Everyday, Linton Hall hears from people who want to enter into home ownership but has found it difficult to secure a mortgage or the down payment needed to purchase property. Although industry-lending standards will remain strict in 2012, there are things that people can do in order to snag an attractive mortgage rate:

1. Be Honest with Yourself: Your Credit Report: As a good credit score is more important than ever in qualifying for home loans, it’s essential to plan ahead if you’re thinking of moving or refinancing your home in order to get the best interest rate. Avoid revolving debt (credit cards) and pay down your balances to increase your score and chances of an attractive mortgage rate.
2. Be Honest with Yourself: Know What You Can Afford: Sure, a huge home may seem attractive—but if you enter into a mortgage you can’t afford, the consequences can be severe. In addition to a lower credit score and even home foreclosure, one will find it much harder to reenter home ownership once finances are restored. Err on the side of caution and make sure that your home is one you can afford. After all, home is where the heart is, right?
3. Shop Around and Compare Options: When making a decision about anything in life, it’s always best to compare one’s options, as well as the pros and cons of each. The same is true when searching for a home and a mortgage rate. Getting quotes from three or four lending companies will help a potential homeowner get the best rate to secure their dream home.

Home ownership is a sweet deal.  There’s nothing like having a headquarters, a home base, a launching pad for life.  Home is the backdrop for the best times of our lives and the place we go to for refuge during the bad times.  In the past few months, just about all of my clients have told me that home ownership is especially sweet at income tax time.

Everybody knows about the advantages of the mortgage deduction, but I’m going to tell you about other, less known ways to reduce the tax bite.  I’m not a tax lawyer or an accountant, so please check with a professional to make sure that you are eligible to cash in on these strategies for reducing your taxes.

By now, most people are aware that the government offers homeowners tax credits for energy efficiency.  These credits aren’t just limited to the purchase of Energy Star qualified dishwashers, refrigerators and other appliances.  Until 2016, homeowners who install solar, geothermal, or wind systems to generate electricity or heat water are eligible for a tax credit worth 30% of the cost of the system, with no upper dollar limit.  The installation of a fuel cell system is rewarded with a similar tax credit, only in this case there is a ceiling of $500 per kilowatt of power generated.  The tax credit includes installation costs.  To learn more about this credit, visit EvergyStar.gov.

Medical-related expenses are another area where you can reduce your taxes.  If you’ve had to add ramps or other features to make your home more safe and accessible to an elderly or handicapped member of your household, you may be able to deduct the cost of the improvement as a medical expense.

Another possible source of a tax break is mortgage debt that has been forgiven by your lender.  This can be of great benefit if you’ve recently had to sell your home in a short sale.  Up until the Mortgage Forgiveness Debt Relief Act of 2007, debt that was forgiven by the lender was considered to be taxable income by the IRS.  Under the Act, the IRS temporarily was barred from collecting tax on this income source.  On December 31, 2012, this tax break will expire. Also, be aware that this break applies only to your principal residence.  Debt on a second home, vacation or investment property that is forgiven by the lender is still subject to taxation by the IRS.  The Mortgage Forgiveness Debt Relief Act of 2007 also extended a tax deduction for private mortgage insurance (PMI), which was originally set to expire in 2007.  The extension allows eligible homeowners to deduct the cost of their mortgage insurance premiums through 2012.  Home-owning families with an adjusted gross income of $100,000 or less qualify for the deduction. Families with incomes up to $109,000 are eligible for a partial deduction. To learn more, read the IRS’s publications Home Mortgage Interest Deduction and Publication 53: Tax Information For First-Time Homeowners, available from the IRS website at www.irs.gov.

Then there’s the home office deduction. If you use part of your home for business, you may be able to deduct expenses for the business use of your home.  These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation.  According to the IRS, there are two basic requirements for your home to qualify as a deduction:

• Regular and Exclusive Use. You must regularly use part of your home exclusively for conducting business.
• Principal Place of Your Business. You must show that you use your home as your principal place of business.  If you conduct business at a location outside of your home, but also use your home substantially and regularly to conduct business, you may qualify for a home office deduction.  For example, if you have in-person meetings with patients, clients, or customers in your home in the normal course of your business, even though you also carry on business at another location, you can deduct your expenses for the part of your home used exclusively and regularly for business.  You can deduct expenses for a separate free-standing structure, such as a studio, garage, or barn, if you use it exclusively and regularly for your business.  The structure does not have to be your principal place of business or the only place where you meet patients, clients, or customers.  Generally, deductions for a home office are based on the percentage of your home devoted to business use.  So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities.

Home Improvement Loan Interest

Home improvement loans can be another deduction.  The good news is that for qualifying repairs such as installing a new roof or new landscaping, you can deduct the interest on the home improvement loan with no limits.  The catch is that ordinary home repairs such as painting don’t qualify.  Only work that increases your home’s value, prolongs its life, or adapts it to new uses are eligible for the deduction.

As you can see from these examples, there’s no place like home during tax season.

If you’ve considered buying a home but have been waiting on the sidelines, think again.  Many of these tax credits and tax breaks will expire in a few years.  With interest rates and home prices still at historic lows, now is the time to take advantage of the tax benefits home ownership offers.

To learn more, contact The Ashley Leigh Team at Linton Hall Realtors.  We are the area’s leading real estate experts.  Whether you’re buying, selling, renting, or interested in our leasing and property management services, we are your one-stop shop.  You can reach us by telephone at (703) 485-4663, or by E-mail: Sales@LintonHallRealtors.com.  Helpful tips and information on home buying are available at the Linton Hall Realtors website, www.LintonHallRealtors.com.

Searching for your dream home can be complicated enough, let alone making sure it can be successfully financed. Regardless if a one is a new homeowner or a veteran, Linton Hall knows how stressful the process can be. To ease this burden, keep the following suggestions in mind when buying and financing a home:

1. Save, Save, Save! It is important to reserve as much money as possible for the down payment. Several first-time homeowners will invest in a mortgage insured by the Federal Housing Association. As a part of this program, buyers can put down as little as 3.5 percent of a home’s cost. If the home doesn’t qualify however, one must apply for a conventional loan—requiring between 10 and 20 percent of the purchase price as a down payment.
2. Be responsible with your finances. Now more than ever, lenders are taking a closer look at applicants’ debt-to-income ratio, in addition to one’s housing-to-income ratio. Generally, responsible lenders follow a strict 28/36 rule. This means that no more than 28 percent of your monthly income should go to housing costs, while no more than 36 percent should be devoted to debts.
3. Make sure your credit report is clean. As a good credit score is critical to getting the best mortgage terms possible, it’s important to review your score and make sure it’s error-free. Under law, you can request one free credit report each year through one of the major credit bureaus (Experian, Equifax, and TransUnion). Before applying for a mortgage, look at your credit score and take active measures to fix any outlying errors.
4. Plan for first-year expenses. Many new homeowners are so concerned with trying to scrape together a down payment that they forget about the additional expenses that go into setting up a house. It’s always a good idea to set aside $5,000-$10,000 for essentials such as a lawnmower, dishwasher, basic decorating, or unexpected repairs that may pop-up. (It would be awful for the air conditioning to stop working during the hot summer months, for example!)
5. Play hard to get and shop around. It’s important to look at several options to get the best home for your dollar. The same holds true when applying for a mortgage—get proposals from at least three or four lenders before deciding on the best offer.
6. Consider buying a “starter” home or “fixer-upper.” Although these properties are often smaller and require minor repairs, they’re also a great opportunity to enter the real estate market at a lower cost, while building valuable equity at the same time. Look for a house that needs a little love and attention, situated in a neighborhood where the other homes are well maintained or being remodeled.
7. ALWAYS do a home inspection before agreeing to any transaction. Even if you’ve just received the offer of a lifetime, buying a home without an inspection first would be a huge mistake. Not only will the professionals be able to alert you to potential problems that may not be obvious to an untrained eye, but it could also be useful should you need to sue the seller for concealing problems.

It makes sense that United States citizens would have strong feelings regarding the housing market, particularly when one takes into account how influential home-ownership truly is. According to the Federal Reserve, two-thirds of Americans own a home that generally accounts for two-thirds of their income. When looking it from this perspective, one would think that people would be rushing to buy, as making residential investments is one of the most effective ways to drive local and national economies.

In spite of its importance, would-be homeowners concentrate on the wrong things. Many people will disregard buying property in a badly-hit area with lower home prices in fear of a bottoming out market consumed by a “shadowy inventory” of unsold foreclosures. Instead of making a residential investment in a home, several Americans don’t think twice paying sky-high rent prices in New York or San Francisco.

From the way Americans are playing the real estate market in recent years, one would think that renting (as opposed to buying) would be the most ideal and cheapest option. However, home prices in the United States are down a third since 2006, while rent has been increasing steadily for years, according to the Department of Labor—ultimately making it cheaper to buy than rent in the current market. Let this example put things into perspective: average home prices in Las Vegas during 2011 were about six times the annual rent, while New York prices are 36 times rent.

Unfortunately, this happens because many don’t understand real estate as a principle, despite it being a simple asset to comprehend. When one buys a home, they can live in it rent-free or lease it out to someone else—there is no other value to it. Think of rent to housing as earnings are to stocks, and it’s clear that the only qualified approach to real estate is to compare a home’s price to the present and future rents and nothing else.

So when is the right time to buy? Many real estate economists claim that the best time to enter into home ownership is when the prices are 15-times annual rents or lower, which is the case in about 75% of American cities. Economist for the Center for Economic and Policy Research, Dean Baker, explains that according to “…a historical examination of the price-to-rent ratios, home prices are the closest to fair value when they are about 15-times gross annual rents.” Using this rule of thumb, the hardest-hit cities are incredibly cheap while already-pricey areas look even more expensive.

If you happen to live in a city were home prices fall under this index and it fits your lifestyle, buying property now is a smart financial investment. Entering into home ownership offsets the permanent need for housing, a hidden liability often neglected when choosing between buying and renting. Regardless if a home is purchased or not, you’ll always need somewhere to live. Each year one waits to buy another year that they must accumulate rent money, in an economy where rent prices have traditionally risen to align with inflation.

Should the idea of purchasing a home be attractive to you, the best course of action is to contact experienced real estate brokers in your area. This can be very beneficial to investigating your local market as agents are the ones who would have home and rent pricing information in your area. Most importantly however, reaching out to knowledgeable real estate experts can help you make an informed decision about a long-term investment that not only effects your finances but also your family as well.

As we conclude 2011 and head into 2012, Virginia’s housing market will likely continue to stabilize, due to factors like low interest rates, rising residential rental rates, and an improving household balance sheet based on increases in household saving habits.

Highlights:

• Home sales increased in nearly every region of Virginia when comparing the fourth quarter of 2011 to the fourth quarter of 2010. Despite a 9% decline in Northern Virginia, five of Virginia’s seven regions experienced a sizable increase in home sales, the most substantive in Hampton Roads / Chesapeake Bay area with a 12.9% increase.
• After slightly inching upward in the third quarter of 2011 to a median price of $235,000, home values declined to a median price of $220,000 in the fourth quarter of 2011. It is important to note, however, that a decline between the third and fourth quarters is the normal trend in Virginia.
• The Commonwealth witnessed a remarkable 26% decline in foreclosures when comparing the fourth quarter of 2011 to the third quarter of 2011. The Roanoke / Lynchburg / Blacksburg region was the only area of the Virginia to experience an increase in foreclosures during the fourth quarter of 2011.
• Virginia has experienced a slight decline in its unemployment rate from 6.5% in third quarter to 6.2% in fourth quarter 2011.

In an annual survey released Tuesday, January 3, 2012, the Association of Foreign Investors in Real Estate (AFIRE), named the top five cities for foreign investment in 2012 as New York, Washington, D.C., San Francisco, Boston and Los Angeles.  The investors who took the survey collectively hold more than $874 billion of real estate globally, including $338 billion in the U.S.  Sixty percent of them say that they plan to increase their U.S. investments this year.  Fifty-nine percent of respondents said that the U.S. offers the most stable and secure real estate investments worldwide — the highest level of respondents’ confidence in the U.S. since 2006.

Multifamily complexes remain the most popular investment property type for foreign buyers, according to the survey.  The survey was conducted in the fourth quarter of 2011 by the James A. Graaskamp Center for Real Estate, Wisconsin School of Business

A report by the National Association of Realtors also identifies foreign investors as a force to be reckoned with.  NAR says that a “significant share” of home purchases are made by people whose primary residence is outside of the U.S.  Internationally oriented sales amounted to $82 billion for the year ending in March 2011, according to the most recent data from the National Association of Realtors, about 8 percent of total U.S. sales and $16 billion more than the same period last year.  These figures are part of a growing trend: for the 12 month period ending April 2010, purchases of residential homes by foreigners totaled $64B, compared to $36B for the 12 month period ending April 2009.

Why Northern Virginia is a Magnet for Foreign Investor

There are many reasons why these investors have targeted our area:

The U.S. real estate market is one of the safest and most stable markets in the world.  It offers growth-oriented tax laws, a consumer-friendly judiciary, and strong private property rights.

Changes in the value of the dollar have also made US real estate more attractive to foreign vendors. The declining value of the dollar relative to their home currencies, combined with declining residential real estate prices in the US, has made US real estate a deal too good to pass up.  These investors know that as the market rights itself, this advantageous situation cannot last and they are snapping up real estate bargains at a furious pace.

Our area’s economy has recovered faster than the rest of the country.  The unemployment rate in Fairfax County is 4.2% as compared to a rate of 4.5% for Northern Virginia and 8.6% for the nation as a whole.  Fairfax County was featured as one of America’s richest counties in a recent issue of Forbes Magazine.  This year the metropolitan area added 18,600 jobs and half of them are located in Northern Virginia.  Unsold housing inventories are low and the figure for average days on the market for Northern Virginia homes is only 60 days.  Because the Washington, DC area offers proximity to U.S. government policymakers and international organizations such as the World Bank and International Monetary Fund, Northern Virginia will remain a favored location for diplomats and the businesses that cater to their upscale lifestyle.

Our region’s popularity with foreign investors is yet another proof that our market is well on the way to recovery.  Additionally, there is a great deal of pent-up demand in our area due to population growth, employment levels and the “doubling up” phenomenon (the tendency for people to live with parents or in group houses during hard times).  As this pent-up demand translates into home buying, prices will rise dramatically.

What all this means for you is that the appeal of our market has gone global and those who sit on the sidelines and continue to wait for the market to “bottom out” will miss the biggest and best deal of the century.

The time to buy is RIGHT NOW while you still can take advantage of historically low interest rates and incredibly low prices.

Linton Hall Realtors is the area expert in distressed properties.  Our agents can show you a wide variety of foreclosed and short sale properties that will appeal to every taste and budget.  We have close working relationships with every mortgage lender in the area and have extensive experience in quickly and successfully negotiating and closing foreclosures and short sales.  You can start your hunt for the bargain property of your dreams right now by visiting the buyers section of the Linton-Hall Realtors’ web site.  There you will find up-to-the-moment information including a prequalification service so that you will know exactly how much you can borrow and at what rate, a homes by e-mail service so that you can get e-mail alerts for homes that meet your specific criteria, community videos, first time homebuyer information, mortgage information and more.

To get involved in this promising market, you need a local expert to guide you.  The local community expert is Ashley Leigh at Linton Hall Realtors.  He has sold over 4,500 homes.

Ashley is optimistic about the Year 2012 real estate market.  “Now is the time for all buyers to get into the marketplace. This is an excellent market not just for investors, but also first time buyers, as well as move-up and move-down buyers.  Interest rates are extremely low and I expect them to be low throughout Year 2012,” states Ashley.

Overall, the local market has bounced up nearly 30% in appreciation from its bottom in Year 2007.  Prices are trending upward in most price ranges.  It really is the time to buy!

Contact Ashley Leigh at Linton Hall Realtors, Phone: 703-485-4663, Email: ALEIGH@LintonHallRealtors.com , website: www.LintonHallRealtors.com.

What is a “short sale”?  A short sell happens when the lender is shorted on a mortgage, meaning the lender accepts less than the total amount that is due. To avoid going through a foreclosure, a lender will sanction a short sale by letting a buyer purchase the home for less than the mortgage balance while the home is in pre-foreclosure stage.

Below is a sample set of steps for a short sale:

• Seller signs the listing agreement with a real estate agent subject to selling as a short sale with third party approval.

• The agent finds a buyer who makes an offer for less than the amount of the mortgage.

• Seller accepts the potential buyer’s purchase offer.

• Seller’s lender accepts the potential buyer’s offer.

• Transaction close when the buyer delivers the funds, the lender releases the lien and the seller delivers the deed.

Qualifications for a Short Sale:

• Home’s market value has dropped.

• Mortgage is in or near default status.

• Seller has fallen on hard times.

• Seller has no assets.

Contact Us to see if a short sale is right for you

HousingWire.com

Wells Fargoand Citigroupcontinue on pace to score high marks for foreclosure prevention in 2011, according to Fannie Mae.

The government-sponsored enterprise released its third-quarter list of top servicers Thursday. Ally Financialand Everhome Mortgage joined Wells Fargo and Citi among the largest servicers on track to perform at or above a median level.

Bank of America, JPMorgan Chaseand PHH Corp.did not make the projected year-end list, but Fannie said JPMorgan and PHH made progress in the third quarter.

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