclosure. The last owner may have bought the home ignoring some of the aforementioned problems, and seen value sink because of them. Don’t ignore those problems, especially if you are considering selling in the next 5 to 10 years. Know how long the home has been empty; the longer it has, the more of a chance this isn’t a good deal. Also, if there are plenty of other foreclosures nearby, that may also be a bad sign of the financial health of the community and you cannot predict who your neighbors will be in the future.

Use Professionals to Represent You!
An experienced Exclusive Buyer Broker and real estate attorney are key to protecting yourself when considering buyer a foreclosure property from a lender. “Contract Terms” will change – Your initial offer may be accepted verbally however, soon thereafter you will receive a whole new set of documents & addendum’s to review and sign ASAP if you expect the contract to move forward. You’ll find that many of the terms, times and conditions are very different than what is in a standard contract. The only thing that is accepted is “price”. All other conditions will be incorporated in the bank or investors contract and they tend not to negotiate terms. You will likely be required to work with the banks chosen escrow and Title Insurance company. They will rush you for your deposits and afterward take their time on processing the required signatures and meeting deadlines. There may be liens, open permits, or no permits on work previously done on the home. All of these need to be thoroughly investigated to ensure you have a marketable property and clear title.

Skip or, at least, very strongly re-think THE FLIP. House-flipping, i.e., buying at bargain-basement pricing, updating, then selling for much higher is very 2006… and hasn’t exactly been hot since. Even if a house looks like an incredible flipping opportunity, beware of this temptation unless you are a pro, with incredible contractor connections. Avoid the temptation to make fast money unless you think it through and talk to their real-estate professional (Exclusive Buyer Agent), a home inspector, and contractors. Whatever you think you will spend to rehab a home (double or triple the estimate for unforeseen issues and cost overrides.)

Go over the budget. A fixer-upper means nothing if you can’t afford to fix it up and that’s especially true for foreclosures, where those fixes can cost a pretty penny. Before buying, make sure you have an ample budget to do all the repairs needed, after truly taking stock (with the help of a home inspector) of what those needs are. Make sure they have at least half of that money in cash, and preferably all of it. Loans are very difficult to get today on making the initial purchase and home equity loans are almost non-existent. If you do not have the cash to do the repairs reconsider buying a foreclosure.

Do your homework on lenders. Fewer people are getting financing for home-buying than they did before the recession, but good financing is luckily still available to many qualified buyers. Just make sure, as with regular home buying, that you enlist a reputable lender. A good lender will take the time to do a review of your financial life and long- and short-term goals. Also ask about hidden costs, rate locks, prepayment penalties, origination fees and whether underwriting is done in-house. Make sure everything is explained to you clearly, and review all of the answers with a real-estate attorney, who will also be able to check out the lender’s overall reputation. These are things that many people do during the standard home-buying process, but might gloss over when lured by a low foreclosure price tag.

See it in person. Finally, never to buy a house without going in person to see it.

Filed under: Blog by Kim Bregman
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While buying a home is a huge financial expenditure, homeowners need to keep in mind that the spending doesn’t stop once the home is purchased. Whether you are moving into a new or old home, homeowners need to be aware of the ongoing maintenance that any home requires. Dan Steward

First, buyers should understand the 1% rule. This rule postulates that normal maintenance on a home is about 1% of the value of the home per year. For example, a $250,000 home would require $2,500 per year to maintain. This would be enough to replace the roof covering and then, a few years later, to replace a failed hot water tank and then a few years more until a new central air system is required.

Then there is the 3% rule. Some experts say that home buyers should plan on spending 3% of the value of the home in the first year of ownership. This is because new homeowners will most likely have to buy drapes, blinds, a washer and dryer, a stove, maybe even a new roof covering. Also, new homeowners often customize the environment to their taste, so they need to budget for repairs, replacements and maintenance.

In addition, most home components have fairly predictable life cycles. For example, the typical life cycle of kitchen appliances is 10 to 15years. One way to know the extent of the maintenance needed and the costs to repair and/or replace items is to have a home inspection conducted. Home inspectors are required to let the buyer know if a component is significantly deficient or if it is near the end of its life cycle (service life), and a reputable home inspection company may offer up-to-date repair-cost guides to help clients with their planning.

Home inspectors work with Realtors and buyers to help them understand the issues that are found in the home, regardless of age, offering the right perspective and objective information. Home buyers need to understand that it’s normal for items in a home to wear out. This should be regarded as normal wear and tear and not necessarily a defect.

A good home inspection determines the current condition of the house, offering a report of all the systems and components in need of maintenance, service, repair or replacement.

A good home inspection provides objective information to help the buyer make an informed decision. Knowing what items need to be budgeted for repair or replacement will help home buyers plan or negotiate better and not be stuck with unexpected costs of hundreds, or even thousands of dollars in the long run. Also, fixing these items will make a marked improvement on the performance of a home and minimize issues that could affect its future integrity and value.

Filed under: Blog by Kim Bregman
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Buying and owning a home is a big expense — besides the purchase price, there are the property taxes, heating and cooling costs, maintenance expenses…the list goes on. But the good news is that there are tax savings available to homeowners. Read on to find out about some of the top tax deductions and credits available to those who own a home.

Mortgage interest and points

Most homeowners can deduct the interest paid on their mortgage as an itemized deduction on Internal Revenue Service form 1040, Schedule A. (Deductions reduce your adjusted gross income when computing your taxable income.) And because mortgage interest makes up much of homeowners’ monthly mortgage payments, that’s a big tax break.

However, if your mortgage is more than $1 million, or your home equity loan is greater than $100,000 you may be out of luck.

The amount of your first mortgage may limit how much you can deduct for mortgage interest on your home equity loan, especially if the debt on your home is greater than your property’s value. Read the Internal Revenue Service’s Publication 936, Home Mortgage Interest Deduction for complete requirements and information.

If you itemize your deductions on Internal Revenue Service form 1040, Schedule A, you also may be able to deduct your mortgage points in full the year they were paid. If you are refinancing, you can, based on the number of years of the loan, deduct some of the points. Read the IRS’s Tax Topic 504 – Home Mortgage Points to get all the requirements and details.

Real estate taxes

As a homeowner, you no doubt hate paying property taxes. But the good news is that real estate taxes can be claimed as an itemized deduction on Internal Revenue Service Form 1040, Schedule A. To find out how much real estate tax you’ve paid, check your escrow account through your lender.

For homeowners who don’t have enough deductions to itemize, they can now increase their standard deduction by adding some of their property taxes to their standard amount, under a new law. Single homeowners can increase their standard deduction by as much $500 (or $1,000 for those married filing jointly). This new law will be in effect through the 2009 tax year.

Moving expenses

If you had a work-related move (say, if you landed a new job or if your employer relocated you to a new location), you may be able to deduct your moving expenses. (Use IRS Form 3903 to calculate how much you can deduct and note those expenses on Form 1040.)

To qualify for the deduction, your new job must be at least 50 miles further from your old home than your old job was. Also, you need to have worked full-time for your employer at least 39 weeks in the first 12 months after your move to your new home. Read Topic 455 — Moving Expenses from the IRS for more information.

Capital gains tax exclusion

Imagine being able to sell your home, pocket the profits and not have to pay Uncle Sam a dime in taxes. That’s the tax benefit available to homeowners as long as they’ve owned their home for at least five years and lived in it at least two of the five years before selling it.

Single homeowners can realize up to $250,000 tax-free in sales gain from the sale of a home, while married joint filers can see up to $500,000 tax-free in gains. Read Topic 701, “Sale of Your Home,” for more information.

Filed under: Blog by Kim Bregman
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