Archive for November, 2009

Green Home Improvements Can Ease Your Tax Bill

Thursday, November 19th, 2009

Energy Efficient Mortgages We love housing tax credits around here, almost as much as we love innovative ways to build a sustainable environmental future for the Dallas-Ft. Worth area.

So here are two tax credits that can both make your home more energy-efficient and lower your annual tax bill at the same time.

Non-Business Energy Property Credit

Energy Property Credit , the Non-Business Energy Property Credit actually expired after 2007, but has been reinstated to help spur green housing initiatives. The tax credit lets you claim non-business energy property credits of up to 30 percent of the cost of some energy-efficient equipment installed in 2009, including green property like high-efficiency heat pumps, hot water heaters, and air conditioners. Improvements like energy-efficient doors, windows and insulation, some asphalt roofs, and stoves that turn biomass into fuel also might qualify.

  • Labor costs for installing the high-efficiency upgrades can also be included in the 30 percent.
  • The total amount of credit homeowners can claim combined in 2009 and 2010 is limited to $1,500. In other words, $5,000 worth of energy-efficient additions can get you there.
  • This specific credit applies to existing homes only.
  • Improvements made during 2008 don’t apply.

Residential Energy Efficient Property Credit

This credit also covers 30 percent of what the homeowner spends on more advanced green elements. Officially called the "Residential Energy Efficient Property Credit," this means equipment like wind turbines, fuel cells, geothermal heat pumps, solar water heaters and electric systems.

  • Labor costs can again sometimes be covered.
  • Unlike the Non-Business Energy Property Credit, there’s no cap on this credit (except for fuel cell property costs).
  • Both existing homes and new construction apply.

Both credits are good for the earth, and good for your wallet. Contact one of our Texas home loan and mortgage experts for more information, or to ask about a Federal Housing Administration Energy Efficient Mortgage (one more way to both save and sustain).

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Understanding Your Mortgage Options

Monday, November 16th, 2009

Thinking mortgage? The first step is understanding your options. So let’s take a look at just some of the basic types of mortgages out there, and see if we can figure out what’s right for you:

Fixed Rate Mortgages

Fixed rates are the most common — and generally the safest and most straightforward — mortgage program, where interest and principal payments never change. If you can afford a fully amortizable fixed rate mortgage (generally featuring higher interest payments), you sign the papers, set an automatic monthly principal and interest payment for the next couple of decades, and enjoy your new home with fewer worries (property tax and insurance payments still increase). Fixed rates simply make it easier to plan your financial future.

You usually see fixed rate mortgages available for 30, 20, 15 or 10 year terms. Some homeowners prefer "bi-weekly mortgages," which call for smaller payments every two weeks, but cut the loan term nearly in half.

Adjusted Rated Mortgages

ARM loans start off with an interest rate that is usually somewhere around 1-2 percent lower than comparable fixed rate mortgages. This allows you to buy a more expensive home than might otherwise, since the money not spent on interest can be put towards a larger down payment.

Unfortunately — and where homeowners sometimes get into trouble — the interest rates on adjustable rate mortgages are subject to market conditions, and can fluctuate at intervals specified in the contract (usually once a year). Some homeowners are rewarded for their risk-taking, and actually end up paying less interest over time compared to the beginning of the loan. But often the opposite happens, which has helped fuel the recent housing crisis.

Balloon Loans

Similar to fixed rate mortgages, balloon loans feature stable payments throughout the term of the loan. But balloon mortgages don’t fully amortize over the length of the term, meaning there will still be principal left to pay-off after the original term of the loan is over.

So where homeowners with 30 or 15-year fixed rate mortgages will usually fully own their homes at the end of their loans, balloon loan homeowners will usually have to refinance in order to pay off the principal.

Balloon loans are short term mortgages, usually with terms of 5 to 7 years. Homeowners who have been consistently on-time with their payments can often convert to 30-year fixed rate at the end of the term — an option sometimes called a 7/23 Convertible or 5/35 Convertible.

Learn more about all types of mortgage programs available on TexasLending.com.

There isn’t a single best mortgage for everyone. What you’ll want depends on several factors unique to you, including your current financial outlook, how long you think you’ll want to keep the house, and how willing you are to take on the risk of an increasing payment.

Check out our mortgage program section , or contact one of our Dallas-Ft. Worth home mortgage experts for more information.

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Congress Extends Home Buyers Tax Credit (and Doesn’t Stop There…)

Friday, November 6th, 2009

We did it! Okay fine — it probably wasn’t just our efforts alone . But we got even more than we were asking for, and the lucrative Dallas-Ft. Worth homebuying window will stay open a little bit wider and longer.

Not only did Congress extend the current $8k tax credit for first time home buyers (originally discussed here ), but a new $6,500 tax credit for home buyers who have owned their current homes for at least five years will kick in as well.

Good news on both counts.

Combined with historically low interest rates, the tax credit has turned the Great Recession into a golden homebuying opportunity for those who didn’t have to sell in order to buy. Current homeowners still face the selling hurdle before being able to take full advantage, but will still greatly benefit from a healthier and more active housing market.

To qualify, both groups of buyers need to sign a purchase agreement by April 30, 2010, and close by June 30 — a seven month augmentation to the original Dec. 1 deadline.

"This is probably the last extension," Sen. Johnny Isakson, R-Ga. told the Associated Press.

Other details:

  • The first-time buyers $8,000 tax credit is actually a misnomer, as anyone who hasn’t owned a house in the past three years can qualify.
  • The credit is only available for principal homes costing $800,000 or less (no vacation homes). Individuals with annual incomes above $125,000 — and for joint filers with incomes above $225,000 — will see the credit phased out.
  • Members of the military serving outside the United States for at least 90 days get an extra year — until June 30, 2011 — to close on a house.

Contact us to see if the $8k tax credit extension or new $6,500 tax credit could work for you.

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