Bonnie Jessee

Eight Reasons Help Your Clients Want To Own Their Own Lifestyle Home

Truckee Real Estate

Bonnie Jessee, ABR 530 412 3984

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, as well as some of the costs involved in buying your home.

2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.

3. Equity. Money paid for rent is money that you'll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Basic Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. No Surprises. Unlike rent, your fixed-mortgage payments don't rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.

6. Choices. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships.

8. Everyday life. With your own home, you are able to provide your friends and family with the Sierra Lifestyle you want. With the endless list of fun and exciting activities to enjoy you will find yourself happy year after year.

TRUCKEE REAL ESTATE

Contingencies You and Your Agent Should Always Plan For!

When you are about to write a contract with your Realtor, as you are planning on buying a home, the best plan is always to buy the home on the terms in the original contract. Secondarily the plan is to buy the home after renegotiating some of the terms. The final part of your ‘system' is the contingency plan. Perhaps there is an insurmountable flaw in the condition of the home or the home doesn't appraise for the purchase price, or your lender refuses to fund your loan for whatever reason, you can back out of the transaction with no penalty (other than the money you've spent on inspections) so long as you have the appropriate contingencies in place. Know this, contingencies equal the right to cancel the contract and walk away. This is where having an educated Realtor representing you is imperative!

When you're in a hot seller's market, or there are multiple offers on a property, you might feel pressured to make an offer with no contingencies, or one with no appraisal or loan contingency. If your agent suggests this I would definitely rethink your position. It is not a wise Realtor who would be consider having no back-out plan on a purchase in the hundreds of thousands of dollars for you, their buyer client. This is unprofessional behavior to consider a purchase of this magnitude without your contingencies in place, at least until your due diligence into the condition and other considerations of the property is completed.

The results of the home inspections (don't forget the pest inspection) will assist in your decision making process as to whether you need to cancel a home purchase. Typically properties that appear well maintained will have no deferred maintenance. Sellers, who tend to the basic maintenance of their homes and keep things well dusted and clean, also often maintain the items that do not appear to the eye of a buyer.

In short, don't dismiss these sorts of properties that appear to require the ‘handyman' either. My point is that with any property looks can be deceiving. The best suggestion is always write your preliminary contract with the following contingencies: Financing (loan contingency) Inspections (home/pest) Appraisal contingency.

Home buying should be a serious, yet joyful experience! Enjoy it with the help of your qualified agent.

Truckee Real Estate - Lake Tahoe Real Estate and The Tax Benefits of Home Ownership

Bonnie Jessee, ABR 530 412 3984

Everyone knows that owning a home is the American dream, but did you know that borrowing to pay for one is a taxpayer's dream? Home mortgage interest is deductible on your income taxes if you itemize. You can deduct the interest on up to one million dollars of home mortgage debt, whether it is used to purchase a first or a second home. You can also deduct the interest on up to $100,000 of home equity debt, even if you don't use the money for home improvements. Real estate taxes are deductible as well.

What could the home mortgage deduction mean to you? What follows are two examples of the potential tax savings.

"Bob" rents a home at a cost of $1,200.00 per month. He is single with no children and takes the standard deduction on his income taxes. His adjusted gross income is $128,000. He has $3,500 in state income tax withheld from his paychecks throughout the year, but doesn't qualify for any other itemized deductions. Bob's federal income tax liability for 2008 will look something like this:

Adjusted gross income $128,000-less standard deduction, Single $4,400-less personal exemption $2,800

Taxable income $120,800

Bob's 2008 federal income tax $32,129

Suppose there is another "Bob" out there. This Bob is single with no children and is paying the mortgage on the home he purchased a few years ago. Bob has been saving up and this year he fulfills his dream of purchasing a vacation home. It's not much, just a cabin in the woods, but it has a bedroom, bath, and kitchen. Here is what Bob's second home does to his tax liability for 2008:

Adjusted gross income $128,000-Less itemized deduction for state income taxes $3,500-Less itemized deduction for real estate taxes on 1st home $1,500-Less itemized deduction for mortgage interest on 1st home $7,800-Less itemized deduction for real estate taxes on 2nd home $1,100-Less itemized deduction for mortgage interest on 2nd home $10,200-Less personal exemption for Bob $2,800

Taxable income $101,100

Bob's 2008 federal income tax $26,022

The $1,100 Bob pays for real estate taxes on his 2nd home and the $10,200 he pays for mortgage interest on his 2nd home save Bob approximately $3,500 on his federal income taxes in 2008. Bob is so efficient, fulfilling his dream of owning a 2nd home and saving money on his taxes.

Mortgage Rates Fall to Lowest Level on Record

Bonnie Jessee, ABR 530 412 3984

Rates on 30-year mortgages fell to the lowest level on record for the second consecutive week after the Federal Reserve launched a new effort to assist the staggering U.S. housing market.

Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages dropped to 4.78 percent this week, from 4.85 percent last week.

It was the lowest in the history of Freddie Mac's survey, which dates back to 1971. Rates are down by more than a full percentage point from a year ago.

Mortgage rates fell dramatically over the winter and have fallen further after the Federal Reserve said last month it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.

Lenders, however, have tightened their standards dramatically over the past year, so the best rates are available to those with solid credit.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

The average rate on a 15-year fixed-rate mortgage dropped to 4.52 percent this week, from 4.58 percent last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages fell to 4.92 percent, compared with 4.96 percent last week. Rates on one-year, adjustable-rate mortgages fell to 4.75 percent, from 4.85 percent.

The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for all mortgages in Freddie Mac's survey except for one-year adjustable mortgages, which had an average fee of 0.6 point.

~Truckee Real Estate~ Down Payment Assistance Planning

Options For Your Buyer Clients

Bonnie Jessee, Realtor

530 412 3984

We have all been taught to follow the rules that it is best to put down 20(%) percent on the home you are buying (or the loan you are obtaining). With a 20 (%) percent down payment, you will secure a loan on the best terms, without paying private mortgage insurance (PMI) or the FHA equivalent of PMI, also known as MI, and typically obtain a lower monthly or annual interest rate.

And as housing prices stabilize in most states, coming up with that kind of cash can be difficult for first time buyers. Most first-time buyers don't have 20(%) percent to put down on a home. Many buyers are attempting to get in to a property with as little as 3(%) percent to 10(%) percent.

While getting a 100 percent loan (no down payment necessary) is still possible, it can be difficult to find a good lender who will do it at a reasonable cost. And we know that getting that 20(%) percent down payment is important.

In conjunction with saving as much as possible for that 20(%) percent down payment there are other options to consider:

401K MONIES. If you work for a company that offers a 401(k) plan, it's in your best interest to fund it to the maximum allowed for your income. Not only will you be able to tap into the power of compounding (and have your money work harder for you), but you'll be able to more quickly build a sizeable nest egg for your retirement. When it comes to borrowing from a 401(k) plan, not every company allows it. Check with your plan administrator to see if your company will allow you to borrow, if there are limitations on what you can do with the cash, and what the interest rate will be on the money you borrow. You should also be aware that you'll typically need to repay this cash within 5 years. But if you should leave the company, or be fired, you'll need to repay the cash within 60 days, or it will be considered a withdrawal (and you'll owe federal income taxes on that money along with a 10 percent penalty, if you're under the age of 59 1/2).

IRA MONIES (UP TO $10k). If you have an individual retirement account (IRA), the IRS allows you to withdraw up to $10,000 for the purchase of a first home. (For those of you who have purchased a home before but haven't owned a home in the last 3 years, you're considered to be a "first-time buyer" for this specific purpose and can make a withdrawal). When you withdraw cash at any time from a tax-deductible, tax-deferred IRA, you'll owe federal income taxes on the amount you're withdrawing at your current marginal tax rate. However, if you're withdrawing for the purchase of a first house, you will not owe the 10 percent under-age penalty if you're less than 59 1/2 years old.

Gifts. If you're buying a house, your parents, siblings, other relatives or friends can give you a gift of funds to be used toward your down payment. However, for a lender to accept that this is a gift, and not a loan, you'll need your friends and family to sign a gift letter that states that this cash is a gift and does not need to be repaid. That letter will become part of the documents that you provide to the lender who will be approving your loan.

Rent-to-own or lease/options. If you don't have enough cash in your IRA or 401(k), and you can't get your lender to give you a 100 percent loan, you might put your plans to purchase on hold for a year or two and find a seller who is willing to do a rent-to-own or lease/purchase arrangement for his or her property. Often, the seller will provide down payment assistance by giving you a credit for a portion of your monthly rent payments. In a year or two, you can easily build up a 5 to 10 percent down payment, depending on how much of a rent credit you're given. For example, if you pay $1,000 per month, and the seller gives you a 20 percent credit, $200 per month will accrue toward a down payment on the property. After a year, you'll have $2,400 for your down payment. If you're going to go down this path, be sure to work with a real estate attorney who can help you negotiate the fine print. You may want to negotiate the purchase price of the property upfront, and you will definitely want to include the down payment credit terms as part of the lease