Thursday, December 23, 2010

Daily Real Estate News

December 10, 2010




5 Predictions for 2011

Freddie Mac analysts point to five features that they believe will likely characterize the 2011 housing and mortgage markets:



1. Low mortgage rates. With Fed observers expecting the central bank to keep the federal funds rate at its current target range of 0 percent to 0.25 percent for most (or all) of 2011, relatively low mortgage rates will be a feature of the 2011 mortgage market. Thirty-year fixed-rate loans are likely to remain below 5 percent throughout the year, and initial rates of 5/1 hybrid adjustable-rate mortgages will likely remain below 4 percent in 2011.



2. Prices have hit bottom. House prices are likely to begin a gradual, but sustained recovery in the second half of 2011.



3. Housing will remain affordable. With affordability high, many first-time buyers will be attracted to the housing market in the New Year, likely translating into more home sales in 2011 than in 2010.



4. Refinances will dwindle. Many eligible borrowers have already refinanced and the federal Making Home Affordable refinance program is expiring on June 30. While fixed-rate loans are likely to remain low, they will move up gradually, making it even less likely that refinances will be attractive to most home owners.



5. Delinquency rates will decline. Based on the last several business cycles, the share of loans that are 90 or more days delinquent or in foreclosure proceedings — known as the "seriously delinquent rate" — generally crests within a year of the start of the recovery in payroll employment, and this economic recovery appears to fit within that pattern. Payrolls began to rise last January, and by the spring the seriously delinquent rate had begun to fall.



Source: Freddie Mac (12/09/2010)

Monday, October 18, 2010

Why You Should Worry About Mortgage Fraud

By: MortgageLoan.com


The legal and financial ramifications and consequences of mortgage fraud are significant. This is true whether borrowers knowingly committed such fraud or not. Either way, borrowers are ultimately responsible for the personal data provided on their applications and legal documents.

The Mortgage Asset Research Institute (MARI) reported that incidents of mortgage fraud are at an all-time high, increasing 26 percent between 2007 and 2008. The number of new cases is expected to grow as the housing market to recovers from the distressing selloff that occurred during that time. So it should come as no surprise that federal and state governments have taken significant steps to drastically increase the legal punishments that can be handed out to fraudulent perpetrators.

Legal and financial liabilities

Consumers can get caught up in mortgage fraud in a variety of ways. They might misrepresent their income on a loan application or be asked to do so by an unscrupulous broker. They may be asked to stand in as a buyer for someone with bad credit. Persons in tight financial circumstances may fall victim to refinancing or loan modification frauds that leave them in worse shape than before.



What consumers should know is that the penalties for mortgage fraud are real, substantial, and commensurate with its costs. Depending on the specific fraud involved, mortgage fraud is a felony under federal and state laws. Stiff penalties against individuals involved in such schemes have been handed out in terms of millions of dollars in fees and lengthy jail times. Such penalties have been given to executives who securitized mortgage-backed investments, loan officers who helped originate individual loans and individuals who have either willingly, or without knowledge, engaged in mortgage fraud.

Aggressive actions

In the wake of a worsening economic crisis, the Federal Trade Commission (FTC), Congress and the states focused on taking an aggressive approach to protecting consumers in financial distress and increasing oversight and enforcement over providers of consumer financial services and assistance. Examples include mortgage fraud, foreclosure consulting, credit counseling, debt management, and debt settlement.



Testimony in Washington, D.C. has emphasized law enforcement and consumer education efforts aimed at addressing mortgage foreclosure rescue scams, debt relief and credit repair services, and unlawful debt collection. The Federal Trade Commission and other agencies have recommended new legislation and other remedies to enhance the effectiveness of mortgage fraud prevention efforts.

Accurate information a must

The bottom line is that each consumer is responsible for ensuring that the information he or she provides on any mortgage application is accurate. Lenders and brokers are also responsible for that same information. Penalties can and generally will be harsher if a fraudulent activity was undertaken willingly.

Tuesday, September 28, 2010

What really drives prices in Real Estate?

  Everyone knows that if you have a house in a great location, let's say on a pretty cul-de-sac with lots of trees and just a few neighbors in a town with a great school system and easy access to transit, then that house would be worth more than a house that backs up to the train tracks on a major street in the same town.  As you've probably heard that's the old maxim, location, location, location.

   So the second house would take longer to sell right?  Well, not necessarily.

   Real estate, like any other commodity is driven by consumer demand, in other words, the potential buyers are the one's who drive the prices.  We have recently seen the prices in the stock markets all over the world drop.  The simple reason is that more people are keeping their money in liquid assets; therefore, they are removing their money from less liquid markets and causing prices to drop.

   In any market, it is the buyer's who drive the prices, even in a seller's market.  So the best way to get the best price in a falling market, of any kind, is to price the commodity, i.e. your house, where the buyer's will feel that it has the best value.  So, if the house on the train track is priced where the buyer still feels that they are getting a good value, then it will sell before the house on the pretty cul-de-sac.

  Reprinted from Alberta Ceres-Buda's blog

Monday, June 28, 2010

Condominium vs. Landominium: What's the Difference?

Condominium versus Landominium: These two forms of ownership are often confusing, so what follows is a synopsis of the two.

A condominium is a creature of statute and what is and is not a condominium will be set forth int he legislation. However, a condo unit is normally a cube of air space (visualize this) bounded by the perimeter walls, floor, and ceiling of the unit described down to the undercoated surface of these boundaries (this is to  insure that the unit owner owns the first layer of paint and is thus responsible for the maintenance thereof). any part of the condo development that doesn't fall within the unit definition by statute is considered common elements or limited common elements. Common elements are owned in common by all of the unit owners, according to their respective percentage for ownership interest set forth in the condo documents (Declaration and Drawings). Limited common elements are those common elements outside the unit which can be utilized or accessed by only that unit, such as a balcony or patio.

A landominium, on the other hand, (by the way, there is no legal definition of this form of ownership and "landominium" is the commonly accepted phrase) is really a form of special zoning. Under this format, the owner is purchasing a parcel of ground on which the residence is constructed (ranch or townhouse) and the ownership includes the land, as well as the improvements to the exclusion of the other contiguous owners. Thus the landominium boundaries would be the lot up to the sky to infinity and downward tot he core of the earth. Unlike the condo's cube of airspace, the landominium maintenance and replacement of the building would be solely left to the owner, however, many associations provide that all exterior maintenance and landscaping, etc. is done by the association. the land outside of each individual lot is owned in common by all the owners, unlike he condo where the units compromise the entire ownership. For tax purposes, the only tax bills for a condo are the unit bills whereas, with a landominium, there are separate tax bills for each lot plus a bill for the common lot owned in common.     

Saturday, June 19, 2010

Realty Times - Should You Move Up?

Realty Times - Should You Move Up?

This timely article from Realty Times reviews the pros and the cons.

By The Numbers

Reprinted from source

73% In a third quarter 2009 pricing survey by HomeGain, the percent of home sellers who believed their homes were worth more than their agents' recommended listing price, up from 69% in the second quarter.

$2,982 The average closing cost for Ohio, which ranked 9th in the country in 2009 according to Bankrate.com (rankings went from most expensive to least expensive). In 2008, Ohio ranked 12th. Researchers requested a good faith estimate for a $200,000 loan, assuming a 20$ down payment and  good credit. The most highly variable cost - taxes, other government fees and escrow fees - are not included in the figure.  

95% The percent of all agents who aren't happy with he production from their Web sites, according tot he National Association of Realtors.

27% A new Rasmussen Reports national telephone survey found this percent of homeowners who say the value of their home is likely to go up over the next year. Just 19% say the value of their home is likely to go down in the next year. Homeowners are slightly more optimistic about long-term values. 54% say the value of their home is likely to go up over the next five years, while 14% say their home's value will fall over the next five years and 255 think it will remain about the same.

90% According to a survey by the California REALTORS Association, the percent of home buyers who shop online first, and spend up to six weeks doing so before ever contacting a real estate professional. Only 13% of potential buyers say they read newspapers or magazine ads when searching for a home.

10% According to a recent report from social media service provider ViTrue, click through rates on Facebook are nearly this percent higher on Tuesdays than any other day of the week.

40% A study released by Pear Analytics revealed that more than this percent of all tweets are "pointless babble." Another study by The Conference Board and TNS said the top reasons for tweeting are to connect with friends (42%), update their status (29%), and to look for new (26%). They also use Twitter for work-related (22%) reasons. The study shows that 30% of users are tweeting to interact with family, 30% connect with celebrities and 24% interact with bloggers

LAND CONTRACT vs LEASE PURCHASE/OPTION

Reprinted with permission
Written by Terrance Monnie, Attorney

Agents and Clients,

The purpose of this memo is to discuss three very commonly utilized methods of dealing with the sale and purchase of real property.


Lease-Option: As the title implies, a property owner agrees to lease property to a tenant and that the tenant has the option (but is not required to exercise it) to purchase the property either during the lease term or at the end of the term. Ohio's Landlord Tenant Law (ORC 5321) applies. Most lease-options provide that the tenant may exercise the option only if they are not in default of the terms of the lease. This format favors the tenant, who may or may not exercise the option and doesn't give the owner much help other than the rent received, not does it achieve the goal of selling the property.

Lease-Purchase: Like the lease-option, the owner leases the property to the tenant; however, the tenant is obligated to purchase the property at the price and on the terms specified in the lease-purchase agreement. If the tenant defaults, the owner has various remedies ranging from eviction to forgiveness. Note that with both the lease-option and the lease-purchase formats, landlord-tenant laws apply. While both these methods have their merits, they lack overriding benefits of a land installment contract.

Land Installment: Contract: Land installment contracts are a creature of statute in that what is and is not land contract and its requirements are set forth in great detail in ORC 5313. What follows is a summary of the most important features:
  • As the name implies, land or real estate property (normally 1-4 family residential) is being sold in installments for periods in excess of one year.
  • Legal title remains vested in the seller until such time as the final payment is made on the land installment contract. This gives the seller the assurance that he has more control during this period and the buyer has ll other rights and obligations of ownership (benefits and burdens), including, but not limited to, maintenance, insurance, etc.
  • Most sellers have an existing mortgage on the property being sold and most every mortgage in existence today for residential property is the standard FNMA/FHLMC )Fannie Mae/Freddie Mac) mortgage form. These mortgages have a "due on sale" provision which specifies that the owner/borrower may not covey any "beneficial ownership interest" in the mortgaged property without the prior written consent of the lender. This provision has a very broad range and almost every conveyance, except between husband and wife will normally trigger the "due on sale" clause, giving the lender the right to call the loan due (acceleration) in the event of such a sale (including a land installment contract). agents need to make this disclosure but I recommend that you retain legal counsel to assume this responsibility to avoid being charged with unlawful practice of law. From my perspective and experience, while the disclosure must be made, I tell my clients that their first course of action is to notify the lender of their intentions and get written approval from an authorized officer representing that lender as a precondition to avoid future problems and the triggering of the "due on sale clause."    
  • What if the buyer defaults? Under the statute, land contract buyers who have either (1) paid more than 20% of the total purchase price or (2) have paid on the land installment contract for a period in excess of five years cannot be evicted but the land contract must be foreclosed like a standard mortgage. This is valuable protection for a buyer who may have accumulated substantial equity in a property.
  • A buyer who has not done the foregoing and defaults is subject to being evicted as a tenant and all payments made under the land installment contract will then be construed as rent.
  • Most land installment contracts provide that the buyer will make the payments of interest and principal at a rate agreed upon by the parties, and normally, the payments will equal or exceed the owner's own payments on the underlying first mortgage. Also, most sellers require that the buyer make additional payments for taxes and insurance rather than depending on the buyer to voluntarily make those payments which may pose a risk to the seller. It should be noted that sellers may wither (1) add the buyer to their existing homeowners insurance policy "as their interests may appear" or (2) have the buyers purchase a new policy again naming both seller and buyer "as insureds." This policy will ultimately end up int he hands of the lender who will require a copy and will be a tip-off that the property has been sold on a land installment contract basis.
  • Ohio requires that ALL land installment contracts be recorded within twenty (20) days of their execution and this is very important protection for buyers who, without this recording, are subject to sellers encumbering the title to the property against their interest. this recording, as noted, will make the sale a matter of public record.
  • Properly drafted land installment contracts will contain a provision, that while the seller may keep a mortgage on the property, the balance(s) may not exceed the balance owing on the land installment contract. Furthermore, buyers have the right to direct their payments to the mortgage holder int he event the seller fails to make the mortgage payments. It is important for the buyers to determine at the outset that the seller is current on the underlying mortgage obligation, as I have had two experiences int he past year where the seller took the buyers' land contract payments and never paid their lender, resulting in foreclosure. (This may be avoided by the buyers making the payment to the sellers' lender).
  • Why I really like and recommend the land installment contract?
    • Sellers can deduct the interest paid on the underlying mortgage(s)
    • Buyers can deduct the interest paid on the land installment contract. **It should be noted that in many instances, sellers who sell their primary residence via land contract then have this former home re-characterized by the IRS as income or investment property. This should be the trigger for sellers to consult their tax counsel for the changes in how they prepare and file taxes. (Any interest sellers receive on a land contract payment will normally be treated as income but may be offset by any interest they pay on their loan... so, in many cases it results in no additional tax burden for sellers, but this varies from case to case.
    • Lenders normally treat land contract buyers as owners when it comes time to refinance the land installment contract giving them more favorable rates and terms. Note that most lenders will require the land installment contract to be "seasoned" for varying periods from 6 months to a year or more.DO NOT get involved in any scheme to backdate this document as this constitutes fraud.
    • Realtors can normally get paid their commission(s) from the initial closing of the land contract depending on the amount of monies pad down; however, this is a matter of negotiation between the various parties.
  • Fees: Although fees can vary, I normally charge the following, depending on the location and whether it is unregistered or registered land with higher recording fees:
    • Title Exam, document preparation and closing $350.00
    • Recording fee: $85.00
  • What information is needed:
    • Contract to purchase: Simply prepare a standard contract (CABR has a contract checklist for land contract sale to assist in identifying necessary information) but in the financing section or Addendum, provide something like the following: "Seller agrees to provide financing in the form of a land installment contract with the following terms and conditions:"
      • Sale price
      • Down payment
      • Interest rate
      • First payment date
      • Last payment date
      • Monthly PI or PITI
      • Other relevant information
The following information will also be needed:Sellers
  • Sellers names as appear on the deed (copy of deed greatly appreciated) and mailing address for payments
  • Purchasers' names and marital status, as well as contact information (email)
  • Property address with zip code
  • Name of mortgage lien holders and approximate loan balance(s).

Monday, May 31, 2010

Home Buying Trends in 2010: Smaller in Size, But Big on Amenities

'Thinking of selling? Understanding popular home buyer trends can help you showcase your home's most marketable features. 'Not selling? Staying abreast of homebuyer trends can still be a helpful in determining return on investment when making improvements to your home.

Home Buying Trends in 2010: Smaller in Size, But Big on Amenities

For more information on selling your home in today's market, contact Roger Morris with RE/MAX Preferred Group at 513.325.1056.  

Sunday, May 30, 2010

Buyer Housing Incentives Still Remain!

The Federal Income Tax Credit for Homebuyers expired April 30, but there are still incentive programs that benefit homebuyers now. Click here to learn more about a variety of current programs!

Saturday, May 29, 2010

Closing 101, Part 10 of 10: Common Title Problems

AN EDUCATIONAL INITIATIVE OF THE AMERICAN LAND TITLE ASSOCIATION

Here are three short stories on some common title problems:

Fraud & Forgery

(NAPS) — Those involved in real estate fraud and forgery can be clever and persistent, which can spell trouble for your home purchase. In a western state, an innocent buyer purchased an attractive home site through a realty company, accepting a notarized deed from the seller. Then another couple, the true owners of the property — who lived in another locale — suddenly appeared and initiated legal action to prove their interest in the real estate was valid. Under the Owner’s Title Insurance Policy of the innocent buyer, bought for a one-time fee at closing, the title company provided a money settlement to protect against financial loss. As it turned out, the forger spent time in advance at the local court house, searching the public records to locate property with out-of-town owners who had been in possession for an extended period of time. The individual involved then forged and recorded a deed to a fictitious person and assumed the identity of that person before listing the property for sale to an innocent purchaser, handling most contacts through an answering service. Also, the identity of the notary appearing on deeds was fictitious as well.

Fraud and forgery are examples of hidden title hazards that can remain undetected until after a closing despite the most careful precautions. Although emphasizing risk elimination, an Owner’s Policy protects you financially through negotiation by the insurer with third-parties, payment for defending against an attack on the title as insured, and payment of valid claims.

Conflicting Wills

(NAPS) — Conflicts over a will from a deceased former owner may suggest a study topic for law school. But the subject can take on a reality dimension and all too quickly your home ownership is at stake. After purchasing a residence, the new owner was startled when a brother of the seller claimed an ownership interest and sought a substantial amount of money as his share. It seemed that their late mother had given the house to the son making the challenge, who placed the deed in his drawer without recording it at the court house. Some 20 years later, after the death of the mother, the deed was discovered and then filed. Permission was granted in probate court to remove the property from the late mother’s estate, and the brother to whom the residence initially was given sold the house. But the other brother appealed the probate court decision, claiming their mother really did not intend to give the house to his sibling. Ultimately, the appeal was upheld and the new owner faced a significant financial loss. Since the new owner had acquired an Owner's Policy of Title Insurance upon purchasing the real estate, the title company paid the claim, along with an additional amount in legal fees incurred during the defense.

Missing Heirs

(NAPS) - When buying a home, it's important to remember what you don't know can cost you. A couple purchased a residence from a widow and her daughter, the only known heirs of the husband and father who died without leaving a will. Soon after the sale, a man appeared - claiming he was the son of the late owner by a former marriage. As it turned out, he indeed was the son of the deceased man. This legal heir disapproved of his father's remarriage and had vanished when the wedding took place. Nonetheless, the son was entitled to a share of the value of the home, which meant an expensive problem for the unwary couple purchasing the property. Although the absence of a will hindered discovery of the missing heir in a title search of the public records, an Owner's Policy of Title Insurance issued for a one-time fee at the time of the real estate transaction would have financially protected the couple from the claim by the missing heir. For a one-time charge at closing, an Owner's Policy will safeguard against problems including those even an exhaustive search will not reveal.

An Owner's Policy is necessary to fully protect a home buyer. Lender's title insurance, which is usually required by the mortgage lender, serves as protection only for the lending institution.

Closng 101, Part 9 of 10: Why You Need Title Insurance

AN EDUCATIONAL INITIATIVE OF THE AMERICAN LAND TITLE ASSOCIATION


When you purchase your home, how can you be sure that there are no problems with the home's title and that the seller really owns the property? Problems with the title can limit your use and enjoyment of the property, as well as bring financial loss. That is what a title search and title insurance are for.

The Title Search

After your sales contract has been accepted, a title professional will search the public records to look for any problems with the home's title. This search typically involves a review of land records going back many years. More than 1/3 of all title searches reveal a title problem that title professionals fix before you go to closing. For instance, a previous owner may have had minor construction done on the property, but never fully paid the contractor. Or the previous owner may have failed to pay local or state taxes (See below for some other common title problems). Title professionals seek to resolve problems like these before you go to closing. What happens if a problem arises after you move in? Read on. (If you are refinancing, scroll down or click here to jump ahead and learn more about what you can expect.)

The Owner's Title Policy

Sometimes title problems occur that could not be found in the public records or are inadvertently missed in the title search process. To help protect you in these events, it is recommended that you obtain an Owner's Policy of Title Insurance to insure you against the most unforeseen problems.

Owner's Title Insurance, called an Owner's Policy, is usually issued in the amount of the real estate purchase. It is purchased for a one-time fee at closing and lasts for as long as you or your heirs have an interest in the property. Only an Owner's Policy fully protects the buyer should a covered title problem arise with the title that was not found during the title search. Possible hidden title problems can include:

• Errors or omissions in deeds

• Mistakes in examining records

• Forgery

• Undisclosed heirs

An Owner's Policy provides assurance that your title company will stand behind you — monetarily and with legal defense if needed — if a covered title problem arises after you buy your home. The bottom line is that your title company will be there to help pay valid claims and cover the costs of defending an attack on your title. Receiving an Owner's Policy isn't always an automatic part of the closing process, and is paid for by different people in different parts of the country. Be sure you request an Owner's Policy and ask how it is paid for where you live. No matter who pays for the Owner's Policy, the fee is a one-time fee paid at closing. The Owner's Policy protects you for as long as you or your heirs have an interest in the property.

You also have the option of purchasing a policy with expanded coverage. It's called the Homeowner's Policy and it covers more things than the Owner's Policy. Ask your local title company for an explanation of the expanded Homeowner's Policy so you can decide which policy is the best one for you.

The Loan Policy

There are two types of title insurance: Owner's title insurance, as mentioned above, and Lenders title insurance, also called a Loan Policy. Most lenders usually require a Loan Policy when they issue you a loan. The Loan Policy is usually based on the dollar amount of your loan. It only protects the lender's interests in the property should a problem with the title arise. It does not protect the buyer. The policy amount decreases each year and eventually disappears as the loan is paid off.

Prices vary from state to state. Be sure to ask your settlement or title company about pricing and whether the Loan Policy and Owner's Policy are sold separately or together.

Monday, May 24, 2010

The Closing Process, Part 8: Shopping for Title Insurance

AN EDUCATIONAL INITIATIVE OF THE AMERICAN LAND TITLE ASSOCIATION


In most states, consumers are free to shop for title insurance and to select a title company, settlement company, or attorney to conduct their closing. (Ask a local title company if consumers are able to shop for title insurance in your state.) Many consumers rely on their real estate agent or lender for a recommendation for a title company since they are in a position to know which companies provide good service. However, you are not required to use the title company they recommend. If you decide to choose your own title company, we encourage you to shop for title insurance. There are some things to keep in mind, however, which vary from state to state. And there are some terms you will want to know when speaking with title companies asking for a rate quote.


Types of Title Insurance

Knowing what you are asking for is your first step in shopping for title insurance rates. There are two kinds of title insurance: the Loan Policy, which protects the lender's investment, and the Owner's Policy of Title Insurance, which protects the buyer's interests. If you are obtaining a loan to purchase your house, the lender will usually require that you purchase a Loan Policy to protect their investment. We strongly encourage consumers to obtain an Owner's Policy for a one-time fee paid at closing to protect their interests. Who pays for the Owner's Policy varies from state to state and sometimes even within a state. For instance, on much of the West Coast, the seller would purchase the Owner's Policy for the buyer. On the East Coast, however, the buyer usually pays for the Owner's Policy. An Owner's Policy is not automatically issued in every state. Be sure to ask your local title company or real estate agent how it's handled in your area and whether the Loan and Owner's policies come together or are sold separately.

How Title Insurance Rates are Set

How title insurance rates are set varies from state to state. Some rates are set by the companies themselves and some are set by the State Department of Insurance. For those states that set the rates (Florida, New Mexico, and Texas), each title company is required to charge the same for title insurance for each different type of policy and for each different type of rate. Some other states, including but not limited to, NY, PA, NJ, OH, and DE, which have rating bureaus authorized under state law, may have uniform rates as well. When shopping in the states listed above, you will receive similar rates for title insurance from each company. While title insurance rates may not be as "shoppable" in these states, the cost of other services provided by the title company may or may not be included in the rate so you can shop for those services. Talk to your local title company for how rates are determined where you live.

As mentioned above, some rates may or may not include other services provided by the title company such as conducting the closing, preparing and notarizing documents, adding endorsements to the policy which may be required (usually by the lender or buyer), and other services. When comparing one rate to another, be sure to get detailed information on what is included in that rate, so you are comparing equally.

Rate Terminology

Here are some terms that would be helpful to know when talking to a title company. Ask your title company which of these you may qualify for:

Basic Rate: The rate charged to a consumer who does not qualify for a reduced rate such as, but not limited to, the reissue rate or simultaneous issue rate. (see below).

Reissue Rate: The reduced rate for an Owner's Policy issued on a property which was previously insured within some period of years. In some states, the term is also used for a refinance rate (see below).

Simultaneous Issue Rate: The reduced rate for a Loan or Owner's Policy issued on the same property or loan at the same time as another policy. The term usually refers to a Loan Policy issued at the same time as an Owner's Policy when a property is purchased.

Refinance Rate: The reduced rate for a Loan Policy issued on the new loan in a refinance transaction, in which the original loan was previously insured within some period of years.

Risk Rate: A rate that does not include the cost of researching the title or the cost of conducting the closing.

All-Inclusive Rate: A rate that includes at least some part of the cost of researching the title or the cost of conducting the closing.

Settlement Agents

A settlement agent glues together the process of the sale, working with both the buyer and the seller in the transaction. They research the title, making sure there aren't any liens on the property, pay the seller and the old lender, obtain recording fees and taxes for the government, and file the paperwork at the local courthouse. In effect they orchestrate the settlement from the start to finish.

Closing the sale of your house or business is easy, if you chose the right title company. Title companies, or any settlement agent who performs a closing - attorneys, escrow agents or title insurance companies - are involved in a multitude of activities involved in a closing. Some states require that an attorney conduct the closing. Some escrow agents, and others a title company or agent. Be sure to find out how it's done in your area.

A settlement agent glues together the process of the sale, working with both the buyer and the seller in the transaction. They research the title, making sure there aren't any liens on the property, pay the seller and the old lender, obtain money from the buyer and new lender, obtain recording fees and taxes for the government, and file the paperwork at the local courthouse. In effect they orchestrate the settlement from start to finish.

So how do you find a competent title professional? ALTA recommends going through someone you are already working with - your real estate agent or lender. If you are obtaining a loan, chances are the lender will recommend you use a title company (or attorney if they are required in your state) they are familiar with. If you are not obtaining a loan, ask your real estate agent for a recommendation. Agents and lenders usually have relationships with several title professionals they know are reputable and provide good customer service.

Or ask friends and neighbors if they were happy with their settlement agent and get a referral. You are free to select your own title professional. If you do, there are some things you should look for. How many transactions does the company do? Find out how many employees the company has. A company that does hundreds of closings will be more informed about how to perform the service than a company that does only a few. Is the company sufficiently staffed for the amount of work they do?

Find out if the company is part of the state title association or the American Land Title Association. If they are members, they are keeping abreast of state and federal level current trends and requirements. You can also contact your state insurance department or the Better Business Bureau to see if they have any information on the company.

Keep in mind that settlements vary from state to state and even from county to county. Be sure to ask how it's done in your area so you know what to expect.

Closing 101, Part 7: Glossary of Terms

AN EDUCATIONAL INITIATIVE OF THE AMERICAN LAND TITLE ASSOCIATION

Part 7 of 10 in the "Closing 101" series is a comprehensive glossary of terms. This is a great reference tool for homebuyers and sellers. It's in a printable format or bookmark to your favorites for future reference.

Tuesday, May 4, 2010

Test Your Knowledge, Part 6 of Closing 101

Ready to test your knowledge on the real estate closing process.
Click here to take the Closing Quiz.

Note: not all answers apply to Ohio. Check with your real estate professional for specific issues and laws for your state.

Monday, April 26, 2010

Celebrating Your New Home, Part 5 of Closing 101

AN EDUCATIONAL INITIATIVE OF THE AMERICAN LAND TITLE ASSOCIATION


You did it! The house is officially yours. Family, friends and new neighbors all want to get a glimpse of your new place and you want to show it off. It's time to celebrate with a housewarming party. Following are links to help you create the first of many great celebrations in your new home.


How To Host a Housewarming

Housewarming Ideas

Housewarming Food Suggestions

• The Easy Way to Invite Friends and Neighbors

Wednesday, April 21, 2010

Items Required by the Lender to be Paid in Advance, Part 4 of Closing 101

AN EDUCATIONAL INITIATIVE OF THE AMERICAN LAND TITLE ASSOCIATION

Pre-Paids (Section 900 of the HUD-1 Statement)

There are certain items the lender may require you to pay at the time of closing or in advance of the actual closing date. These could include:

• Interest - Lenders usually require payment of loan interest from and including the day of closing through the end of the month of closing. After that, interest is accrued and paid as part of the monthly loan installments.

• Mortgage Insurance Premium - At the settlement, you may be required to pay your first year's mortgage insurance premium, or a lump sum premium that covers the life of the loan. This fee is payable to a Private Mortgage Insurance Company. If the loan is being federally insured (FHA) or guaranteed (VA), the mortgage insurance or funding fees for those government loan programs would be charged here.

• Hazard Insurance Premium - Oftentimes lenders require payment of one year's hazard insurance, commonly referred to as homeowner's insurance, against fire, windstorms and natural hazards. In order to bind the coverage, the premium is often paid in advance of closing.

• Flood Insurance - Depending on the location of your home, flood insurance may be required and payment of the first year's premium must be made in advance of closing.

Escrows/Impounds/Reserves (Section 1000)

Although the lender isn't required to provide an estimate of the reserves they will be collecting, it is important that you be aware of whether the lender will or will not be "escrowing" for taxes, mortgage insurance (if any), hazard and flood insurance. The use of an escrow/impound account to build up the funds needed to pay these items as they become due can often be a good way for borrowers to budget rather than having to pay these large sums out-of-pocket when they come due. Be sure to ask your lender in advance of closing how these items will be paid on a go-forward basis.

Title and Closing Charges (Section 1100)

These fees cover the administrative costs of a title search, title examination, issuance of the title commitment/binder and final title insurance policy(ies.) Also included would be charges for conducting the closing/settlement/escrow. You are free to select the company to conduct your closing/settlement/escrow, and to shop for the best pricing. Be sure to visit the Shopping for Title Insurance section of this site.

• Settlement/Closing Fee -A fee must be paid to a settlement agent who has prepared documents, calculated figures, and oversees proper execution of closing documents. This fee is often split between buyer and seller but can be negotiated as part of the sales contract.

• Abstract of Title, Search, Title Examination, Title Insurance Commitment or Binder - In order to ensure that there are no pre-existing problems with your property, a title insurance professional must perform a title search and produce documentation on the home's title. In some places, one or more of these charges will appear separately on the HUD-1 and in other places they may be included within the title insurance premium. When a mortgage loan is involved, there may also be added charges for special endorsements that will accompany the lender's title policy.

• Document Preparation - Some settlement agents charge for the cost of preparing legal papers such as the mortgage, deed of trust, note or deed and/or other loan and title documentation. If a lender charges a document preparation fee, it will typically appear in the Loan Fees/Direct Loan Costs section of the HUD-1.

• Notary Fee - Because there are legal documents involved, a licensed notary is required to acknowledge the fact that the proper people signed these official documents in their presence. Notaries often charge a fee for their services.

• Attorney fees - Both the homebuyer and the seller might have their own legal representation to prepare and record legal documents. Frequently, however, where an attorney is acting as a settlement agent, there may only be one involved in the closing. Who pays for those services is a matter of contract negotiation but is often handled like fees paid to any other settlement agent/title agent.

• Title Insurance - There are two kinds of title insurance policies: Loan and Owner's policies. The cost for the Loan Policy is based on the loan amount and the cost for the Owner's Policy is based on the sales price of the home. Who pays these one-time fees at closing varies from state to state. Ask your settlement agent how it is handled in your area. In some circumstances, discounts may be available (such as a "reissue rate" or "reissue credit") when the property has recently been insured by a title insurer. Be sure to ask if you are entitled to any discounts.

You also have the option of purchasing a policy with expanded coverage. It's called the Homeowner's Policy and it covers more things than the Owner's Policy. Ask your local title company for an explanation of the expanded Homeowner's Policy so you can decide which policy is the best one for you.

Sunday, April 18, 2010

Closing Costs Explained, Part 2 of 10 in the "Closing 101 Series"

AN EDUCATIONAL INITIATIVE OF THE AMERICAN LAND TITLE ASSOCIATION

  
Closing your home should be exciting, and once you understand the process and how it works, it can be.

Here you will find a list of costs commonly associated with closing on a home. Fees may vary depending on where you live, so be sure to talk to your lender, real estate agent, and settlement company for more specific information.

All closing costs must be listed on your HUD-1 settlement form, a document that is required to be filled out prior to finalizing the purchase of your home.

What are My Closing Costs?

In addition to the sales price of the home, there are a variety of costs associated with finalizing the transaction. Click on any of these links below for more information on these costs:

  • Real Estate Broker Commission/Fees (Section 700) If you use a real estate agent to help you in buying your home, the cost of the agent's services can be paid in one of two ways. Generally, the seller pays for all agents in a transaction in an amount usually stated as a percentage of the sales price. While this amount will be deducted, along with other seller-paid closing costs, from any amount the seller might otherwise be paid and is usually stated on the HUD-1, this will not be your charge. Increasingly, buyers in some places are engaging their own so-called "buyer's broker or agent." How they are paid and by whom varies from place to place and can be negotiated in many cases. Sellers frequently also pay for such services on behalf of buyers but if a charge is paid by the buyer, it will also be stated on the HUD-1 and added to the amount you'll need to bring to closing. 

  •  Loan Fees - Direct Loan Costs (Section 800) Most people need to obtain a mortgage loan to pay for their home. There are often fees associated with obtaining a loan such as the ones listed below. These fees include ones paid directly to the lender or the lender's designated payee. Fees payable to third-party loan originators (typically Mortgage Brokers) are also shown in this section of the HUD-1. 

  • Loan Origination Fee  This fee covers the lender's cost of obtaining financing and administration for your loan. The fee is usually calculated as a percentage of the loan amount but can also be in a flat dollar amount. It has become more common for an "application" fee (stated in flat dollar amount) and, possibly, other up-front charges like an "underwriting" fee (also usually in flat dollar terms) either to take the place of or be in addition to an origination fee. Each lender and each loan program a lender offers will have different front-end charges. You should shop carefully and examine all the fees and terms prior to closing. It is generally too late to change those fees and terms at closing. 

  • Loan Discount (sometimes referred to as "points") This is a one-time fee charged by the lender in order to give you a lower interest rate on your loan. Each point is 1% of the mortgage amount. Points paid upfront can reduce the interest rate you pay on your loan. Whether this is the best option for you in shopping for a mortgage loan depends on whether you have the necessary cash and how long you think you'll stay in the home or keep the mortgage before selling or refinancing — the longer you intend to stay and keep the financing, the better off you may be paying something upfront and paying a lower interest rate on your loan. In any event, this cost will be collected at closing generally. 

  • Appraisal Fees To approve your loan your lender has to obtain an estimate of what your home is really worth. The appraisal fee covers the cost of getting an estimate of the market value of your home, usually by an independent, certified, licensed appraiser. 

  • Credit Report Fee Mortgage lenders require a credit report to determine whether or not you are eligible (have good enough credit) for a loan, how much they will lend you and at what interest rate. Credit Reports today often also include a "credit score" which is an indicator of your ability and willingness to repay the loan. The higher your credit score, the better risk you are. 
  • Lender Inspection Fees - If the lender requires certain inspections to take place before closing (particularly where new construction or recent repairs are involved), such inspection fees, payable to the lender or its designee, will appear in this section of the HUD-1. 

  • Mortgage Insurance Application Fee There are often fees associated with processing an application for mortgage insurance. Some private mortgage insurers waive the application fee. This line of the HUD-1 may be used for other fees when the borrower is seeking an FHA-insured or VA-guaranteed loan. 

  • Assumption Fee If you are taking over the existing mortgage loan on the home, there is often a charge associated with assuming the mortgage, called the assumption fee. 

  • Mortgage Broker Fee  This fee covers the costs of services of a mortgage broker if one is engaged by the borrower to help them shop for mortgage financing. Mortgage brokers typically present the borrower's application to a variety of funding sources before helping the borrower make their final selection. 

  • Yield Spread Premium (YSP) This is a fee that the funding lender may pay directly to the mortgage broker or other third-party loan originator. This fee is for securing a borrower on behalf of the funding lender at rate and terms agreed upon which may be higher than what is called "at par." The fee is sometimes called a "Par-Plus Pricing" fee. While this fee is not paid by the borrower (it typically is shown as "POC" by the Lender"), it must be shown on the HUD-1 if the mortgage broker is receiving such compensation.

Monday, April 12, 2010

Home Closing 101: Part 1 Closing Process

Following is the first in a ten part series featuring information from American Land Title Associations Web page, Home Closing 101. The information in this series is from the ALTA-sponsored site http://www.homeclosing101.org/. This information is intended for general information purposes only and is not meant to be a substitute for professional legal representation. For specific laws and practices for your state, consult a title attorney or or your real estate professional. For more real estate information, as well as listings for Greater Cincinnati, visit http://www.mlscincyohio.com/ or contact Roger Morris (513) 325-1056.

Check back regularly. New posts in this ten part series will appear about every 3-5 days.    



Part 1: Closing Process


AN EDUCATIONAL INITIATIVE OF THE AMERICAN LAND TITLE ASSOCIATION

Let's start at the very beginning — what does "closing," "settlement," or "closing escrow" on your house mean?

Closing – or settlement as it is known in some parts of the country — is a term used for the point in time at which the title to the property is transferred to the buyer and, generally, a mortgage (or "deed of trust") is given by the buyer/borrower to the lender.

Buying a house is an exciting time and the more you know about the process, the more relaxed you'll be going through it. Keep reading, and we'll walk you through what the closing process really means.

Some information about the costs associated with closing on your home should be provided to you before you put a contract on a house. If you are obtaining a loan to purchase the property, your lender has three days from the time of the loan application to provide you with a Good Faith Estimate of your loan costs so there are no surprises about costs. Within those three days you should also receive a copy of the booklet, "Buying Your Home," which outlines the settlement process. If these two things do not occur, talk to your lender.

Once the seller accepts your sales contract, the countdown to closing begins. Timing is essential to make sure all the ingredients for a successful closing are in place for your arrival. You can shop around to select a settlement agent to prepare the documents for your closing, or you can rely on a recommendation from your real estate agent or lender. In some parts of the country, the settlement agent is an attorney, title company, or escrow company. Once a settlement agent has been selected, he or she will handle the closing process from there. If you have given the seller an earnest money deposit, the escrow agent, settlement agent, or real estate broker (this varies based on where you live), will see that it is promptly deposited into an escrow account where the funds are held until the time of closing.

Next, the settlement agent will request preliminary title work. A title professional will search and examine the public records for information related to your home's title. This provides warnings of title flaws that must be dealt with before the property can change hands. For instance, the previous owner may have failed to pay local or state taxes. Or there may be an outstanding mortgage or judgement on the property. Title professionals work hard to see that such obligations are dealt with and resolve any issues they find well before you go to closing, if possible. If the sales contract calls for a prior mortgage to be paid off, the settlement agent will order payoff figures from the existing lender. If the buyer is assuming the loan, the settlement agent handles that as well. He/she, if directed to do so, also may order property inspections and termite reports. If it is customary in your area, the settlement agent may order a survey.

Finally the settlement agent is ready to prepare the HUD-1 Settlement Statement. The HUD-1, as it is referred to, outlines all of the costs for both the buyer and seller associated with the closing. You can download a copy of the HUD-1 form to see all of the items listed on the form.

On closing day, the property will be transferred from the seller to the buyer. In most parts of the country, you will sign a number of documents that will be explained by your settlement agent. Check with your settlement agent for more details on how the closing is conducted in your area. Once all of the signing is done, the house is yours! Congratulations on achieving the American Dream!

You should be generally aware that the behind-the-scenes process continues after the closing. The settlement agent still must forward payment to any prior lender, pay all the other parties who performed services in connection with your closing, pay out any net funds to the seller, and order a final search of the title to your new home before finally recording all the documents needed legally to complete your purchase. But you don’t have to be involved in any of this. Your settlement agent takes care of these post-closing details!



This page is being updated to reflect changes that went into effect Jan. 1, 2010, which were mandated by the Real Estate Settlement Procedures Act. Source: http://www.alta.org/  

Friday, April 9, 2010

REALTOR® Magazine-Daily News-Extreme TV Makeovers Downsize

REALTOR® Magazine-Daily News-Extreme TV Makeovers Downsize

Contract to Closing. Know What's Next.

Evaluating the First Offer

Your dining room table is the scene of high drama. Your home has been listed for sale for six weeks, and finally, the first offer has come in. You are meeting with the agents, and are very excited until they mention the price--it is a lot less than you expected.

Before you feel offended, however, remember that the first offer is often just the beginning of a negotiating process. Your agent can help you weigh the good and bad points, evaluating the price in relationship to the terms or conditions of the sale. Sometimes an offer with a low price can look quite attractive once you understand all of the terms. If you are willing to make some compromises, the buyers may accept a counter offer that will give you more money. A lower price from highly qualified buyers may be better than one from people who may have difficulties with financing. Keep in mind that your first negotiated price is often your best price!


Making An Offer : Low Offers

You have found the perfect house with everything you wanted--and then some--but the price is more than you want to pay. You decide to go for it anyway, and ask the agent to submit what real estate agents call a "low ball" offer.

Low ball offers sometimes work. If the market is fluctuating and the sellers are anxious, they may just accept it. They may be willing to negotiate if they have listed the house at a higher price than is reasonable. Most sellers are open to offers, but they won't give their house away, especially if the asking price is in line with recent sales of similar homes.

What do you have to lose by making a low offer? If the seller yells and screams, the agent will be the focus of his wrath -- and we don't take it personally. If you really want the house, however, a very low initial offer may irritate the seller to the point that he won't consider a better offer, if you decide to submit one. Design your strategy on the basis of how badly you want the house.


First Time Buyers: Credit Card Traps

It is not unusual for first-time buyers to be free of debt. They have been saving for their first home for many months or even years. But after they move into their new home, the new homeowners are often deluged with pre-approved credit card applications from banks and stores offering credit lines. Before they realize what is happening, they can be overwhelmed with debt.

The consumer credit agencies know that mortgage companies do thorough checks before approving a loan, and those who have passed through that process are considered good credit risks. They also know that new homeowners often need to make major purchases of furniture and appliances at a time when they have depleted most of their savings accounts. After years of disciplined savings, new owners may be faced with a tremendous temptation to just say "charge it" for the things they need.

If you have just purchased a home, be aware--and wary--when those credit card applications start pouring in!

Fair Market Value

What is the best price for a piece of real estate? Mortgage lenders, appraisers, and real estate brokers use what is called the "fair market value" (FMV). FMV has been defined as "the price that a buyer is willing to pay and the seller is willing to accept, when both parties are knowledgeable about the property and neither is under any time pressure to buy or sell". Sounds great, but how is this price determined?

The starting point for determining a fair price may be an opinion of the value or "comparative market analysis". Such an analysis uses information on similar properties which are: 1) currently for sale, 2) already sold, or 3) expired properties (those which did not sell). Local, national and international trends and market conditions must also be evaluated.

By comparing similar properties in each of the three categories and the market conditions, appraisers, lenders and agents come very close to the maximum price that buyers would be willing to pay for a house.

Monday, April 5, 2010

Nearly half of all US Home Owners will be underwater by 2011

NEWS RELEASE: A Recent Study by Deutsche Bank shows nearly half of all US Home Owners will be underwater by 2011 and it could be 2020 or beyond before the housing market turns up. Contrary to some Government statements, the housing recession is far from over. Hundreds of thousands of agents who have seen the conventional market dissipate and are thinking a recovery is around the bend, should think again. Many have turned their focus to Distress Sales (REO's, short sales, etc.) but are running into fierce competition in securing and selling listings. At the same time, asset managers and loss mitigators for lending institutions are becoming more and more hard-pressed to find enough qualified agents to provide them with what they need to approve short sales, as well as list and sell their REO's.


A typical Realtor® might or might not inform you of what they feel about the market. We are not your typical Realtors®. Be the news sweet or sour, we don’t SPIN it and give our clients or prospective clients the feeling of security in a insecure marketplace.

If you have the same feelings as we do, and are in the buying or selling situation, contact me. I promise I don’t bite and I will treat you with the respect that you deserve during a Real Estate Transaction.

Best regards,

Roger M. Morris

RE/Max Preferred Group
401 Crescent Ave.
Cincinnati, OH 45215
rmorris.remax@zoomtown.com
513-325-1056

Learn more at www.MlsCincyOhio.com

Credit Consequences of Home Loss

by Bob Hunt

Financially distressed homeowners not only face painful personal circumstances, but also they must consider choices that have both tax and credit implications. While a variety of professionals may be able to explain taxation issues in these circumstances, not as much seems to be known about credit consequences - other than that they are bad.

Recently, the legal department of the California Association of Realtors® (CAR) issued a memorandum titled "Credit After Foreclosure, Bankruptcy, or Short Sale." It is an extremely useful document for those who have questions about how credit is affected by the various ways in which one might lose his or her home.

In large part the memo is based on the 2008 update of Fannie Mae guidelines (Fannie Mae Announcement 08-16), so it should be clear that the explanations are not completely general or unqualified. When, for example, it is said that a person is not eligible to obtain a home loan for a certain number of years, that means that Fannie Mae won’t buy a home loan made to that person during that time. Granted, most lenders want to be able to sell their loans to Fannie Mae or Freddie Mac (whose rules tend to be similar), but there might be portfolio lenders or other institutions that would make such a loan.

That said, it is well worthwhile to review the contents of the memo.

Five years after a foreclosure, a consumer may be eligible to obtain a home loan. Of course, certain restrictions may apply. At least a ten percent down payment is required, and a minimum credit score of 680. Also, purchase of a second home or investment property is not permitted.

A consumer may be eligible three years after foreclosure if "extenuating circumstances" had led to the foreclosure. Extenuating circumstances are "nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations."

Four years after giving a deed-in-lieu of foreclosure, a consumer may be eligible for a home loan. If there had been extenuating circumstances, that period is shortened to two years.

In the case of a short-sale, when the mortgage had been delinquent, a consumer may be eligible for a home loan two years after completion of the short sale. There are no exceptions due to extenuating circumstances.

If the consumer had executed a short sale, but had not been delinquent on his or her mortgage, then there is no two-year period applicable. To be eligible for a home loan, the borrower must not have had any mortgage delinquencies of sixty days or more during the past twelve months, and the borrower must not have "entered into any agreement with the short sale lender to repay any amounts associated with the short sale, including a deficiency judgment."

In the case of bankruptcies, other than Chapter 13, there is a four year period from the discharge or dismissal date of the bankruptcy before the consumer may be eligible to obtain a home loan. With a Chapter 13 bankruptcy, the period is two years.

It is frequently said that short sales have a less damaging effect on credit than do foreclosures. While this may be true with respect to the length of time before one can obtain a home loan again, it should also be noted that a short sale has no greater effect than a deed-in-lieu when there are extenuating circumstances. Moreover, it is certainly not true with respect to one’s FICO score. A deed-in-lieu, a foreclosure, or a short sale all have the same impact as far as FICO is concerned. Some people will not believe this. They should visit the FICO web site and look at the question regarding alternatives to foreclosure.

Published: March 23, 2010

Wednesday, March 17, 2010

The Secret to Pricing Your Home to Sell

Reprinted from GE Credit Union's Real Estate Views

Contrary to popular belief, when selling your home, its value is determined by one thing and one thing only - what a qualified buyer is willing to pay for it. A home without a buyer has no value in the marketplace.

Here is the secret to pricing your home to sell: it's not what you think the home is worth that matters; it's what a reasonable buyer will think your home is worth that will ultimately  determine if your home will sell. If you left it up to the buyer, however, they would pay you as little as possible. But, you have no obligation to sell your home at that price. To purchase your home, the buyer will have to make you an offer you can't, or won't, refuse.

But, here is how many sellers fall into a trap. Sellers believe that they can hold out for an inflated price and eventually the market will come to them. The buyer, however, just like you, the seller, is under no obligation - they don't have to buy any particular home. No amount of marketing will motivate a buyer to purchase an overpriced home. This reveals one of the most important considerations in pricing your home - price versus time.

Price Versus Time

This boils down to your need to sell within a set time frame or instead to hold out for the best possible price. If you would like to sell for top dollar, be prepared to potentially wait longer for a buyer willing to pay a premium price.

On the flip side, if you need to sell quickly, expect to discount your asking price somewhat because of the limited time you have to expose your home to the market. Ask yourself, what is your highest priority - selling quickly at a lower price or leaving your house on the market longer to possibly sell at a higher price? 

Accurate Pricing

Ultimately, your asking price will, in large part, determine your selling time. To accurately price your home, you need to think like the buyer and look at your home through the buyer's eyes. Do you over-value things in your home that a buyer may not? Remember, if you're holding out for a high offer, someone in a similar home in the same neighborhood may have their home priced much lower to sell before your home. It's important to do your research.

An easy tool for accurately pricing your home is a Comparative Market Analysis. This is a report that can compare your home with other homes in your specific neighborhood that have recently sold. This analysis is then used to provide an anticipated sales price or price range for your home. Although it is not a formal appraisal, the report provides a similar function by giving sellers and buyers a clear understanding of the market data that might affect their opinion of the home's value.

Real Estate Services provided by the Home Information Network, Inc.

For more information on your home's value in today's market, contact Roger Morris at (513) 325-1056.

    

Happy St. Patrick's Day!

HAPPY ST. PATRICK'S DAY! This video might take a little while to load , but is worth it. Enjoy!


http://www.andiesisle.com/ThisBlessingIsForYou.html

Tuesday, March 9, 2010

Getting a Mortgage Now

Times have changed - and so have lender requirements. Get updated, then get pre-approved. Click here for this timely article from Realty Times.

What's My Real Estate Really Worth

How much is your real estate - your house, condominium, income property - worth in this market? P.J. Wade has a few questions and suggestions for you whether a value popped into your head or not.

Read the full story featured in Realty Times here:

Monday, March 1, 2010

Selling or Staying... Now is the Time to De-clutter

Decluttering can not only improve your home's performance during a showing, it can bring order and efficiency to your home - whether you are moving or not. Read on for great tips, and enlightening before and after images in this e-article from HGTV.com "Decluttering the Way to a Sale."

Tax Tips for Homeowners Preparing 2009 Returns

By: Mike DeSenne

Reposted from HouseLogic.com
Originally published: February 19, 2010


You’ve heard it before: Your home is probably the biggest investment you’ll ever make. It’s also probably the biggest tax write-off you’ll ever have. Follow these tax tips for homeowners to ensure that you receive all of the tax deductions and tax credits to which you’re entitled for the 2009 tax year.

Home-related tax deductions, from mortgage interest to real estate taxes, can add up. If you’re married filing jointly with taxable income of $100,000, an extra $5,000 in deductions would lower your tax bill by $1,250. Tax credits, for such things as energy efficiency and homebuying, are even more valuable because they increase your refund (or decrease what you owe) dollar for dollar.

Give yourself a day to organize paperwork and fill out tax forms. Need help? IRS Publication 17, “Your Federal Income Tax,” has the answer to just about any question you can think of, and it’s free. Basic tax software starts at $29.95, and H&R Block charges $187, on average, to prepare a tax return. Full-service accountants charge more, depending on the complexity of a return.



Tax deductions for non-itemizing homeowners


The last thing taxpayers want to hear is that the IRS has come out with yet another form. But this time the news is good, especially for homeowners. The new Schedule L allows homeowners who don’t use Schedule A to itemize returns to deduct real estate taxes and certain disaster-related losses. Only about one-third of filers itemize, according to the IRS.


Non-itemizers are usually entitled to a standard deduction, which for 2009 is $11,400 for married couples filing jointly ($5,700 for singles). Schedule L allows homeowners to increase the standard deduction by as much as $1,000 ($500 for singles and married filing separately) to account for any state or local real estate taxes paid during the year. Losses from federally declared disasters can also be added to the standard deduction. First, affected homeowners need to complete Form 4684 to determine the amount of the net disaster loss. Then, the amount of the loss needs to be reported on Schedule L to determine the new standard deduction. Only losses from official federally declared disasters, as opposed to ordinary casualty losses suffered during non-declared disasters, can be added to the standard deduction.



Mortgage-related deductions


Generally, the interest you pay on the mortgage for your main home and a second home is tax deductible. To qualify for the mortgage interest deduction, the loan must be secured by a qualified home, and you must itemize your tax return. Even a house trailer or boat can count as a qualified home, as long as there are sleeping, cooking, and toilet facilities.


The interest you pay on second mortgages, home equity loans, and home equity lines of credit (HELOCs) can also be deducted. Generally, you can deduct the interest on up to $1 million—$500,000 if you’re married filing separately—in home loans used to buy, build, or improve a home. If a home loan was used for other purposes, such as buying a car or paying tuition, you can only deduct interest on the first $100,000 ($50,000 for married filing separately). Read IRS Publication 936.



“Points,” certain fees paid to a lender to obtain a home loan, might be deductible too. The general rule for points that you pay on refinanced loans is that those points aren’t deductible in full immediately, but are spread across the life of the new loan. In limited circumstances, if you pay the full amount of those points at the refinancing closing, you might be able to deduct the points in full immediately. The mortgage insurance premiums you pay on loans issued or refinanced after 2006 also can be deducted, though income limits apply.
Energy-efficiency tax credits



Home improvements made during 2009 aimed at lowering your energy bills could lower your tax bill as well. Uncle Sam is offering energy-efficiency tax credits equal to 30% of the cost of qualifying projects. Claim your residential energy tax credits on IRS Form 5695.


The tax credit for some energy-efficiency improvements, such as new windows and insulation, is capped at $1,500. More ambitious projects, such as solar panels and geothermal heat pumps, have no upper limit on the amount of the credit. Restrictions apply to both capped and uncapped credits—second homes may or may not qualify, and labor costs are excluded in some cases—so be sure to familiarize yourself with the energy tax credit rules.

Homebuyer tax credits


If you bought a home in 2009, you might be eligible for a homebuyer tax credit. First-time buyers who made a purchase between Jan. 1 and Nov. 6, 2009, can get a tax credit worth up to $8,000. Income restrictions apply. Purchases made after Nov. 6 are subject to more generous income limits as well as an $800,000 cap on home prices. A first-time buyer is defined as someone who didn’t own a home for three years prior to purchase.


The tax credit isn’t limited to first-time buyers. Longtime homeowners who’ve lived in their principal residences for five consecutive years out of the last eight can qualify too. This tax credit, worth up to $6,500, is good on home purchases made after Nov. 6. There are income and price restrictions.


Claim your homebuyer tax credits on IRS Form 5405. Because the IRS requires additional paperwork to verify the home purchase, you can’t file electronically. The homebuyer tax credits were extended into 2010. A signed contract needs to be in place by April 30, and settlement needs to occur before July 1. Credits earned in 2010 can be taken on 2009 or 2010 returns.


This article provides general information about tax laws and consequences, but is not intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.



Mike DeSenne is Online Managing Editor for taxes, finances, and insurance at HouseLogic.com, and the former Executive Editor of SmartMoney.com.