Taxpayers are allowed to decide each year whether to take the standard deduction or to itemize their deduction when filing their personal income tax returns. Roughly, 75% of households with more than $75,000 income and most homeowners itemize their deductions.
The 2012 standard deduction, available to all taxpayers, regardless of whether they own a home, is $11,900 for married filing jointly and $5,950 for single taxpayers.
Let's look at an example of a homeowner couple with a $150,000 mortgage at 3.5%. The standard deduction would give them $2,650 more than the total of their interest paid and property taxes of approximately $9,250. If they were in the 28% tax bracket, the actual tax savings would be $742.00.
When mortgage rates were considerably higher, many people expected the interest and property taxes to easily exceed the standard deduction but with today's low rates, a comparison is certainly justified.
There are other things that could come into consideration like charitable contributions, medical expenses and casualty losses. Tax professionals will compare available alternatives to find the one that will benefit the taxpayer most.
For more information, see www.IRS.gov and consult a tax advisor.
Low inventory is a relative term depending on how you're comparing it. Would the comparison be to total number of homes on the market last year, homes in a certain price range or homes in a certain area? In some situations, it's a combination of all of those things.
In any given market, inventories will fluctuate based on area and price range. The National Association of REALTORS® considers a balanced market to be six months' supply of homes. If it takes longer than six months to sell, it is thought to be a buyer's market and less than six months, a seller's market. Most buyers and sellers probably feel inventory equilibrium is more like three month's supply of homes.
Inventory has a direct impact on price. During the housing bubble, demand decreased, supply ballooned to four million houses and prices dropped dramatically. Increased inventories due to foreclosures, bank' revised lending practices and builder's lack of new housing starts each contributed to the dramatically lower prices.
As the market has recovered, economic conditions have improved, banks have loosened their requirements, interest rates have remained low, foreclosures have slowed and gradually, the inventory has been reduced to approximately two million houses. When demand is constant but inventory is reduced, price tends to increase because the same number of people are trying to buy a smaller than normal number of homes.
Based on the low mortgage rates that have been inching up each week in 2013 and an improving consumer confidence level, most markets are experiencing some increase in demand. With inventory decreasing, buyers in the marketplace can see that prices are increasing.
Just as signs of spring can be seen to be just around the corner, it should be recognized what direction prices will be moving. Hindsight is 20/20 but we can't purchase or sell in the past. We need to make decisions today on what we think will happen in the future.
If you're curious to know what inventory conditions are for your specific market, send me an email with the price range and area and I'll send you a report. Mike@MikeParker.com
How much evidence is needed to make a decision to get out of the rent race and become a homeowner?
Compare your rent with a mortgage payment on a similar size property. If you want a larger home than your current one, use the rent that property would require instead of what you're currently paying. If it's considerably cheaper, you may not need any further encouragement.
By the time you consider the principal reduction, appreciation and tax savings, your monthly cost of housing could be much less than the rent you're paying.
The principal reduction included in each payment is like a forced savings account that increases as your mortgage balance decreases. Your equity in the property will also grow due to appreciation. The equity is part of your net worth and an investment in your family's future.
The income tax savings can be an additional financial consideration if the combined interest and property taxes exceed the allowable standard deduction.
Trends are showing that both tenants and homeowners are staying in their homes longer. It's been said that whether you rent or own, you're paying for the home. Do you really want to buy the home for your landlord? Check out your numbers on a Rent vs. Own.
As the market shifts from a buyer's market, it's good to know how to improve your chances to have the seller accept your offer.
Once you decide on a home, don't waste time; write an offer and submit it as soon as possible. Competing with another buyer happens more frequently than you'd expect. Multiple offers are a seller's advantage but here are some tips to level the playing field:
Realistic offer - don't give the impression you're trying to "steal" the property. Submit comparable sales that justify your offer.
Pre-approval letter - this satisfies seller's biggest concern that an unqualified buyer will unnecessarily take the home off the market and the seller will lose other opportunities.
More earnest money - it shows you're serious and makes the seller feel like the contract will actually close.
Minimize contingencies - from a seller's standpoint, each contingency is one more reason why the sale won't go through. They feel the home is "off the market" and they're in limbo.
Shorten inspection period - your agent can help you set a reasonable date but let the seller know you're willing to close prior to that if possible.
Write a personal letter to the seller telling them why you want their home - this can be the emotional connection to the seller that makes the difference in you getting the home.
A seller wants to feel confident that the offer they accept will actually close so they can plan for their next move. Following tips like these can definitely affect negotiations and help put together an offer that is more likely to be accepted.
Home prices have come down 20, 30, 40% or more in the last three years and mortgage rates are lower than they've been in 50 years and you still haven't bought a home. Really?
Housing affordability is over 180, an all-time high when 100 is considered good and you're still renting. Really? Are you waiting for it to get to 200? Do you think prices and rates are going to get lower? Really?
You know it's costing you more every month to rent than to own. Tax savings, appreciation and principal reduction lower the monthly cost of housing and yet you'd rather let your landlord benefit...Really? Have you heard that the average homeowner has 41 times greater net worth than a renter? Do you think it's a coincidence? Really?
And have you heard that most people want a place of their own; a place to raise their family; to share with their friends; to feel safe and secure. So, you'd rather go home after working hard all day to your landlord's home. You'd prefer to invite some friends over to your landlord's home for dinner next weekend. Really?
You haven't checked out whether you can actually take advantage of the best buyer's market ever. You haven't invested thirty minutes to find out the facts as they apply to you and your situation. Really? You're basing a decision on national news, chat rooms and Facebook. Really?
Every market is different. Every buyer is unique. If you want a home; if you have a down payment; if you have good credit, you owe it to yourself and your family to explore the possibilities...but with a real estate professional; someone who can really show you the reasons and really give you options.
Once you step inside this beautiful home, you'll immediatly want to call it home. What's not to love about it. It is gorgeous inside and out, and an amazing location as well. Take a look for yourself....
Welcome home to 589 Mustang Dr. located in beautiful Walton, Kentucky. This immaculate home features four spacious bedrooms, three full bathrooms, one half bath, a formal dining room, a gourmet chef's kitchen, a partially finished lower level, a large first floor laundry, and much, much more.
Walk-in to stunning hardwood floors with a marble inlay. The rich hardwood floors continue on into the formal dining room where stunning tray ceilings, a lovely chandelier, columns, chair rail and crown molding are sure to impress those over for those wonderful home cooked dinner parties. Located just off the dining area sits the kitchen which is definitely sure to please the chef in your family. The kitchen boasts granite counter-tops, 42 inch Maple cabinets, a walk-in pantry, an extra deep sink, and center island with additional storage and electric. Appliances included with the kitchen are the gas oven, dishwasher, garbage disposal and the refrigerator. Entertain in style in the amazing living room complete with gas, stone fireplace - perfect for those chilly months out of the year. You'll also enjoy the all season sun-room with it's double walkout to the fantastic deck and backyard. The sun-room also features soaring cathedral ceilings and ceramic tile.
After a long day, you'll enjoy relaxing in the unbelievable master suite that is fit for royalty. This bedroom is located on the second floor and includes an adjoining full bathroom, spacious walk-in closet and plush wall to wall carpeting. You'll enjoy soaking the days worries away in the awesome jetted bathtub. A large walk-in separate shower, private restroom and double vanity sinks round out the master bath. Three additional guest bedrooms are also located on the second floor and share a full bathroom with shower/tub combination.
This home is located on a cul-de-sac street and sits on an amazing wooded lot loaded with professional landscaping and mature shade trees. You'll also enjoy the incredible Trex Deck that is stain resistant and has limited up-keep. For those extra sunny days, use your remote and bring out the Sunsetter Awning to keep cool. The deck is the prefect spot to relax as you enjoy your favorite drink and listen to the birds sing. Entertain family and friends underneath in the outdoor living area. This expansive area is super private and features a ceiling fan and superb views of the backyard.
Loaded with upgrades this home sits in the Boone County Public School system and is super convenient to shopping, places of worship, the expressway, the Boone County Public Library, area attractions, restaurants and much more. It includes a fenced backyard, ceiling fans, recessed lighting, a security system window treatments and much more. For your private tour of this simply stunning home, contact The Mike Parker Team/HUFF Realty today. 859-647-0700
FHA has announced a major change to its loan program which allows borrowers to cancel the mortgage insurance premium (MIP) when their unpaid balance reaches 78% of the original purchase price. While no specific date has been set for the change, sometime in 2013, new FHA loans will require the mortgage insurance for the life of the loan.
At existing rates, the monthly MIP on a $168,875 mortgage is $178.99 per month. Under the current rule with normal amortization, the MIP would no longer be required in 9 years and 9 months. However, under the new rule, it would last for the entire 30 year term.
They also announced that the annual MIP will also be increased from 1.25% to 1.35% at some point in the near future. HUD, the parent agency for FHA, is making the changes to restore the capital reserves of the program that are needed to fund failed loans.
People that can close a FHA loan before the change takes place will fall under the old rules for canceling MIP and the lower rates. Since no date was announced, it is not known exactly when the changes will take effect.
While this information will probably not make the evening news, it will have a big impact on borrowers planning to use an FHA loan. Please pass it on to anyone you know who might be considering purchasing or refinancing with a FHA loan.
This week finds us expressing gratitude to family and friends, co-workers and colleagues, clients and customers. However you choose to celebrate Thanksgiving, The Mike Parker Team wishes you a joyful week of gratitude.
Ready for a Spooktacular Scare? Check out the top areas to get your scare on in the Tri-State:
Here are some of the top haunted houses in the Tri-State, and when and where you can find them to get spooked:
1. The Land of Illusion- Thru Nov. 3 8762 Thomas Road, Middletown Ohio Website: www.thelandofillusion.com Phone: 513-423-9960 begin_of_the_skype_highlightingFREE 513-423-9960end_of_the_skype_highlighting Hours: Friday and Saturday Times: 8 p.m. – 2 a.m.
2. The Dent School House - Thru Nov. 3 5963 Harrison Avenue, Cincinnati, Ohio Website: www.frightsite.com Phone: 513-598-4600 begin_of_the_skype_highlightingFREE 513-598-4600end_of_the_skype_highlighting Hours: Thursday – Sunday Time: Thursday and Sunday: 7:30 p.m. – 10 p.m. Friday and Saturday: 7:30 p.m. – 12 a.m. Lights Out Tour – Nov 1 and 2 7:30 p.m. – 12 a.m.
3. Halloween Haunt at Kings Island – Thru Oct. 27 Kings Island Drive, Mason, Ohio Website: haunt.visitkingsisland.com Phone: 513-754-5700 begin_of_the_skype_highlightingFREE 513-754-5700end_of_the_skype_highlighting Hours: Friday and Saturday Time: Fridays 6 p.m. – 1 a.m. and Saturdays 11 a.m. -1 a.m.
4. Haunted Hollow Ride– Thru Oct. 27 1261 Dalton Road., Wilmington, Ohio Website: www.wilmingtonhauntedhollowride.com Phone: 937-382-6147 begin_of_the_skype_highlightingFREE 937-382-6147end_of_the_skype_highlighting Hours: Friday and Saturday Time: Last Bus leaves at 11:45 p.m.
5. Nightmare Penitentiary– Thru Oct. 27 1261 Dalton Road., Wilmington, Ohio Website: www.wilmingtonhauntedhollowride.com Phone: 937-382-6147 begin_of_the_skype_highlightingFREE 937-382-6147end_of_the_skype_highlighting Hours: Friday and Saturday Time: Remains open until the last victim goes through
9. Scream Acres Ct.- Thru Oct. 27 5055 Glencrossing Way, Cincinnati Website : http://www.cincyscreams.com/ “Spooky Laser Tag” runs from 7 p.m. until 9 p.m. and “Haunted Laser Tag” runs from 9 p.m. until midnight. Overnight haunted laser tag event on Oct. 26 from midnight until 7 a.m. For more info, call (513)703-7384 begin_of_the_skype_highlightingFREE (513)703-7384end_of_the_skype_highlighting or send an email email@example.com .
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