Repairing Your Credit to Buy a Home

Repairing Your Credit to Buy a Home

 

Buying your first home is an exciting milestone.  Buying a home is a multi-step process. The most important step is to insure that your credit score is as high as possible.  Your FICO credit score is a three digit number ranging from 300-850. The higher the score, the better interest rate which equates to a lower payment.  For a small fee, your credit score is available through myfico.com   If your credit is less than stellar there are things you can do to improve it before meeting with a mortgage lender.  

  • The first step in managing your credit is to familiarize yourself with the credit reports.  There are three credit bureaus: Equifax, TransUnion, and Experian. Each bureau will allow you to review your credit report for free once a year.  When you are planning on purchasing a home, it is in your best interest to download or print your report from each bureau. If you want to make sure everything is accurate with no intention of buying for a few months or a year, then you should pull your report from a different bureau every few months.  

 

  • Once you have reviewed your credit report(s), dispute any incorrect information.  Most people find a few discrepancies. It may be as simple as a misspelled name or an account number that has been transposed by mistake.  Other discrepancies could be more damaging such as an account or purchase that you never authorized. This could indicate identity theft and should be addressed immediately.  Any error could cause your credit score to be many points lower. Using a service like Credit Karma will allow you to review your credit reports, learn your FICO score, and allow you to dispute any discrepancies electronically.   

 

  • After you have reviewed your credit reports and reported any inaccuracies, you can begin to build your credit up and improve your score.  First and foremost try to pay down or pay off new or high interest credit cards. It can be hard to pay extra on accounts especially when you are short on cash.  My best advice is to follow a strict budget, cancel any memberships that aren’t being used or you can go without for a while, and sell items to bring in extra income. The ratio of the balance on your credit cards compared to the credit limit is called your credit utilization ratio. If you have a $1000 limit on a card with a $600 balance, your credit utilization ratio is 60%, which is considered very high. You want to pay down the balances on all of your cards as low as possible. The lower the balances, the higher your credit score will be.  

 

  • From this point on make sure you pay every bill on time every month.  Even one late/missed payment one month can hinder your credit score.

 

  • Now that you have increased your credit score and cleaned up your credit reports, it is time to meet with a mortgage lender to get pre-approved and start house shopping.  The mortgage lender will pull credit reports, verify your income, bank documents and tax filings. We can recommend local lenders that are knowledgeable and can work with individuals with lower credit scores, as well as offer special programs for teachers, police officers, and veterans.  

 

  • One last and extremely important tip:  Once you have your pre-approval and until you have closed on your new house, do not open any new accounts or make any large purchases.  This can hinder the mortgage process and cause you to lose your dream home.

 

When you are ready to purchase your home, or if you have any questions regarding the home buying process, please give me a call at 970.393.3424 or sign in to my website.

Follow me on Facebook, Twitter, Pinterest, and YouTube.

If you would like more information on how to repair your credit, please click on the following links:

https://www.creditrepair.com/articles/loan-center/buying-a-home-with-poor-credit

https://thelendersnetwork.com/how-to-buy-a-house-with-bad-credit/

https://www.inc.com/jeff-haden/12-simple-steps-to-repair-your-credit-and-increase.html

 

Have a Heart ❤️

Have a Heart ❤️

February is National Heart Month.  The Center for Disease Control tells us that approximately 610,000 Americans die from heart related deaths each year.  Heart disease is the number one killer for both men and women.  What can we do to lower these statistics? 

It may take a little research or a conversation with parents or elders in your family to find out who has had heart attacks, strokes, high blood pressure, and even diabetes.  All these ailments can cause damage to the heart muscle.  Even if your family has had a clean bill of heart health, other factors such as thyroid disease, chemotherapy, poor diet, lack of exercise and heavy alcohol consumption can also contribute to heart disease. 

Early symptoms of heart disease can be barely noticeable or ignored completely.   Get regular check ups with your primary care doctor or cardiologist.  Contact your doctor if you feel any pain, pressure, or discomfort.  Chest pain isn’t always a tell-tell sign of a heart attack so be sure to tell your doctor if you have experienced any of the following:

  • Pain, numbness, and/or tingling in the shoulders, arms, neck, jaw, or back
  • Shortness of breath when active, at rest, or while lying flat
  • Chest pain during physical activity that gets better when you rest
  • Lightheadedness
  • Dizziness
  • Confusion
  • Headaches
  • Cold sweats
  • Nausea/vomiting
  • Tiredness or fatigue
  • Swelling in the ankles, feet, legs, stomach, and/or neck
  • Reduced ability to exercise or be physically active
  • Problems doing your normal activities

To improve your heart health start by taking these steps:

  • Increase your physical activity.  Start with something you enjoy like taking a brisk walk, biking, dancing, walking during your golf game, bowling, etc.
  • If you smoke, quit.  Smoking leads to hardening of the artery walls which causes heart disease. Quitting later in life will still have some benefit and will lower your chance of getting cancer.
  • Follow a heart healthy diet which includes lots of fruits, vegetable, whole grains, and less sugar and salt.
  • Keep a healthy weight.  If you are wondering what a healthy weight should be, click here.
  • Keep your diabetes, cholesterol, and high blood pressure under control.  Be sure to take all your medications prescribed by your doctor as directed.

Unfortunately, heart disease is not just a condition for adults.  1 in 100 infants and children are diagnosed with Congenital Heart Disease.  Most congenital heart defects are holes or leaky valves.  Although, there are more serious defects such as heart valve defects, problems with the heart walls, issues with the heart not pumping correctly, and bad valve connections.  Treatment for some defects can be managed with surgery, medications, or other procedures.  You will need to be under the care of a cardiologist for regular check ups. 

If you or someone you know is expecting or plan to become pregnant, encourage them to talk to their doctor around the 20 week mark for possible testing of CHD.   

For more information on heart disease causes and prevention, please click on the links below:

American Heart Association    www.heart.org

National Heart, Lung, and Blood institute    www.nhlbi.nih.gov

National Institute of Health     www.nia.nih.gov/health/heart-health-and-aging

Center for Disease Control   www.cdc.gov/heartdisease/facts.htm

Web MD                               www.webmd.com/heart-disease/guide/congenital-heart-disease#1

Children’s Healthcare of Atlanta    www.choa.org/heart

Homestead Exemption:  What You Need To Know

Homestead Exemption: What You Need To Know

Happy New Year!!!  It is time to gather our 2018 files and prepare to file taxes.  If you are a new home owner, you may wonder if a homestead exemption is for you.  If so, where do you get an application and how do you file?  Allow me to shed some light on this …

In certain states including Texas a homestead exemption will help protect a homeowner’s principal residence from creditors and will also affect your property taxes. Under the homestead exemption, creditors cannot force you to sell your home to satisfy a debt (this does not pertain to mortgage foreclosure or defaulted property taxes).  For example, a company financing your car loan cannot force a sale of your home to pay for the defaulted automobile loan.  Another advantage of homesteading is it will shield a portion of your home’s value from property taxes.  Typically it will shield the first $25,000 to $75,000 of the value from property taxes only requiring you to pay for the remainder of the assessed value.  In other words, if your home’s county assessment is $250,000 and your homestead exemption is for $25,000, you are only required to pay property taxes on $225,000. 

There are several partial and absolute exemptions available. Some of these exemptions include General Residential Homestead, Over 65, Over 55 Surviving Spouse, Disability Homestead, Disabled Veterans, Charitable, Religious, Freeport and Pollution Control.

For more information on Kaufman County, Texas property taxes click on the following link: http://www.kaufman-cad.org/tax-information/faq/ or google your local county appraisal district.

Applying for the homestead exemption can be done in 4 easy steps:

  • Download the application form from your appraisal district’s website–it is free to apply! Note: You must occupy the property by January 1, 2019 to apply.
  • Complete the form and attach copies of your Driver’s License. Note: The address listed on your Driver’s License must match the address of the homestead. Check with your local tax appraisal district for further information and requirements before submission.
  • Return the form to the Appraisal District by April 30, 2019.
  • The homestead exemption will remain in place as long as the owners occupy the property as their homestead. If the owners sell the property or no longer occupy the homestead, they should request a removal of the exemption. Failure to do so may result in the assessment of penalties and interest on the portion of taxes that should not have been exempted. 

In the event you wish to dispute your property’s assessed value or would like to know what your home is worth, please feel free to contact me for a free comparative market analysis by clicking on the link below. 

                                                                      https://alessiobassrealestate.com/what-is-my-home-worth/

 

Winter Hazards and How to Avoid Them

Winter Hazards and How to Avoid Them

Winter is one of the most beautiful and dangerous times of the year.  Frigid temperatures, snow and ice, and sickness are just a few of the hazards that come with cooler weather.  Listed below are a few tips for keeping you safe and healthy during this time of year.

According to Safe Winter Roads, approximately 116,000 Americans were injured and 1,300 were killed on icy snowy roads every winter. OSHA has some tips to keep you and family safer on the winter roads:

Brakes:  Brakes should provide even and balanced braking. Also check that brake fluid is at the proper level.

Cooling System:  Ensure a proper mixture of 50/50 antifreeze and water in the cooling system at the proper level.

Electrical System:  Check the ignition system and make sure that the battery is fully charged and that the connections are clean. Check that the alternator belt is in good condition with proper tension.

Engine:  Inspect all engine systems.

Exhaust System:  Check exhaust for leaks and that all clamps and hangers are snug.

Tires:  Check for proper tread depth and no signs of damage or uneven wear.  Check for proper tire inflation.

Oil:  Check that oil is at proper level.

Visibility Systems:  Inspect all exterior lights, defrosters (windshield and rear window), and wipers. Install winter windshield wipers.

It is also very important to keep an emergency kit in your call that includes:  

  • Jumper cables
  • Flashlight with extra batteries
  • Emergency flares
  • Blankets
  • Bag of sand or cat litter
  • Windshield ice scraper
  • Water/snacks

During this festive time of year, millions of people are putting up twinkling lights inside and outside of their home.  Before you string up the merriment, make sure to inspect all extension cords, lights, and electric decorations for any damage.  Always check the UL rating to make sure that the lights you are putting up are appropriate for indoor or indoor/outdoor use. If you are unsure, there will be a green UL hologram for indoor and a red UL hologram for indoor/outdoor.  Never ever place indoor lights or decorations outdoors because it puts you at risk for electric shock or fire.

Staying healthy during the winter season can be tricky.  Even though we all know what we need to do to keep from getting sick, it always bears repeating.  

  • Wear your coat, scarf, hat, and gloves.  Prolonged exposure to cold temperatures can force your body temperature to drop too low known as hypothermia.  Hypothermia is a medical condition that requires immediate treatment for a full recovery. If left unchecked, it can kill you.
  • Wash your hands.  Wash your hands before you eat, keep your fingers out of your eyes and nose.  Wash your hands after you sneeze or cough.
  • Get plenty of sleep.  Lack of sleep can affect your immune system.  Studies have shown that those who do not get quality sleep or enough sleep are more susceptible to catching viruses such as the common cold.  Lack of sleep can also affect how fast you recover.
  • Fruits are not just for the summer!  Vitamin C is a key vitamin to help you stay healthy or heal quickly if you do become sick.  Citrus fruits such as oranges, grapefruits, lemons, and limes are packed full of vitamin C. Eating a healthy diet with plenty of fruits and vegetables can be challenging this time of year, but your immune system will thank you for it.

I know that this area of Texas does not deal with snow very often, but when it does happen these tips will help keep you in good shape. Clearing Snow from your roof or your sidewalk can be hazardous.  Shoveling snow sends over 11,000 people to the hospital each year. While most of the patients are not hurt by the act of shoveling itself, many of them are victims of heart attacks from the strenuous, sudden exercise.  Make sure you stretch before you start shoveling and take frequent breaks. Keep your hands at least a foot apart on the shovel handle and try to push the snow (like a snow plow) whenever possible to minimize strain. If you know you have health issues, it may be best to find someone else to shovel for you.  In the Dallas/Ft. Worth area we do get the occasional ice storm.  The best advice is to stay home if at all possible during these times.  If you must get out, make sure to take it slow and leave plenty of room between the you and the vehicle ahead of you.  

These are just a few items to help keep you safe and healthy during the colder months.  What other tricks do you use during this time of year? I would love to hear in the comments below.

Remember to sign into my website (www.alessiobassrealestate.com) to keep up to date on all of your real estate questions and please follow me on your favorite social media outlets.  

Happy Holidays!

The Power of Gratitude

The Power of Gratitude

November is the month of gratitude.  Every November you will hear about friends listing the things they are grateful for, or the tradition of going around the table at Thanksgiving listing the people, places, or things that provided a memorable impact for you.

So, you have to wonder ….  is gratitude really a thing?  Is there power behind gratitude?   Is it really important? Will being more grateful really improve life?  The answer is an overwhelming yes, yes, yes and YES!

Gratitude is an emotion that relates to our ability to feel and express thankfulness and appreciation.  Simply put, being grateful allows us to focus on the positives in life rather than the negative. Did you know you are unable to be grateful and worried at the same time?  Our brains do not allow two different emotions to be present at the same time. So it is cognitively impossible to think about how blessed you are to purchase your dream home while simultaneously stressing about property taxes.  

Being grateful helps with money issues, job performance, relationships (both personal and professional) and also our health.  I am not suggesting that just because you are grateful that you will automatically start getting more money. But by being grateful for the money you have and learning to be content with your material possessions may help you want for less.  When you want for less, you buy less, thus saving you money. When you are saving money, you have more money.

Practicing gratitude can also help you in your professional life.  Kulraj tells us that being content in our current situation at work and having a reduced need for exterior pleasures will allow us to harbor patience, which in turn develops more logical, balanced, and thoughtful decision-making skills.  Having patience will have a positive effect on business situations including not jumping at deals, taking offers or opportunities only for short-term gains and helping reduce negative discussions with co-workers by being more understanding of others’ actions.  All these things will allow your work day to become more relaxed and productive.

Science shows us relationships are key to our survival.  Love is not just an emotion, but an essential need for humans.  So how do we get and keep the best possible people into our lives?  The answer is really quite simple, light attracts light. When you are practicing gratefulness, you instantly become happier, healthier, are slow to anger and judgement, and even more energetic.  Who wouldn’t want to be around a person that exudes good will and patience towards everyone and everything? Of course, we all have our moments when we curse at the car that just cut us off or are upset because our spouse left dirty dishes in the sink again; but it’s what we do with that energy that will decide how the rest of our day goes.  Learning to be thankful for a thoughtful spouse that yes, left the dishes in the sink, but was kind enough to bring you a cup of coffee while you were in the shower. Perhaps the person who cut you off in traffic had a late start because the electricity is out at their house and they’re afraid of getting fired if they are late. Showing them a little grace instead of honking the horn will go a long way in helping your day go well.  As the saying goes…., “Only you can make it a great day!”

Gratitude is important to our health as well.  Greater optimism results in increased self-esteem, higher energy levels, stronger immunity, and lower blood pressure.  When we embody gratefulness we begin to experience less stress, anxiety, depression and even headaches. When we begin to feel better physically, we automatically want to take better care of ourselves and effortlessly transition into a better diet and more activity.  

So you’re convinced that gratitude is key to a happy life, but how do you really begin to practice?  The simplest start would be to keep a gratitude journal. Many different styles of journals can be purchased or you can just as easily keep a notebook next to your bed and write 3 to 5 things down that you are thankful for at the end of the day and start your morning with another 3-5 items before your feet hit the floor.  Why not take a walk and soak up the beauty found only in nature. Take time to have a pleasant conversation with someone you haven’t spoken to in some time. Sit in a comfortable chair, close your eyes and think about a favorite memory for a few minutes. There are innumerable ways to pause a moment to appreciate the moments in your day.

Practicing gratitude is a simple and effective way to improve your life on many levels in just a few minutes a day.  

So my question is simply this:  What are you grateful for today?

Estate Planning 101 – Part Two

Estate Planning 101 – Part Two

Estate Planning 101

Part Two

Part two of this blog series touches on wills and testaments. 

Wills are important. They insure your final wishes are implemented.  Having a will is not just for the wealthy as many believe.  It is often presumed that everything will automatically go to their spouse in the event of their death.  This is not always the case. In the state of Texas, if you die without a will, your estate will automatically transfer to your next of “blood” kin.  In other words:

  • If you are single w/o children – your entire estate will transfer to your sibling(s), parents, or nieces and nephews depending on the statute.
  • If you are single w/children – your children will inherit your estate.  If they are underage, they could be sent to live with their nearest blood relative and that person would be in charge of their inheritance until they are of age.
  • If you are married w/o children – your spouse will inherit the community property (what you have acquired as a married couple), and your next of kin (sibling, parent, etc.) would receive your personal property (things you acquired before marriage or solely in your name depending on the statute).
  • If you are married w/children – your spouse would receive the community property and only receive one-third of your separate personal property and a life estate (the right to use the property until his or her death).  The remainder would be inherited outright by the children of the deceased.
  • If you are married w/o children – your spouse would be entitled to the community property and your entire personal property, but if the deceased has siblings or parents, the surviving spouse is only entitled to half of the personal property.  The remainder would be passed off to the parents, siblings, or decedents of siblings as set forth by the statute.

As you can see, dispersing of one’s property is not as cut and dry as we would like to believe.  It really is in your loved ones best interest to have a decree in place so there is no confusion or conflict. If you would like research further, click on the link for a more thorough explanation: Texas Estate Codes.

A will and testament allows you to name a guardian for your children if the other parent is unfit or deceased, how long you wish to remain on life support (if at all), how you want your remains to be handled, and of course who or what will receive any personal property or money.

It is best to consult with a qualified attorney.  Estate attorneys are well versed in the state’s laws regarding community and personal property and can make recommendations if you decide to set up a trust for your heirs or for handling complicated business or personal issues. 

If your instructions are fairly cut and dry, there are websites and software options that make it easy to do it yourself for a fraction of the cost.  Legal Zoom and Quicken WillMaker Plus are two highly rated do-it-yourself will and testament options.

I welcome all comments and questions.  Please follow me on social media and subscribe to the blog by filling out my contact card.

 

Estate Planning 101 – Part One

Estate Planning 101 – Part One

Part One

The idea of estate planning can be unnerving.  It is difficult to think about our own mortality and the mortality of our loved ones.  This however is a topic that should be addressed.  Many do not know what needs to happen once a person dies.  For this reason, listed below are a few hints to assist you in getting your affairs in order.  This will insure that your family will not have the added stress of making decisions for (and paying for) your funeral, divvying up your worldly possessions, and most importantly the guardianship of your child(ren). 

First contact a trusted attorney to insure that you have a will and a medical living will in place. (Will blog this topic in the near future.)

Part One of this blog series will address the cost and options for a funeral.

The average cost of a funeral was $7,000+ in 2017.  This includes funeral planning, permits, the burial, viewing, embalming, and transportation to the burial site.  This amount may not include a higher end casket, flowers, headstone, or catering.  Costs can easily be in excess of $10,000. 

Here are few things thoughts to consider:

  • Shop around.  Funeral homes have different rates and may include different services for the same cost.
  • Casket Selection.  An average caskets cost $2,000, but the selection can easily be as much as $10,000.  If this is not a priority, simply ask the funeral director for economical options.  Funeral law states the director must show you what options the company has and the price before showing you the actual casket. 
  • Burial Vaults or Grave Liners are not required by law and funeral directors may not disclose.  Although, many cemeteries require some kind of outer burial liner to keep the casket from shifting in the future.
  • Burial or Cremation.  Being cremated reduces the cost by thousands of dollars.
  • Direct Cremation or Immediate Burial saves money on embalming services, hair/makeup, and viewing costs at the funeral home.
  • Go green.  Green funerals usually means a simple biodegradable wooden box instead of a casket, and no embalming.  This allows the body to decompose naturally and return to the earth. 
  • Space Services.  Go into space with a space burial.  For a fee Space Services can fit lipstick size container of ashes to free space on rockets already being launched with satellites.  The ashes will orbit Earth for years or centuries until the vessel returns back to the atmosphere and incinerates.

It is a good idea to begin saving up for the inevitable.  Consider setting up a dedicated savings account and share the access with your executor to insure easy access or buy a bond for the person planning your funeral.  You can finance, plan and pay for the service through the funeral home of your choosing. 

Should You Sell Your Home?

Should You Sell Your Home?

Could now be a good time to sell your home?

The Dow Jones Industrial Average is just under 25,000.  Deputy chief economist Len Kiefer announced a positive economic outlook saying “Treasury yields are higher and the economy has strengthened since December”.  As a result, and as I projected in my fall blog, interest rates on a 30 fixed mortgage have gone up; and they’ve gone up 48 basis points since January.  When this happens, historically the real estate market slows, however not this time.  Coming off of a strong 2017, there still wasn’t enough inventory to meet the demand of the buyer community.   “We think the strength of the economy and pent up housing demand should allow the U.S. housing market to post modest growth this year even with higher mortgage rates” Kiefer goes on to say.  Along with interest rates and buyer demand, home prices have also been going up, showing an increase of 7.1% over the last year.  That means your $350,000 home will now sell for roughly $375,000.

For so many people, the equity they have in their home is a big part of their net worth.  I always tell my clients, I don’t determine the price of your home nor does the consumer, the market dictates the price of a home.  So we are in a unique moment in time where while rates have increased, so too have the number of qualified buyers and the value of your home; yet inventory remains low.   Right now, you have an opportunity to perhaps be one of just a few, perhaps even the only home for sale on your street or in your neighborhood!  What does this all spell out?  Well, if you’re a home owner that is looking to downsize, now may be a very good time to list.  If you are a homeowner and are looking to go bigger, you may also consider listing because rates are still very low, but are climbing.  I recently had a client say, “if I list now, I may get more money from the sale of my home, but I’m also going to pay more for my next home!”  My response was simple: “use a mortgage calculator and plug in 4.5%, 5%, 6% and 7% because in doing so you will see the impact mortgage rates will have on your decision making.  All I’m saying is that if, in the back of your mind you have considered selling, you should have a market analysis done on your home, be presented with the facts and make an educated decision.  I’ve seen the cycle of real estate for many years; too many people wait too long, in hopes to max out their equity, which is extremely difficult to project.

 

 

 

 

 

Tax Bill Explained

Tax Bill Explained

Tax Cuts & Jobs Act:  How will the new tax laws affect you?

Part 1:  The new brackets

Part 2:  Deduction Changes

Part 3:  The Big Winners

Disclaimer: The examples provided are for illustrative purposes. Individuals should consult a tax professional regarding their unique financial position

The Brackets:

In comparison to the old tax brackets, the new rates are slightly lower and the brackets are broader.  In simple terms, the new tax brackets as a whole, will save most people some money, which is always great.  What’s important to look at is where you were last year (what tax bracket) and if this year was a mirror image, what would happen under the tax cuts and jobs act.

For example, if you were filing single and earned $157,000 under the new tax brackets, you would pay 24% in taxes, or $37,680, giving you a net of $119,200.   Last year you would have paid 28%, ($43,960) netting you $113,040.   So now in 2018, you have $6,160 more in your pocket.  That’s a new car payment, a vacation or money you can put into a retirement account, all good stuff that will trigger spending and/or investing which boosts the overall economy.  However, by making just 3,000 more, $160,000, you fall into the 32% tax bracket in 2018 and were still in the 28% bracket in 2017.  So by making $3,000 more, you only bring home $108,800 in 2018 ($160,000 – $51,200 )versus $111,200 in 2017.  In this case, you took a 4% hit in net income ( 2017 income on 160k= $111,200 vs. 2018: 108,800).  In that scenario, you would earn $2,400 less under the new tax brackets.

Here’s another quick example:

Johnny made $40,000 as a single tax payer in 2017.  His tax rate was 25%, paying $5,739 in taxes.  Under the 2018 tax bracket, Johnny is now only paying $4,740 in taxes (22%), giving him an extra $999 to save or spend.  That’s just on the tax bracket side of things as Johnny will also benefit from the increase in standard deductions.

As you can see in the diagram, they have doubled the standard deductions and eliminated the personal exemptions.  Being that 70% of American’s don’t itemize their deductions, this is also an added savings for most.

Deductions

Tax brackets, rates and credits play a large role in how much a taxpayer will pay, but the amount of taxable income plays an EVEN BIGGER role.  So here’s a very simple reference for my readers to know and understand about the new law:

 

  1. Personal and dependent exemptions are eliminated. However, child tax credits have increased through 2025.  The TCJA increases the maximum child tax credit from $1,000 to $2,000 per child.  The refundable portion of the credit increases from $1,000 to $1,400.  So taxpayers who don’t owe tax can still get a credit of up to $1,400.  The higher child tax credit will be available for qualifying children under the age of 17 (as under current law).    In addition, the TCJA allows a new $500 credit for dependents who do not qualify for the child tax credit.  These are children who are too old for the child tax credit, or non-child dependents.  No social security number is required, you can cliam the credit using an Individual Tax Identification Number (ITIN) or and Adoption Tax Identification Number (ATIN).
  2. Standard Deductions Increase
    1. $12,000 (single)
    2. $18,000 (head of household)
    3. $24,000 (married filing jointly)

This means you don’t have to file a schedule A.  That said, you may want to continue to track your expenses so you know whether or or not the standard deduction or itemized deduction process favors you more.

  1. Changes to Itemized Deductions:

Fully eliminated:

  • Employee business expenses
  • Tax preparation fees
  • Investment interest expenses
  • Personal casualty and theft losses (with the exception of federally declared disasters)
  • Moving expenses (minus US military required relocation)
  • Alimony- no longer deductible AND the spouse receiving alimony does not have to report alimony as income

 

Limitations put on old deductions:  it’s very evident, one is encouraged to use the new standard deductions offered vs itemization.  If you’re one of the 30% of American’s that used itemized deductions, you need to know what has been modified or eliminated.

 

Limited:

  • SALT Tax (state and local tax): still deductible but only up to a combined total limit of $10,000 ($5,000 if MFS).  This can make a difference in high taxed states like New York or California
  • Mortgage Interest
    • Limited to interest paid on up to a $750,000 mortgage ($375,000 if MFS) on a mortgage taken after 12/14/2017
    • Home Equity Loans- The final bill repeals the deduction for interest paid on home equity debt through 12/31/25. Interest is still deductible on home equity loans (or second mortgages) if the proceeds are used to substantially improve the residence.
  • If you’ve taken out a mortgage prior to 12/15/2017, you can deduct mortgage interest up to a $1MM mortgage moving forward. That applies if you refinanced your mortgage prior to 12/15/2017 ($550k if MFS)

Modifications

  • Medical expenses- still deductible to the extent they exceed 7.5% of AGI (adjusted gross income)
  • Charitable contributions: These have expanded.  You may contribute up to 60% of your AGI, up 10% from the former 50% number

Unchanged

  • IRA deduction
  • Health Savings Account deduction
  • Student loan interest
  • Educator expense deduction ($250 for unreimbursed classroom supplies)
  • Deductions for the self-employed (self-employment tax, health insurance, qualified retirement contributions etc)

Notables:

  • You can continue to claim the American Opportunity Credit of up to $2,500 per year for the first 4 years of college education. In addition, you can still earn the lifetime learning credit of up to $2,000 per year for education expenses
  • 529 plans may now be used for K-12 expenses- plans can distribute up to $10,000 each year for tuition related to public or private education
  • The Obama administration’s health care penalty for those not enrolled in a health care plan has been eliminated

The Biggest Winners of the Tax Cuts & Jobs Act:  Businesses

There are two primary types of businesses:

  1. Corporations- C-Corps. These businesses pay corporate tax using the corporate tax brackets.  They pay dividends to their shareholders who are then taxed on their gains
  2. Pass Through entities: LLC’s, Sole Proprietors, S-Corps and Partnerships. In this business structure, the business does not pay taxes.  The profits of these businesses are “passed through” to the owner(s) whom are taxed on the individual tax bracket schedule.

Corporations “C-Corps”:

With the intent to create more jobs and keep American businesses from moving offshore, C-Corps will go from paying 35% to 21% in corporate taxes.  Truly the top win in the new bill, corporations are encouraged to deliver more jobs, keep their businesses on US soil and subsequently a greater overall tax base for this country. One set of beliefs is that this needed to be done to grow America; that doing business in America was costing many American businesses millions and in some cases, billions of dollars; vs heading overseas and employing foreign employees while paying substantially less in taxes.  The flip side argument is that it’s merely taking away entitlement programs and supplying the top 1% with a substantial boost in income and shareholder wealth.   The fact, which is what I present to my readers is from a historical perspective, growth in American business means growth to main street USA.  Growth in Main-street USA is undeniably critical to balance our economy.

2n Place Prize: Pass-Through Business Owners: pass-through businesses will receive a 20% deduction on their income.   So if you are Suzie Creamcheese LLC and you, after all of your legal business expenses, show a $100,000 profit to your business, you now get an additional 20% tax savings; taking your adjusted income to $80,000.00.  In addition, at $80,000 income are also saving an additional 3% on the newly introduced tax brackets.  If you’re a small business owner, I encourage you to click on the link below in addition to having a clear meeting with your accountant.  You should learn some of the particulars and restrictions as certain industries have limitations to this new law, it’s not a blanket 20% for all small business owners:

https://www.kiplinger.com/article/taxes/T049-C032-S014-small-business-owners-win-big-with-new-tax-law.html

Summary:

Overall we will be paying less in taxes.  This should in turn generate spending and the opportunity for businesses to employ more people, which historically equates to a stable economy.    These changes as it relates to the real estate and mortgage industries should end in:

  1. Increased prices on homes
  2. More inventory
  3. Higher interest rates

To my readers that are considering buying, my recommendation is to do it sooner than later.  For my sellers, know the market value of your home, contact me if you don’t know it and I will help you.  Your home is a tremendous asset and being informed always provides you with the knowledge you’ll need to make educated decisions.  Thank you very much for reading my blog; I hope you find value in my research.

Do you have old debt you’re not sure how to handle?

Do you have old debt you’re not sure how to handle?

Old DebtSo many good people experience times in their lives where they face financial adversity.  The 2008 recession in particular impacted millions of people.  Throughout the course of my career I’ve had to set many people straight on the topic of old debt that I thought I would blog on the topic in hopes to help more people understand their rights and how to make educated decisions.

Step 1: Obtain your credit report.  You can do this for free once per year simply by going to www.annualcreditreport.com

Here you will have what is on the three big credit bureau’s: Equifax, Transunion and Experian.

Go thru your entire report with a highlighter and highlight anything derogatory and all “old debt” items you see.  Now, you may be surprised on some of the dates you see.  For example, let’s say you had a credit card debt of $10,000 dating back to 2008 and the credit card company turned your account off in 2009 and began their collection process.  Now you see that same “old debt” but the date says it’s a debt where they stared collections in 2013.  How can that be right?  Read on.

Step 2:  Find your state’s Statute of Limitations.  In short, what this means is how long your creditors have to collect on your debt.  So go back to the $10,000 credit card debt from 2009.  If your state has a statute of limitations of 6 years, they can only go after you until 2015.  But now it’s 2017 and you’re still getting collection calls and/or threatening letters in the mail.  So many people ask me, “how can they just adjust the date beyond the statute of limitations”?  The answer is they can’t, but in the next point I’ll explain what happens.

Step 3:  Find out if a law office or attorney bought your debt!  It doesn’t have to be a law firm; in fact, many of these companies are nothing more than sales organizations/credit collection companies that simply try to scare people into paying on a debt the original company sold off to them!  These are companies that use in many cases, very aggressive, somewhat shady business practices to scare the lights out of you in an effort to collect.  They purchased your debt for pennies on the dollar and set up very aggressive campaigns to frighten you into one of a few things:  1.  Admitting you owe the debt.  When you do this, they “re-age” or what’s called “park” your debt.  This is a big reason people see old debt “within the statute of limitations….again…and again…and again”.    An illegal practice, especially when the creditor did not notify you in writing that they intend on re-aging your old debt.  2.  Say or may any notion that you intend on paying.  This can take you backwards and resurface even the oldest of debts.   The easiest way to handle these people is to “hang up” on them.

Should you find yourself fighting an old debt, here is my recommendation:

  1. Do research on the company coming after you.  Are they really a legit law firm or posturing themselves as such?
  2. Write back to them within 35 days of their initial contact.  Request verification of the debt.  They legally must show proof that you owe them, proof of the actual sum and proof that they are entitled to collect.
  3. If they are harassing your cell phone, home phone or mailbox, write them a letter to cease all communications with you.  They must comply with the Fair Debt Collection Practices Act.
  4. Dispute any “re-aged” actions you see on your credit report directly with them; and not acknowledging in your letter that you owe the money.
  5. If you don’t see the date removed on your credit report, you can write directly to the three main credit bureaus directly.  They legally must remove it if they do not written confirmation.

Over the years, so many people in these situations simply are not educated on their rights as a consumer.  As a result, “old debt” prevents many people from moving forward with their plans to get a mortgage and own the home they wish to live in.

If you need help or advice on this matter, I would be happy to help.  Thanks for taking the time to read my blog.

The information on this website is designed to inform and educate only.  The views and opinions expressed herein are simply those of the author and do not reflect the policy of my company.