This one is pretty slick since they provide YOU with all the information, except the one piece they want.
Note, the callers do not ask for your card number; they already have it. This information is worth reading. By understanding how the VISA & MasterCard Telephone Credit Card Scam works, you'll be better prepared to protect yourself.
One of our employees was called on Wednesday from 'VISA', and I was called on Thursday from 'Master Card'. The scam works like this: Caller: 'This is (name), and I'm calling from the Security and Fraud Department at VISA. My Badge number is 12460. Your card has been flagged for an unusual purchase pattern, and I'm calling to verify. This would be on your VISA card which was issued by (name of bank). Did you purchase an Anti-Telemarketing Device for $497.99 from a Marketing company based in Arizona ?'
When you say 'No', the caller continues with, 'Then we will be issuing a credit to your account. This is a company we have been watching and the charges range from $297 to $497, just under the $500 purchase pattern that flags most cards. Before your next statement, the credit will be sent to (gives you your address), is that correct?'
You say 'yes'. The caller continues - 'I will be starting a Fraud investigation. If you have any questions, you should call the 1- 800 number listed on the back of your card (1-800-VISA) and ask for Security.'
You will need to refer to this Control Number. The caller then gives you a 6 digit number. 'Do you need me to read it again?'
Here's the IMPORTANT part on how the scam works. The caller then says, 'I need to verify you are in possession of your card'. He'll ask you to 'turn your card over and look for some numbers'. There are 7 numbers; the first 4 are part of your card number, the next 3 are the security Numbers that verify you are the possessor of the card. These are the numbers you sometimes use to make Internet purchases to prove you have the card. The caller will ask you to read the 3 numbers to him. After you tell the caller the 3 numbers, he'll say, 'That is correct, I just needed to verify that the card has not been lost or stolen, and that you still have your card. Do you have any other questions?' After you say No, the caller then thanks you and states, 'Don't hesitate to call back if you do, and hangs up.
You actually say very little, and they never ask for or tell you the Card number. But after we were called on Wednesday, we called back within 20 minutes to ask a question. Are we glad we did! The REAL VISA Security Department told us it was a scam and in the last 15 minutes a new purchase of $497.99 was charged to our card.
Long story - short - we made a real fraud report and closed the VISA account. VISA is reissuing us a new number. What the scammers want is the 3-digit PIN number on the back of the card Don't give it to them. Instead, tell them you'll call VISA or Master card directly for verification of their conversation. The real VISA told us that they will never ask for anything on the card as they already know the information since they issued the card! If you give the scammers your 3 Digit PIN Number, you think you're receiving a credit. However, by the time you get your statement you'll see charges for purchases you didn't make, and by then it's almost too late and/or more difficult to actually file a fraud report.
What makes this more remarkable is that on Thursday, I got a call from a 'Jason Richardson of Master Card' with a word-for-word repeat of the VISA scam. This time I didn't let him finish. I hung up! We filed a police report, as instructed by VISA. The police said they are taking several of these reports daily! They also urged us to tell everybody we know that this scam is happening.
Please pass this on to all your family and friends. By informing each other, we protect each other.
PROFITABILITY: Landlords are not even close to breaking even now, given the increase in taxes and insurance. Most are losing money. Investment in rental property has all but halted. SB 1790 will be the last nail in the coffin.
ATTORNEYS FEES WILL RISE: Attorneys statewide typically experience some amount of bad debt from their landlord clients. Attorneys like us advance all costs in most cases for the landlord and have to absorb them when there is bad debt.
STIPULATIONS WILL STOP: When a tenant wants to pay to stop an eviction and enter into a stipulation, the tenant will now be faced with paying a LOT more, resulting in them moving or becoming homeless. Paying an extra $200.00 or more will break a tenant who is already at the end of the rope. Social services agencies, the last safety net, will run out of money fast. Charities and government agencies will not be able to bear this cost when helping tenants and tenants will become homeless.
The Bottom Line: If a landlord wants to sue a tenant to get possession only, (a one count eviction), keep the filing fee at the current amount of $80.00. The amount of court resources needed for a one count, possession only eviction is minimal compared to other cases. We Suggest Senators and Representatives Make These Changes:
For eviction cases that include a lawsuit for back rent, make the fee proportionate to the rent asked for in the complaint.
Mark your calendars, this Thursday May 1st is the General Meeting. The speaker is Rick Harper and he will teach (it's a no pitch presentation)
"Ten Investment Principles to Succeed in a Buyer's Market"
Rick Harper grew up in the real estate business. He bought his first investment property at age 16. This is his third real estate depression and he has learned how to cash on a buyers market. He is a multi-million dollar real estate investor. That's multi-million in equity not debt.
The event is at the American Legion post 7 in Clearwater at 1760 Turner Street. The meeting is free for members and only $10 for non-members. It's worth it to stay after the event and network with us in the adjacent lounge. Million dollars worth of joint ventures have been forged after the meeting, so don't miss it, get to know the members and network with them. Bring lots of business cards.
Your host will be the TBREIA Hernando host Lee Stefonovich from LRS Appraisals (www.lrsappraisals.com). For more info about the upcoming general meeting click on the link below:
http://www.tbreia.com/gm/01May08/
By Brian SacksNot everyone with a lot of debt ends up declaring bankruptcy. Some of them aren't eligible to do so. Others feel strongly that declaring bankruptcy is not the morally correct thing to do - they feel that they should make every effort to pay their debts.Some of these people turn to consumer credit counseling. Non-profit credit counseling organizations do not lend money to the person in debt. Rather, they work with the debtor's creditors to try to work out a reduced payment plan, a consolidation of debt, or a reduction of interest rates or late fees - thus making it possible for the debtor to repay his or her debts over a period of three to five years. The debtor makes a single payment to the counseling service, and the counseling service makes payments to the creditors.Non-profit credit counseling services were "invented by" some of the major credit card companies and are funded by donations from creditors. The creditors realize that they are better off working with debtors who want to pay them back rather than making it harder for them to do so. They count on the counseling services to teach people about debt management and budgeting.The counseling services also relieve the creditors of the additional work necessary to collect debts. It's important to note that many creditors make a notation on the debtor's credit report indicating that the debt is being managed by credit counseling.Consumer credit counseling services usually work well for the consumer, but sometimes there are problems. The consumer might be making payments to the credit counseling service on time, but the service isn't making payments to the creditors on time. This shows up on the consumer's credit report as late payments. It is also possible that the credit counseling service is making the payments on time, but the creditors are not accepting the reduced payment amounts. This, too, would negatively affect the consumer's credit report.However, the lender can get a printout from the service, indicating the date the consumer entered it, the creditor's listed, and the history of the consumer's payments. The lender can then piece together the information. If the consumer has been paying consumer credit counseling on time, but the creditors have been getting their payments late, then that's not the fault of the consumer and shouldn't reflect poorly on him or her.How Do Lenders View Credit Counseling Services?Some lenders look at use of credit counseling services as similar to a Chapter 13 bankruptcy, because both can entail a payment plan and re-negotiation of debt payments. (and, in fact, some people who are using a credit counseling service do end up filing bankruptcy because they still don't have the income or money management skills to handle the payments.) So, in some cases use of such a service can be a negative.However, many lenders recognize that if a person is attempting to handle debt responsibly, then that person probably takes financial commitments seriously. Again, the lender must look at the "big picture." In general, in order to get a mortgage the borrower must have a 12-month history of paying on time and a letter from the counseling service stating that purchasing a home will not interfere with the repayment plan.
Get your Free Annual Credt Report HERE
By Bobbi Dempsey
While foreclosures wreak havoc on the finances of their victims, they also can be golden opportunities to buy.
In recent years foreclosed homes have become popular targets for real estate investors -- even novices have been lured by the dream of getting rich quick through foreclosure "flips."
How good -- or bad -- an idea is it to buy a foreclosure, given the current housing market?
Let's start with the bad news: Buying foreclosures for profit is now much less feasible and practical for the average Joe or the newbie investor than it was just a few short years ago. Many sources of easy financing are now just a memory, and with home prices dropping, the potential for a big profit in the short-term is not as great.
But with so much inventory to choose from at bargain prices, investors with available capital or ready financing -- combined with the financial wherewithal and patience to wait for housing prices to rise before trying to sell -- might want to consider buying foreclosures.
It boils down to supply and demand.
There's plenty of supply. Would-be investors have their pick of foreclosed homes -- often choosing from several different foreclosures on the same block.
The other side of the coin is demand. To make quick profits, the investor has to buy properties cheaply and then flip them quickly at a significant profit. The faster you can flip it -- at a profit over the cost of purchase, repair and updating -- the more money you will make.
Right now, demand is not so good for investors. The same low demand that makes foreclosed houses attractive because of low prices turns right around and bites the investor when the updated house is put back on the market. Buyers are scarce, demand is low. The flip often turns to flop.
Traditionally, investors flipped a lot of homes to first-time buyers, who didn't mind putting some sweat equity into a fixer-upper. They would also sell to people who had gotten approval for questionable subprime loans. In some cases, they would sell to people who wanted the properties as investments and planned to rent them out. Or, the investor might not sell the property and might decide to be a landlord himself.
Dwindling optionsBut now, loans are much tougher to get. Landlords now may be struggling to make their mortgage payments on properties they financed several years ago. And then there's the added burden of rising costs related to rental properties, such as soaring fuel prices and rising costs of construction materials needed for repairs.
What's more, the investor may be in a very crowded field. The popularity of TV shows featuring flippers who make nice profits after a few weeks of work has created the notion that anyone can do it. The veteran investor finds himself competing with a bunch of newcomers, all trying to unload rehabilitated foreclosures. Bottom line: Many investors, caught unaware when the housing bubble burst and the subprime lending market melted down, found themselves holding a bunch of properties they couldn't get rid of -- properties quickly becoming expensive to maintain.
If it still sounds like a good idea for you to buy a foreclosed property, keep reading.
Three types of foreclosuresFirst, consider the three options when it comes to investing, which coincide with the three stages of foreclosure:
1. Preforeclosure: This is when the borrower is in default on the loan, but a formal foreclosure has not yet been filed. To buy a property at this point, you deal directly with the homeowner, possibly while involving the lender, such as in the case of a short sale. If you try to acquire a preforeclosures without notifying the lender -- say, by simply taking over the mortgage -- you risk triggering the "due on sale" clause found in most mortgage agreements. This clause in the homeowner's mortgage means the note becomes due and payable in the event of any title transfer of the property.
2. Auctions and sales: This is where the property is sold at an auction or sheriff's sale. The good side of this is that there are no negotiations with homeowners, and existing liens and encumbrances typically are wiped out. The downside is that you often cannot inspect the property beforehand, you usually need significant and immediate cash and you may need to evict the occupant from the home.
3. Real estate owned properties: At this point, the lender has reclaimed the property, and the homeowners have vacated. The condition of real estate owned, or REO, properties can vary widely. Generally, liens and other clouds on the title have either been satisfied or wiped out. You can tour the property before making an offer. You will usually get the property for less than market value, but not drastically lower. Discounts are more likely if the property is in less-than-perfect condition. However, the lender is eager to unload this home and therefore will probably be willing to offer favorable financing terms or throw in other incentives.
Finding foreclosuresFinding properties in foreclosure isn't hard these days:
· Drive around. In many high-foreclosure areas, you can often spot them simply by driving down the streets and look for the "Foreclosure" banners on top of the "For sale" signs.
· Go online. Use online foreclosure search services. Many of these sites offer a short, free trial period, but keep in mind you will be automatically charged the subscription fee once that period ends. Be sure you know exactly what fees you will incur -- charges can vary widely from one site to another.
· Pick up a newspaper. Auction properties are easy to identify, as these sales are usually advertised in the newspaper (and possibly) online, often a month or two prior to the sale. Also, search for ads placed by owners or agents that contain buzzwords and phrases that signal distress, like "owner anxious," "bring all offers" and "priced for quick sale." Many people actually state right in the ad that the home is in foreclosure or preforeclosure. Or use the newspaper in reverse -- you can get distressed owners to come to you by placing newspaper ads or posting signs. Mostly likely you've seen those "I buy homes" ads that seem to be springing up all over. Many other people are posting the same signs, so it can be tough to make yours stand out.
Contact a local agent. Real estate salespeople can search their multiple listing service, or MLS, listings for properties that are in distress or have been on the market for long periods of time. To find REO properties, check with local brokers who specialize in these types of homes. Or go the direct route and simply call the lenders in your area (ask for the resource recovery department).
How do you pay for it? The biggest challenge in foreclosure investing is the money issue. Riskier, subprime and "creative financing" loans from most lenders have disappeared. There are some perfectly legal techniques still available, including subject-to deals and lease-option and lease-purchase transfers, but these are risky because of "due-on-sale," or DOS, clauses in many existing mortgages. Keep in mind that while DOS clauses are common, they're not universal. Mortgages written prior to the 1980s, for example, commonly do not contain them.
Financing options include:
•
Conventional financing.
Opening a line of credit.
Borrowing against existing equity.
Enlisting a partner/investor.
· Conventional financing. If you have good credit, this may be an option. However, some lenders are hesitant to finance foreclosure purchases.
· Borrowing against existing equity. You can get a mortgage (or a second mortgage/home equity loan) on other property you already own. These are generally a specified amount at a fixed rate. This may be easier than getting a loan for the foreclosed property, but the ongoing credit crisis has caused a great deal of tightening in the home equity lending market too, so this isn't as easy as it was just a year ago.
· Opening a line of credit. Usually adjustable-rate loans, these, too, are becoming harder to find because so many homeowners are having trouble meeting their first-mortgage obligations that lenders are reluctant to extend secondary loans. You will need to have high-value collateral (such as property in good condition). The advantage of this route is that you only borrow money when/if you need it, but it is available on short notice, which can come in handy for auction purchases.
Enlisting a partner/investor. This can be a great move, if you can find a partner with deep pockets. There are many investors out there who would like to profit from foreclosures, but don't want to do the hands-on work. For new investors, foreclosures can be risky. There are two major concerns:
2. Maintenance and structural issues. Foreclosures are notoriously high-maintenance. Assume you're getting a fixer-upper. If the homeowner couldn't afford the mortgage, it's likely that he couldn't afford upkeep and repairs, either. These homes are often neglected -- and, in some case, they've been deliberately trashed. It's a good idea to have a home inspector or professional contractor give the home a thorough evaluation.
A few more tips
· Be selective. Skip neighborhoods with lots of foreclosures. It is usually a sign that the neighborhood as a whole will take time to recover from this downturn. Instead, look for a neighborhood with only one foreclosure -- and then scoop it up. Target areas that are doing well (or at least not so bad) overall, and have a good chance of riding out this economic storm fairly well. Places like Detroit, for example, involve a higher risk because of their unemployment problems and other economic challenges.
· Don't get cute. Avoid risky or "creative" financing techniques, at least at first. Until you get a few successful investments under your belt, play it safe. New investors often underestimate the time it will take to fix up and sell a property, which could mean big trouble if you've used a hard money lender or other time-sensitive means of financing. Interest rates are still pretty low, so if you can qualify for a fixed-rate mortgage at a decent rate, that's probably your best bet.
· Get a pro. In order to protect distressed homeowners from scam artists, many states have recently enacted new laws involving foreclosures and the transfer of these properties. Your local county clerk's office (or a real estate attorney) can probably fill you in on the latest legal changes regarding foreclosures. To get some quick info, do an online search using your state and "foreclosure" along with "laws" or "legislation." Unless you consider yourself a real expert in foreclosures, hire an experienced real estate attorney to oversee the deal from contract through closing. This is no place for amateurs.
Editor's note: Bobbi Dempsey is the co-author of "The Complete Idiot's Guide to Buying Foreclosures."
Will housing prices keep falling until they get back to their pre-bubble value? Brad DeLong doesn't think so:
The rise of Asia and the resulting demand by the rich and by governments for U.S. assets to hedge political risk is likely to keep savings glutting for decades. We aren't buiding more superhighways, there are no major transportation improvements on the horizon, America is filling up, and so land-value gradients are on the rise. If the income distribution continues to erode, we will wind up with higher prices for scarce positional goods — chief among which is location, location, location. My guess is that we will ultimately give back half of the doubling...
The rise of Asia and the resulting demand by the rich and by governments for U.S. assets to hedge political risk is likely to keep savings glutting for decades. We aren't buiding more superhighways, there are no major transportation improvements on the horizon, America is filling up, and so land-value gradients are on the rise. If the income distribution continues to erode, we will wind up with higher prices for scarce positional goods — chief among which is location, location, location.
My guess is that we will ultimately give back half of the doubling...
I think that's right, and I'd add the fact that rising average earnings have, over time, increased the percentage of income that families are willing (and able) to spend on housing. Different regions will react differently, and prices everywhere still have a ways to go before the housing market bottoms out, but I doubt that the national average will ever get all the way back to its circa 2000 level.
This is, by the way, both good news and bad. The bad news is that housing prices are probably going to end up permanently higher than they were in the past. The good news is that the market will bottom out a little bit sooner than the most pessimistic estimates would have it, which is the first step toward recovery and stability. Every silver lining has a cloud, and vice versa.
February 28, 2008
Dolans.com Member,
We’re in the process of finishing up our tax returns (thanks to Daria), and believe us, we know how confusing taxes are!
Get a load of this statistic…
A study by the Government Accountability Office showed that commercial tax preparers made errors of $1,000 or more in 100% of the cases brought to them.
Don't File Your Taxes Before Reading Our Brand-New Report
One small mistake can cost you, so you owe it to yourself to read 14 Powerful New Tax Changes You Must Know Before Filing This Year. You’ll learn:
Download your copy now!
Pretty scary, huh? Imagine if your doctor was wrong 100% of the time!
Whether you do your taxes yourself, or have them professionally prepared, the unfortunate truth is most tax returns have mistakes.
You’re almost certainly paying too much (no thank you) or not paying enough. These mistakes could cost you not only thousands of dollars in missed deductions, but even more in penalties and interest in the event of underpayment.
So as we were working on our taxes, we got to thinking that we could help you by passing along some important tax tips.
That’s why we put together our brand-new special report called 14 Powerful New Tax Changes You Must Know Before Filing This Year. We're happy to make this available to valued Dolans.com members like you absolutely free. Click here to read the report now.
Please take a few moments to read your new report, and you’ll confidently file your tax return knowing that you haven’t paid the IRS a dime more than you owe!
Sincerely,
Ken & Daria Dolan
P.S. When you consider that your income taxes are the single biggest expense you have in your life – yes, even more than your mortgage! – you owe it to yourself to learn how to pay the bare-bones minimum. We show you how in this new report. Click here now to read 14 Powerful New Tax Changes You Must Know Before Filing This Year.
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Tax time is a dangerous time. It's all too easy to miss a trick and overpay Uncle Sam. (If you turned 65 in 2007, don't forget you deserve a bigger standard deduction than younger folks.)
Years ago, the head of the IRS told Kiplinger's Personal Finance magazine that he figured millions of taxpayers overpaid their taxes every year by overlooking just one of the money-savers listed below. Claim them if you deserve them ... and cut your tax bill to the bone.
1. State sales taxes. Although all taxpayers have a shot at this write-off, it makes sense primarily for those who live in states that do not impose an income tax. You must choose between deducting state income taxes or state sales taxes. For most citizens of income-tax states, the income-tax deduction is a better deal.
IRS has tables for residents of states with sales taxes showing how much they can deduct. But the tables aren't the last word. If you purchased a vehicle, boat or airplane, you get to add the state sales tax you paid to the amount shown in IRS tables for your state, to the extent the sales tax rate you paid doesn't exceed the state's general sales tax rate. The same goes for home building materials you purchased. These items are easy to overlook. The IRS even has a calculator on its Web site to help you figure the deduction, which varies by your state and income level.
2. $250 educators' expenses. Teachers and their aides can deduct up to $250 they spent in 2007 for books and classroom supplies. If you qualify, put your deduction on line 23 of the Form 1040. You get this deduction regardless of whether you itemize.
3. College tuition. You may qualify to deduct up to $4,000 you paid in college tuition in 2007 for yourself, your spouse or a dependent. This break can pay off if your income is too high to qualify to claim the Hope or Lifetime Learning credit. You also get to claim this deduction regardless of whether you itemize.
4. Student loan interest paid by Mom and Dad. Until recently, if parents paid back a student loan incurred by their children, no one got a tax break. To get a deduction, the law held that you had to be both liable for the debt and actually pay it yourself. But now there's an exception. If Mom and Dad pay back the loan, IRS treats it as though they gave the money to their child, who then paid the debt. So, a child who's not claimed as a dependent can qualify to deduct up to $2,500 of student loan interest paid by mom and dad. More: Deductible Education Expenses
5. Out-of-pocket charitable contributions. It's hard to overlook the big charitable gifts you made during the year, by check or payroll deduction. But little things add up, too, and you can write off out-of-pocket costs you incur while doing good works. Ingredients for casseroles you regularly prepare for a nonprofit organization's soup kitchen, for example, or the cost of stamps you buy for your school's fundraiser count as a charitable contribution. More: Charitable Deductions
6. Moving expense to take first job. Here's an interesting dichotomy: Job-hunting expenses incurred while looking for your first job are not deductible; but moving expenses to get to that first job are. And you get this write-off even if you don't itemize. If you moved more than 50 miles, you can deduct the cost of getting yourself and your household goods to the new area, including 20 cents a mile (and parking fees and tolls) for driving your own car.
7. Military reservists travel expenses. If you are a member of the National Guard or military reserve, you may deserve a deduction for travel expenses to drills or meetings. To qualify, you must travel more than 100 miles and be away from home overnight. If you qualify, you can deduct the cost of lodging and half the cost of your meals, plus 48.5 cents a mile (and any parking or toll fees) for driving your own car. You get this deduction regardless of whether you itemize.
8. Child-care credit. A credit is so much better than a deduction: It reduces your tax bill dollar for dollar. So missing one is even more painful than missing a deduction that simply reduces the amount of income that's subject to tax.
It's easy to overlook the child-care credit if you pay your child-care bills through a reimbursement account at work. Until a few years ago, the child-care credit applied to no more than $4,800 of qualifying expenses. And, the law allows you to run up to $5,000 of such expenses through a tax-favored reimbursement account at work. Now, however, up to $6,000 (for two or more children) can qualify for the credit ... but the old $5,000 limit still applies to reimbursement accounts. So, if you run the maximum $5,000 through a plan at work, but spend more for work-related child care, you can claim the credit on that extra $1,000. That would cut your tax bill by at least $200. More: Deductions for Dependents
9. Estate tax on income in respect of a decedent. This sounds complicated, but it can save you a lot of money if you inherited an IRA from someone whose estate was big enough to be subject to the federal estate tax.
Basically, you get an income-tax deduction for the amount of estate tax paid on the IRA balance. Let's say you inherited a $100,000 IRA, and the fact that the $100,000 was included in your benefactor's estate added $45,000 to the estate tax bill. As you withdraw the money from the IRA and pay tax on it, you also get to deduct a proportional amount of the estate tax paid. If you withdraw $50,000 in one year, for example, you get to claim a $22,500 itemized deduction on Schedule A.
10. State tax you paid last spring. Did you owe tax when you filed your 2006 state tax return in the spring of 2007? Then remember to include that amount with your state-tax deduction on your 2007 return, along with state income taxes withheld from your paychecks or paid via quarterly estimated payments.
11. Refinancing points. When you buy a house, you get to deduct points paid to get your mortgage in one fell swoop. When you refinance a mortgage, though, you have to deduct the points over the life of the loan. That means 1/30th a year if it's a 30 year mortgage -- that's $33 a year for each $1,000 of points you paid. Not much, maybe, but don't throw it away. And, in the year you pay off the loan -- because you sell the house or refinance again -- you may get to deduct all as-yet-undeducted points. You do unless you refinance with the same lender. In that case, you add points on the latest deal to the leftovers from the previous refinancing and deduct the expense ratably over the life of the new loan. See more Deductions for Homeowners
12. Reinvested dividends. This isn't really a deduction, but it is a subtraction that can save you money ... and this is the break former IRS Commissioner Fred Goldberg told Kiplinger's that lots of taxpayers miss.
If, like most investors, you have mutual fund dividends automatically invested in extra shares, remember that each reinvestment increases your "tax basis" in the fund. That, in turn, reduces the taxable capital gain (or increases the tax-saving loss) when you redeem shares. Forgetting to include the reinvested dividends in your basis -- which you subtract from the proceeds of sale to pinpoint your gain -- means overpaying your tax.
TurboTax Premier and Home & Business products include a very cool tool — BasisPro — that will figure your basis for you and make sure you get credit for every dime of reinvested dividends.
13. Jury pay paid to employer. Some employers continue to pay employees' full salary while they are doing their civic duty but ask that they turn over their jury fees to the corporate treasury. The only problem is that the IRS demands that you report those fees as taxable income. You've always had a right to deduct the amount, so you weren't taxed on money that simply passed through your hands. But now tax forms include a line dedicated to this deduction. See more Deductible Employee Expenses
Are you looking for more tax deductions? Visit Kiplinger's What's Deductible? Taxopedia
Here are the latest top selling books on real estate, according to Amazon.com:
1. Be a Real Estate Millionaire: Secret Strategies for Lifetime Wealth Today, By Dean Graziosi
2. The Pre-Foreclosure Property Investor’s Kit: How to Make Money Buying Distressed Real Estate Before the Public Auction, By Thomas Lucier
3. Rich Dad’s Advisors: The ABC’s of Real Estate Investing: The Secrets of Finding Hidden Profits Most Investors Miss, By Ken McElroy
4. The Foreclosures.com Guide to Making Huge Profits Investing in Pre-Foreclosures Without Selling Your Soul, By Alexis McGee
5. Flipping Confidential: The Secrets of Renovating Property for Profit in Any Market, By Kirsten Kemp
6. Real Estate Investing for Dummies, By Eric Tyson and Robert S. Griswold
7. Flipping Houses for Dummies, By Ralph R. Roberts and Joe Kraynak
8. Complete Guide to Real Estate Tax Liens and Foreclosure Deeds: Learn 7 Days (Investing Without Losing series), By Don Sausa
9. Rich Dad’s Real Estate Advantages: Tax and Legal Secrets of Successful Real Estate Investors, By Sharon L. Lechter and Garrett Sutton
10. Investing in Duplexes, Triplexes, and Quads: The Fastest and Safest Way to Real Estate Wealth, By Larry B. Loftis
A little time spent shoring up your credit, crafting your budget and organizing financial documents will go far in smoothing the way to a home purchase. Ideally, you can start working on your home-buying project before you even start shopping for homes. Keep in mind that most buyers take eight weeks to actually shop for a home, according to a survey by the National Association of Realtors. Your financial prep work should start well ahead of those eight weeks.
"My advice is to start to talk to your local Realtor and Mortgage Expert six months ahead of time," says Pat Vredevoogd Combs, a practicing residential broker in Grand Rapids, Mich., and president of the National Association of Realtors. "Most have a good handle on mortgage people in the area. And, there are a lot of really cool mortgage programs out there for first-time buyers."
3 steps to take before applying
1.
Get your credit in shape.
2.
Organize your documents.
3.
Check your budget.
For example, Combs says some local governments will offer interest rate or down payment subsidies to buyers who agree to buy a home in certain areas. And governments or employers may subsidize teachers, fire fighters, police officers, nurses and other service professionals who have difficulty affording a home in high-priced communities. A hospital trying to recruit and retain nurses, for example, might offer a down payment loan, which is forgiven and turned into a grant if that nurse remains employed with the hospital for several years, says Combs.
Before you begin your house hunting, there are three important steps to take to make sure you are eligible for the best interest rates and to make the mortgage application process a breeze.
1. Get your credit in shape: Order your credit reports
One of the first steps any prospective buyer should take is to take advantage of the free credit reports everyone is entitled to request annually, thanks to federal law. While there are many sites on the Web offering "free" credit reports, many of those offers require that you sign up for a free trial of a credit-monitoring service that will cost money if you fail to cancel during the free trial period. The official site where you can get free, no-strings-attached credit reports annually from the Equifax, Experian and TransUnion credit bureaus is www.annualcreditreport.com. You can receive one free credit report from each of these three agencies every year.
David Reed, an Austin, Texas, mortgage banker and author of "Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You," says you should review each of those reports for errors. There could be mistaken entries noting late payments or account information that belongs to someone else. Common names sometimes get mixed up on credit reports, as do "Juniors" and "Seniors" in the same family.
"I see that a lot," says Reed.
If you spot an error, you should write to that specific creditor and request a correction. Bankrate has a work sheet to help you request and track corrections on each of your credit reports.
How's your credit?While paying down your credit card balances will improve your financial picture, this is not the time to close credit accounts because reducing the amount of credit available to you can actually lower your credit score.
"Don't assume you should just get rid of it," says Combs.
If you already own a home and have an existing home equity line of credit, or HELOC, Combs recommends that you not get rid of it in preparation for a new home purchase. "I think you ought to leave it alone. Sometimes buyers are going to need it; they can use it as an easy bridge loan (to cover the down payment temporarily until you sell the old home) so they don't have to go through the trouble of getting one."
2. Organize your financial paperwork
You also should gather up all the financial documents that a lender will need when you submit an application. They include copies of your income tax returns, W-2 wage statements, paycheck stubs, bank and investment account statements, divorce decrees and child support documents and recent credit card statements. Having those documents handy will also help you put together a realistic budget and help you figure out what you really can afford to pay as a down payment and toward subsequent monthly payments for mortgage principal and interest, plus property taxes and insurance.
Documents to gather:
Tax returns for the past two years.
W-2 income statements.
Two most recent pay stubs.
Most recent credit-card statements.
Most recent bank and investment account statements.
Divorce decrees and child support documents.
Your budget.
3. Craft a budget: How much house can you afford?There is a difference between the maximum payment a borrower can qualify for -- which can sometimes be surprisingly high -- and the amount you can comfortably afford, says Combs.
"Each person has to know the difference in his own mind," she says. "If you're just getting by with your current rent payment, and the lender says you can qualify for more, give it some thought."
However, first-time buyers, in particular, often don't know how the tax-deductibility of mortgage interest and property taxes can help offset a mortgage payment that is higher than their rent. A good real estate agent can help you figure out the bottom line.
Keep it steady Once you're closing in on your purchase, and especially after you've applied for a mortgage, do your best not to change your financial picture. "When you sit at the closing table, you will be asked to sign a document that says your credit is the same as it was when you originally applied for the loan," says Combs.
If at all possible, put off job changes. Lenders like to see a steady history of employment and frown on job changes while your application is pending, unless the new job is in the same field and at the same or greater pay.
Written by: Elizabeth Razzi is a freelance personal finance reporter and author of "The Fearless Home seller." She is based in the Washington, D.C., area.
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