Tag Archives: buying a home

What You Need to Know About Buying a House This Summer

Planning on buying a house this season? Go in prepared with advice from the pros.

Summer brings longer days, warmer weather and more people out house-hunting — particularly families hoping to get settled before the school year begins in September. But there aren’t necessarily more houses on the market—and this year that’s truer than ever. “Inventory is the lowest I’ve ever seen it,” says Denver, CO, agent Susie Best. Recent Trulia research bears this out, showing inventory falling for 8 consecutive quarters. The reasons are varied: investors bought up homes during the crash and are renting them out now; prices have risen so much that homeowners can’t afford to trade up; or some homeowners are still underwater and can’t afford to sell yet. This means “multiple offers are driving up prices,” says Best. How to up your chances? Here’s what agents are advising buyers to do in this hot market — at the hottest time of year.

7 Tips for buying a home in the summer

  1. 1. Research trends based on your market location

    While many markets are red hot in the summer, that isn’t true across the board. For example, Chicago winters are long and many families seize the all-too-brief summers for vacation, so single-family home sales slow down a bit from June to September. “Right now we’re really a tale of two markets,” says Jennifer Ames, a Chicago, IL agent and a broker with Coldwell-Banker. “There’s a home surplus at the high end; the starter homes are where the competition is. I tell buyers, ‘Understand the dynamics of your particular market.’ They’re not all the same.” You can use Trulia Maps to check out historical pricing trends in the housing market where you’re looking.

  2. 2. Line up your financing

    This one applies year-round. And although interest rates will probably keep creeping up, “it’s still relatively cheap to borrow,” says Ashley Kendrick, an agent in Kansas City, MO. Even so, sellers are much more apt to consider buyers who present a loan preapproval letter up front. And make it from a known lender like a bank—not an application completed online.

  3. 3. Be clear with yourself on what matters most

    Make a list of your must-haves, your wants, and your it-would-be-nices so you’re ready to decide right away. “This is no time to be a lookie-loo,” Best says. “There’s no more, ‘Let me see if I qualify for this and come back.’” Know what you can live with and what you can’t live without.

  4. 4. Don’t quibble on price

    As the inventory for starter and trade-up homes continues to shrink, the competition for what’s available on the market is fierce. In markets where this is happening, “the price is never the price,” says Anthony Gibson, an agent from Austin, TX — buyers may need to offer more to stand out. “A healthy down payment always appeals,” Kendrick adds, since it suggests you’d have cash to cover any difference between appraised value and a higher asking price; you may be asked to sign a waiver agreeing to that. That’s not raising the overall price, Best notes—just how much you’d pay outside the loan.

    A bigger earnest-money payment (the good faith deposit you pay to a seller to show you’re serious) could also provide an edge, says Jennifer Ames. “A typical initial check might be $1,000; I might advise a buyer in competition to start with $5,000.”

  5. 5. Get your own real estate representation

    Particularly when timing is everything, a house-hunter needs the right agent. “Make sure yours can provide accurate information the minute a home hits market—for example, whether the seller is reviewing offers as they come in or after the weekend,” Best says. And do get your own agent to represent you: This is no time to try enticing a listing agent to handle both sides of the deal in an effort to curry favor with the sellers. With competing bids flying, you want someone fully focused and advocating on your behalf.

  6. 6. Craft a strong offer

    Top bid doesn’t always mean highest price. For sellers, flexible terms may be what clinches the deal—say, letting them pick the closing date, or a generous leaseback period that lets them stay put until they close on buying a home. Be sure not to load up your offer with unnecessary contingencies. “It’s important owners know they’re getting what they want,” Gibson says. And don’t forget the personal touch: “A letter to the seller always helps,” Kendrick suggests.

    Need some inspiration for that a letter to the seller? Here are three offer letter templates to get you started.

  7. 7. Don’t sweat it if it doesn’t happen by August

    Even when deals fizzle, the waiting and offering will probably pay off. “I tell my buyers, ‘You’ll find a house,’”  Kendrick says. “It’s a patience game.”

Post courtesy of Trulia,

10 Tips for Spring Home Buyers

Follow these 10 tips to make the home-buying process a happy one.

The arrival of spring means it’s time to start fresh. Along with pulling out your warm-weather wardrobe and tackling spring cleaning, you may have a bigger project on your to-do list: buying a new home.

Before you start on your home-shopping journey, check out these 10 home buying tips to save you both time and money.

Find the right agent

Real estate expert Joe Manausa says the key to happy spring home buying is finding the most qualified agent to guide you through the process.

With reviews available at your fingertips, finding a real estate agent you trust can be easy — provided you take the time to do some research.

Check for agents with the best reviews, and give them a call. They’ll relieve some of the pressures of home buying, and walk you through all the necessary steps.

Think location

Sure, the three things that matter most in real estate are “location, location, and location.” Nonetheless, some buyers end up purchasing a home in a location that’s not right for them, simply because they make their choice for all the wrong reasons.

“They’re looking at a house in the wrong area or the wrong school district, but they buy it because they like the kitchen,” Manausa says.

Use the new open house

The internet has completely changed the home-buying process, making it easier to choose which homes to go see in person.

With 3-D tours available on the web, buyers can tour a home from their mobile device or a computer. Eighty-seven percent of home buyers use online resources during their home search, according to the Zillow Group Report on Consumer Housing Trends.

Buy a home, not a project

Buyers who purchase a fixer-upper can end up spending the same (if not more) than they would on a new home.

“When buying a home, pay close attention to the ‘bones’ … and avoid getting caught up in the cosmetic features,” advises Dan Schaeffer, owner of Five Star Painting of Austin.

If the kitchen cabinets are in good shape, but you want the space to be brighter, adding a fresh coat of paint is easier and less expensive than replacing all the cabinets.

Ka-ching! Be a cash buyer

Sellers are more likely to choose the buyer who already has money in hand over an offer that’s contingent on a mortgage loan.

But if you can’t pay cash, getting pre-qualified for a loan can help the seller feel more confident that you’ll be able to secure financing.

Avoid disaster — get a warranty

The last thing you want after buying a home is for something to go wrong. You protect your car, so why not your home? Manausa recommends purchasing a home warranty: “[They’re] very affordable, and cover all the things that go wrong.” Your wallet will thank you.

Make inspection time count

Small problems eventually turn into big problems. The wood could rot, drains could leak, or the electrical panel may not be up to code. “Hire experts, and always get your home inspected,” adds Nathanael Toms, owner of Mr. Electric of Southwest Missouri.

If the inspection reveals issues, be sure to deal with them effectively. For example, “it’s very important that a licensed electrician makes sure all circuits work properly,” say Dana Philpot, owner of Mr. Electric of Central Kentucky.

Put safety first

No matter the neighborhood or the home, your family’s safety should always be the number one priority after purchasing a home.

“Even if the previous owner promised to return the copy of every key, it’s always a good idea to change the locks throughout the exterior of the home,” says J.B. Sassano, president of Mr. Handyman. “If the house has an alarm system, remember to change the code — and don’t forget the garage door.”

Fix common repairs

Repairs may come in the form of patching up small nail holes or weatherproofing electrical outlets. Whatever the need, Schaeffer recommends fixing the repairs before moving in your belongings. “An empty house is easier to maneuver and clean,” he says.

For bigger jobs, find a professional to complete the repairs. Sites such as Neighborly can help you find home services providers.

Add the finishing touches

The best part about buying a new house is making it a home. Change the color of the walls, update the lighting, or add a more personal touch with a photo gallery wall.

“It’s important to find the right gallery layout by measuring the wall space, which determines the size of photos you can use,” Sassano says. “Lightweight frames are the safest option, especially when hanging on drywall.”

Courtesy of zillow.com

Guide to Buying a Second Home or Vacation Home

One out of three homes sold in 2007 was a vacation home or investment property, showing that demand for second homes remains healthy despite a slow housing market. Reasons for buying a second home vary, from recreation and vacation enjoyment to investment and development to retirement planning.

With homebuyers enjoying an advantage in many markets, now may be the time to buy that second home. Whether you’re dreaming of paradise or profit, follow these five steps for a smart investment:

  • Step 1: Decide if it’s the right time to buy
  • Step 2: Know what to look for in a second home
  • Step 3: Explore financing options and negotiate with the seller
  • Step 4: Learn the tax ins and outs
  • Step 5: Research alternative ownership options

Second Home Factoids:

Median age of buyer: 46 (baby boomers own 57 percent of all second homes)
Median household income: $99,100
Median price of second home/nonprimary residence: $211,000
No. 1 reason for buying: Family retreat
No. 2 reason: Future primary residence
No. 1 location to buy: The South
No. 2 location: The West
Most popular type: detached single-family homes, followed by townhomes and condominiums
Most popular area: suburbs, followed by small towns, urban areas, resort and vacation areas

Source: National Association of Realtors

Step 1: Decide if it’s the right time to buy.

Think through your plans for a second property before you leap, advise experts.

  • Assess your goals. It may come down to investment reasons, vacation enjoyment or a combination of both. Want a place within driving distance for a retreat? Looking for a family vacation spot? A jump on a retirement home?
  • Consider the market conditions, your personal finances and the affordability of the property. Given the downturn in housing prices with many U.S. regions taking hits, there are deals to be had, says Melanie Greenstein, principal of Rise Network in Minneapolis, a real estate brokerage specializing in second homes. “Use the right agent in the right city and if you do your homework, you can find some phenomenal buys. Don’t plan to flip or sell the property within the next 12 to 24 months.”
  • Focus on areas with steady appreciation rates. Don’t bank on renting out the home or having all your expenses covered, advises Lynda Traverso, GRI, Realtor with VIP Realty Group in Sanibel Island, Fla. “Do look at a second home as an investment and consider areas where homes are going to appreciate.”

Step 2: Know what to look for in a second home.

Once you have a good idea of your goals around a second home, it comes down to homework and scouting for the right property in the right location.

  • Try it out first.
    When assessing location, particularly for a vacation home in an area you’re not familiar with, renting for at least one stay is always a good first step. Carefully consider travel time and expenses against how often you plan to use the home, real estate broker Ruth Krinke says. “How accessible is the property? With the price of gas today and rising airfares, this is a big issue.”
  • Talk to the locals.
    Even if you’ve been vacationing in the same area for years, getting to know the place from a local perspective is important before buying a home there. Talk to residents and ask them what they like about the area, how it’s changing, what types of people are moving there and what it’s like off-season.
  • Act like a local.
    You should also visit the area yourself during each season to get a feel for what it’s like year round. While you’re there, scope out restaurants, grocery stores and entertainment. Does the area have enough of the things you like to keep you interested? Also check out the public school system; even if you never plan on your kids attending there, homes near great schools have more value.
  • Look at the comps.
    To help gauge whether the property is a good investment, review other home sales in the community to examine what the track record is on resale values of similar properties, Traverso says.
  • Know the rules of renting.
    If you plan to rent the property, expect to do additional research. For example, some communities ban weekly vacation rentals, allowing only for monthly rentals. “It depends on the homeowners association and the city law,” Traverso says. On the flip side, if you’re craving a quiet retreat, you may not want to vacation in a community with a lot of rental turnover.
  • Work with an experienced agent.
    A seasoned real estate agent can help you weigh your criteria and make all the difference in a second home purchase. Try these tips for finding an agent or broker:

    • Scout local listings, including free sales publications that list the type of property you want to buy.
    • Find an agent that knows the area and property values. “Select one with at least five years minimum experience in that marketplace, preferably more,” Greenstein says.
    • For extensive searches, scouting in resort communities or exploring alternatives like fractional ownership, consider an agent with the Resort & Second Home Property Specialist (RSPS) Certification by the National Association of Realtors.
    • Beyond the sale, a good agent will stay in contact and help you. This is particularly important for homeowners who may not live near the property.

Step 3: Explore financing options and negotiate with the seller.

In many ways, second home purchases are similar to the primary home purchase. Realtors say putting 20 percent down or more is common for second homes to avoid the expense of mortgage insurance and given today’s tightened lending practices. “It’s possible to buy a true second home with 5 or 10 percent down, but it’s tricky,” says Ruth Krinke, RSPS (Resort & Second Home Property Specialist), associate broker with Steamboat Real Estate in Steamboat Springs, Colo.

When it comes to negotiating, second home sellers may be more flexible than their primary-home counterparts. “Second home sellers are often more flexible in price and terms of sale. They may want out because they are overextended or their lifestyle has changed,” Greenstein says.

To move the sale along, buyers can request special terms of the seller. For example, as an incentive, sellers might be willing to carry a second mortgage for three to five years, Traverso says. “Sometimes banks will accept 10 percent from the seller when the buyer puts down 10 percent. The seller may take on a burden to get the deal done when banks will only loan 80 percent of the value of the home.”

Consider these tips when investigating your financing options:

  • For mortgage financing, use a local lender in the area you are buying, Traverso says, because its expertise and knowledge of the market can avoid problems later;
  • Stricter guidelines are involved in qualifying for a mortgage for an investment property. Typically, borrowers pay a higher interest rate;
  • If you do need the rental income to qualify for the loan, you may need a minimum of 25 percent down, Krinke says. Lenders tend to give credit for up to a 75 percent occupied rate;
  • Other forms of financing include tapping into your primary home’s equity line of credit, known as HELOCs.

Step 4: Learn the tax ins and outs.

Savvy tax planning can make a difference in your return on the property. Tax implications for second homes can vary significantly based on your financial situation and whether or not you plan to rent out the property. Keep these in mind when figuring the impact on your taxes:

  • Consider property taxes, utilities, homeowners association fees and other applicable expenses.
  • Generally, the interest on the mortgage of your second home is tax deductible, and rental properties are subject to additional tax breaks. “If it’s an investment property, then the deductions come in an array of possibilities, including depreciation of the real estate itself and a separate, accelerated depreciation of personal property such as furnishings,” Krinke says. “Owners can use the property only for two weeks a year to get certain tax benefits on rentals,” Greenstein cautions.
  • If you rent out the home for 15 days or more during the year, you have to report all rental receipts to the IRS as income, but you can also deduct operating expenses such as utilities, repairs, insurance and management fees against that income.
  • Consider strategies for reducing or deferring capital gains upon the sale of the home. For example, the Internal Revenue Code Section 1031 tax-deferred exchange allows for the deferral of capital-gains tax by exchanging for “like kind” property allowing for taxes to be paid when a sale of a second or third property is ultimately realized. As a general rule, 1031s are used when you sell real estate held for investment purposes and not for the sale of your personal residence.
  • Always consult with a tax professional or a specialist such as a national qualified intermediary for tax-deferred exchanges before getting too far into the second-home buying process.

Step 5: Research alternative ownership options.

In addition to single-family homes, townhomes and traditional condominiums, experts say to tread cautiously with alternative ownership forms of vacation homes such as fractional ownership, vacation clubs, time shares and condo hotels.

Resale values on certain types of cooperative-ownership properties may not hold up over time and selling these properties can be a burden. “Resale values on fractional ownership properties are usually higher than time shares because very few timeshares are actually deeded ownership,” Krinke says.

Financing is easiest around single-family homes, Krinke says. “Multifamily dwellings, townhomes and particularly condos, can be difficult to arrange financing for.”

Whether you’re looking for a home to spend your retirement days or an investment property to diversify your portfolio, make sure you do your homework and work with the right experts.

Post courtesy of hgtv.com

How To Be Financally Prepared To Buy Your First Home

Getting ready to buy your first house can be daunting. Credit scores, down payments, and mortgages are all on your mind. Here’s a guide to help you get ready to make one of the biggest purchases of your life.

Buying your first home can be one of the most exhilarating — and stressful — moments of your life. But armed with the right information, you can shop for a house, apply for a mortgage, and close the deal with confidence.

Buying your first home: Where to start

The first thing to do before buying a home is to make sure it’s the right time to do so. Generally speaking, owning a home pays off financially if you will live in it for at least five years. Otherwise, there’s nothing wrong with renting. Your actual numbers may vary, but you can play with scenarios with our rent vs buy calculator.

Step 1: Determine how much house you can afford

You might disagree, but I don’t believe should treat your home as an investment. Yes, hopefully it will appreciate over time. But you should buy it because you want a home, not an investment.
That means you should never stretch to buy your primary residence thinking you can take cash out or flip it for a quick profit in a few years. Only buy a house that you can afford today!
Although it may not always be feasible if you live in an expensive real estate market, try to keep your total housing payment under 30 percent of your gross monthly income. When you spend much more than that on your mortgage, you risk becoming “house poor” — you might live in a beautiful home but find it difficult to save or even cover other monthly expenses.

Step 2: Prepare your finances for the mortgage process

The last thing you want to do is find your dream home only to discover you’re not financially qualified to buy it. To guarantee you’re financially ready to buy your first home, you’ll need good credit, cash to close, and a verifiable income.
Check your credit

Hopefully this isn’t a a surprise, but getting a mortgage requires a good credit score. It’s a good time to check your credit reports for errors and possibly invest in a few months of a daily credit score monitoring service.
A fast way to improve your score by a few points is to pay down credit card balances and stop using them for two months before you apply for a mortgage. Also, you’ll want to avoid applying for credit (for example, a new credit card or car loan) until after you’ve closed on your new home.
If you’re buying a home with a spouse or other co-buyer, your mortgage lender will likely consider both buyers’ credit scores in the application process. That’s not to say you’re necessarily doomed if one person’s credit isn’t as good, but don’t count on things going off without a hitch just because one buyer has a stellar score.
Finally, remember that improving your credit score significantly can take at least six months, so get started if you need to!
Save cash for a down payment and other expenses

In addition to making sure your credit score is in order, you’ll also want to consider the cash you’ll need to make buying your first home a reality. Of course there’s your down payment — typically between 3.5 and 20 percent of the purchase price.
As you save money for your down payment, avoid the temptation to invest in the volatile stock market with money you hope to use in the next year or two. While you might be tempted to try to earn a greater return on your money than an online saving account paying 1 percent, the greatest risk is not having your money available when you’re ready to buy a house.
And as you save, don’t underestimate how much money you’ll need — you might be surprised at how much cash you’ll need for closing over and above the down payment amount.
Get your documentation in order

Finally, if you’re close to putting an offer on a home, begin to collect documents that you’ll need to verify your financials on the mortgage application: paystubs, W-2’s, bank statements and, if you have freelance or self-employment income, copies of your last two tax returns.

Step 3: Go shopping for a mortgage

Too often, home buyers leave mortgage shopping to the last minute and watch their dream home go to another bidder who had financing in order. Mortgage pre-approval is a free and non-binding process that presents you to sellers as a serious, qualified buyer when buying your first home.
Mortgage types

Comparing two mortgages can be confusing. There are fixed-rates and adjustable rates, or ARMs, which are priced very differently. You can take out a mortgage for 30 years or as little as five years (interest rates are typically higher the longer the term of the loan).
Most buyers should look at fixed-rate mortgages and, indeed, the 30-year fixed rate mortgage is the most common kind of loan, by far. Still, it doesn’t hurt to become familiar with how mortgage rates work and the different kinds of loans that are available.
You may also want to run some scenarios through a mortgage calculator to see how different terms and rates will affect your monthly payment.
Mortgage fees

To make matters worse, mortgage lenders charge fees that aren’t necessarily reflected in the interest rate. There can be fees for appraising the home, checking your credit, and preparing documentation.
In some cases, you may be offered the option to pay “points” at closing that will reduce your interest rate. Points are essentially prepaid interest. This can be a tricky decision, but it can make sense if 1) you can afford to put down the extra cash and 2) expect to carry the mortgage for many, many years.
It can be a good habit to compare mortgage rates online regularly. You’ll notice that they fluctuate quite a bit from week-to-week and that some lenders will run the equivalent of “sales”, lowering rates to attract more customers away from the competition.
Private mortgage insurance (PMI)

If you put less than 20 percent down, your lender will likely charge you a monthly premium for what’s called private mortgage insurance, or PMI. Private mortgage insurance protects the bank in the event you default on your loan and the value of your home declines significantly.
Before the 2008 financial crisis, you probably remember hearing about how many people were starting to have trouble making payments on adjustable rate mortgages, or ARMs. This post briefly describes the difference between fixed rates and ARMs, as well as what mortgage points are, and whether you should ever pay them on your mortgage. Compare current mortgage rates and get good-faith estimates from a few lenders on what your rate and costs would be.

Where to get mortgage rates and pre-approval

The only wrong way to get a mortgage is to walk into your local bank, ask for a loan officer and accept whatever rate she gives you without ever shopping around.
You can compare rates with any number of leading online mortgage lenders or find a local mortgage broker who will shop your application to multiple lenders on your behalf.
I often also recommend using the site LendingTree to quickly get four or five competing mortgage rates from different banks. These rates will be more accurate than the ones you see in advertisements and Websites because banks provide real rates based upon your credit profile and the location and value of the home you want to buy. Learn more about getting mortgage quotes and pre-approval from LendingTree.

Post courtesy of MoneyUnder30.com

 

3 Ways to Research a Property Online

Once you’ve got the basics, it’s time to do a little more digging.

Nearly every home search starts online these days. Sorting through listings, photos, floor plans and descriptions is a great way to feel out the market for those who are in the earliest stages of the home search.

When you find a home you’re ready to bid on, it’s incredible how much background information you can find online. The Internet is full of data on past home sales, recorded sales prices, and the history of each sale, plus information that may not be as obvious — such as the safety of the neighborhood you’re considering buying into.

Here are three ways to use online tools and real estate mobile apps to get more details about the home you want.

Check building records

Nearly all public information and documentation is now available online, and most municipalities provide web access to building permit history. Although the law requires most sellers to disclose previous work done on the property, there may be a history of earlier work the seller didn’t know about.

For example, if there is a newer bathroom or kitchen but no history of a permit for the work, there is a chance someone did the work without a permit — and potentially not to health or safety code. And if you become the owner, this unpermitted work becomes your responsibility.

To begin your search, type “building records,” plus your city’s name into your favorite search engine. Example: “building records Seattle.”

Use Google Street View

Researching an address using Google’s Street View can be one of the most revealing options available. Street View provides a snapshot of a property at a particular moment in time, which can provide insight into the recent history of the property or neighborhood.

Be aware, however, that the image you see may not accurately reflect the home’s current state. For example, I helped a homeowner list and sell a home in San Francisco’s Lower Haight neighborhood a few years back. We planted a beautiful garden area to create a buffer between the sidewalk and the windows. But a search for the property on Google Street View revealed the windows with bars on them, and no garden. The previous owner had bars on the window, and someone had removed the bars to make the property look more inviting.

Seeing the windows with bars on them in Google Street View could raise questions for potential buyers: Is the neighborhood unsafe? Was there a history of crime in the community or on the property? Are the street-level windows safe?

Consult a neighborhood crime app

A variety of crime reporting apps for mobile devices show on a map recent crimes that have been reported, including assault, theft, robbery, homicide, vehicle theft, sex offenders, and quality of life (which often means noise complaints). It’s an easy way to get a quick overview of how safe or unsafe a neighborhood is.

So much information is available to buyers these days. You don’t need to rely solely on the seller’s or the real estate agent’s disclosures. Use online resources to find out as much background information on a property as you can, either before making an offer or during your contingency period. It is best to do as much research as possible, in order to make an informed final decision.

Post courtesy of zillow.com

Homeowner Tax Benefits

Did you know that paying money to own a home can actually save you money? This April 15, take advantage of these tax benefits and reap your homeowner rewards for the rest of the year.

  • Reduce the interest on your mortgage

No longer do mortgage payments have to be a burden. Now you can take advantage of those homeowner fees and deduct them from your taxes. The more you pay on your mortgage now, the more you’ll save when April rolls around.

If you’ve taken out a mortgage recently, you’re in even more luck. Because early mortgage payments are mostly all interest, you can claim a deduction for these interest payments and save on your taxes.

  • Deduct your property taxes

 

With deductible property taxes comes hefty savings. The average household property tax is $2,127, according to the U.S. Census Bureau. This can either be deducted from your monthly payment on your mortgage, or by writing off the payment after paying your property taxes off early.

Something important to note: you must claim the tax deduction in the same year you write the check. For more details, check out how to calculate property taxes.

  • Insurance on your private mortgage

 

You might be paying private mortgage insurance if you initially paid less than 20% for your home. You can deduct the small percentage of interest on this insurance from your annual income and pay less in taxes.

 

For example, if you make $100,000 and put down 5% on a $200,000 house, you’ll pay about $1,500 in annual PMI premiums and thus cut taxable income by $1,500.

 

  • Putting “green” updates in your home puts more “green” in your wallet

For any equipment you’ve updated in your home that uses renewable energy sources, you can claim up to 30% of the installation costs from The Renewable Energy Efficiency Property Credit.

Upgrades such as wind turbines, solar panels, HVAC systems, energy-efficient windows, and storm doors could help you earn a tax credit of up to $500. While some of the credit for these updates might have expired in 2016, the credit for installing solar panels runs until 2019, so hurry and take advantage of these extra “green” savings.

  • Stay in – work from home

Working in your pajamas never had so many benefits. By claiming your “office space” at home, you can take a $5-per-square-foot deduction off your annual taxes, for up to 300 sq./ft. of office space. Check with your accountant to make sure you fulfill all the requirements before taking advantage of this money-saving opportunity.

  • Age in place

By renovating your home to make it more accessible as an older homeowner, you could save on your taxes this year. Wheelchair ramps and grab bars in bathrooms are two updates that could help you save big.

Jayson Mullin, owner of Top Tax Defenders, says “You can deduct the amount by which the cost of the improvements exceeds the increase in your home’s value.” If you spend $5000 installing a wheelchair-accessible ramp in your home, and it increases the value of your home by $3,000, the end deduction you could claim would be $2,000.

The only catch is the renovations must cost more than 10% of your AGI, unless you or your spouse are 65 or older, then the cost must only exceed 7.5% of your AGI.

 

  • Take advantage of your HELOC

Deduct the interest you pay on your home equity line by spending it on repairs and renovations for your home. The bigger the loan you take out, the more you can save later on your taxes. So this year, upgrade your home and you might reap big financial benefits.

Should You Buy a Home Now or Later?

You may know you want to buy a home, but timing is everything. For such an important decision, you have to consider when exactly the right time is.

It is impossible to pin point the exact perfect time for anyone to buy a home, but there are a few valuable questions to consider when determining: when is the best time to buy a house: right now, or wait?

Consider these three questions while deciding when to buy a home:

Your Financial Situation

When you are buying a home the first and most important thing you need to consider is if you can afford it! You must consider the following:

  • Being able to put down a down payment – down payments on homes are typically 20% of the home value. This is money you must provide upfront and must be able to front before moving in. If you can’t commit to this large sum of money you may consider taking some more time to save up.
  • Affording a mortgage payment every month – on top of the down payment you must consider the monthly mortgage payments. Can you afford to pass off a few thousand dollars every month?
  • Your credit score – one last financial item to consider is your credit score. Have you paid off debt in the past? Can lenders trust and rely on you? Having a good credit score is very important when buying a home in order to ensure you can be approved for the mortgage.

Conditions of the Real Estate Market

Like a lot of things in life, the real estate market is constantly changing. Sometimes are better to sell and sometimes are better to buy. Talk to your real estate agent about the local real estate market conditions to determine when would be the best time to commit to buying a home.

When the buying season is slow you oftentimes have more negotiating power, this is something to look out for! Here are some items to consider when looking into the real estate market:

  • Quantity of available listings – if houses have been sitting on the market for a while then chances are prices should be down and you should have the negotiating power. If houses are selling quickly then now may not be the best time for you to buy if you are worried about financing.
  • Mortgage Interest rates – The rates on home loans are constantly fluctuating and impacting the conditions of the market. Again, if you are worried about finances then you want to make sure to buy at a time when interest rates are lower.
  • Buying vs. Renting – another factor to consider is whether you want to buy or rent. There is nothing like owning your own home, but sometimes it helps to rent first and take some time to save up more and be fully ready to make a financial commitment when you do decide to buy a home.

The Time of Year

A lot of people move during the spring and summer months that ore often less busy then fall when school is starting or winter when the holiday craze takes over. Although this has credit to it, you should be aware that buying during these times can give you more of a competitive edge. Consider what you are looking for and how the seasons can affect your purchase.

Your History

Do you have a track record of moving from place to place and never settling down? Buying a home brings on a lot of additional costs that may not be suitable for your needs if you aren’t looking to stick around for the long haul. When buying a home, consider how long you want to stay in the area and whether it would be a good idea to purchase a home in that area.