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  

--------------------------------------
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 Perfect Last Minute Gift

It’s part of holiday tradition to celebrate with family and friends and to share gifts with our loved ones.  There’s no measuring how much is spent on the combined effort and money to find the perfect gift.

The challenge is to identify the right gift in the right color and size; something they really want and need; and something that won’t break the budget.

“Eight Gifts That Do Not Cost a Cent” are suggestions that have been offered on numerous Internet sites attributed to an anonymous writer.  They may be just what you need to find the perfect gift.

• THE GIFT OF LISTENING...but you must really listen. No interrupting; no daydreaming; no planning your response; just listening.

• THE GIFT OF AFFECTION...be generous with appropriate hugs, kisses, pats on the back and handholds.  Let these small actions demonstrate the love you have for family and friends.

• THE GIFT OF LAUGHTER...clip cartoons and share articles and funny stories.  Your gift will say “I love to laugh with you."

• THE GIFT OF A WRITTEN NOTE...it can be a simple "thanks for the help" note or a full letter.  A brief, handwritten note may be remembered for a lifetime and may even change a life.

• THE GIFT OF A COMPLIMENT...a simple and sincere, "you look great in red" or "you did a super job" or "that was a wonderful meal" can make someone's day.

• THE GIFT OF A FAVOR... go out of your way every day to do something kind.

• THE GIFT OF SOLITUDE...there are times when a person wants nothing more than to be left alone.  Be sensitive to those times and give the gift of solitude to others.

• THE GIFT OF A CHEERFUL DISPOSITION...the easiest way to feel good is to extend a kind word to someone.  It’s really not that hard to say, Hello or Thank You.

Wishing you all the best at the holidays and throughout the year; enjoy!

------------------------------

Of course, the gift of home is always a great gift to yourself! Holiday time is when families often talk about moving - people get engaged, change jobs, combine households, down-size, announce new babies on the way, need more room, finding a better place for parents who need assistance...If you find yourself having these kinds of conversations and would like to talk about your next move, please contact me or visit www.marilynmessenger.com to search for homes, get the latest market reports for Concord, Wayland, Sudbury, Stow, and Maynard; learn about buyer agency, or request a valuation report for your home. 

A Home is More Than an Address

A home is a place to call your own, raise your family, share with your friends and feel safe and secure. It is also one of the largest investments most people have.

Leverage is the ability to control a larger asset with a smaller amount of cash through the use of borrowed funds. It has been described as using other people’s money to increase your yield and it applies to homeowners and investors alike. Positive leverage causes the yield to increase as the loan-to-value increases.

Even a modest amount of appreciation combined with the amortization of a loan can cause a substantial rate of return on the down payment and closing costs. Homes build equity as the price goes up due to appreciation and the unpaid balance goes down due to amortization.












The example above indicates the yield on a home considering 3% acquisition costs on the home with a 4.5% mortgage rate and the resulting equity at the end of five years. The different down payments will affect the yield based on the leverage effect. 
Whether you rent or buy the home you live in, you pay for what you occupy. The question a person is faced with is whether they are going to buy it for themselves or their landlord. Take a look at the cost of Renting vs. Owning.

Search for homes

Get Regular Check-ups

Following his heart surgery last week, after an issue was discovered during his annual physical, President George W. Bush encouraged everyone to get regular check-ups. 
Another important checkup that should be done on a regular basis and can be just as beneficial for your finances is an annual homeowner advisory. Why would you treat your investment in your home with less care than you treat your car or even your HVAC system?

Consider investigating the following:

• Know the value of your home by obtaining a list of comparable sales in your immediate area as well as what is currently on the market for sale.

• Have you compared your assessed value for tax purposes to the fair market value in order to possibly reduce your property taxes?

• Even if you’ve refinanced in the last two years, can you save money and recapture the cost of refinancing in the time you plan to remain in your home?

• Have you considered reducing your mortgage debt with low-earning cash reserves that will not be needed in the near future?

• Have you considered investing in rental homes in good neighborhoods to increase your yields and avoid the volatility of the stock market?

• Recommendations of repairmen and other service providers from a trusted source who deals with them more frequently than you do.

 

My goal is to create a lifelong relationship to help you be better homeowners and to be your “go to” person whenever you have a real estate question. I want to help you not only when you buy and sell but all of the years in between by providing good, consumer-based information about homeownership on a regular basis through email and social networking. If it benefits you by helping you be a better homeowner, hopefully, you’ll consider me your real estate professional for life.

Anytime you or your friends need help, please call. Knowing where to get the answer is just as important as knowing the answer. If you’d like information on any of the items we suggested, please let us know.
---------------------------------
About the author: Marilyn Messenger is a licensed real estate broker associated with Andrew Mitchell and Company based in Concord MA. As a Certified Residential Specialist and Accredited Buyer Representative, she has been representing home buyers and sellers for 20 years in Wayland, Sudbury, Maynard, Stow, and the suburbs west of Boston. Her clients appreciate her extensive knowledge about local real estate and her ability to negotiate the best deal on their behalf. Visit www.marilynmessenger.com to search for homes and get information about buying and selling homes.

It Can't Hurt to Wait, Can It?

It’s been said that more money has been lost due to indecision than was ever lost because of a bad decision. Regardless of whether you agree with the statement, delaying the decision to buy in today’s market is going to cost the buyer more. 

Home prices have gone up considerably in almost every market in the country in the past year and while inventories are beginning to grow, prices are expected to continue to rise. Mortgage rates jumped 1% from the beginning of May to now. They could easily reach 5% by the end of the year and continue to rise in 2014.

Many of the financial experts in the country believe that the economy will not be strong until rates are in the 7% area.
The two components that move the cost of housing are price and mortgage rates. Escalation of either one will have an affect but when both are going up simultaneously, it is dramatic. It can literally eliminate buyers who could have purchased earlier.

The following example shows what would happen to the payments on a $200,000 home if the price were to go up 3% at the same time that the mortgage rates went up 1%. Not only would the payments go up by $150.81 per month, the price of the home would be $6,000 more. Even though the down payment may not change much, the new owner would have to borrow more money. By not acting, it is costing them more in price and payment. The loss of the appreciation would have been equity had they purchased prior to the rise in price.

















A lot of people who would like to sell their house and buy another are also waiting because they want to sell for more money. Waiting will also cost move-up buyers and people who are down-sizing for the same reason: the home you are buying will cost more and you will also pay a higher interest rate.

Check out the Cost of Waiting to Buy to see what the effect will be using your own projections.

----------------------------------------
Visit www.marilynmessenger.com to search for homes and get the latest real estate market reports for Wayland, Sudbury, Concord, Maynard, and Stow.

Connect with Marilyn Messenger on Google+

If I'd Known...

We’ve probably all said or at least thought “if I knew then, what I know now, I would have done things differently.” We should have stayed in school longer. We should have listened to our parents. We should have bought Apple stock in 2002 for $8.50 that sells for $400 today. Or we could have bought gold in 2000 for under $300 for a four-fold profit today.

Years from now, if we look back at 2012, we may say that it was the best buyer’s market ever. Even now, in 2013, it’s apparent that both housing and mortgage prices are going up and they may never return to the record low levels.
The housing affordability index, which is considered to be good at 100, had increased to over 200 this past December, January and February. Shrinking inventories and rising prices in most markets have caused the index to fall to 172.7 for May 2013.

This market applies equally to acquiring a home to live in or a home to use as a rental. It is estimated that about 30% of the property purchased last year was done by investors. It is understandable because the positive cash flows far exceed most other investment alternatives.

Homeowners moving up in a rising market may sell their home for more by waiting but it will also cost them more for a new house. Typically, a person buys a 50% larger home when they move up. If they wait for prices to go up 10% on the $150,000 home they're selling, they’ll realize $15,000 more but will pay $22,500 more for the new home purchase. They’ll actually net $7,500 less by waiting for prices to go up and may have to pay a higher mortgage rate too.

The question homebuyers and investors alike are faced with today is whether they will be saying years from now that they seized or missed an opportunity of a lifetime.
---------------------------------------------------
NOTE: Housing prices are examples taken from national stats. The prices in Concord, Wayland, Sudbury and the suburbs west of Boston are substantially higher, however the principle concept in this post still apply.

View market reports, search for homes and sign up for MLS listing updates go to www.MarilynMessenger.com or call 508-596-3501.

Retirement Without a Mortgage

Planning for retirement is obviously important and many times, an activity plagued by procrastination. Some people plan to have their home paid for by that magical date so they won’t have payments after they retire. It makes sense to eliminate a large recurring expense before they quit working.
One strategy would be to be make regular principal contributions in addition to the payments so that it will eliminate the debt by the target retirement date.

Let’s say that a homeowner refinanced their $200,000 mortgage at 4% last year with the first payment due on May 1, 2012. Under normal amortization, the home would be paid for at the end of the term; 30 years in this example.

By making additional principal contributions with each payment, it would accelerate the payoff on the home. An extra $250.00 a month would pay off the mortgage in 10 years. $524.55 extra with each payment would pay off the loan in 15 years; and $796.23 would pay off the loan in 12 years.
Having a home paid for at retirement has the obvious benefit of no house payment. It is also a substantial asset that could be borrowed against or sold if unanticipated events should occur.

Another strategy might involve purchasing a smaller home now to use as a rental that you intend to live when you retire; see Retirement Home Now.

To make some projections to pay off your own mortgage, use this Equity Accelerator.

When Rates Go Up

Rising interest rates are great if you are renewing a certificate of deposit but not so much when you’re borrowing money. With interest rates on the rise as well as home prices, housing affordability is a concern for would-be homeowners.

A rough rule of thumb is that a person’s or family’s housing should not exceed 28% of their monthly gross income. While rental rates and home prices have been consistently increasing, mortgage rates have been soaring in the past month. In one week, according to the Freddie Mac Primary Mortgage Market Survey, they jumped by .5%.

This means that people have to pay a larger percentage of their income for housing unless their incomes have been increasing at an equal pace.  A $200,000 mortgage would be over $100 more per month if closed in July compared to closing at the interest rates available in January of 2013.

If rates increase by .5% by the time you close on the same size mortgage, payments would increase by almost $60 per month. In order to keep the payments the same, a borrower would have to put an additional $11,000 down to lower the mortgage amount.



Check out how your payment would be affected if interest rates continue to rise.
The National Association of REALTORS® suggests that housing is more affordable now than one year ago. However, with all of the variables in play including inflation that was not addressed in this piece, it is unclear how long conditions will remain “affordable”.

Visit www.marilynmessenger.com for easy home searches - no sign up required or call 508-596-3501 to find out about recent price reduction in Wayland, Sudbury, Maynard, Concord and the towns west of Boston. There is still time to be in for school, so don't wait!
 
 

Wayland Open House Sunday 4/17 - 12:30 to 2:30

163 Cochituate Road, Wayland - $469,000

Imagine how much you'll love living in this updated Cape in Wayland with everything for your comfort & convenience! 1806 square feet on 3 levels. All 3 bedrooms upstairs, 2 full baths, maple/stainless kitchen, fireplaces in the living room & family room, finished lower level. Central air-conditioning, replacement windows, lots of closets, neutral color palette.New money saving/easy care Prodigy siding & new GEOTECK composite deck. Lots of room to play in the flat yard abutting trees. Great commuter location to Waltham, Cambridge, Boston; handy to Mass Pike. 1-yr. home warranty. Come see!

Call 508-596-3501 or email: marilynmessenger@realtor.com
Visit: http://www.marilynmessenger.com/ for the latest market information and real estate news in Wayland, Sudbury, Maynard, Stow and Weston; and complete MLS home searches

Listing broker: Marilyn Messenger, RE/MAX Landmark Realtors, Wayland