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March 2009

Moving and taxes

This article is byThe Move Advocate:

Now that 2008 is over, it’s the right time for you and your clients to begin thinking about taxes. Many of us are getting our records in order in preparation for tax day, April 15, 2009. If you or your clients have made a move this year, deducting moving expenses may be on your mind. But are all expenses allowable tax deductions?

The IRS does allow tax deductions for some of the costs associated with a move to accommodate a job in a new location. There are, however, two tests which must be met in order to qualify for deductions.

Test 1 - Distance Test

To qualify for a deduction, your new principal workplace must meet a 50-mile test. The distance between the old home and old work minus the distance between the old home and the new work must be greater than 50 miles. In other words, if the commute to the old workplace was 3 miles, a commute from the previous home to the new workplace must be at least 53 miles. If the person did not have a job before moving, then the new job must be at least 50 miles from the previous home.

Test 2 - Time Test

A person must work full time in the general area of the new workplace for at least 39 weeks during the 12 months right after the move. There are exceptions to the time test and other rules apply for those that are self-employed.

If you are not sure if you or your clients meet the requirements to deduct your moving expenses it is best to check with a tax advisor or visit the IRS website, Publication 521, and Form 3903 for more details.

If both tests are passed then some expenses may be deductible:

- Costs for packing, crating and movement of your household goods
- Up to 30 days of storage and insurance for household goods
- Transportation and lodging expenses (not meals) while traveling to new location

If you have clients who have made a move in 2008, it is a good idea to advise them to check with a tax advisor before deducting their expenses to make sure that they take the right deductions. According to Forbes, one of the top reasons for IRS tax audits is claiming too much for itemized deductions, including the deduction of moving expenses.

5:51 PM - Mar. 31, 2009 - comments {0} - post comment

There are still benefits to home ownership

If you or someone you know are still paying a landlord's mortgage instead of building equity of your own, see what you're missing. Check out some of the other financial benefits of being a homeowner.

Typical Tax Deductions for Homeowners

• Mortgage interest – One of the biggest tax incentives to owning a home is that the interest you pay on your mortgage is tax-deductible, up to $1 million. This deduction applies to any kind of home, including a second home under certain conditions.
• Real-estate taxes – As a homeowner, you can deduct the local property taxes you pay each year, too. This applies to both your principal home and any others you may own.
• Points – If you (or even the seller) paid points to the lender to secure your mortgage, you may be able to deduct those points on your taxes.

New and Temporary Deductions

• $8,000 for First-time Buyers – Just when you were figuring out the $7,500 tax credit for first-time buyers, Congress changed the rules and is now offering an $8,000 tax credit – and guess what? Buyers won't have to repay it unless they sell their homes within three years.
• Mortgage Insurance Premiums – Thanks to Congress, MI premiums can be deducted in most cases by home buyers for mortgages issued after 2006 and before 2010 (although Congress may extend this provision). This one has income limits, so ask your tax professional for help.
• New Standard Deduction – Prior to 2008, only taxpayers who itemized their deductions could deduct state and local property taxes. New legislation changes this for 2008 and 2009. Qualifying tax payers who don't itemize but pay property tax, get up to a $500 extra deduction; married filing jointly get up to $1,000.

Special Incentives

• Tax-Free Profits on Sale – When you sell your primary residence, you can make up to $250,000 in profit if you're a single owner, twice that if you're married, and not owe any capital gains taxes.
• Other Benefits – Ask your tax professional about Penalty-free IRA payouts for first-time buyers, home improvement deductions, energy credits, and even moving expense deductions.

3:21 PM - Mar. 29, 2009 - comments {0} - post comment

Are your elderly relatives financially secure?

Are you noticing subtle – or maybe not so subtle – changes in the way your aging relatives are handling their finances lately? Are you concerned that they might be having serious trouble, but you don't want to say anything to make them feel bad or put them on the defensive? While this can be a sensitive area for many people to discuss with aging family members, there are ways you can assist your family members with their finances without causing embarrassment or completely taking over this important task.

The first step, however, is communicating. You have to do it. If you're concerned that there's a problem, then there's really no way around it. After all, the best time to act on this is before something disastrous happens to their finances or their health that could challenge your lives and your relationship even more. Did you know that a recent study found that nearly 60% of people who endured a home foreclosure never spoke to their lender or even their closest family members, until it was too late? Don't let this happen.

A good way to begin the discussion is to simply ask them how they're doing, and to let them know you are concerned about them. Some experts suggest using "I" statements to help break the ice and get the conversation going: "I am worried about you, and I want to make sure that everything is okay."

Once you've gained their confidence, let them know that you're just there to help. Sit down with them and assess the situation. Offer to help them organize their important documents, like their checkbooks, bills, bank statements, credit card statements, even their mail. Those having difficulty managing their finances will often have large piles of unopened mail, notices from utilities and collection agencies, and excessive amounts of magazine and catalogue subscriptions – even un-cashed checks. These are huge red flags that can help you uncover just how bad the situation may be.

Be sure to discuss their income, assets and insurance policies, even safe deposit boxes. Find out if a will is in place, and discuss whether a health care power of attorney is appropriate. Help them find and apply for government programs or special interest groups and clubs that represent seniors, like the AARP Money Management Program and the National Council on Aging. If it's too much for you to handle on your own, find out if they would be willing to have a family attorney or financial planner review the materials you've already organized together.

It may take a little work and a lot of patience, but don't assume that your relatives will automatically reject your offer to help. Take the time to communicate, and help them get their finances back on track. You'll be glad that you did

3:19 PM - Mar. 27, 2009 - comments {0} - post comment

You CAN qualify for a loan

During the first quarter of 2009, the first 100 days of the new President's term, you are no doubt going to hear a lot of news stories about the economic stimulus plan and the financial rescue package and their possible ramifications to the real estate and mortgage markets.

You're going to see headlines about new incentives for home buyers and hear stories about 4% interest rates. But the truth is that right now, at the time of the writing of this article, the government already has in place one of the largest tax incentives for qualifying home buyers it has ever offered - up to an $8,000 tax credit for first-time buyers, and mortgage rates are within a half a point of being the lowest they've been in our country's history.

The truth is that, while all of this is great news for those looking to buy or refinance a home in 2009, none of it matters if you can't qualify for financing. None of it matters if you sit on the fence and watch the great opportunity of homeownership pass you by.

Make sure your financial house is in order
If the idea of buying or refinancing a home in 2009 has even crossed your mind, give us a call. We'll review your financial situation and see what makes sense for your individual goals.

Remember, because of increased delinquencies and today's tougher economy, lenders have tightened standards for both new purchases and refis. And while mortgage financing is certainly available and affordable to everyone who qualifies, you're going to need a solid credit score, you'll need to be able to document your income, and, if you're purchasing a new home without a special government program from the VA or USDA, you're likely going to need a down payment as well – at least 3.5% for an FHA loan. And there's no stimulus bill or bail-out plan that is going to change this. So, if you're looking to purchase a new home in 2009, take the time to locate the following items:

• Your W-2s and tax returns for the last two years;
• Your last three months of bank statements; and
• Pay-stubs for the most recent 30 days.

If you haven't checked your credit in awhile, now is the time to do so. A lot could have changed since the last time you checked it, good or bad, and you don't want any surprises that might alter your plans. We'll gladly review your credit for you and see if there is anything that needs to be addressed, but don't wait. It would be a shame to miss out on a great opportunity simply because you didn't check your credit report.

For homeowners with enough equity to refinance, now may be the time to lock in a low rate. Sure rates could go lower, even to the 4% level you've heard about in the news. But rates could just as easily start to rise again, and home values could drop even lower, making it difficult for your house to appraise. In the financial and credit markets, there are no guarantees, and there's nothing in the stimulus bill or bail-out plan to address mortgage rates. Why lose money waiting around for an opportunity to save a little bit more each month in the future when you can have significant savings every month right now?

3:17 PM - Mar. 25, 2009 - comments {0} - post comment

How the stimulus will effect homeowners and home buyers

”There are four primary sections of the economic stimulus plan that will benefit home owners and buyers,” said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers. According to Nicholas, these include:

1. Expansion of Home Improvement Tax Credit.

”The tax credit for making energy efficient home improvements is now 30% of the cost of the improvements up to a maximum of $1500,” Nicholas said. “This means that if the improvements cost you $4,500, you would receive a tax refund of $1,500 when you file your tax returns.”

Eligible improvements include energy efficient exterior doors and windows, insulation, heat pumps, furnaces, central air conditioners and water heaters.

“Generally, most modern improvements like windows, furnaces, and air conditioners meet the necessary standards for energy efficiency,” Nicholas said. “If you’ve been holding off on making some of these improvements, now is a great time to get a move on it - especially with all the great deals being offered.”

2. Expansion of First-time Home Buyer Tax Credit.

The tax credit available to first-time home buyers was increased from $7,500 to $8,000 for homes purchased between January 1, 2009, and December 1, 2009. Also, the credit no longer needs to be paid back as long as the buyers live in the home without selling it for at least 3 years.

“The previous version of the credit expired on July 1, 2009, and required home buyers to pay the funds back over a 15 year time frame,” Nicholas said.

The income limitations remain the same ($75,000 for single tax payers claiming the full credit and $150,000 for married tax payers), as do most other qualification requirements. Also, the credit remains refundable. “This means that first-time home buyers who owe less than $8,000 in taxes for the year are still eligible for the full $8,000 credit when they file their tax returns, and the IRS will write them a check for the difference between $8,000 and their actual tax bill,” Nicholas said. “In fact, the credit can be claimed on your 2008 tax returns that you file by April 15 of this year, even if you buy the home in 2009.”

There is one catch, however: if you bought the home in 2008, the credit remains $7,500, and it still needs to be paid back over a 15 year timeframe beginning in 2011 when you file your 2010 returns.

3. Higher Reverse Mortgage Loan Limits.

The loan limits for FHA-insured reverse mortgages have been increased to $625,500 across the entire country-not just the higher cost areas. The previous limit was $417,000 across the country.

“This is especially important because the FHA program is virtually the only game in town as private and jumbo reverse mortgage programs have nearly all evaporated,” Nicholas said.

This coincides with another little-known change in the reverse mortgage
arena: the availability of reverse mortgages on home purchase transactions.

“This is a fantastic opportunity for senior citizens to buy a new home and live mortgage payment-free without having to wait for their old home to sell,” Nicholas said. “Seniors could also use this strategy to buy a new home and turn the old home into a rental or otherwise wait for market conditions to improve before trying to sell the old home.”

4. $729,750 FHA and Conforming Loan Limits Restored in High Cost Areas.

“The $729,750 maximum loan limit had been in force throughout 2008, but was reduced to $625,500 in 2009,” Nicholas said. “The economic stimulus plan restores the $729,750 maximum. This makes higher cost homes more affordable - especially in the coastal housing markets that tend to have higher than average home values.”

3:06 PM - Mar. 23, 2009 - comments {0} - post comment

Tips for cold and flu season

According to the Centers for Disease Control and Prevention (CDC), the common cold is one of the largest contributors to missed work and school every year. There are more than 200 documented viruses that can cause cold symptoms of varying severity, and no known cures, therefore, more emphasis must be placed on prevention this cold and flu season.

Although it seems nearly impossible to avoid catching some form of a cold or flu, the University of Phoenix College of Nursing is recommending the following tips to reduce your chances of becoming sick:

1. Get a Flu shot. The CDC recommends the flu shot for children aged 6 months to 19 years, pregnant women, people 50 years of age and older, anyone with certain chronic medical conditions such as diabetes, asthma or COPD, people who live in nursing homes and long term care facilities, and for people who live with or care for those who are at high risk.

2. Hands off. Most cold and flu viruses are spread by hand to hand or skin to skin contact, so direct your germs into a tissue or your elbow when you cough or sneeze.

3. Sleep tight. Lack of sleep may profoundly weaken your immune system.

4. Stay hydrated. Drinking extra fluids and clear soups prevent dehydration caused by fever; can loosen mucus, and keeps your throat moist.

5. Avoid alcohol and smoking. Also avoid secondhand smoke which can make cold symptoms worse.

6. Use over the counter medication. Carefully read the labels of all medicines and remember that there are over the counter remedies, including decongestants that are not available on the shelf but can be obtained from the pharmacist. Parents should contact their child’s health care provider for advice on their child’s cold because many over the counter medications are no longer recommended.

7. See your doctor if symptoms persist. Generally, you can beat the common cold and flu without a trip to the doctor, but if symptoms last more than 10 days or you have trouble breathing, call you doctor immediately. Children should be seen for any worsening symptoms, especially cough, persistent fever for more than 5 days, or any fever of 105 or higher.

3:03 PM - Mar. 21, 2009 - comments {0} - post comment

Tips to being a successful Seller

This article is by Paul Pastore, a Re/max broker in Chandler, Arizona.

1.  Be committed to selling.  In a buyer's market with inflated inventories, short sales, and repos, there is no place for sellers who want to 'test the waters'.  Don't even think "If I get my price".  You won't.  Money is only a secondary motivator to the serious seller.

2.  Make sure the price is right. Try triangulation.  Ask a few agents for their opinion.  Glance at www.zillow.com Consider a formal appraisal.  Focus on both current competition and current comps.  Sellers should realize they seldom see their property objectively or know the other properties the buyers have seen.

3.  Staging is a necessity.  Clutter eats equity.  Hire a professional stager or listen very carefully to your agent's suggestions.  View a staging DVD. Buyers 'horriblize' defects.  A faded front door suggests deferred maintenance.  A stucco crack may infer expansive soil.

4.  Consider a keysafe.  The new lock boxes are electronic and enable the listing agent to see who is showing the property.  Homes with easy access get more showings.

5.  Install a for sale sign.  If you don't want the neighbors to know you are selling, reread #1 above.  The people in your area will know with or without the sign your property is for sale.  They might even have a friend or relative who wants to be their new neighbor.

6.  Absorb all feedback.  If one buyer says something, others are thinking the same thing.  If several similar comments are made, do something about the problem.  Put your ego in storage with the excess furniture.

7.  Flexibility is fundamental.  No showings usually means the price istoo high.  No offers usually means the price is too high.  Be proactive especially if the market is flat or declining.  Regularly reduce the price until an acceptable offer is received.

8.  Accentuate the positives.  Selling, buying, and moving are stressful events.  Tell your agent you appreciate their efforts.  Ask them how you can help get the house sold.  Ask them what they would do if you were their relative, or it was their home.  Ask this question frequently.

9.  Time is of the essence.  This means sooner is better than later.  Do not underestimate the first buyer.  They may be the best buyer.  They may be the only buyer for a long time.  A lower asking price may net a seller more money in the long run.

10.  Patience is a virtue.  Ask your agent what the average days on the market is in your area.  The only way to get somewhere faster is to step on the gas if you are in a car.  Or, reduce the price if selling a house.

2:59 PM - Mar. 19, 2009 - comments {0} - post comment

Going "green" in today's economy

Much has been written about reducing one’s carbon footprint and being green. There is more action than ever before in many earth conscious arenas including; renewable energy, recycling and mass transportation with live/work centers along their routes. We are seeing the banishment of plastic bags and the plethora of re-usable shopping bags available to us. Steel or ceramic water bottles are the new rage; replacing the disposable water bottle as many people’s daily companion. We’ve become a nation more focused on conservation than ever before.

2:53 PM - Mar. 17, 2009 - comments {0} - post comment

7 tax tips to save you dollars

Question: What three words do people least want to hear in the middle of a recession? (Besides “You’re laid off,” that is.) Answer: “It’s tax time!” Yes, by now you should have your W-2 in hand, and you’re already dreading having to file. Tax season isn’t all bad news, says financial counselor and bestselling author Eric Tyson. Even if you’re not expecting a fat refund check, the looming presence of April 15 can inspire you to make some changes that will keep more of your cash out of the clutches of the IRS-now and in the future.

“Many people have had a tough year,” says Tyson, coauthor along with Margaret Atkins Munro and David J. Silverman of Taxes 2009 For Dummies® (Wiley, 2009, ISBN: 978-0-470-24951-2, $17.99). “Americans have faced job losses, pay cuts, foreclosures, and constricting budgets, and now, here comes Uncle Sam with his hand out! But the good news is that a smart tax strategy can help you keep more money in your pocket right now when you need it most.”

Tyson has some advice that will allow you to cross “taxes” off of your list of worries and even help you put some money back in your pocket right away.

Here are a few of his tips:

Revisit your withholdings. Do you dread April 15th because it means you have to dole out a huge check to pay your tax bill? Or maybe you have to skimp and save throughout the year but then get a big tax refund when you turn in your taxes? Either way, you need to adjust your withholdings. You can do so by filling out a Form W-4-one of the many forms you filled out on your first day at your job and probably haven’t thought about since-and turning it into your employer. You’ll see an adjustment in how much you’re bringing home on your paycheck within a month.

“If you or your spouse has recently lost a job, changing your withholdings might put some extra money in your pocket-especially if one of you has been withholding too much,” says Tyson. “Just be sure that your withholding matches your tax liability. Adjusting your withholding just so you get more out of a paycheck isn’t a good idea if you’re not prepared to pay the bigger tax bill when your taxes come due next year.”

Be a fast filer. Too many of us get our W-2s just after the new year begins and hold on to them until we finally file a week or two into April. You can file now and have refund money in your bank account within a few weeks. Thanks to e-filing, there is absolutely no reason to wait until April 15th. If you e-file either by using a website or DIY taxes computer software, you can set up your refund so that it is direct deposited into your bank account.

“Usually, your refund money will go into your account in about ten days, great news for cash-strapped households who are making the most of every penny right now,” notes Tyson. “The flipside, of course, is that if you know you are going to have to write a check to the IRS, you might as well wait as long as possible to file, because you can hold on to the money just a little longer.”

Keep an eye on the new stimulus package. (And if it passes, hands off the tax credit!) The new stimulus package is still being knocked around the halls of Congress, and if it passes, there may be some beneficial tax credits coming your way. The bill proposes that singles receive a $500 payroll tax credit and married couples receive a $1,000 payroll tax credit.

“Just be sure that you spend it wisely,” says Tyson. “It’s easy to look at these kinds of stimulus checks as free money and spend the cash on something we want rather than need. But in the down economy, you’re probably better off rolling the money into your IRA or using it to make a safe, long-term investment. In this way you can make that check go much further than a new flat screen TV.”

If you’re thinking about buying your first home, now might be a good time to take the plunge. Home ownership has always yielded tax benefits for smart, sensible buyers. And if the stimulus package passes, there’s a little something in it to sweeten the pot: a proposed tax credit of $8,000 to first-time homeowners or those who haven’t owned a home in the last three years. Right now this opportunity extends to homes purchased before July 1, 2009.

“While I would never recommend that anyone make such a big decision for tax benefits only, I do feel that if you’re financially and emotionally ready to buy, now is the time,” says Tyson. “Property prices and mortgage rates are low and of course your interest on mortgage payments is tax deductible. The fact that you might get the tax credit is just icing on the cake.”

It can’t be said too often: Fund your retirement. When you funnel your savings dollars into retirement accounts, such as a 401(k), 403(b), SEP-IRA, Keogh, or IRA, you can earn substantial upfront tax breaks on your contributions. Tyson says you might even consider investing your tax refund check there. And please, he adds, don’t let worries about the stock market’s ups and downs dissuade you from making smart, long-term investments now.

Investigate itemizing. If you’ve looked at itemizing your taxes as too much trouble in the past, now is the year to start. You might be surprised what a difference spending a little more time on your tax return can make. The IRS gives you two methods of determining your total deductions and you get to pick the method that leads to the largest total deductions-and the lowest tax bill. But sometimes the choice isn’t so clear, so be prepared to do some figuring. Taking the standard deduction usually makes sense if you have a pretty simple financial life-a regular paycheck, a rented apartment, and no large expenses, such as medical bills, moving expenses, or loss due to theft or catastrophe.

“The other method of determining your allowable deductions is to itemize them on your tax return,” says Tyson. “The painstaking procedure is definitely more of a hassle, but if you can tally up more than the standard deduction amounts, itemizing saves you money. Schedule A of your 1040 is the page summing up your itemized deductions, but you won’t know whether you have enough itemized deductions unless you give this schedule a good examination.”

Invest in your health: HSAs help you keep thousands of dollars away from Uncle Sam every year. Health Savings Accounts allow you to put away money for a rainy day and reduce your taxes. If you are unfamiliar with how HSAs work, here are the basics: An HSA savings account, which is paired with a high-deductible health plan, empowers you to save on a tax-free basis toward current or future unreimbursed medical expenses. If you get sick and haven’t met your deductible, the funds in your HSA can be used to pay it off. Once your deductible is paid, your insurance plan will kick in and cover any subsequent medical costs under your policy, but your HSA can still be used to pay for your co-pays and any non-covered healthcare expenses.

“Single people can contribute $3,000 to an HSA and families can contribute $5,950,” says Tyson. “That means depending on your status you can reduce your taxable income by $3,000 or $5,950 in a given year. If you normally have your tax refund deposited into your IRA, but would like to deposit some of the money into your HSA, you can now choose to have your refund split between as many as three accounts. It’s a great way to make the U.S. tax system work for you.”

“In this down economy, no one wants to send any more than necessary to Uncle Sam,” says Tyson. “But it’s not just a matter of the dollars you’ll save; it’s psychological. Doing what you can during tax season to hold on to more of your money will help you manage some of the anxiety you’re feeling as you try to make ends meet in 2009. Any small, money-saving step that helps you feel more in control is one worth taking.”

2:28 PM - Mar. 15, 2009 - comments {0} - post comment

How long will a loan modification take?

This article is by Ralph R. Roberts who is a consumer advocate, spokesperson for Federal Loan Modification Law Center, a host of KeepMyHouse.com, and author of numerous books, including Foreclosure Self-Defense For Dummies and Loan Modification For Dummies (Summer, 2009).

Understandably, homeowners who apply for a loan modification tend to get a little antsy and perhaps even annoyed when they apply for a loan modification and then fail to hear anything for several weeks, especially if they continue to receive late payment notices and nasty phone calls from collection agencies.

Many homeowners wonder, “How long will it be before I hear anything?” and “What should I do while I’m waiting.” This article should help answer those very pressing questions.

How long will it take?

The loan modification process typically takes 30 to 90 days, depending mostly on your lender and your ability to efficiently work through the process with your attorney or other loan modification representative.

Note: The loan modification timeline is not set in stone. The more complex your situation or the greater the degree of concessions needed from the investor, the longer the process takes. Borrowers with a lot of collateral issues can see their loans take longer than what has become the typical 30- to 90-day timeframe.

A professional can often reduce the amount of time required by processing your paperwork efficiently, presenting your application exactly the way the lender wants it, and knowing from past experience what the lender is able and typically willing to agree to. Although each borrower’s situation is unique, knowing the measures the lender is willing to take for similarly situated borrowers can be a real time saver.

Whether you are dealing directly with your lender or through a loan modification specialist, ask several questions up front:

How long is the process likely to take? Find out the best- and worst-case scenarios and then count out the days and mark them on your calendar.

When can I expect to hear something about my case? Mark this date on your calendar.

If I don’t hear anything by the specified date, whom should I contact? Get the person’s name, employee identification number (if available), phone number, and any extension you need to dial to reach the person directly.

What should I do while I’m waiting?

Playing the waiting game can be agonizing, particularly when you have no idea of whether your application will be accepted or rejected or what the lender will offer in terms of a workout. It feels like your future hangs in the balance, and you remain in the dark. Knowing the standard timeline for processing a loan modification can certainly help relieve some anxiety. In addition, you can continue to make progress on your own by doing the following:

If you hired a loan modification specialist to represent you, do not speak with your lender or lender’s representative. Refer all matters to the professional who is representing you. Anything you say to the lender could confuse things or compromise your representative’s ability to negotiate the best deal on your behalf.

Log all phone calls and correspondence between you and your lender or representative. Write down the number you called, the person you talked with, what the person said, and what you said - not word for word, just jot down the key points.

Keep track of important dates. If you do not hear something back on the date promised, call the next day to find out what’s going on. Lenders almost never call you back with updates. If you hired a third party representative, they will (or should) keep you posted, but the lender simply doesn’t have the time to make follow up phone calls. If you’re dealing with your lender directly, you’ll have to be the one making the calls. Mark your calendar and schedule periodic update phone calls. Consistent follow up is paramount to a successful modification.

Explore other options. If the lender denies your request for a loan modification or presents an offer that you cannot accept, you will need a plan B (and maybe a plan C and a plan D). In addition, other options may be better for you than a loan modification. Consult a real estate agent about listing your home for sale. Talk to a mortgage broker or loan officer about refinancing. Speak with a bankruptcy attorney to find out whether filing bankruptcy would be a better choice.

Don’t be surprised if you continue to receive delinquency notices or late payment phone calls. Lenders rarely put a stop on the foreclosure process until a workout solution is fully in place. You should ask your lender if your attempts to negotiate a solution will stop or at least postpone other collection actions. If they do not, you should find out what that means for you. If the lender is able to foreclose in 30 days and a workout takes 60 days, there’s a slight timeline problem. Push to have all default and foreclosure actions put on hold while your workout attempts are underway.

When your fate is in someone else’s hands, 30 to 90 days can seem like an eternity. By doing your part to keep the process on track, remain informed, and explore other options, you not only improve your chances of achieving a positive outcome, but you can also reduce the stress that commonly accompanies the waiting process.

4:17 PM - Mar. 13, 2009 - comments {2} - post comment

This recession is nothing new

This article is by Chris Kaucnik who is the director of marketing for Home Warranty of America, Inc.

Like any other market, housing runs on supply and demand. Factors manipulate supply and demand like interest rates, employment, Wall Street, the government, and consumer confidence to name a few. But do we always have to accept what inventory levels and demand are, or can we affect them too? 

National housing inventory levels are high and have been for 26 months. In turn, home values have taken a beating. But what side of this bell curve are we on? How do housing inventories move? We asked these and other questions when we looked at seasonally adjusted, national housing inventories all the way back to 1963. In brief, here’s what we found.

Housing inventories remained low during 1963-1973, between 4 and 6 months. Then for the next 31 months, the inventory went up significantly, hitting it’s zenith at 10.4 months in February of 1975. At this point inventories normalized at 5-6 months, until September of 1975. They hovered between 5-7 months until spring of 1979.

In the 70s we experienced an economic downturn after decades of prosperity. Little economic growth and inflation was coined stagflation. We were changing over to a service economy and Japan and Europe challenged our global dominance. We had an oil crisis. Chrysler and Lockheed needed bailouts.

During the spring of 1979, housing inventories began to move up from 7 months to 8 and reached 11 months in April of 1980. They stayed relatively high until September of 1982. Then, during 1980-1984, our country endured two years of severe recession followed by two years of robust recovery. The inflation rate was brought down and jobs were created, but at a price.

The Federal Government had spent and budget deficits soared. We also had a crisis in banking because of high inflation and interest rates, plus speculative real estate ventures. Thousands of banks failed and the real estate boom went bust.

It took 40 months (May 1979 - August 1982) for housing inventories to recover. Then from September of 1982 through October of 1988, inventories stayed stable, presumably from deficit spending.

In November of 1988, inventories began to rise again for almost 3 years, until October of 1991. Our economy went into recession again in the early 90s with oil prices rising as Iraq invaded Kuwait, and we had higher interest rates and lower credit availability. Unemployment was 7.5% in 1991. The recovery officially began in March of 1991 due to a defense spending spree. From the 1991 recovery through mid-2000 the economy enjoyed prosperity. There was economic expansion and housing inventories remained low. But during this time, the deficit and corporate debt were rising rapidly, and our borrowing as households rose twice as fast as personal income.

Next the tech bubble burst. The economy went into recession in the second half of 2001 and the tragedy of 9/11 increased its severity. The economy began to slowly recover in 2002. Inventories stayed low and housing sales grew through 2005 in most parts of the country, fueled by new loan products, low interest rates and inflation.

Today’s recession started with sub prime mortgage defaults and the complicated financial products created from them which were sold around the globe. Interestingly, we had another oil crisis. How does all of this help us determine where housing inventories are going?

We are in month 26 of high housing inventories. The average number of months for inventories to fully shift during this 56 year period is 35. Optimistically, we could be entering the downward curve of the bell beginning in the second quarter of 2009, especially with some added government incentives.

While this recession has some new twists, there is a pattern that emerges, from energy crises to large budget deficits, increasing consumption and widening gaps between the rich and the poor. What can we do to avoid the bad times and create some stability?

While our economy is driven by many factors over which we have no control, we do have control over our own spending and saving habits. We have control over the greening of our homes and offices and supporting new planet-friendly technologies.

We have power in our own individual decisions. And now, for the first time in decades, the US has a positive savings rate, 2.8%, greater than the less than 1% rate during the past several years. The key to a more stable economy, housing market and planet may be as simple as moderation in consumption, increasing our savings, and moving toward green technology and energy resources. Now it’s time for you to decide, because you have the power!

3:57 PM - Mar. 11, 2009 - comments {1} - post comment

Tips for a larger tax refund

No one ever wants to pay more taxes than necessary, but this year it's even more important to save every penny you can. Here are some tips that can help you get a larger refund:

Property Tax Deduction for Non-Itemizers: Before 2008, only people who itemized their deductions could deduct property taxes. For 2008, individuals who do not itemize can deduct up to $1,000 of property tax on a joint return or $500 on a single return.

Driving Deductions: The IRS increased the cents-per-mile deduction for business-related driving expenses from 50.5 cents to 58.5 cents from July 1, 2008 through December 31, 2008. They also increased the rate for deducting medical and moving driving-related expenses from 19 cents to 27 cents for that same time period.

Disaster Losses: Casualty losses (i.e. like those from storm or fire damage) are normally deductible only to the extent they exceed 10% of AGI. For 2008, casualties in federally declared disaster areas can be deducted without having to abide by the 10%-of-AGI rule, which raises the amount that is deductible.

Capital Losses: Review your portfolio and note all your realized losses for 2008. You can write these off against capital gains and you can have a net loss of up to $3,000 deductible against your salary and other ordinary income. What's more, any excess can be used to offset gains or can be deducted in 2009 or later years.

Retirement Plan Contributions: You can make tax-saving contributions to retirement plans for 2008 through April 15, 2009.

Charitable Donations: Not only can you claim deductions for money and items you donate to a charity, you can also claim deductions for expenses you incur on a charity's behalf (i.e. driving costs, printing costs, long distance phone call costs, etc.).

Make sure you take time to go through your records carefully so you receive the biggest refund possible.

3:43 PM - Mar. 9, 2009 - comments {1} - post comment

Get a good night's sleep

Millions of people have trouble sleeping. Sometimes it's the stress of a job or the anxiety over the economy. But, all too often, lack of sleep is actually caused by everyday habits that interfere with your natural resting cycle. If you or someone you know have experienced trouble sleeping, follow these simple steps to help get your body back on a restorative cycle.

Follow the ABCs of bedtime – To help yourself get a good night's sleep, make sure your bedroom is: (A) quiet, (B) dark, and (C) comfortable. After all, if you're constantly awakened by noise or light, you can't expect to fall into a deep, restorative sleep. That goes for comfort, too. Make sure your bedroom isn't too hot or too cold, and that your mattress and bedding are ideal for your preferences. You also don't want to go to bed hungry or full, so monitor your snacking habits before you head off to bed. Finally, remember that your dog or cat may be the cause of your discomfort. If you sleep with your pets, try putting them on the floor for a few nights to see if your sleep improves.

Avoid caffeine, alcohol, and nicotine – Most people know that caffeine will keep you awake, but few people realize how long it stays in your system. The fact is, you should cut caffeine out of your diet at least 6 hours before you go to bed. Similarly, you shouldn't drink alcohol too close to bedtime either. Although it may make you feel tired at first, it may be the reason you wake up in the middle of the night and have trouble getting back to sleep. Research has also shown that use of nicotine too close to bedtime may make it difficult to fall asleep, and the withdrawal from it in the middle of a sleep cycle may contribute to further sleep disturbances.

Find a stress-free ritual before bed – Regardless of how stressful your day or the economic news is, you need to find a way to put it out of your mind before bedtime. So find a stress-free ritual like reading or listening to music. Just make sure it helps you relax, calm down, and stop thinking about those stressful events that filled your day.

Watch your workout schedule – Exercise is good for your body for a number of reasons, including relieving stress and helping you sleep better. But make sure you pay attention to when you workout. If you exercise too close to bedtime, you may end up energizing your body. So try to work out during the afternoon or even in the morning if you find your workout routine is interfering with your body's ability to slow down before bed.

Don't drink just before bed – One of the main reasons people wake up in the middle of the night and disrupt their sleep is that old familiar trip to the bathroom. By not drinking too close to bedtime – say, after 8 p.m. – you can help eliminate the urge to wake up at night.

Keep your naps to 20 minutes or less – Falling asleep during the day can be a welcome rest, but it can also throw off your sleep pattern. If you can, try to avoid naps during the day. If you do need a short nap, try to keep it between 15-20 minutes...and make sure it's not too close to bedtime.

3:51 PM - Mar. 7, 2009 - comments {1} - post comment

A short sale primer

With unemployment figures reaching a 25-year high, the toll of the declining economy continues to impact hundreds of thousands of families each month, especially homeowners struggling with their mortgage. According to RealtyTrac, 303,410 foreclosure notices were served on properties in the month of December alone. This followed the 2,854,396 foreclosure filings throughout all of 2008.

For homeowners facing foreclosure, options do exist that can prevent the trauma of losing their home or facing long-term financial loss. Short sales are an alternative to foreclosure for struggling homeowners who do not want to stay in their homes but would also like to avoid the years of potential financial damage that a foreclosure could cause on their credit rating. If you or someone you know are looking for a "short" way out of a mortgage, keep reading and find out if a short sale is a feasible option.

Don't Be Short-Sighted
Before we dive into what a short sale is and how it can benefit some struggling homeowners, it's important to understand that you're not alone, and that just because you're struggling now doesn't mean you won't be able to recover in the near future. In today's tough economy, millions of Americans are facing challenging situations seriously affecting their finances right now that they can, and will, eventually overcome, including lay-offs, divorce, the death of a spouse, or even major losses in the stock market or their retirement investments.

That's why, before choosing to attempt a short sale, it's important to ask yourself if staying in your home is an option you'd like to explore, because there are opportunities, including a loan modification that may be a better path for some struggling homeowners to pursue. A loan modification would allow the homeowner, in many instances, to renegotiate the terms of their existing mortgage(s) to a more affordable monthly payment(s). This can be accomplished in a number of ways that bring about both temporary and permanent solutions but ultimately allow the homeowner to keep their home.

If you think that a change in your mortgage terms, like a lower rate or lower monthly payments, might help you make it through this rough patch, it's important to communicate with your lender, even if you're several months behind in your payments. Many lenders have reported that in over 50% of the cases where a homeowner is delinquent on his or her mortgage, they have been unable to reach the owner to discuss any options. Picking up the phone and placing a call is always in your best interest. More importantly, opening lines of communication with family members, in many cases, could help lighten the emotional burden that often comes along with these challenges.

When Staying is Not a Viable Option
If, however, you think a loan modification would not be appropriate for your individual needs, one solution to avoiding foreclosure could be a short sale. A short sale is an agreement from the lender(s) to allow the homeowner to sell the property for less than what is owed on the mortgage(s). An example would be an agreement to allow a sale of the home to take place for $175,000 when $300,000 is actually owed on the property.

For a lender to consider a short sale, there are a number of factors that the lender will take into consideration before an approval can be secured, including:

1. Current hardship, which can include a change of income due to job loss, loss of hours or salary reduction, illness, death of a wage earner, or a change in marital status.
2. The property is "upside down," which means the house is worth less in today's market than what is owed.

It's important to note that, unlike a loan modification, a homeowner does not have to be delinquent to be considered for a short sale. However, a hardship should be demonstrated showing that the homeowner would not be able to remain current on the mortgage in the future due to mounting financial obligations.

Why would a lender agree to sell your home at a loss? Well, in many cases, the foreclosure process results in a loss of up to 40% or more of the original mortgage balance for the lender. When borrowers and lenders work together on a short sale or loan modification, however, these losses can be reduced by roughly half, in many cases. For example, a foreclosure on a $300,000 home could cost the lender up to $120,000 or more in losses, where they might only lose $60,000 by working with the borrower. Add to that the record losses incurred on other foreclosures, and it's clear why lenders, in many cases, prefer to negotiate a solution.

Credit Benefit
Working with a lender to negotiate a short sale instead of a foreclosure can also be more beneficial to your credit as well, especially if you want to secure another mortgage in the near future when your finances are back on track. According to Fannie Mae, one of the largest mortgage insurers in the country, a foreclosure on your credit record will likely mean it will be between 3 and 5 years before you're able to secure a new mortgage. The typical timeframe to buy a new home with a short sale on your record, however, is only two years.

A short sale also has a lesser impact to your FICO score compared to a foreclosure, which is very important for obtaining future credit from everything including automobiles and consumer credit to getting reconnected with local utilities and cell phones services. Your credit score can even affect certain employment opportunities as well.

Start the Process
The first step of a short sale is to contact your lender and seek their assistance.

The second step is to enlist the help of an experienced real estate agent. An agent who is skilled at handling the negotiation process will not only minimize negotiation time, he or she will also help in limiting the time and costs of marketing the property.

Tony Sena, a real estate agent with North American Realty in Las Vegas, Nevada agrees. Sena, who is currently closing 10-15 short sale transactions a month says, "The single greatest reason for a distressed property not selling is selecting the wrong agent."

When selecting an agent, don't be afraid to ask questions about their experience. Sena says to look at the current inventory of listings the agent represents and ask:

• How many of the properties are currently short sale properties?
• Does the agent have testimonial letters from short sale sellers?
• If an agent says they have sold a number of short sale properties, how many of the transactions were listings sold, not just where they had the buyer.

The third step is to price the house properly, according to the market. While many buyers would love to "steal" your property for the lowest price possible, remember that the lender is already going to incur a loss and they are not interested in losing more than they have to. Sena suggests initially pricing the property at the current value and then reducing the asking price every two weeks until it attracts buyers. Then, once you have an offer, the negotiations on the final price can begin with the lender.

The last step is to be prepared for challenges in both the short sale process and in the market place. Remember, you have a lot of competition out there and getting a property sold can be tough, especially in a buyer's market. However, choosing the right agent and setting the right price can assist you in not only selling it more quickly but also in minimizing the friction of having to deal with the lender directly.

Be aware that, in some cases, not all, a lender will agree to a certain price, but only if the seller agrees to accept a promissory note for some amount of the deficiency – that means money that you will be responsible for paying back. In some cases, Sena has seen lenders ask that sellers pay up to $20,000. However, while early last year the interest rate for these notes was in the range of 4% to 8%, lately Sena has seen that lenders have also been extending offers with 0% and terms of repayment up to ten years.

Get Moving
Once you recognize that you are having problems keeping up with your mortgage payment, take action quickly. Decide whether you want to stay in the home or not. Then contact your lender to find out the best solution to your needs

3:44 PM - Mar. 5, 2009 - comments {0} - post comment

Cost effective home selling tips

This article is byDan Steward who is president ofPillar To Post.

In today’s real estate market, sellers need additional advice on how to cost-effectively prepare their homes in order to sell quickly. With an abundance of homes on the market, waiting several months to sell a home could leave many recession-plagued sellers in financial distress.

For example, in October 2008, the median existing-home price was the lowest since March 2004 at $183,200. This means that a homeowner who lived in his or her home for four-and-a-half years is seeing the value of the home as the same or less than when the home was bought (CNNMoney.com, November 2008).

The good news is that although some homes may need extensive upgrades or renovations, many may only require simple changes. For a limited cost, or no cost at all, home sellers can fix their homes to appear more appealing to prospective buyers.

Here are some quick and inexpensive fixes to sell a home more quickly:

Focus on outdoor aesthetics. Cut back overgrown shrubs and plants. Hose down a dusty, dirty house. Sweep the driveway, sidewalk and any stairs.

Cost: $0

Eliminate odors. Before showing the house, open windows to let fresh air in; use air fresheners or baking soda to rid odors; sprinkle baking soda on the carpet and leave it for at least 10 minutes to make carpets smell clean.

Cost: approximately $15

Wash windows. Purchase a window-cleaning product to avoid professional costs. Clean windows make a home look well-kept and outdoor views more crisp.

Cost: approximately $25

In addition, consider scheduling a prelisting home inspection, an inspection conducted prior to putting the home on the market. These early inspections aid homeowners in identifying problem areas that can be easily repaired. For example, existing electrical, heating, or plumbing systems may need to be upgraded, or mold growth in a basement may require professional advice on how to eliminate dampness.

The home inspector can also suggest additional work to be done and what could be postponed. And, remember, a home inspector is an objective, third-party consultant who does not stand to profit from work suggested. A good assessment of the current state of a home and its systems will allow for more accurate planning and estimating as homeowners prepare a home to sell.

3:31 PM - Mar. 3, 2009 - comments {0} - post comment

10 ways to become a Green homeowner

OptHome, an online resource for homeowners, says it’s easier and less expensive to go green than homeowners may think. Suggest these few simple and cost-effective tips that your clients can incorporate into everyday living to help turn their home into a more energy-efficient investment.

1. Recycle. It’s free, reduces household consumption and increases energy efficiency.
2. Save Water. Install low-flow shower heads and faucets to cut back on water flow. A simple fix-shorten your shower times and shorten your water bill.
3. Conserve Rain Water. Set up barrels in your backyard to collect rain water and snow for watering plants and shrubs. Use this to water your indoor plants, too.
4. Reduce Electricity. Remember to turn off the light when you leave the room and to unplug your computer and other electronics and appliances when not in use. These small gestures will not only save energy but will save you money on your electric bill as well.
5. Replace Light Bulbs. Replace your current light bulbs with compact fluorescent lighting. These bulbs use 30% less energy, but produce the same amount of light and last longer.
6. Drive Less. You may not be ready to give up your SUV, but why not trade it in for a hybrid?
7. Double up on Printing. Configure your computer to print on both sides of the paper. This saves paper, trees and you running out to the store last minute to buy a new supply.
8. Adjust Refrigerator Temperature. Refrigerators use the most electricity in your house. Adjust your fridge to the average temperature of 37 degrees F and your freezer to 0 degrees F.
9. Support Local Farms. You will be cutting back on gas and decreasing our dependence on oil with the trucks that are used to ship produce.
10. Dry Clothes Outside. Hang your clothes outside and get that fresh smell. You’ll also be reducing the amount of energy you use in the home.

1:29 PM - Mar. 1, 2009 - comments {2} - post comment

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