Why Many Home Buyers Are Buying Now, Choosing Not to Regret It Later!

Almost everyone involved in the real estate industry has been shouting out loud and clear that this is the best time to buy – EVER. And it has remained so for some time now. But as things look up, prices begin to rise and consumer confidence gets stronger – what is the impending impact on our market?

Leveling Out Home Prices Expected to Rise By Early Next Year

The good news keeps on getting better as many markets across the nation are seeing a slight increase in home prices. In fact, some areas are already experiencing significant jumps in home prices – otherwise expected to hit the rest of the country beginning in 2013. Analysts are predicting an increase of anywhere from two to four percent or more next year with steady inclines thereafter. This comes at a time when there has already been a national increase of 1.4% in home prices in January 2012 versus the final quarter of 2011.

Foreclosures Quickly Dipping to Welcome Lows

One of the biggest downward drivers of the market has been the vicious cycle of a weak economy coupled with vast numbers of foreclosures to hit the housing market. This has finally begun turning around with a decline in foreclosures by the end of 2011 of as much as 15% compared to the previous year. Not only that, the dip in distressed sales has been picking up more recently, according to the Mortgage Bankers Association, with the most decline occurring in the last quarter of 2011. An increased number of foreclosed properties are expected to hit the market within the next six months as a result of banks unloading shadow inventory in the wake of the recent robo-signing scandal settlement. Despite the expected spike in foreclosures the overall market outlook is forecasted to improve.

Interest Rates Expected to Climb Soon

One more reason for buyers to buy sooner than later is the fast-changing interest rates. It seems that the rock bottom lows have been surpassed and interest rate averages have begun to climb, albeit slowly. The Mortgage Bankers Association predicts an increase to about 4.5% on average across the nation by the end of this year.
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These changes, while occurring relatively slowly for now, will have a strong impact on the positive future of our market in 2013 and beyond. The biggest lesson to take away from this though is that the prospect of buying a home for pennies on the dollar will not last much longer. People that are in the market to buy a home in the near future should seriously consider taking the plunge now, before it’s too late.

Tax Changes – Understanding the “Buffett Rule”

The primary focus on the newly proposed tax fairness proposal is that the middle class should not be penalized by way of the wealthy benefitting from lower tax brackets.  In other words, just like progressive tax systems amount to a somewhat higher tax bracket for higher income earnings for Americans earning below $1 million annually – the same should apply for wealthy individuals.  The Buffett Rule encompasses the simple principle that any household with annual earnings of $1 million or more should not pay a smaller share of their income taxes than as compared to middle class family earners.  In short:  everyone should pay his or her fair share of income taxes. 

As reported on the official White House website, approximately 55,000 millionaires are paying a lower tax rate than millions of Americans with average middle class incomes.   In fact, the tax bracket of about 18% has hovered for the last fifty plus years with no change whatsoever in the income tax required by average earners in the nation.  Conversely, wealthy individuals have seen a steady decline on the amount owed on income taxes, with a starting average percentage of about 50% in 1960 to about 25% in the present day.  The numbers are even more staggeringly low for mega-millionaires. 

Present-Day Tax System

As reported by the IRS, there were 22,000 taxpayer households that earned at least a million dollars in the 2009 tax year, all of whom paid below 15% of their income in federal taxes. What’s more, nearly 1,500 of these people enjoyed having no income taxes at all on those incomes. Recently the number two person on Forbes’ list of wealthiest persons, Warren Buffett, realized that his was a lower tax bracket than that of his secretary!  This is the current tax system but according to President Obama it must be changed to reflect a more balanced and fair tax system.

Little change has occurred over the past 50 years for middle class earners, with an average increase in 2010 to 16% versus the 14% average income tax paid by the same in 1960.  The insignificant change in wealthier Americans’ income tax has sparked growing awareness of the possibilities should there be more balance and fairness across the board.

Proposed Changes to Current System With Buffett Rule

The single biggest change that is proposed with the Buffett Rule is that anyone earning more than $1 million in a given tax year should not be allowed to pay a smaller share of their income – especially as compared to middle-class households.  Furthermore, taxes should not be increased at all for the 98% of American households that earn under $250,000 per year.

By limiting how much the wealthy and extremely wealthy are able to tap into tax loopholes that make it easy for them to pay far less in income tax than their middle-class counterparts, the Buffett Rule would engage all earners to pay according to their earnings level. The benefits of this new system would immediately be felt throughout the country, reverberating positivity in the economy and the chance for a return to strong economic growth.  The money saved by tax breaks currently received by the county’s most well-off households would serve to improve education, health care systems, defense departments, social security administration and more.  Not only that, Americans could expect to see a reduction in our national deficit rather than increasing debt.
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There is much controversy on the Buffett Rule.  What do you think?  Do you feel that Americans earning more should continue to be allowed tax breaks on that income?  Or do you feel that it depends on whether or not earnings are used for basic survival versus personal gains?  I invite you to weigh in on this topic with your comments below.

The Ten Commandments of Mortgage Applications

Follow these Ten Commandments and you will be viewed as an “angel” in the eyes of your loan officer and underwriter (the real mortgage decision maker). So what are those ten things to be absolutely devoutly good about?  Read on, because if you can follow them there is hardly any reason for your loan officer to condemn you to the “other side”.

I. Thou Shall Not Change Jobs or Become Self-Employed

One of the most important aspects of securing a mortgage is demonstrating somewhat long term and stable employment.  Lenders look for at least two years of working with the same company before considering the application.  While being self-employed does not mean a person is unstable it is a factor that makes loan officers shy away from a mortgage loan commitment with you.  If at all possible, avoid self-employment but if that is your only source of employment there are ways to obtain a mortgage regardless.

II. Thou Shall Not Buy A Car, Truck, Van or SUV Unless You Plan To Live In It

The last thing lenders want to see is you taking on more debt – especially debt as significant as what is needed for a vehicle.  If you need a car try exploring alternatives like waiting until after closing, buying through a close family member or friend or using other forms of transport until the dust settles in your home purchase process.

III. Thou Shall Not Use Your Credit Cards or Let Your Payments Fall Behind

Falling behind on your payments or doing anything that demonstrates a lack of control on your part – especially in terms of being financially responsible – is just about the worst thing you can do to your chances of getting a mortgage.  Stay in control.  Once you have closed on the house you can go nuts but until then, hold off on any spending that will rack up your credit cards.

IV. Thou Shall Not Spend The Money You Have Saved For Your Down Payment

Every dollar you have saved for your down payment is absolutely critical to your home purchase.  The more you put down the better off you are in many ways; you’ll get a better interest rate, you will obviously have less amount owed on your mortgage and if you put at least 20% down you can even avoid costly private mortgage insurance fees.  Spend it and you’ll be sorry.

V. Thou Shall Not Buy Furniture Before You Buy Your House

There are so many reasons why buying anything for a home you don’t have yet is wrong.  The most obvious is that it shows your lender that you are cutting into resources that would otherwise be counted toward your creditworthiness during the application process.  The other thing is the risk of not getting your home puts you in the awkward position of having spent all that money on furniture you no longer need for that home.  By exercising just a little patience the positives will go a long way and it will all be worth it in the end.

VI. Thou Shall Originate Any New Inquiries On Your Credit Report

So many mortgage applicants unknowingly walk out of their loan officer’s office and straight into a store to apply for a credit card.  The last thing you want to do is change anything from the way it was presented to the lender.  Adding new inquiries not only reduces your credit score but if you are approved for more credit it throws off your credit and debt to income ratio.

VII. Thou Shall Not Make Any Large Deposits Into Your Bank Account

Just like in a church, synagogue or other religious environment – sometimes you have a lot of explaining to do if you do something wrong.  Well if you make large deposits to your bank account you may find yourself doing just that.  All sources of income must be reported and properly sourced in order for your loan application to run smoothly.  The easiest way to handle this is to avoid making large deposits in the first place.

VIII. Thou Shall Not Change Bank Accounts

Keeping with the tradition of not changing anything that doesn’t really need to be changed, bank accounts are no different.  Let as much of your financial life remain as transparent as possible, leaving very little to the loan officer’s imagination and having everything on paper and clearly discernable.  You may not realize it but a simple thing like changing a bank account can be a deal breaker on your loan app.

IX. Thou Shall No Cosign For Anyone

As many financial experts will tell you, cosigning for anyone anyway is a bad idea let alone while you are vying for a mortgage.  Not only does it add to your existing debt load but it also has the potential to wreak havoc on your financial standing if the person defaults or even makes late payments on the loan.

X. Thou Shall Not Purchase ANYTHING Until After The Closing

This is probably the most important thing to remember of them all – do not spend anything until after you have closed on the home.  One little purchase can set off a chain of negative reaction events that can end up in rejection and your losing the home of your dreams.  It’s just not worth it.
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Sounds pretty simple, doesn’t it?  But seriously – trust me when I tell you that now is not the time to be taking risks with your mortgage application.  You want to present a pristine financial history and do all the right things.  It starts with these Ten Commandments, which I’m sure will be your key to get to homeownership heaven.

I Have to Pay Income Taxes on WHAT?!

Just when you started to get the hang of taxes, each year filing the same way and logging your deductions like a good little taxpayer, the IRS comes out with a new law or changes to the existing one that any normal person would hardly be able to tell. There are a few areas that are not so small yet they fall under the radar of many law-abiding, tax-paying citizens.  Want to try and use these last few days before the inevitable and get ahead on these tax surprises? Here’s what they are and how you can soften the blow:

Major Changes to FHA-Backed Mortgages; Courtesy Obama's Latest Plan

A special thanks to Bridget Olson of Century 21 Real Estate for being in the video. Call her at 402.218.6021 or email her at wcoastproperties@aol.com

Here’s one more move Uncle Sam is making while under President Obama’s umbrella that will lighten the heavy load shouldered by many homeowners facing foreclosures in the wake of the nation’s recent foreclosure crisis.  With the idea that anything the government can do to help homeowners keep their homes despite the industry’s recent ups and downs, the administration’s announcement comes with much relief to both the mortgage industry as well as homeowners that have the potential of losing their properties.

The plan, already in place and being implemented by many mortgage professionals across the country, will serve to cut insurance fees paid by the mortgage owner for FHA-backed loans.  At a time when every dollar counts during this weak economy, this comes as a welcome concession for many families and homeowners struggling to make ends meet.  The government hopes that with this new plan, mortgage holders are compelled to refinance their loans and avail lower interest rates while benefitting from a lower cost of insurance on the mortgage.

Lower Fees Amount to Big Savings for Homeowners

Under the plan, most FHA-insured mortgages can be refinanced at half the current fee; combating future expected rising mortgage insurance premiums in the years to come.  Further, the premium charged at the time an FHA loan is established will also be reduced.  The administration pegs this as hopefully being the motivation millions of homeowners will need to initiate refinance applications on their current higher-interest rate mortgages.

Currently, Private Mortgage Insurance fees amount to the equivalent of 1.15% of mortgage holders’ balance each year.  The new plan now cuts those same fees to just 0.55%; almost half the fees homeowners are currently paying.  Not only that, loan insurance premiums will also be reduced ten times as much as the current amount paid up front by FHA buyers.  This not only translates to significant savings at the time of refinance but it also eases the burden on homeowners on a month-to-month basis, allowing them to tackle more of the loan’s principal and interest.

How Does a Homeowner Qualify for This Money-Saving Program?

The first thing you should do is to contact your loan officer.  The program is designed to assist as many as three million homeowners, mostly first-time homeowners or those that qualify as low-income buyers.  To find out whether you fit the criteria, your loan officer will assess your home purchase and determine eligibility.

This program provides the additional ease of only requiring 3.5% down on the purchase and the requirement to prove employment is waived.  Underwater or distressed property mortgages are also eligible.  Your loan officer will be able to determine which type of program best suits you, in case there is another federal housing program that better suits your needs.
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It is too soon to see whether this move to ease some of the financial burdens of struggling homeowners will have a significant impact on the housing industry as a whole, however with overall lower interest rates obtained and reduced up-front insurance fees there is much to gain.  Industry experts also say that this plan will help boost job growth, which in turn will hopefully stimulate the economy.

To find out if you qualify to save hundreds on your mortgage each year and each month, contact your mortgage officer today!

Real Estate "Very Attractive Asset Class Now" - Warren Buffett

The news spread like wildfire.  No, it’s not another politician’s sex scandal or the latest (definitely not greatest) gas prices.  It is the monumental statement made by Warren Buffett that he would buy up “a couple hundred thousand” single-family homes.  The catch is that he would do that if it were something he could practically manage. He may not be able to practically manage it but individuals certainly can.

Think about that.  For months, if not more than that, countless Realtors have been urging their clients and potential clients that now is the perfect time to buy.  Now that it comes from one of the biggest investors of our time, it brings new light to the subject for many investors and has generated widespread industry buzz from the moment the billionaire uttered those words.

In an interview where he discussed several topics, soon into the discussion with Becky Quick of CNBC’s Squawk Box, he said that in addition to equities, single-family homes are probably the most attractive investment there is out there right now.  With the low rates that seem to be heading further down still, he suggests buying at these low interest rates and then for homeowners to refinance if and when the rates dips even more. 

He cited that the only reason he has not purchased as many homes as he would have liked is because of the practicality of managing the transactions and properties.  Apartment units might have been more manageable and in his words, he said he would “load up on them” had that been the case. But for the everyday investor it makes perfect sense to seize this opportunity and Warren Buffett highlights this repeatedly in his most recent discussion on CNBC.

Mr. Buffett shared his perspective on the idea of buying homes at distressed prices, fixing them up and renting them out as an ideal way to get a solid return on investment.  Referring to the changing trends and attitudes within the housing market, he also said this is the perfect way to “short the dollar” because with a 30-year fixed rate mortgage it can go two ways; either the interest rate is too high down the line after which you can go and refinance or if it’s too low the other guy’s stuck with it for 30 years.  Could this be the return of the house-flipping craze that we saw boom in the mid 2000s?

Mr. Buffett’s statement brings new light to something that so many agents and mortgage consultants have been saying all along.  Buy now.  At a time when stocks are just now rebounding after four years of inching their way back up, he says that consumers should acquire 30-year fixed rate mortgages and then refinance when rates go down further. 

If homeowners can hold on to their property for a long time after purchasing it at the lowest rates the industry has to offer they are sitting on the best investment possible of our time.  Of course equities are still very strong but they have come up quite a bit and Warren Buffett says owning a home is a “leveraged way of owning a very cheap asset”, making it quite possibly the most attractive investment that you can make.

Six Ways to Stretch Your Dollar and Save Money!

Who doesn’t want to save a little extra money? Exactly. So one of the best things you can do is to live life as you normally would but in a way that allows your pockets to fatten up a bit in the process. If you’re someone that HAS to have a $6 gourmet cup of coffee made by the cute blonde at the national coffee chain on the way to work – think again. Join a coffee club, get a coffeemaker (usually free with most clubs you join) and learn to make the perfect cup o’ joe yourself.

Here are six more things you can change in your life so that you can actually enjoy life fuller and longer in the end – with more cash in hand. Doesn’t everybody want to retire in style? And if you’ve got more on your plate (and mind) than retirement, living frugally for a few weeks (months? years?) can definitely pave the way for a great retirement someday.

Free Entertainment

City and county governments are always trying to fill up their calendars with lots of great things to do for their citizens. Enjoy anything from outdoor events like seasonal concerts, holiday parades, and heritage celebration to the local library, community recreation centers or fruit/veggie picking. The possibilities are endless when you factor in each holiday throughout the year (Halloween, St. Pat’s Day, Easter, or National Apple Pie Day to name a few). Most of these events cost little to nothing and are usually free for kids. You can visit parks, see fireworks, enjoy natural beauty in the Omaha area, go on a picnic or attend charity-based events while getting in some exercise too.

Use It or Lose It

We’re not talking about exercise here, rather your old stuff. You won’t believe how much you can make (saving with a little discipline) by selling off things you don’t need. This can be anything from old computers and electronics, furniture, magazines and books or toys. If you have an old vehicle you have sitting around thinking you will “get around to fixing it up someday” JUNK it and save hundreds (more?) for a rainy day. So many people are obsessed with owning stuff that they tend to have so much of it that they don’t even need! If you have duplicates of one thing, over and over again – get rid of the extras.

Get Couponing

There is a two-sided message here. 1. Get Couponing and 2. Get Coupons! By “get couponing” we mean that you ought to understand how it works, respect the process and get going on it. The latter is simple – just go out and start grabbing coupons for anything and everything you see that you would normally spend money on. Long before the TV show Extreme Couponing came out, people were clipping coupons to save hundreds upon hundreds of dollars each month. Do it just a little bit to get a feel for it and then dig in! Don’t forget the library has a million of them (at least) on hand.

Plan Meals Ahead – Way Ahead

The whole idea of fast food is not necessarily that food is available fast but also that you didn’t have time (or make time) to plan a meal so now you have to think fast. The amount of money Americans end up wasting on take-out (and dine-in) is astronomical and with just a few simple changes you can be way ahead of the game both food-wise and financially. Put meals on paper, plan them out so that one blends into the other*, shop ahead of time. It’s as simple as that to save hundreds of dollars if not more – each month.

*If you bake a chicken on Monday, make chicken fajitas with the leftovers on Tuesday.

Reduce, Reuse, Recycle

We’re not talking about washing out the empty milk jugs and chucking them in the recycle bin (although in the long run that IS saving the planet some cash) but instead, investing in used furniture pieces and then refurbishing them. It’s amazing how nice an old dresser can look after it’s been sanded and stained. Paint some old dining chairs and you’ve just saved yourself a TON (depending on where you might shop for regular price chairs). This even works great for those really expensive kids’ toys that have been around for generations and will be around for generations more. Why waste if you won’t know the difference once you personalize the secondhand stuff?

Savor the Stuff You Already Have

Too many people buy stuff and then forget they even own it. Savor what you have and forego the next trip out shopping. If you have old books, let go of spending $5, $6 sometimes more on a magazine and go for the classics. In fact, visit your local library (yes, we keep mentioning the library) and enjoy all the freebies there – books, CDs, or DVDs. Depending on where you live, a lot of libraries even offer a ton of activities for kids or enrichment classes for everyone else.
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Try it for one month – and write back to us. We’ll post it on the blog to share how everyone’s doing. Trust me, it will be a ton of fun!

Budgeting Help, Eight Reasons Why Mint.com Is a Great Catch!

Anytime a new relationship is on the horizon, who doesn’t want to be absolutely sure that they’ve got a great catch?  Well let me tell you, it’s no different when it comes to finding someone (or something) that will manage all of your finances.  Mint.com is exactly that – an agent (well, a website) that will handle the most important aspects of your financial life and keep it all organized in one neat little package.  But why choose this one as opposed to myriad other options out there?  Here’s a list of qualities you’ll absolutely love about this new love in my life and I’m sure that once you explore it a little bit, you’ll feel the same way as I do.

Total Monogamous Relationship

One password, one log in and you get everything you want and need rolled into one, perfect little website.  What’s more, it’s not complicated or complex.  Once you decide to get involved with Mint, you won’t want to stray in other directions.

Likes To Travel

Mint’s easy mobile connectivity allows you to access all your financial information in one spot, from one spot – your phone – no matter where you are.  With optimization for smart phone technology, being a modern player is definitely not lost on this newbie.

Smart AND Organized

All information about what you have to spend, what you’re saving for later, notes for your car and home plus anything (financial) in between – is easily organized and at your fingertips.  You’ll get reminders and alerts to make sure you stay in line with your goals and budget.

Team Player

Mint.com is up-to-date and cares about making your life easier.  They’ve teamed up with Turbo Tax to make tax time a breeze.  The site works with your bank information, mortgage lender and investment firms to streamline everything, making life easier (and wonderful) for you.

Young and Fresh

You’ll see innovative concepts and streamlined processes that clearly make it obvious that this is a young and totally current player in the game.  Clean lines, no heavy baggage, simple and easy handling – you’ll wish that all your relationships were as easy as this one.  The administrators make sure that everything you do is über-easy and completely user-friendly.

Wants a Future With You

Not only do you get fantastic tools to help you through today, mint.com has the provision of some great budget and planning tools to help you move successfully into the future.  As you work toward achieving your goals, the site has ample positive traits that help your success right along, just like you’d expect from any good, devoted partner.

Low-Maintenance

You won’t believe how little it will cost to keep this relationship in a happy place!  In fact, becoming friends with Mint is completely free.  Not only that, you aren’t paying anything for added safety in security and you know you’re in good hands because you can trust them.

Invested in Your Personal Growth

Browse through the tons of really valuable advice and content that you get through the Mint community page and you’ll realize that there is genuine support toward your personal growth.  Since there are so many articles available about personal finance, money and financial topics that will help you get and stay successful, there’s one more reason that this relationship is definitely a keeper!
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Don’t take my word for it, check it out for yourself.  https://www.mint.com/ 

Mortgage Lenders Watching Over Borrowers With Big Brother Eyes?

Even though we have been seeing very low interest rates for some time now, it does not mean that lenders haven’t been putting potential homeowners through hoops of fire. The many hang-ups being reported throughout the country on various tiny little nuances is a list that keeps growing longer. For example, a borrower in Michigan was recently forced to prove his motivation for selling his home and wanting to buy in Florida. The lender was finally satisfied after receiving a photograph of the sub-zero thermostat sent by the borrower, demonstrating the desire to move somewhere warmer.

The point is that just when you think lenders are going to be reasonable again, they raise the bar on the seemingly ridiculous requirements in order to borrow. You cannot really blame them though, given the intense mortgage meltdown crisis that finally brought all “good things” crashing down in 2007. But how far can we expect them to go?

Prying Eyes Provides Lenders With Transparent Access to Almost Everything

You may have heard the company name CoreLogic, its services have traditionally been to provide lenders with a consolidated version of all credit reports from the three main agencies. But there is a new product available through the company that is going to change the face of lending practices across the board. The CoreScore credit report will include a far more detailed glimpse into the lives of those wanting to borrow to purchase a home. Though the company is currently working with FICO to develop the exact formula by which consumers’ data will be measured and quantified for consumers’ sake, it is already available to lenders. Once there is a formula in place consumers will be able to access the report online without any charge. The report is available now by contacting the company directly and sharing proof of identity, including name, social security number, date of birth and addresses.

How This Will Impact Borrowers Looking for a New Mortgage

Most people know that when a credit report is pulled and viewed by a potential lender, the information contained on the report usually includes any lending history – such as previous loans on a home, vehicle loans, credit card accounts and other forms of revolving credit and student loan history as well. In addition to that, bankruptcies and settlements on debt are also included on the report and each time a request is sent to the credit reporting agencies, the inquiry shows up on the report.

With the new CoreScore credit report there will be a wider scope of information available for review. Housing payment history for those who have rented in the past will appear on the report, including any missed payments regardless of whether they are disputed or a matter of tenant negligence. Eviction records, property tax liens and also homeownership fee payment history will be available for lenders to review in detail. All this shares a very broad perspective on the potential lender’s financial responsibility level in things that go beyond the traditional credit report. Any applications for loans that go against paychecks plus child support and other court judgments will also be included on the report. One way that could potentially hurt otherwise viable applicants is the capability for lenders to see the value of real estate property currently owned – providing them an avenue to raise interest rates if values are lower than the borrowed amount.

Since most of this information stems of publicly available records, there is a higher probability of inaccuracy however consumers will be able to provide explanation for items on the report. Still, the information is pulled and ready for lenders review as early as three weeks from the date of a new transaction – as much as two months faster than traditional credit bureau reporting lead times. Boasting a current database of 1 billion records that cover virtually the entire US population, CoreLogic is two steps ahead. It seems this type of credit reporting could become the norm for lending practices as we progress further into the New Year and beyond but it is important for consumers to understand their rights. Here is more information about this product, directly from the company’s website.
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The main thing to keep in mind is that like with any other negative data on a credit report, the potential for a less-than-optimal interest rate exists. The best way to combat that is to request a copy of the report at regular intervals and periodically review it for any erroneous information. Once corrected on the report itself you should also provide your loan officer with a detailed explanation for any misrepresented items on the report. And now that you know somebody’s watching you, you will surely be careful with every move you make!

Tax Advantages of Home Ownership & Popular Tax Incentives

Have you recently bought a home?  Do you know that you have now entered a world of tax advantages exclusive to only homeowners?  The feeling is great that Uncle Sam rewards those that choose to purchase their homestead and of course as your Realtor, I want to make sure you know all there is to know about what you stand to gain from this exclusive status of homeowner.

Though the best person to offer advice and consultation would be a CPA or a certified tax consultant, the information below will help you to plan and be prepared for what lies ahead during tax season.

Purchase of a New Home

If you have purchased a new home in 2011 – then this year when you file your taxes you can deduct three things; any mortgage points that were paid as part of the purchase, prepaid mortgage interest and pro-rated property taxes.

There are a few conditions on the mortgage point deduction, like the fact that the points must be for the primary residence of the homeowners.  Also, the amount of money spent by the homeowner toward the purchase of the home at closing needs to be greater than the amount that is charged in points.  Since lenders sometimes inflate the loan amount to accommodate the points, it is important to be aware before filing taxes since in that scenario the points amount would not be tax deductible.

Depending on what day you close on your home, you will most likely be charged pre-paid interest on your loan and that amount will be deductible. For example, a home that closes on the tenth day of the month will have twenty days of prepaid interest, all deductible when you file your taxes the following year.

In the same way, the amount of property taxes that make up for the time you will be taking possession of the home might have been covered in the previous property tax payment made by the seller.  If that happened the amount owed by you would have been charged as part of your closing costs – a deductible amount.

Refinancing An Existing Home

Mortgage debt is broken down into two types; home acquisition debt and home equity debt.  As the name suggests, home acquisition debt is the amount you paid to purchase your home.  During a refinance, however, your new loan amount that is utilized to pay off your previous mortgage is considered home acquisition debt with anything above and beyond that amount being qualified as home equity debt.  Interest accrued in both types of mortgage debt is tax deductible, however home equity debt has a tax deduction ceiling of $100,000.

Yearly Tax Breaks for Homeowners

Each year, until you are paying interest on your home mortgage, you will be eligible for a tax deduction on up to $1,000,000 of mortgage debt.  This can be debt you have taken on for the purpose of acquiring a new primary residence, to build or renovate an existing property as well as a second home you may have.

Home Equity Debt Interest Tax Advantage

If you use the debt acquired through your home equity to improve upon your primary residence (no limit) or for any other reason (limit of $100,000) it is possible that the interest on that loan could be tax deductible.  This is an ideal scenario for homeowners with some equity to borrow against that equity and pay off high-interest credit cards or vehicle loans – debt that carries interest that cannot be deducted.

Tax Exclusions on Forgiven Debt or Alternatives to Foreclosure

If you are able to secure a mortgage workout for your primary residence or if you are a homeowner who has received debt forgiveness, you may qualify for federal income tax exclusion on that forgiveness.

Energy Conversation Tax Incentives

With a growing emphasis on green living and energy conservation, there are a number of tax incentives offered to homeowners in exchange for demonstrated energy saving measures taken in the home.
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In terms of buying and selling homes, there is always the opportunity to donate items from your home to charitable organizations – all tax deductible of course.  There are myriad tax advantages of homeownership and after additional research, chances are you may find more nuances that could suit your own situation and maybe even provide a greater benefit than the ones listed here.