What to consider when making the final decision

As you find yourself heavily immersed in house-hunting mode, you may encounter a situation in which you're torn between two houses. Perhaps you and your spouse each have a favorite, or perhaps you both like two houses equally - or think you do.

Making a final decision and determining which house to make an offer on shouldn't be taken lightly. The decision should be made rationally and not guided by emotion.

Of course, you may not have the luxury of taking your time on deciding which house you'd like to pursue. You may be in a market in which homes in your price range get snatched up as quickly as they go on the market, perhaps even attracting multiple offers.

But in some situations, you may find yourself torn between two houses. Sometimes the easiest thing to do is take pen to paper and outline your family's needs, your budget, and the pros and cons of each house.

Some things you'll want to compare include:

• The neighborhoods. If the two final contenders are in different neighborhoods, evaluate the pros and cons. If you have kids and being close to a park is important, you'll want to consider that. How close are shopping, restaurants, church, and other services? Are the streets maintained? Do homeowners landscape and maintain their homes nicely? How long will your commute to work be?
• The schools. If you have school-aged children, you definitely want to consider the reputation of the neighborhood schools. You can usually find general district information and state standardized test results online. But once you're this deep in the process, you'll want to visit the schools and receive the information first-hand from school officials. You should also talk to teachers and parents.
• Crime. Go to the local police or sheriff department and ask about crime in your specific neighborhood. You might find theft or vandalism to be more prevalent in one area than another.
• The houses compared to others in the neighborhood. While it may boost your self-esteem to have the biggest house on the block, it's typically a better idea to stay away from purchasing the neighborhood monster. When it comes time to sell you'll find that the lower value of your neighbors' homes will shrink your home's value.
• Appreciation. If the two homes you're eyeing are in different parts of town or different neighborhoods, ask your real estate agent to retrieve sales of homes in those neighborhoods over the past few years. If one neighborhood shows an annual average 8 percent increase and another is skyrocketing at 15 percent, you may have your decision made.
• The sellers' situations. If you don't know already, ask your real estate agent how long each home has been on the market. Usually the longer a house has been listed, the better chance the seller will accept an offer lower than asking price. Conversely, if the house has been on the market for just a couple days, the sellers will probably wait for a better offer if you offer less than the listed price. Your real estate agent might also be able to dig up additional information about the sellers, like why they're selling. If it's a job-related move or a divorce, the sellers likely want to move as quickly as possible, meaning you have a better shot at them accepting a lower price.
• The houses themselves. If you haven't already, you should make a list of the amenities and attributes you want your house to have. If you want that first-floor home office, a large, open back yard for the kids, or a gourmet kitchen, be sure to include that on your list. Then, rate how each house measures up to each need on your list.
• Drawbacks. Likewise, make a list of the cons associated with each house and determine how much of a negative impact each will have.

As you carefully weigh all the factors, it might become clear that one house is more enticing than the other. Or, you may find the houses are still equally appealing. If that is the case, be sure you look at the homes more than once. You may notice something you didn't the first time around - something that could sway you one way or the other.

In fact, you should probably visit each home at least two more times, at different times of the day to get a feeling for how the house and neighborhood look and feel in the morning versus late afternoon or evening. Once you make a decision and an offer, you can take comfort in knowing you may still have a back-up if the deal falls apart.

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First, find a local agent that specializes in that area

Novices interested in buying foreclosed houses should find a good local agent specializing in that area, says Steve Berges, a seasoned renovator of distressed homes and author of real-estate investing guides including "The Complete Guide to Flipping Properties" (John Wiley & Sons, 2003).

He says many real-estate brokerages have agents who are experts on foreclosed properties. Some of them advertise that skill in local real-estate publications. Agents who work regularly with banks in finding buyers for foreclosed homes should be able to let you know what's available and guide you through what can be a complicated process. Try to find someone experienced in your market who can recommend an agent.

Another real-estate author, William Bronchick, whose books include "Flipping Properties: Generate Instant Cash Profits in Real Estate" (Dearborn Trade, 2001), suggests finding a local information provider to e-mail you regular reports on notices of default. He pays about $40 a month for one such service covering six counties. There also are national companies that provide such information, but sometimes their information is dated, Mr. Bronchick warns.

A good source of data on repossessed homes being sold by the U.S. government is the Web site of the Department of Housing and Urban Development (www.hud.gov). Information on available homes is updated weekly, HUD says.

Both authors warn that the pursuit of foreclosed properties is highly competitive in some markets and no sure ticket to riches. Berges says he invests in houses only if he is confident he can make at least a 15- to 20-percent return on his money. He wants a wide margin for error because the costs of rehabilitating and selling a house can be hard to predict. That furnace that seemed sound could conk out before you sell the house.

Aside from the cost of buying and fixing the house, you need to add up the likely cost of financing, insurance, taxes and any brokerage commission on your eventual sale of the property, Berges says. "It's not as cut-and-dried as you might be led to believe," he says, but it can be very profitable if you get it right.

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Buying a home is more affordable when you share the costs with friends and family

In today’s market, home prices are out of reach for many, but some are pooling their resources with a friend or family member to purchase a home they otherwise wouldn’t be able to afford. For young adults who can’t pay for a home on their own—or for family members who want to take advantage of the tax benefits associated with home ownership—co-buying is the best bet when it comes to buying a house.

"Neither of us had a big enough chunk of money to put down for a home in a desirable neighborhood," Brian Free told the U.S. News & World Report about his decision to purchase a home with his friend. "However, aggregating our resources allowed us to find a home that suited our needs."

As with any financial arrangement involving close friends or family, planning and careful consideration are needed. But with forethought and a little know-how, many of the common pitfalls can be avoided.

Choose how you will hold title

The decision on how to hold title determines who can sign documents and how the property is transferred in case of an owner’s passing. Co-buyers who aren’t married to each other may share a title as tenants in common (TIC) or as joint tenants with right of survivorship (JTWROS). Married co-owners may also take title via community property or tenancy by the entirety.

How do TIC and JTWROS ownerships differ?

When each co-owner has an equal interest (or share) in a home, a JTWROS applies, with one title held between all the co-owners. When a co-owner dies, his or her share goes to the other owners. Ultimately, the last surviving owner will own all the shares in the property.

The shares of tenants in common may be equal or unequal, and each co-owner has a separate legal title. In a TIC arrangement, there is no right of survivorship, so the home doesn’t go to the last surviving owner. Each co-owner can pass along his or her ownership via a will, meaning that the remaining tenants in common may find themselves sharing ownership of a home with someone they have never intended to.

Tenancy in common can be dissolved when one owner buys out another, the property is sold or one owner files a partition action to sell the home.

How are TIC and JTWORS ownerships similar?

In both tenancy in common and joint ownership situations, co-owners have equal rights of possession, meaning that each may occupy and use the property. If the home is rented, each co-owner is entitled to rental income from the entire property in proportion to the ownership share.

Before you buy, write a co-ownership agreement

Sharing the cost of buying a home can benefit all the parties involved, but it’s essential to determine ground rules before any money changes hands.

Co-ownership agreements are essentially the pre-nuptial agreements of home ownership: they lay out the relevant concerns of the parties involved. While it might be difficult to imagine problems when you’re excited to own a home with a friend or family member, these documents are important because they are the only way to resolve ownership issues aside from court proceedings. And when thousands of dollars are stake, it’s important to address the next three concerns.

What are the ownership percentages?

For joint tenants, this is easy: each co-owner has an equal share. Tenants in common may choose to divide the shares, perhaps based on the amounts contributed for the down payment.

How are ongoing expenses divided?

The division of recurring expenses such as mortgage payments, property taxes, insurance, utilities and maintenance costs should be spelled out in your co-ownership agreement. They may be divided to match the ownership percentages, or by the amount of time each co-owner will invest in improving or providing upkeep for the property. Consider setting up a joint checking account so that any co-buyer may draw from it in order to pay these bills.

What happens when one co-owner wants to sell?

When co-owners want to their interest in the house, they are not required to sell to someone approved by the remaining co-owners. However, a co-ownership agreement can grant the remaining co-owner the right of first refusal.

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Five steps to Successful Negotiation

Whether you're a buyer or a seller you want to succeed in the realty marketplace. That's natural and reasonable, but what are the steps you need to triumph?

Negotiation is a complex matter and all transactions are unique. Both sides—buyer and seller—want to feel that the outcome favors them, or at least represents a fair balance of interests. In the usual case there is a bit of bluff, some give-and-take, and neither party gets everything they want.

So how do you develop a strong bargaining position, one which will help you get the most from a transaction? Experience shows there are five basic keys which will determine who wins at the negotiating table.

1. What does the market say?
At various times we're in a "buyers" market, a "sellers" market, or a market where housing supply and demand are roughly equal. If possible, you want to be in the market at a time when it favors your position as a buyer or seller.

Because all properties are unique—it is possible to buck general trends and have more leverage than the marketplace would seem to allow. For instance, if you have a property in a desirable neighborhood with few sales, you may be able to get a better deal than elsewhere. Or, if you're a buyer who can quickly close, that might be an important negotiating chip when dealing with an owner who just got a new job 500 miles away.

2. Who has leverage?
If you're on the front page of the local paper because your business went bust—and the buyer knows it—you have little clout in the bargaining process. Alternatively, if you're among six buyers clamoring for that one special property, forget about dictating an agreement—the owner can sit back and pick the offer which represents the highest price and best terms.

3. What are the details?
A lot of attention in real estate is paid to transaction prices. This surely makes sense, but the key to a good deal may be more complex.

Consider two identical properties that each sell on the same day for $275,000. The houses are the same, the sale prices are the same, but are the deals the same? Maybe not. For instance, one owner may have agreed to paint the property, replace the roof, purchase a new kitchen refrigerator, and pay the first $3,000 of the buyer's closing costs. The second owner made no concessions.

In this example, the first house was actually sold at discount—the $275,000 purchase price less the value of the roof repairs, closing credit, and other items. If you're a buyer, this is the deal you want. If you're a seller, you would prefer to be the second owner and give up nothing.

4. What about financing?
Real estate transactions involve a trade—houses for money. We know the house is there, but what about financing? There are several factors that impact the money issue:

Has the buyer been pre-qualified or pre-approved by a lender? Meeting with a lender before looking at homes does not usually guarantee that financing is absolutely, unquestionably available—a loan application can be declined because of appraisal problems, title issues, survey findings, and other reasons.

• But, buyers who are "pre-qualified" or "pre-approved" (these terms do not have a standard meaning around the country) at least have some idea of their ability to finance a home and know that they are likely to qualify for certain loan programs.
  The result is that pre-qualified buyers represent less risk to owners than a purchaser who has never met with a lender. If the seller accepts an offer from a buyer with unknown financial strength, it's possible that the transaction could fail because the buyer can't get a loan. Meanwhile, the owner may have lost the opportunity to sell to a qualified buyer.
• The lower the interest rate, the larger the pool of potential buyers. More buyers equal more potential demand, good news for sellers.
  Alternatively, high rates or even rising rates may drive buyers from the marketplace—and that's not good for anyone.
• It used to be that downpayments were a major financing hurdle—but not anymore. For those with good credit, loans with 5 percent down or less are now widely available. In fact, 100 percent financing, mortgages with nothing down, are now being made by conventional lenders. Reduced downpayment requirements are good for both buyers and sellers.
  5. Who has expertise?
  Imagine you're in a fight. The other guy has black belts in 12 martial arts—and you don't. Who's going to win?
  Brokers have long represented sellers, and now buyer brokerage is entirely common. In a transaction where one side has representation and the other does not, who has the advantage at the bargaining table?
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You may save money in the long run

Looking for a new home can be exciting and frustrating. You can help alleviate the frustration by paying close attention to five key areas of the homes you're considering buying; it may save you money in the long run.

Don Walker is an inspector and owner of Ace Home Inspections. He says there are five areas in homes that he frequently reports problems with. They are electrical, foundation, plumbing, the attic, and landscaping.

Electrical
Walker says sometimes homeowners assume with newer homes that all will work just fine but that's often not the case. "I [inspected] a brand new house -- four years old but the electrical was all done incorrectly," says Walker.

Having a complete home inspection will help to rule out any problems and point out any areas of concern. However, even as you're browsing homes, buyers can start to make note of the key areas that Walker mentioned, such as the foundation.

Foundation Walker says a four-year-old home he inspected recently was already showing trouble signs which could result in a costly repair project. "It was a model home. What [the homeowners] did was plant trees for shade to make it look really nice, but they planted the wrong trees and they're going to crack the foundation and it's going to cut the property value down by $50,000," says Walker.

Walker says in the case of that home, the trees were causing micro-fractures in the tile in various locations of the home. "As you walk through the house, 21 feet in and 30 feet deep, there's just too much root invasion and it's going to ruin their tile," explains Walker.

He says some tell-tale signs with this home were the minor cracks in the foundation that were causing a lifting and separation of the foundation. Also, the windows were not opening and closing properly, "which means the foundation is moving."

However, just because you see cracks doesn't mean there is a foundation problem. "Most people don't understand that there are natural cracks in a house. That's why when we do an inspection report we have to look at it and say 'Okay, this is a typical crack and this one is an untypical crack,'" says Walker. He says some cracks may lead to other problems while others won't.

Plumbing Walker says another big area of concern is the plumbing. It's an area that you can't always spot as easily but it can create expensive repairs if plumbing issues go either undetected or are not properly fixed. "Mold forms underneath sinks when people have a leak and they fix the pipe but they don't take care of the mold," says Walker.

He says things like caulking the sink can help prevent mold. "That's my number one thing I always find -- bad sinks," says Walker.

He says that when you look at the sink, look behind it and most of the time you will discover a little crack. "What happens is, when you wash dishes or you wash your hands in the bathroom or the kitchen, the water gets in that crack and seeps down. Once the water gets behind the cabinet it's in a perfect position to create mold," says Walker. The dampness, humidity, and lack of light can turn that area beneath the sink into a mold-breeding ground.

Attic "You can tell everything about the house by the attic," says Walker. He says other areas of the home can be covered up if a repair had occurred. For instance, if there was a leak and it damaged a wall, with the right contractors and repairs it can be made to look like new and, hopefully, function like new. But Walker says the attic is sort of the eyes to the soul of the home. "In the attic you can tell where all the damage has been," says Walker.

"If you're in a 20-year-old house and you see that the insulation is brand new, you know that there was a water leak because it had to be replaced," says Walker. He adds, "You can tell if the roof is good because you can look right at the wood."

Landscaping "There should not be moisture or plants next to your house," says Walker. He says there should be a 12 inch barrier between the landscape and the house. Walker says otherwise you run the risk of having the foundation crack and affect the home. What happens is, as the landscape that is too close to the home is watered, the foundation and soil expand. Then, when no watering occurs, the foundation dries up and shrinks and this can cause it to crack.

Remember, knowledge is power, so learning about the home before you close the deal on it will keep you from making a mistake that may cost you extra out-of-pocket money later.

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Make sure you ask the right questions

You've found the house, your offer has been accepted, and funding is in place. But before you start packing, be sure you hire a professional home inspector to make sure your house doesn't have any major defects that could cost you down the road.

A home inspection typically includes an examination of heating and central air conditioning systems, interior plumbing, electrical systems, the roof, attic, visible insulation, walls, ceilings, floors, windows, foundations, and basements. Inspections may also include appliances and outdoor plumbing.

Once the inspector examines the house, he or she will write up a report with findings. If there are any major problems, you'll need to negotiate with the seller to either lower the sale price of the home, or determine how the problem will be fixed.

When you make an offer it's wise to have a contingency clause based on the home inspection. In other words, if the inspector finds $10,000 worth of problems and the seller doesn't want to provide the fix, you can rescind your offer.

In fact, two in five resale houses will have at least one major defect that could cost you from a few hundred dollars to as much as $15,000 to repair, according to the 2000 HouseMaster Resale Home Deficiencies Study.

Spending a few hundred dollars for a home inspection is well worth the peace of mind.

If you don't know how or where to find a home inspector, be cautious about asking your real estate agent.

"Be careful, though, of inspectors who are popular with agents—that popularity may stem from not killing too many deals by going easy on their inspections," says Eric Tyson and Ray Brown in their book Home Buying For Dummies.

Tyson and Brown say the American Society of Home Inspectors is a good place to start.

"Just because an inspector is an ASHI member doesn't guarantee that you'll get a good inspection, but it certainly increases the likelihood that you'll be working with a qualified professional," Brown and Tyson write.

All certified members have performed at least 250 inspections have passed two written proficiency exams. They must also adhere to standards of practice, continuing education requirements, and code of ethics.

The authors and the ASHI recommend you interview several inspectors before choosing one. Some of the questions you should ask include:

• What does the inspection cover? Make sure the inspection and the inspection report meet all applicable requirements and comply with the ASHI Standards of Practice.
• How long have you been in the profession and how many homes have you inspected? Again, ASHI Members are required to have completed at least 250 paid professional home inspections and passed two written exams that test the inspector's knowledge.
• Are you specifically experienced in residential inspection? The answer should be yes. If someone says they have specialized training in something like construction or engineering but not in residential inspection, you may want to move on to the next candidate.
• Does the inspector's company offer to do repairs or improvements based on the inspection? The answer should always be no. This is against the ASHI Code of Ethics because it might cause a conflict of interest.
• How long will the inspection take? The average for a single inspector is two to three hours for a typical single-family house; anything less may not be enough time to do a thorough inspection. Some inspection firms send a team of inspectors and the time frame may be shorter.
• How much will it cost? Costs vary quite a bid depending on the region, size of the house, scope of services and other factors. A typical range might be $300-500, but consider the value of the home inspection in terms of the investment being made.
• Does the inspector prepare a written report? Ask to see samples and determine whether you understand the report.
• Does the inspector encourage the client to attend the inspection? This is a valuable educational opportunity for you to learn about how things work around what could be your house, and the inspector may point out things that don't quite merit a mention in the report but which you should keep an eye on. An inspector's refusal to allow you to be present should raise a red flag.

Finally, once you've found an inspector you like, ask him for references, then follow up and contact those clients. Two key questions—whether they discovered any major defects after the close of escrow that the inspector missed, and whether they'd use the inspector again.

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How to scout out the best place to call home

Once you've become pre-qualified for a loan, you should be ready to put your house-hunting efforts into full gear. But don't skip the important step of scouting out neighborhoods before you start your search for the perfect house.

The neighborhood in which you live will heavily dictate your whole way of life—things like walking to a nearby park with your kids, knowing your kids are attending good schools, feeling safe when your children play outdoors, being close to restaurants and shopping, enjoying a short commute, and knowing your home will appreciate at a healthy rate.

Of course one way to get started in your neighborhood search is to get in your car and explore, especially if you're unfamiliar with the area. Get an idea about the neighborhoods by driving around and seeing which areas appeal to you. Walk around, explore, and talk to some of the residents.

Take note of the general appearance of the homes. Are they well maintained? Are they nicely landscaped?

If you have children, you might be looking for a neighborhood with plenty of children around, as opposed to neighborhoods that attract more seniors or young singles.

Other factors you'll want to consider are the schools, crime, your family's specific needs, and appreciation - as in how much the value of the home is likely to increase.

A good Realtor will be very familiar with all the neighborhoods in the area and should be able to tell you about the strengths and weaknesses of the specific neighborhoods you're eyeing.

The school district Even if you don't have school-aged children, buying a home in a district with good schools will be in your best interest. When and if you sell the home at some point in the future, future buyers with children will likely consider good schools their top priority. And neighborhoods with good schools typically attract more buyers.

There are several sites on the Web in which school reports are just a few mouse clicks away. Basically all you do is enter a geographical area or zip code and it will display ratings for the school system. Also:

• Ask your Realtor about information on schools in the area.
• Talk to people in the neighborhood, especially people with children.
• Standardized test scores are also available on the Internet.
• Visit the schools and take a tour if you have children. It's important that your decision isn't based purely through facts gathered online. Get a true feeling for what the school is like.

Crime statistics No one wants to live in a neighborhood where break-ins and burglary are the norm. There are web sites that can provide you with statistics on crime and other information pertinent to your search.

In addition to school information, Homestore lets you enter a city or zip code and provides you with crime data for the area you choose. It also compares crime statistics with other cities (such as the city from which you are moving).

In researching a neighborhood, you must first determine your area. The suburbs may have lower crime statistics, but may be farther from your work. Cities may have more crime, but may have other qualities that you consider more attractive, such as convenience and cultural activities.

Use the following tips to help you learn about crime statistics in a neighborhood:

• Talk to neighbors.
• Take note if there are bars on the windows and doors of homes.
• Talk to the police or sheriff's department.
• Check for gang graffiti on walls and walkways.
• Keep in mind that if you're looking in-town, you may not be able to get away from everything you consider unappealing (such as noise and traffic).
  Keep your family in mind A home isn't just an investment when you have a family to think of. You'll need to consider more than just the number of bedrooms or whether it has an attached garage. You'll need to consider the community first and foremost. Do you want schools that are in walking distance? Do you want to be close to your place of employment? Do you want to be close to shopping, restaurants, and other services?
  You'll also want to research property values before you find a home in the neighborhood that you like; property values reflect a community's overall health.
  And when you do your research, find out what houses sell for now versus a decade ago, five years ago, and three years ago. Also, find out how much property taxes have gone up.
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Answers to 23 frequently asked questions about the extended homebuyer tax credit

1. Who is eligible to claim the $8,000 tax credit for first-time buyers?
First-time home buyers who have not owned a home in the past three years and who purchase any kind of home—new or resale—are eligible for the tax credit for 10 percent of the purchase price, up to a maximum of $8,000. To qualify for the current tax credit, a home purchase must occur on or after November 6, 2009 and they must have a binding sales contract in force on or before April 30, 2010.  Purchasers have until June 30, 2010 to close.
 
The full credit is available for married couples filing a joint return whose modified adjusted gross income is $225,000 or less and for other taxpayers who’s MAGI is $125,000 or less.  The credit phases out for buyers earning more than those income limits.

Persons claimed as dependents by other taxpayers or who are under age 18 do not qualify for the tax credit program. Source: National Association of Home Builders, Internal Revenue Service

2. Who is eligible to claim the $6,500 tax credit?
Homeowners who have lived in their current home for at least five consecutive years within the last eight and who want to purchase a different home qualify for a $6,500 tax credit.  Home purchase must occur between November 7, 2009 and April 30, 2010.  The purchaser has until June 30, 2010 to close.
Source: National Association of REALTORS®

3. What is the definition of a first-time home buyer?The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. If you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, IRS Notice 2009-12 allows unmarried joint purchasers to allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
Source: NAR, NAHB

4. How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000 (See No. 12 for price limits) for first-time buyers and a maximum of $6500 for existing owners.
Source: NAR, NAHB

5. The income limits for claiming the tax credit were raised when the tax credit was extended. Are the higher limits retroactive?
No. The new income limits are only applicable to purchases occurring after November 6, 2009. The income limits for sales occurring  after November 6, 2009 are $125,000 a year for individuals and $225,000 for couples $75,000 for single taxpayers and $150,000 for married couples filing jointly.
Source: NAHB, IRS

6. What is “modified adjusted gross income”?
Modified adjusted gross income or MAGI your total annual income minus adjustments to income.  Examples of adjustments to income are Alimony payments, contributions to an IRA, contributions to health savings accounts, or moving expenses for a new job.
Source: Investopedia, IRS

7. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phase out limits.
Source: NAHB

8. Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $235,000. The applicable phase out to qualify for the tax credit is $225,000, and the couple is $10,000 over this amount. Dividing $10,000 by the phase-out range of $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is a $4,000 credit.

Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $138,000. The buyer’s income exceeds $125,000 by $13,000. Dividing $13,000 by the phase out range of $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
Source: NAHB

9. How is this home buyer tax credit different from the tax credit that Congress enacted in early 2009?
For first-time buyers the tax credit’s income limits were increased, the documentation requirements were tightened, and the program's deadlines were extended.  Existing homeowners who buy a new principal residence also now qualify for a credit up to $6500.
Source: NAHB

10. How do I claim the tax credit? Do I need to complete a form or application? Are there documentation requirements?
You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). No other applications are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase. Home buyers must attach a copy of their HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase.
Source: NAHB

11. What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit, provided the home is purchased for a price less than or equal to $800,000. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

It is important to note that you cannot purchase a home from, among other family members, your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse or your spouse’s family members. Please consult with your tax advisor for more information. Also see IRS Form 5405.
Source: NAR, NAHB

12. I read that the tax credit is “refundable.” What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even the entire amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).
Source: NAHB

13. Will the tax credit need to be repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.
Source: NAR

14. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after November 6, 2009 and on or before April 30, 2010 (or by June 30, 2010, provided a binding sales contract was in force by April, 30, 2010).

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.
Source: NAHB

15. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
Yes. The tax credit can be combined with an MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.
Source: NAHB

16. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
No. You can claim only one.
Source: NAHB

17. I am not a U.S. citizen. Can I claim the tax credit?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of “nonresident alien” in IRS Publication 519.
Source: NAHB

18. Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.
Source: NAHB

19. I bought a home in 2008. Do I qualify for this credit?
No, but if you purchased your first home between April 9, 2008 and November 6, 2009, you may qualify for a different tax credit. Please consult with your tax advisor for more information.
Source: NAHB

20. Is there a way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 or 2010 tax return?
Yes. You have several options.
Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the down payment.

Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

Second, you may claim the tax credit and participate in a program financed by tax-exempt bonds. As a result, some state housing finance agencies have introduced programs that provide short-term second mortgage loans that may be used to fund a down payment. Prospective home buyers should check with their state housing finance agency to see if such a program is available in their community.  Here is a list of state agency loan programs with information on how to apply.  
Source: NAHB, National Council of State Housing Agencies

21. HUD is now allowing "monetization" of the tax credit. What does that mean?
It means that HUD allows buyers using FHA-insured mortgages to apply their anticipated tax credit toward their home purchase immediately rather than waiting until they file their 2009 or 2010 income taxes to receive a refund. These funds may be used for certain down payment and closing cost expenses.

Under HUD’s guidelines, non-profits and FHA-approved lenders are allowed to give home buyers short-term loans of up to $8,000. The guidelines also allow government agencies, such as state housing finance agencies, to facilitate home sales by providing longer term loans secured by second mortgages.

Housing finance agencies and other government entities may also issue tax credit loans, which home buyers may use to satisfy the FHA 3.5 percent down payment requirement. In addition, approved FHA lenders can purchase a home buyer’s anticipated tax credit to pay closing costs and down payment costs above the 3.5 percent down payment that is required for FHA-insured homes. 
Source: NAHB

22. If I’m qualified for the tax credit and buy a home in 2009 (or 2010), can I apply the tax credit against my 2008 (or 2009) tax return?
Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 (or 2010) as if the purchase occurred on December 31, 2008 (or if in 2010, December 31, 2009). This means that the previous year’s income limit (MAGI) applies and the election accelerates when the credit can be claimed. A benefit of this election is that a home buyer in 2009 or 2010 will know their prior year MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home who wish to claim it on their prior year tax return, but who have already submitted their tax return to the IRS, may file an amended return claiming the tax credit using Form 1040X. You should consult with a tax professional to determine how to arrange this.
Source: NAHB

23. For a home purchase in 2009 or 2010, can I choose whether to treat the purchase as occurring in the prior or present year, depending on in which year my credit amount is the largest?
Yes. If the applicable income phase out would reduce your home buyer tax credit amount in the present year and a larger credit would be available using the prior year MAGI amounts, then you can choose the year that yields the largest credit amount.
Source: NAHB

Contact Us
AURUM ESTATES
#1-2, Opp. Uniworld Gardens,
Adjoining indian oil petrol pump,
Sohna Road Gurgaon
(Haryana) 122018
Tel: +91 124 3295123
Mob: +91 9999997969
Fax: +91 124 2217833
Email: info@aurumestates.com
website http://aurumestates.com

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Cosmetic issues are easy to remedy

Home shopping for first-time homebuyers it's an exciting, albeit nerve-wracking, experience. If you're like others in the market for their first home, you probably have in mind exactly how your soon-to-be home will look.

But it's important not to fall into the bad decorating, dingy walls and dirt-bare back yard equals bad-home trap. If you don't see past the hideous wallpaper, funky light fixtures and avocado green carpeting, you may miss out on a home with great potential.

And, if you're looking for a home in a seller's market where homes are being snatched up as soon as they go on the market, you'll come to realize you can't be choosy if you want to make a competitive offer.

One of the first things to do is to get pre-approved for a loan and determine the maximum you can afford to offer for a house. Don't look at homes that are asking for more than 5 percent above your maximum, otherwise you'll be setting yourself up for disappointment if you find the perfect—but outside your budget—home.

So what to do?

The floor plan of the home is extremely important. If a floor plan isn't quite to your liking, consider rearranging it or adding on. If you're looking at an existing home and will need to remodel or expand to suit your needs, the estimated cost of renovation needs to be considered when making an offer.

Also, consider the features of a home:

• Walls. While these are among the easiest to remedy, they also make a huge first impression. If the walls need to be painted, are covered in wallpaper or are painted a color you find distasteful, picture them crisp and clean in the color of your choice—that's how they could look after you paint them.
• Floors. Like walls, carpet or floor surfaces that are old or outdated can be easily replaced. You could even ask for a carpet allowance in your bid, especially if you're in a buyer's market.
• View. Things like old, ugly—even dirty—windows and window treatments can make a view appear less desirable. Those things can be improved, so unless the only view you have is of your neighbor's clunker on the side of the house, don't get hung up on what is surely a fixable view.
• Landscaping. Your best bet is a moderately landscaped yard because you can always improve landscaping without spending too much. Worst case, even if you're looking at dirt, landscaping is one of the easier projects to tackle. Plus you get to design it however you'd like if you're starting from scratch.
• Closets and garages. You can never have too much storage space, which is why so many newer homes have three-car garages. But if you encounter a converted garage that is now a bedroom or storage room, don't give up. Converted garages can almost always go back to their original purpose without much cost or labor.
• Kitchen. The most popular room in the house, many homeowners want their kitchen to be large and have modern appliances. Don't let outdated color schemes deter you because there's nothing like a fresh coat (or two) of paint to make a kitchen your own. Plus, if you like the rest of the house enough to make an offer, you can give the kitchen a minor spruce-up with some new appliances or a major overhaul complete with new countertops, cabinets, and flooring.
• The exterior. If the home doesn't have good curb appeal, try to picture it with a fresh coat of paint and revitalized landscaping.
• Pools. If you want a pool, buy a home with a pool already built in. Pools are expensive and you will not get a full return on the cost when you go to sell. Let someone else lose the return. The cost of repairing a pool is less than putting one in, so if you're looking at a home with an old pool that looks like it's in bad shape, it's still a better bet than putting one in later.
  When making an offer, consider what you can't live without, as well as your budget. Also, be sure you hire a professional home inspector to inspect the house. If the home's systems are in good working order and the house has everything you want except a minor item or two, make an offer accordingly.
  Most importantly, keep in mind that unless you're building your dream home from scratch, you'll probably never find the perfect home. But seeing past a previous owner's bad decorating choices to the core of the home and its potential for livability will yield you the home you've always wanted. It may take some work, but hey—it's yours.
  Contact Us
  AURUM ESTATES
  #1-2, Opp. Uniworld Gardens,
  Adjoining indian oil petrol pump,
  Sohna Road Gurgaon
  (Haryana) 122018
  Tel: +91 124 3295123
  Mob: +91 9999997969
  Fax: +91 124 2217833
  Email: info@aurumestates.com
  website http://aurumestates.com
  

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Many issues can be at root of indecision

You've looked at dozens of homes. Your REALTOR® is about to tear her hair out with frustration. You are paralyzed, letting one great home after another pass you by. Why can't you make a decision?

Buying a home can be an overwhelming process. There are so many decisions to make and any of them can mean serious financial consequences. A home, after all, is hardly a liquid asset. Nor is it a growth investment, according to Wall Street definitions. It's your greatest financial debt, even while it puts a roof over your head. As it appreciates, it also needs repairs and maintenance. With all that weighing on you, no wonder you've got commitmentphobia.

Yet, you really want to buy a home. You know that few purchases will provide you the quality of life that a home of your own does. There are plenty of advantages, as well - tax breaks, rising real estate values, a stable environment for the family, to name only a few. So you stifle your worries and keep looking for homes. You just can't find the one that's just right for you.

It might be time to back this train up and examine what is causing the conflict between wanting to buy and being unable to make a decision. There is a cause, and it's name is money. The question is, which aspect of money is stopping you from moving forward?

Fear of spending too much
Lenders will loan you money at the top of your ability to borrow. Realtors will suggest that you will be happier in a "bigger, better" home, eliminating the need to "trade up" in a few years. Stretching to buy the most home you can possibly afford is a good strategy, but only under certain conditions - that you have confidence that your salary will rise, that your income is stable, and that you can handle large surprise expenses.

If you've been pre-qualified, you are already looking at bigger, better, more beautiful homes at the top of your range. But something isn't quite right. Even though you may feel that your income is stable, a feeling is telling you that if you buy in this range, you won't have enough in reserves should something happen. Those are your instincts talking, and you should listen, because your desires have been doing the talking up to now. Your instincts are telling your desires to scale back a little.

That means backtracking. Talk to your Realtor and ask her to show you less expensive homes. You can't go wrong buying slightly under your ability. In fact, many financial advisors tell their clients to budget about 25% of their income for housing in order to position them to build reserves for savings, investments, home improvements, emergencies and dozens of other reasons. That's almost six percent less than lenders will allow you to borrow. Just think what else you can do with six percent of your income. You'll still have your house, you'll just have more to do other things with.

A conflict in goals
Many couples purchase homes with the idea that they will have a child, so stretching buying power to have the extra space makes sense. But if you are trying to accomplish two big financial goals at the same time - buying a home and adding to your family, then something has to give.

You can't have it all - peace of mind, a large mortgage, and burgeoning expenses all at the same time. Something has to give and the way to do that is simply to prioritize your goals. In what order of importance do you want things to happen? What is most important to you? Whether you are planning a family, returning to graduate school, paying off a student loan, or buying a new car, you surely realize that your financial pie can only be sliced so many ways. Your mortgage is the largest, and the larger it is the smaller the other pieces.

Problems in the marriage
This is one of the toughest issues to address, and one your Realtor can't help you with. But just as you are listening to your instincts about the amount of money you should spend on your new home, you should be paying even more attention to your feelings about your marriage. And only you can answer the question - will we still be together in five years? You should at least be able to predict being together long enough to pay off the interest on your loan! Or you'll be selling your home without the benefit of building any equity and equity only comes with appreciation and mortgage reduction.

Buying a home will not fix a poor relationship. It will only make things worse. So you have a decision to make and it isn't which house to buy. It is whether or not you want this relationship to survive. If you decide you want the marriage, then you must pour your efforts into fixing its problems, including your share of the blame. Be willing to change some things, compromise on others, or accept many things as they are. If you can't do all of those, then to dissolve the partnership is your only other choice. After you have solved the problems in your relationship, you will find your home more easily.

Fear of the future
Fear takes the fun out of a lot of things, but there is reasonable fear and unreasonable fear. Unreasonable fears have no basis in reality, so there is little you can do beyond getting professional help for your anxiety. Reasonable fears you can handle on your own with a little common sense.

Fear can be tamed by looking at the worst case scenarios compared to the best case scenarios. So examine the questions that are really bothering you.

What if we can't make our payments? This question can be balanced by a best case. What if we manage our money so well that we can make double payments? So the fear here is manageable - it comes down to how confident you are about managing your money. If you aren't sure of yourself, get help. Ask someone whose money management style you admire for advice on how to manage your money better. Then stick with it.

What if the value of our home goes down in value? Would you feel as fearful if you asked yourself whether your property will go up in value? Property can go up or down, but all property requires maintenance or it surely will deteriorate in value. This can be easily prevented by having enough budgeted or in your reserves to perform scheduled and unscheduled maintenance. Look at the properties surrounding the home you are considering. Are they maintained with pride? Are they being updated? Then your chances are good that the neighborhood and your home will retain its value. Rest assured that there will always be a buyer for an attractive, well-maintained property.

Because it is not a liquid asset, real estate is not as volatile as you think. It goes down slowly and rises comparatively slowly. And home values even when depressed may get a resuscitation after a few years. Your best hedge against the future is to keep your property in desirable condition.

You can't predict the future. The only thing you can do is prepare yourself to handle what may happen.

So money isn't the root of all evil, but it is the root of indecision - at least when you are paralyzed about buying a home. Thinking through the money issues can help you get moving one direction or the other. For some of you, just reading this article will put your jitters to rest. For others, you may realize that a home isn't in the cards for you right now, and that's OK. Wait a few days or weeks if you need to. Use the time to regroup. It is far better for you to work through a few obstacles than to jump into the largest investment of your life without confidence. If you can work through your fears, get your finances in tip top shape and proceed, you'll find buying a home doesn't have to be a paralyzing decision. In fact, it can be one of the most exhilarating things you'll ever do.

If you are worried about cash flow, then making disproportionately large house payments will tarnish the joy of home ownership, unless you can find ways to cut down the other pie pieces. Work to improve your cash flow. Accelerate your credit card pay -offs Don't incur new debt. Rebudget your expenses and eliminate unnecessary expenditures. Make compromises - vow to cut down if you can't cut something out. Be willing to move timelines for meeting your goals. Don't be influenced by others to live beyond your means. Set your sights on an affordable home, and you may find your dream home will appear right before your very eyes.

Contact Us
AURUM ESTATES
#1-2, Opp. Uniworld Gardens,
Adjoining indian oil petrol pump,
Sohna Road Gurgaon
(Haryana) 122018
Tel: +91 124 3295123
Mob: +91 9999997969
Fax: +91 124 2217833
Email: info@aurumestates.com
website http://aurumestates.com

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Residential Apartment for Sale in Canary Greens, Sector-73 Gurgaon, by a...

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