Real Estate Info

Have you ever completed your tax returns only to find out that you owe way more to Uncle Sam than you were expecting – or worse, that your tax bill is more than you can possibly afford to pay right now?

According to the IRS, the penalty for filing late is generally 5% per month, or up to 25% of the total tax amount due. Not to mention interest charges, which the IRS changes quarterly, and which range between 4% and 9%. This interest applies to the unpaid balance, penalties, and to any interest that has been charged to the account as well.

If no effort is made to pay back-taxes, the IRS can impose stricter penalties, including levying bank accounts, wages, other income, or taking other assets like houses and cars. A Federal Tax Lien could also be filed, which could ruin your credit history for years to come.

The penalty for filing on time but paying late, however, is only half of one percent or .5% per month, up to 25% of the total amount owed. If you choose an installment plan to pay your debt, interest will accrue on the unpaid debt amount only.  Therefore, when you file your return, pay as much as you can and cut down the penalties even more.

It is possible to get a 30 to 120-day extension to pay your taxes after filing a return on time. Soon after filing, the IRS will send you a tax bill for the amount you still owe. Simply call the number on the bill and request an extension and explain your situation. If granted an extension, the penalties and interest will be much lower. 

If you cannot pay any part of your tax bill, the IRS may temporarily delay collection until your financial situation improves, although interest and penalties will accrue throughout this time. But this extension is reserved for what the IRS calls "significant hardship."

According to an article today on CNNMoney.com  "The Federal Reserve cut its key interest rate by a quarter percentage point Wednesday, but the central bank's statement signaled it may be the last rate cut for at least a while.

The cut took the federal funds rate, the key overnight rate at which banks loan money to one another, to 2%. It had been at 5.25% as recently as September, when the Fed started slashing rates in an effort to spur the economy and keep the nation out of recession.

The fed funds rate, as it is more commonly known, is a benchmark for home equity lines of credit, credit cards and other consumer loans as well as the prime rate used for short-term business loans.

The Fed's statement repeated earlier ones about how rate cuts up to this point should help to spur the economy and lessen the risk of a downturn. But the central bank removed the following language form the current statement: "downside risks to growth remain."

The absence of that phrase, along with the new comment in the statement that "uncertainty about the inflation outlook remains high" led some experts to believe the central bank is signaling it is ready to pause on rates for some time.

"They haven't closed the door to further cuts, but they've shut it part way," said Mark Zandi, chief economist for Moody's Economy.com. "They're saying they believe they've done enough."

Stocks initially surged following the Fed announcement but wound up giving up all their gains and finished the day lower, a possible sign that investors are still worried about the weak economic environment. The government reported earlier Wednesday that the economy grew by just 0.6% in the first quarter.

Fed policymakers are not set to meet again until June 24 and 25, the longest gap in its calendar of meetings this year.

Zandi said he believes a pause is the proper policy for the Fed to take at this point.

"I think they've done a lot," he said. "They sense the financial system is on firmer footing. The economy is still weak, but the pace of decline doesn't seem like it's accelerating."

But Keith Hembre, chief economist for First American Funds, believes further weakening of the U.S. economy could cause the central bank to start cutting once again later this year or early in 2009.

"The Fed has certainly done a lot so far," he said. "But I think six months down the road we'll find that the economy is not rebounding as we've anticipated and the Fed will have to move rates lower."

That is what happened during the last period of Fed rate cuts, when it lowered rates throughout 2001, taking the fed funds rate down to 1.75%.

Then it kept rates on hold through most of 2002, before cutting again in November of that year and once more in June 2003. Rates were at 1% following that cut."

FROM CNN’s Jack Cafferty:

"The federal government began sending out checks to taxpayers this week as part of its economic stimulus plan.

130 million payments totaling more than $110 billion will eventually be made to citizens who filed a tax return for 2007. The minimum amount is 300 dollars with 600 dollars going to single taxpayers who earned less than $75,000 and $1,200 going to couples who earned less than $150,000. Uncle Sam will also pay $300 for each child under the age of 17.

The idea is to give our sagging economy a shot in the arm. Officials hope people will spend the check as opposed to using the money to pay down debt or simply saving it. But surveys indicate most folks will send it to the credit card companies, put it in their gas tanks, or stick it in the bank.

Retailers smell all this money and are already announcing promotions designed to get you to come to them so they can empty your pockets of all this additional dough.

But at the end of the day how much impact this will have on an economy that is likely already in recession is questionable.

It’s important to remember this is an election year…and this was one of the very few items both parties could agree on in Washington all year long. The politicians figure tossing bread crumbs to the masses creates the impression they care what happens to any of us. I seriously doubt it.

Here’s my question to you: How much of a difference will the stimulus checks make to our economy?"

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According to CNNMoney.com "The federal government, eager to boost the flagging economy, will start distributing special stimulus payments Monday - four days earlier than expected."

"The department announced the early arrival of the payments Thursday after saying last month that it would begin sending out the money on May 2.

As of next week, 800,000 tax filers daily will begin to have their checks directly deposited Monday, Tuesday and Wednesday. No checks will be distributed Thursday, and 5 million payments will be made Friday.

The payments will go out ahead of schedule because of a new computer program that updates records daily - faster than an older program that updates weekly, according to Andrew DeSouza, a Treasury spokesman.

Overall, the Treasury will distribute more than $110 billion to 130 million taxpayers by July and hopes to get the first $50 billion out by the end of May, DeSouza said.

The checks are the centerpiece of an economic stimulus program signed into law by President Bush in February. The aim is to boost consumer spending and help mitigate problems caused by the slowing economy.

Checks are being distributed to people who file 2007 tax returns. Those who opt for direct deposit with the Internal Revenue Service will start getting payments before those who use the mail.

The program calls for rebates of up to $600 for single filers making less than $75,000. Couples making less than $150,000 would receive rebates of up to $1,200. In addition, parents would receive $300 rebates per child. Filers who do not owe income taxes but have at least $3,000 in income would get a $300 payment.

Payments to taxpayers slated to get paper checks will start to go out May 9 - one week earlier than originally planned.

The order in which tax filers will receive their payments will be based on the last two digits of their Social Security numbers." 

By Catherine Clifford, CNNMoney.com staff writer

How do you plan on spending your stimulus payment? 

Allen's treatise, As A Man Thinketh, was first published at the turn of the twentieth century. His central notion is that our thoughts are under our control, and that they in turn determine our emotions, our health, and even our circumstances.

· Inquire about emergency plans at work, school, and any other locations that family members frequent on a regular basis.

·Determine how to care for your pet(s) since most temporary shelters only permit service dogs to enter. Start by visiting the American Red Cross website's Animal Safety section to learn about suggested alternatives (www.redcross.org).

·Next, develop a Family Emergency Plan:

· Create contact information cards for each family member. Select a reliable out-of-state relative/friend who family members should contact if local communications are down.

· Establish home escape routes and practice them.

· Learn how to shut off your utilities.

· Procure proper insurance coverage and protect your vital records.

· Create a short list of what to take in case of a fire.

· Water - Store one gallon of water for each family member per day, and plan on a minimum of three days.

· First Aid Kit and essential medications.

· Non-electric can opener, knife, and utensils.

· Battery-operated radio, flashlights, batteries, pens and paper.

· Be sure to review the contents of the kit every six months, and replace anything that's about to expire.

Bring Your Lunch to Work - The average person spends $6 when they buy their lunch yet only $2 when they pack it themselves. That's a potential savings of $20 a week or $1,040 dollars a year.

Durable over Disposable - Using products like Handi-Wipes (semi-disposable rags) as opposed to paper towels, and a rechargeable razor rather than the disposable kind, can save you up to $200 per year.

Hold an Annual Yard Sale - You should have no problem making at least a hundred bucks. Besides, you'll get rid of all that household clutter in the process. Whatever you don't sell can be donated to charity and used as a tax write-off.

Ask for Discounts - From buying airline tickets to paying a medical bill, always ask if there's a discount to be had. The worst that can happen is you'll be told no.

Get a Library Card - As opposed to buying a book for $20 or renting a DVD for $4, get it for free. If you average 3 movie rentals a month, you'll save yourself over $140 a year.

Watch Those Utilities - Changing over to energy saving light bulbs and low flow showerheads is a great start. Also, most utility companies offer a home audit you can complete online. If not, go to http://hes.lbl.gov for a virtual inspection of your home. You may be surprised to learn how much energy (and money) you could be saving.

According to an article from CNN, a recent telephone poll conducted of 1,002 Americans indicates that "Sixty percent said they definitely won't buy a home in the next two years, up from 53% who said so in an AP-AOL poll in September 2006. At the same time, just 11% are certain or very likely to buy soon, down from 15% two years ago.

The growing reluctance to dip into the housing market seems to stem partly from worry that housing prices will continue falling -- good if you're buying a house but bad if you have to sell one.

The number envisioning falling prices in their area has grown to one in four, while four in 10 think prices will rise, a decrease from two years ago. Expectations for rising prices are highest in the South, with Westerners likeliest to predict they will drop.

Underscoring the public's unsettled feelings, the number saying local housing prices are about right has fallen to 35%. Half say homes are overpriced - especially in the Northeast - while those saying housing is underpriced have doubled to one in 10, particularly Midwesterners."

What does this mean for you?

With the falling prices of homes, are you now in a position to afford to own your own home?  Now is the time to call and see what you may qualify for.  While you may think that homeownership is out of reach, a complimentary review of your financial information may indicate that it is the time to purchase and stop paying your landlord's mortgage payment!  Call us today at (858) 455-6700.

The seller will also have a wish list of what they want out of the negotiation. Listen attentively to determine what their hot buttons are. You can use this information to leverage what you want out of the deal at some point along the way.

Find out if the seller has a deadline. Perhaps they have already purchased their new home, or have to relocate because of a commitment to a new employer. Find out what the seller's current mortgage balance is and use this to your advantage.

On the other hand, if the seller wants to move because they can't manage upkeep on the home, or don't want to invest in repairs, these problems will be passed on to you. If you are prepared to go into a deal that involves a fixer-upper, there is an FHA financing program designed to provide funds for both purchase and repair. My team and I can provide you with more information on FHA loan programs and secondary financing.

You would also want to know if the seller is planning this move because there are problems in the neighborhood. Take a walking tour of the area and ask the residents what the neighborhood is like. You can also ask the local police department about the crime rate, or check the local newspaper for crime listings. Don't be afraid to ask questions.

When the seller is intent on getting their way on a certain point, make sure you are getting something in return. Typically the built-in amenities such as the dishwasher and garbage disposal will stay with the home. You can negotiate other items in exchange for something that ranks high on the seller's wish list. Be prepared to split the difference so everyone involved is satisfied with the negotiation. A win-win situation for both the buyer and the seller is critical to a smooth close.

Keep it simple and be direct, but above all, know that my team and I are here to assist you.

Go Easy on the Pedals - Jackrabbit driving is a killer when it comes to burning fuel. Remember that slow and steady wins the race in more ways than one.

Avoid Long Idles - The bottom line is idling burns more gas than restarting an engine.

No Junk in the Trunk - Clean out your trunk and the rest of your car for that matter. Excess weight bogs down your vehicle, causing it to burn more fuel.

Drive the Speed Limit - The higher the speed, the more gas your car will use.

Go Easy on the A/C - Air conditioning burns gas. Before turning it on, ask yourself if rolling down a window or two might do the trick.

Use Overdrive and Cruise Control - Most automatic transmissions have these features. If you drive a stick, consult your owner's manual about the recommended RPMs when shifting.

Keep Tires Inflated and Aligned - Believe it or not, frequent alignments and keeping your tires inflated to the proper amount will save you gas.

Honor the Scheduled Maintenance - Scheduled maintenance is designed to help your car run as efficiently as possible. Check your owner's manual for specifics.

Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.

Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.

The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!

However, if you were to purchase your own home or condominium, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down.

In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and we can help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.

To find the loan program that is right for you, we will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let us know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.

There are many different types of loan programs available, including “low” and “no” down payment mortgage programs. These types of programs require the borrower to provide less than 3 percent of the loan amount as down payment. FHA lenders rule that the mortgage payment, including principal, interest, taxes and insurance (PITI) should not exceed 31 percent of your gross income, and the PITI plus other long-term debt (car payments, etc.) should not exceed 43 percent of your gross income.

Housing is an expense that takes a big bite out of the monthly budget. If you are a renter and feel that “home” is more than just someplace to hang your hat, think about the advantages of purchasing real estate. It may be time to take the step into building your personal net worth as a home owner.

If you or someone you know intends to take advantage of the low home prices and the lowest mortgage interest rates in years, please call us today at (858) 455-6700.