Kathy's Real Estate

Know your credit numbers before you look for that home you want to buy

2009-05-19T15:22:00.000-07:00

Do you know how the credit agencies assess your credit worthiness--which is translated into your credit score?

Here's what I learned from a lender who looks at these things all the time:

The three credit bureaus divide your score into different elements, assigning a percentage of importance to each. For example,
Your payment history is 35% of your score and represents a total of 297.5 possible points
The length of your credit history is 15% of your score and represents a total of 127.5 possible points
New credit is 10% or a total of 85 possible points
The amount you owe is 30% for a total of 255 possible points
and the type of credit used is 10% for a total of 85 possible points.

I also learned that problems that might have affected your credit score, probably won't hurt you all that much after they are older than 24 months. And, here's another suggestion: if you have a credit card you haven't used in a while, do NOT cut it up. That card relates to your credit history. The longer that credit history, the better!

Finally, you are entitled to request one free report from each of the three credit bureaus once a year at no charge to you! It's a good idea to do that--if only to make sure that someone else's bad credit has not erroneously been attached to your name. Knowing your credit score can help you make a decision based on knowledge rather than guesswork or what you wish is the case.

Questions? Call your favorite lender for details.

Looking for a job?

2009-04-03T12:41:00.000-07:00

According to the US Bureau of Labor Statistics most recent jobs report, 10 cities are the places to look to find a job. Of those ten, Seattle is one!

People working in Seattle are often seeking less costly housing. The Bellingham/Whatcom County area is one place where commuters are settling. It's a straight shot down I-5 to Seattle from our area.

Come see why so many people are buying here, even though they are working elsewhere. And, if you are a telecommuter (or have that capability), you can still call Seattle your workplace even as you conduct your business in your jammies while watching the birds at the birdfeeder or the kids on the deck!

2008 Ski-to-Sea Parade

2008-05-27T12:03:00.000-07:00

In 2007, the local Keller Williams Western Realty office joined the parade with a fabulous float featuring various 50's songs and TV characters and swept the field, taking all three grand prizes, including that for the commercial division.

This year, we entered our new float, which featured a magic carpet (Transportation was the theme for all floats and other parade entries) and we won the grand prize for the commercial division again!

Our participation is one of the many ways in which we support our community. If you haven't already enjoyed the many festivities surrounding the Ski-to-Sea weekend over the Memorial Day weekend, why not join us in 2009?

Semiahmoo Waterfront Living!

2007-12-31T11:06:00.000-08:00

Is your dream to live overlooking or near a golf course? This beautiful community is minutes from the Canadian border and will nicely fill the bill. The 18-hole golf course was designed by Arnold Palmer and was rated Washington State’s #3 public course by Golf Digest in 2005. Degree of placement challenges golfers at all skill levels and the course includes a driving range, and putting and chipping greens.
Homes range in price from $350,000 to more than $2 Million and include cozy cottages nestled in the trees as well as manor homes with more than 4,000 square feet of elegant ambience.

Waterfront Homes
Gated Semiahmoo is a community with many homes that overlook the saltwater, providing expansive views of Drayton Harbor and/or the Straits of Georgia, and several of the islands between the mainland and Vancouver Island, British Columbia. Home prices range from around $600,000 t0 over $3,000,000. Park you boat at the Semiahmoo Marina, and enjoy waterfront living throughout the year.

Semiahmoo Condos
Have you decided that you want to buy a condo? As a second home? For year-round living? Gated Semiahmoo could be your first choice. Several such groupings overlook the Semiahmoo Golf Course; still others offer privacy as they nestle among the native Western Red Cedars, where birds of all kinds abound. And other clusters overlook Drayton Harbor and nearby White Rock, BC across the bay. Prices for these condos range from $200,000 for a studio to more than $1 million for condos with more than 2,000 square feet of living space!

For a personal showing, or to see what is available in this beautiful Semiahmoo area, contact me today!

The TRUTH about Today’s Market

2007-10-13T18:38:00.000-07:00

Many media outlets have generated doom and gloom stories about the real estate market. While the situation may be less than terrific in some areas of the United States, such conclusions do not apply to Washington state. What is happening in Florida, southern California, and some states in the Midwest does not represent the market in Washington. Consider the following facts:

1) The market for homes in Washington is not keeping pace with the growth in population, which continues to climb at about 1.8% per year. Expected population growth is anticipated to increase by another 1 million people over this decade and to reach 6.8 million by 2010. Approximately 2/3 of that growth is anticipated to result from in-migration; the remainder represents expected growth of families already living in Washington state.

2) The real estate market in Washington state is a stable and responsible marketplace for home buyers.

3) Foreclosure rates today are the same as they were 10 years ago. Fewer than 1% of all mortgages end in default in Washington state. Although subprime, adjustable-rate loans represented 20% of loans nationally in June 2007, they represented only 6% of home loans in Washington state.

4) Home appreciation in Washington continues to outperform the rest of the nation with year-to-year price increases every quarter since Spring 1995.

5) Home prices in Washington state have increased, on average, 8.1% since last year. Some counties have experienced much higher price increases: for example, Chelan county has experienced a 29.8% increase, Okanogan county 24.5%, Douglas county, 22.2%, and Lewis county 19.3. In Whatcom county, Bellingham continues to experience 4-5% price increases over 2006. In some neighborhoods, price increases approach double digits.

6) The demand for median-priced homes continues to grow. In fact, the housing shortage is forcing some families to take on more debt than they is desirable; others are compensating with longer commutes than preferred, and affordable housing continues to be an issue of concern to many.

7) Loans continue to be available for all manner of purchases, including no down packages, VA, and FHA loans, and both first and second conventional programs.

8) Interest rates continue to hover at around 6.25% for borrowers with good credit. The so-called “liar loans” have disappeared in favor of the appropriate expectation that a borrower should be able to show proof of income and ability to pay a mortgage at the time of application and thereafter!

9) In Bellingham/Whatcom county in the first nine months of 2007, 3151 home and condo purchases occurred. In 2006 in the first nine months of the year, 3404 homes and condos occurred. Thus, 2007 represents home purchases only 7.5% lower than occurred in the first nine months of 2006. Does this qualify as doom and gloom? Not at all.

10) Buyers have many homes to choose from in all price ranges; in established and new neighborhoods; in town and in the country; on small lots, large acreages, and everything in between; and, from little studio condos to homes that truly can be called mansions.

How "Green" is Your Mansion?

2007-08-08T13:37:00.000-07:00

The average US household spends approximately $1,700/year on energy in the home. How is this divided? Approximately 1/3 covers heating, 1/3 relates to lighting and appliances (not counting refrigerators), and the final third on air conditioning, water heating, and refrigeration. Thus, the first place energy-efficiency experts check is a home’s “envelope;” that is, how tightly the house is sealed. A “leaky” house costs many dollars in lost energy consumption.
With bows to Kermit the frog, going green at home is more likely these days, and one doesn’t have to wear tie-dye, either! Below are several different elements of the “green” revolution that homeowners are considering. Perhaps one or more of them would work for you!

1) Insulation – Common escape points of heating and cooling occur at openings for plumbing, wiring, and recessed lighting, as well as basement cracks, attic vents, and plumbing stacks. Duct leaks alone have been found to reduce household energy efficiency by as much as 20 percent. Step one in becoming more energy efficient is to reduce escape points by optimizing the home’s envelope.

2) Lighting – Compact fluorescent light bulbs are all the rage in some areas. Their benefits? They last 8-15 times longer than incandescent bulbs, use 2/3 less energy and save approximately 2,000 times their own weight in greenhouse gasses. Are they worth it? Absolutely! Some homeowners have switched completely to these CFL bulbs; others are gradually replacing incandescent bulbs with CFL bulbs as the former burn out. Whatever your choice, the more CFL bulbs in place, the lower each homeowner’s contribution to global warming from greenhouse gas emissions.

3) Know the R- and U-value of your windows. R-value measures how much heat a window retains; U-value indicates how much heat passes through. To cut cooling energy needs, low-E (emissivity) windows have a special coating that lets in light but reduces heat transfer. In cooler climates, gas-filled and vinyl windows will cut heating costs.

4) Recycle – Use a local recycling drop-off center if your trash service does not already include recycling pickup. You can reduce the amount of material to be recycled by reducing your consumption of packaging materials, containers, magazines, and newspapers. Also important: know where to safely dispose of chemical waste (used car oils), old televisions, computers, fax machines, batteries and similar materials.

5) Roofing – using roofing materials that reflect solar radiation and thus reduce the absorbance of heat will cut a home’s cooling energy needs 10-30 percent. Not only does this help the individual homeowner; it can also reduce the “urban heat island” that is the result of densely-populated areas whose neighborhood roofs absorb heat and then reflect it into the atmosphere. Cool roofs cost about the same (or only a bit more) than the “uncool” competition; thus, homeowners can quickly recoup any cost differences in energy bill savings.

6) Solar power— Whether it is active or passive, this is the “green” form of that has been around the longest. Some people go passive, meaning they place the windows in the home to take advantage of the heating potential as sunlight warms brick walls, tile floors, and the like. Using active solar can be more costly, although local, state, and federal tax credits can substantially cut the upfront costs. Most active solar projects involve solar roof panels. Flat ones are rarely seen from the street, but are more costly than those that are installed at a slant. Persons with active solar systems may actually make money by selling their excess power back to the local power company. Tax credits up to 30 percent, capped at $2,000, are available for qualified photovoltaic systems, fuel cells, and solar water heating systems. Such credits are not possible for solar heating systems for hot tubs or swimming pools.

7) Square footage – Although the average size of a single-family home has increased steadily in the past 20 years to about 2,400 square feet, more homeowners are now rethinking the overall cost of “mini-mansions” in light of their purchase price and their heating and cooling costs. Superior design is linked to a home’s character, functionality, details, and improving how people experience their homes. Newer homes that are well-designed to maximize light and space are gaining in popularity—for families of all sizes, not just down-sizers.

8) Water – Use a tankless water heater; it heats the water as it is needed. Such a unit costs between $500-$1000 and saves $100-400/year in heating energy, thus enabling the homeowner to recoup the upfront costs in a relatively short time. Another option might be a solar water heater. Water-saving showerheads also are reduce water usage. Close to two-thirds of a home’s water-heating energy goes to showers.

9) Wood – Some is sustainable and eco-friendly. Look for the fsc.org logo for the Forest Stewardship Council logo. Wood products with this logo were obtained from forests that meet standards for responsible management. Some wood has been recycled or salvaged; many green builders are now using recycled or reclaimed wood for floors, furniture and many things in between!

Beat the competition: "stage" your home

2007-07-14T10:47:00.000-07:00

Has your listing agent suggested that you “stage” your home prior to putting it on the market? Have you been encouraged to stage it because several weeks have elapsed with no forthcoming offer? Have you concluded that “staging” is that little “extra” that will elevate your home above the competition?

If so, focus on the following “looks” for different rooms:

The living room – if there is a key feature, such as a fireplace, arrange furniture to focus on the fireplace.

If hardwood flooring is a positive feature, use a small area rug to call attention to it.

Enhance light from outside by keeping window coverings to a minimum.

Reduce distractions by removing bookshelves and their contents or reducing same by at least half.

The home office – if cluttered with more than a few pieces of furniture, open up the traffic pattern from entry to windows (light sources).

Remove all but one or two pieces of furniture.

Use a contrasting accent piece on one wall to highlight one “use” area (if you have both a desk and a sitting area in the room).

The master bedroom – consider the color of the room; it should have a restful, soft color.

The carpet should be in neutral shades, the better to “fit” with the buyer’s furnishings.

Open the traffic flow to key areas, such as the master bath and the closet/storage areas.

Keep wall decorations to a minimum and depersonalized (i.e., no family pictures).

In all rooms, consider whether each piece of furniture is necessary. Less is more; that antique end table you inherited from Grandmother may be valuable to you, but if it doesn’t fit with the one couch you leave in the living room, take Grandma’s piece with you when you leave or put it in storage until the home sells.

Key elements include…
light (from the windows) in addition to well-placed interior lighting;
all walking areas, including stairs and their landings should be free of stopping points, such as small tables or similar decorations;and,
neutral colors with contrasting elements such as occasional pictures or carefully placed plants will show well.

Staging does not require furniture in every room; if the home is going to be vacant, concentrate on the living room, master bedroom, and one other center of activity, such as the kitchen, family room, or office. The point is to show how the room might be used without overwhelming the buyer with the seller’s personal “stamp.”

Bellingham Named “Best” – and Why!

2007-07-08T20:48:00.000-07:00

If you are considering moving to Bellingham, Washington, and people you know wonder why, you might want to refer them to the following sources, all of which named Bellingham “best”—for a variety of reasons. And, the list of mentions continues to grow….

September 2001 - One of the top ten “dream towns” - Outside Magazine

Spring 2003 - Among the 15 top “dream towns” for boomers - AARP Magazine

May 2003 - One of the 50 best small cities in which to live (ranked 33rd) - Men’s Journal

August 2003 - Best place to retire – CNN and Money Magazine

September 2004 - Among the Top Ten Adventure Towns - National Geographic Adventure Magazine

November 2005 - Among the Top Ten Dog-Friendly cities – Dog Fancy Magazine

February 2006 – Best Places for active seniors to live – Where to Retire Magazine

April 2006 - Bicycle Friendly Community (awarded silver level by the League of American Bicyclists, the only city in the Pacific Northwest with this designation)

May 2006 - Cleanest air nationwide (among top 11 cities, for the 6th year in a row) - American Lung Association

May 2006 - Fifth hottest boomtown under 150,000 population, based on job growth – INC Magazine

August 2006 - Best paddling town in the USA – Outside Magazine

August/September 2007 - One of the 8 great places people have never heard of – Mother Earth News

Home Buyers’ and Sellers’ Closing Costs

2007-07-08T20:33:00.000-07:00

When buying or selling a home, the costs of the home are not all that must be paid for. Below is a list of items that buyers and sellers can expect to pay in most transactions. Obviously, if a buyer is paying cash (not securing a mortgage on the property), those costs relating to a loan would not be required (marked by an asterisk [*]).

Buyers’ fees
1) Document preparation (if required)
2) Notary fees (if required)
3) Recording fees
4) The escrow fee (if required only of the buyer or half of same if split between buyer and seller)
5) Termite inspection (if required)
6) Homeowners’ association transfer fee (if required)
7) Any new loan fees (except those paid by the seller)*
8) Interest charges on the new loan from the date of funding to 30 days prior to the first payment date*
9) Home warranty (if written into the contract)
10) Buyers’ title insurance premium
11) Fire insurance premium for the first year
12) All prepaid deposits for taxes, insurance, private mortgage insurance*, and the like

Sellers’ fees
1) The owner’s title insurance premium
2) The escrow fee (if required only of the seller or half of same if split between seller and buyer)
3) Notary fees (if applicable)
4) Any loan fees required by the buyer’s lender (if included in the contract)*
5) Pay-off of all loans including accrued interest, statement fees, reconveyance fees, prepayment penalties (if they apply)
6) Termite inspection (if required)
7) Home warranty (if written into the contract)
8) Any judgments, tax liens, and the like on file against the seller or the seller’s property
9) Recording fees to clear all documents of record against the seller
10) Prorated and delinquent taxes unpaid at the time of title transfer
11) Any unpaid homeowner association dues
12) Any bonds or special assessments (if written into the contract)
13) Real estate commission

If you have questions about these or other costs, feel free to contact me at realestate@kathyauerbach.com for additional information.

Save Energy, Save Money

2007-07-08T20:14:00.001-07:00

With sensitivity to global warming issues on the news almost daily, it is important to consider how each of us can save energy and do our part to reduce greenhouse gases, and the like. Here are some great ideas for saving energy and for saving money at the same time!

The Federal Energy Policy Act of 2005 allows homeowners to claim up to $500 on their federal income taxes for qualified energy-saving improvements—as long as they have placed them in service on or before December 31, 2008. Here are some items that qualify:

• Central air conditioning units that meet the highest tier standards set by the Consortium for Energy Efficiency (CEE; www.cee1.org). These standards are higher than the Energy Star (www.energystar.gov) standard.

• Upgrades to your home that include such items as insulation, replacement windows, and sealing ducts—which retain cool air—can earn the credit if qualifying products are used. Check the following websites for additional information: www.naima.org, www1.eere.energy.gov, www.efficientwindows.org, and www.energystar.gov.

• Fans for cooling and heating systems that consume no more than 2% of the system’s energy use also can qualify. The Gas Appliance Manufacturers Association marks such units with an italicized “e” in its Consumer’s Director of Certified Efficiency Ratings (see www.gamapower.org).

• Appliance manufacturers must certify that their equipment meets the necessary specifications. Ask for a copy of this certification when you purchase a new appliance and keep the certification on file in case the IRS questions your claim.

• Finally, the $500 credit applies to each improvement made in the two years before December 31, 2008; thus, if you take a $350 credit in 2007, you are still able to obtain a $150 credit in 2008.

• To learn more about the Energy Policy Act of 2005, go to the Tax Incentives Assistance Project at www.energytaxincentives.org.

Neighborhood Information and Where to Find It!

2007-07-08T20:10:00.000-07:00

Homebuyers considering a particular part of the country, county, city or neighborhood often want "the facts, ma'am!" before writing an offer on a given home. The internet is a great place to obtain all manner of such interesting data.

If you want information about a particular school or district, begin at The National Center for Education for demographic information on schools and school districts. Then go here for a given school's student-teacher ratio, and race and ethnicity entrollment. Check out these two sites as well: http://www.greatschools.net/ and http://www.schoolmatters.com. I also have links on my website under "Neighborhood" (left side of my home page) for every school district and school in Whatcom County.

Crime statistics, in particular sex offender information, can be had at the National Sex Offenders Registry site: http://www.familywatchdog.us/. This site enables you to enter a given street address and will generate a map showing where sex offenders live. For very specific information, call the local police department in the city where you are thinking of moving.

If you want to know about pollution indices, the location of hazardous waste sites, and similar information, go to the US Environmental Protection Agency (USEPA) site, http://www.epa.gov/epahome/commsearch.htm. For air and water quality information, go to http://www.scorecard.org/.

Finally, for general information about particlar cities and counties, check out the US Census Bureau website. It contains all manner of socioeconomic data and other details. Just click on http://quickfacts.census.gov/gfd/index.html.

Happy searching!

First Step to Financial Freedom: Become Debt-Free

2007-05-25T13:18:00.000-07:00

Are you tired of worrying about the money you owe? Here are four steps to becoming debt-free!

Step 1: Stop adding to credit card debt. If you can’t stop using them, cut them up! Or, leave your credit cards at home when you shop; carry only cash. If you place yourself on a weekly allowance, you will become much more aware of the money you do spend.

If you have to use plastic, consider a debit card rather than a credit card. And, use only 2-4 credit cards rather than a wallet-full. Keep only those cards that you’ve had a long time and on which you have a positive credit history (because you’ve paid them on time). A few good accounts can boost your credit score. Too many cards with too much debt will lower your score.

Step 2: Look at those cards. Reduce your interest rate by asking for a better rate. If you can transfer the balance of a card with a higher rate to one with a lower interest rate, do so! Then pay on time. If you receive a card with a low introductory rate, do not accept it unless you can keep that rate for at least one year. Read the fine print: do not activate a card with hidden fees or costs.

Step 3: Reduce those balances. List each card, its existing balance, minimum payment required, and the interest rate. Pay down the card with the highest interest rate FIRST. If you have to pay the minimum on the other cards to pay off the high-rate card, do so. As soon as the highest interest rate card is paid off, use the same amount to pay down the card with the next highest interest rate and so on until you have paid off ALL the cards.

Keep one low-interest card for emergencies and maintain a zero monthly balance on it by paying it in full when the bill arrives.

Step 4: Once you are debt-free, think about investing the money you’ve been using to retire your debt. If you chose to live on less while getting rid of debt, you can continue to do so while building an investment account.

If you think this can’t be done, think again! Visualize how you will feel being debt-free, paying cash for every purchase, and looking forward to a retirement without worrying about creditors.

One last suggestion: to stop the flood of credit card offers that hit your mailbox, call 1-888-5-OPTOUT (or 1-888-567-8688).

Check Your Credit Score - for Free!

2007-05-15T20:50:00.000-07:00

As of 2005, consumers may obtain a free report from each of the three credit bureaus every 12 months. To monitor your score, select one of the following bureaus—Equifax, Experian, and TransUnion—and every four months, as one of them for your free credit score. In the second four months, ask a different bureau for your free credit score, and four months later, do the same with the third bureau. As long as you request the credit score from each bureau only once every 12 months, you can receive their report free!

Why is this important? The US Public Interest Research Group found in one study that up to 79% of credit reports contain errors, including duplications and other problems. Some are serious enough to negatively affect a consumer’s opportunity to obtain credit. By monitoring your report, you can check to see that errors have been corrected that you have discovered! When a bureau is told of an error on their report, they have 45 days to correct the problem; most do so within 15 days. However, the same error can appear in different reports; thus, monitoring one’s credit report throughout the year by checking each of the bureaus’ reports can reduce the likelihood that a discrepancy will continue to appear.

To report a problem with your credit report, call toll-free: 877-322-8228 or write a letter to the Annual Credit Report Request Service, PO Box 105281, Atlanta GA 30348-5281. Even faster is to report and dispute an inaccuracy via the following website: www.annualcreditreport.com. This site is secure and thus safe to provide personal information on the authentication form sent to you to report recent transactions, the size of outstanding loans, and the like. Once authenticated, your credit report will appear onscreen. Do not close the window without first printing off the report. When you close the window, the report is gone and along with it, the opportunity for your free report!

One other thing: husbands and wives are viewed as individuals; thus, each spouse may obtain a free report from each of the credit bureaus in a given 12-month period. Finally, a personal query is considered a “soft” pull, and thus does not reduce one’s credit score.

Attention! First Time Home Buyers

2007-01-29T16:43:00.000-08:00

Eric Bramlett is a Real Estate Broker in Austin, Texas. He suggests that first-time home buyers consider the following seven tips before signing on the dotted line. Why? Buying a first home is a big step, and requires several serious decisions. You will feel less intimidated when you break down the process of purchasing a home into manageable steps.

1. Begin by asking yourself a question. Will you live in your next home for at least 3 years? If ‘yes,’ purchasing a home makes sense rather than continuing to rent. With average appreciation, you’ll break even on closing costs after two years and you will begin making money at year three.

2. You don’t need a down payment. A hefty down payment is not required. And, you don’t have to have perfect credit, either. Zero down payments are still common, and many banks will jump at the chance to loan you 100% of the home’s value.

3. Get Pre-Qualified. This is a very easy, and important step. In many cases, this can be done over the phone, gives you the buying power to know what you can offer and before you get in the car with your realtor, you’ll know what that new home will cost each month. Knowing your monthly payment will tell you the price range you need to explore.

4. Contact a Real Estate Professional Pronto! Realtors® have access to approximately 99% of the homes for sale in a given market. Your agent will share her/his knowledge of the market and help you make the best possible offer—which isn’t always the highest offer! Choose a Realtor® who listens to you. Her/his insight will be invaluable.

5. Make a List of “Must Have’s” and “Wants.” Your search will be easier and you will be more confident in your decision if you organize your search by making two lists: one includes items that you MUST have—such as the price, the size, the school district, commuting distance, and the like. Your second list of “wants” are items that would be nice to have, but that you can live without. If two of you are buying together (married or not), your lists should reflect what you BOTH are looking for.

6. Pick your favorite neighborhoods. You can change things in the house, but you can’t move it. Drive through different areas and tell your agent what areas most appeal to you and why. Then, concentrate on finding a home in that neighborhood that fits your “must have” list.

7. Make your decision. Your home is likely your largest investment, and making an offer can be scary. However, if you follow the above steps and you’ve found a home that meets your “must have” desires and most of your “wants,” it’s in the right neighborhood and within your budget, go for it! Don’t let another buyer get what would make you happy.

Renters - Stop paying someone else's mortgage!

2007-01-10T12:07:00.000-08:00

Are you or someone you know renting a home or condo? If so, did you realize that renters pay the owner's mortgage? And the owner gets all the benefits, including being able to deduct property taxes and mortgage interest (even when most or all of the mortgage payment is paid by the renter!) from his tax liability, and depreciation.

If your monthly rent is $600, after one year, you will have paid $7,200 of your landlord's mortgage; after 3 years: $21,600; after 5 years, $36,000.

If your monthly rent is $900, after one year, you will have paid $10,800 of your landlord's mortgage; after 3 years: $32,400; after 5 years, $54,000.

One last painful example (for you, not your landlord): if your monthly rent is $1500, after one year, you will have paid $18,000 of your landlord's mortgage; after 3 years: $54,000; and, after 5 years, $90,000!

Wouldn't you rather use that money to pay your own mortgage? Instead of throwing your money away on rent, build equity in a home of your own. Interest rates continue to be quite low; many homes and condos are currently vacant and eager for a loving homeowner. And, sellers are waiting for offers right now. Call me and we'll talk!

Private Mortgage Insurance and Your 2007 Tax Deductions

2007-01-02T17:48:00.000-08:00

Purchasing a home with little or no down payment can benefit buyers. However, Private Mortgage Insurance (PMI) is required of all buyers whose down payment is less than 20% of the purchase price. And, the price these buyers pay for PMI is a premium that lenders require to protect themselves from financial loss should the buyer default on the loan.

Previously, PMI was not tax deductible and often represented a sizable increase in monthly payments for the buyer. In order to get around this, many buyers opted for a 2nd mortgage, often at increased interest rates in order to avoid paying PMI. Why? Because the interest on the 2nd mortgage, while substantially higher than the 80% first, then became tax-deductible.

As soon as the loan balance in combination with appreciation in the value of the property exceeds 80%, private mortgage insurance can be removed. However, the lender will not alert the borrower to this. It is the homeowner’s responsibility to inquire.

Congress just passed a law changing the tax code to allow PMI to be claimed as a tax deduction. There is a catch or two, however:
· The deduction only applies to households earning less than $100K annually;
· If the annual income is less than $110K, but more than $100K, a proration table identifies allowable deductibility in that PMI;
· In order to use the PMI tax deduction, the buyer must itemize deductions when computing their tax liability for 2007; and,
· This tax deduction is good for 2007 only; Congress must enact another law (or write an extension to the new one) for the deduction to be carried over to 2008 and beyond.

Is it worth it to itemize? One rule of thumb suggests that, if the mortgage is around $130,000, itemizing is worthwhile. For specifics about this new opportunity, it is wise to consult a tax professional. I know several, should you wish a referral.

Check out my January newsletter for more information on PMI and the 2007 tax deduction.

Bellingham Home Values Increase

2006-12-21T17:02:00.000-08:00

Homeowners in Bellingham and Whatcom County are experiencing an increase in home valuations as a result of several factors. They include:
· Scheduled reassessment, which occurs every four years
· Self-imposed taxes in the form of new levies or bond issues recently voted into existence. These may include school levies, increased levy support for specific fire districts, the Greenways levy (for Bellingham), construction of the new City Hall in Lynden, and various other city-specific levies or bond issues within Whatcom County; and,
· The number of taxing districts that affect a given property.

Home revaluations do not necessarily generate a property tax increase. Why? Because taxes are levied against a group of properties (such as a taxing district), not by a specific home or property within that taxing district, according to Whatcom County Tax Assessor, Keith Willnauer. Homeowners wishing to appeal their increased home valuations may do so through the end of December, 2006.

Washington state limits property tax increases to one percent annually. Some taxing districts elect not to request an increase each year; Whatcom County was one such taxing body that did not request a tax increase for 2007, according to the December 21 issue of The Bellingham Herald.

Alert to Home Owners with Septic Systems

2006-12-19T16:41:00.000-08:00

Welcome to my blog! This site will regularly post important information for home owners, renters, buyers, and sellers. Feel free to comment or simply read and be informed!

As of April 2, 2007, all homeowners in Whatcom County with on-site septic systems will be required to have their system inspected annually, or once every three years if theirs is a gravitational system. The required inspection must be completed by a Whatcom County Certified Inspector based on the county's standards found on their "Report of System Status" form.

Prior to the sale of any property with a septic system, this report must be on file with the Whatcom County Health Department, and must be provided to the prospective buyer in advance of completion of the sale.