Families Step in as Lenders to Help Kids Buy a Home

Families Step in as Lenders to Help Kids Buy a Home. Image courtesy of photostock / FreeDigitalPhotos.net

Employment troubles, large student loan debt, and tight underwriting standards have been major hurdles holding back potential first-time home buyers in their 20s and 30s, the Los Angeles Times reports.

In 2012, Americans who were 30 to 34 had the lowest home ownership rate of any similarly aged group in recent decades at 47.9 percent, according to demographer Chris Porter of John Burns Real Estate Consulting. As comparison, Americans born between 1948 and 1957 had a 57.1 percent ownership rate by the time they were in the 30 to 34 age group.

Studies have shown a strong desire among 20- and 30-somethings to buy a home, but their finances are holding them back from making such a move. As such, more relatives are stepping in to provide assistance with downpayment and closing costs. Twenty-seven percent of first-time buyers received a money gift from relatives last year.

In some cases, instead of just handing over the money, some family members also are serving as “mini-lenders” themselves to help their adult children purchase a home, The Los Angeles Times reports. The family members may provide a second mortgage or first mortgage that are designed to deal with the young relative’s financial hurdles too, like paying off student loans to reduce debt-to-income ratios (which has been a hurdle for many in qualifying for a conventional loan). What’s more, the loans can provide annual returns to family members that have been known to perform better than money-market funds or bank deposits.

Companies are stepping in to help structure and service these intra-family transactions. For example, National Family Mortgage says it’s business has been booming in this area. It has serviced more than $155 million of intra-family transactions in the last two years and expects to service $150 million in volume in 2014 alone.

Source: “Finding Ways to Help Young Adults Make Their First Home Purchases,” The Los Angeles Times (Feb. 16, 2014)

Not Just the Weather That’s Frozen Sales?

Not Just the Weather That’s Frozen Sales? Image courtesy of Tina Phillips / FreeDigitalPhotos.net

Many industry analysts have pointed to the frigid temperatures and harsh winter weather this season as the culprit behind the drop in new- and existing-home sales in both November and December. But some experts are saying that Old Man Winter is getting an undue amount of blame for the freeze in the real estate market.

Lately, sales around the country have fallen by some of the largest numbers in the West, where cold weather has been less of a factor, CNBC reports. In Southern California, closed sales fell 21.4 percent in December compared to November, and they were down nearly 10 percent from December 2012, according to DataQuick.

DataQuick President John Walsh says low inventory as well as the rise in mortgage rates and home prices are likely big contributors to the slowdown in sales.

But in “the Northeast and the Midwest, truly, those weather patterns have impacted the listing market,” Richard Smith, CEO of Realogy, told CNBC. “So until we see some relief there, you’re going to see lower inventory levels. And then one day it’s going to spike, and it will be some time in early spring — of that, we’re fairly optimistic, but I can’t predict that any more than you can.”

Overall, “we may just have to wait for the snowstorms to stop in order to glean what’s real and what’s the impediment of weather,” writes analyst Peter Boockvar of the Lindsey Group.

Source: “Beyond ‘Frozenomics’: What’s Hurting the Housing Market,” CNBC (Feb. 13, 2014)

Tax Tips for You and Your Clients

Tax Tips for You and Your Clients. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

This coming Tuesday, Feb. 18, is the deadline for financial institutions to send their customers the documents they’ll need to file taxes if they received capital gains, interest dividends, or profits from real estate sales. Finally, you’ll have all the paperwork – including forms 1099 – you need to do your taxes. And this year’s tax season is shorter than usual, so it’s time to get moving!

But there are also numerous changes you need to know about before diving in. If you’re like a lot of real estate professionals who made a significantly larger amount of money in 2013 than they did in 2012, prepare yourself for a bit of a shock when it comes to your tax bill. This is especially true if you made estimated payments based on 2012 numbers, rather than your presumably larger 2013 income.

REALTOR® Magazine created two videos to help you prepare for tax-related changes. In the first video embedded here, you’ll learn about how the IRS has made it easier for you to claim your home office deduction, and how the agency has increased the mileage allowance, handy for all the time and money you spend driving buyers to and from listings in your car.

This second video looks at some of the tax changes to be aware of if you or your client is in a higher-income bracket.

Did you know that President’s Day is one of the busiest times for IRS phone lines? Here are some of the most common taxpayer questions, which have been answered by IRS.gov. These will not only help you, but also provide great tips you can pass on to your clients.

1. What is the status of my refund? The IRS will issue most refunds in less than 21 days. You can easily check the status of your refund by using “Where’s My Refund?” on IRS.gov or the newly updated smartphone app, IRS2Go. You’ll need verification information from your tax return to get the status of your refund.

2. Can I get a copy of my tax return or transcript? You can easily order a copy of a return or transcript on the IRS.gov website, on our IRS2Go smartphone app or by mailing the IRS a completed Form 4506-T.

3. What if I can’t pay my tax bill? If you owe taxes but can’t pay, use the “Online Payment Agreement” tool. It can help you determine in a matter of minutes whether you qualify for an installment agreement with the IRS. There is also an Offer in Compromise Pre-Qualifier for those whose tax obligations are more serious. This tool helps determine if you qualify for an agreement with the IRS to settle your tax liability for less than the full amount owed.

4. Where can I get help preparing my taxes? Try the IRS Free File program. You get to choose brand name software to e-file your taxes for free. Also, there are free tax preparation sites available nationwide from IRS-certified volunteers. Find a location nearby by searching “Free Tax Help” on IRS.gov. Certain income limitations apply.

5. What if I have tax law questions? If you are wondering whether to file a tax return or who to claim as a dependent, start by typing a simple keyword search on IRS.gov. You can also use Publication 17, the annual, searchable income tax guide. Or try the IRS Tax Map, where you can search by topic or keyword to get tax information. Taxpayers can even call TeleTax at 1-800-829-4477 for a recording of information on a variety of general and business tax topics.

Sources: REALTOR Magazine, IRS.gov, and “Where Are My Tax Forms? When Your W-2, 1099, 1098 & Other Forms Aren’t In The Mail”  Forbes (Feb. 7, 2014)

3 Hot Web Design Trends for 2014

3 Hot Web Design Trends for 2014. Image courtesy of KROMKRATHOG / FreeDigitalPhotos.net

Does your website need an update? Forbes.com recently highlighted three leading trends in Web design for this year. Which trend will you choose as the basis to lead your Web design forward in 2014?

1. Responsive design: A website that is optimized for multiple screens — smartphones, tablets, and desktops. By using responsive design, the website can be seamlessly enjoyed in any format. It’s quickly becoming a standard, and for those who don’t use it, it can even affect your Google rankings, according to Forbes.com.
2. Simple design: Using best Web design practices so visitors can easily get what they need at your website without complication. This includes powerful images, meaningful content, and purposeful navigation. A Web team using this approach will likely do testing to gauge response with the website to make sure it’s user-friendly.
3. Storytelling design: Tell a story through concise, compelling copy that is supported by strong images as users scroll down the page. This approach allows users to discover you and your company. You take the user from top to bottom of your Web page, and the process unfolds like a fairy tale. As Forbes.com notes, challenge your Web team with the following: “I want new visitors to be able to move down from the top of the page to the bottom in 30 seconds and have a crystal-clear idea of who we are and what we do. And for repeat visitors, I want them to easily identify where to go to make a purchase, or visit our blog, virtually without having to look.”

Source: “Top Web Designs in 2014,” Forbes.com (Feb. 10, 2014)

Helping Unmarried Home Buyers Navigate the Purchase

Helping Unmarried Home Buyers Navigate the Purchase. Image courtesy of imagerymajestic / FreeDigitalPhotos.net

More couples these days are purchasing homes together before they marry, and some do not intend to marry at all. Unwed twosomes need to determine how to hold the title: whether the home will transfer to the surviving partner if the other dies, as joint tenants with the right of survivor-ship; or whether a percentage of ownership will pass to the beneficiary named in the will through a tenants-in-common arrangement.

They also need to consider whether both or just one partner will sign the promissory note. If both sign it, they both could be pursued by the bank in the event of foreclosure; but if only one partner signs it because he or she has a job, better credit, and contributes more to the down payment and mortgage, then he or she will be on the hook alone — regardless of how they hold the title.

Taxes must be discussed as well, mainly with regard to whether the partners will divide the mortgage interest and property tax write-offs equally if the payments are not equally divided between the two of them. They also must consider what would happen if they break up after the home purchase.

“I try to remind them that this is 100 percent business,” says Nanci Lieneck of Weichert Realtors in Ridgewood, N.J.  “They are joint owners. Married or not, they will own a property, and you have to think of that in a business perspective.”

Source: “Crucial Questions for Unmarried Home Buyers,” NorthJersey.com (Feb. 9, 2014) & realtor.org