If you’re into bottom-fishing, now may be the time to start trolling for real estate. At least that’s the advice of Michael Corbett, author of Before You Buy: The Homebuyer’s Handbook for Today’s Market. “I’m pretty comfortable saying that five years from now, people are going to be saying, ‘Damn, if I had just bought in 2011,’ ” said Corbett, who is also host of the “Mansions & Millionaires” segment on the syndicated TV show “Extra.” “Prices are bumping along the bottom and rates are really low,” he said. “When you have those two together, you have the perfect buying opportunity.” Housing prices may not have hit rock bottom, Corbett acknowledged. But he thinks that people who wait to find the market’s bottom are likely to miss out on the current low rates. And rates can be every bit as important to the cost of a deal as price. You might think you can snag a great deal by lying in wait — hoping that the owner of a $500,000 listing will get desperate enough to accept $450,000, for example. But if rates rise 1% during the time you wait, you’ll end up shooting yourself in the foot. Assuming you finance $400,000 of the purchase price of that home, the 1-percentage-point difference between a 5% and a 6% loan will cost you more than $90,000 over the life of a 30-year loan. “It’s hard to tell where the bottom of a market is, until prices start going up,” said Dianne Patton, a consumer real estate specialist with Coldwell Banker Real Estate. “But the stars are aligned for buyers right now.” Source: LATimes.com All-cash transactions accounted for 28 percent of home sales last year –double the rate of October 2008 — reports the National Association of Realtors. Cash deals are gaining in popularity because buyers believe prices are at or near the bottom. In addition, new home sales may bounce back this spring, and the rebound could last through at least 2012, predict market watchers. The Mortgage Bankers Association forecasts a 10 percent jump in volume; while Fannie Mae and the National Association of Home Builders project gains of 18 percent and 20 percent, respectively. The groups are optimistic despite tighter underwriting, the absence of a home buyer tax credit and stiff competition from bargain-priced foreclosure properties Sources: WSJ.com and BusinessWeek.comWhile renting offers zero tax breaks, buying a home offers several tax benefits that can make homeownership more affordable. The following is a few of the tax benefits to home ownership, according to Stephen Fishman, an author and lawyer who specializes in small business, tax and intellectual property law:
  • Home loan interest deduction: Home owners can take an itemized deduction on interest paid on home loans of up to $1 million for a principal residence and/or second home. This deduction could potentially reduce the cost of borrowing by one-third or more.
  • Property tax deduction: Home owners can deduct from their federal income taxes the state and local property taxes that you pay on the home.
  • Deductible home buying expenses: Several closing costs in a home purchase are also deductible, such as loan origination fees (points), prorated interest on a new loan, and prorated property taxes paid at settlement.
  • $250,000/$500,000 home-sale exclusion: Home owners who have lived in their home for two of the prior five years prior to its sale do not have to pay income tax on the majority of their profit — $250,000 for single home owners and $500,000 for married homeowners who file jointly.
  • 14 days of free rental income: Home owners can rent the home up to 14 days during the year and pay no tax at all on the rental income. Source: InmanNews.com
Daniel Flannery First United Bank 7424 S Yale Tulsa, ok 74136 dflannery@firstunitedbank.com (918) 636 – 1243

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