Road to Homeownership home-buying

Tax breaks real estate you should be prepared to do without in 2014

Dozens of tax laws are set to expire at the end of 2013. Many of these provisions are quite popular and likely will be extended by Congress. Exactly when or how lawmakers will get around to doing this is unclear.

The situation is complicated by the fact that both the White House and Congress want to enact serious tax reform in 2014. Key members of Congress and the Obama administration have proposed that extending or making permanent some of these expiring provisions be made part of the overall tax reform process instead of being done piecemeal though special tax extension legislation.

The expiring provisions of most importance to the real estate industry include:

Mortgage insurance premiums deduction: Since 2007, qualifying homeowners have been able to deduct premiums for mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, the Rural Housing Service, and private mortgage insurance. Homeowners whose incomes are not too high can treat such payments the same as mortgage interest payments. (IRC Sec. 163(h)(3)(E).) Unless the law is extended, no deduction will allowed for amounts paid or accrued after Dec. 31, 2013.

Discharge of indebtedness on principal residence exclusion: Since 2008, homeowners have been allowed to exclude from their taxable income up to $2 million of debt forgiven on their principal residence by a lender in a short sale, mortgage restructuring, or forgiven in a foreclosure. (IRC Sec. 108(a)(1)(E).) Full Article

All-in-One Guide to Packing Your Kitchen

When it comes to packing for a move, most people dread the kitchen, with all the dishes, appliances, and odds and ends crammed onto shelves. And it’s not a job you can rush through, because if you’re not careful in your packing, you risk finding broken dishes and shattered wine glasses when you open the boxes in your new place.

But, believe it or not, you can avoid the common mistakes and get your kitchen packed in a weekend.

Appliances

If you still have your appliances’ original boxes and packaging, use them. If not, you’ll need medium-sized packing boxes and a little ingenuity. Before packing, make sure each appliance is clean and dry. Remove smaller parts and fragile items, such as glass bowls.  Next, locate the owners manual and tape it to the front of the appliance for easier assembly later. Finally, wrap the fragile pieces in bubble wrap and use a double layer of newspaper or packing paper to wrap the metal or plastic pieces. Put the appliance in the box first and stack the lighter, smaller pieces on top.

Dinnerware

Start by placing two layers of bubble wrap or packing paper on the bottom of the box. Wrap each piece of dinnerware with a thin layer of packing paper and stack them one at a time in the box, adding an extra layer of bubble wrap or paper in between every three dishes. For extremely fragile items such as wine glasses and coffee mugs, wrap them individually in T-shirts or tank tops and save the expense of extra bubble wrap.

Silverware

Loose silverware is a pain to sort out during unpacking and can damage fragile items in shared boxes. To save yourself the headache, start by sorting your silverware according to type. Wrap each type with a rubber band or piece of string. Finally, place all of the silverware in a shoebox and tape the box closed with packing tape.

Pots and Pans

To find the right box for your pots and pans, grab your biggest pan and place it into a box both horizontally and diagonally. If you can close the lid securely, the box will work. If not, try a larger box. Once you find the right size, stack your pots and place them in the box. Once the boxes are in, wrap glass lids with thin packing paper and place them underneath the handles of the pans.

Food

Packing is a great time to unclutter your pantry. Sort through the items there and toss out anything past the expiration date. Any food that’s useable but that you don’t want can be donated to a local food bank. For the food you want to keep, use tote bags to carry it to your new place.

Odds and Ends

To save on boxes, wrap your kitchen utensils and other odds and ends with a single layer of packing paper. Once wrapped, tuck the pieces into your other boxes to fill up the last bit of unused space. For heavier items, use a small packing box. Full Article

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Be Prepared for Mortgage Rules Changes in 2014

The world of mortgage lending has changed significantly since the housing bubble burst. Mortgage lenders have returned to traditional loan standards that require extensive documentation of income and assets for a loan approval.

Government regulatory agencies also continue to react to the housing crisis, with more adjustments to mortgage requirements set to go into effect in 2014:

Qualified Mortgage Rules

Whether you’re thinking of buying a home or mulling over refinancing your mortgage, Jan. 10, 2014, could be an important date for you to remember. The Consumer Financial Protection Bureau is in the process of implementing regulations to meet goals set forth by the Dodd-Frank Act in Congress, which was meant to correct the errors that led to the housing crisis. The CFPB’s “Qualified Mortgage,” or QM, rules go into effect in January. Essentially, these rules require lenders to prove borrowers’ ability to repay a loan by meeting several guidelines, including a maximum debt-to-income ratio of 43 percent. While many lenders already limit borrowers to a similar maximum debt-to-income ratio, the new rules won’t allow for any compensating circumstances such as significant cash reserves or a large down payment to be considered in order to offset a higher debt ratio.

If you have credit problems or a high debt-to-income ratio, you may want to push through your loan application for a refinance or home purchase to make sure you close your loan before the new rules go into effect. However, many lenders are already using QM standards in order to make sure they’re in compliance with the regulation. Mortgages that don’t meet QM standards will have to be held by the lender rather than sold to Fannie Mae and Freddie Mac, so most lenders are careful to meet the new standards.

The 3 Percent Rule

The new QM requirements also limit fees for originating a loan to no more than 3 percent of the loan amount. If you’re financing a more costly home, such as a $400,000 home or more, the lender can easily keep fees under 3 percent, which in this case would be $12,000. However, if you’re refinancing a smaller loan balance or purchasing a less expensive home — for example, for $80,000 — the lender might find it more difficult to keep all fees under $2,400. Mortgage lenders are less likely to offer loans for smaller amounts since they won’t always recoup their costs and make enough profit to pay their staff. If you need a small loan, you may want to push to get it closed before Jan. 10, 2014.

Self-Employed Borrowers

One particular group of borrowers will most likely be impacted by the QM rules: self-employed borrowers. These borrowers already are heavily scrutinized and find it more difficult to obtain a mortgage because they must prove their income based on tax returns and profit-and-loss statements, rather than standard paystubs and W2 forms. The “ability-to-repay” feature of QM rules requires all borrowers to prove they have the cash flow to make payments on their mortgage. Self-employed borrowers often have fluctuating income and rely on cash reserves to pay bills in-between payments, but the emphasis on cash flow can make it harder for lenders to approve a loan even for someone with significant funds in the bank.

Potential Lower Loan Limits

The Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, announced in October that plans to reduce the maximum loan limits for conventional conforming loans will be delayed until later in 2014. Typically, loan limits are adjusted on Jan. 1 of each year, but the agency decided to wait to see the impact of the introduction of QM rules before making changes. Currently, the limits are $417,000 in most housing markets and rise to $625,500 in high cost areas. If you need a mortgage near these limits, it would be wise to close your loan earlier in 2014 rather than later in case limits are lowered. Full Article

Weekly Round Up

Happy Friday! This week has been a great one, almost everyday we helped sellers look over offers, had an offer accepted or closed in escrow! Below are the new listings of the week.

 Give us a call if you have any questions on our services or would like to take a look at one of our listings. 

16659 SE 69th Way Bellevue WA 98006

MLS# 567559

$1,258,888

515 Bonnie CRT NW Salem OR 97034

MLS# 13179901

$499,000

8910 161st St E Puyallup WA 98375

MLS# 565085

$219,999

3525 278th PL NE Redmond WA 98053

MLS# 564382

$289,900

1563 N 5th St McCleary WA 98557

MLS# 566075

$179,000

What You Need to Know About Buying a Home During the Holiday Season

If you’re house hunting over the holidays, you’re likely a serious buyer with an immediate need.  Perhaps you have to relocate for a new job opportunity, or there’s been a change in your personal life? Regardless, while you may assume it’s not an ideal time to be looking — namely because there isn’t much to look at — there aresome advantages to buying this time of year.

Less competition

Let’s start with the obvious one: less competition. This lowers the chances of multiple offers and bidding wars (something we saw a lot of last spring/summer), and should translate into a bigger discount for you. Know your market! This is where sites like Zillow come in handy. Start your research here for comps in your area and to see what homes are selling for.

Serious home sellers

Why would sellers pick such an inconvenient time — while everyone is busy entertaining family and friends and enjoying the spirit of the holidays  — to list their properties? Probably because they need to sell and may feel compelled to do so before the end of the year for tax purposes. What this means for you: less hassle when it comes to negotiating; a greater willingness, on the part of the seller, to agree to concessions; less chance of the seller waffling; and greater respect for your offer, even if it’s a little lower than the seller was perhaps expecting.

Faster mortgage approval

Lenders aren’t as busy this time of year, and less volume could mean faster approval. Some lenders might even be willing to reduce fees during the off-peak season in hopes of gaining your business. Regardless, don’t just go with the first lender who comes along. It pays to shop around. Get multiple quotes and check out lender reviews on Zillow Mortgage Marketplace.

Greater affordability

Sure, home prices have been rising, but they’re typically lower in December than during any other month (so you don’t have to be as aggressive with your initial first offer, compared with buying during peak to high season). Zillow’s third quarter Real Estate Market Reports showed home value appreciation slowing. As we enter the slower home shopping season many overheated markets are moving away from bubble brink and ultimately becoming more affordable than they have been historically. If you want to take advantage of low interest rates, the time to act is now. Full Article

Home Selling Tip: Look Past the Home Staging

One of the great pleasures of house hunting is visiting homes on the market and fantasizing about living in them.

Many of today’s Realtors are expert at home staging, or they will hire a professional home stager to make their listings as attractive as possible to the widest range of buyers. Sellers are taught to present their home as if it’s a hotel room or a model home rather than showing it to buyers the way most people truly live.

While buyers can enjoy the view at a staged home, they should be careful to peek behind the curtains to make sure they’re seeing the reality and not the sparkle.

Try the House on for Size

Staging techniques are used to help buyers visualize what will fit in a room or the function of the room, but they can also mask a too-small or a too-large space. Before you go house shopping take a few measurements of your furniture and the rooms you live in now. Home stagers often remove extra furniture and sometimes take off interior doors to make rooms seem more spacious, so make sure you’ve checked that your king-size bed or your king-size sectional sofa will fit.

One of the costliest things to change in a home is structure, so instead of admiring the shiny granite kitchen counter or enjoying the fluffy new towels in the bathroom, check to see if the kitchen is located where you want it and whether the bathroom will need a major remodel.

Stagers often have sellers empty their closets so that the home seems to have an abundance of storage space, but you should think about what you own and where you’ll put it, rather than assume all those closets will stay empty.

Use Your Senses

A home that smells like cinnamon or citrus appeals to your nose, but if the sellers are using air fresheners in every room, they could be masking a musty smell from a damp basement or pet odors that are permanently part of the carpet.

Use your eyes to check out the lighting. Home stagers sometimes bring in extra lamps, add brighter bulbs and strip away all the window treatments; but since you may want a little privacy and don’t want your home to look like a lighting store you should look for overhead light fixtures and how much natural light the home receives. If you love a particular light fixture, find out if it stays or if it’s part of the staging package.

Think Like a Home Inspector

Freshly painted walls are nice to look at and so are fresh flowers, but you should dig deeper if you’re serious about a home and check under sinks for leaks and look for damp spots in the basement. Test the windows to make sure they work, look at the foundation, and see if you can evaluate the quality of the cabinets and flooring.

Make a checklist of places that you want a home inspector to evaluate carefully.

There’s nothing wrong with enjoying an attractively staged home and even picking up ideas for rearranging or redecorating with your own furniture, but taking your time to thoroughly check out a home before making an offer will increase the chances that you’ll buy a home you love. Full Article

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