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Mark and Lanea's Blog

Avoid PMI Insurance, if you can!

March 28th, 2009 10:17 AM

Tips to Avoid Mortgage Insurance
By Susan M. Keenan
Photo: © Norman Pogson - Dreamstime

First time homeowners looking to keep their monthly costs down should try to avoid private mortgage insurance (PMI) when buying a home. After all, this added cost could defeat the purpose of shopping around for the lowest interest rate for mortgages, the lowest APR, and the fewest chargeable points. Don’t spend money on something you don’t need or want.

Avoiding Private Mortgage
Insurance is Possible
You can easily avoid private mortgage insurance if you put down 20% of the purchase price of the home. If you don’t have the available cash to do so, you should look into getting a small secondary loan. Talk to your lender about arranging your finances to include a primary mortgage of 80% of the purchase price and a secondary loan to increase your down payment so that it reaches the necessary 20%.

Before the lending environment tightened it was easy to obtain a small secondary loan at a minimal monthly cost. In today’s market, a secondary loan is still an option. It is more difficult to qualify and the interest rates are higher. If you can obtain a small secondary loan at a reasonable interest rate, the added monthly cost of the secondary loan may be less than the cost of private mortgage insurance. Ask your lender about your options. Your goal is to avoid the added cost of private mortgage insurance, and have more disposable cash each month.

A Larger Down Payment Means More
Money in Your Pocket
If the thought of obtaining a second mortgage is a bit frightening, the alternative to avoiding private mortgage insurance is to save up a larger down payment. It will be difficult, especially if you are already cutting corners. But, if you put off making unnecessary purchases, cut back on entertainment costs, and trim your grocery bill, you should be able to accumulate enough money to help you meet your goal of 20% of the purchase price.

Save More with Lower Homeowner's
Insurance Premiums
Even if you avoid private mortgage insurance, the monthly expenses of owning a home add up quickly. Trim your cost by shopping around for the best rate on a homeowner’s insurance policy. Keep in mind that there are often discounts for bundling insurance policies such as car and life insurance, safety devices, and security systems.

Posted by Mark Kelley on March 28th, 2009 10:17 AMPost a Comment (0)

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$8000 Tax Credit!

March 28th, 2009 10:11 AM

New First-Time Homebuyer
Tax Credit!
Photo: © Ericsphotography - iStockphoto

The recent $787 billion economic stimulus bill includes an $8,000 first-time homebuyer tax credit. If you are familiar with the $7,500 tax credit for last year, the new $8,000 tax credit is similar, but with some improvements; the tax credit doesn’t have to be repaid, the home purchase date has been extended, and there is a $500 increase in the credit amount. It’s not a big change, but for those ready to buy, the new tax credit is an added incentive.

Here are the new qualifications:

The home must be purchased on or after January 1, 2009 and before December 1, 2009. People who purchased a home last year are covered by the $7,500 tax credit and are not eligible for the $8,000 tax credit.
If you keep your home for at least three years, the tax credit doesn’t have to be repaid.
The tax credit is only available to homebuyers who have not owned a home as a principal residence in at least three years. A vacation home is not considered a principal residence.
There are income restrictions. If your modified adjusted gross income (MAGI) exceeds $75,000 for singles and $150,000 for married taxpayers, you may be eligible for a partial credit.
This tax credit is refundable, meaning you can receive it as a tax refund after filing your federal tax return.

Posted by Mark Kelley on March 28th, 2009 10:11 AMPost a Comment (0)

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2009 Energy Tax Credits

January 9th, 2009 11:08 PM

Energy Tax Credits in 2009
By E. E. Kane
Photo: © Feng Yu / Dreamstime

Trying to decide whether to invest in new energy-efficient home improvements? Tax credits can put those improvements affordably in your reach, after deductions and lower energy bills. However, there are a few things you need to know before you make a purchase or sign a contract.

The IRS granted credits for improvements made during 2006-07, but not 2008. This applies for all but the most expensive improvements.

If you made energy efficient home improvements in 2006-07 and didn’t claim it, or all of it, you might be able to claim those in 2009. Beginning January 1, 2009, homeowners are again eligible for tax credits on approved improvements made after that date. Here are the basic guidelines:

•

You can claim a maximum of $500 in tax credits for certain improvements made during 2006, 2007, and 2009. These improvements include replacement windows, storm windows, exterior doors, storm doors, skylights, insulation, non-solar water heaters, biomass stoves, metal roofing, and some HVAC equipment.

•	New homes do not qualify for tax credits in the above categories.

•	New homes do qualify for tax credits for photovoltaics, solar water heaters, fuel cells, and small wind systems.

•	You can qualify for tax credits above $500 total for ground source heat pumps, solar energy systems, small wind energy systems, and fuel cells. These systems are not negated for 2008 and are in effect until 2016.

•	Only some Energy Star labeled products, usually the most efficient, qualify for tax credits.

•	Only principal dwellings in the United States are eligible.

•	Installation costs are generally not included for tax credits.

•	If you bought an energy efficient product that qualifies for a tax credit during 2008, you may still be able to claim it as a tax credit if you do not install it until 2009. According to EnergyStar.gov, the product can be "placed in service" between January 1, 2009 and December 31, 2009 to qualify.

When you purchase your energy improvement product, save the following for tax purposes: receipts, all Energy Star labels (one for each window you buy, for example), and the manufacturer’s certification statement.

Take advantage of energy tax credits. Even in a recession, an energy-efficient improvement is a wise decision. It improves the value of your home, boosts the economy, lowers your utility bills, and makes the world a cleaner, longer-lasting place

Posted by Mark Kelley on January 9th, 2009 11:08 PMPost a Comment (0)

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Keep Upbeat!

January 9th, 2009 11:04 PM

Is your local TV news full of stories about people losing their business or their home? It is not easy to miss widespread media coverage of troubled families and the failing economy. It was even the focus of the 2008 presidential election. What matters most to you is what you are doing to respond to the economic problems while you continue living your life. Here are a few ideas for fighting the sour economy one day at a time.

1. Make a budget and stick to it. You can find thousands of ideas on the Internet on how to save money in your household budget. Design a budget plan that works for your family. After you’ve got a plan, sticking to it is your key to fighting your economic situation.

2. Get back to family time. Having less spending money gives you more quality time to stay home

with your family. If you can accept your present economic situation, you can focus your energy on other things, like spending time with family and doing your hobbies.

3. Look for better employment. A sour economy is not a reason to give up on finding your first job, your second job, or your next job so that you can provide for you or your family. The connections that you make now may lead you to a better situation in a few months or even a couple years. Don’t give up the job search just because it is a difficult job market.

4. Develop an encouraging motto. A great motto for facing economic challenges is, “I will take my financial problems one day at a time and I will not let them ruin my quality of life.” Keep in mind that the poor economy is a cycle that economies go through periodically. Taking one day at a time is a strategy for dealing with problems that will keep you from becoming overwhelmed. So, keep focusing on the positive things in your life while you make an effort to improve your situation. When the economy improves, you will be poised to live a more economical lifestyle and you will have a mindset that focuses on solutions instead of problems.

Posted by Mark Kelley on January 9th, 2009 11:04 PMPost a Comment (0)

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