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This Is Your Home’s Most Valuable Asset

September 26, 2014

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By: Anne Miller, REALTOR.com

 

A home isn’t just a building.

Land is truly real estate’s most valuable asset. The planet isn’t making more land. You can’t move your land.

You wouldn’t own a house without understanding its history and upkeep needs. The same holds true for the land.

While the property beneath the foundation may feel secondary to your big purchase, your investment also rides on the land under your home—the most valuable asset.

Why Land Matters

Say you want to erect a fence around your backyard. You’ll need to know exactly where your property line runs. Carving out a driveway or a garden triggers the same need. You don’t want to pave over the neighbor’s lot line.

The issue isn’t limited to bonus features you want to install:

How does drainage run on your property?
Who’s responsible for fixing it?
If you want to retrench a ditch that no longer drains correctly, do you have the right?
Who’s responsible for trimming trees? Or mowing certain sections?
These issues get to the heart of quality-of-life in your new home. It’s worth taking a few minutes to understand exactly where you—and your home—stand on the dirt.

History Lessons on Your Most Valuable Asset

The history of your land could date back 200 years to the time of land grants and squatters, but it likely began with your parcel’s development as part of a tract in a subdivision.

Building and planning departments usually have this information, because they oversee development, construction, home improvements, building codes, permits, demolition, zoning rights, crop farming, environmental issues and other activities affecting the land.

Depending on where you live, you can check with a local municipality or a county office. They should have records for your land’s legal description and boundaries—and the clerks to help you find them. They should be able to give you a copy of the map of your parcel within a tract or subdivision. Some files include photos.

The file containing your land’s description will include the legal specifications or schematics of septic tanks, aquifers, wells, easements, the floor plan of your home, and other evidence of how your land has been used over time.

Title Searches

When you open escrow during a real estate transaction, you likely will trigger a title search that tracks recorded interests, encumbrances, claims of title, and other forms of ownership or claims against your land and its components.

That can include the current owner’s mortgage, titles, deeds, liens, judgments and other legal actions, the status of property tax payments, easements, and other claims against the property and its use.

However, the title search doesn’t stop at the current owner: it examines public records and any other depository holding a record of your property as far back as necessary to be certain you are buying a home with a clear title. That could include the assessor’s files, appraisal reports and homeowners association records.

A preliminary title report will document what the title search discovers.

If you live in a condo, you own land jointly with other homeowners association members—which partially explains why condos are less costly than single-family homes.

Condo buildings go up, so air space can become part of your “land”; your condo unit file may describe and map the air space (a different kind of valuable asset) you own within your association’s development—including the land beneath it all.

Room for Error

While most government records are complete and accurate, the sheer volume of records leaves plenty of room for errors and omissions.

If there’s a question about the boundaries of your land, its use, easements or zoning, you may need to hire a survey company or seek a title company’s interpretation. Have a surveyor or a real estate attorney review any documents you receive.

Ask a REALTOR® for their experiential knowledge as well, for one who has worked in the area for a long time may know some tidbits no one else does.

And if you make any changes to your property, document those as well. You never know when it might matter.

Based on an original article by Broderick Perkins.

Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.  Just send me an email or call me at 619-888-2117.

How to Deduct Your Mortgage Interest and Equity Loan Costs

September 18, 2014

Mortgage Tax Deduction

 

Written by: Richard Koreto for Client Direct


This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice.

 

Deducting mortgage interest is a great tax benefit that can make home ownership more affordable. Your first mortgage isn’t the only loan that qualifies, either. In many cases, you can also deduct interest on home equity loans, second mortgages, and home equity lines of credit, or HELOCs.

You need to itemize your return to reap the benefits of these deductions. Calculations can be complicated, so consult a tax adviser.

Know your loan limits

A good place to check out what you can deduct before you borrow is the chart on page 3 of IRS Publication 936. It’ll walk you through the requirements you must meet to deduct all of your home loan interest.

The first hurdle you’ll run into is the total amount of your loan or loans. In general, individuals and couples filing jointly can deduct interest on loans up to $1 million ($500,000 if you’re married and filing separately). The money must have been used for acquisition costs — that is the cost to buy, build, or substantially improve a home, explains Scott O’Sullivan, a certified public accountant with Margolin, Winer & Evens in Garden City, N.Y. Any interest paid on loan amounts above the $1 million threshold isn’t deductible.

The same $1 million limit applies whether you have one home or two. Buying a vacation home doesn’t double your loan limits. And two homes is the max; you can’t deduct a mortgage for a third home. If you have a mortgage you took out before Oct. 13, 1987, you have fewer restrictions on claiming a full deduction. The calculations for “grandfathered debt” can get complex, so get help from a tax professional or refer to IRS Publication 936.

Whatever you do, don’t forget that you can also deduct the points and fees associated with a first or second mortgage when you initially buy your home, says Jeff Rattiner, a CPA with JR Financial Group in Centennial, Colo. If you refinance the same house, you have to deduct those costs over the entire term of the loan. If you refinance again, you can deduct all the costs from the earlier refi in the year you take out the new loan.

Spend loan proceeds wisely

The other limitation comes into play when you take out a home equity loan or HELOC, even if you don’t use the proceeds to buy, build, or improve your home. In that case, you can deduct interest on up to $100,000 ($50,000 if married filing separately) on outstanding home equity debt. This loan limit also applies in a cash-out refi, in which you refinance and take out part of the equity you’ve built up as cash, says John R. Lieberman, a CPA with Perelson Weiner in New York City.

That means if you decide to take out a $115,000 home equity loan to buy that Porsche, you can deduct the interest on the first $100,000 but not on the $15,000 that exceeds the limit. Use the same $115,000 to add a new bedroom, however, and the full amount is allowable under the $1 million cap. Keep in mind, though, that the $115,000 gets added into the pot of whatever else you owe on your other home loans. In many cases, points and loan origination costs for HELOCs are deductible.

Consider this simplified scenario: You borrow $250,000 against your home at 8% interest. That means you’ll pay $20,000 in interest the first year. Spend the $250,000 on home improvements, and all of the interest is deductible. Spend $150,000 on improvements and $100,000 on your kids’ college tuition, and all the interest is still deductible.

But spend $100,000 on improvements and $150,000 on tuition, and the improvement outlays are deductible, though $50,000 of the tuition expense isn’t. That’ll cost you $4,000 in interest deductions. Preserve the $4,000 deduction by coming up with the extra money for tuition from another source, perhaps a low-interest student loan or by borrowing from a retirement plan. For someone in a 25% bracket, a $4,000 deduction lowers taxes by $1,000, plus applicable state income taxes.

Beware the dreaded AMT

Even if you’ve followed all the loan limit rules, you can still get stuck paying tax on mortgage interest. How come? It’s all thanks to the Alternative Minimum Tax. Congress created the AMT, which limits or eliminates many deductions, as a way to keep the wealthy from dodging their fair share of taxes.

Calculating the AMT can be complex, but if you make more than $75,000 and have several kids or other deductions, you might well be subject to it. Problem is, if you fall into the AMT group, you may not be able to deduct interest on a home equity loan, even if the loan falls within the $1 million/$100,000 limit. If you’re subject to the AMT and borrow money against the value of your home, you’ll have to use it to buy, build, or improve your place, or you may not have a chance to deduct the interest, says Rattiner, the Colorado CPA.

Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.  Just send me an email or call me at 619-888-2117.

 

School or Pool – Which factors more for home buyers

September 11, 2014

Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.  Just send me an email or call me at 619-888-2117.

 

SchoolOrPool

Real Estate @ a Glance: August 2014 Edition

September 2, 2014

 

Here is the most recent information on the San Diego housing market. For specific information on your neighborhood or a market analysis on your home, please send me an email or call me at 619-888-2117.

Reportable Period :: JULY 2014 :: SAN DIEGO ASSOCIATION OF REALTORS®

Although low supply and tight credit standards are still hurdles to recovery, prices continue to rise in most local areas. Job growth has strengthened lately, but wage growth has not kept pace with the price gains we have seen. Buoyed by stable and continuously lower interest rates, affordability is still historically high yet below its all-time peak. Rising inventory levels will lead to more choices for qualified buyers, but as the summer reaches toward fall, the prospect of more homes coming on the market begins to wane.

Closed Sales: 2, 745

Median Sold Price:  $456, 995

Homes for Sale:  9,458

Average Days on the Market: 39

Housing Affordability Index: 30

For the comprehensive Market Overview infographic, click this link.

JulyMarketOverviewSDAR

 

 

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6 things homebuyers should avoid doing once they are preapproved for a mortgage

August 21, 2014
Do's and don'ts (Image via Shutterstock)

Do’s and don’ts (Image via Shutterstock)

 

Making other major purchases or applying for new credit can turn experience into big hassle

You have done the hard part in the homebuying process and chosen a lender and a real estate agent to work with. You have also gone out and found the home of your dreams! Best of all, your team has done a great job of negotiating the best deal for you.

Now, as a buyer, all you have to do is sit back and wait for your loan to close … right? Wrong!!

Getting a home loan these days is a very interactive process. I am always amazed by how many clients I work with who come to me unaware of all the pitfalls they face during the loan process. To help avoid any surprises while waiting for final approval, I provide my clients with a short list of “do’s and don’ts” to follow.

Let’s start with the “do’s” …

Do keep the process moving by responding to your loan officers’ requests for documentation as soon as possible.
Do make decisions as soon as is reasonably possible.
Do convey questions or concerns you have as they develop.
Do continue to make all of your rent or mortgage payments on time.
Do stay current on all other existing accounts.
Do continue to work your normal work schedule with no unplanned time off.
Do continue to use your credit as normal.
Do be prepared to explain any large deposits in your bank accounts.
Do enjoy purchasing your home but remain objective throughout the process to help make decisions that are best for you.
After you have been preapproved for your mortgage you will want to refrain from the following …

Do not make any major purchases (car, boat, jewelry, furniture, appliances, etc.).
Do not apply for any new credit (even if it says you are preapproved or “xxx days same as cash”).
Do not pay off charges or collections (unless directed by your loan officer to do so).
Do not make any changes to your credit profile.
Do not change bank accounts.
Do not make unusual deposits into your bank accounts or move money around from one account to another.
Follow these simple rules and you will help to make your loan closing as smooth and hassle-free as possible! Good luck!

(This article was originally published by Barbara Mooers on Active Rain. Barbara is a loan officer with Primary Residential Mortgage in Tacoma, Washington.)

 

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No Project Left Undone

August 14, 2014

Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during
renovations and more.
 Just send me an email or call me at 619-888-2117.

 

NoProjectLeftUndone

Top 10 Questions to Ask During an Open House

August 7, 2014

Top 10 Questions to Ask During an Open House

 

By: Virginia C. Mcguire, Trulia

 

Visiting an open house gives would-be buyers the opportunity to speak directly to the seller’s agent. And the best way to take advantage of this personal meeting is to be prepared. Get the inside scoop by asking these ten questions:

1. How many offers have been made?

Does the agent look suspiciously happy? They might have received word that an offer is coming in any minute. If they’ve received offers, they’ll probably be eager to tell you, in hopes that you’ll bid as well and drive the price up.

2. How stable has the price been?

Your agent can find out how many times the price has changed since it was first listed, but the seller’s agent will likely jump at the chance to explain why. Perhaps the price dropped because the seller has to move on a tight timeline. Info like this might even clue you in that the list price is somewhat flexible.

3. Why do the sellers want to move?

If the sellers are moving because the area is unsafe, the schools are terrible, or the neighbor practices the drums at midnight, their agent is unlikely to tell you. But ask this question anyway, and try to read between the lines.

4. How long has this property been on the market?

You can find this information yourself on Trulia, or by asking your agent to check the local multiple listing service, but the seller’s agent will be able to put this information in context. Perhaps it’s been on the market for a long time, but only because the sellers received an offer from a buyer whose financing fell through. Or, perhaps the house went on the market this week, but the sellers have had a lot of interest and expect it to sell quickly. All of this is useful when you’re deciding whether to make an offer.

5. What issues does the house come with?

The seller is required to tell potential buyers about any known structural problems or code violations. It’s standard to ask for a written seller’s disclosure, so request one – and if you’re lucky, a talkative agent might reveal more in person.

6. When was the house last updated?

Clearly visible updates, like new appliances or a fresh coat of paint, are easy to identify. However, features like the age of the roof and wiring which can’t be easily seen, are equally as important and need to be asked about.

7. How much do utilities cost?

Know what you’re getting into before you make an offer by asking to see recent utility bills. If you’re moving from an apartment into a house, you might be surprised at the impact utility bills have on your budget.

8. What’s the seller’s timeline?

Sometimes sellers choose a buyer’s offer simply because of timing. Perhaps they want to sell quickly, or delay the sale so their kids can finish the school year. The more you know about what the sellers want, the more easily you can work around it — and put together a tempting offer while getting a good deal on the price.

9. Where can I get a bite to eat?

Getting directions to a local eatery or coffee shop will tell you a lot about your neighborhood. If there’s a retail strip close by that locals frequent and feel proud of, chances are you’ll love it too.

10. What are the neighbors like?

Is the neighborhood kid-friendly? Are there lots of retired people? Is there a thriving bar scene on the weekends? Some people are fine doing their own thing and don’t require (or want) a tight-knit neighborhood community. But other people are much happier if they’re surrounded by kindred souls who are in a similar stage of life. The seller’s agent will be able to give valuable information about who you’d be rubbing shoulders with, if you choose to buy.

And don’t forget: while open houses are great venues to ask questions and listen, be careful not to give away more than you want about your own situation. Being discreet about your finances and how much you love the home will benefit you when it’s time to bargain for a good price.

Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.  Just send me an email or call me at 619-888-2117.

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