Tips for Preparing for Tax Season

2019 has come to an end which means tax season is right around the corner. Soon it will be time to prepare your 2019 tax returns and it pays to be ready! Getting prepared early can not only save you time and stress but potentially money.  It’s especially important if you have experienced major changes throughout the year such as getting married or buying a home. The IRS encourages early preparation and has recently shared a few tips that can give you a head start.

Always make sure you’re paid up on your taxes is important. The IRS expects that you will have paid most of your tax bill by the time you file your return. If your taxes are being withheld from your pay, chances are that’s enough to cover your total bill and even leaves you with extra for a refund. But keep in mind life events can happen which affect your tax withholding.  You will want to make sure your withholding will also take care of any other income you receive from other sources such as a business or investments.

Of course, you won’t start receiving your W-2s or 1099s until January at the earliest, but there are a few things you can do while you wait. Gathering important records and documents ahead of time will allow for a quicker return. Making sure your address is up to date with your employer and investment providers will ensure you receive these forms in a timely manner. Creating a checklist is also very helpful and can be used every year. Look at your old tax records to compile of list of what materials you were sent. Use that list to create a checklist so you know what to expect throughout the tax season. If you have recently purchased a home, there are some additional documents you may need to gather such as the settlement statement, property tax statement, and if you’re a first-time homebuyer, your Mortgage Credit Certificate.

When you’re all set to file, consider doing so electronically! Every year the IRS is encouraging tax payers to file electronically for many reasons. Not only is filing electronically quicker and secure, it’s easier and is highly accurate. Anyone with a bank account is eligible for direct deposit. Meaning your refund will be automatically sent to you bank account, so you won’t have to wait to receive the check in the mail.

Now that the holiday season is over, preparing for tax season should be on the forefront of your mind. Taking steps to ready yourself will prove to be beneficial in the future.

 

Source: https://www.msn.com/en-us/money/taxes/4-ways-to-get-ready-for-tax-season/ar-BBWsZss?ocid=spartanntp

Potential Federal Rate Cut

From what you pay on the balance on your credit card to inflation, rates can have an influence on our everyday lives. When the economy dips, rates tend to dip as well. This encourages people to spend more which gives the economy a boost. Jerome Powell, chair of the Federal Reserve, makes the big decisions when it comes to the federal fund rate and due to recent trade war news and the overall global economy, he’s hinting that rates could be decreasing soon.

But how will this affect your wallet? If you have credit card debt or plan to buy a home in the near future, the rate cut can be a benefit. Most credit cards that have variable rates are linked to the prime rate so a federal funds cut would lead to lower interest rates. The lower the interest rate on your credit card, the easier it will be to pay that balance down so be sure to take advantage.

Though the federal fund rate isn’t linked to mortgage rates, it can have an impact on them. Whether your mortgage is a fixed-rate or an adjustable rate will determine the impact a rate cut would have on your savings. An adjustable rate will generally decrease when the fed rate decreases but a rate cut would have no impact on a fixed-rate mortgage. Lower rates are beneficial for potential home buyers and with a federal rate cut it would be a good time to purchase. Even if you’re not in the market for a new home it would be a great time to consider refinancing to take advantage of a lower interest rate! Please reach out to a Loan Officer near you to discuss all of your options!

Sprucing Up the House for Spring

Open those windows and turn off the heaters, warmer weather is on the way! Winter has faded, and the trees are starting to bloom, spring is finally upon us. Warm weather fans rejoice!

As spring season is setting in, it’s a good idea to make a home maintenance checklist of items to prep your home for the new season. Spring cleaning isn’t just for the inside of your home. Check out the tips below that will help prepare the inside and outside of your home.

Inspect the Roof

Winter weather can cause havoc on your home’s roof, whether it’s damaged from ice or snow. With “April Showers” on the way, it is important to inspect your roof for missing or damaged shingles which can lead to leaks. A leaky roof can cause havoc on your wallet if you ignore it.

Test Smoke and Carbon Monoxide Detectors

While we hope you will never have to rely on these items, make sure your smoke and carbon monoxide detectors are in working condition and have fresh batteries.

Check Water Drainage and Gutters

Clogged gutters can lead to leaks, which in turn will lead to water damage. Save your future self some money by clearing out your gutters and getting rid of any dirt and debris that piled up over the year.

Clean Up the Lawn

Properly maintaining and servicing your lawn mower and other lawn accessories will ensure they last longer. Also, remove any sticks and debris from the yard before mowing. Add new mulch to the garden for a fresh new look.

Service the HVAC Unit

Although you should do this more than once a year, servicing your HVAC unit is a spring must-do. Cleaning any dirty filters and making sure the unit works properly can save money on your AC bill each month, especially when the summer heat sets in.

Window and Door Treatment

Clean and inspect windows, doors and screens. Fix any cracks in windows or doors and patch up any holes in your screens. On cooler nights, you can open the windows in your home and turn off the AC to help reduce your electric bill.

Fix the Cracks

Inspect your driveway and sidewalks for any cracks that occurred during the winter months. Repairing these issues early on will be easier and more budget friendly for you rather than waiting until it becomes a major problem.

Tiny House, Large Living: The Tiny House Movement

Living large doesn’t necessarily mean owning a mansion and filling it with an abundance of possessions. Just ask those who have joined the tiny house movement. You may be asking, what exactly is the tiny house movement? The latest trend involves homeowners downsizing to a home, generally measuring 400 square feet or less. Small, right? How can one live in such a small space? It’s definitely a lifestyle change and it’s not for everyone, but those who have joined this movement have benefited big time!

So why would someone choose this lifestyle? There are many benefits to going tiny. Affordability is a major factor; the cost of a tiny home is substantially cheaper than a normal-sized home. Typically, tiny homes can range from $10,000-$50,000 depending on the type of home, amenities and if you build it yourself or purchase a pre-built home. That is a fraction of the cost of an average house in the suburbs. The cost of upkeep of a tiny home tends to be less as well since there is less square footage to maintain.

Going tiny can also simplify your life. Since your home is smaller, there is less room for material items and possessions. Freedom from objects will allow you to focus on experiences and connecting with people and nature rather than focusing on “things”. The less time you spend focusing on things, the more time you can focus on yourself and finding activities that make you happy.

Another benefit of going tiny is being more mobile and not tied down to one location. Some tiny homes can be placed on a trailer bed and towed and some are fixed on wheels. Either option lets you travel often and experience adventures you may not have been able to if you were tied down with a non-mobile home or a large mortgage payment.

Sounds great so far, doesn’t it? While there are many advantages of a tiny home, they do have a few drawbacks as well. Some states and/or counties have their own set of strict rules regulating where owners can place/park their tiny homes, making it difficult to stay in one place for a long period of time. Their small size creates limited storage areas, so renting a storage unit may be an additional cost homeowners need to budget for. If you decide to grow your family and need to move out of your tiny home, there is a very small market for tiny home buyers, so selling could be an issue.

As mentioned before, tiny house living isn’t for everyone, but those who choose to live this lifestyle have the financial and personal freedom to live how they want and where they want.

7 Reasons to Own a Home

For most, it is the American Dream to own a home.  It has always been an important milestone of adulthood.  But as a first-time home buyer, how do you know it is the right thing to do?  Besides the obvious benefits of owning a home, here are additional advantages of owning rather than renting.

Tax Benefits

The bulk of your house payment each month goes toward interest.  Mortgage interest is tax deductible unless your mortgage loan is greater than $1 million.   You can also deduct the property tax your lender pays on your behalf.

Appreciation

Over time, houses generally go up in value.  A $200,000 house after 30 years becomes a $545,313 house.  According to the Price-Shiller Index, existing homes increased 3.4% annually on average from 1987 to 2009.  Over a 30-year period, this increase is a big deal.

Equity

Equity is the difference between the home’s value and how much is owed to the mortgage lender.  The reduction of your mortgage every month increases your equity and builds interest in your home.

Savings

Having a mortgage is having a forced savings plan.  When you pay your mortgage every month, you are ultimately being forced to save because you are building more valuable equity in your home.  Making an extra payment on your mortgage each quarter could potentially save you money on interest resulting in your loan retiring earlier.

Predictability

As a borrower, you are able to accurately predict your future payments with a fixed-rate mortgage.  Your interest rate doesn’t fluctuate during the loan period, keeping your payments relatively the same.  Rent payments are unpredictable and may rise every year.

Freedom

Owning a home gives you the freedom to do what you want with it, especially aesthetically.  Decorate it how you please, paint whatever color you’d like and upgrade amenities that suit your sense of style.

Stability

You are officially planting your roots in an area you choose that benefits you and your family the most.  From here, you will build long-lasting relationships with your neighbors and will offer the benefit of life-long friendships and education continuity to your children.

 

Want to learn more about the home buying process? Contact a First Home Loan Officer today!

$1,500 Closing Cost Assistance in Rhode Island and Florida

Looking to buy a home in Rhode Island or Florida?  This assistance may be perfect for you!  Rhode Island Housing and Florida Housing are both offering $1,500 in closing costs to qualified borrowers.  Rhode Island Housing is the state’s housing finance agency that ensures those who live or work in Rhode Island can secure a healthy, attractive home that meets their budget and needs.  Florida Housing provides a range of affordable housing opportunities for residents that help make Florida communities great places in which to live, work and do business.

Rhode Island Housing

In collaboration with Fannie Mae, Rhode Island Housing is offering a Summer Closing Cost Credit Program on all Fannie Mae purchase transactions.  This $1,500 credit is applied to the borrower’s closing costs (including prepaid charges and upfront) but may not be used for down payment.

Key Features:

  • Borrower’s income may not exceed 80% of applicable area median income ($57,680 is the current AMI for Rhode Island)
  • Applied only to Fannie Mae purchase transactions
  • For new loans starting July 20, 2017
  • Repayment not required

Florida Housing

Florida Housing will be giving borrowers $1,500 as a closing cost assistance grant.  These funds may only be used for additional closing cost assistance to first served, qualified borrowers on Conventional HFA Preferred and HFA preferred PLUS loans.

Key Features:

  • Credit qualifying income at 80% AMI or lower
  • Loan Application qualifying income (not based on household income)
  • Can be combined with HFA Preferred Loan with FL Assist DPA ($7,500, $9,000 total including closing cost grant)
  • Can be combined with 3% PLUS DPA product (3% of sales price plus additional $1,500 for closing cost assistance)

Contact a First Home Loan Officer today to learn more about RI’s and FL’s closing cost assistance before they run out!  Click Here.

ALERT- DC Open Doors Closing Cost Grant Special

DC Housing Finance Agency is offering a DC Open Doors Closing Cost Grant Special in the amount of $1,500.  This can only be used towards the borrower’s closing costs and the loan must be closing between June 9, 2017 and September 1, 2017.

Eligibility

  • Borrower must purchase a home in the District of Columbia
  • The borrower’s income must be at 80% or less of the Area Median Income ($88,240)
  • Grant is only available on a loan reserved/locked as a DC Open Doors HFA Preferred loan product (Fannie Mae loan with or without Down Payment Assistance)
  • DCHFA will provide a Grant Disclosure for the borrower to sign

Contact a First Home Mortgage Loan Officer today to see if you qualify.

 

This is not a guarantee to extend consumer credit as defined by Section 1026.2 of Regulation Z.  Programs, interest rates, terms and fees are subject to change without notice.  All loans are subject to credit approval and property appraisal.  First Home Mortgage Corporation NMLS ID #71603 (www.nmlsconsumeraccess.org).

FHA Reduces Mortgage Insurance Premiums UPDATE

*Update 1/22/17: The Trump administration suspended the pending rate cut to FHA mortgage insurance indefinitely. The National Association of Realtors have requested that the premium cut be reinstated in order to help up to 40,000 new homebuyers in 2017. Presently, it is unclear whether this suspension will be repealed.*

Original post:

On Monday, the Federal Housing Administration announced it would be reducing monthly mortgage insurance premiums on loans closing or disbursing January 27th or later. This change means more borrowers may be eligible to purchase a home through the FHA in 2017.

The FHA provides government backed mortgages for as little as 3.5% down, which is why FHA loans are very attractive to first time and low-to-moderate income borrowers. In exchange for a lower down payment, homebuyers must pay mortgage insurance. When there is a reduction in this required cost it opens the door for more aspiring homebuyers.

Every time mortgage insurance premiums decrease, more borrowers can meet the debt-to-income ratio required to purchase a home. New borrowers who close on an FHA mortgage on or after January 27th could save an average of $500 this year, according to the U.S. Department of Housing and Urban Development. This comes at the right time for consumers who might be facing higher credit costs due to rising mortgage interest rates.

FHA mortgage products have always provided opportunities to creditworthy borrowers who may not be able to obtain conventional loans. This cut in mortgage premiums breathes new life into the housing industry and may enable more borrowers to utilize the FHA program to achieve the dream of homeownership.

To read the full HUD press release about FHA, please visit their site here.

First Home Mortgage is an approved FHA lender. To learn more about FHA loans, contact your local Loan Officer.

2016 Tax Deductions for Homeowners

Purchased or refinanced a home in 2016? Find out the tax benefits available to you as a homeowner.

For most people, the annual task of completing income taxes is about as exciting as a visit to the dentist’s office. BUT…homeownership typically means increased tax deductions, which are generally considered to be a good thing.

Use the information below as a reference to help you determine which items from last year’s closing may be written off on your 2016 income taxes.


Write Off Items for 2016 Taxes

The list below pertains to primary or vacation residences (for investment properties, please see IRS Publication 527). All the items listed below can be found on the Closing Disclosure signed at settlement. This may help you save money in 2017!

Points Paid on a Home Purchase in 2016 – Closing Disclosure Page 2, Section A

If any origination charges include points paid in exchange for a lower interest rate, they may be fully deductible. **Other fees in this section – application, underwriting, processing, etc.- may not be deductible.

Points Paid on a Mortgage Refinance in 2016 – Closing Disclosure Page 2, Section A

Points paid to your mortgage company in exchange for a lower interest rate may be deductible, BUT there is a distinction between could be deductible this year, and what is deductible over the life of the loan:

  • Points paid on the portion of the mortgage proceeds that were used for home improvements may be deducted this year.
  • Points paid on a rate term refinance or any portion of the mortgage not used for home improvements must be spread out over the life of the loan. **As outlined above, other fees itemized in this section may not be tax deductible.

Property Taxes (actual and pro-rated) – Closing Disclosure Page 2, Section F

Property taxes itemized in this section may be tax deductible in the year they are paid. However, property tax escrows in section G may NOT be tax deductible until they are actually paid by your mortgage company to the appropriate municipality, (city or county).

Pre-paid Interest – Closing Disclosure Page 2, Section F

Pre-paid interest is typically collected at closing to square the borrower(s) away through the end of the month. Because this is a pro –rated part of the payment to begin the amortization cycle in arrears, the interest noted in this section may also be deductible.

Upfront Mortgage Insurance & VA Funding Fee – Closing Disclosure Page 2, Section B

If your adjusted gross income is $109,000 or less, you may be able to deduct upfront mortgage insurance on FHA and conventional loans as well as the VA Funding Fee.

This list does not include all of the property taxes paid throughout the year or all of the mortgage interest that will be included in the 1098 form(s) that will be sent by your mortgage servicer(s).


**PLEASE NOTE: THIS OVERVIEW IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL, TAX, OR FINANCIAL ADVICE. PLEASE CONSULT WITH A QUALIFIED TAX ADVISER FOR SPECIFIC ADVICE PERTAINING TO YOUR SITUATION. FOR MORE INFORMATION ON ANY OF THESE ITEMS, PLEASE REFERENCE IRS PUBLICATION 936.

5 Ways to Reduce Your Energy Bill This Summer

When summer rolls around, many of us dread the cost required to keep the house (and its occupants) cool. The higher the temperature outdoors, the harder your air conditioner has to work to maintain a comfortable climate indoors. In addition to your regular utility costs, having the AC on full blast can lead to an expensive energy bill throughout the summer. Although we cannot regulate the weather on a day to day basis, there are ways to help control your utility bills.

Here are five simple ways to save money on energy bills this summer:

  1. Unplug devices while not in use: If you have devices you’re not using, consider going around and unplugging them or using plugs which feature automatic shut off switches. Same goes for lighting – try to rely on natural light during the day and turn off lights when you leave a room.
  2. Start using fans: This may seem like an obvious alternative. However, opting to use your fan at times, such as cooler days and evenings, will help make a difference on your utility bill.
  3. Close up cracks: just as you may focus on insulation and closing up your home during the winter months, you should also consider doing the same thing in the summer. Try to seal windows and close doors in the areas of the house you don’t use.
  4. Tune up your AC: Have your system inspected to make sure it’s working as efficiently as possible. You can also set a schedule for your air conditioner. If you plan on spending the day outside of the house, turn the AC down or completely off until you return.
  5. Start drying laundry outside: Summer is a wonderful time that you can ditch the use of your dryer in favor of drying your clothes in the sunshine.

Keep some of these top ideas in mind for reducing your energy consumption throughout the summer months in order to save money.

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