Tax Benefits and Deductions Avalaible to U.S. Homeowners

This article is current for the 2014 tax year and should not be considered tax advice. For tax-related questions or mortgage strategy related to your individual tax liability, speak with a licensed accountant.


Tax season may feel like a burden for some Americans, but homeowners have plenty of advantages when it comes to claiming deductions.


The U.S. tax code is designed to offer incentives to homeowners, and by taking advantage of these breaks, 1040-filing citizens can maximize their financial investment in homeownership.
Whether a home is financed via a mortgage, or paid-in-full with cash, there are a multitude of tax-savings opportunities associated with owning a home. Of course, every homeowner's financial situation is different, so please consult with a tax professional regarding your individual tax liability.

Tax Deduction : Mortgage Interest Paid

Mortgage interest paid to a lender is tax-deductible and, for some homeowners, interest paid ca provide a large tax break -- especially in the early years of a home loan. This is because the standard mortgage amortization schedule is front loaded with mortgage interest.


At today's mortgage rates, annual interest payments on a 30-year loan term exceed annual principal payments until loan's 10th year.


Mortgage interest tax deductions are extended to second mortgages, too.


Interest paid on refinances, home equity loans (HELOAN) and home equity lines of credit (HELOC) are tax-deductible as well. However, restrictions apply on homeowners who raise their mortgage debt beyond their property's fair market value.


The Internal Revenue Service (IRS) imposes a $1 million loan size cap. Loans for more than one million dollars are exempt from this tax deduction.

Tax Deduction : Discount Points

Mortgage tax deductions can extend beyond your monthly payment. Discount points paid in connection with a home purchase or a refinance are often tax deductible too.


A discount point is a one-time, at-closing fee which gets a borrower access to mortgage rates below current "market rates".


As an example, if the current market mortgage rate is 5 percent, paying one discount point may get you access to a mortgage rate of 4.75%. The IRS treats discount points as "prepaid mortgage interest" which, in turn, can render them tax-deductible.


When discount points are paid in conjunction with a purchase, the cost may be deducted in full in the year in which they were paid, dollar-for-dollar. With respect to a refinance, discount points are not fully tax-deductible in the year in which they are paid. With a refinance, discount points are typically amortized over the life of the loan.The cost of one discount point on a 30-year loan can be deducted at 1/30 of its value per tax-calendar year.

Other Deductions : Property Taxes, Renovations, Home Office

Real Estate Taxes

Homeowners typically pay real estate taxes to local and state entities. These property taxes can often be deducted in the year in which they are paid. If your mortgage lender currently escrows your taxes and insurance, it will send an annual statement to you which you can file with your complete federal tax returns. Your accountant can help determine the payment's tax deductibility.

Home Improvements

For tax-paying homeowners, certain types of home improvement projects are tax-deductible. Home improvements made for medical reasons, for example, can be tax-deductible. If you are making home renovations to accommodate a chronically ill or disabled person, and the renovations do not add to the overall value of the home, the project costs are typically 100% tax deductible. Repairs and improvements made for aesthetic purposes are not tax-deductible.

Home Offices

Homeowners who work from their residence can typically deduct the expenses of maintaining a qualified home office. Allowable tax deductions for a home office include renovations to the room(s), telephone lines, and the cost of heat and electric. Before claiming a home office on your returns, though, be sure to speak with an accountant to understand the benefits and liabilities. There are caveats to claiming home office tax deductions on your tax returns, and the rules can be tricky.

Homeowners : Budget For Your Tax Breaks

Tax deductions will reduce your annual costs of homeownership and, for some homeowners, mortgage interest tax deductions will shift the answer to the "Should I Rent or Should I Buy?" question.


Tax law changes frequently, though. Consider building your housing budget with the help of a tax preparer. Get a feel for how much home you can afford before and after accounting for your various homeowner tax breaks. And, as you build your budget, use legitimate mortgage rates in your calculations.


Article Credit to Dan Green

Reverse Mortgage Basics

Market Information

Volatility yesterday after the FOMC statement kind of said rates will go higher, also kind of said the Fed will be “patient”, the Yellen said the FOMC will not increase rates in the4 next two FOMC meetings. The policy statement had something for everyone with the usual confusion left to markets to decide what the Fed will do and when. The reaction yesterday afternoon generated a lot of volatility in stock markets and in the MBS markets while treasures were a comparatively subdued but rates did increase. The DJIA finally ended up 288.00 after wide trading ranges as investors tried to handicap the Fed’s statement. This morning the US stock indexes at 8:00 were trading up 250 points on the DJIA and the other indexes also strong.

 

Weekly jobless claims at 8:30 were a little better than consensus, claims declined 6K to 289K, back to levels we had in early November. The consensus was for claims to be unchanged on the week. The 4 week average decreased to 298.750 from 299,500. In the last six weeks claims have held rather steady with not much change from week to week and mostly under 300K. No direct reaction to the slightly better report as markets were already well extended from yesterday’s closes. Claims were the lowest in six weeks.

 

Putin held a press conference to reassure Russians on Thursday that the country’s economic troubles will pass in no more than two years, saying at his annual news conference that the government and central bank are responding appropriately, though a bit belatedly. Putin blamed the US and the EU and accused the west of trying to disarm Russia and said the current economic troubles “are payment for our independence, our sovereignty.” The ruble has collapsed this week. Sanctions and the fall of crude oil is taking the Russian economy to its knees; it started with the Ukraine invasion and has become worse by the day.

 

The DJIA opened +139 at 9:30, NASDAQ +59, S&P +19. The 10 yr note yield up 6 bps to 2.20% testing its 20 day average. 30 yr MBS price at 9:30 -17 bps from yesterday’s close and -42 bps from 9:30 yesterday.

 

Two data points at 10:00; Dec Philadelphia Fed business index was expected at 25 from 40.8 in Nov. The index at 24.5 close enough; the 40.8 in Nov was an anomaly; the Oct index was 20.8. Nov leading economic indicators was expected +0.6%, as reported +0.6%; Oct LEI revised from +0.9% to +0.6%. Neither report had any impact on trading.

 

Another consumer confidence index out early this morning; the Bloomberg Consumer Comfort Index climbed to 41.7 in the period ended Dec. 14, the highest reading since mid-November 2007, from 41.3 the week before. Monthly views on economic expectations rose to match a two-year high.

 

Market volatility in most markets, including crude that is slightly higher this morning. All global markets improving today after the FOMC statement yesterday was more dovish than what was expected. The Fed will increase rates according to Yellen but she left a wide open door that the decision to increase rates is still dependent on economic performance and employment. Germany’s 10 yr bund this morning up 8 bps from yesterday at 0.63%. The increase in rates yesterday and this morning is denting our bullish models, the 10 at its 20 day average and momentum has ebbed quite a bit on the bullish outlook. All key markets will continue the high level of volatility, interday and intraday. Time to get on the sideline, let this uncertainty currently gripping markets subside.

Preparing for an Open House

After you’ve set the date and posted pictures of your house online, you need to get your house into tip-top shape for those up-close looks. Remember though pictures online are the first impression given to agents wanting show your house so make sure your house is presentable that way they will want to show your house.

2 Weeks Before

 

• Reserve a trusted cleaning service for the day before your open house.
• If you’ve never used one before, have a trial cleaning to make sure you get someone you really like; then request that same person to clean for your open house.
• Fix chipped paint spots (outside and inside).
• Plant flowers.
• Repaint bold walls with neutral colors.
• Unclutter closets and bookshelves.
• Secure a storage facility with an open unit (or your parents’ basement).
• Make plans for pets to be away starting 24 hours before open house.
• Have rugs cleaned and floors polished.

 

1 Week Before

 

• Trim hedges.
• Clean gutters.
• Move excess furniture, appliances, books, clothes, and canned goods to the storage unit (basically, you want to make the house, closets, and cabinets look as spacious as possible).
• Scrub the doors and deck.
• Create handouts (or make sure your Realtor does) so visitors can take information about your house with them for reference.

 

2 Days Before

• Hide cords (even if it means unplugging electronics).
• Hide traces of a pet or a smoker (air out your place as much as possible).
• Lock up your valuables.
• Verify cleaning service.

 

1 Day Before

 

• Check in on the cleaning service before they leave; make sure the house meets your standards.
• Place handouts by the door.
• Get a sign-in sheet ready so people can write down their names and contact info.

 

Morning-Of

 

• Open drapes and curtains to get maximum light.
• Turn on lights in dark rooms.
• Ensure temperature is comfortable throughout house.
• Straighten up bedrooms and bathrooms.
• Create a nice scent by grinding coffee beans or by baking cinnamon rolls in the oven on low.
• Turn on soothing music at a low volume.
• Leave the house (if you have a Realtor).

Agents and For Sell by Owners contact our office to see how we may help with your open house at no expense.


Credit to Nest.com

Reverse Mortgage Purchase

Reverse mortgage purchase pdf from Effective Mortgage Company

PRICES @ 10:00 AM

10 yr note:                    -5/32 (15 bp) 2.42% +1 bp

5 yr note:                      -2/32 (6 bp) 1.59% +1 bp

2 Yr note:                      -1/32 (3 bp) 0.44% +1 bp

30 yr bond:                    -12/32 (37 bp) 3.23% +2 bp

Libor Rates:                  1 mo 0.155%; 3 mo 0.234%; 6 mo 0.328%; 1 yr 0.552%

30 yr FNMA 3.5 Sept:   @9:30 102.42 -6 bp (-30 bp from 9:30 yesterday) 4.0 coupon 105.58 -3 bp (-27 bp from 9:30 yesterday)

15 yr FNMA 3.0:           @9:30 103.47 +1 bp (-16 bp from 9:30 yesterday)

30 yr GNMA 3.5 Sept:   @9:30 103.52 -11 bp (-24 bp from 9:30 yesterday) 4.0 coupon 106.27 -3 bp (-23 bp from 9:30 yesterday)

Dollar/Yen:                  103.33 +0.41 yen

Dollar/Euro:                $1.3287 -$0.0033

Gold:                           $1297.30 +$0.60

Crude Oil:                   $95.76 +$1.28

DJIA:                          16,916.93 -2.66

NASDAQ:                   4520.33 -7.18

S&P 500:                    1980.58 -1.02

Market Report

Market information:

Generally quiet start early this morning but no improvement in the MBS or treasury markets even with US stock indexes aiming at a lower opening at 9:30. At 9:00 the 10 yr -2/32 2.41%, 30 yr MBS prices -5 bps from yesterday’s closes. At 9:30 the DJIA opened -15, NASDAQ -7, S&P -3; 10 yr unchanged at 2.41% while 30 yr MBS prices -6 bps in price.

 

Mortgage applications increased 1.4% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 15, 2014. The Refinance Index increased 3% from the previous week.  The seasonally adjusted Purchase Index decreased 0.4% from one week earlier.  The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 11 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 55% of total applications from 54% the previous week.  The adjustable-rate mortgage (ARM) share of activity increased to 7.8% of total applications. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.29% from 4.35%, with points increasing to 0.26 from  0.22 (including the origination fee) for 80% loans.  The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.18% from 4.24%, with points increasing to 0.23 from 0.19 (including the origination fee) for 80% loans.  The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.99% from 4.04%, while points remained unchanged at 0.03 (including the origination fee) for 80% loans.  The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.44% from 3.48%, while points remained unchanged at 0.30 (including the origination fee) for 80% loans.  The average contract interest rate for 5/1 ARMs decreased to 3.10% from 3.24%, with points decreasing to 0.44 from 0.45 (including the origination fee) for 80% loans. 

 

Yesterday and Monday we got better housing data with the NAHB index gaining 2 points and July housing starts and permits twice as strong as forecasts. Starts up 15.7%, permits +8.1%. The better data set off a run of experts declaring the housing market getting back on track with the outlook much better. The MBA data this morning didn’t co-operate with those more positive reports on purchase apps, down 0.4%. The re-finance sector was widely declared as dead by a few housing experts, saying all re-finances have now been achieved; this morning MBA data showed re-finances increased 3.0% from the previous week.

 

This afternoon (2:00 pm) the minutes of the 7/30 FOMC meeting will be released. Always something to chew on with more specifics than we get when the meeting concludes with the policy statement. Likely the minutes will get a little ink, but with Yellen speaking Friday at Jackson Hole, the minutes are somewhat dated given the title of her speech is “The Labor Market”, following her remarks Mario Draghi will also speak on the EU economy.

 

Not likely MBS prices will improve today with treasuries still unwinding huge long positions. No geo-political reasons for short term traders to buy now, the issues are still out there but this week there has been no fearful news from Ukraine, and Putin is scheduled to meet next week with Ukraine leaders and EU countries. Some relaxation occurring now in Ukraine, Israel and Iraq; nothing really has changed, just not worsening. The fear factor into treasuries has ebbed this week. The economy is back in the headlights. As we noted last Friday, the bond market had become overbought basis the near term; since then prices have slipped and interest rates have Increased a little; the 10 yield up 7 bps from Friday’s close while MBS prices -36 bps since Friday’s close. Trading volume though is the lowest we have seen this year in both stocks and bonds ahead of Jackson Hole on Friday. The wider outlook is still bullish, a close over 2.48% will change the pattern and turn the 10 bearish from a technical perspective.

3 ways real estate agents can instantly increase their income

It’s that time of year again.

Every year it’s the same thing. The end of the year approaches, and brokers ask their agents to start thinking about next year, and they begin to encourage their agents to develop a business plan for next year. Were you happy with your work this year? Were you pleased with your closings? What will you do differently next year? These are the types of questions that you hear at the office meetings.

 

If you’ve been in real estate for any length of time, the preparation of the business plan and the encouragement to set goals is part of a cycle and the same questions arise about this time every year. The best agent I know believes that the only way to see loads of closings in January is to put loads of deals in your pipeline in September, October, and early November.
He believes that this will pump you up and get you motivated because you begin the year strong. Makes sense, right? If you start winding down around Thanksgiving, you may not have another closing until February. And, if you consider real estate your full time gig, it may be hard to make ends meet without those regular closings.

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3 Ways to Instantly Increase Your Income

If you are a residential specialist in your local area and you are looking to boost your income and your closings in 2014, there are many things that you could do to revise or adapt your current business model. Here are some things that you may want to add to your real estate bag of tricks:

1. Short Sales. If you are one of those people that hates the paperwork and the general dysfunction associated with working on a short sale, you may want to think again. According to RealtyTrac data, there are still 19 million borrowers that are underwater on their mortgages (25.3% of all homeowners with mortgages) that may need your help today. Consider marketing for short sale listings and co-listing with a short sale specialist.


2. Property Management. In the past six years, millions of homeowners have become renters. Consider the steady income associated with property management as a great way to pay the bills in good and bad economic times.


3. New Neighborhoods and Farm Areas. What’s the average sales price for your closings? Are there local neighborhoods that have a higher median sales price? Market in new areas where the median sales price is higher and you can increase (possibly making more money, while closing fewer transactions).

Of course, when considering ways to change your business plan, you have to give to get. If you expect to increase your income and your market share in 2014, you may need to spend time and money in order to get in front of the clients that you want. Don’t just sit around the office and wait for the phone to ring. With landlines becoming increasingly obsolete, there’s no excuse for sitting around anymore.

Credit to AG Beat

Homeowners benefit from tax credit for green remodeling projects

While uncertainty regarding the fiscal cliff may have had consumers concerned about the overall economy and how taxes would be affected, those who have purchased homes for sale in Los Angeles County and made eco friendly renovations could benefit from a tax credit that has been extended.

The American Taxpayer Relief Act pushed the $500 tax credit through the new year, so projects done in 2012 and in 2013 are eligible. The tax break itself , the non-business energy property tax credit, gives homeowners $500 off their taxes for making approved energy-efficient improvements. Some renovations include the installation of a new front door or other Energy Star labeled appliances and products.
Breaking down the credit, 10 percent of the cost of building materials, not including labor for insulation, windows and doors, greener roods, heat pumps, furnaces and corn-fueled stoves. In addition to savings when filing taxes, homeowners can expect to see reduced utility bills with these changes.

California home prices surge in April

Owners of Los Angeles real estate might have gained some equity in April, as home prices across California surged.

The median price for a home sold in the Golden State surpassed $400,000 for the first time in five years, rising from $378,960 to $402,760, according to the California Association of Realtors.
"The upsurge in the median price continues to be driven by an increase in sales in the upper- price range, where low inventory is less of an issue," said CAR vice president and chief economist Leslie Appleton-Young.

Prices have been on the rise in recent months, as buyer demand has far outpaced supply in the housing market. Part of the reason demand has been so high is the fact that mortgage rates have been near all-time lows.

However, mortgage rates jumped for the second consecutive week in mid-May, which could help ease demand a bit, but they are still well below averages seen a year ago at this time.
Fifteen-year fixed-rate mortgages rose to 2.69 percent in the week ending May 16, while 30-year loans hit 3.51 percent, according to Freddie Mac.

Myths and Realities of a Reverse Mortgage

Reverse Mortgage Myths and Realities Flyer from Effective Mortgage Company

Reverse Mortgage- Purchase

Reverse mortgage purchase pdf from lvazi001

The Housing Market: Have We Finally Hit Rock Bottom?

You Can Still Refinance Even If You Don't Have Equity

Harp 2.0

View more documents from lvazi001.

FHFA, Fannie Mae and Freddie Mac Announce HARP Changes to Reach More Borrowers

HARP is unique in that it is the only refinance program that enables borrowers who owe more
than their home is worth to take advantage of low interest rates and other refinancing benefits.
This program will continue to be available to borrowers with loans sold to the Enterprises on or
before May 31, 2009 with current loan-t0-value (LTV) ratios above 80 percent.
The new program enhancements address several other key aspects of HARP including:

• Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers; Removing the current 125 percent LTV ceiling for      fixed-rate mortgages backed by Fannie Mae and Freddie Mac;

• Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;

• Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises; and Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.

Small Claims Court

Increasing Small Claims to $10,000: Commencing January 1, 2012, the small claims court jurisdiction will generally increase from $7,500 to $10,000 for an action brought by a natural person.  For a claim of bodily injury from a car accident, the increase to $10,000 will not occur until 2015.  The dollar limit in small claims court for an action brought by a corporation or other entity will remain at $5,000.  Senate Bill 221.

What not to do when you are in the buying process!!!

If you plan on buying a home, are in the process or have been pre-approved to buy remember these simple things.

1. Do not change jobs, become self-employed, or quit your job!



2. Do not buy a car or a van, or a truck or you may be living in it.


3. Do not use charge cards excessively or let accounts fall behind.


4. Do not spend money you have set aside for closing.


5. Do not omit debts or liabilities from your loan application.


6. Do not buy furniture.


7. Do not originate any inquires into your credit.


8. Do not make large deposits without first checking with your loan officer.


9. Do not co-sign for anyone.


10. Do not change bank accounts or move money around.


If you are unsure at anytime or for even a second doubt what you are doing call us first it could save you a lot of heart ache in the end. Contact us anytime with questions or to get pre-approved to buy a home!

5 Steps to protect your rental property

1. Take down the “For Rent” signs. Think about it: you don’t want to advertise that your place is vacant – or worse, that there are new Maytag appliances sitting inside. There are many other ways you can market your home for rent (ads online are a good start).
2. Keep up the yard. Maintaining your rental property’s yard makes it appear as though a tenant is living there – even when there isn’t. (And not only will weeds, broken sprinklers and over-grown grass make your property look abandoned; they might also keep potential renters away.)
3. Put the lights on a timer. Leaving a porch light on for 24 hours a day is just as noticeable as a property that is completely dark (especially to a criminal). Having the lights go on a regular schedule gives the appearance that someone is home.
4. Use the blinds. There is a debate in the law community over whether it is safer to leave blinds opened or closed for better security; I recommend both. Keep the downstairs blinds closed (so that no one can see in) and leave the upstairs blinds open (so that it appears that someone is home).
5. Screen interested callers. However you advertise your property for rent, you can’t control who contacts you. Use caution when speaking to interested renters: revealing too much detail up front may compromise the security of your rental property. Is a caller really interested in renting your property or is the caller trying to find out where your obviously-vacant property is located? You can never be too sure – which is why it may make sense to hire an experienced property management company to do the tenant screening work for you.

As a rental property owner you want to attract potential renters, not criminals. Posting a real estate ad with the description “move-in-ready, fully-furnished, new appliances” is going to pique people’s interest – but, you just want to be aware of who you attract.

Author: Tony Sena on Zillow

September is Realtor Safety Month

Take precautions and be smart about your safety all it takes is doing a few extra measures to increase your safety.

Google: Check out you clients before you meet them. There is so much information out there now.

Meet your clients at your Office: Take a copy of their id, let your co-workers see who you are with.

Any added measurements are good ones