Stephen Speer

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Tax Breaks in Purchasing a Home (edit/delete)

Buying your first home is a huge step. When you leave the world of renting behind, you begin building equity in an investment. And Uncle Sam is there to help ease the pain of high mortgage payments.

Mortgage interest. For most people, the biggest tax break from owning a home comes from deducting mortgage interest. You can deduct interest on up to $1 million of debt used to acquire your home. Your lender will send you Form 1098 in January listing the mortgage interest you paid during the previous year.

Points. When you buy a house, you usually have to pay "points" to the lender to get your mortgage. This charge is usually expressed as a percentage of the loan amount. And, believe it or not, you get to deduct the points even if you persuaded the seller to pay them for you as part of the deal. The deductible amount should be shown on your 1098 form.

Real-estate taxes. You can deduct the local property taxes you pay each year, too. The amount may be shown on a form you receive from your lender, if you pay your taxes through an escrow account. If you pay them directly to the municipality, though, check your records or your checkbook registry.

New for 2008: For the first time, homeowners who take the standard deduction instead of itemizing can deduct part of their property taxes. Joint filers can add in up to $1,000 of property taxes paid to the amounts shown above. Singles can add in up to $500 of real estate tax payments.

Credit for first-time home buyers. If you purchased a primary residence after April 8, 2008, and before July 1, 2009, and are a "first-time" home buyer, you can qualify for a new tax credit for 10% of up to $75,000 of the purchase price. To be eligible, you must not have owned a residence in the U.S. in the previous three years. Nor can the credit be taken if your mortgage is funded with tax-free bonds that states and localities issue to give below-market mortgages.

As always, please check with your CPA to make sure that you are eligible for the deductions outlined on this blog. For mortgage banking information, please contact me at my office at 630.327.8855.

After a brutal 2008 real estate market, I started analyzing what can be in store for 2009.

The Good News:

• Mortgage rates are at history lows and about a full percentage point lower than they were in most of 2008.
• Since receiving TARP money, banks are more eager to lend, although not as much as the past.
• Congress has begun investigating new ways to stabilize the housing market. One way they are considering is to provide homebuyers with nice tax incentives
• Sellers are more realistic in pricing their homes now that reality has set in. Great bargins are to be had!
• Pending home sales in December were up 6.3%.

The Bad News:

• The stock market is down 35% from a year ago.
• The unemployment rate rocketed to a more than 16-year high of 7.6 percent from 7.2 percent in December. Some top economist are predicting a 9.75% by the end of this year.
• The credit markets continue to be unstable. The Government continues to search for ways in stabilizing this very important sector.
• Retail Sales figure so far in 2009 is the worst in 28 years. This effects all layers of the economy.

We all hope for a recovery in the near future. This might be a great time for me to provide you some mortgage planning in order to determine of your current mortgage is aligned with your long and short-term financial goals. Please give me at call at 630-327-8855 to schedule an appointment or to verbally review your mortgage and your financial goals.

I am happy to let you know that mortgage rates are their lowest level in 5 years! It is a great time to refinance your current loan and possibly save hundreds of dollars each month. Even if you obtained your mortgage recently, I may be able to help lower your payment even more! If you have an adjustable mortgage, it may make sense to secure a fixed rate during these uncertain times. Despite what the news media says, getting approved for a loan is easier than most people think, and many of the refinances are done with no money out of pocket.

Please call me at (630) 388-1300 extension 222 for your free no obligation mortgage refinance analysis.

Stephen

In the interest of serving my clients more effectively and securely, and to pursue my own professional aspirations, I have resumed my position as Sales Manager at Chicago Bancorp. This perhaps may be a great time for me to reassess your current mortgage and to determine if it's still in line with your financial goals, so give me a call. I can be reached at 630-388-1300 extension 222.

Stephen Speer