Real Estate Information

Being a homeowner offers big tax advantages, not the least of which are perks related to that mortgage you pay every month.

And if you refinanced your mortgage last year, there are some specific "dos" and "don'ts" you need to know prior to filing your income taxes, as well as a few pointers that can help you lower your tax bite.

The following information will help to reduce your federal income taxes and get you prepared for mortgage-related tax issues in 2012 and beyond.

Do: Itemize to claim your mortgage interest deduction

As long as you itemize deductions on Schedule A (Form 1040), you can typically deduct up to $1 million in interest ($500,000 if you're married, filing separately) that you pay on a home loan for your primary residence, including your refinanced mortgage. Interest paid on a home equity loan is generally deductible up to $100,000.The mortgage interest deduction isn't available to those who take a standard deduction.

"When it comes to filing your tax return to reflect a refinance you did in 2011, the good news is that tax deductions for mortgage interest paid are still in place," says mortgage expert Debra Jones. "Will it remain that way in the future? Who knows? Although it is assumed that the mortgage interest deduction will remain intact, it has been a subject of much political and economic debate in this current presidential election season."

Indeed, several proposals floating around Congress would either reduce or eliminate the mortgage interest deduction for homeowners. If that happens in 2012 or later, you'll be especially glad that you claimed your deduction for 2011.

Do: Get a write-off for private mortgage insurance

Fortunately, if you refinanced in 2011, any qualified mortgage insurance premium payments made prior to 2012 can be deducted as long as you itemize, and provided the mortgage insurance contract was issued after 2006, according to a spokesman for the California Society of CPAs.

Just be aware of certain income restrictions because the deduction is phased out for those with adjusted gross incomes exceeding $100,000, or $50,000 for married couples filing separate federal income tax returns.

Also realize that 2011 looks like the last year you'll be able to write off mortgage insurance, at least for the foreseeable future.

Congress originally allowed homeowners to deduct mortgage insurance as part of the Mortgage Forgiveness Debt Relief Act of 2007. The law has been extended several times, including through 2011. But effective Jan. 1, 2012, the tax deduction for mortgage insurance expired, meaning homeowners can't claim this for tax year 2012 or later -- unless Congress retroactively amends the law.

Don't: Raise red flags by erroneously claiming points and fees from your refinance

"People often make the mistake of thinking that the points and fees paid on a refinance are tax deductible just as they may have been when they originally obtained the mortgage on their home," says Jones. "That, however, is not the case."

Jones explains that, per IRS guidelines, points paid when refinancing are not taken in full during the year in which the refinance was obtained. "Instead, the points must be deducted equally over the life of the loan," she says. "To figure the annual deduction amount, divide the total points paid by the number of payments to be made over the life of the loan. Usually, this information is available from the lender."

For example, a homeowner who paid $2,000 in points on a 30-year mortgage (360 monthly payments) could deduct $5.56 per payment, or a total of $66.72 for 12 payments. Taxpayers may deduct points only for those payments actually made in the tax year, according to Jones.

Spreading the points paid over the life of the loan isn't the only factor determining whether or not your refinance expenses are fully tax deductible. You also have to take into account whether your original loan was before or after October 1987 (if you incurred mortgage debt prior to Oct. 14, 1987, different rules concerning tax deductibility may apply), whether or not your total combined mortgages exceed the allowable limit for the mortgage interest deduction, and whether or not portions of the refinance were used for home improvement, Jones says. "That last factor can sometimes enable you to write off more expenses during the year of the refinance," she notes.

If you're a homeowner, you certainly should take advantage of every homeownership tax deduction for which you qualify. But to make sure you don't run afoul of IRS tax rules, be sure to consult an accountant or financial advisor regarding your particular situation.

It's also a good idea, Jones suggest, to read IRS Publication 936 where all the nuances concerning the tax deductibility of mortgage refinance expenses are fully explained. "It's not necessarily in 'plain English,' but it's explained nonetheless," Jones says

About the author:

Lynnette Khalfani-Cox, The Money Coach®, is a personal finance expert, television and radio personality, and the author of numerous books, including the New York Times bestseller "Zero Debt: The Ultimate Guide to Financial Freedom." A former Wall Street Journal reporter for CNBC, Lynnette has appeared on such national TV programs as The Oprah Winfrey Show, Dr. Phil, The Today Show and Good Morning America. She can frequently be seen as a guest commentator on CNN, MSNBC, ABC and FOX Business Network. Follow Lynnette on Twitter @themoneycoach or visit her free financial advice blog at AskTheMoneyCoach.com

HOW TO IMPROVE CURB APPEAL WITH PAINT COLOR

By:  Teri Danahey, Accredited Staging Professional (ASP), REALTOR®

Daniel Fevre, REALTOR®

PRUDENTIAL NEW JERSEY PROPERTIES

Real estate agents will tell you that buyers often decide “at the curb” whether they will like a home on the inside.  If the curb appeal is too disappointing, there are many instances where the buyers don’t even go in.   Here are some tips on how to make a home’s curb appeal irresistible with paint color..

The two most important factors when choosing exterior paint color are:

·        The neighborhood

·        The style of the home

The Neighborhood

Buyers favor homes in neighborhoods that have a cohesive appearance because it suggests community spirit, common goals and like mindedness.  A peaceful street of homes punctuated by one house with a garish paint color is disturbing and reduces the overall appeal of the neighborhood.  “Fitting in” is a critical element of curb appeal and adds value to the bottom line.   (You can always express yourself on the interior of the home!)

The Style of the Home

There are no ‘forbidden” house paint colors (except possibly black), but there are colors that just don’t seem to fit the style of a house.  For example, a traditional New England salt box style home would look odd painted pink.  Yet, a Mediterranean style stucco home in a warm climate may look right at home painted pink or coral.

Mid-20^th Century Modern homes look best with one subtle color over 90% of the house and minimal, monochromatic trim accents.  In comparison, ornate Victorian or Carpenter Gothic style homes look best when the characteristic trim is accented with as many as 6 different colors of paint.  Research the home style to see what colors complement the style of the house.  There are some excellent online tools in the personal color viewer at www.BenjaminMoore.com and architectural styles at www.Behr.com

As a rule of thumb, houses that take their color cue from their immediate environment will look most at home, such as:

• Homes in the northern climates tend to look best with a muted palette since nature dims the surroundings for much of the year.  Consider these colors:

•  
  • Benjamin Moore – Stratton Blue – HC-142
  • Benjamin Moore – Monroe Bisque – HC-26
  • Sherwin Williams – Simple White – SW 7021

• Homes in southern climates tend to look best with a brighter palette since there is abundant sunshine and vibrant blooming for much of the year.  Consider:

•  
  • Sherwin Williams – Faint Coral – SW 6329
  • Benjamin Moore – Camoflage – 2143-40
  • Benjamin Moore – Windham Cream – HC 6

• Seaside homes in northern climates look best with muted water and fog colors; coastal homes in southern climates look best with clear water and sand colors.  Consider:

•  
  • Benjamin Moore – Silver Marlin – 2139-50
  • Benjamin Moore – Saybrook Sage – HC-114
  • Sherwin Williams – Take Blue – SW 6513

• Homes in woodsy areas look great with a natural palette; homes in more urban areas can look nice with fresh colors.  Consider:

•  
  • Sherwin Williams – Morning Sun – SW 6672
  • Sherwin Williams – Restoration Ivory – SW 6413
  • Benjamin Moore – Montgomery White – HC-33

• White is the one “safe” color that works everywhere on nearly every style of home.

As people embrace eco-friendly products and a more natural lifestyle, we see these preferences for the colors of trees, earth and stone that almost make a home look as though it grew from the ground.  Apply the most muted tones of greens, browns and grays in the northern climates and the brighter tones of greens and browns including beiges for the southern climates.  These are the color choices used by new home builders; older homes painted the same current colors as newer homes will knock years off the appearance of the house.  Examples:

• Sherwin Williams – Mega Greige – SW 7031
• Benjamin Moore – Rockport Grey – HC-105
• Benjamin Moore – Saybrook Sage – HC-114

Choosing the Palette

Consider the roof color when selecting the primary house color.  Homes look most interesting with this general design principle:

• 60 percent of your paint color will go on the body
• 30 percent of your paint color will go on the trim
• 10 percent on feature items such as the front door or porch elements

Most homes do well with this principle but it is wise to alter the proportions when painting “extreme” styles like a Mid-20^th Century Modern or Victorian.  

In general,

• Smaller homes look larger with a greater percentage of one color
• Homes with brick or stone look larger when the body color is similar with the brick or stone
• Monochromatic schemes tend to look more refined; contrasting schemes tend to look more cheerful

About Trim

Trim and trim color defines the house and distinguishes it in the neighborhood.  Again, consider the roof color when choosing a trim paint color in order to pull the body and roof together as well as highlight notable features.  Select just one trim color or trim color family.

• Paint trim a color similar to the body to simplify the style or enlarge the appearance of the home.
• Paint trim an accent color to highlight interesting details such as roofline, windows, shutters, etc. 
• If there is an unattractive trim or distracting part of the house, you can minimize it by painting it the same color as the body.  
• If there is a detail worth noting, this is the time for a trim or accent color.

The “Invisible” Trim

Invisible trim are things like

• Window frames
• Soffits
• Door jambs

These are items that the eye skims over and are seldom noticed unless you get it wrong.  Like most interior ceilings, these items are usually best painted white.  However, if the body of the house is a muted color, stark white trim would be too bold so add 15% of the body color to the white to return those items to “invisible”.  Craftsman style homes are heavy with wood trim and muted tones so a heavier tint (30% or more) of the body color may be necessary to retain the characteristics of this earthy style of home.

Never paint window frames the same color as a dark shutter, for example.  This treatment looks like bad eyeliner and the result is a distracting, patchwork of small windows.

What to do about the garage door(s)?

• The sheer size of a white garage door will create an undesirable focal point and imbalance unless the house has a lot of white trim,
• If the garage door is closer to the curb than the front door, the garage door should be painted the same color as the body or a slightly deeper tone of the body to recede it and enable the front door to be the focal point  
• It is out of style to accent the raised panels or other door details with paint.
• Wood stain or a wood look is a good, neutral look for garage doors.  

Accent colors - the final 10%

The most interesting color choice will be for an accent color, used on the front door, for example.  Have fun with this and choose a welcoming, standout color such as eggplant, plum, cranberry, maroon, persimmon, copper, marine blue, teal, peacock blue or forest green.  A rich wood stain is also a good look.

The most important thing about an accent color is that it be used sparingly.  The second most important thing is that the accent color should be concentrated in one area so the eye doesn’t bounce around and dilute its impact. .   

Getting it Right

Many paint manufacturers have assembled color combinations and some websites have virtual-design tools that can help you make a decision.  Definitely ask for help from color experts often found in high volume paint stores.  Note:  a painter or how-to-paint expert found in high volume paint stores may not be a designer so take care where you get your color advice.    

• The greater the area devoted to one color, the more intense it will be so if the goal is a sand color, look at color chips that appear lighter than the intended result. 
• Buy test quarts of prospective colors and apply it in 1 foot square samples on both the sunny and shady side of the house. 
• Live with the colors for a few days before deciding.  

Finally, make the most of the color selection with the best possible paint job.  This means adequate preparation, good tools and top quality paint that will yield excellent curb appeal for years.  

See these excellent resources:

• See the personal color viewer on the Benjamin Moore website (http://www.BenjaminMoore.com).  Also find a full description of architectural styles with companion color suggestions.

·         Sherwin-Williams:  check out the Virtual Color visualizer tool.  www.SherwinWilliams.com

·         Behr:  check out the Color Smart tools and inspiration library.  www.behr.com

Comments:  Please contact Teri Danahey at Teri.D@PrudentialNewJersey.com

See also:

 http://www.NewJerseyBestHomes.com

 http://www.NJRealEstateMarketReport.com

 http://www.NewJerseyFirstTimeBuyer.com

PAINT COLORS FOR HOME STAGING

By:  Teri Danahey, ASP/REALTOR®

Daniel Fevre REALTOR®

PRUDENTIAL NEW JERSEY PROPERTIES

One of the best things a homeowner can do in a remodeling project is to paint the walls in a current color.  Not only does it freshen the appearance of walls but it updates the entire space for about the same money as a new throw pillow!

It’s no wonder then that home stagers look carefully at the wall colors and condition when staging a home for sale.  Vivid red dining rooms, princess pink and marine blue kids’ rooms are risky choices when appealing to future buyers.  Home Stagers will strongly suggest that bold colors be changed to popular, but neutral hues.  In the process, rooms frequently look larger when walls don’t jump forward with strong color. 

Wall Preparation

Professional painters spend 80% of the time preparing the walls for painting and 20% of the time applying the paint which is why professional jobs look so good.  Applying primer paint (www.Kilz.com) over a vivid color will assure even coverage and color true to the paint sample. 

Finish Choices

Most interior walls look best with a flat paint finish.  In addition, flat finish paint can disguise small wall imperfections.  A flat finish in a high quality paint is more washable than in past years making it an acceptable choice even for kid’s rooms and high traffic areas. 

Woodwork, on the other hand, looks best with a glossier finish either semi-gloss in more formal areas or high gloss.   

Low VOC (volatile organic compound) paint is an eco-friendly choice that is much appreciated by buyers today to reduce the indoor air pollution and can be a “green” selling feature.

Planning the Color Pallet

Interesting woodwork such as crown or base molding, built-ins, door and window frames or architectural room details deserve to be highlighted but it doesn’t have to be a high contrast to get those elements noticed.  White remains the “go to” color for woodwork and ceilings because it is classic and crisp.  If the wall color is a muted neutral, however, the ceiling and woodwork could be white toned down with 15% of the primary wall color to give a softer, more cohesive look.  If there is a natural accent wall such as surrounding a fireplace, for example, some drama could be created with a darker version of the primary wall color.  Never paint ceilings, crown or base molding or door and window frames a darker color than the walls when staging a home for sale. 

Fail-Proof Colors for Home Staging

Here is a list of the most popular, neutral paint colors from two paint leaders.

Benjamin Moore – check out the Pottery Barn Colors and the giant samples available from Benjamin Moore dealers.  http://www.BenjaminMoore.com

Sherwin Williams – check out the Virtual Color visualizer tool.  http://www.SherwinWilliams.com

:

Things to Remember:

• The paint color will look darker and/or more intense on the wall than the paint sample.
• Rooms with a bright, southern exposure can handle a deeper tone than a room with a dark, northern exposure
• Paint the ceiling first, then the walls
• Buy high quality paint and the right tools for the job. 

Comments:  Please contact Teri Danahey at Teri.D@PrudentialNewJersey.com

www.NewJerseyBestHomes.com   www.NJRealEstateMarketReport.com

Cato Institute analyst Mark Calabria in his piece, Housing Market Will Be Fine Without 30-Year Fixed Loans (Investor’s Business Daily, March 17),  argues that the stability provided to households from the 30-year, fixed-rate mortgage comes with a big contingent liability: the bailout of Fannie Mae and Freddie Mac.

As Calabria puts it, although the 30-year fixed-rate mortgage has given borrowers some stability in their monthly mortgage payment, “it has done so by exposing households, as taxpayers, to massive, hard-to-predict contingent liabilities. There’s been no bigger ‘hidden fees’ or ‘payment shock’ in the mortgage market than the cost of the bailout of Fannie Mae and Freddie Mac.”

But surely Calabria knows that it wasn’t the 30-year, fixed-rate mortgage that forced the two secondary mortgage market companies to need a bailout; it was their dabbling in subprime, stated-income, Alt-A, and other exotic loans while they were playing catch-up to Wall Street players in the private-label mortgage securities market. The Obama administration, in its white paper on reforming Fannie and Freddie, makes this clear:

“Fannie Mae and Freddie Mac were largely on the sidelines while private markets generated increasingly risky mortgages. Between 2001 and 2005, private-label securitizations of Alt-A and subprime mortgages grew fivefold, yet Fannie Mae and Freddie Mac continued to primarily guarantee fully documented, high-quality mortgages. But as their combined market share declined—from nearly 70 percent of new originations in 2003 to 40 percent in 2006—Fannie Mae and Freddie Mac pursued riskier business to raise their market share and increase profits. Not only did they expand their guarantees to new and riskier products, but they also increased their holdings of some of these riskier mortgages on their own balance sheets.”

Calabria says that as long as the federal government guarantees the 30-year, fixed rate mortgage, someone will have to pay for that subsidy. But it wasn’t until the two government-sponsored enterprises strayed from their role backing the 30-year, fixed rate mortgage that taxpayers got hit with a bill to pay for the subsidy to those two companies. On that basis, if the concern is over reducing taxpayer exposure to bad loans that cost taxpayers money, then ensuring the government retains a role supporting the 30-year, fixed rate mortgage is arguably what we should be encouraging.

And to be clear: consumers—i.e., taxpayers—have been unambiguous in their preference for long-term, fixed-rate mortgage financing. About 90 percent of those that finance their purchase choose that type of loan.

By Robert Freedman, senior editor, REALTOR® Magazine

Shortly after the subprime mortgage crisis, adjustable-rate mortgages were often blamed for leading to soaring rates of loan defaults and home foreclosures — which ultimately caused many borrowers to shun them due to its higher risk than fixed-rate mortgages. Now more borrowers are revisiting ARMs.

ARMs, which have low initial interest rates that change over time, aren’t exactly the same as they were before the subprime crisis though. Lenders have introduced more conservative ARM products that no longer offer extra-low “teaser” rates that adjust every six months or “pick-a-pay” and “option” features that let borrowers pay less than the monthly interest that will give them with a bigger bill later on, The New York Times reports.

The ARMs most in demand are “5/1” and “7/1,” which have fixed interest rates for the first five or seven years and then adjust annually at a capped rate.

Bank of America has reported a higher interest in its ARM products, with nearly twice as many ARM transactions last month than last year. ARMs account for 10 percent of all of its mortgages, the bank reports.

Source: “More Borrowers Are Opting for Adjustable-Rate Mortgages,” The New York Times (March, 17, 2011)

RISMEDIA, March 10, 2011—A recent study conducted by the National Association of Home Builders (NAHB) shows that while consumer hesitation on home buying is waning, the recent housing downturn has changed what Americans are looking for in their next home.

The survey research on consumer preferences, which is presented annually at the NAHB International Builders’ Show, suggests that the severity of the recession has left an indelible mark on prospective home buyers, who have shifted their perspective on the housing they want and need.

Builders who were surveyed expect homes to average 2,152 square feet in 2015, 10% smaller than the average size of single-family homes started in the first three quarters of 2010.

To save on square footage, the living room is high on the endangered list—52% of builders expect it to be merged with other spaces in the home by 2015 and 30% said it will vanish entirely.

“As an overall share of total floor space, 54% of builders said the family room is likely to increase,” said Rose Quint, NAHB’s assistant vice president for survey research. “That makes it the only area of the home likely to get bigger.”

In addition, the relative size of the entry foyer and dining room are likely to be diminished by 2015. However, opinions were fairly evenly divided on the fate of the kitchen, master bedroom and bath and mudroom, said Quint.

The average new home of 2015 is likely to feature a great room comprised of the kitchen, foyer and living room; a walk-in closet in the master bedroom; a laundry room; ceiling fans; a master bedroom on the first floor in homes with two stories; and a two-car garage.

In addition to floor plan changes, 68% of builders surveyed say that homes in 2015 will also include more green features and technology, including low-E windows; engineered wood beams, joists or tresses; water-efficient features such as dual-flush toilets or low-flow faucets; and an Energy Star rating for the whole house.

RISMEDIA, February 19, 2011—Nationwide housing affordability during the fourth quarter of 2010 rose to its highest level in the 20 years since it has been measured, according to National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) data. The HOI indicated that 73.9% of all new and existing homes sold in the fourth quarter of 2010 were affordable to families earning the national median income of $64,400. The record-setting index for the fourth quarter surpassed the previous high of 72.5% set during the first quarter of 2009 and marked the eighth consecutive quarter that the index has been above 70%. Until 2009, the HOI rarely topped 65% and never reached 70%.

“Today’s report shows that housing affordability at the end of 2010 was at its highest level since we started computing the HOI,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “However, while this is good news for consumers, both home buyers and builders continue to confront extremely tight credit conditions, and this remains a significant obstacle to many potential home sales.”

Indianapolis-Carmel, Ind., was the most affordable major housing market in the country for the second consecutive quarter, after relinquishing for a quarter the top spot it has held for five years. In Indianapolis, 93.5% of all homes sold were affordable to households earning the area’s median family income of $68,700.

Also ranking near the top of the most affordable major metro housing markets were Youngstown-Warren-Boardman, Ohio-Pa.; Syracuse, N.Y; Warren-Troy-Farmington Hills, Mich.; and Detroit-Livonia-Dearborn, Mich.

Among smaller housing markets, the most affordable was Elkhart-Goshen, Ind., where 97.0% of homes sold during the fourth quarter of 2010 were affordable to families earning a median income of $58,600. Other smaller housing markets near the top of the index included Lansing-East Lansing, Mich.; Kokomo, Ind.; Mansfield, Ohio; and Bay City, Mich.

New York-White Plains-Wayne, N.Y.-N.J., again led the nation as the least affordable major housing market during the fourth quarter of 2010. In New York, more than a fourth—25.5%—of all homes sold during the quarter were affordable to those earning the area’s median income of $65,600. This was the 11th consecutive quarter that the New York metropolitan division has held this position.

The other major metro areas near the bottom of the affordability index included San Francisco-San Mateo-Redwood City, Calif.; Honolulu; Los Angeles-Long Beach-Glendale, Calif.; and Santa Ana-Anaheim-Irvine, Calif., respectively.

Santa Cruz-Watsonville, Calif. was the least affordable of the smaller metro housing markets in the country during the fourth quarter. In Santa Cruz, 45.0% of the homes were affordable to families earning the median income of $84,200. Other small metro areas ranking near the bottom included Ocean City, N.J; San Luis Obispo-Paso Robles, Calif.; Laredo, Texas; and Santa Barbara-Santa Maria-Goleta, Calif.