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Breathe Easy
The benefits of regularly changing the heating and air-conditioning filters are obvious to homeowners; the real challenge is creating a system to make sure it gets done. A reasonable schedule would be to replace it with a new one-inch pleated filter every 60-90 days. Households with shedding pets should consider replacing them every month. Some people change their filters every month when they pay their electric bills. A simple system would be to set a recurring appointment on your calendar like Outlook or Google. Filters trap dust, mold and bacteria which can directly affect the air quality and play havoc with your allergies. When a filter is dirty, it prevents proper airflow and allows dust, dirt and allergens to blow through your home. Changing your filter regularly helps to avoid maintenance, improves equipment life and produces increased energy savings. When shopping for filters, it’s understandable to look for the best bargain but the cheapest price may not be the best choice. When purchasing, recognize that HEPA-rated and HEPA-type filters are not the same thing. HEPA stands for high-efficiency particulate air. A HEPA filter meets or exceeds standards for efficiency set by the U.S. Department of Energy. Most HVAC contractors recommend HEPA filters. Some filters need to be changed monthly and other types have manufacturer recommendations of every three months. An alternative to disposable filters are the permanent, washable types. These will cost more initially but because you can clean them and re-use them, eventually, you’ll recapture the cost and realize savings.
As your real estate professional, I have the training and experience to provide solutions to make homes more marketable and help structure favorable transactions. Please forward this article to your friends or family who could benefit from it. Alan Smith RE/MAX PROFESSIONALS alanjsmith@remax.net |
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Whose Commission Is It?
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Whose Commission Is It?
One of the most common reasons buyers want to deal directly with the seller is because they feel they can save the commission. It’s a valid consideration but interestingly, it’s the same reason the seller isn’t employing an agent. Both parties cannot save the commission. The buyer feels they have earned it because they’ve had to find the home, determine its value and negotiate with the seller. They had to arrange their own financing, title and inspections. The seller equally feels that they have earned the commission because they too have had to research value, financing and title work. They have incurred all of the marketing expenses and have invested hours upon hours to be available to show the property, hold open houses and answer inquiries. There is certainly value in all of the things that buyers and sellers are willing to do. However, only one person can save the commission assuming the buyer and seller can reach a written agreement. The Profile of Home Buyers and Sellers survey reports that 14% of sales were For-Sale-by-Owners in 2003 and 2004 compared to just 9% in 2012. The trend shows that agent-assisted sales rose to 88% in 2012 from 82% in 2004. The three most difficult tasks identified by for-sale-by-owners is attracting potential buyers, getting the price right and understanding and performing the paperwork. When surveyed, sellers most value the home selling in an anticipated time frame and for an expected amount. Experienced, third-party advocates helping buyers and sellers is a valuable contribution to the transaction which may determine whose commission it is. As your real estate professional, I have the training and experience to provide solutions to make homes more marketable and help structure favorable transactions. Please forward this article to your friends or family who could benefit from it. Alan Smith RE/MAX PROFESSIONALS alanjsmith@remax.net
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Buying a Home in a Seller’s Market
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“Please take our offer…”
It’s interesting that the housing climate has changed so quickly. Some buyers, who think they’re still in the driver’s seat, find the market is now going up and they’re losing the home that they really want. Multiple offers are increasingly more common and buyers are frustrated because even full-price offers don’t guarantee that they’re going to get the home. In an effort to personify a contract offer and add emotional appeal, buyers are including a personal letter to the seller. In most cases, the seller wants to maximize the net proceeds from the sale by getting the highest price with the least expenses and an assurance that the home will actually close on time without surprises. When a seller is faced with multiple offers that may be close to the same net, an emotional appeal might make the difference in them accepting a particular offer. That’s where the letter comes in play. It should be a relatively short letter that gets to the point. The tone of the letter should be humble while positive and definitely, shouldn’t mention that you may have lost other homes due to multiple offers.
After writing the letter and eliminating the non-essential parts, read the letter a few times to your spouse or friend. Polish the verbiage and check the spelling and grammar. If your handwriting isn’t attractive and easy to read, print it. Use nice paper to appeal to the tactile senses. Attach the letter to the offer so they’re considered simultaneously. Being pre-approved with good credit, adequate financial resources, good employment, sufficient earnest money and a reasonable offer with minimum contingencies will favorably position you. A personal letter might be the deciding factor in your favor. As your real estate professional, I have the training and experience to provide solutions to make homes more marketable and help structure favorable transactions. Please forward this article to your friends or family who could benefit from it. Alan Smith RE/MAX PROFESSIONALS alanjsmith@remax.net |
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Cut Refinancing Expenses
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Cut Refinancing Expenses
Every single day, homeowners who are excited about lowering their rate have a tendency to ignore the refinancing costs because they’re being rolled back into the new mortgage. If the payment is lower than what they’re currently paying and there’s no money out of pocket, it seems like a good deal. Refinancing your home because a lower rate is available is one thing but the closing costs associated with that new loan could add several thousand dollars to your mortgage balance. By following some of the suggestions listed below, you may be able to reduce the expense to refinance.
A lender must provide you a list of the fees involved with making the loan within 3 days of making a loan application in the form of a Good Faith Estimate. Every dollar counts and they belong to you. As your real estate professional, I have the training and experience to provide solutions to make homes more marketable and help structure favorable transactions. Please forward this article to your friends or family who could benefit from it. Alan Smith RE/MAX PROFESSIONALS alanjsmith@remax.net
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Shifting Debt to Tax Deductible
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Shifting Debt to Tax Deductible
The Mortgage Interest Deduction is available to homeowners for up to $1,000,000 of acquisition debt on the combination of their first and second home. They can also deduct interest on up to an additional $100,000 of Home Equity debt. While Acquisition Debt is used to buy, build or improve a principal residence, the Home Equity Debt can be used for any purpose. It can be used for educational or medical expenses, to purchase a personal car or boat, consolidate debts or pay off credit cards. A homeowner with $15,000 of credit card debt at 19% and sufficient equity in their home could replace it with a home equity loan at much lower interest rate. Not only would the interest rate on the home equity loan be about 1/3 of the rate paid on the credit card, it’s would now be tax deductible. If the taxpayer was in the 28% bracket, the net interest on a 6.5% loan would be 4.68% after tax benefits are considered. Shifting personal debt to Home Equity debt can result in an interest deduction and probably, a lower interest rate. For more information see IRS Publication 936 page 10 and consult your tax professional. As your real estate professional, I have the training and experience to provide solutions to make homes more marketable and help structure favorable transactions. Please forward this article to your friends or family who could benefit from it. Alan Smith RE/MAX PROFESSIONALS alanjsmith@remax.net |
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When to Sell the Temporary Rental
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When to Sell the Temporary Rental
Some homeowners, who were not able to sell during the recession, chose to rent their homes instead. In some cases, they didn’t need to sell their home at the depressed prices and opted to rent it until the market recovered. It’s a valid strategy but there are time restrictions that could have serious tax implications for some homeowners. The section 121 exclusion for gain in a principal residence requires that the home is owned and used as a main home for at least two years during the five year period ending on the date of the sale. This allows a homeowner to rent their home for up to three years and still have some part of the exclusion available. The sale of a home with a $200,000 gain that qualifies as a principal residence would result in no tax being paid by the owner. Comparably, a rental property with the same gain could have a $30,000 or higher tax liability depending on the length of ownership and tax brackets of the investor. The housing market has dramatically improved in the last year. If you have a gain in a home that has been your principal residence and it has been rented less than three years, you might want to consider selling it while you qualify for the exclusion. If you are considering a sale on your principal residence that has been rented, consult with your tax professional for advice on your specific situation. For additional information, see IRS Publication 523. As your real estate professional, I have the training and experience to provide solutions to make homes more marketable and help structure favorable transactions. Please forward this article to your friends or family who could benefit from it. Alan Smith
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Boomerang Buyers
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Boomerang Buyers
It’s estimated that 10% of the homes sold in 2013 will be to buyers who lost a home in the past five years. Approximately 500,000 buyers who may have thought they wouldn’t own a home anytime in the near future will be homeowners again. It’s estimated that several million of these previous homeowners will purchase again in the next eight years. This kind of activity will contribute significantly to the housing recovery. Some people thought that the housing crisis would cause a shift in values placed on owning a home but the boomerang buyers definitely don’t support that theory. Having a home of your own, where you can raise your family, share with your friends and feel safe and secure is still part of the American Dream. The rising rents, increasing prices and low, low mortgage rates are also influencing buyers into the market. In many cases, it is cheaper to own than to rent. All new buyers, including those who have experienced foreclosures or bankruptcies, must have good credit history and the ability to repay the loan. It just may not take as long to reestablish the credit as some would-be buyers might have thought. Read more about Bidding Wars This Spring, Spring’s Wild Card and Boomerang Buyers. As your real estate professional, I have the training and experience to provide solutions to make homes more marketable and help structure favorable transactions. Please forward this article to your friends or family who could benefit from it. Alan Smith RE/MAX PROFESSIONALS alanjsmith@remax.net
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Bunch your Taxes and Save
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Bunch Your Taxes and Save
One of the drawbacks to low mortgage rates is that the total interest and property taxes paid for the year may be lower than the standard deduction. A little planning might be able to help you at least every other year. Most homeowners know they can deduct their qualified mortgage interest and property taxes on their Schedule A of their 1040 tax return or to take the standard deduction if it is greater. See Your Deduction…Your Choice. Deductions are taken in the year that they’re actually paid. If a homeowner paid their 2012 property taxes in 2013, they would not be deductible on their 2012 tax return. Then, if the 2013 property taxes were paid in 2013, both the 2012 and 2013 taxes could be deducted on the 2013 Schedule A. By delaying the payment of the 2012 taxes until 2013, the combination of the 2012 and 2013 taxes might exceed the 2013 standard deduction and provide a higher deduction. Other Schedule A expenses such as charitable contributions and medical expenses may be bunched also. From a practical standpoint, since most mortgage payments are due monthly, the mortgage interest would not be bunched. This information should be discussed with your tax advisor to see how it might apply to your individual situation. The key is you must be aware of the strategy early to be able to use it. As your real estate professional, I have the training and experience to provide solutions to make homes more marketable and help structure favorable transactions. Please forward this article to your friends or family who could benefit from it. Alan Smith
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Eliminate Mortgage Insurance
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Eliminate the Mortgage Insurance
Pre-paying your mortgage can save thousands in interest and build equity in your home. As cheap as mortgage rates are currently, they’re higher than you can earn on your savings. If you don’t need the money any time soon, pre-paying the mortgage can be the better investment. If you have a FHA loan, pre-paying the mortgage can also benefit you by eliminating the annual mortgage insurance premium early. For example, if a person bought a home for $175,000 with a 3.5% down payment on a 4% FHA loan, the monthly mortgage insurance would be $178.99. It would take 116 months or over 9.5 years to reduce the principal enough to cancel the MIP. If the borrower would make additional principal contributions of $285.32 per month, the MIP would not be required after five years. Beginning June 3, 2013, mortgage insurance on FHA loans will be required for the life of the mortgage. The elimination of MIP would lower payments or a buyer could continue making the higher payments to reduce the principal and retire the loan sooner. FHA mortgages with terms longer than 15 years, the MIP can be cancelled when the loan-to-value reaches 78% after a minimum of five years. With normal amortization, that would take about 10-12 years. Another alternative to eliminate the MIP is to refinance the home with a conventional loan. If the loan-to-value is less than 80%, the MIP would no longer be required and a lower interest rate may be available. As your real estate professional, I have the training and experience to provide solutions to make homes more marketable and help structure favorable transactions. Please forward this article to your friends or family who could benefit from it. Alan Smith
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Better Homeowners
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Maintaining Comfort
Even with the attention that perfoming this list will provide, it is recommended that you have your units serviced annually by a licensed contractor. Furnaces can be inspected for carbon monoxide leaks and preventative maintenance may help avoid costly repairs. Click Here if you’d like a recommendation. As your real estate professional, I have the training and experience to provide solutions to make homes more marketable and help structure favorable transactions. Please forward this article to your friends or family who could benefit from it. Alan Smith |
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