From Homescape

If you’re thinking about buying your first home, you have more incentives for purchasing one other than the good deal you can land in today’s housing market. Home ownership comes with some pretty nifty tax breaks, besides the pride of owning your own place and building equity (instead of throwing away your cash on rent).

So, as you patiently wait in line at the post office today to send off your income tax returns to Uncle Sam (hopefully, you’re not there until midnight!), look on the bright side and consider the tax perks of owning a home — instead of feeling squeamish about buying one.

Here are the tax benefits, as described by Bankrate.com:

Mortgage interest
All the interest you pay on your monthly mortgage is deductible, unless your loan is more than $1 million. Interest tax breaks also apply to the extra cash you pull out from refinancing, or if you decide to get a home equity loan or line of credit later on.

Points
If you paid points to get a better rate on any of your various home loans, the points offer a tax break. (Points are interest charges you pay upfront when you close on your loan.) You can deduct points in the tax year you paid them. If you're refinancing a loan, the points are tax deductible over the life of the loan.

Property taxes
A big part of most monthly loan payments is taxes, which go into an escrow account for payment once a year. This amount should be included on the annual statement you get from your lender, along with your loan interest information. These taxes will be an annual deduction for as long as you own your home.

Mortgage interest, points and property tax deductions are itemized deductions you indicate on Schedule A of IRS Form 1040. Get the entire scoop on Tax Information for First-Time Homeowners from Publication 530 from the IRS.

When you sell
When you decide to move up to a bigger home, you will be able to avoid some taxes on the profit you make. Here’s how it works: You need to have owned the property for two years and lived in it for two of the five years before the sale. For singles, $250,000 of the sale is tax-free, while married couples (joint filers) enjoy a tax break for $500,000 in sales gain. Learn more about Selling Your Home in IRS Publication 523.

Stay tuned for possibly more tax credits in the coming year, as Congress and the White House try to hammer out a plan to revive the battered housing market.

Got hot local housing tips or a story you want to share? Contact Dean Golemis at openingdoorsblog@homescape.com.

It’s no industry secret that the housing market isn’t doing so hot, and according to a poll released on Monday by the Associated Press and AOL Money & Finance, consumers are reading the writing on the wall. The poll found that more people have become anxious about declining home values and have become more reluctant to sell during the current slump.

According to the poll, more than a quarter of homeowners worry their home will lose value over the next two years, and one in seven mortgage holders fear they won’t be able to make their monthly payments on time over the next six months.

The AP-AOL Money & Finance poll was conducted from March 24 to April 3 by Abt SRBI Inc. It involved telephone interviews with 1,002 adults nationwide. Those surveyed included interviews with 769 homeowners. Below are some stats from the poll that I found interesting:

• Sixty percent of those surveyed said they definitely won’t buy a home in the next two years.
• One in four respondents believe home prices in their area will continue to fall.
• Half of those surveyed say that homes are overpriced in their area — mainly those in the Northeast region. About one and 10 people, particularly Midwesterners, believe housing in their markets are underpriced.
• Despite the negative outlook on the housing market, the silver lining in the clouds is that 59 percent of respondents think now is a good time to buy, thanks to lower home values.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

I was having dinner with a friend of mine the other night, gorging on all-you-can-eat sushi, when we started talking about real estate. My friend, who is planning on buying her first home this summer, told me she started reading more about the housing crisis so she could get a better understanding of today’s market. Despite her studious efforts, she tells me, she “still doesn’t get it.”

Like many people who aren’t agents or mortgage brokers, trying to understand the causes of the housing meltdown is like trying to read Mandarin. While the housing problems are a lot more complex than I can even understand sometimes, after talking with various industry experts and reading up on new reports from National Public Radio, The Wall Street Journal, The New York Times, CNNmoney.com, and Bloomberg News, the explanation below is a simplified answer to my friend’s query.

Wall Streets jumps in
Back in the “good old days,” banks use to meticulously review a borrower’s financial portfolio because they wanted to make sure they got their money paid back to them. But times have changed, and over the past decade, Wall Street has created a cash cow from mortgage backed securities by repackaging the loans and selling them off to investors from all over the world.

As a result, selling loans quickly turned into a commission game to lenders. During the housing boom, some brokers felt that getting the $20,000 commission was more important than denying less-qualified borrowers a loan. Once the loan was sold, it had become someone else’s problem. But investors didn’t question these high risks, because home values were going up and everyone was making money. That was until all those unqualified borrowers, who shouldn’t have been approved for the loans to begin with, started defaulting on their payments. Due to the rapid growth of mortgage companies over the last decade, industry standards have been limited and inconsistent.

Industry standards
The housing problems stemmed not just from zero-down loans, but because these loans were given to people with terrible credit and insufficient income to sustain their monthly payments. A good handful of lenders, underwriters and investors turned a blind eye during the housing free-for-all. Accountability usually results form oversight, and without one the other cannot exist. Now nobody really wants to take the blame for the one of the worst housing crashes in U.S. history.

Visiting various housing industry blogs, I’m surprised to still see mortgage brokers pushing loans with low-down-payments and high interest rates. I’m told by one broker that there’s still three private lenders offering zero-down payment loans. But the heyday of under-regulated lenders may be over. Both Republicans and Democrats agree that that their needs to be greater regulations within the industry, and better controls in the systems. Over the next year we’re going to start seeing proposals for tougher rules both from the government and financial leaders. But as the old adage goes, “hindsight is 20/20.”

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

The other day when I was clearing off my desk, trying to catch up on my reading, I come across an article that deals with the growing number of sites on the Internet where you can find information about an illness. Much of the data being provided to these sites are from patients. I know that when my wife’s cousin received her diagnosis of cancer, she was helped immensely by my mother, a cancer survivor, coming to talk to her. Nevertheless, much of the information being provided does not really give a new patient all of what he really needs to know, especially from an expert that may know more. This is a concern for me.

The truth hurts

In a way, I have seen the same problem on many real estate sites. On one occasion, I answered a question in a Zillow forum about home inspections. This is my job, which in Texas requires over 400 hours of education, so I thought of myself as qualified. I faced strong opposition to my answer though, because it went against a perception that many homeowners have. Many people believe that older homes do not need to meet the same safety requirements that newer homes do.

Here in Texas, I am required to report on several safety issues that were not enforced even twenty years ago. Many of these items are minor in the sense that a two-dollar part could repair the situation. For example, an antisiphon device on an exterior hose bib is needed, but many older homes here typically do not have one. The argument presented to me was that if it has been safe so far, it will always be safe. I angered several people on the forum when I wrote that I would have to place such an item in my report. Their claim was that I was just being mean to the seller. I could have blamed my listing these issues on the state government, since it was a state regulation requiring me to include these items in the report to begin with. But I tried to explain that the reason for mentioning these safety issues is so a buyer would be made aware of them. The seller is not required to repair them, and the buyer does not need to do anything about them, but they need to know what they are getting into.

Experts matter

Experience of a situation is useful to the homeowner and the buyer, just as my mother's talk was useful to my cousin. These stories are valuable, and they should not be underestimated. In that regard, these forums play a vital role for our professional community on the Internet. We know that new buyers are going to the Web for information, and these sites are main providers. From looking for homes to understanding the buying process to finding a real estate professional, the Internet is becoming an integral part of real estate transactions. I believe that housing experts like myself, need to become more involved on Internet sites to help better understand our clients’ needs.

In the end, we have to factor in consumer experiences as important to the understanding of housing problems and misconceptions that exist, but we also have to ensure that they are hearing our own voices as well. Listening to consumers will make real estate professionals better at their job, and the communication between industry experts and their clients may help dispel some myths about their homes.

Frank Schulte-Ladbeck Professional Real Estate Inspector

To help bring in some extra dough to pay for home amenities and property taxes, I have a couple of friends who have chosen to convert the lower level of their homes into garden apartments and rent them out. They’ve all shared similar stories of getting the 4 a.m. phone call from the drunk tenant, who lost his house keys at the bar and needed to be let into the apartment. And other than one crazy renter who packed her bags and left in the middle of the night without paying the rest of the six months left on her lease, overall, my friends say they’ve had ideal experiences as landlords.

Taking on the responsibilities of renting your property involves constant follow-up and a whole lot of patience. And just because a tenant never calls for repairs and is timely with his rent, doesn’t mean you shouldn’t check in periodically to see how your property is holding up under the care of a stranger. You never know what you’ll find.

This landlord horror story was forwarded to me, and includes several photographs of a townhouse overflowing with about 70,000 empty beer cans and beer boxes. Although it seems almost unbelievable, the photographs are genuine. Century 21 property manager Ryan Froerer took the snapshots two years ago after being called to check a townhouse in Ogden, Utah. The renter lived in the home for eight years and according to a news report, the owner never suspected any wrongdoing because the man paid his rent on time every month and never called to complain.

According to KSL.com, the realtor who asked Froerer to check the townhouse could not even go in due to the foul stench. When Froerer entered, he was confronted with an amazing site:

      

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.