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What Should You Expect in 2011, Part 1

Forecasts for the Economy and Employment – Their Impact on the Housing Market

The economy and housing markets have seen some rough times the last couple of years. But the good news is last year we saw some stabilization in 2010 – and 2011 should continue on the road to recovery.

To help you prepare for the coming year, I put together a two-part overview of what to look for in 2011. In part one, I look at the big picture and discuss the outlook for the overall economy, the stock market, and the all-important employment market.

Then next month, i'll dig into what to look for in terms of the housing market, including home prices, the foreclosure crisis, new legislation that impacts the housing industry, and the direction of home loan rates in 2011.

Economic Outlook

Overall, the economy looks to have stabilized from the crisis situation a couple of years ago. Although there are still some global economic concerns in Europe, the U.S. economy appears positioned for continued growth and strengthening.

I see the United States' Gross Domestic Product (GDP) to finish the year up about 2.5% to 3% from where it ended 2010. This growth won't happen overnight, however, but instead will start out slow in the first half of the year and pickup steam in the second half.

Much of that growth should come from demand in other countries. Currently, the U.S. only derives about 12% of its GDP from exports. While that equates to a lot of money, it means that the U.S. relies less on exports than many other countries – and it means that there's room to grow. Already we've seen U.S. exports get back on track and they're primed for growth to countries in places like Asia and Latin America.

This is good news for the U.S. economy as a whole, as well as individuals because it sets the stage for growth while still allowing U.S. consumers to catch their breath. After all, the tough economic climate over the last couple of years has hit U.S. consumers hard and has forced many Americans to reprioritize their family budgets to focus more on their savings.

Stocks Make Their Mark

The stock market had a good year and saw some strong earnings in 2010, continuing its climb out of the financial crisis that began a couple of years ago. With the strong finish to last year, the stage is set for another good year – and we could see the S&P 500 grow another 7% to 10% over the next twelve months.

That said, the corporate earnings may look like they've slowed. That's because of the way that experts compare year-over-year earnings. For example, corporate earnings showed strong improvement coming out of the recession because they were compared to the extreme lows of the year before. However after a strong 2010, the increase in earnings won't be nearly as dramatic. So while the year-over-year increase may appear to flatten out, the important thing to focus on is that corporate earnings should show solid, steady improvement.

The segments of the market that can look for a strong showing in 2011 include energy stocks, global companies that specialize in high-tech equipment, and even steel producers which should benefit from global sales. Those segments should benefit from strong business spending around the world as the economy improves and companies start to reinvest and expand.

Labor Looks Ahead

The big economic picture is important, but millions of Americans are really focused on the labor market. Will they find a job? Will they keep their job? Those are some of the most important questions families face. And the good news is that for many families the outlook should be better in 2011.

Here's why. The good news for the overall economy and for corporate earnings in 2010 and heading into 2011 should help the labor market improve. Let's look at two of the factors that should influence employment in the coming months.

First, many companies have seen higher earnings over the last year but those earnings haven't translated into more hiring. Instead, companies have been cautiously waiting for signs that the economy was stable – after all, I have heard a lot of talk in the past about the possibility of a double-dip recession. In other words, full-time employment was held back by insecurity and fears of the future. Now that most economic reports appear to be on a steady climb out of the recession and confidence is increasing, many companies will be more willing to hire.

Second, during the last couple of years, companies were trying to keep their operations lean and efficient. That means that manufacturing companies worked hard to get the highest level of production possible out of their current work forces or by only hiring temporary or part-time employees. While that may have been a good move when the economy was questionable, it means that production has hit a ceiling.

But now that many retail companies are beginning to restock their shelves, manufacturing companies are seeing higher demand for their products. In order to satisfy that demand and increase manufacturing production, companies will need more people on the factory floor to satisfy demand, which will lead to an uptick in full-time employment.

Based on those factors, watch for the labor market to continue looking better in the coming months, with more noticeable improvements coming in the latter part of the year.

Unfortunately, we're not completely out of the woods yet in terms of the overall unemployment rate. While hiring will pick up, we need to see a net growth of 200,000 jobs each month just to absorb all of the new people entering the job market – and that's just to hold steady, so we'll need to see even better numbers for the unemployment rate to actually drop. Based on that, we won't see a noticeable drop in the unemployment rate until some time in 2012…and even then it will take a handful of years to bring us back to the lower unemployment rates seen before the recession.

The point is the job market is a work in progress and will take some time, but we will see hiring improve in the coming months – and that should help ease the burden for millions of Americans.

What Does All That Mean to Housing and Home Loan Rates?

Although people tend to talk about the economy, the stock market, and employment separately in the news, the reality is they're all related. For example, an improving economy leads to better corporate earnings and increased manufacturing demand, which in turn leads to increased hiring.

In addition, all of the aspects discussed above influence the housing market and home loan rates. One of the biggest influences is employment, so improvements in employment will be good for the housing industry. After all, people who are unemployed, under-employed, or are afraid of losing their jobs are less likely to purchase a new home.

In terms of home prices, a more secure employment market can help home prices stabilize, as fewer people are at risk of losing their homes to foreclosure. In addition, as we'll discuss next month, the improvements in the labor market should open the door for more first-time homebuyers to join the ranks of homeowners.

That said, it's important to remember that all real estate markets are local…and that means that there can be enormous variations across the country. In areas where employment is struggling, the housing market will continue to struggle as well. However, in many parts of the country where the bottom has been tested and employment is improving, we'll see the housing market on the mend in 2011.

But home prices and homebuyers aren't the only aspects of the housing market impacted by the direction of the economy.

As stated above, 2011 should look better than 2010 in many respects. But, good economic news is a double-edged sword, as it can lead to higher rates. That's right, good economic news can be bad news for home loans rates.

There's actually a pretty simple explanation for this seemingly strange phenomenon. But, you first need to understand two important financial concepts:

1. Big money managers – who are always in search of higher returns – avoid holding onto cash. So they invest in both Stocks and Bonds.
   
   
2. Home loan rates are actually based on the performance of Mortgage Backed Securities (MBS), which are a type of Bond.

When we put those two facts together, we begin to understand the relationship between good economic news and higher home loan rates.

Here's why: Whenever the economy is on fire and there are good economic reports along with positive economic news, investors tend to put more money into Stocks. That's because Stocks are more risky, but they generally offer higher returns. To do this, however, investors must remove some of their money from less-risky Bonds. This decreased demand in Bonds causes Bond prices to worsen, which causes home loan rates to rise.

I will dig into the forecast for the housing market and home loan rates more in Part 2 of this article next month. But for now, the important thing to note is that home loan rates have gradually been rising and that trend looks to continue in 2011.

The good news is that home loan rates are still extremely attractive and are still near historic lows…for now. So, if you or someone you know has been thinking about purchasing or refinancing a home, now is the time to get started as we head into 2011.

Stay tuned for Part 2 of this article next month, when I will unveil my detailed forecast for: home prices…the foreclosure crisis…new legislation that impacts the housing industry…and where home loan rates will end up in 2011.

Home Financing is Harder Than Ever! Tough Home Loan Guidelines. September 07, 2010

Buy a home today...Even with today's tough guidelines...Even with challenged credit.  Get started today.

Financing Your Home In Today's Economy is harder than it has ever been.  Wholesale Mortgage Source is approved by the Department of Housing and Urban Development to originate FHA Loans.  Call them for the LOWEST RATES AND FEES in California.  You choose...you win!

Wow, I Could Have Had a V8 And a Great Home Loan Rate!

You've probably seen a commercial for V8 where someone gets 'bonked' in the head for skipping their veggies. Well, with rates this low, the same could be true for many people with home loans.

For six weeks running, according to Freddie Mac, interest rates continue to nudge lower, bringing new all-time lows. Compared to the average 30 year fixed rate in August 2008, rates have dropped nearly 2.0%. Better stated, the savings on a $200,000 loan equates to nearly $4,000 pretax for someone in a 25% tax bracket.

In times where employment pay increases are harder to come by, opportunities to save money each month are equally as important. In many cases, saving money today is even more important.

Recent reports from companies like Kellogg and Colgate indicate that consumers are looking to save in many ways, including buying less expensive private label products. Just as was indicated in last month's issue of YOU Magazine, while what you make is important today, what you keep counts even more.

Cash In, Cash Out, Roll In and Roll Over
Saving money these days on your mortgage can and is being done in multiple ways and in some cases, not too typical from times in the past.

Cash In
One recent surge in those refinancing their mortgage has been to bring money to the table, also known as "cash in" or paying down the balance of the mortgage at closing. Freddie Mac states that 22% of refinancing borrowers chose to pay down the mortgage in the second quarter, up from 19% in the first quarter.

Cash Out
While more popular during the real estate boom, pulling cash out from the equity in your home can make a lot of sense for those with debt carrying higher rates of interest, particularly non-secured and non-tax-deductible debt like credit cards.

Many people took out, or were offered with their mortgage, a home equity line of credit. While many of these loans may be adjusting at rates below 5% right now, when interest rates resume their rise, the interest rate and minimum payments on these loans will be going higher. Wise consumers will be evaluating what their risk is for payment increases and act accordingly.

Roll In and Roll Over
Many consumers when refinancing "roll in" their closing costs when obtaining a new loan. As an example, say someone had a $200,000 loan and the closing costs would be $5,000. As opposed to paying the $5,000 at the closing table for the new loan, the borrower would simply obtain a new mortgage for $205,000.

As interest rates have dropped and some property values may not have increased, the ability for some people to add their costs to the loan balance has been limited by loan-to-value ratios.

That has not prevented many people from refinancing though. Check with your lender to see if they can do a No Closing Cost mortgage. A No Closing Cost loan will carry an interest rate that will be higher than a typical loan but you will be able to lower your payment without increasing your loan amount.

You Magazine spoke with Derek Egeberg, a mortgage professional who has had many clients choose this path recently. Egeberg states that many people "thought they were not going to be able to take advantage of the lower rates but have been able to lower their payment by utilizing loans guaranteed by the FHA and VA." He went on to state, "until someone picks up the phone, you just don't know what you can do and more important, how much you can save."

My Value Dropped…
Many people have thought that if the value of their home had declined, they would not be able to refinance without incurring PMI, even if they currently do not have it.

Loan programs that were released by the Obama Administration through the Home Affordable Refinance Program allow many loans that are owned by Fannie Mae and Freddie Mac to be refinanced without PMI, even when the loan amount exceeds 80% of the property value on the new loan.

Some loans can even be refinanced without the need for an appraisal through what is known as a "Property Inspection Waiver." Mortgage professional Ed Conarchy has had many clients save thousands of dollars a year through the special programs.

Conarchy says, "It's one of the best mortgage programs to come from the Administration and Washington. Until now, you would have never have been able to refinance a loan without PMI when the loan exceeded 80% of the value." He goes on to state that the program allows for most loans to go up to 105% of the appraised value.

What Now?
Recent estimates indicated that as many as 10-15 million homeowners could benefit from refinancing their mortgage at present interest rate levels. Many people may not be aware of the opportunities that exist for them, potentially saving thousands of dollars a year in payments or tens of thousands of dollars in interest paid over the term of their loan.

The best path to follow to see how you or someone you know could benefit would be to call me at 888-971-8326 x 2.

It's Your Money Why Not Keep It?

The economic realities of the past few years have taught people some valuable lessons. One of which is: It's not what you make, it's what you keep, that counts.

If you discovered that someone was stealing from you, how quickly would you act to stop them from doing it again? Would you act today, in a week, a month, or not at all? The odds are you would act sooner rather than later.

So here's a question for you to consider. Is your current loan stealing money from you? Recent estimates in the news have indicated anywhere from 30-50% of people could benefit from refinancing and lowering their interest rate and/or monthly payments on their home loan. According to multiple sources, home loan rates dropped to their lowest levels ever reported on July 1.

This month, I turn to contributing editor and national mortgage expert, Jim Sahnger, for a different perspective on why people should think more about acting now to save money. Read on as Jim shares a personal story about this important topic.

How Much is Too Much? 
Last summer, I was reviewing one of my online bank accounts and was a little perplexed. Not only was my balance lower than I expected, but many of the charges just didn't seem to register in my mind with anything I had purchased. At first glance, I saw that a few hundred dollars had been taken from my account.

Yep, you guessed it. Someone had gained access to my debit card information and went on a little spending spree. The first thing I did was check to see if I had lost the card but I still had it. The card was right in my money clip where it always was. I'm still not sure where or how the information was swiped.

Before even totaling the amount of the theft, though, I immediately called the bank and moved to have the account closed and the card shut off to eliminate any potential further loss. To say the least, I was mad and nothing was going to stop me from putting into place an immediate plan of action to keep what was mine.

When I finally discovered that someone had been popping my account for money, the toll was north of $2,000 even though I had only immediately recognized a few hundred dollars missing. In contrast to some stories, the thief did not run out and buy large ticket items. Instead, the thief tapped the account on multiple occasions, typically in amounts smaller than $100, apparently not to set off any alarms.

The scheme worked. The hits occurred over a 7-10 day period and actually funded what appeared to be a little road trip from South Florida to Maryland, covering fuel, meals and other things.

In many ways, I suppose you could say I was lucky. First and foremost, my bank made me whole. It took over a week but I was able to recover what was stolen from my account. Don't get me wrong, I was still out nearly 15-20 hours of time, but I did not bounce any checks, face embarrassing denials at cash registers, or any other potential issues from this.

But my eyes were opened to something. When someone steals from you, self-preservation kicks in and you act quickly to stop it. Procrastination is tossed aside and unless you have something that you simply cannot miss, you will drop most anything on your schedule to deal with the issue at hand.

Save It or Lose It. It's Still Your Wallet Getting Lighter 
Whether you are overpaying several thousand dollars a year for something or someone swipes cash from your wallet, the end result is the same. You are still out of the money.

The difference is that when someone reaches into your wallet, you experience and recognize the loss right away and consequently will react to stop it. But when you are overpaying for your mortgage, you are already in the habit of signing the check each month. To save money, you have to recognize that a change will put money into your pocket.

Regardless of when you last obtained a mortgage, the odds are you could put more money in your pocket, either today or over time.

On a $300,000 mortgage, a payment savings of $224 a month returns a savings of nearly $20,000 over five years and over $42,000 at 10 years when that difference is invested back into the loan. This is a lot of money and the savings differences are for loans involving a rate of 5.875% compared to 4.75%.

Act Now. How Much Money Are You Losing? 
You never know what lies in wait until you investigate your options. It's possible you could save money in your monthly payment, pay off your loan years ahead of what's currently scheduled, or a combination of the two. You don't want to find out too late that your existing loan has been and will be robbing you of money every month.

Call me at 888-971-TEAM x 2 to see what you can do to put some money back in your pocket.

Empowering Youth - Five Time Management Tips For Parents

Everyone is busy; especially parents, but you can't teach your child what you don't know.

Setting a good example is a key ingredient of parenting and improving your time management skills will go a long way to empowering your child.

Set priorities.

Take time to determine what you really want to accomplish. These are your priorities and if you are going to get things done, your tasks must align. Non essential activities have to be eliminated or at least moved way down your to-do-list. Realize that you only have so many hours in a day.

Hint: Do the worse things first (those tasks that you do not enjoy). Once you accomplish the hard stuff, the rest of your day is sure to be a breeze.

Learn to say NO.

You can't be everything to everyone. Get comfortable with your limitations and practice saying 'no'. You need to set realistic goals and use your priority list to maintain balance in your life. You are not a robot so remember to factor in some daily downtime.

Hint: Putting your "me time" on the family calendar will let everyone know when you are off limits.

Plan and take action.

Create long term plans, short time plans and will dos. Even planning things like your weekly menu will save on unnecessary trips to the grocery store. You can also benefit from having a big family calendar where everyone's activities can be seen at a glance.

Hint: Planning "will dos" a day before will keep you focused on the next day's top priorities.

Live in the moment.

Put your mind fully on the task before you. But when you rest, clearing your mind from thoughts of work will recharge your mental and physical battery. Spend time with the kids, read a book or take a walk on the beach. Work smart and play hard.

Hint: Set a specific playtime activity to reward yourself for completing your top 3 tasks each day.

Communicate. Delegate. Automate.

Parenting is not a one way street, it's a family venture. Don't forget to include your partner and let the kids take part too. Get help - where you can, whenever you can. Delegate and make things easier. This might mean getting a housekeeper, someone to manage maintenance of the house and yard, or even a grocery delivery service. Hey, if you have the resources to make things happen without you, why not.

Hint: Getting everyone in the house an alarm clock will take a lot of time pressure off of you.

5 Real Estate Scams You Need to Know About

Don't be duped by mortgage fraud. Here are a few common scams and the red flags you should look for in a transaction.

 

Mortgage fraud is pervasive: An estimated $4 billion to $6 billion in annual losses result from mortgage fraud, according to FBI reports. “An entire community can be damaged by mortgage fraud,” says Rachel Dollar, a lawyer from Santa Rosa, Calif., and editor of the Mortgage Fraud Blog. Mortgage fraud can lead to a spike in foreclosures, home values plummeting, and lenders raising their rates and fees to recover losses.

 

The crimes are often complex, involving several parties and occurring over multiple transactions. To protect you and your clients, educate yourself about mortgage fraud and be on guard for any warning signs in a transaction. You can start by reviewing these five scams.

 

 

1. The Foreclosure Rescue Scheme

 

The Scam: “Rescuers” promise cash-strapped home owners that they can save their home from foreclosure. The rescue, which involves paying upfront fees, can take multiple forms, such as the perpetrator obtaining a new loan on behalf of the owner or by having the owner sign over the home’s deed and then rent the home until they can repurchase it. Eventually, the home owner loses the home, either to foreclosure or the fictitious rescue company.

 

Red Flags: With foreclosure rescue programs, borrowers are often advised to sign over the title of their house to a third party, become renters of their home, not contact their lender, or send mortgage payments to a third party, according to Fannie Mae, which provides fact sheets on mortgage fraud.

 

 

2. Loan Documentation Fraud

 

The Scam: This fraud involves numerous schemes in which a borrower provides inaccurate financial information — such as about their income, assets, and liabilities — or employment status in order to qualify for a loan with lower rates and more favorable terms. Occupancy fraud is one growing area: Borrowers say they plan to live in the property when they actually intend to rent it.

 

Red Flags: Documentation may raise suspicion if the employer’s address is shown as a post office box, accumulation of assets compared to the person’s income appears too high or low, the new house is too small to accommodate occupants, the person has no credit history, or the application is unsigned or undated, according to Fannie Mae.

 

 

3. Appraisal Fraud

 

The Scam: A faulty appraisal — saying a property is worth more than what it really is — is connected to many types of mortgage fraud. It entails manipulating or overstating comparables, market values, or property characteristics in order to obtain a higher appraisal. The higher property appraisal, which generates false equity, is done by falsifying an appraisal document or using an appraiser accomplice to obtain the higher value.

 

Red Flags: Be skeptical of appraisals that are dated prior to the sales contract, list comparable sales that do not contain similarities to the property or are outside the neighborhood, the owner is not the seller listed on the contract or the title, or a third party participating in the transaction orders the appraisal, Freddie Mac warns.

 

 

4. Illegal Property Flipping

 

The Scam: This entails purchasing properties and reselling them at inflated prices. These scams usually involve faulty appraisals and inaccurate loan documents. The property is then refinanced or resold immediately after purchase for an inflated value. The home is purchased at a higher price, often by straw buyers working with the “flipper,” and eventually falls into foreclosure. 

 

Red Flags: Some key things to look for are rapid refinancing of a property; the seller recently having acquired the title or acquiring the title concurrent with the transaction; an appraisal that comes in too high; a property that was recently in foreclosure being purchased at a much lower price than its sales price; or the owner listed on the appraisal and title not matching the seller on the sales contract, according to Fannie Mae.

 

 

5. Short Sales Schemes

 

The Scam: Borrowers owe more than the current value of their home so they fake financial hardship and no longer make their mortgage payments. An accomplice of the borrower then submits a low offer to purchase the property in a short sale agreement. The lender agrees to the short sale, unaware that it was premeditated. The property, after being purchased at the reduced price, is then often resold at the home’s actual value for profit.

 

Red Flags: The borrower suddenly defaults on the mortgage with no workout discussions with the lender, an immediate offer is made to a lender at a short sale price, the short sale offer is less than current market value, or a cash back is offered at closing to the delinquent borrower (disguised as “repairs” or other payouts, for example) and is not disclosed to the lender, according to Fannie Mae.

 

You can report instances of suspected mortgage fraud to Stopfraud.gov.

Toward a More Perfect Financial Union

"All marriages are happy.  It’s living together afterward that’s difficult."

Anonymous 

Flags, parades, picnics, and fireworks.  July is the month we celebrate those traditions and institutions that make our society strong and free.

Before the Founding Fathers wrote their plan for “a more perfect union,” they did a lot of thinking, discussing, and a fair bit of arguing. Their plan for a new government had to rest on a foundation of communication, understanding, and trust. 

Open, honest, and thoughtful discussions about money are vital to all strong relationships, from colonies to couples. Just as the Founding Fathers met to discuss their issues, here are some guidelines for coming together with your mate to create your more perfect union:

1. Organize regular “money meetings” to discuss your financial situation, dreams and goals.  Use this time to brainstorm creative solutions to problems and generate ideas to improve your future.

2. Time your financial discussions carefully.  During the morning rush, late at night, or after a bitter argument are not good times to discuss financial topics.  A lazy Sunday afternoon, a quiet weekday evening, or during a leisurely walk are better choices.

3. Set realistic goals for your discussions.  You cannot change the past, spend the same money on two different things, or make your partner into a different person. Be clear about what you want to achieve.

4. Don’t be afraid to rehearse your financial discussions in advance. Love does not mean constant spontaneity.  Considering how and when to best approach your partner can make the difference between success and failure when discussing tough subjects.

5. If a discussion looks like it might become a fight, have a timeout.  It takes at least twenty minutes for the adrenaline rush triggered by an argument to subside.  Once your blood pressure has dropped, write out your position on a piece of paper.  Show it to your partner and use it to identify points of agreement and disagreement.

6. For women:  Men do not like to talk as much, as often, or about as many subjects as women.  This is natural.  Get to the point, suggest practical solutions, and be ready to take action. For men:  Women generally require more discussion and consensus than men do.  This is natural. Resist the urge to solve everything before your mate has talked through the problem.

Money is a tool for use in the pursuit of life, liberty and happiness. Try to make your money management tasks and your talks about them positive and safe for both partners.  By using these basic steps, your money partnership will grow and thrive with shared knowledge and open communication.

By Candace Bahr, CEA, CDFA and Ginita Wall, CPA, CFP

Buying an "As-Is" Home

If you're looking for a house that won't break your budget, or are having trouble finding the right home in a hot real estate market, buying a property "as-is" may be a viable option. However, the convenience of an as-is transaction may be offset by its lack of security, so make sure you know what you're getting before you buy.

The term "as-is" refers to a property sale in which no requirements are placed on the condition of the property. As-is properties typically come from homeowners who, for whatever reason, are more interested in getting the property off their hands as quickly as possible than in getting the maximum price.

Make an effort to learn as much about the property as you can before you buy. Many as-is sellers are motivated by time, but don't let the seller's eagerness to close the deal force you into a purchase you're not comfortable with. Even though the seller doesn't have to make repairs or guarantee the property's condition, he or she does have to disclose any known defects prior to the sale.

Home inspections can be important in purchasing a home, but they may also be a sticking point in an as-is purchase. The seller of an as-is property may not want to accept a home inspection contingency in the contract, but that transfers a lot of risk to the buyer. As a buyer, ask yourself if the home price discount offered by the seller is worth this additional risk.

On the other hand, if you've made the home sale contingent on a satisfactory home inspection (even though the seller is unlikely to pay for any required repairs), you can decide to walk away from the deal if the inspection turns up more problems than you bargained for.

While the seller and the buyer may both agree to the sale regardless of the property's condition, the same may not be true of the lender. Many loan programs, particularly those that are insured by the Department of Housing and Urban Development (HUD), will not lend money for properties that do not meet certain standards. These standards are not translated into any formal guidelines, and determining a given property's acceptability is largely a subjective process, but some of the basic requirements are:

• Proper sanitation
• Structural soundness
• Good interior air quality
• Presence of smoke detectors
• Lack of lead-based paint
• Safe water supply

If the property you're interested in meets all of your lender's requirements, you still need to consider post-closing expenses. If you've done a walk-through of the home, you will have noted any obvious defects or cosmetic flaws, but be prepared for problems that could lurk beneath the surface. Since an as-is transaction frees the seller of any obligation to make repairs to the home, you should make sure you have the cash needed to make any necessary repairs after you close.

If you're willing to accept the risks of an as-is purchase, you might end up with quite a bargain. Just make sure to keep your own interests in mind, and don't buy a discounted property that you don’t have the budget to make livable after you close.

To find out about home financing with the best rates and lowest fees with a lender directly licensed by the Department of Housing and Urban Development to originate FHA loans in addition to all kinds of financing, contact us today at 888-971-TEAM x 2 for your free consultation.

Pending Home Sales Crash, 30% Drop | Real Estate Crash 2.0 is NOW.

National Association of Realtors pending home sales data = simply epic decline in home sales.

…..30% decline in home sales…across the board, across the US..the real estate markets have crashed (again).

There should be no doubt that we are in a real estate double dip. Expect a continued sharp drop in home sales for June and July.

Watch this video and understand that this is the start of a new long term trend for housing. There will be no more governmental intervention on the level we have seen thus far. Don’t expect there to be another ’save housing’ program anytime soon. Like it or not, we are on our own.

What this means is that if you are under water in your home and a foreclosure is in the future...DON'T let that happen to you!!!  Do a Short Sale!  Some lenders have the short sale process down to two weeks!!!  Make sure you are using someone who has a short sale team, who have agents experienced in mitigation with the lenders, and who can actually get your home sold!!!  Email me to find out more or call our team at 888-971-TEAM x 3!

A Second Chance at Tax Savings

You've got about three years to amend your return, so go back and make sure you got everything you deserve.

Did you claim every tax break that you were entitled to when you filed your 2009 federal tax return this year? Now that the pressure is off and the April 15 deadline for filing your return has passed, it may be worth your time to give your return a thorough review. There were so many new tax breaks for 2009 that it would have been easy to miss a few. If you did, you may have received a smaller refund – or paid a bigger tax bill – than you should have. But you can set things right by filing an amended tax return now, which could put more money in your pocket in a matter of months.

Don't worry if you discover a simple math error, though. You don't need to file an amended return. The IRS can correct computation errors and will send you a notice if you owe more money or are entitled to a bigger refund.

Missing forms
Sometimes, the IRS will accept returns that are missing certain forms or schedules. For example, many taxpayers were confused by the new Schedule M used to claim the Making Work Pay credit – a 6.2% payroll tax credit worth up to $400 for individuals or $800 for married couples. (The Making Work Pay tax credit is phased out for high earners starting at $75,000 for single taxpayers and $150,000 for couples filing a joint return.)

Although most employees received the credit throughout the year in the form of lower tax withholding, you had to file Schedule M to claim the credit and adjust your tax bill accordingly. Retirees who received a $250 economic-recovery check or direct deposit in the summer of 2009 and who had earned income from a job in 2009 are also required to file a Schedule M. To avoid prohibited double dipping, retirees must deduct the $250 payment they received from the $400 Making Work Pay credit for a net tax credit of $150.

But the new Schedule M caused lots of confusion, and millions of people who should have filed one didn't. So the IRS took matters into its own hands. "Most of the time, we're going to pick up that omission," says Eric Smith, a spokesman for the IRS. "Normally, we'll send you a math-error notice showing the adjustment." If your refund is larger than you expected, it means the IRS computed the proper tax for you and included the credit amount in your refund. (Retirees with earned income who failed to subtract their $250 economic-recovery check may get a smaller refund than expected.) If you didn't claim the Making Work Pay credit and the IRS didn't adjust your refund, file an amended return to claim your extra cash.

Another new form – Schedule L – also caused some confusion. On this form, taxpayers who didn't itemize their deductions could claim an enhanced standard deduction for net disaster losses, sales or excise tax paid on the purchase of a new car after February 16, 2009, and a property-tax deduction of up to $500 ($1,000 for married couples filing jointly). If you missed one of those tax breaks, file an amended return.

Don't wait to claim the home buyer's credit
Another case in which you may want to file an amended return: You bought a new house in 2010 and qualify for either the $8,000 first-time home buyer's credit or the $6,500 credit for longtime residents who bought another principal residence. You don't have to wait until you file your 2010 tax return to claim it. Special rules allow you to claim it on your 2009 return as long as you signed a binding contract before May 1, 2010, and close on the home before July 1. Amend your 2009 return by filing Form 1040X. (You'll also have to file Form 5405, "First-Time Homebuyer Credit and Repayment of the Credit," and include a copy of your settlement sheet.)

Review education credits
There were so many new tax breaks to offset the cost of college tuition that it's possible you didn't claim the best one for your situation. Say you have a child who attended college as a freshman or sophomore last year in one of the seven midwestern states that were declared federal disaster areas following the devastating spring floods of 2008. (The affected states are Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska and Wisconsin, but not all counties in every state qualify.)

Depending on your income, you could claim the supercharged Hope credit for the midwestern disaster area, with a top credit of $3,600 for qualified students, rather than the $2,500 American Opportunity credit available to students elsewhere in the country. Caution: If you choose the Hope credit, you cannot claim the American Opportunity credit for any student in the same year. And while a portion of the American Opportunity credit is refundable if you owe no tax, the Hope credit is not. Tax-preparation software can help you figure out which tax break is best for your situation.

Check your filing status
Perhaps you are single and normally use the tax-rate tables for single individuals to compute your tax. But your daughter and grandchild moved in with you last year, and now you realize that you should have filed as head of household to take advantage of more-generous tax rates and claim the $1,000 child tax credit for your dependent grandchild. File an amended return.

Above-the-line deductions
Or maybe you're accustomed to filing a simple return using Form 1040EZ and didn't know that there are several tax breaks you can claim even if you didn't itemize your tax deductions. You need to use the right form. For example, non-itemizers can deduct up to $2,500 of interest paid on student loans and contributions to an IRA. Teachers and other educators can deduct up to $250 in out-of-pocket expenses for classroom supplies. You can claim the deductions on either Form 1040 or 1040A. If you moved to take a new job, you may be able to deduct your moving expenses on Form 1040. If you missed any of these tax so-called above-the-line deductions, file an amended return.

Mail your paperwork
Generally, you have three years from the date of your original return or two years from the date you paid the tax, whichever is later, to claim a refund. (You have seven years to amend a bad debt or loss incurred in that tax year.) Fill out Form 1040X, which you can download at www.irs.gov. Enter the corrected numbers and explain why you need to amend your original tax form. You don't have to redo your entire return; just make the necessary changes and adjust your tax liability accordingly.

Unlike your regular income-tax return, you can't file Form 1040X electronically. You can prepare it electronically but you'll have to print it out and mail it to the IRS. Figure it will take about 12 weeks to process your request. And you can't ask for direct deposit, either. The IRS will mail your refund check to you. If you are filing amended tax returns for several different years, mail each amended return in a separate envelope. You may also need to file an amended return with your state tax agency.

Reprinted with permission. All Contents © 2010 The Kiplinger Washington Editors. www.kiplinger.com