Buying a home can result in a big tax break every year, among other benefits.
In terms of investments, purchasing a home is probably the biggest one you will ever make. Moreover, it can be the wisest, due partly to a number of tax advantages the government has instituted to encourage homeownership. These benefits can help reduce the cost of buying and owning a home and leave you with more money when it's time to sell. Because tax rules vary based on income and other factors, you should consult an accountant or financial advisor for advice on your particular tax situation.
Deducting mortgage interest
One of the biggest incentives to owning a home is that the interest you pay on your mortgage is tax-deductible, up to a limit of $1 million. This deduction, like most other tax breaks for homeowners, applies to any kind of home. That includes a second home, as long as you spend a certain amount of time there: either 14 days each year, or 10% as much time as it's rented.
In addition, you can deduct the interest on up to $100,000 of other debt that uses your home as security such as a home equity loan. However, the amount you can deduct may be limited if the money you borrow raises your debt above the home's actual market value. This can sometimes happen when a lender extends you a loan based on more than the value of the house.
You can also deduct any amount you pay for points to reduce the interest rate of your mortgage or other loan linked to your home. In most cases, the points on a mortgage to buy or build your principal home can be deducted fully in the first year. However, if you refinance, take a home equity loan, or a loan secured by a second home, the points must be deducted over the life of the new loan. The exception is if you use part of a refinanced mortgage to improve your house; that portion of the points can be deducted in the same year.
Tax-free profits
Another major advantage of homeownership is that, in most cases, you don't have to pay taxes on any profit you make when you sell your home. The law allows you to exclude from taxes up to $250,000 in profit from the sale of your principal home -- $500,000 for a couple who file jointly. This exclusion also covers the sale of a parcel of land adjacent to your house, unless it's used for business.
There are some stipulations, however. The home must be your principal residence, and you (and your spouse, where applicable) must have lived there for at least two of the previous five years. You can only claim the exemption once every two years. If you don't meet those requirements, you may still claim a partial exemption if the sale was due to a change in your place of employment, necessary for health reasons, or due to other unforeseen circumstances.
Don't forget property taxes
You can claim property taxes you pay as an income tax deduction. This applies to both your principal home and any others you may own. Any money held in escrow to pay future taxes, however, is not deductible.
Write off your moving costs
The government allows you to write off many of your moving costs when you buy a new home if it's at least 50 miles closer to your job than your old home. To qualify, you must continue to work full-time in the general area of your job for 39 weeks during the following year. If you're self-employed and work in your home, any move of 50 miles or more will make your moving expenses deductible. However, you must also work full-time near the new location for 78 weeks during the next 24 months.
Of course, because tax rules vary based on income and other factors, be sure to consult an accountant or financial advisor about your particular situation.
http://www.homeloancenter.com/Articles/Mortgage-Advice/Tax-Benefits-of-Homeownership.aspx
Wednesday, May 2, 2007
Home Buying Tips
Purchasing a new home may have you climbing the walls, but with our help and the tips we provide below, you should be well on your way to a stress-free home purchase.
Steps to Home Ownership
Between your real estate agent and the help of our expert home mortgage team here at HomeLoanCenter.com, there is very little for you to do. In the meantime, take a few minutes to read over the 8 simple steps to owning your home.
Keys to Your Home Loan
Researching & Budgeting
Determining Your Price Range
Home Purchase Pre-Approval
Create a Wish List For Your Home
Search For a Home
Make an Offer on a Home
Lock-In Your Interest Rate
Close & Own Your Home
Researching & Budgeting
Before you begin home shopping, it helps to figure out your budget. That way there are no surprises later on, and you can fully enjoy home ownership rather than look at it as an overwhelming burden.
To determine your purchasing power, you need to consider the following things such as monthly income, monthly debts, down payment amount, loan closing costs, and your credit history. For help, you can use any of these easy calculators and tools that HomeLoanCenter.com has developed to assist you in your research:
Mortgage Calculators
Rent vs. Own Calculator
Monthly Payment Calculator
Payment Affordability Calculator
Home Purchase Tools
Home Buying FAQs
Get Pre-Approved
Find a Real Estate Agent
Determing Your Price Range
Pre-qualifying for a particular home loan amount helps your real estate agent focus your home search so you only look at homes that fit within your price range. In fact, many real estate agents require either a pre-qualification letter or a certificate of pre-approval before showing you a home. You can pre-qualify in a couple of minutes by speaking with one of our mortgage specialists, or by applying right here online. You won't have to supply any supporting documentation until you actually start the home loan process. HomeLoanCenter.com simply uses your information here to quickly determine how much you can afford to borrow so we can send you a pre-qualification letter right away.
HomeLoanCenter.com provides a no-cost, no-obligation pre-qualification letter online in minutes, or you may contact one of our experienced home loan specialists to obtain a pre-qualification letter. Get a Pre-Qualification Letter Online
Home Purchase Pre-Approval
A pre-approval certificate is the best way of demonstrating your ability to purchase a home. Pre-approval offers are also given stronger consideration by a seller than pre-qualification letters. To issue you a pre-qualification certificate, your mortgage specialist will ask you for documentation such as W-2 forms, paycheck stubs, and bank account statements, and then run your credit report to establish credit worthiness. Once that's complete, and everything checks out okay, your letter can be in your hands so you can submit the best offer for your next home.
What Documents Do I Need?
Get Pre-Approved for a New Home
Create a Wish List For Your Home
To ensure that your new home meets your needs, we've created a checklist to help you identify and prioritize features you want. With this checklist, you can also organize all the key people involved in your home purchase process. Download Home Finding Checklist
Search For a Home
Now we get to the fun part - searching for your ideal home! You can browse the homes for sale at various online websites, in the classified section of your local newspaper, visit open houses, or find a real estate agent. A real estate agent not only has access to homes not always advertised in the paper, but will help you locate homes that meet your exact price, size and other criteria. HomeLoanCenter.com can help you find a real estate agent in your area and help you earn up to $2000 cash. Learn More
About Home Purchase Loans
Make an Offer on a Home
Typically, the homebuyer or real estate agent will present an offer to the seller or their representative that includes the following information:
. The proposed offer price
. Seller concessions (if applicable)
. Financing contingencies (if applicable)
. Home inspection contingencies (if applicable)
. A specific outline of what is to be included in the sale of the home
. The "earnest money" deposit amount to be tendered with the offer
After the seller reviews your offer, it will either be accepted, rejected, or turned into a counter-offer. Any change to an offer is considered a counter-offer. An offer does not become a contract until both you and the seller (including all parties to the transaction) accept it. After acceptance, you and the seller will sign a home purchase agreement to finalize the deal.
Lock-In Your Rate
After signing a home purchase agreement, you're ready to lock-in an interest rate. This freezes your interest rate and protects you against market fluctuations for a specific time period. HomeLoanCenter.com offers instant pre-approval and same-day lock-in for 40 days. You can count on getting the best rate available from HomeLoanCenter.com.
Closing
After locking-in your rate, your team of mortgage specialists will go to work to close your home loan in conjunction with all third-party vendors. A processing specialist will schedule an appraisal and make certain that your file is complete and ready for final underwriting review. While all of this is going on, your escrow and title companies are working to gather the proper paperwork and approvals. Once all escrow conditions are met, your home loan is ready to fund, record, and close. The home is yours!
http://www.homeloancenter.com/HomePurchase/HomeBuyingTips.aspx
Steps to Home Ownership
Between your real estate agent and the help of our expert home mortgage team here at HomeLoanCenter.com, there is very little for you to do. In the meantime, take a few minutes to read over the 8 simple steps to owning your home.
Keys to Your Home Loan
Researching & Budgeting
Determining Your Price Range
Home Purchase Pre-Approval
Create a Wish List For Your Home
Search For a Home
Make an Offer on a Home
Lock-In Your Interest Rate
Close & Own Your Home
Researching & Budgeting
Before you begin home shopping, it helps to figure out your budget. That way there are no surprises later on, and you can fully enjoy home ownership rather than look at it as an overwhelming burden.
To determine your purchasing power, you need to consider the following things such as monthly income, monthly debts, down payment amount, loan closing costs, and your credit history. For help, you can use any of these easy calculators and tools that HomeLoanCenter.com has developed to assist you in your research:
Mortgage Calculators
Rent vs. Own Calculator
Monthly Payment Calculator
Payment Affordability Calculator
Home Purchase Tools
Home Buying FAQs
Get Pre-Approved
Find a Real Estate Agent
Determing Your Price Range
Pre-qualifying for a particular home loan amount helps your real estate agent focus your home search so you only look at homes that fit within your price range. In fact, many real estate agents require either a pre-qualification letter or a certificate of pre-approval before showing you a home. You can pre-qualify in a couple of minutes by speaking with one of our mortgage specialists, or by applying right here online. You won't have to supply any supporting documentation until you actually start the home loan process. HomeLoanCenter.com simply uses your information here to quickly determine how much you can afford to borrow so we can send you a pre-qualification letter right away.
HomeLoanCenter.com provides a no-cost, no-obligation pre-qualification letter online in minutes, or you may contact one of our experienced home loan specialists to obtain a pre-qualification letter. Get a Pre-Qualification Letter Online
Home Purchase Pre-Approval
A pre-approval certificate is the best way of demonstrating your ability to purchase a home. Pre-approval offers are also given stronger consideration by a seller than pre-qualification letters. To issue you a pre-qualification certificate, your mortgage specialist will ask you for documentation such as W-2 forms, paycheck stubs, and bank account statements, and then run your credit report to establish credit worthiness. Once that's complete, and everything checks out okay, your letter can be in your hands so you can submit the best offer for your next home.
What Documents Do I Need?
Get Pre-Approved for a New Home
Create a Wish List For Your Home
To ensure that your new home meets your needs, we've created a checklist to help you identify and prioritize features you want. With this checklist, you can also organize all the key people involved in your home purchase process. Download Home Finding Checklist
Search For a Home
Now we get to the fun part - searching for your ideal home! You can browse the homes for sale at various online websites, in the classified section of your local newspaper, visit open houses, or find a real estate agent. A real estate agent not only has access to homes not always advertised in the paper, but will help you locate homes that meet your exact price, size and other criteria. HomeLoanCenter.com can help you find a real estate agent in your area and help you earn up to $2000 cash. Learn More
About Home Purchase Loans
Make an Offer on a Home
Typically, the homebuyer or real estate agent will present an offer to the seller or their representative that includes the following information:
. The proposed offer price
. Seller concessions (if applicable)
. Financing contingencies (if applicable)
. Home inspection contingencies (if applicable)
. A specific outline of what is to be included in the sale of the home
. The "earnest money" deposit amount to be tendered with the offer
After the seller reviews your offer, it will either be accepted, rejected, or turned into a counter-offer. Any change to an offer is considered a counter-offer. An offer does not become a contract until both you and the seller (including all parties to the transaction) accept it. After acceptance, you and the seller will sign a home purchase agreement to finalize the deal.
Lock-In Your Rate
After signing a home purchase agreement, you're ready to lock-in an interest rate. This freezes your interest rate and protects you against market fluctuations for a specific time period. HomeLoanCenter.com offers instant pre-approval and same-day lock-in for 40 days. You can count on getting the best rate available from HomeLoanCenter.com.
Closing
After locking-in your rate, your team of mortgage specialists will go to work to close your home loan in conjunction with all third-party vendors. A processing specialist will schedule an appraisal and make certain that your file is complete and ready for final underwriting review. While all of this is going on, your escrow and title companies are working to gather the proper paperwork and approvals. Once all escrow conditions are met, your home loan is ready to fund, record, and close. The home is yours!
http://www.homeloancenter.com/HomePurchase/HomeBuyingTips.aspx
First Time Home Buyer
Being a first time home buyer brings with it many personal and financial advantages. By committing to home ownership, you have achieved a common dream, and you have earned the right to benefit from your hard work. Find out here all the ways you benefit financially from being a first time home buyer.
Save Money at Tax Time
Homeowners are rewarded by the federal government, and by many state governments. As a homeowner, you can deduct your mortgage interest and property tax obligations every April 15. And, since most of your mortgage payment goes toward interest in the first few years of home ownership, it's like the government is paying you to buy a house!
Invest Wisely
A home is one of the most secure investments you can find. The national median home price has increased steadily since 1968 when the National Association of REALTORS® started recording and reporting home prices. Even during times of recession, war and home sales declines, prices have climbed steadily upward. If you stay in your home, or keep your home for investment property, you'll likely earn some pretty significant capital gains on your initial investment!
Building Home Equity
Home equity accounts for the portion of your home or property that you actually own, and as you make your mortgage payments every month, your equity continues to rise. You can consider it as a type of savings account, where your house continues to appreciate, and your loan amount continues to decline. Your equity is that difference between the property value and your outstanding loan amount. Therefore, you actually make money as you continue to pay off your mortgage! You certainly can't say that about paying rent.
Learn More About Home Equity Loans
Home Equity Line of Credit
Home Equity Installment Loan
Establish Strong Credit
Buying a home can help people with less-than-perfect, or even bad credit, rebuild their financial standing. By making mortgage payments on time every month, a homeowner can establish another level of credit history. Timely repayments establish your reputation as a positive risk for lenders, meaning that you improve your credit every time you make a payment on time.
Gain Immediate Borrowing Power
Even if you are one of the fortunate buyers who find your dream house early in your life, the equity you build in your home still comes in handy. You can use it to secure a loan or get a line of credit to make home improvements, pay for college, finance an emergency, or even to take a dream vacation. You can even build on your homeownership experience by buying investment property with your equity. Homeownership gives you options.
About Home Purchase Loans
Financial Stability
One of the biggest rewards of being a first time home buyer is the financial stability you have. On a fixed rate mortgage, you know exactly what your payment is for up to 30 years. Even on an adjustable rate mortgage, you have a cap on your rate, and so you can figure out what your maximum possible payment would be. Renters do not have the luxury of knowing with certainty what they will be paying next year, or five years from now. Also, something many people find is that once they buy a home, everything else falls into place, financially and within the community. When you buy a home, you buy a share in your community.
Ready to Be a Homeowner? Apply Now
While buying a home may not be the right decision for everyone, being a first time home buyer does give you certain advantages. To find out whether first time home ownership is for you, try out our Rent vs Own Calculator.
http://www.homeloancenter.com/HomePurchase/FirstTimeHomeowners.aspx
Save Money at Tax Time
Homeowners are rewarded by the federal government, and by many state governments. As a homeowner, you can deduct your mortgage interest and property tax obligations every April 15. And, since most of your mortgage payment goes toward interest in the first few years of home ownership, it's like the government is paying you to buy a house!
Invest Wisely
A home is one of the most secure investments you can find. The national median home price has increased steadily since 1968 when the National Association of REALTORS® started recording and reporting home prices. Even during times of recession, war and home sales declines, prices have climbed steadily upward. If you stay in your home, or keep your home for investment property, you'll likely earn some pretty significant capital gains on your initial investment!
Building Home Equity
Home equity accounts for the portion of your home or property that you actually own, and as you make your mortgage payments every month, your equity continues to rise. You can consider it as a type of savings account, where your house continues to appreciate, and your loan amount continues to decline. Your equity is that difference between the property value and your outstanding loan amount. Therefore, you actually make money as you continue to pay off your mortgage! You certainly can't say that about paying rent.
Learn More About Home Equity Loans
Home Equity Line of Credit
Home Equity Installment Loan
Establish Strong Credit
Buying a home can help people with less-than-perfect, or even bad credit, rebuild their financial standing. By making mortgage payments on time every month, a homeowner can establish another level of credit history. Timely repayments establish your reputation as a positive risk for lenders, meaning that you improve your credit every time you make a payment on time.
Gain Immediate Borrowing Power
Even if you are one of the fortunate buyers who find your dream house early in your life, the equity you build in your home still comes in handy. You can use it to secure a loan or get a line of credit to make home improvements, pay for college, finance an emergency, or even to take a dream vacation. You can even build on your homeownership experience by buying investment property with your equity. Homeownership gives you options.
About Home Purchase Loans
Financial Stability
One of the biggest rewards of being a first time home buyer is the financial stability you have. On a fixed rate mortgage, you know exactly what your payment is for up to 30 years. Even on an adjustable rate mortgage, you have a cap on your rate, and so you can figure out what your maximum possible payment would be. Renters do not have the luxury of knowing with certainty what they will be paying next year, or five years from now. Also, something many people find is that once they buy a home, everything else falls into place, financially and within the community. When you buy a home, you buy a share in your community.
Ready to Be a Homeowner? Apply Now
While buying a home may not be the right decision for everyone, being a first time home buyer does give you certain advantages. To find out whether first time home ownership is for you, try out our Rent vs Own Calculator.
http://www.homeloancenter.com/HomePurchase/FirstTimeHomeowners.aspx
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