6 Essential Tips For First Time Home Buyers

Even better than being pre-approved is Certified Mortgage ReadyTM, something that we at John L. Scott can help home buyers with. It allows borrowers to compete with cash offers.

6-essential-tips-for-first-time-home-buyers

How to Claim Your Energy Tax Credits

Home-and-Money.jpgEnergy tax credits on select improvements available through the end of tax year 2013.

If you upgraded one or more of the following systems last year, you may be eligible to take a tax credit — up to $500 — on your return.

  • Biomass stoves
  • Heating, ventilation, air conditioning
  • Insulation
  • Roofs (metal and asphalt)
  • Water heaters (non-solar)
  • Windows, doors, and skylights

The energy tax credits are small, but at least a credit is better than a deduction:

  • Deductions just reduce your taxable income.
  • With a credit, you get a dollar-for-dollar reduction in your tax liability: If you get the $500 credit, you pay $500 less in taxes.

Limits on IRS energy tax credits besides $500 max

  • Credit only extends to 10% of the cost (not the 30% of yesteryear), so you have to spend $5,000 to get $500.
  • $500 is a lifetime limit. If you pocketed $500 or more in past years combined, you’re not entitled to any more money for energy-efficient improvements in the above categories. But if you took $300 back then, for example, you can get up to $200 now.
  • With some systems, your cap is even lower than $500.
  • $500 is the max for all qualified improvements combined.

Certain systems capped below $500

No matter how much you spend on some approved items, you’ll never get the $500 credit — though you could combine some of these:

System Cap
New windows $200 max (and no, not per window—overall)
Advanced main air-circulating fan $50 max
Qualified natural gas, propane, or oil furnace or hot water boiler $150 max
Approved electric and geothermal heat pumps; central air-conditioning systems; and natural gas, propane, or oil water heaters $300 max

And not all products are created equal in the feds’ eyes. Improvements have to meet IRS energy-efficiency standards to qualify for the tax credit. In the case of boilers and furnaces, they have to meet the 95 AFUE standard. EnergyStar.gov has the details.

Tax credits cover installation — sometimes

Rule of thumb: If installation is either particularly difficult or critical to safe functioning, the credit will cover labor. Otherwise, not. (Yes, you’d have to be pretty handy to install your own windows and roof, but the feds put these squarely in the “not covered” category.)

Installation covered for:

  • Biomass stoves
  • HVAC
  • Non-solar water heaters

Installation not covered for:

  • Insulation
  • Roofs
  • Windows, doors, and skylights

How to claim the energy tax credit

  • Determine if the system you installed is eligible for the credits. Go to Energy Star’s website for detailed descriptions of what’s covered; then talk to your vendor.
  • Save system receipts and manufacturer certifications. You’ll need them if the IRS asks for proof.
  • File IRS Form 5695 with the rest of your tax forms.

This article provides general information about tax laws and consequences, but isn’t intended to be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice, and remember that tax laws may vary by jurisdiction.

Biggest Housing Regrets From The 2013 Spring House Hunting Season

An interesting infographic via Trulia.

real-estate-regrets-survey

5 Myths About VA Loans

VA LoanVA loans are the most misunderstood mortgage program in America. Industry professionals and consumers often receive incorrect data when they inquire about them. In fact, misconceptions about the government guaranteed home loan program are so prevalent that a recent VA survey found that approximately half of all military veterans do not understand it.

With this in mind, we would like to debunk the most common myths about VA Loans.

Myth 1: The VA loan benefit has a “one time” use.

Fact: Veterans and active duty military can use the VA loan many times. There is a limit to the borrower’s entitlement. The entitlement is the amount of loan the VA will guarantee. If the borrower exceeds their entitlement, they may have to make a down payment. Never the less, there are no limitations on how many times a Veteran or Active Duty Service Member can get a VA loan.

Myth 2: VA home loan benefits expire if they are not used.

Fact: For eligible participants, VA mortgage benefits never expire. This myth stems from confusion over the veteran benefit for education. Typically, the Montgomery GI Bill benefits expire 10 years after discharge.

Myth 3: A borrower can only have one VA loan at a time.

Fact: You can have two (or more) VA loans out at the same time as long as you have not exceeded your maximum entitlement and eligibility. In order to have more than one VA loan, the borrower must be able to afford both payments and sufficient entitlement is required. If the borrower exceeds their entitlement, they may be required to make a down payment.

Myth 4: If you have a VA loan, you cannot lease the home.

Fact: By law, homeowners with VA loans may rent out their home. If the home is located in a non-rental subdivision, the VA will not guarantee the loan. If the home is located in a subdivision (such as a co-op) where the other owners can deny or approve a tenant, the VA will not approve the financing. When an individual applies for a VA loan, they certify that they intend on making the home their primary residence. Borrowers cannot use their VA benefits to buy property for rental purposes except if they are using their benefits to buy a duplex, triplex or fourplex. Under these circumstances, the borrower must certify that they will occupy one of the units.

Myth 5: If a borrower has a short sale or foreclosure on a VA loan, they cannot have another VA loan.

Fact: If a borrower has a claim on their entitlement, they will still be able to get another VA loan, but the maximum amount they would otherwise qualify for may be less. For example, Mr. Smith had a home with a $100,000 VA loan that foreclosed in 2012. If Mr. Smith buys a home in a low cost area, he will have enough remaining eligibility for a $317,000 purchase with $0 money down.  If he did not have the foreclosure, he would have been able to obtain another VA loan up to $417,000 with no money down payment.

Veterans and Active duty military deserve affordable home ownership. In recent years, the VA loan made up roughly 13% of all home purchase financing. This program remains underused largely because of misinformation. By separating facts from myth, more of America’s military would be able to realize their own American Dream.

Phil Georgiades is our guest blogger today.  Phil is the Chief Loan Steward for VA Home Loan Centers, a veteran and active duty military services organization. 

All Cash Real Estate Sales By State [infographic]

New York comes in at #1 with 56% of sales in September 2014, being all-cash.

All-Cash RE Sales

The History Of Mortgage Rates

HistoryofMortRates

What Impact Will Increasing Mortgage Rates Have On Prices?

3d diceMany pundits are warning that there will be a drop in real estate values because mortgage rates are beginning to increase. The logic makes sense. However, history shows that increasing rates have not negatively impacted home values in the past.

Four times over the last 30 years mortgage interest rates have dramatically increased. Here is the impact the increases had on home values at the time:

Dates

Mortgage Rate

Home Values

May ‘83 – July ‘84

12.63 – 14.67

+ 6.6%

March – Oct ‘87

9.04 – 11.26

+ 5.2%

Oct ’93 – Dec ‘94

6.83 – 9.2

+ 1.2%

April ’99 -May 2000

6.92 – 8.52

+ 10.9%

Perhaps the impact of increasing rates on future home prices won’t be as dramatic as some are predicting.

Existing Home Sales Report From NAR [INFOGRAPHIC]

NAR Existing Home Sale Report 3Q 2013

The Benefits of Homeownership

Infographic Benefits Homeownership