Atlanta Housing Wire - HomeBuyers Guide to Atlanta Homes

The U.S. Senate voted on Wednesday to give homebuyers another three months to settle on their contracts and take advantage of a popular tax credit that sparked a rush of activity in the housing market.

The Senate, with a vote of 60-37, accepted an amendment by Democratic Leader Harry Reid that extends the closing deadline to Sept. 30 for buyers who met the April 30 deadline to have a signed contract.

The current deadline requires buyers to close by June 30 to get the $8,000 tax credit for first-time homebuyers. Existing homeowners buying a new primary residence are eligible for a $6,500 credit.

One thing to clarify though is that this amendment does not extend the deadline for home buyers to qualify for the tax credit; it extends the deadline for closing the transaction, from June 30 to Sept.30.

Continued from previous week’s article

How your insurance score is calculated

Your insurance score starts with your credit report, a history of your credit use. What credit cards and loans do you have? What are the balances? How promptly do you pay? Your report also includes information gleaned from public records such as bankruptcies and liens. FICO is the best-known company that turns the information in credit reports into credit scores. FICO credit scores range from 300 to 850.

Insurers are less concerned than lenders about your ability to pay back a specific amount than your overall ability to manage money, especially whether you make late payments and how long since delinquencies took place. Your insurance claims history, as recorded in your CLUE report, also affects your insurance score. So can your age, the construction of your house, and whether you’ve installed smoke detectors and other safety equipment.

All of these data are crunched to come up with a numerical insurance score. This is where it gets tricky for homeowners. There isn’t a single source for insurance scores, and your insurer probably won’t tell you your score even if you ask. Some insurers employ proprietary formulas. Others use insurance scores calculated by companies like FICO and ChoicePoint.

Ways to raise your score

The most effective way to raise your insurance score is to improve your credit score. You’re entitled to free copies of your credit reports annually from the major credit bureaus: Equifax, Experian, and TransUnion. Order them and look for errors: Is your Social Security number correct? Are all the debts and credit cards yours? Do the balances jibe with your records? Errors can be disputed online.

If the information on your credit report is correct, there are still things you can do to improve your score. Paring down balances on credit cards is a big plus. Paying bills by the due date is another major factor, accounting for 35% of a FICO credit score. Time is also on your side. Most late payments are removed from your credit report after seven years. A few major problems such as a bankruptcy may stay on for a decade or more.

Paying all of your bills on time is one good way to improve your insurance score—and, in turn, lower your homeowners insurance premiums.

Most people expect the cost of homeowners insurance to go up after a claim is filed. But it may surprise you to know that how good you are at managing your finances can have just as big an effect on your premium as the tree that fell on your house.

Insurers look to your credit history to calculate an insurance score that’s used to judge how much of a financial risk you are. The lower the score, the higher the risk—and the higher the premium you’ll likely pay on your homeowners insurance. Don’t despair. There are strategies, including paying bills on time, that can help improve your insurance score.

Good credit pays off

Wondering what too many credit cards has to do with the limb that landed on your roof? More than you’d think, it turns out. Several studies have found that your credit history is a good indicator of how often you’re likely to file an insurance claim. Because more claims translate into more expense for insurance companies, homeowners with low insurances scores tend to be charged higher premiums.

To be Continued on next article……

Continued from previous article……..

No matter if property values are rising, falling, or stagnant, you need to understand how you’re being taxed. Everything starts with your real estate assessment letter, which reveals what your property is judged by the local government to be worth. The letter will differ, depending where you live, but most will have a legal description of your house and separate values for the land and the structure. Add those two numbers together to get your home’s assessed value.

Some local governments will appraise your home every year, others every two or more years. Tax assessors generally use one of two methods to come up with an assessment value for your home. The most common relies on looking at recent sales of comparable homes. Keep in mind that “recent” is a relative term. To come up with a real estate assessment, assessors may be looking at sales that occurred as long as 18 months prior or the most common menthod, our homes Sales Price.
Break out the calculator

How much you pay in property taxes is based on your real estate assessment. Put simply, your home’s assessed value is multiplied by the local tax rate of the county. However, it can become more complicated if there are multiple taxing authorities like the city where you live (ex. Atlanta, East Point, Decatur) these cities add their own tax bills ON TOP of the counties.

Knowledge is power—and savings

Assessors have a lot of ground to cover. Many rely on valuation formulas that assess whole streets or neighborhoods. Most haven’t seen your house in person, so don’t wait for a knock on your door from an assessor hoping to take a look around. That’s why you need to read your real estate assessment letter carefully, look for errors, and challenge your assessment if it seems too high.

If you find a way to reduce your real estate assessment, whether by contesting it or qualifying for an exemption (Homestead), the savings can add up. Trimming just 15% off your tax bill could equal savings of about $400 or more for the year. Of course, if your home value and local tax rate are higher, then you’re looking at even greater savings.

The real estate assessment letter you filed away unopened is the driving force behind how much you pay in property taxes. You might not think too hard about your real estate assessment, the dollar value the local government puts on your house and land. You should. The assessment determines how much you shell out on property taxes.

Once you understand your real estate assessment, you’ll understand your property tax bill—and, more importantly, whether you’re paying the right amount.

Your local government needs every dime it can collect to pay for all of the services you expect as a resident: schools, libraries, hospitals, and so on. A healthy chunk of that revenue is raised from homeowners via property taxes. In normal times real estate values climb steadily, allowing local governments to take in a little more every year to keep up with inflation and perhaps even add a few services. Property tax bills usually come due once a year.

The situation gets stickier when real estate values are in decline. If that occurs, local governments generate less revenue from property taxes, meaning the tax rate needs to go up, the money needs to come from somewhere else, or spending on services needs to go down.

Continued on next update……………….

Do I have enough money to buy a home?

To first step to finding out how much home you can truly afford is to get pre-qualified for a mortgage.

Also, take a step back and look at your finances. FHA requirements say you should have 3.5 percent of the purchase price to put down. You should also have less than a 45 percent debt to income ratio. Be sure to include all of your monthly obligations in that equation, including student loans, child support payments, alimony, car payments, credit cards, etc.

Once you’ve looked at your savings, make sure that apart from your down payment, you’ll have enough left over to pay closing costs, which include such things as attorney fees and transfer fees. (We will negotiate to get the seller to pay for these fees which saves you out of pocket money). You also need to have money left as a cushion. What if unexpected repairs, either to your house or car, come up? Be sure that you have enough money leftover after the purchase to keep your life running smoothly.

Will I have buyer’s remorse?

It is perfectly normal to have a few feelings of buyers remorse, so you should prepare yourself for some mild feelings of “what if”. You may have to give up a few “wants” to get a few “needs” when you buy your next home. Or if this is your first purchase, you may have to buy something a little short of your dream house, and build equity in order to move up at a later date. Try not to lose sight of the big picture. This is a home that you own. You now get the benefits of tax breaks. You are building equity as you pay off the loan. And more than likely your home will appreciate in value over the coming years.

How can I handle owner handle repairs?

Before you swear off doing some of your own projects or repairs, know that everyone starts somewhere. Take a class at your local home improvement store, invest is a handyman’s guide, or ask a friend that has already tiled their bathroom or fixed a leaky sink to come and give you some pointers.

Be prepared for repairs, maintenance, and updates. Even with a new home, there will be projects. Plan accordingly financially. And if all else fails, hire a professional.

You’ve heard it before: Your home is probably the biggest investment you’ll ever make. It’s also probably the biggest tax write-off you’ll ever have. Follow these tax tips for homeowners to ensure that you receive all of the tax deductions and tax credits to which you’re entitled for the 2009 tax year.

Home-related tax deductions, from mortgage interest to real estate taxes, can add up. Tax credits, for such things as energy efficiency and homebuying, are even more valuable because they increase your refund (or decrease what you owe) dollar for dollar.

Mortgage-related deductions

The interest you pay on the mortgage for your main home is tax deductible. To qualify for the mortgage interest deduction, the loan must be secured by a qualified home, and you must itemize your tax return. Even a house trailer or boat can count as a qualified home, as long as there are sleeping, cooking, and toilet facilities.

“Points or Mortgage Origination(normaly 1% of loan amount),” are certain fees to a lender to obtain a home loan, they are deductible too. The mortgage insurance premiums you pay on loans issued or refinanced after 2006 also can be deducted, though income limits apply.

Energy-efficiency tax credits

Home improvements made during 2009 aimed at lowering your energy bills could lower your tax bill as well. Uncle Sam is offering energy-efficiency tax credits equal to 30% of the cost of qualifying projects. Claim your residential energy tax credits on IRS Form 5695.

The tax credit for some energy-efficiency improvements, such as new windows and insulation, is capped at $1,500. So be sure to familiarize yourself with the energy tax credit rules.

Homebuyer tax credits

If you bought a home in 2009, you might be eligible for a homebuyer tax credit. First-time buyers who made a purchase between Jan. 1 2009 and April 30, 2010, can get a tax credit worth up to $8,000. Income restrictions apply. A first-time buyer is defined as someone who didn’t own a home for three years prior to purchase.

The tax credit isn’t limited to first-time buyers. Longtime homeowners who’ve lived in their principal residences for five consecutive years out of the last eight can qualify too. This tax credit, worth up to $6,500, is good on home purchases made after Nov. 6, 2009 to April 30, 2010. There are income and price restrictions.

Claim your homebuyer tax credits on IRS Form 5405. Because the IRS requires additional paperwork to verify the home purchase, you can’t file electronically. A signed contract needs to be in place by April 30, and settlement needs to occur before July 1. Credits earned in 2010 can be taken on 2009 or 2010 returns.

1. Not asking enough questions of their lender and end up missing out on the best deal.

The home buying process really starts with the pocket book. Not only do you need to know how much you can afford to buy now, but you need to look at what the closing costs are, as well as what the long term cost of the loan is. Most lending programs available today that include some sort of special deal are geared towards 1st time buyers. Tap in.

2. Not acting quickly enough to make a decision and someone else buys the house.

Analysis by paralysis. Study long, study wrong. This is the deal: It is wise to do your studying before you do your shopping. Once you ask a seller to neglect their dinner for you to walk in and “think about it” you should be beyond the “thinking about it” stage. Be ready to make a decision at that point. Don’t think about it — you already did that last week.

3. Not doing enough to make their offer look appealing to a seller.

In a buyer’s market with a lot of media hype, it can be challenging for buyers to make offers that will get them what they want. They think no matter what the list price is, hey, it’s a buyer’s market, so low ball. This is not true. Even in a buyer’s market, there is a pretty firm value the market places on each property. The value is set by willing buyers, willing sellers. What you are low balling today is what someone else is fighting for saying this is the one. So, know that you, as the buyer, are not the only factor here.

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First Time Buyer Tax Credit ($8,000) + Short Sale + April 30th/June 30th Deadline = ????? (Time is Running Out)

The main item of issue here is the short sale. The home buying transaction typically takes 30-60 days. However, when the bank that is holding the seller’s mortgage needs to make a decision, on “who, where, when, why” regarding the sale of the home, a buyer can expect to add a few weeks … or even a few months to the timeline. And that is no exaggeration.

In such situations you could have an attorney for the seller, a negotiator for the short sale, a PMI company evaluating their loss options, a seller that is going crazy and doesn’t care anymore … and the list goes on, with each party adding more time to the equation.

So first time home buyers be prepared. If the home that you are purchasing is a short sale, you may be getting an AWESOME deal on it. And well you can still get an awesome deal, just don’t be heart broken or count on the first time home buyer tax credit.

As a first-time homebuyer, you are are probably curious about how much you can afford before you even talk to a real estate agent or home loan professional. As a general rule of thumb most people who have good credit and a steady income can afford to buy a home that cost 2 and one half to three percent of their annual income.

Using my rule of thumb as an example, let’s assume that you have a combined annual income of $30,000 from your salaries and other steady income. Your debts, such as car payment and credit cards, are less than 8% of your income and you have a good credit rating. You would probably qualify for a home between $75,000 and $90,000.

Please keep in mind that the actual amount that you will pay for your home depends on the type of loan program, interest rates and your credit score. Remember high debt will reduce the amount that you can borrow. The higher your monthly debt payments, the smaller the amount you can borrow for your home.