Yes, They Extented the $8.000 Tax Credit - "But Susan, Why Do You Think Interest Rates Will Rise?"

Oh, wow, the government did a wonderful and smart thing when they took the Federal Tax Credit program for first-time home buyers and not only extended it, but expanded it as well to individuals who already own a home but want to get a new one!

Now, below, I’m going to give you the details of the program. But, first, I want to alert you to what will likely happen when the program ends next year!

Believe me, when it terminates, interest rates will likely rise. And that’s not just my opinion! Many mortgage professionals think this is a likely scenario.

Why am I bringing this up? Because by buying now, you can save yourself thousands of dollars over the life of a mortgage loan! Just a 1% rise in the rate can be very expensive for you.

Let me explain with an example. For ease of calculation, let’s assume the interest rate is 5% for a $165,000 30-year fixed mortgage. The monthly payment will be $885.76. Or use this easy loan calculator.

Now, let’s raise the rate to 6% for the same mortgage. This means the monthly payment will raise to $989.20, or $103.50 more. That’s an extra $1,242 per year. Over a 30-year period, well…..that’s going to take a lot of money out of your pocket!

So, you can see why it’s important for you to… buy a new home now and get huge savings!

Okay, let’s get back to the details of the wonderful tax credit program I promised you. Here goes…

If you’re a first-time home buyer, the tax credit remains the same - $8,000.

But, as I said earlier, there’s been a wonderful change in terms of the income range. It’s been expanded as well!

The credit doesn’t begin to phase out until your modified adjusted gross income exceeds $125,000 for single filers or $225,000 for joint filers. The old phase-out thresholds were $75,000 and $125,000, respectively.

And now for even more fantastic news if you already own a home but want to buy or build a new one. The tax credit program has been expanded to cover you if you’ve lived in your current principal residences for at least five out of the last eight years.

In that case, your maximum credit will be $6,500. I know, I know, it’s lower than that of a first-time home buyer, but it’s still a substantial amount of money!

So, whether you’re a first-time home buyer or a current owner, contact me right now at 402.305.4335 or sclark@deebrealestate.com to learn more about the details of the program and those low interest rates!

Announcing the NEW Government Extended and Expanded the Tax Credit Program!

Want to Buy a New Home? Or Build One? - The Government Has Extended and Expanded the $8,000 Tax Credit Program!

Remember when the federal government introduced the $8,000 Home Tax Credit program for first-time home buyers?

Like me, you might have been skeptical about its effectiveness.

Well, I’m happy to report my skepticism wasn’t warranted. The program has been a resounding success, getting first-time home buyers into new homes and helping out the American economy at the same time!

Now, the news is even better!

The program has been so wildly popular that it’s been extended into 2009 and expanded to include second-time home buyers! Now, I know you want to get into a new home fast (or build one) so here are the details on the program. If you’re a first-time home buyer, the tax credit remains the same - $8,000. However, there’s been a fantastic change in terms of the income range. It’s been expanded as well!

The credit doesn’t begin to phase out until your modified adjusted gross income exceeds $125,000 for single filers or $225,000 for joint filers. The old phase-out thresholds were $75,000 and $125,000, respectively.

But wait…there is even better news if you already own a home but want to buy or build a new one!

The program has been expanded to cover you if you’ve lived in your current principal residences for at least five out of the last eight years.
Your maximum credit will be $6,500. Yeah, I know, it’s lower than that of a first-time home buyer, but, heck, it’s still a substantial amount of money! So, whether you’re a first-time home buyer or a current owner, contact me right now at 402.305.4335 or sclark@deebrealestate.com to learn the details of the program!

Please, please, don’t wait! The time for action is now, especially if you want to build a new home (it takes six months to get one up and going)!

Want to Increase the Value of Your Home? Think Basement Bathroom and Bedroom!

Want to Increase the Value of Your Home? Think Basement Bathroom and Bedroom!

Let’s assume you have a good basement space that you’re not really using to its full potential. Let’s further assume that you’d like to sell your home when the economy and the housing market improve.

If that’s the case, consider installing a bathroom and/or bedroom in the basement. Obviously, they’re very useful additions, and they add a lot of value to your property in the eyes of potential buyers. It’s a fact that people are actually more inclined to buy homes which have finished basements with a bathroom and/or bedroom in them.

Plus, if you’re a really handy sort, you may be able to do the work yourself and save a lot of money! All you’ll be paying for is the materials and fixtures, and you’ll have the satisfaction of doing the work yourself.

If you’re not the handy sort or lack the time, I’d recommend hiring a professional to install the bathroom in particular. It’ll cost more, of course, but you know the job will be done right. Plus, you can show the paperwork to potential buyers and give them the reassurance that the work was done professionally by a licensed plumber.

In terms of finding a good plumber, first ask around among your friends, neighbors, co-workers, etc. Word-of-mouth is the best recommendation since these individuals will have had personal experience with the plumbers.

Second, ask for references from the plumbers themselves and check to make sure that they’re actually legally licensed, insured and bonded by your state. You can do this by checking with the appropriate state agency.

Third, ask for a guarantee on the work. A legitimate and professional plumber will be happy to provide you with one since they know great word-of-mouth brings in more business.

Avoid any “plumber” who refuses to give you a guarantee. The last thing you need is sloppy work that ends up putting water into the basement – and the expense of getting the work done all over again the right way.

Want to talk more about the benefits of refinishing your basement? Hey, contact me today at 402.305.4335, and we’ll have a great talk about that subject or any other area of real estate you’d like to discuss!

Ever Wondered Which Home Improvements Give You the Best Return on Investment (ROI)? I’ve Got the Answers for You!

**SPECIAL THANKS** Aaron Hochstein, Highrock Remodeling, Office number 402.614.4892, highrockremodeling@hotmail.com

Below I provide you with the best home improvements to make in terms of their Return on Investment (ROI). Choose the ones that best fit your situation and your budget!

Natural Gas Furnace Replacement

The ROI on furnace replacement can reach as high as 100%. How can that be? Well, of course, it depends on how long you keep the house before you sell it. In the first year, the ROI of a new furnace may be only around 10%.

However, consider that a new furnace adds to the resale value of your home and makes your home very attractive to potential buyers. And, then, if you look at the money saved in utility bills over, say, a five-to-ten year period, well, then you’ll be hitting that ROI of 100%!

Painting

Amazingly, a new coat of paint on the exterior of your home can give you an ROI of 90%. Dollar for dollar, it’s one of the most cost-effective home improvement projects you can undertake!

Depending on the quality of exterior paint, it can cost you anywhere from $25 to $50 a gallon. To give you an idea of the overall costs, the average 3,000-square-foot home takes about 15 gallons of paint. So, you may pay anywhere from around $375 to $1,500.

Looking at the interior, you’ll likely pay anywhere from $12.00 to $50 a gallon, again depending on the quality of the paint.  Plus, of course, you have the cost of rollers, brushes, drop cloths, etc.

If you do the work yourself, it’ll likely cost you around $300.00. If you hire a professional, double the cost. In either case, you’ll end up with an ROI of around 75%.

Vinyl Siding Replacement

If appropriate, siding is a great place to start your home improvement projects. It has an ROI of around 88%.

Nearly everyone loves vinyl siding for two reasons – it’s low maintenance and has great durability. Plus, of course, the shiny appearance adds the perception of increased value in the eyes of potential buyers.

And you have two options for putting it on. If you have the time and talent, you can do it yourself for around $1.00 per square foot!

If you have neither the time nor the talent, then it’s time to call in a professional. Depending on your area and the size of your home, the job may cost you around $7.00 per square foot and anywhere from $3,000 to $12,000.

Replacement Windows

New windows have an ROI of 80% plus. It’s true that they are expensive, running $300 for a basic design up to $1,000 for custom designs. However, they have tremendous value in terms of either maintaining the house or increasing its value for sale.

Chosen wisely, replacement windows can really improve the look of your home from the exterior and in the interior. In addition, of course, they can really save on heating bills since old windows are great leakers of energy.

Kitchen Remodeling

Remodeling your kitchen can give you an ROI of around 80%. Now, it’s true that such a remodel can be expensive; the average cost is about $17,000.

However, you must remember that the condition of the kitchen is very often the deciding “sale/no sale” factor in the minds of potential buyers!

So, seriously consider this remodeling project. Add new countertops, cabinets and appliances.

If you have the time and skills, do much of the work yourself. Plus, of course, shop all the sales to get the lowest price on any appliances like stoves and refrigerators.

Roof Replacement

Replacing a roof has an ROI from around 60% to 65%. Depending on the nature of the replacement, it can cost about $100 to replace a few asphalt shingles on up to around $100 to $350 for a 10 x 10 foot square.

An overall re-roofing can cost anywhere from $6,000 to $14,000, depending on the size of the roof and the nature of the shingles (asphalt, wooden, etc.).

Now, while roof repair or replacement doesn’t have as high an ROI as some other home improvements, it’s definitely important because buyers will back quickly away from the purchase of a home that needs roof repairs. So, put this one high on your list!

Bathroom Remodeling

The ROI on a bathroom remodel ranges up to 78-80%. The average remodel costs in the $12,000 to $13,000 range. If you go “whole hog,” costs can range up past $30,000.

However, you don’t have to do all the remodeling at one time, and you may be able to make some of the changes yourself.

For example, new tile or linoleum can up down for anywhere from $100 to $1,000, depending on the size of the bathroom and the materials used. New light fixtures can also be an inexpensive do-it-yourself project.

So, there you have it – a list of home improvements that will give you the best return on investment! If you’d like to discuss the ROI on other home improvements, contact me today at sclark@deebrealestate.com, and I’ll give you all the information you need!

Do You Know The RISKS & REWARDS of Buying a Home?

 

We all know that every financial decision has its rewards and its risks. The purchase of a home is no different. The wise course to take in these decisions is to weigh the rewards against the risks. Naturally, you want to maximize the advantages and minimize the disadvantages.

So, how do you do that? It calls for objectivity on your part!

Normally, you’d have to do some research to find out the risks and rewards of home buying. But I’ve already done that for you below! Read on to see if you're a good candidate for owning a home!

Rewards

Everybody receives an "intangible" benefit when they buy a property - the joy of owning it and creating a home for your family. But, there are also several objective financial rewards that can be earned through home ownership! 

First, there’s appreciation. On a long-term historical basis, your home is generally worth more when you sell it than when you bought it. A home purchase is a wonderful financial investment over time.

A second benefit: Financial flexibility! This benefit is a result of appreciation. Here’s how it works: When your home appreciates, this means you can sell it at a higher price. Then, you can use the profit to buy a bigger and better home…tap into the equity (what your home would sell for minus what you owe on the mortgage)…pay college tuition for the kids…use it to fund your retirement…or any other goals you have in mind!

The third benefit: leverage. Buying a home allows you to use borrowed money (the mortgage) to profit on later price increases (appreciation) on property you haven't paid for.

The fourth benefit: tax breaks! You can deduct property taxes and mortgage interest and keep up to $500,000 of capital gains!

After reviewing those rewards, you can see that home ownership is nothing less than a wise investment in your future!

Risks

It’s no secret that every financial decision has its risks as well as rewards. This means you need to know what those risks are right from the start.

With this knowledge, you can anticipate those risks and make a decision on how you want to deal with them. So, I recommend that you review the following risks to make sure you want to assume the responsibility of home ownership.

Risk 1: A decline in value. 

Unfortunately, we saw this risk raise its ugly head in the recent "mortgage meltdown." From 2006-2009, the value of homes declined.

To be honest, this seldom happens on a historical basis (and prices are on the rebound). However, it still tells you there's no absolute guarantee that home values will appreciate.

If that makes you a little nervous, consider this fact: Over the long-term, home prices do tend to appreciate. Also, home ownership is a heckuva lot less risky than the stock market!

Risk 2: Maintenance expenses. 

It takes money to maintain a home - roofing, heating, cooling, siding, paint, etc. This fact means that you must have the money to pay for routine maintenance costs as well as the inevitable big-ticket items (water heaters, furnaces, etc.) that come with long-term home ownership.

Risk 3: Loss of other investment opportunities.  

In the short-term, alternative investments (stocks, bonds, etc.) may give you a greater return in less time if their value rises faster than that of the homes in your neighborhood.

In such an event, you might do better as a renter or investor. However, keep in mind that, as I stated above, this is a short-term strategy.

Risk 4: Lack of flexibility. 

A home purchase ties you down to a specific neighborhood and city. Now, this is a benefit to many home buyers because it allows them to settle down in a community. But, if you're a person who prefers the freedom to “roam," then home ownership may not be a good choice for you.

Here’s what I mean: home ownership doesn't make it easy for you to take a new job elsewhere or move on to a different location. Plus, if you have to put the home on the market in a hurry due to a divorce, job loss, etc., then you can take a heavy financial hit.

Risk 5: Fewer financial options. 

If you have a large mortgage payment, it can make it hard to invest money elsewhere (savings, investments, vacations, etc.).

Okay, I hope this list of the rewards and risks of home ownership has helped you reach an objective decision on home buying. If you'd like further help in analyzing how these factors apply to your specific situation, contact me sclark@deebrealestate.com or 402.305.4335.

Make a Down Payment on a New Home as BIG as Possible!

It’s a fact – a new home down payment affects nearly everything you can think of financially in the buying process – loan program options, interest rate, closing cost amounts, etc.

Here’s the fundamental equation on this subject:

The higher the down payment = more options for you!

Why is this rule true? For the simple reason, that mortgage lenders don’t like risk. Their business is making money by lending money. So, when you make a larger down payment, they say, “Wow, I like this deal because there’s less risk!”

The benefits don’t stop there, either. If you’ve got enough cash for a large down payment, the lender also says, “Hey, I’m willing to give this person more choices because he or she looks like a great bet!” A “smorgasbord” of options opens up to you - conventional fixed rate loans, adjustable rate mortgages, VA, FHA, graduated payment mortgages, etc.

And if you really want loan officers to fall in love with you, not only offer them a large down payment, but combine it with a good-to-excellent credit score. Believe me, you’ll have their undivided attention!

What Are Acceptable Sources for Down Payment Monies?

Generally, lenders want to see adequate funds available for a period of at least sixty (60) days in your account. The usual methods of proof of these funds are either a Verification of Deposit form or two months' worth of your most recent bank account statements.

So, if you're an individual who keeps money "under the bed" or somewhere in your home, it won’t do you any good. That money has to be deposited in an account (bank or investment) for at least two months (preferably longer).

In the real estate/loan world, this is called "seasoning." And the reason behind it is this: First, by having money in an account, it demonstrates to the lender that you have the ability and discipline to save money and, therefore, are a good risk from his or her point of view.

Second, it also demonstrates that the money is likely yours and not a personal loan from a family member or a friend.

Finally, and most importantly, it shows you have enough money on hand for a down payment.

In general, here are acceptable sources for a down payment:

• Checking account
• Savings account
• 401k account
• IRA account (have to meet specific guidelines)
• Money market account
• Stocks
• Bonds
• Mutual funds
• Certificates of deposit and other liquid assets.
• Sale of an asset, etc.
  

To be blunt about it, the safest method to accumulate cash for a down payment is to simply save the money! This action teaches you financial discipline which is good for all aspects of your life, and it means you don't have to “steal’ money from other assets to pay the down payment.

As you can see, there are many different methods of obtaining down payment money, and I’d love to discuss the possibilities with you. Contact me at sclark@deebrealestate.com or 402.305.4335.

FSBO - Your Advantages and Disadvantages - Why Shouldn't I Try to Sell My Home by Myself?

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Be Honest. Why Shouldn't I Try to Sell My Home by Myself? I'll Get a Better Value, Won't I?

Many home owners think about selling their own home but relatively few attempt it. Why? Because it's an extremely time-consuming and often exhausting process, especially if you're working a full-time job! It's the Realtor who takes this burden off your back.

Nonetheless, I don't discourage you from putting your home on the market and attempting to sell it yourself.

But before you do it, I do encourage you to become extremely knowledgeable about the process and aware of the both advantages and disadvantages of it.

Below, I've provided information on the benefits and drawbacks of doing a "For Sale By Owner" (FSBO) sale. Read it carefully and then make your decision!

Advantages of Selling Your Own Home

Of course, the biggest advantage a FSBO is that there's no commission to be paid to a Realtor. You get all the proceeds from the sale, minus any marketing costs you incur.

A second advantage is that you have complete control of the transaction. You don't have to rely on anyone else. You're totally independent.

A third advantage concerns your equity. If it's low, you have the possibility of selling your home without having to write a check.

A fourth advantage is that you don't have to rely on a realtor to schedule showings, answer inquiries, etc.

Disadvantages of Selling Your Own Home

Perhaps the greatest disadvantage is the tremendous amount of time you have to put into the sale.

It's a time-consuming process to do all the paperwork, the marketing and advertising, the showings, etc. by yourself - not to mention the hours it takes to get acquainted with all the legal, financial, and other issues. You must be prepared for this.

A second disadvantage is the costs in terms of marketing and advertising. If you don't exactly what you're doing, this can be very expensive!

A third disadvantage is that you won't have access to the Multiple Listing Service (MLS) unless you pay a fee to have your listing included. If you don't pay that fee, then you'll end up hunting for buyers one at a time, a very inefficient, ineffective, and frustrating process.

The fourth disadvantage relates to your knowledge of the market. If you're not knowledgeable about it, you may not price your house correctly.

That is, you may underprice it or overprice it. If you underprice your home, you lose money. If you overprice it, you lose buyers. By the same token, if you do find a buyer and you're not experienced at negotiation, you could be taken advantage of.

A fifth disadvantage relates to a belief of some buyers. They believe that since you're selling the house by yourself and not paying a commission, then they're the ones who should get the savings instead of you!

My Advice: Do your homework before considering selling your home by yourself! And, if you do decide to go the FSBO route, be fully prepared in all aspects of home sales!

If you'd like more information and advice on selling your own home as well as my real estate services, contact me at sclark@deebrealestate.com or 402.305.4335.