New tax credit for Iowa home buyers

 Mortgage Credit Certificates may provide Iowa home buyers with up to $2,000 in annual federal income tax credits 

(DES MOINES) – Gov. Branstad and Lt. Gov. Reynolds were accompanied by Iowa Finance Authority Executive Director Dave Jamison today to announce that eligible Iowans can now buy a home and reduce their federal income tax liability by up to $2,000 a year for the life of their mortgage. The Take Credit! Mortgage Credit Certificate program is available as of January 1, 2013 and approximately 1,000 Iowa home buyers may benefit from the program. The program is administered by the Iowa Finance Authority, (IFA). 

“Iowa home sales are currently up by more than twelve percent over 2011, according to the Iowa Association of Realtors and today’s announcement of another resource for Iowa home buyers supports an even greater uptick in home sales, and that is good news for Iowa,” said Branstad. “The Take Credit mortgage credit certificate program will provide an added incentive for Iowans to purchase a home, which leads to a healthy, stable economy and also provide Iowa families to keep more of their hard-earned income, income that would otherwise be spent on federal income taxes.” 

After an eligible homeowner has closed a mortgage loan with an IFA Take Credit! Participating Lender, IFA will issue the homeowner a mortgage credit certificate for pre-approved applicants. The homeowner in turn may apply the credit against their federal income tax liability on an annual basis for the life of their mortgage. The credit may be claimed on IRS Form 8396. 

“Through the program, fifty percent of eligible homeowners’ mortgage interest becomes a tax credit that can deduct dollar-for-dollar from federal income tax liability,” said Reynolds. “For example, a family with a $70,000 four percent fixed interest, thirty year mortgage would receive a tax credit of $1,388.78 in the first full year of homeownership. I encourage Iowans to look into this valuable resource provided by the Iowa Finance Authority.” 

Eligible home buyers must be approved for a mortgage and meet federal requirements, including income limits, maximum home sale price, limited prior homeownership interest and purchasing the home as a primary residence. More information including a Participating Lender list and eligibility quick check tool are available at IowaFinanceAuthority.gov. 

3.8% real estate tax won't affect most

Beginning January 1, 2013, a new 3.8 percent tax on some investment income

will take effect. Since this new tax will affect some real estate transactions, it is

important for sellers. to clearly understand the tax and how it could impact their sale. It’s a complicated tax, passed by Congress in 2010 with the intent of generating

an estimated $210 billion to help fund President Barack Obama’s health care

and Medicare overhaul plans.

Understand that this tax WILL NOT be imposed on all real estate transactions,

a common misconception. Rather, when the legislation becomes effective in 2013,

it may impose a 3.8% tax on some (but not all) income from interest, dividends,

rents (less expenses) and capital gains (less capital losses). The tax will fall only

on individuals with an adjusted gross income (AGI) above $200,000 and couples

filing a joint return with more than $250,000 AGI. Most people are not in this category. However, the capital gain on the sale of real estate will be added to your AGI. If you have a large gain on the sale of your real estate, it could push you up into the higher category.

This new tax was never introduced, discussed or reviewed until just hours before the final debate on the massive health care legislation. That legislation was enacted on March 23, 2010, more than a year after the health care debate began. This new tax was put forward after Congress was unable to agree on changes to current law that were sufficient to pay for the proposed changes to the Medicare program and increased subsidies to individuals and businesses. The new tax raises more than $210 billion (over 10 years), representing more than half of the total new expenditures in the health care reform package. NAR expressed its strongest possible objections, but the legislation passed on a largely party line vote. The new tax is sometimes called a “Medicare tax” because the proceeds from it are to be dedicated to the Medicare Trust Fund. That Fund will run dry in only a few more years, so this tax is a means of extending its life.

A second new tax, also dedicated to Medicare funding, is imposed on the so-called “earned” income of higher income individuals. This earned income tax has a much lower rate of 0.9% (0.009). This additional or alternative tax is based on adjusted gross income thresholds of $200,000 for an individual and $250,000 on a joint return. Like the 3.8% tax, this 0.9% tax is imposed only on the excess of earned income above the threshold amounts. 

Another way of thinking about these new taxes is to think of the 3.8% tax as being imposed on a portion of the money that you make on your money — your capital (sometimes referred to as “unearned income”). The 0.9% tax is imposed on a portion of the money you make on your labor — your salary, wages, commission and similar income related to earning a livelihood.

8 steps to speedy credit score repair

Use credit cards properly and correct information reported to credit bureaus

If your credit score is 760 or above, move on, you're already getting the best interest rates. Anywhere below that, however, read on and improve your score.

1. Get a credit card if you don't have one.

Having and using a credit card or two can build your scores. Look for a card that reports to all three bureaus: Equifax, Experian and TransUnion. If you don't qualify for a regular credit card, consider a secured credit card, where the issuing bank gives you a credit line equal to your deposit. 

2. Add an installment loan.

You'll get the fastest improvement in your credit scores by also showing you're responsible with installment loans (personal, auto, mortgage, student). If you don't have any, add a small personal loan to pay back over time. Make sure it's reported to all three bureaus.

3. Pay down your credit cards.

Lenders like to see a big gap between the credit you're using and your available limits. Getting your balance below 30% of the credit limit on each card helps; getting balances below 10% is better. Pay down the cards closest to their limits 1st, rather than the highest rate cards.

4. Use your credit cards lightly.

Big balances can hurt your scores, even if you pay your bills in full each month. Spread the load around among your cards, and pay balances before the closing date to reduce the amounts reported to the credit bureaus.

5. Check your limits.

Your lenders might be showing a lower limit than you actually have, which will lower your scores. Your credit card issuers will update the information when you ask them.

6. Dust off an old card.

The older your credit history, the better. But if you don't use a card, it won't be weighted as heavily in the credit score formula. Charge a recurring bill to an old card or use it once per month.

7. Cash in some good-will.

If you've been a good customer, a lender might agree to erase that one late payment from your history. Ask for it in writing. For a more troubled account, ask that it be re-aged, which erases previous delinquencies once you've made a year of on-time payments.

8. Pick your battles.

Here's what's worth correcting:

- Late payments, charge-offs and collections that aren't yours.

- Credit limits reported as lower than they actually are.

- Accounts listed as "settled", "paid derogatory," "paid charge-off," or anything other than "current" or "paid as agreed."

- Accounts that still are listed as unpaid that were included in a bankruptcy.

- Negative items older than 7 years (10 in the case of bankruptcy) that should have automatically fallen off your credit reports.

Mortgage Rates Sink to New Lows Again

DAILY REAL ESTATE NEWS | FRIDAY, SEPTEMBER 28, 2012

Mortgage rates were back to breaking records for the second consecutive week. All mortgage products, except for the 5-year adjustable-rate mortgage, averaged a new record low, Freddie Mac reports in its weekly mortgage market survey.

For those who can qualify, the low rates are helping to keep home buyer affordability high and refinancing strong, Freddie Mac reports. 

"Fixed mortgage rates continued to decline this week, largely due to the Federal Reserve's purchases of mortgage securities, and should support an already improving housing market,” says Frank Nothaft, Freddie Mac’s chief economist.

The Fed recently announced it would purchase $40 billion in mortgage-backed securities every month until the economy shows more improvement. The move is expected to send rates lower. 

Here’s a closer look for the national average rates for the week ending Sept. 27:

• 30-year fixed-rate mortgages: averaged a new record low of 3.40 percent this week, with an average 0.6 point, dropping from last week’s previous record low of 3.49 percent. A year ago at this time, 30-year rates averaged 4.01 percent. 
• 15-year fixed-rate mortgages: averaged a new low of 2.73 percent, with an average 0.6 point, dropping from last week’s previous record low of 2.77 percent. A year ago, 15-year rates averaged 3.28 percent. 
• 5-year adjustable-rate mortgages: averaged 2.71 percent, with an average 0.6 point, dropping from last week’s 2.76 percent average. Last year at this time, 5-year ARMs averaged 3.02 percent. 
• 1-year ARMs: averaged a new low of 2.60 percent this week, with an average 0.4 point, dropping from last week’s 2.61 percent average. A year ago, 1-year ARMs averaged 2.83 percent. 

Source: Freddie Mac

7 Hard-Core Tactics for Sellers

If you’re about to put your home on the market, understand that you are about to engage in a war of sorts. Selling your home is a battle with other listings for the qualified buyers that are out there, a battle with everything else a buyer has to do for their time and attention and a battle with every other thing they could be spending their money on.  

A well-priced, impeccably-staged home is the A-number-one weapon you must wield to win this war.

That said, it’s not at all unusual to experience the tugs of emotional attachment, resentment and even resistance when it’s time to stage your home. Staging puts your home, your things and your taste under the microscope and subjects them to critique - so it’s easy to get prickly at your agent’s or stager’s suggestion that the place might need more than a good spit-and-shine to get it ready for listing.

But let’s face facts: listing your home for sale is a war with very high stakes for your finances, your life plans and your emotions: the potential jubilation of selling your home, the ecstasy of selling it at top dollar, and the agony of not being able to get it sold.

So, it’s time to buck up, put your emotional sensitivities aside and get hard core about home staging - here are 7 tactics for your battle plan.

1.  Conduct a recon mission.  The US Army Field Manual defines reconnaissance as “a mission to obtain information by visual observation or other detection methods, about the activities and resources of an enemy or potential enemy.” As a seller-to-be, your recon mission is simple: to scope out the competition. As soon as you start thinking about selling, you should be getting out to visit the other homes in your competitive bracket - the other homes that your home’s likely buyer will also likely see - during their Open Houses.  

That means you should attend the Open Houses of listings with similar beds, baths, square feet and price range to your own home, both in your neighborhood and in similar neighborhoods in your town.

If you do this for long enough, you’ll start to notice several things. If it’s been awhile since you’ve been in the market, you might be surprised at how pristine and attractively prepared the competition is, especially the non-short sale, non-foreclosure listings. You’ll start to see what homes look like that sell quickly and at (or above) the asking price, and what homes look like that lag on the market. You’ll also start to notice which listing agents and home staging companies tend to show the best-prepared properties: this is the beginning of your arsenal of information that will help you step up your home’s battle advantage.

2.  Create your plan of attack. To win this home-selling war, you must attend to the basics of home staging systematically, creating a comprehensive, written plan for everything from your home’s landscaping, the exterior and interior finish materials (paint, carpets, etc.) and every individual room of your home, including what you’ll do with your personal property and what furniture and decorative items will be used to stage the place. This plan, of course, must be created and carried out in the context of whether you plan to reside in the home while it is on the market, and in the context of your agent’s recommendations about how quickly you need to be able to have the place buyer-ready when you get a viewing request.

I strongly recommend that, at this stage, you involve some professionals in your battle preparations. Your agent should be engaged, and will be happy to have the chance to guide your property preparation decisions. Additionally, data has shown time and time again that homes prepared by professional stagers sell for more than their non-staged counterparts; consider enlisting one for your home.

That said, if you can’t afford a full-blown stager, consider reaching out to the staging companies you learned about in step 1, above, to see if any of them offer consulting services for an hourly rate. (Your agent might also be able to recommend a good, local stager.) For a couple hundred dollars, you might be able to get the most powerful benefits of a stager - their smart, creative and experienced thinking about what you can and should do to show your home in its best light - and incorporate that into your staging plan.

3.  Deploy the stealth tactic of demolition.  Turns out, some of the most powerful staging techniques are simply removing, demolishing and otherwise getting rid of unsighly features, versus adding or strategically enhancing them.  This is especially critical to keep in mind if you are staging your home on a shoestring budget - rather than trying to figure out how you’ll come up with the cash to buy a bunch of new things, focus first on whether there’s anything you can remove that will enhance a buyer’s experience of your home.

For example, I have seen the entire look and feel of a property take a dramatic turn in the right direction when a number of window coverings were removed entirely.  Studies show that the light this allows in actually makes people (i.e., your target buyers) happier than they are in the same room, darkened by drapes or shades. [Note: before you do this, take note of what a buyer will see out the window!]

I’ve seen similarly stunning effects when old, dirty carpets were pulled up. Again, though, umderstand that there might be some risk of exposing something worse, depending on the property.  That said, in many cases, buyers see imperfect original hardwood floors as far preferable to bad carpet. You might even be amazed at how relatively inexpensive it is to replace a couple of bad floorboards, compared with the costs of replacing the entire wall-to-wall carpet.
 
4.  Pre-pack.  The call to de-clutter is the rallying cry of virtually every stager. By that, they mean to clear countertops, floors, table-tops and every other surface in the home of as much of the minutae of living as humanly possible. All that should remain is the occasional decorative or functional piece - a clock here, a vase of flowers there - and even these things only to the extent that they jive with the staging plan.

While this makes sense, logically speaking, it can be difficult to wrap your head around exactly what this means when it comes time to execute. “Surely we should leave the model plane collection,” one seller might think. “Of course, we should make an exception for the classic ukelele,” another might insist.  Add to a dozen model planes even one mini Hawaiian guitar, then compound that with a few tissue boxes, candles, bottles of hand soap and inkpens, and you’ve got yourself a recipe for visual clutter, aka junk, in the eye of the beholder/buyer.

Some sellers find it easier to wrap their heads around the concept of simply pre-packing, versus decluttering. If you win this battle upon which you’re about to embark, you’ll be moving anyway, so taking the pre-packing approach harnesses the power of momentum toward the end of putting everything but the items you actually need to live your daily life in boxes and putting those boxes in storage or - neatly - in the garage, so they’re ready to go when your home sells.

5.  Wash, rinse and repeat.  The sort of cleaning you need to execute before you list your home is not like any cleaning you might ever have done before. It is not like ‘friends are coming for dinner’ cleaning, where the bedrooms don’t count. It’s it not like ‘white-gloved mother-in-law is on her way cleaning,’ where you can enlist the kids to run interference and distract her with the power of their cuteness. It even trumps ‘cleaning lady is coming’ cleaning, because you want her to feel needed, so can’t leave the place pristine before she comes - that would look like you were trying too hard!

The cleaning you give your home before showing it to buyers must be uber-thorough, covering every surface - even the nooks and crannies you’ve forgotten existed - and it must be from the outside in.  The best-staged, best-selling homes tend to have garages, basements, side yards, sheds and dog runs that are just as immaculate as their kitchens, bathrooms and master bedrooms.

Start early, give yourself ample time and  and if you have the bandwidth - consider investing a few hundred bucks to hire a cleaning crew to polish every lighting fixture and dust every baseboard and ceiling fan blade. Like your agent and stager, they can see (and clean) things you can’t, due to your familiarity with your home.

6.  Fixate on trims and details.  It’s tempting, when staging, to do the big jobs - painting the walls, polishing the floors, moving and removing furniture - and to run out of steam and cash before the little details get handled. But winning this war demands that you:

• be aware that this temptation may come,
• detect it if it does and
• resist it at all costs.

One pattern you might note on your recon mission is that the homes that show as the most pristine, the most polished, are often the ones which were prepared with the most attention to detail. On the outside of the house, this involves making sure details like mailboxes, window shutters, eaves and even shrubbery are meticulously painted, trimmed and even replaced. Adding attractive flowers, door kickplates and knockers and house numbers are some inexpensive ways to add visual detail and a polished, cared-for look to an otherwise plain property.  Inside, window trims, door casings, moldings and baseboards have the same effect, as does ensuring that drawers and doors operate smoothly and that walls are scuff mark-free.

In this way, some of the least expensive home staging projects can carry the most powerful buyer-impressing payload.

7.  Be brutally honest with yourself.  When you think you’re done preparing your home, think again. It’s not overkill to go out on a Sunday afternoon, walk through a few Open Houses, get back in the car and drive up to your house, walking through it exactly the way a buyer would.  Ask yourself: What can you edit?  What looks like clutter? What is distracting? What stops a buyer from seeing the possibilities for their own family here?  

If all else fails, take your agent with you - arm him with a packet of post-it notes and give him free rein to stick one on anything he thinks should be removed before showing the home. Then get that stuff out of there!

Tractor ride

Tractor ride through Fayette this morning. Its always a great sight to see the old tractors roll through town. After Fayette, they were headed to Wadena, Arlington and back to Oelwein. Tomorrow its Hawkeye and Summner.

Tips for Home Sellers

Interior Repair Hot Spots 

If the thought of making pre-sale home repairs all over your entire house feels overwhelming, take a step back and consider where you should really focus your attention. When you're considering the interior of your house, here are the top repair hot spots on which to focus: 

1. Electrical Panel 

Just prior to sale, you are not likely to be doing any major upgrading on your electrical system, but you will need to locate your main electrical panel and give it a good cleaning. Brush out all the cobwebs, dead spiders, and dust and wipe off any rust or mildew. 

2. Plumbing and Sewage 

Make sure each and every sink and tub in the house is draining properly and that the drain lines are clear. Flush them all, but don’t stop there. Your buyer’s inspector won’t. He will run water in several sinks and flush several toilets at the same time. This is a great test of the house’s main drain line. So, if your house doesn’t flow with the flush, get that plumber over now! 

3. Water Pressure 

Another revealing plumbing trick is to run the dishwasher and washing machine along with a sink and shower. How’s the water pressure? Do you need a bigger hot water tank? Is it big enough to handle a small family? Find out now and plan on doing some re-piping if necessary. 

4. Hot Water Heater 

Look under the water heater to check for rust or leaks. If you find any, replace it now, and save some money and negotiating. A rusty or leaking water heater will be an immediate request for replacement to your buyers from their inspector. 

5. Septic Tank 

If your house is on a septic tank system, schedule it to be emptied at least two weeks prior to sale. The last thing you want to do is empty that tank during showings. 

6. Leaks 

Most pipe and faucet leaks are an easy and inexpensive fix, but a real turn off for buyers. Inspect each and every faucet and hose bib inside and outside the house—both above and below countertops. 

7. Heating and Cooling 

Test your heating and air conditioning systems. If the systems are eight years of age or older there may be a problem about to happen, or you may have to replace something before you sell. And some buyers don’t care how small a problem is; they will often ask for a credit for a whole new system. So make sure yours works. Also, this is the time to change your filters, and make sure the units and visible ducts are spanking clean. 

8. Thermostats 

Test your thermostats. If they are broken, replace them now!