Daily Archives: March 4, 2014

What is the Consumer Financial Protection Bureau (CFPB) asking of credit card companies? | Armonk Real Estate

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The Consumer Financial Protection Bureau (CFPB) is calling for credit card companies to make credit scores available to card holders on a monthly basis.  Will this cause more confusion and frustration for the average consumer?

Why are credit card companies responsible for providing consumers with copies of their credit scores monthly? It is hard enough as it is for consumers to get explanations and information from their credit card companies. It seems the three major credit bureaus who compile all the data should provide credit scores to the general public instead of the credit card companies. The bureaus have already created scores and can provide them to consumers much more easily. Right now there are some credit card companies, like https://www.53.com/content/fifth-third/en/personal-banking/bank/credit-cards/secured-card.html , offering credit scores but this could wind up confusing consumers and giving them a false sense of reality. If you read the fine print on the Discover Card offering credit scores it is clear that only the Trans Union FICO score is provided.

Here is the fine print taken from the Discover site:
“Your FICO® Credit Score is based on data from TransUnion and may be different from other credit scores. FICO® Credit Scores are delivered only to Primary cardmembers who get a monthly statement and have an available score. Discover and other lenders may use different inputs like a FICO® Credit Score, other credit scores and more information in credit decisions. This benefit may change or end in the future. FICO is a registered trademark of the Fair Isaac Corporation in the United States and other countries.”
Since banks take the middle score of ALL THREE credit bureau FICO scores (Trans Union, Equifax, and Experian) only having one score isn’t a true and accurate reflection of what a lender would see when evaluating credit. Many consumers have different information on each credit bureau report. This will cause the three scores to vary. If a collection agency updated a bad debt it would place the derogatory on only two of the three credit bureaus.

Do You Understand Income Tax Considerations of Rental Properties? | South Salem Real Estate

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A rental property can generate “taxable losses” that can be used to reduce your normal salary income, hence the federal income taxes you pay. It’s difficult for most people to understand how taxes work, and even more confusing once we get into the realm of rental properties and taxes. Note that understanding how taxes impact personal residences are a completely different topic, as those are governed by totally separate tax codes and go elsewhere on your 1040 form.

Below are some of the basics to understanding rental properties and federal income taxes.

Often I hear people saying that they want to buy some real estate to save money on income taxes. However, depending on your tax situation, owning real estate might not save you a dime on taxes. It wholly depends on your specific tax picture and the IRS rules about Passive Activity Loss Limitations.

First and foremost you should never make real estate investment decisions based solely on tax considerations. The first order of business is do your due diligence and determine if an investment makes sense based on cash flows, cash on cash returns, renovation costs, rental income, financing, and the risk of any particular property. Once you believe it makes sense in every other sense, then you can contemplate the tax effects.

Important note: Always have a CPA, attorney or licensed tax professional guide you through your individual tax picture — this article is an illustration of one scenario but your scenario can be very different based on your financial picture.

To better understand, let’s first quickly discuss the IRS 1040 form.

The 1040 form you fill out each year does two things:

 

http://homes.yahoo.com/news/understand-income-tax-considerations-rental-properties-184514095.html

Building boom signals stock market bust | Cross River Real Estate

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According to a study recently published in the Journal of Financial Research, not long after construction begins on a number of large buildings or they are actually finished, the stock market goes into the dumpster.

Its author, Guenter Loffler, a professor of finance at Ulm University in Germany, studied the correlation between skyscraper construction and stock market trends from 1871 to 2009.

He told the newspaper Real Estate Weekly recently that skyscraper construction is a better predictor of stock prices than more commonly used indicators, such as corporate profits or price/earnings ratios.

He offers plenty of examples.

In 1929, the Chrysler Building was under construction, while work was about to begin on the Empire State Building. This was an era that Real Estate Weekly considers to be “the greatest skyscraper boom in history.”

The stock market crashed later that year.

In 1993, construction began on the world’s tallest building, the Petronas Towers located in Kuala Lampur, Malaysia. Before its doors were opened, this super skyscraper was engulfed in the Asian Financial Crisis that sent stocks sinking around the world.

Fourteen years later, in 2007, construction began on what was slated to be the tallest building in the Western Hemisphere, the Chicago Spire. Like in the past, this was just one of the many towers being erected at that time. Indeed, the total square footage underway in 2007 was more than twice the average of the previous 20 years, writes Prof. Loffler.

As you might recall, the stock market peaked in October of that year and worked its way lower before plunging in September, 2008. The Spire was postponed indefinitely, as were a number of other buildings.

 

http://www.marketwatch.com/story/building-boom-signals-stock-market-bust-2014-03-04?siteid=yhoof2

Deducting Real Estate Taxes: A How-To Guide | Armonk Real Estate

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You can deduct on Schedule A the municipal, school and county, and state and foreign, real estate taxes, based on the assessed value of real property (land and “improvements“), that you paid during the year – whether you sent the check directly to your township, municipality or county, or whether the taxes were paid out of a mortgage escrow account.  There is no limit to the number of properties for which you can claim a deduction.

Charges for specific services, such as trash collection or water and sewer usage, are not deductible as real estate tax.  Neither are special assessments for capital improvements that increase the value the property, like a new sidewalk.  But you can deduct additional assessments to maintain public facilities, such as to repair existing sidewalks.

You can elect to “capitalize” (add to the cost basis) instead of claiming a current deduction for any real estate taxes paid on unimproved and unproductive land held for investment, such as a vacant lot.  A statement of election must be attached to the original Form 1040 for the year the election is made.  This election is made on an annual basis.  A taxpayer can capitalize property taxes paid on a lot purchased in 2013 in 2014, 2016, and 2017 and can claim a deduction in all other years.

 

http://www.mainstreet.com/article/moneyinvesting/taxes/deducting-real-estate-taxes-how-guide-0?puc=yahoo&cm_ven=YAHOO

Before you buy, try that mortgage on for size | Katonah Real Estate

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If you’re a future homebuyer, you might have used one of those “How much mortgage can I afford?” calculators online. These calculators typically gather information like your down payment amount, credit score range, monthly or annual income and debts.

 

Then, they’ll spit out an estimate of what a bank might lend you mortgage-wise.

These calculators work primarily by figuring out your debt-to-income ratio and then how much you can afford to pay for your monthly mortgage payment. This is similar to how banks decide how much to lend you.

The typical bank limit on monthly mortgage payments is about 28 percent of your gross monthly income. Therefore, the bank thinks you can devote up to 28 percent of your household income to your mortgage payment and expenses (including taxes, insurance and association dues).

Banks will also typically allow a total debt-to-income ratio of up to around 36 percent. This means that your mortgage, credit card payments, student loan payments and car payments shouldn’t exceed 36 percent of your total monthly income. (Note that if your other debt payments are already at 15 percent of your monthly income, you only have 21 percent of your income to devote to your mortgage, regardless of the 28 percent rule.)

So when you put your current income and expenses into a house affordability calculator, it will tell you how much you can afford to pay for your home per month. Then, based on factors such as estimated interest rate, tax payments, insurance payments and available down payment, it’ll tell you how much house, in total, you can afford.

 

http://homes.yahoo.com/news/before-you-buy–try-that-mortgage-on-for-size-211830352.html

Can You Afford to Buy a House? | Bedford Hills Real Estate

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With the help of low interest rates and intervention from policymakers, the housing market has been one of the most improved areas of the economy. However, a combination of higher rates, rising home prices, and stagnant wages is building affordability issues.

The cost of homeownership is on the rise across the nation. The estimated monthly house payment for a median-priced, three bedroom home purchased in the fourth-quarter of 2013 surged 21 percent to $865, compared to $714 from a year earlier, according to the latest report from RealtyTrac. The firm analyzed 325 U.S. counties and included other factors such as insurance, taxes, maintenance, and tax deductions. Among the 15 most populated counties analyzed, the estimated monthly house payment jumped an average of 34 percent from a year ago.

“A potent combination of rapidly rising home prices and the often-overlooked but significant uptick in interest rates in the second half of 2013 caused the monthly cost of owning a home using traditional financing to jump substantially in many markets over the last year,” said Daren Blomquist, vice president at RealtyTrac, in a press release. “The monthly cost of owning a home is still less than renting in the majority of markets, but the cost of financed homeownership is becoming dangerously disconnected with still-stagnant median incomes, driven not by shoddy underwriting practices this time around but by investors and other cash buyers who are not tethered to the typical affordability constraints.”

 

 

http://wallstcheatsheet.com/politics/economy/can-you-afford-to-buy-a-house.html/?ref=YF

Something is out of whack for housing | Bedford Real Estate

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It is hard to look at the falling snow across much of the mid-Atlantic on Monday and not blame the weather for sluggish home sales this winter. For anyone east of Nevada, this has seemed like one of the coldest and snowiest winters in a very long time, and it is. While Americans hunker down in their homes, the prospect of house hunting is less enticing.

Home sales numbers so far back that up, but some claim the lackluster sales are not due to the weather but to the seasons, or specifically, seasonal adjustments that are out of whack.

The housing market has been abnormal in many respects over the past few years. Analysts at Goldman Sachs point to an elevated level of distressed sales, the first-time homebuyer tax credit in 2009 and 2010, and significant investor activity in 2012 and 2013.

“Now that the housing market is normalizing with fewer distressed sales and less investor activity, applying these unusual seasonal factors may distort housing indicators,” the analysts wrote in a report.

 

http://www.cnbc.com/id/101460942?__source=yahoo%7Cfinance%7Cheadline%7Cheadline%7Cstory&par=yahoo&doc=101460942%7CWhat%20is%20out%20of%20whack%20with

Time for a Mortgage? How to Know You’re Ready for Home Ownership | Pound Ridge Real Estate

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As a Discover Home Loans mortgage professional, I’m regularly asked how to begin the process of buying a home.

As with most big decisions, you’ll need to weigh the benefits against the immediate and long-term time, energy and costs associated with owning a home. See how many of these statements apply to you and decide if buying a home is the right move for you.

1. Your rent is higher than a mortgage payment. The cost of renting, over time, can eclipse the cost of owning and maintaining a home. To help you decide if your finances would be better -suited to home ownership, check out the Rent vs. Buy Calculator from Discover Home Loans.

2. You’re staying put. Are you planning to stay in the same place for the next three to five years? If so, you might be better off buying a home. Keeping your house for several years helps to recoup the costs associated with a new home loan by building equity. The more equity you have in the house, the more you’ll benefit when you sell the home.

3. Your finances are set. Buying a home may seem intimidating, but with the right preparations it can be a seamless process and a smart financial choice. Determine how much you have saved for a down payment, as well as the amount you can afford to devote to a monthly mortgage payment. Lenders want to make sure buyers have the income to keep up with mortgage payments. Don’t forget a safety net to account for unexpected illness, change in employment or natural disaster—generally enough to cover three to six months of living expenses. There are many tools available online to help you determine how much house you can afford.

4. Your credit is under control. A good credit score helps you get the best deal on a home loan. Generally, the higher your credit score the lower your interest rate. Reviewing a copy of your credit report will give you insight into how your finances look to lenders.

 

http://finance.yahoo.com/news/time-mortgage-know-ready-home-144528638.html

Why pending home sales ticked up, driven by move-up buyers | Bedford Corners Homes

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The Pending Home Sales Index is put out by the National Association of Realtors (the NAR). It tracks the number of home sales under contract. This tends to lead the actual home sales data by a few months. Home sales data is an indicator of the real estate market’s health. Recently, the market has been characterized by limited supply, as homeowners who aren’t desperate to sell have removed their properties in hopes of getting a better price. While the headline real estate appreciation numbers have been large, they’ve been concentrated primarily in the major West Coast markets, especially the markets hit the hardest in the downturn. The rest of the country has been experiencing low single-digit appreciation.

 

http://finance.yahoo.com/news/why-pending-home-sales-ticked-144317446.html

US home prices rose at solid pace in January | Chappaqua Real Estate

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U.S. home prices rose in January after three months of declines. A tight supply of homes might have helped boost prices and offset sales slowed by cold weather.

Real estate data provider CoreLogic says prices rose 0.9 percent in January after dipping 0.1 percent in December. Over the past 12 months, home prices have risen 12 percent, the biggest year-over-year gain in more than eight years.

CoreLogic’s price figures aren’t adjusted for seasonal patterns, such as winter weather, which can depress sales.

Snowstorms and low temperatures contributed to a sharp drop in sales of existing homes in January. The National Association of Realtors said sales plunged to their lowest level in 18 months. Still, the number of homes for sale remained low, a factor that might have helped increase prices.

Home sales and construction have faltered over the winter, partly because the weather has likely discouraged many Americans from house-hunting. The average rate on a 30-year mortgage is also about a percentage point more than it was last spring, which means buying costs are higher.

 

http://finance.yahoo.com/news/us-home-prices-rose-solid-130122017.html