Archive for the 'Finances' Category

July 22, 2008: Housing Stimulus Update (Video)

July 23rd, 2008 categories: Finances, Home Ownership, Mortgages

There might be a bit of overacting in this video , but nonetheless,  if you’re interested in the latest Housing Stimulus Bill and where the National Association of Realtors stands, here’s your update…

NAR President-Elect Charles McMillan sits down with NAR Chief Lobbyist Jerry Giovaniello to discuss the importance of the Housing Stimulus legislation currently pending on Capitol Hill.

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First-Time Home Buying in 2008: 5 Reasons Why Now is a Good Time to Buy

March 18th, 2008 categories: Finances, Home Buying, Mortgages, Real Estate

With the constant barrage of negative media surrounding real estate these days, it’s no wonder that newlyweds and other first-time home buyers are putting their dreams of buying their first home on hold. But 2008 promises to be as good a time as any to buy your first home and here’s why:

It’s a buyer’s market

With foreclosures adding houses to a market already hungry for buyers and economists predicting that residential housing sales and prices will not pick up until 2009, sellers who need to sell are lowering prices and often throwing in additional incentives.

Perfect timing is rarely achieved

Although you should educate yourself and use caution when buying into a declining market, a buyer waiting for prices to hit absolute bottom, usually waits too long and then pays the cost of buying into a rising market with increased home prices. If you’re planning on staying put for a while, now is a great time to buy your first home because the market will eventually balance itself and turn once again to a seller’s market and when it does, your home’s value will increase too.

Interest rates are low

Recent Federal Reserve decisions have lowered interest rates yet again making the Federal funds rate drop to 2.25% (down from 5.25% a year ago) and the prime rate drop to 5.25%. And today a Bankrate.com index showed that the national overnight average for a 30-year, fixed-rate mortgage is being offered at 5.74% and a 15-year fixed at 5.09%, both of which are buyer-friendly rates.

Labor and materials are readily available

Even if you don’t qualify for enough financing to buy the home of your dreams due to tightening lending practices, it’s easier than ever to fix-up and maintain properties with the number of home improvement stores, tips, do it yourself classes and handymen readily available. And because new construction has slowed down in most markets and all trades that depend on it are eager for employment, buyers are likely to get better work, done faster and maybe a little cheaper in 2008 than at anytime in the future.

A need to sell makes sellers flexible

Remember, sellers who don’t need to sell right now generally don’t have their properties for sale. And those who do need to sell tend to be more flexible in negotiations, so buyers should consider proposing terms that ask sellers to help make the deal work beyond just lowering their price. Sellers may have the ability to finance part of the purchase price to make it easier on the buyer, they may be able to fix or replace something that needs updating, and they can always pay more than the customary share of closing costs and taxes.

Happy House Hunting!!

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Tax Audit Advice: 5 Red Flags to Avoid

February 22nd, 2008 categories: Finances

There’s really no sure way to avoid an audit. Most audited tax returns are selected for review either because the filer is part of a target group or because a computer program selects the return. The computer selects many returns randomly, but there are red flags that will draw the IRS’s attention.

The key is to minimize your exposure. Here are some suggestions from MSN Money on things you should try to avoid:

1. Math mistakes

The biggest reason people receive letters from the IRS is addition or subtraction goofs. Fortunately, math errors rarely lead to a full audit. Still, double-check your math before you send in your return.

And if you receive a letter from the IRS that says you owe them, check your numbers first. Sometimes, the IRS misreads one of your numbers, or the number is keyed incorrectly into the IRS computer. If it’s wrong, send a letter with a printout of your calculations.

2. Mismatched interest and dividend reporting

If the amounts reported in supporting documents don’t match the amounts on your return, you will get a letter.

There are lots of possible errors here. Sometimes, the IRS will enter the Form 1099 information into its computer and erroneously keystroke the income amount or the Social Security number of the recipient. If the income isn’t yours, get a letter from the bank or other payer and forward that letter to the IRS. If the amount is incorrect, send a copy of the Form 1099 mailed to you by the payer.

3. You’re on the IRS hit list

Those who receive much of their income in cash are traditionally on the radar screen of IRS agents looking for unreported income. Recently, the IRS has also pinpointed small-business owners and the self-employed in its bid to find more of the estimated $345 billion in uncollected taxes.

4. You’ve got a big mouth

Never brag about how you put one over on the IRS. Internal Revenue Service informers can earn a reward of between 15% and 20% of the additional tax collected, including fines and penalties and interest. Whistleblowers can file Form 211 or call the IRS hotline at 1-800-829-0433. Everyone else: Zip it, and keep your accounting strategies to yourself.

5. You’re exceptional

An IRS computer program compares your deductions to others in your income bracket and weighs the differences. This secret IRS formula, called the “DIF Score,” is used to select returns with the highest probability of generating additional audit revenue.

The IRS is coming
If you are facing an audit, don’t panic. An audit is merely a process where the IRS asks you to substantiate the numbers on your tax return. Here are some survival strategies:

Call your tax professional. Or get one. If the audit is simple - to prove your charitable and interest deductions, for example - you can do it yourself by mailing in copies of your substantiation. For all in-person audits, I strongly suggest professional representation.

Plan your taxes to preempt an audit. If, say, you have a huge medical deduction that you feel would increase your chances of being audited, attach copies of your medical bills to your return. The IRS computer will still kick out your return, but when a real person looks at it, the reviewer will recognize that you know the rules. This may actually reduce your odds of a full audit.

Keep records for three years. The IRS can audit you for three years after you file your return. In reality, however, most returns are audited within 18 months. This gives the IRS time to do the review and request the appropriate substantiation before the statute of limitations (usually the three-year period) ends.

Once the deadline has passed, the IRS normally cannot audit your return and your expenses are insulated from examination.

File at the last minute if you are concerned about a potential audit. It won’t hurt and might decrease your chances of being selected. The good news is, if you are audited one year with a refund or no change, it decreases your odds of being audited in subsequent years. In fact, if you are audited on the same items two years in a row with no additional taxes due, the IRS manual specifically recommends that they not audit you on the same items for a third year. Full Story

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Foreclosure Filings Report: Hardest Hit Markets by State

February 22nd, 2008 categories: Finances, Mortgages, Trends

U.S foreclosure filings continued their upward climb in December, rising 97% from the previous year and 7% from the month before. Total foreclosures rose 75% in all of 2007.

According to MSN Real Estate’s latest report, hardest-hit markets were along both coasts, which experienced a more severe boom and bust in the latest cycle, as well as areas hard hit by auto-industry layoffs such as Michigan and Indiana.

The surge in foreclosures is expected to continue at this same pace until after the next wave of risky loans resets in the middle of 2008.

2007 foreclosure filings by state

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