What’s the Point?

March 26, 2014

Prepaid interest, sometimes called “points”, is generally tax deductible when a person pays them in connection with buying, building or improving their principal residence. When points are paid on a refinance, they are not a current deduction but have to be taken prorata over the life of the mortgage.DEDUCTIBILITY.png

For instance, if $3,000 in points were paid on refinancing a 30 year mortgage, a deduction of $100 per year is allowed. When the loan is paid off or replaced by refinancing again or the home is sold and the mortgage paid off from the proceeds, the balance of any un-deducted points may be taken in that tax year.

Your tax professional needs to be made aware of any of these situations so that he or she can accurately reflect the deductions in your return. Currently, the most common situation is homeowners may be refinancing their home for the second, third or even, fourth time. If there are points that have not been completely deducted, they need to be treated in the year of refinancing.

For more information, see points in IRS Publication 936; there is a section on Refinancing in this publication. For advice considering your specific situation, contact your tax professional.


Addition Part II

March 20, 2014

A few weeks I told you about an addition we were hoping to make on our home. It included being able to get a variance between our lot and the neighbors. We presented our plans, photographs and intentions to the county planning commission ahead of time and had our hearing this evening. It took all of maybe 3-4 minutes. We gave our quick explanation and plans along with having our neighbor mail a letter to the Board ahead of time stating her approval of our plans. We won.

Doing our homework and planning simply and concisely worked well in this situation. We meet with the contractor next week to get started but we have one more hurdle. We have to get our neighborhood architectural review committee to approve. I’m hopeful that will go well as this is a definite improvement for our residence and should add value as well.

More updates soon and pics.

Qualifying Guidelines.pngThe Qualified Mortgage Rule came into effect on January 14, 2014 as one of the results to the Dodd Frank Reform Act to protect consumers from predatory lending practices. This will affect the underwriting standards that the majority of lenders will use to qualify borrowers.

The ability to repay rule states that financial information must be supplied by the borrower and verified by the lender. The borrower must have sufficient assets or income to pay back the loan which limits the maximum debt-to-income ratio of 43%. In an effort to present a more accurate picture of the costs to the borrower, teaser rates can no longer hide a mortgage’s true cost.

A maximum of 3% in upfront points and fees can be paid on behalf of the borrower. There can be no negative amortization, interest-only or balloon payments and the loan term limit cannot exceed 30 years.

While there are more requirements, most deal with good underwriting practices that are followed by reputable lenders such as considering and verifying things that affect the ability to repay the mortgage like income, assets, employment status, simultaneous loans, debt, alimony, child support and credit history.

Forgetful or just rude?

March 18, 2014

In my industry as with many others, follow up is essential to success. As a REALTOR® those of us in my market know exactly who will or won’t answer their phone much less return a call. It has been the discussion of many a sales meeting. We don’t even have to actually say the name(s) or those individuals. We just all know. As a Broker who has to answer to complaints about our agents I too have had to answer to that particular complaint from time to time. There are only so many excuses one can use. “I’m just so busy”. “I’ve had so many appointments”. “I had all these issues with a transaction”. Whatever your excuse is it’s just plain rude. It says to people you are not important or worthy of my time. I made it a priority when I started in real estate to never let a day go by without returning a call. If I did forget, I did acknowledge that when I did speak to the other person. I’ve found that forgiveness goes a long way in a professional relationship when you acknowledge your faults and mistakes. It’s odd that I can call someone and not get an answer, but yet get a text immediately asking me what I want. What? In an age of technology overload we have lost our manners. We ordered a boatload of simple notecards for our agents asking them simply to write a personal note to their clients at the end of the transaction. I’m amazed that they don’t use them. I use my own personalized note cards and write several each week. Perhaps they are using their own personal ones as well. I sure hope so. Having clients for life instead of one transaction is one of the keys to a long and prosperous career in sales. It could go a long way personally as well. I miss the art of etiquette in todays business world. I fear that the generation behind us will miss out on the importance of common courtesy. Social networking, texting and other technological means of communication are great, but good old southern manners can mean a good deal go great as well as help teach others a thing or two about courtesy.


water meter key.jpgA water meter key is like insurance; buy it before you need it.

Imagine a pipe has burst and there is water flowing like a river through your home. There may a cut-off valve to each sink if it works and if that’s where the leak is coming from. Your home may have a master cut-off valve but if you haven’t used it before, you might not know where it is. The last resort is to cut off all the water to your house at the meter.

In most cases, you’ll need a key to get into the meter. With water starting to rise in your home, concern over the damage being done may add to your anxieties. You don’t have time to call a plumber or even go the store to buy a water meter key.

Emergencies are handled much better when you plan for them in advance and practice, even though you hope you’ll never need it.

1. Determine what kind of key you need to open your water meter.
2. Purchase it at the home improvement or hardware store.
3. Practice opening the meter to be able to do it quickly and easily.
4. If your meter key doesn’t have a wrench on one end, you need a wrench to turn the water valve.
5. Practice turning the water off just to see how it works and feels.
6. Put the key in an obvious and conspicuous place.
7. Have the phone number of an emergency plumber, just in case you need it.

While you’re planning for the unexpected, it might be a good idea to show some of the other family members how it works and where you keep the key.

Reasonable Expectations

March 4, 2014

fortune cookie2.pngCoffee should be hot. Beer should be cold. Mexican food should be spicy. However, if these things are less than the standard that you expect, there are not any lasting consequences.

As the value of the object in question rises, either in price or gravity, the expectations usually increase and decisions become progressively more important. Marriage, children, health and careers are certainly a few of the more important items that bear careful consideration.

The sale of the largest asset that most people own, their home, also merits having reasonable expectations. A homeowner should expect to get the market value for their home in a reasonable period of time with as few inconveniences as possible.

According to the latest Home Buyers and Sellers Survey, more homeowners are entrusting the sale of their home to real estate professionals. Owners can increase the likelihood of a favorable outcome by sharing their expectations with agents prior to listing their home for sale.

Challenge your agent to explain what they intend to do to:

  • Price the home correctly
  • Prepare the home to make a good impression
  • Position the home in the marketplace

It is reasonable for a seller to expect the agent will work hard to sell the home; will tell the truth and represent the client’s interests to the best of their ability. Agents exemplify remarkable service when they exceed the seller’s expectations.

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