The Gift of Home Tax-free!

December is not only when we give gifts to our loved-ones for the holidays but it's also the time to review tax-saving options for 2019 and plan for 2020 and what could be a better gift than tax-free help with a down-payment for a new home?

Parents, grandparents, aunts and uncles, and even friends can start to pass along/gifting their estates while reducing inheritance taxes and getting to see their family enjoy the benefits of their gift

Under current IRS guidelines (please consult your accountant for tax advice and ramifications) each

parent or relative can give up to $15,000 to each child or relative every year. That would mean that a mother and father can each give $15,000 a year to each son, daughter, and/or grandchild that would amount to $30,000 a year in total per couple for each person that you gift.

If both sets of parents want to help with the down-payment on a house; each of the parents can give each borrower a gift of $15,000 per year. That would add up to $60,000 for both of you! That is a significant amount of tax-free money to help you buy a home for your family! Of course, a gift can also be less than $15,000, so give what you can.

That amount is per calendar year and not based on every twelve months. That would mean that they could give $60,000 (or more) in December 2019 and an additional $60,000 (or more) in January

2020. With less than one-month left , this is the time to bring up the subject with your family. What could make them happier than helping you buy a house and saving money on taxes?

For most types of mortgage loans, you will need to have 5% of the amount of the down-payment on your own, however, there are exceptions. To find out the exceptions and details about how gift money can be applied to your down-payment contact a reputable mortgage broker.

More about tax-free gifts and life-time limits: https://smartasset.com/retirement/gift-tax-limits

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About the author: Marilyn Messenger, a licensed real estate broker, Certified Residential Specialist, and Accredited Buyer Representative, and Certified Luxury Homes Marketing Specialist is associated with Andrew Mitchell and Company in Concord has been representing home buyers and sellers in Wayland, Sudbury, Maynard, Stow, and Concord MA since 1993. www.MarilynMessenger.com for more. Visit www.marilynmessenger.com to see homes for sale, get the latest real estate market reports, and learn about having your own buyer agent on your side.

Down-Payment Gifts Save Taxes!

What could be a better gift than tax-free help with a down-payment on a home?

Parents, grandparents, aunts and uncles, and even friends can start to pass along/gifting their estates while reducing inheritance taxes and getting to see their family enjoy the benefits of their gift

Under current IRS guidelines (please consult your accountant for tax advice and ramifications) each parent or relative can give up to $15,000 to each child or relative every year. That would mean that a mother and father can each give $15,000 a year to each son, daughter, and/or grandchild that would amount to $30,000 a year in total per couple for each person that you gift. 

If both sets of parents want to help with the down-payment on a house; each of the parents can give each borrower a gift of $15,000 per year. That would add up to $60,000 for both of you! That is a significant amount of tax-free money to help you buy a home for your family! Of course, a gift can also be less than $15,000, so give what you can.

That amount is per calendar year and not based on every twelve months. That would mean that they could give $60,000 (or more) in December 2019 and an additional $60,000 (or more) in January

2020. With less than one-month left , this is the time to bring up the subject with your family. What could make them happier than helping you buy a house and saving money on taxes?

For most types of mortgage loans, you will need to have 5% of the amount of the down-payment on your own, however, there are exceptions. To find out the exceptions and details about how gift money can be applied to your down-payment contact a reputable mortgage broker. 

More about tax-free gifts and life-time limits: https://smartasset.com/retirement/gift-tax-limits  

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About the author: Marilyn Messenger, a licensed real estate broker, Certified Residential Specialist, and Accredited Buyer Representative, and Certified Luxury Homes Marketing Specialist is  associated with Andrew Mitchell and Company in Concord has been representing home buyers and sellers in Wayland, Sudbury, Maynard, Stow, and Concord MA since 1993. www.MarilynMessenger.com for more. Visit www.marilynmessenger.com to see homes for sale, get the latest real estate market reports, and learn about having your own buyer agent on your side. 

The Golden Rule for Home Buyers

Buying a home is an emotional experience that can bring out the best and sometimes the worst in people. Even people who are generally considerate sometimes forget how to behave when they are looking for a house. After-all it’s not something people do every day, it’s a big purchase and it’s at least a little scary for most people.
 
When there’s more than one person involved they may not agree, the kids are cranky from driving around, and everyone is concerned about making the right decision. All of these stress factors can cause people to act in ways they never would otherwise.

Here are some things to keep in mind to help you through the process:

1. When you contact a real estate agent or call an office be prepared to give some basic information – name, address, phone number, and if you are pre-approved for a mortgage.

 

2. If you are not pre-approved for a mortgage, don’t be offended if an agent won’t show you a house. Instead, ask who you can contact to get pre-approved. It’s a waste of everyone’s time and agents have a responsibility to show homes only to qualified buyers. If you’re not ready to get pre-approved, then you’re not ready to look at houses!

3. If you go to an open house be prepared to sign-in and give correct information. If you are under contract with a buyer agent make sure you write that on the sign-in sheet. If you don’t want the agent at house to contact you just write please do not contact next to your information. Refusing to sign-in is rude and sets a tone of distrust – what if you really like the house? You’ve already gotten off on the wrong foot. Giving false information is never OK. Remember, you’re in someone’s home!

4. Houses are shown by appointment, so plan ahead. If someone is living there, they need some notice to pick up and get out – very few people can keep their house ready for visitors with a moment’s notice – can you? Even new construction is shown by appointment – there might be workers at the house, etc.

5. Real estate agents and home sellers have schedules. It is not realistic to call an agent or an office from in front of a house and expect an agent come right out to meet you.

Imagine calling your accountant, hair-dresser, plumber, mechanic, financial planner, or anyone else and expecting on the spot service!

6. Set up a meeting with an agent so you can talk about your needs and get to know each other. Buying a home is a big investment and can take several months – don’t you owe it to yourself to invest an house upfront?

7. Buying a home involves the whole family, so it’s OK to bring the kids (although, you will certainly be able to focus better without them…) If you bring them, make sure they understand that they are visiting someone’s home. Keep them by your side at all times, especially in new construction where things are unfinished and may be dangerous. It’s for their safety and for the safety of the homeowners’ possessions – wouldn’t you feel awful if they broke something? And please don’t let them play with the home-owners’ kids toys – they wouldn’t want anyone playing with their things.

8. Treat the house with respect. Of course, you need to look in closets and cabinets, etc. but dresser drawers, medicine cabinets, personal belongings are off limits. Never sit on someone’s bed or use the master bath – sellers know they give up some privacy when their homes are on the market but again, put yourself in their shoes!'

9. Relationships are about trust and mutual respect - loyalty matters. If you are under contract with a real estate agent, always contact that agent when you need information. People can get impatient sometimes or they don’t want to “bother” their agent so they start calling offices or listing agents demanding information or pretending that they are going to be clients.

Call your agent – he/she will call you back. If your agent doesn’t return calls and give you the information you need then find another agent. If you can’t stop yourself from calling an office or listing agent directly, make sure that you disclose that you are working with an agent right away and that you would appreciate some information.

10. The Golden Rule – as with everything else, if you treat people (real estate agents) and property the way you want to be treated, the home-buying process will be efficient, and the transaction will be a lot easier. If you’re not sure what the protocol is, just ask – we’re here to help.

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Marilyn Messenger, a Certified Residential Specialist and an Accredited Buyer Representative (ABR®) and associated with Andrew Mitchell & Company, has been representing buyers and sellers in Sudbury, Maynard, Wayland, Stow, Acton, and west of Boston MA since 1993. See what clients say.

Homes for sale 
Buyer Agency 

Cut Your Housing Costs in Half

Serious shoppers wait for a 50% off sale to make the decision because of the bargain factor.  Renters who are serious about lowering their monthly cost of housing should consider buying with today’s low mortgage rates.  For an example, let’s assume a person buys a $200,000 home with 3.5% down payment on a 4.5% FHA mortgage for 30 years.

The total house payment would be approximately $1,508 per month.  However, once you consider the equity build-up due to normal amortization, a monthly appreciation estimated at 2% annually for this example, the tax savings and paying maintenance that a tenant wouldn’t be required to do, the net cost of housing is $772 a month.  This is almost half of the full mortgage payment.
If this person was paying $1,750 a month for rent, it would cost him almost $978 more to rent than to own. In the first year alone, it would accumulate to over $11,000 which is more than the down payment required of $7,000.

Owning a home is the largest investment that most people make and the down payment of $7,000 to purchase this home would grow to $58,837 in equity by estimating a 2% appreciation and normal amortization.

To check out what your real housing costs might look like, go to Rent vs. Own or contact your real estate professional.


Contact Marilyn Messenger for additional information about how a buyer agent/broker can help you manage the home buying process. Visit www.marilynmessenger.com to search for homes and find market reports for Wayland, Sudbury, Maynard, Stow, and Concord MA.

Home Buying: 2 Ways to Buy a House

There are 2 ways to buy a house:

1.        On your own/unrepresented
2.      With a buyer agent/broker on your side to represent your interests throughout the buying process.

Unrepresented/on your own: You look at public websites like Zillow, Trulia, or Realtor.com that collect listings from a number of sources and post them online with descriptions, photos, etc.

When you find a house that you like the looks of, you contact the agent shown on the listing. That agent is the listing agent; the person who is legally bound to get the most money and best terms for the seller. The listing agent will be happy to show you the house, ask you questions about your finances and other personal information to make sure you are a qualified buyer, and write an offer for you.

The listing agent’s job is to “sell” the house, not to help you make good decisions! The listing agent is not allowed to give you advice. Everything you say will be used to help get the best deal for the seller.

You will be on your own without a professional to help you with these and other tasks:

•        Search for properties.
•         Decide how much to offer using public information that is often incorrect and/or not complete.
•         Decide about contingency dates.
•        Review and understand all of the forms and disclosures.
•         Manage the negotiations.
•              Find an experienced home inspect.
•              Decide how to handle any home inspection issues that come up.
•       Manage additional negotiations that may result from inspection issues.
•        Find an attorney, mortgage broker, insurance agent.
•        Deal with possible appraisal issues.
•       Monitor contingency dates to make sure you don’t jeopardize your deposit. 
•             Remember to request extensions if needed.
•       Verify information that may include zoning or conservation issues/restrictions, permits for work done, Title V/septic information
•        Keep all parties are informed.
•         Make sure you have everything ready for closing.
•       And handle anything else that may come up throughout the buying process.
•       Repeat the process if your first deal doesn't work out.

Or, you can have your own buyer agent/broker to work on your behalf to represent your interests and get you the best price and terms. Your agent will help with the following and more...

•       Explain the home-buying process and be there for you from beginning to end to guide you every step way through closing.
•       Provide you with all of the information you need so that you understand your housing options in the current, local market.
•       Provide a market analysis to help you decide on the offer price.
•       Recommend area professionals, i.e. a home inspector, real estate attorney, mortgage and insurance representatives to help you.
•       Attend the home inspection with you and any follow-up inspections that may result.
•       Help you address any issues from the home inspection and,
•       Renegotiate inspection issues on your behalf.'
•             Preview listings for you and sort out the ones that fit your criteria to save you time and make the process more efficient.
•             Direct you to the right parties to verify information about zoning, conservation, Title V, etc.
•       Track all of the paperwork.
•             Keep all parties in the loop; communications are key to success.
•       Make sure deadlines are met.
•        Help protect your deposits.
•       Accompany you to the final walk-through.
•       Negotiate any last minute issues from the walk-through
•       Prepare you for closing.
•      Attend the closing.

     Always work on your behalf to represent your best interest.
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"Marilyn recently helped us purchase our first home and we couldn't have been happier with her patience, wisdom, and guidance. We found Marilyn to be extremely knowledgeable of the local market and she kept the process stress free by answering calls, texts, and e-mails at all hours. We were thrilled with Marilyn and highly recommend her to all prospective home buyers without reservation."

Elisabeth and Conor

“I contacted Marilyn when I wanted to move to the area. She was able to quickly provide me with appropriate listings for my needs and see me through to the purchase. Marilyn is terrific, knows her business and this area!” 

Bonnie P.

More...

Messenger has been practicing buyer agency in Wayland, Sudbury, Maynard, Stow, and the towns west of Boston since 1993. She is an Accredited Buyer Representative (ABR) and a member of the Real Estate Buyer Agency Council. Contact Marilyn

A Lower Payment is Your Choice

94% of purchasers last year opted for a fixed-rate mortgage at some of the lowest rates in home buying history.  Yet, some of them will pay more in interest than necessary based on the time they’ll own the home.

If a person only plans to be in the home a few years, the adjustable-rate can offer significant savings.
Not only is the interest rate on the adjustable-rate lower than the fixed in the initial period, amortization on a lower interest rate amortizes faster than a higher interest rate.

In the example shown below, a $200,000 mortgage for 30 years is compared using a 4.25% fixed-rate to a 3.25% 5/1 FHA adjustable rate.  The first five years of the ARM generates a $113.47 a month savings which accumulates to $6,808.20.  In addition, due to faster amortization on lower interest rate loans, the unpaid balance at the end of five years will be $3,001 lower on the ARM for a total savings of $9,801.

Assuming the adjustable-rate mortgage was to escalate the maximum allowed at each period, the breakeven would occur in 8 years and 6 months. If a person were to sell the home prior to this point, the ARM would provide a lower cost of housing for the homeowner.

For some people, the uncertainty of how the interest rate may change is not acceptable.  On the other hand, for the risk tolerant individual who may be more confident in financial matters or who may know when they’ll be moving next, the ARM can be a smart choice.

To make projections using your individual numbers, see the Adjustable Rate Comparison.

While you can do some basic calculations to help you decide it is always best to talk with an experienced loan officer to review actual rates and mortgage options since not all variable rate mortgages work the same way. If you would like a recommendation for a loan officer/mortgage representative who can help you purchase a home in Wayland, Sudbury, Concord or any of the towns west of Boston, contact me anytime. There are lots of online mortgage options, however, working with a lender who knows the local market can make the process go a lot more smoothly for you.

Homes for Sale

Wayland Real Estate Report - Prices Up in 2013; Current Shortage of Houses for Sale!

2013 was a very positive year for home sellers in Wayland!

The median single-family house sale price was $612,000, approximately 13% higher than the 2012 median.

There were 80 closed sales; slighter fewer than in 2012. And it took less time sell a house.Click here for details.

Currently there are only 20 single-family houses for sale in Wayland. Last year there were 33. List prices range from $374,900 to $9,300,000. The median list price, $997,000 is higher than last year at this time when it was $939,000. The average list price is $1,668,845, also higher than last year.

"The early bird catches the worm"! If you want to sell your house, this is a great time to put it on the market. Buyers are waiting for listings so why wait for the competition?

Home-buyers, be prepared to move forward if you find a house that fits your needs. While can be difficult to make a decision if you have only seen one or two houses, if you wait you run the risk of not finding another house within your budget. As the spring market progresses, you will have more competition and limited supply will cause prices to go up. Additionally, there is a lot of discussion about mortgage interest rates going up too, further decreasing you purchasing power. Click here to contact an experience buyer agent/broker to help you set up a "game-plan" to put you in a winning position.

Sellers, it's easy to have unrealistic expectations in a "sellers' market". However, correct pricing is still the key to getting your property sold. As good a the market was in Wayland in 2013, there were 146 price changes on 89 single-family properties; the average price change was -7.51%. And, there were 40 "expired" listings; these are houses that did not sell during the listing contract period.
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Search for Homes
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Contact Marilyn Messenger

Visit www.marilynmessenger.com for the latest market information for Wayland, Sudbury, Maynard, Stow, and Concord MA. 



 

Refinance to Remove a Person

Most people are familiar with the various reasons a homeowner refinances their home which generally result in two major benefits: saving interest and building equity. 
2. Shorten the term
3. Take cash out of the equity
4. Combine loans
5. Remove a person from a loan


There is however another reason to refinance which may not be as common which is to remove a person from the loan. In the case of a divorce, when one party wants to keep the home and the other party wants their equity out of the home, it is possible for the remaining party to refinance the home. If the equity is sufficient to justify it and the remaining owner can qualify for the new loan, the refinance can provide the proceeds to buy out the other spouse.

Refinancing to remove a person from the loan could also involve a situation where two or more heirs jointly own a property and have differing opinions on when to sell. The same situation could apply to a rental property with multiple owners and the refinance would provide a way to buy out a partner.

Sometimes, it’s not about taking cash out of the home to buy out the other party. If a person’s name is on the mortgage, they’re responsible if it goes to default. One party may be willing to deed the home to the other party but it doesn’t necessarily relieve them of the liability of the mortgage they originated.
Many times, once a person has made their mind to move on, they’ll take the fastest and easiest way out. Removing a person from the deed or a mortgage is a reason to consider obtaining legal advice to protect your interests. Refinance Analysis calculator.

Reasons to Refinance

1. Lower the rate

The market has changed and if you need information about the current value of your home please contact me at 508-596-3501 or drop a note to marilynmessenger@realtor.com. I would be happy to provide you with the information you need.
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Check out the latest market reports for Wayland, Sudbury, Concord, Maynard, and Stow at www.marilynmessenger.com.

Who's Paying Your Mortgage?

As a homeowner, you obviously pay for your mortgage but as an investor, your tenant does.  Equity build-up is a significant benefit of mortgaged rental property.  As the investor collects rent and pays expenses, the principal amount of the loan is reduced which increases the equity in the property.  Over time, the tenant pays for the property to the benefit of the investor.

Equity build-up occurs with normal amortization as the loan is paid down.  It can be accelerated by making additional contributions to the principal each month along with the normal payment.  Some investors consider this a good use of the cash flows because interest rates on savings accounts and certificates of deposits are much lower than their mortgage rate.

In the example below, is a hypothetical rental with a purchase price of $125,000 with 80% loan-to-value mortgage at 4.5% for 30 years compared to a 3.5% for 15 years.  The acquisition costs were estimated at $3,000, the monthly rent is estimated at $1,250 and $4,800 for operating expenses.



Notice that both properties have a positive cash flow before tax.  The cash on cash return is the revenue less expenses including debt service divided by the initial investment to acquire the property.  The 15 year mortgage will obviously have a smaller cash flow and lower cash on cash but the equity build-up is significantly higher.

If the goal of the investor is to pay off the property to provide the highest possible cash flow at a later date, a shorter term mortgage with a lower interest rate will help them achieve that.  A simple definition of an investment is to put away today so you’ll have more tomorrow.  Sacrificing cash flow now, during an investor’s earning years, is a reasonable expectation to provide more cash flow in the future when it might be needed more.

Contact me if you’d like to explore rental property opportunities with an experienced buyer agent.

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Marilyn Messenger is an Accredited Buyer Representative and a member of the Real Estate Buyer Agency Council and has been representing buyers and sellers in Wayland, Sudbury, Maynard, Concord, and the towns west of Boston since 1993.

Why Borrowers Pay Different Rates

While it is tempting to contact the mortgage company/lender that advertises the lowest rates, it is important to understand that the advertised rates are what people who have excellent credit scores, solid employment, etc. get.
Most likely you will be offered a different rate, here's why.

Lenders, like any business, have to make a profit.  The cost of acquiring the funds, the operating costs to service and the expected profit margin are easily identified.  The variable in pricing is the type of mortgage and the credit worthiness of the borrower.

A loan with a 3.5% down payment is riskier than a loan with 20% down payment.  If the lender has to take the property back to recover their expense, the margin is greater between what is owed and what the property is worth on an 80% mortgage.

Credit scoring is a risk-based pricing method that allows a lender to be competitive in the market for the best loans from different borrower groups.  Individual lenders set their own levels for what they consider “A” credit which is reserved for the best rates.  If good credit is approximately 710 to 740, scores below that are considered higher risk and will have higher rates.

Risk must be assessed for both the borrower and the property that collateralizes the loan.  The borrower’s credit history and income stability are strongly evaluated by the lender but if a default should occur, the property must secure the loan to avoid a loss to the lender.



The challenge for some buyers is they are unaware of what their credit score is and how it will affect the interest rate offered by the lender.  It is to the buyer’s advantage to be pre-approved by a reputable lender prior to starting the process of looking for a home.  In some cases, the lender can actually improve the borrower’s credit score to help them qualify for a lower interest rate.

Contact me for a recommendation of a trusted mortgage professional - marilynmessenger@realtor.com
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Marilyn Messenger is a Certified Residential Special (CRS) and an Accredited Buyer Representative (ABR) associated with Andrew Mitchell and Company based in Concord MA. She has been managing the home buying and home selling for process in Wayland, Sudbury, Maynard, Stow and the town west of Boston for 20 years.

Don't Do It!

You’ve seen lists telling buyers what to do to find the right home but knowing what not to do can be just as important.  After finding the right home, negotiating a contract, making a loan application and inspections, buyers, understandably, start making plans to move and put their personal touches on the home.

In today’s tenuous lending environment, little things can derail the process which isn’t over until the papers are signed at settlement and funds distributed to the seller. Verifications are made by a lender at the beginning of the loan process to determine if the buyer qualifies for the mortgage. The verifications are usually done again just prior to the closing to determine if there have been any material changes to the borrower’s credit or income that might disqualify them.

Simply stated:

1. Don’t make any new major purchases that could affect your debt-to-income ratio
2. Don’t apply, co-sign or add any new credit
3. Don’t quit your job or change jobs
4. Don’t change banks
5. Don’t open new credit accounts
6. Don’t close or consolidate credit card accounts without advice from your lender
7. Don’t buy things for your new home until after you close
8. Don’t talk to the seller or the seller's agent without your agent

 

Your real estate professional and lender are working together to get you into your new home. It’s understandable to be excited about one of the biggest decisions you’ll make and that you feel you need to be getting ready for the move.

Planning is smart but don’t do anything that would affect your credit or income while you’re waiting to sign the final papers at settlement. This is also true for homeowners who are planning to refinance or take out a home equity loan.
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Homes for sale, ask Marilyn, or learn more about buyer agency, market condition reports for Wayland, Sudbury, Concord, Stow, and Maynard at www.marilynmessenger.com

Who is my agent?

More often than you’d expect, homeowners refer to the person they bought their insurance from as their agent. It sounds reasonable but it’s definitely not accurate. That person is the agent of the insurance company and they legally represent the company, not the customer. Even an independent agent who can place a policy with different companies is still an agent of the company.

A mortgage officer, in most cases is an employee and represents the company. And the same is true for a title or escrow officer. It’s important to understand the actual relationship to know what you can expect from them.
Any business person who wants to stay in business must treat their customers fairly and with a high degree of service. As a customer, you should be able to reasonably expect honesty and accountability. The difference is that employees owe their loyalty to their employer and agents owe their loyalty to their principal.

An agent owes more than just honesty and accountability. The principal can expect complete disclosure, obedience, loyalty, reasonable skill and care and confidentiality from their agent. This advocacy is very beneficial during the buying or selling process to coordinate all aspects of the transaction. The agent can bring valuable experience to your side of the transaction to provide confidence that your best interests are being represented from start to finish.

Most states have a recognized procedure for the real estate professional to create a formal relationship between themselves and a buyer or seller. This requires a fiduciary/statutory responsibility that places the principals’ interests above the agent’s own personal interests.

In Massachusetts real estate agents are required to provide consumers the Massachusetts Mandatory Licensee-Consumer Relationship Disclosure form at the first personal meeting with you to discuss a specific property. The form explains the types of agency an agent can provide. Although, this has been mandatory for years, many buyers who have looked at properties with other agents often tell me they have never seen the form! Consumers have a right to know who an agent represents.

Additionally, it is in the consumer’s best interest to have a written agreement with an agent who is going to represent them as a buyer agent. It clarifies expectations so there are no surprises or misunderstanding about responsibilities and makes for a less stressful transaction. Here are some of the other advantages of a written buyer agency agreement. 
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About the author: Marilyn Messenger, a local broker associated with Andrew Mitchell and Company, has been representing buyers and sellers in Wayland, Sudbury, Maynard, and the towns west of Boston for 20 years. She is a Certified Residential Specialist (less than 4% of Realtors have achieved the CRS® designation) and an Accredited Buyer Representative and is an active member of the Real Estate Buyer Agency Council. Visit www.MarilynMessenger.com.  

Connect with Marilyn Messenger on Google+