My Credit Report Info » Investment

Take Advantage of Real Estate Buyer Tax Perks ASAP

Uncle M — Wed, 02 Dec 2009 04:35:15 +0000

Just as homebuyers scurried to buy homes before the end of the year in order to qualify for a special $8,000 first-time home buyer tax credit, Congress decided to extend it a little bit longer. The program has been very successful at encouraging sales, and many housing industry observers credit it with helping the housing market rebound. Now first-time buyers have until the last day of April, 2010 to get purchases under signed contract in order to enjoy the big tax perk. Keep in mind that the IRS defines a “first-time” buyer as anyone who has not bought a house within the past three years. You can even meet this standard despite the fact that you’ve owned another property such as a rental cottage or beach house, as long as the house that has been your principle residence was not owned by you.

But what is really making headlines right now is not the 4-month extension on the first-time tax incentive, but a brand new $6,500 tax benefit that applies to people who already own their own home. The innovative credit applies to those who have owned a home for at least five consecutive years and have used it during that time as their primary residence. If they decide to sell in 2010 and buy another home, then they can pocket the extra $6,500 in tax benefits – which can help many buyers struggling to pay closing costs or cover their down payments.

Check with a tax planner for details, because a few exceptions do apply. But most of those only apply to taxpayers who make rather high incomes. Singles who earn more than $125,000, for example, or married couples with income that totals more than $225,000 are ineligible. There are also some stipulations regarding how long you live in the home after you buy it, and those were primarily added to the legislation to stop professional investors and real estate speculators from taking unfair advantage of this tax benefit.

HELOC Loans

Uncle M — Mon, 01 Sep 2008 17:00:33 +0000

A HELOC or home equity line of credit is a kind of second mortgage that behaves much like a credit card. The line of credit is established based upon the value of your home, so the more equity you have in the property the more money you can borrow. You borrow what you want, when you want it, and pay interest on your outstanding balance. After repaying the balance your line of credit is reinstated so you can borrow it again in the same way. Usually HELOC loans carry not extra fees and they offer rates that are cheaper than those associated with credit cards.

The good news is that HELOC loans are a convenient and competitively priced way to tap the value of your home equity without selling the house. Just borrow against your equity with the line of credit by using a check, a withdrawal slip, or a card similar to an ATM card.

The downside of HELOC loans, however, is being experienced by many homeowners who took them out a few years ago when real estate values were much higher than they are now. Because home prices have fallen, so has equity, and now banks are cutting back on the lines of credit for HELOC loans. That leaves many homeowners without their former line of credit. Hundreds of thousands of credit lines have been either shrunk or completely revoked this year, as banks reevaluate home equity limits based on today’s deteriorating real estate values.

Another risk with HELOC loans is that the collateral for these loans is the borrower’s own home. Take out a HELOC loan and fail to repay it, and the bank can start foreclosure proceedings to sell your house and get their money back. Under the circumstances, it is recommended that only homeowners with exceptionally large amounts of equity use HELOC loans in today’s volatile market. When borrowing against a HELOC, limit the loans to manageable amounts and only use the funds to do things like home improvements that will actually add to your equity instead of diluting or diminishing it.

Micro Lending

Uncle M — Mon, 25 Aug 2008 17:00:26 +0000

Micro lending – which involves loans of small amounts – got its start as a research project meant to study the possibility of designing a credit delivery system targeted to the rural poor. In 1983 the project – created by Professor Muhammad Yunus of Bangladesh, India – was transformed into the Grameen Bank.

Grameen became the first micro-lending institution in the world, and it has loaned about $7 billion dollars’ worth of tiny loans. Many of the loans, for example, are in amounts equaling only $20 or $30 dollars. The bank boasts a repayment rate of more than 98 percent, even as conventional banks face mounting losses and defaults in the current global credit crisis. Yunus was awarded a Nobel Peace Prize in 2006 for his revolutionary ideas and work to help the poor and disadvantaged.

Now the idea of micro loans – which often amount to $100 or less – has caught on in the USA via the Internet. By combining online banking systems with the popularity of cyber-based social networks like Facebook and MySpace, a new breed of unconventional lenders is cropping up on Web sites such as Prosper.com or Zopa.com. The fast-growing sites are populated by registered members who borrow money or make loans to each other, through a type of bidding process not unlike the bid systems used to trade items on eBay.

The way it works is that a member will post a description of their loan needs, along with the interest rate they are willing to pay. Those who want to loan that amount at the desired rate can then agree to the transaction, send the money, and await repayment – which includes interest charged.

Before offering a loan users can check out a borrower’s credit, income, and other financial data – which is collected by the company that runs the site. Because of the potential risk involved in this untested type of loan market, rates charged are usually higher than those available at large banks. But it is much harder to qualify for a loan from a bank; so many consumers are now turning to these new micro loan sites for an easy solution to their borrowing problems.

ING Direct rates drop again!!!

Uncle M — Sun, 03 Feb 2008 07:17:17 +0000

ING Direct, one of the high yield saving accounts have dropped their interest rates a second time in 10 days to 3.40% APY. This is down from 4.20% APY in November, 2007. The two interest rate drops seem to be in proportion with the Federal rate cut which means a lot of other high yield savings accounts will be following suit or have already reduced their interest rates.

Update: 3/19/08 rate drops again to 3.00% (Did anyone say we are near a recession?)

Update: 10/09/08 rate drops to 2.75% (~~Without any notice of the exact date of the rate drop in the statement.~~)

Update: 01/20/09 rate drops to 2.40%

Update: 02/18/09 rate drops to 1.85%

Update: 03/21/09 rate drops to 1.50%

Update: 06/09/09 rate drops to 1.30%

Update: 01/08/10 rate drops to 1.25%

Update: 02/04/10 rate drops to 1.20%

Update: 02/18/10 rate drops to 1.15%

Update: 03/02/09 rate drops to 1.10%

Condo Buying Tips: Condo ownership differs from regular home ownership in important legal and financial ways.

Uncle M — Mon, 21 Jan 2008 04:22:58 +0000

On the surface, condos may appear to be no different than other homes or apartments. But the legal definition of a condominium is significantly different from that of a typical single-family home, and buyers should be aware of these differences before buying a condo.

The main distinction is that unlike an ordinary home – where you own the whole property and have full responsibility and control of everything on it – a condo is owned in partnership with other homeowners in the condo project. Buying a condo means you own your living space, but other “common areas” are shared by all of the different residents. The responsibility for those common features – which may include the parking lot, the landscaping, the outside of the building, the roof, and the central heating and air conditioning system – is also shared by each owner.

The specific legal and financial obligations of each owner are spelled out in documents and minutes of meetings created by the Condo Association or Homeowner’s Association. For instance, there may be rules pertaining to all sorts of details, even including whether or not you can park extras cars on the property, whether you are allowed to rent out your unit to someone else, or whether it is okay to change the paint color of your unit. Before buying a condo, review all important ownership related documents to find out such things as how much your share of the maintenance fees is, how much money is set aside for making necessary repairs, and who is responsible for services such as upkeep of the buildings.

Because these documents can be long, complex, and filled with legal language it is a good idea to have a qualified real estate attorney review them before you sign a purchase agreement or deposit any money to buy a condo. But while they may be complicated, they are also intended to protect you and your legal and financial rights as the owner of a condominium.

REO Listings: A safer, easier way to buy foreclosures.

Uncle M — Thu, 17 Jan 2008 21:24:10 +0000

Most people know that foreclosures are the bargain basement buys within the real estate business. But buying a foreclosure can also involve huge risks, especially for those who are not knowledgeable about the process and the major legal responsibilities that taking ownership of a foreclosure entails. REO properties, however, offer many of the same discounts without the inherent risks, and you can buy them just as you would any property listed with a real estate broker. You don’t have to show up at an auction with a cashier’s check; you have a chance to conduct inspections, and you can pay for an REO with a regular home mortgage.

REO stands for “Real Estate Owned”. The term is used by bankers and real estate brokers to describe properties that lenders sell after failing to sell them at a high enough price at the foreclosure auction. If a bank forecloses on a house and then cannot sell it at auction – or perhaps does not get a high enough bid at the auction – the bank will keep the property and sell it through normal Realtor channels. These are REO properties, and almost every large bank has an inventory of REO homes.

REO houses are usually marketed just like other homes, with a Realtor’s sign in the yard or an ad in your local newspaper. But because they are owned by banks that are highly motivated to sell them, they usually sell at significant discounts. And because the seller is also a mortgage lender, you can often negotiate special financing if you buy an REO and let the bank you buy it from handle your mortgage.

To shop for an REO, just contact real estate brokers and ask them to show you properties that are in the REO category.

The ROTH IRA: Easy money for retirement.

Uncle M — Wed, 16 Jan 2008 03:51:39 +0000

The Roth IRA was first established in 1997, and for those who qualify for a ROTH it has become of the one most widely used and popular types of individual retirement accounts.

One major difference between the ROTH and other types of IRA programs is that the contributions you make to your ROTH IRA during the year do not entitle you to any tax deductions. Many taxpayers rely on tax deductible contributions to help them offset income and pay less to the IRS, so the ROTH may not be appropriate for those individuals. But what makes the ROTH so attractive to others is that when you later withdraw your money through qualified distributions – including the interest or appreciation you’ve gained on your original contributions – you do not have to pay any taxes on those funds.

For fans of the ROTH IRA, that makes it one of the easiest ways to get virtually “free” money for retirement, and many consider it the most generous IRA program ever offered. For withdrawals or distributions to qualify you have to leave your money in the account for at least five years from the date the ROTH is started. You also have to be at least 59 and a half years old to start taking money out tax-free. But you can also use ROTH funds for special circumstances such as help of up to $10,000 with buying your first home or if you become disabled. In the event of your death, the ROTH funds can go to your beneficiaries.

Specific eligibility requirements stipulate how much you can contribute to your ROTH each year, and those guidelines depend upon whether you are single or married and how much income you declare on your taxes. To learn more about the ROTH IRA and how it may provide a great path to a wealthy retirement, talk to your financial advisor or visit a government ROTH IRA information Web site.

REIT – Real Estate Investment Trust

Uncle M — Wed, 14 Mar 2007 22:49:09 +0000

A Real Estate Investment Trust or REIT is to real state what a mutual fund is to stocks. REITs generally invest into multiple types of real estate like apartment homes, condominiums, high rises, etc. There are three kinds of REITs:

Equity REIT

Equity REITs invest in real estate like apartments and make money from the equity in the real estate and the rent they collect.
Mortgage REIT

Mortgage REITs lend money to other developers and make money of the interest.
Hybrid REIT

Hybrid REITs are generally a combination of Equity REIT and Mortgage REIT.

Some REITs invest specifically in one type of real estate like hotels or office buildings where some REITs many specifically invest in only one region of the country.