Glen Oaks Escrow

Tips for Underwater Home Upgrades

All homeowners are in different and unique situation. Some are looking to upgrade and move, but many are content in staying put – even if they are in an upside down mortgage (they owe more than the house is worth). This can absolutely be the right decision. And here’s the best news – just because you’re staying in your house, doesn’t mean you have to put up with a home that isn’t meeting your needs. A few sensible fixes to your home can result in many benefits. It will make your life much more comfortable over the long-term, increase the home’s value, and begin saving you money.

A few cosmetic fixes can go a long way. These fixes can both help you hit an appraisal mark for refinancing or lure a buyer in for short sale. You can make it a DIY project, or hire someone. Consider painting the shutters, eaves, doors and trims, adding new hardware like a mailbox or house numbers, and simple landscaping like planting flowers and trimming the shrubs.

If you are seeking more space, and it’s in your budget, an economical expansion may be the right fit. Look into converting your garage or basement into a livable space – this can be used for visitors, or rented out as a form of extra income. You could also add square footage by adding a prefab unit to a large backyard. If it fits your needs, you may also consider combining rooms to create a larger kitchen, bedroom, or living space. Plus, you get to take out some homeowner aggression and knock down walls!

Another great upgrade to consider is going green! Green fixes like solar panels, dual-paned windows and installing efficient heating and cooling appliances may qualify you for tax credits, and will save you money on your electric bill almost immediately. Of course before you invest in your upside down home do your homework. Have a plan and ultimate goal ironed out and you can make some great regret-free changes to your property.

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6 Tax Breaks Every Homeowner Should Know

Buying a home is a big investment, but with that comes a variety of tax breaks. One of life’s certainties are taxes. Everyone pays them, but those who take the time to understand their write-offs will realize the benefits. While itemizing your taxes does require more work, the benefits for homeowners can more than make up for it. The tax deadline is coming up quickly, so let’s take a look at six tax breaks that should be on the minds of homeowners everywhere!

1. Property Taxes—Like regular taxes, property taxes are inevitable. But understanding how your property taxes are calculated can be empowering, especially at tax time. If yours are based on the assessed value of your real property, you can deduct state and local property taxes. Keep accurate records if you pay out of pocket though. Those who pay through an escrow account will have an easier time, as the amount will appear on Form 1098 from your lender.
2. Mortgage Interest Deduction—Writing a check for your home each month should make your mortgage go down quickly. But the majority of the money is put towards interest at the beginning of your loan. Fortunately, a Mortgage Interest Deduction (MID) exists, and you can deduct the amount from your taxes. The amount also appears on Form 1098.
3. Construction Loan Interest—If you are considering a home remodel, look into getting help with expense through financing. A construction loan might entitle you to deduct the interest during the first two years of the loan.
4. Mortgage Insurance Premiums—Most homeowners pay private mortgage insurance (PMI). It protects your lender in case you default, and it’s also tax-deductible if your AGI is less than $100,000 (married couples).
5. Energy Star—Getting paid to shop sounds like a scam, but when you’re talking about Energy Star appliances, it’s not as far fetched as it sounds. Purchasing energy-efficient appliances, windows, doors, and skylights will give you another tax deduction. You will need to install them by the end of the year though to get the 10% tax credit. And it’s only based on the cost of the products, not installation.
6. Points—You may not remember, so look back to see if you paid any fees when you obtained your mortgage. If you did, you’re entitled to a deduction of the fees during the year you paid them, assuming the loan was for a primary residence. And if you have refinanced, you can deduct the points over the life of the loan.

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Remodeling Projects that Pay off

When it comes to home remodeling, not all projects are created equal. Some projects pay for themselves in the long run, whereas others might not net you anything when you go to sell your home. It’s a typical cost versus value equation, and understanding which projects will make back your money can empower you before you hit the home improvement store with a list.

Remodeling can be an expensive prophecy depending on the project, so replacing old items versus completely gutting can often make more sense. It’s a big trend right now to do so, especially for exterior replacement projects. Take a new garage door, for example. This is a place where homeowners can recoup close to 70% or more of the cost of the project at resale. The same goes for new entry doors, another high-return item. And you’ll notice that was the cost of the project, not just the materials. Labor is something you’ll want to factor into the equation as well to see if you’re getting a good return on your total investment down the line.

Here is a list of mid-range projects that shows the estimated cost versus what the owners can expect to recoup at the time of sale:

1. Replacing the entry door to steel

Estimated cost: $1,238

Cost recouped at resale: 73%

2. Attic bedroom (converting unfinished attic space into a bedroom with bathroom and shower)

Estimated cost: $50,148

Cost recouped at resale: 72.5%

3. Minor kitchen remodel (including new cabinets and drawers, countertops, hardware, and appliances)

Estimated cost: $19,588

Cost recouped at resale: 72.1%

4. Garage door replacement

Estimated cost: $1,512

Cost recouped at resale: 71.9%

5. Deck addition (wood)

Estimated cost: $10,350

Cost recouped at resale: 70.1%

6. Siding replacement (vinyl)

Estimated cost: $11,729

Cost recouped at resale: 69.5%

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New Technology Protects Against Foreclosing on Military Personnel

Lender Processing Services’ (LPS) Military Service Relief (MSR) now allows servicers to recognize and process loans protected under the Servicemembers Civil Relief Act (SCRA) while providing a way to protect against foreclosing on military personnel.  The SCRA disallows mortgage servicers to foreclose on or seize property from active-duty military personnel who are unable to pay their mortgage.  Foreclosure protection will last up to 9 months after their active duty has ended. The new law will also allow service members to quality for interest rate limits.

LPS states, “future MSR enhancements will deliver additional functionality related to default and credit bureau reporting, as well as reconciliation of advances”.

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Help for Repaying Homebuyer Tax Credit

The first-time homebuyer tax credit was first enacted in 2008. To help offset the housing crisis, lawmakers structured it as a no-interest loan. Taxpayers who used it had to pay it back over time (in annual installments through your tax return), but in 2009, the payback requirement was eliminated. Many borrowers in 2008 and others are understandably frustrated, not only regarding the tax credit revision, but also concerning how they might pay the government back.

To help, the IRS recently created a tool to help gather the information required and streamline the process. The tool helps simplify information, and gives taxpayers visibility to their balance, amount paid back to date, total tax credit received, annual installment amount, and also includes the exact payback amount in your federal tax filing. Before the IRS created the tool, taxpayers were responsible for keeping track of all of this information themselves. To access the tool, taxpayers simply enter their social security number, birthday and some other identifying information.

In addition to 2008 taxpayers, those who used the credit in 2009 and 2010 and sold their homes within three years of purchase are also required to pay back their benefit. For more information and to access the tool, please visit www.irs.gov.

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State Cracking Down on Property Tax Writeoffs

When property owners file their tax returns with the Franchise Tax Board in April 2013, they’re in for a rude awakening.  That’s because they’ll be required to break down payments into deductible and non-deductible portions, likely reducing their itemized deductions by thousands of dollars.

But don’t go calling your representatives about which new legislation implemented this change; it has nothing to do with new taxes or laws, but rather a technology upgrade expected to be completed in 2012 at the FTB’s headquarters in Sacramento.  Until that system is up and running, the tax authority hasn’t been able to differentiate between deductible and non-deductible portions of property tax payments.  Property owners typically deduct the total amount of their property tax bill – or the 1098 amount provided by their mortgage company – leaving the state short on taxable revenue well into the billions.  For example, Mello-Roos fees in Orange County alone account for more than $200 million of non-deductible amounts expected to be written off for tax year 2011.  The updated systems will allow the deductible and non-deductible split, giving Sacramento $200 million of “found” income to collect revenue on once the computers are operational.

After a thorough review of state records turned up the shortcoming in property tax deductions, the FTB chose to hold off implementation of the new rules until early 2012, allowing taxpayers ample time to adjust annual withholdings – and to ensure tax preparers have access to the proper documentation when it’s time to filing for tax year 2012.

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“Real” Property vs. “Personal” Property

According to the ‘Lectric Law Library, Real Property is “Land and all the things that are attached to it. Anything that is not Real Property is Personal Property:  anything that isn’t nailed down, dug into or built onto the land.”  Pretty straight forward, right? Not necessarily…

Typically, all parties consider items like furniture and appliances “personal” property.  When you buy a home, you’re buying the family room, not the flat screen television or the leather sofa.  While some jurisdictions have specific interpretations of “real” vs. “personal” property, when buying and selling real estate, there can be substantial grey areas.

If you’re talking about light fixtures and drapes, one person’s real property can be another’s personal property.  Even if the chandelier in the entryway wasn’t meant to be moved once it was installed, its value – whether in dollars or in sentiment – could make a difference when it comes time to sell.  It can also lead to confusion and/or dispute between buyers and sellers.

The best way to avoid conflict is to identify items like this at the outset.  If you’re selling a home and know the appliances are staying or the drapes are going, mention it to potential buyers.  Once a purchase agreement is drawn up, be sure that any items like this are clearly identified.  Built-in bookshelves, window air conditioners, and radiators are examples of other items that could cause dispute.  The list of property items should be given to the closing agent to be included in escrow docs so it’s clear to all parties what items stay and what items go.

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Tips for buyers while house hunting

When you’re looking for a new home, it’s easy to become enamored by paint colors and new flooring.  While there’s a house out there (somewhere)
with your name on it, keep in mind that sometimes it takes a while to find the “perfect” home.  So how can you make sure you’re making the right
decision?

•   Remember the inspection.  Even though it looks like that house is “the” one, it may be hiding secrets that could turn up during inspection.
  Make sure any purchase contract allows you the right to refusal if the inspector finds something you don’t like
•   Cheap isn’t always cheaper.  From foreclosures to fixer uppers, make sure you have real-world knowledge of what it might take to bring it up to
  your standards.
•   Lifestyle choices.  Not every house will be in that “perfect” area that allows you and your family the lifestyle that you lead (or want to lead).  While that’s not necessarily a deal-breaker, ensure that you are all comfortable with what living in that neighborhood would entail.  From schools to shopping to hiking, know where those deal-breakers lie – and stick to them.
• Consider the hidden costs.  Upkeep, property taxes, HOA fees, water, trash, etc.  Know what the “real” cost of that house will be before you hit a point of no return.

In your travels, you’ll see places that will tug at your heartstrings – they’ll say “pick me.”  Follow these tips and you’ll have a better understanding of which homes are keepers, and which ones to pass on.

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Give The Gift Of A Down Payment This Holiday Season

You may still be struggling to find the “perfect” gift for that special someone.  As you consider all the options at your disposal, add one more possibility to the list:  the gift of a down payment.  With lenders now requiring down payments of 20% (or more), this option can help make a significant dent when your adult children are in the market for a new home.  It can also make a difference in the size of your estate, saving your heirs the time and expense associated with probate.

In 2011, the gift limit of $13,000 (to a single recipient per calendar year) means that a married couple could give $26,000 to each recipient without incurring a gift tax.  If combined with gifts from a second set of parents, a young couple could theoretically have more than $100,000 to put down on a house, suddenly putting a $500,000 home within their reach.  Even more exciting is when a gift is bestowed at the end of one calendar year and the beginning of the next, effectively doubling a potential down payment to nearly $250,000.

As with many financial maters, the first and most important step is to consult a tax advisor to help ensure there are no unforeseen circumstances for either party at tax time.  But this is one case where big things come in small packages!

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Ensure Your Smartphone is Protected

One of the most important items at nearly every professional’s disposal these days is a smartphone.  No longer do you have to carry around a file full of business cards or phone numbers. Gone are the days of being tethered to a PC, but if your smartphone fell into the hands of a thief or hacker, you’re extremely vulnerable. By following these tips, you can minimize your risk:

1. Password-protection.  By creating a unique code, you’re ensuring that an unauthorized user doesn’t have access to data on your phone should you misplace (temporarily or permanently) the device.
2. Application review.  Read reviews of applications before installing them.  New or unreviewed apps can be wrought with security and privacy holes.
3. Limit access.  Many apps use personal data stored on your phone (like contacts or GPS).  Make sure you know which apps are using what data and why.  Don’t allow apps access to data they don’t need, e.g. your calculator doesn’t need access to your contacts.
4. Limit Bluetooth usage.  Typically, Bluetooth passwords are short and easy to figure out.  For those situations where you can’t do without a Bluetooth device, make sure the password is robust.  The safest way to prevent someone from listening in on your conversation is to use a wired connection.
5. Regular housekeeping.  By reviewing applications on your device regularly and deleting those you don’t use, you prevent your phone unnecessary open connections to your data.
6. Screen calls and texts.  Calls and text messages sent from unknown or blocked sources can leave you exposed to potential phishing schemes.  Search the web for any unknown numbers to determine if they’re related to any documented scams.
7. Close browsers.  Some mobile sites will remain open indefinitely – even those that are password-protected.  Open pages can leave you vulnerable if you’re logged in to your bank or email.
8. Verify updates.  Never trust an “update” link sent via email or text.  Go to your device’s app store or directly to the app developer’s website for verification.  Hackers use phishing techniques like this to gain access to user passwords.

Smartphones are our lives rolled into little package, but there’s no reason they can’t be safe.  By following these tips, you can keep your most sensitive data out of the hands of unscrupulous characters.

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