Pending Home Sales Down - Severe Weather To Blame

Pending home sales are down and additional declines are expected from abnormal weather conditions, according to the National Association of Realtors®.

Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered shopping activity in February.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in January 2010, fell 7.6% to 90.4 from an upwardly revised 97.8 in December, but remains 12.3% higher than January 2009 when it was 80.5.

With prolonged bad weather in much of the nation, abnormal swings in housing data is not all that abnormal. The real question that remains to be seen is, what happens when the first time homebuyer tax credit expires at the end of April. Stay tuned…

Homeowners Coming to Terms with Actual Home Prices

The real estate smart search engine Trulia just recently released its March 2010 Reduction Report revealing that homeowners were finally coming in line with agents about what their homes are really worth. March marked a record low in residential property price reductions due to a more realistic outlook of the real estate market by the American public as a whole.

The news comes as President Obama’s $8,000 credit for first-time home-buyers and $6,500 tax credit for repeat home-buyers comes to an end in the near future. Contracts must be signed by April 30, and loans must be closed by June 30 in order to qualify for the credit. The incentive is credited with many American’s purchasing homes for the first time last year.

Trulia’s Reduction Report cites increasingly positive news that the real estate market is indeed on its way to recovery. Home price reductions in February managed to drop to its lowest levels in 10 months. Moreover, prices in 19 percent of homes on the market as of March 1 were reduced.

Although home sales have dropped, many agents blame external factors such as bad winter weather, and pricing disputes between agent and seller. In fact, many states are still facing disagreement between buyer and seller.

The overall consensus, however, is that as homeowners face the reality of fair home prices, the market will stabilize. If a house is priced for this market – then that means less time on the market and more turnaround. Stagnant houses are simply bad news for the economy.

Homeowners: More Than Interest to Consider at Tax Time

Interest rates gain the most attention from mortgage borrowers, but two other expenses, points and mortgage insurance premiums, are significant, as well. And both may come into play as you fill out your tax returns this year.

When you shop for a mortgage loan — which is something every potential home buyer should do — you will be given a lot of information. Loan points are among the items that must be listed on the good-faith estimate of closing costs given to you before you commit to the loan. The good faith estimate also attempts to explain — in simple English — all of the terms and conditions of the mortgage loan you are considering.

Each point is 1 percent of the amount of your mortgage loan. So if you were to borrow $350,000, each point would cost $3,500. Lenders can charge as many points as they want, but at some level, the loan becomes usurious and could represent what is commonly known as "loan sharking."

Points paid to obtain a new mortgage are fully deductible in the year they are paid by the borrower. The Internal Revenue Service originally required that the borrower write a separate check to the lender for these points, but in recent years, the IRS has backed off of this position. If you pay points to obtain a refinance loan, however, in most circumstances those points are not deductible in full for the year they are paid. Rather, the IRS requires that you allocate the points by the number of years of your mortgage loan.

Sometimes during negotiations, especially during slow market times, a buyer may ask a seller to make certain financial concessions, such as the seller paying some or all of the buyer's closing costs. The IRS allows seller-paid points to be deducted by the buyer, and although the seller cannot deduct this expense, the IRS allows seller-paid points to be deducted by the buyer. It can get complicated, so if you were involved in a seller-paid-points transaction, discuss your situation with you own financial advisor or accountant.

For more information, go to the IRS Web site, and print Publication 936, "Home Mortgage Interest Deduction." This information is general in nature. Every taxpayer has different situations. You must consult your financial advisor or accountant on your set of facts.

Can't Pay Taxes? What Do You Do?

With tax time upon us, many people are suddenly realizing they don't have the money to pay their taxes. What do you do if you find yourself in this situation?

If you have questions or comments, use the comment link below. If you can't pay your taxes, don't contact us. We can't help you there.

Natural Disaster Planning for Homeowners

Unless you've been living in a closet since the first of January and missed all the news around the world with all the earthquakes, then you are well aware of the fact that the threat of natural disasters such as earthquakes, hurricanes, floods, tornadoes, hail, mudslides and wildfires is a reality of life for many Americans. These anomalies cannot usually be avoided, but their effects on your property and life can be minimized.

If you become a victim of one of these disasters, what should you do?

The three steps you should take are: plan, prevent and insure.

Plan

Escape routes should always be planned out in advance, whether concerning fire, flood, hurricane or other disaster alerts. In addition, every member of your household needs to know who/where to call for help, and to let others know they are safe or in trouble.

At least twice a year the entire household should review escape routes and plans together, making sure emergency telephone numbers still operate. Post escape routes and phone number information in a prominent place for quick referral as necessary.

During high risk seasons, consider putting irreplaceable (or hard to replace), important items like passports, birth certificates, military papers, marriage/divorce papers and jewelry, along with a video or photos of your material goods (and a serial number list/receipts/appraisals) in a safe deposit box. Overnight bags should also be packed for each family member and for pets, and identification and money/credit cards should be kept with you at all times.

Don't forget your precious heirlooms and photos if you have to vacate your home!

Prevent

Not much can be done to prevent earthquakes, hurricanes or tornadoes. However, measures can be taken to prevent wildfires and floods (or mudslides). The American Red Cross and Federal Emergency Management Agency Web sites (www.redcross.org, www.fema.gov) are invaluable sources of information.

Insure

No matter how prepared you are, sometimes things go wrong. Having the right insurance during these times is critical.

Your renter's or homeowners policy covers many things, but may still be inadequate. For example, if a plumbing valve bursts inside your home, your homeowners policy will probably cover the damage. However, if the sewage or water main pipes outside your home break, you may only be covered if you have flood insurance.

If a flash flood occurs, your homeowners insurance will likely not cover your losses; you will need flood insurance. Even with flood insurance, your possessions in the basement will probably not be covered, so you will need to move things upstairs. In addition, flood insurance policies do not take effect for 30 days; keep this in mind when you purchase a policy of this type.

Earthquake insurance is essential in areas of the country that are more prone to this type of disaster. But what many people do not know is that various types of earth movement, including landslides, are covered under this kind of policy. So if a boulder rolls down a hill and into your house, your homeowners insurance may not be the only coverage you need.

Regardless of your situation, it is important to find the best homeowners insurance policy for you and your property.