Friday, April 8, 2011

Military Members : You Have 3 Weeks To Buy A Home, Claim Up To $8,000 In Tax Credits

Military tax credit expirationIf you're an eligible federal employee or qualified military personnel, you have 3 weeks from this Saturday to use the federal home buyer tax credit, and to claim up to $8,000 in federal income tax credits. 

According to the IRS, eligible persons include members and spouses of the uniformed services, members and spouses of the Foreign Service, and intelligence community employees who served at least 90 days of qualified, extended duty service outside of the United States between January 1, 2009 and April 30, 2010, and their spouses.

Eligible persons must be under contract for a new home on or before April 30, 2011, with the home's closing occurring on or before June 30, 2011.

The federal home buyer tax credit is a true credit, too. Eligible buyers receive a dollar-for-dollar tax reduction equal to 10 percent of the subject home's purchase price, not to exceed $8,000 for first-time home buyers, and not to exceed $6,500 for repeat home buyers.

Repeat buyers must have lived in their "main home" through 5 of the last 8 years in order to be eligibke.

Furthermore, both the buyer(s) and the subject property must meet certain minimum eligibility requirements:

  • The home may not be purchased from a parent, spouse, or child
  • The home may not be purchased from an entity in which the seller is a majority owner
  • The home may not be acquired by gift or inheritance
  • The home sale price may not exceed $800,000
  • Buyers may not earn more than $125,000 as single-filers; $225,000 as joint-filers

The complete program description is published on the IRS website.

For additional information regarding your tax credit eligibility, you may want to speak with an accountant or other tax professional. It's often worth the cost.

Thursday, April 7, 2011

How Does Your Real Estate Tax Bill Compare To Other Parts Of The Country?

Real Estate Taxes compared to local household income

Mortgage rates may be a function of free markets, but real estate taxes are a function of government. And, depending on where you live, your annual real estate tax bill could be high, low, or practically non-existent.

Compiling data from the 2009 American Community Survey, the Tax Foundation, a non-partisan educational organization in Washington D.C., published property taxes paid by owner-occupied households, county-by-county.

The report shows huge disparity in annual property taxes by region, and by state.

As a percentage of home valuation, Southeast homeowners tend to pay the fewest property taxes overall, while Northeast homeowners tend to pay the most. But statistics like that aren't especially helpful. What's more useful is to know how local real estate taxes stack up as compared to local, median household incomes.

Not surprisingly, real estate taxes are least affordable to homeowners in the New York Metro area. The 10 U.S. counties with the highest tax-to-income ratios physically surround New York City's 5 boroughs. The areas with the lowest tax-to-income, by contrast, are predominantly in southern Louisiana.

A sampling from the Tax Foundation list, here is how select counties rank in terms of taxes as a percentage of median income:

  • #1 : Passaic County (NJ) : 9.7% of median income
  • #6 : Nassau County (NY) : 8.6% of median income
  • #15 : Lake County (IL) : 7.2% of median income
  • #18 : Cheshire County (NH) : 7.1% of median income
  • #70 : Travis County (TX) : 5.0% of median income
  • #90 : Marin County (CA) : 4.6% of median income
  • #110 : Middlesex County (MA) : 4.4% of median income
  • #181 : Sarasota County (FL) : 3.9% of median income
  • #481 : Douglas County (CO) : 2.4% of median income
  • #716 : Maui County (HI) : 1.3% of median income

The U.S. national average is 3.0 percent.

The complete, sortable list of U.S. counties is available at the Tax Foundation website. For specific tax information in your neighborhood or block, talk with a real estate agent.

Wednesday, April 6, 2011

March Fed Minutes Show Inflation Risks And Rate Hikes On The Horizon

Fed Minutes March 2011The Federal Reserve released its March 15 meeting minutes Tuesday. The notes revealed a Federal Reserve split between optimism and caution for the U.S. economy.

The minutes' official name is "Fed Minutes". It's a periodic publication, published 3 weeks after each meeting of the Federal Open Market Committee. The FOMC meets 8 times annually, so the Fed Minutes is published 8 times annually, too.

The Fed Minutes is similar to the meeting minutes released after a condo board gets together, or after a meeting of the Board of Directors at a large corporation. The minutes give a detailed account of the important conversations and debates that occurred among the attendees.

At the Federal Reserve, those conversations are deep and, as such, the minutes are long; much longer than the more well-known, post-meeting press release anyway.

Whereas the press release is measured in paragraphs, the minutes are measured in pages.

Here is some of what the Fed discussed last month:

  • On inflation : Pressures are rising, but largely because of food costs and oil costs.
  • On housing : The market remains "depressed" with large inventory and weak demand.
  • On stimulus : The Fed will keep its $600 billion bond plan in place.

In addition, there was talk about ending the Federal Reserve's accommodative monetary policy (i.e. the near-zero percent Fed Funds Rate). The FOMC's voting members unanimously elected to leave the Fed Funds Rate near 0.000 percent last month, but there was talk of raising the benchmark rate later this year.

Conforming and FHA mortgage rates in Atlanta are mostly unchanged since the Fed Minutes release.

Tuesday, April 5, 2011

Plan To Sell Within 5 Years? Consider An Adjustable-Rate Mortgage.

Comparing 5-year ARM to 30-year fixed

Which is better -- a fixed-rate mortgage or an adjustable-rate mortgage? It's a common question among home buyers and refinancing households in Georgia.

The answer? It depends. 

Fixed-rate mortgages give the certainty of a known, unchanging principal + interest payment for the life of the loan. This can help you with budget-setting and financial planning. Some homeowners say fixed-rate loans they offer "peace of mind".

Adjustable-rate mortgages do not.

After a pre-determined, introductory number of years, the initial interest rate on the note -- sometimes called a "teaser rate" -- moves up or down, depending on the existing market conditions. It then adjust again every 6 or 12 months thereafter until the loan is paid in full.

ARMs can adjust higher or lower so they are necessarily unpredictable long-term. However, if you can be comfortable with uncertainty like that, you're often rewarded with a very low initial interest rate -- much lower than a comparable fixed rate loan, anyway.

Freddie Mac's weekly mortgage survey highlights this point.

The interest rate gap between fixed-rate mortgages and adjustable-rate mortgages is growing. It peaked 2 weeks ago, but remains huge at 1.16 percentage points.

On a $200,000 home loan, this 1.16 FRM/ARM spread yields a monthly principal + interest payment difference of $136, or $8,160 over 5 years, the typical initial teaser rate period.

Savings like that can be compelling and may push you toward an adjustable rate loan.

You might also consider a 5-year ARM over a fixed-rate loan if any of these scenarios apply:

  1. You're buying a new home with the intent to sell it within 5 years
  2. You're currently financed with a 30-year fixed mortgage and have plans to sell the home within 5 years
  3. You're interested in low payments, and are comfortable with longer-term payment uncertainty

Furthermore, homeowners whose existing ARMs are due for adjustment might want to refinance into a brand new ARM, if only to push the teaser rate period farther into the future.

Before choosing ARM over fixed, though, make sure you speak with your loan officer about how adjustable rate mortgages work, and their near- and long-term risks. The payment savings may be tempting, but with an ARM, the payments are never permanent.

Monday, April 4, 2011

How To Clean A Gas Grill

Keep a clean grillWhether you barbecue for friends or family once annually, or through all 4 Atlanta seasons, it's important to keep a clean gas grill. A well-maintained grill will help your food taste its best -- no matter what you're cooking up.

Cleaning a gas grill is simple and should be performed at least once every 12 months for light use, and once every 6 months for heavy use. You'll need the following tools:

  1. A drop cloth
  2. Aluminum foil
  3. A regular scrub brush plus a wire brush
  4. An active garden hose
  5. Dish detergent
  6. A soft sponge
  7. A bucket
  8. Rubber gloves

With these tools in-hand, follow these basic steps.

First, disconnect the propane tank and move the grill onto the drop cloth. Open the grill and remove its grates and the flame guards (the v-shaped metal pieces on top of the burners). Then, disconnect the igniters and remove the burners. Soak the grates in hot water if they're excessively dirty.

Set the pieces aside for cleaning.

Next, clean out any loose debris from the bottom of the grill. Use the detergent to make a soapy mixture and scrub the bottom of the grill, including its grill pans and grease trays. Clean the grates at this time, too.

Gently brush the outside of the burners with the wire brush, then allow running water from the garden hose to flow through the tubes to clean out the insides. If the burners appear to be cracked, replace them according to the grill manufacturer's instructions.

Allow all of the above cleaned pieces to air dry, then reassemble the grill.

Next, clean the outside of the grill using a soapy mixture and a soft sponge, treating early-stage corrosion with some cooking oil applied like car wax. If your grill has a stainless steel exterior, wipe with the grain to minimize streaking. And that's it!

Cleaning a gas grill can be time-consuming, but better tasting food is worth it. Plus, your grill will last longer.

Friday, April 1, 2011

How Does Your Work Commute Compare To Other Cities?

Average Commute Times In The US, By County

As part of the Census Bureau's data collection activities from 2005-2009, a number of interesting charts have been published at http://census.gov.

The data should not be confused with Census 2010 -- a separate survey conducted every 10 years. This is the first-ever, 5-year American Community Survey. Based on data from 3 million households, it details social, economic, housing, and demographic data "for every community in the nation".

Among the surveys:

  • Median Household Income, Inflation-Adjusted To 2009 Dollars (Chart)
  • Median Housing Value Of Owner-Occupied Housing Units (Chart)
  • Percent Of Households That Are Married, With Children Under 18 (Chart)

The ACS survey also charts average commute time by county. The chart is shown at top.

Whether you live in a "long commute" town like Richmond, NY (40 minutes), or a "short commute" town like King, TX (3.4 minutes), rising gas prices have made commute times and distances relevant to everyone.

Since the start of 2011, the average price for gasoline is higher by 54 cents per gallon. Assuming 22 miles per gallon on a passenger car, that's an increase of 2.5 cents of gasoline per mile driven in the last 90 days. It's a cost that adds up quickly, and can affect a household budget. Plan for higher pump prices moving forward, too. Historically, gas prices surge between April and June.

The American Community Survey is loaded with charts and data. It can tell you a lot about your current neighborhood, and any neighborhood to which you may want to relocate. Then, to bridge the ACS data with community details such as school performance and typical home prices, talk to a real estate professional.