An eClosing is a closing that includes the execution and electronic signature of some key mortgage documents in a secure digital environment, while other key documents may be printed and physically signed (often in the presence of a notary).
The difference between an eMortgage and an eClosing is simply that an eClosing may or may not result in an eMortgage, but eMortgages, which result in an electronic promissory note, are always a product of eClosings. Play the video to learn more.
Regular readers of the Tax Minute know that, under Section 121 of the Internal Revenue Code, you can exclude from taxable income the gain of up to $250,000 for single taxpayers and $500,000 for married taxpayers filing jointly on the sale of the primary residence that you have lived in for 2 out of the last 5 years. However, what many of these listeners don’t know is that there are a whole bunch of exceptions to the 2 out of 5 year rule which will enable you to take this exclusion. The IRS states you can take this exclusion if the primary reason for the sale is the occurrence of unforeseen circumstances. In a recent private letter ruling, the IRS stated that a couple who had 1 child when they purchased a 2 bedroom condo as their primary residence who later had a son prior to meeting the 2 year rule qualified for the reduced maximum exclusion of the gain from the sale of their home as they met the definition of unforeseen circumstances. If you sold your primary residence for a gain and lived their for less than 2 out of 5 years, I suggest you call me on the Tax Line to see if you may have a situation that meets the definition of unforeseen circumstances so that you may be able to avoid tax on the sale of your home.
If you have a question on Section 121 of the Internal Revenue Code – Home Sale Exclusion or any tax matter call Hershman, Fallstrom & Crowley at 508-754-0800
or Email us at pc@hfctax.com.
Buying your first home is a major milestone, a sign that you’ve made it. It’s also a huge financial decision that can be incredibly stressful at times. If you buy a home in poor condition or spend more than you can comfortably afford, that stress will persist long past closing.
That’s not to say you shouldn’t buy a house — far from it! Homeownership has many benefits, like the freedom to remodel and decorate to your tastes, protection from expensive rent hikes, and the potential to grow your net worth. But if you want home buying to be a good experience, there are a few pieces of advice you need to follow.
1. Get your finances in order before shopping for a mortgage
Lenders factor your income, debt, and credit score when assessing your mortgage application. A large debt load could prevent you from getting a mortgage big enough to buy in your preferred area. A low credit score could land you with a high mortgage rate — and that will cost you.
Before house hunting, pull your credit score and report. Identify factors hurting your credit score, like big credit card balances and accounts in collections. If you improve your credit score before shopping for a mortgage, you’ll benefit from lower rates.
2. Know what you can afford to spend
Just because a lender approves you for a big mortgage doesn’t mean you should spend that much. The amount of house you can actually afford depends on more factors than your income. Take Charge America recommends writing out your monthly household budget to determine what you can afford to spend on housing. Don’t forget to factor other big-picture financial goals like saving for retirement or your kid’s education into your budget, and don’t forget to include the full costs of homeownership, not just the mortgage.. Weigh your mortgage options carefully
Fixed-rate or adjustable-rate, 15-year or 30-year, government-backed or conventional — there are a lot of decisions to make when shopping for a mortgage. Do your research before meeting with lenders. When you’re ready to get pre-approved, shop around with different lenders to compare rates, fees, turnaround times, and other factors.
4. Know your must-haves and your deal-breakers
Don’t get swayed by a beautiful home that’s all wrong for you. Go into your house hunt with a clear understanding of the characteristics your home absolutely must have and the ones you can’t tolerate in a house.
It’s not much use listing requirements if they don’t match what’s actually available in your market. As you dream up your perfect home, research homes for sale in your area to get a feel for the options. With homes selling around $253,000 in Leominster, MA, first-time buyers can find great homes within their budget. However, you might realize you need to compromise on certain features to find a home you can afford.
5. Don’t wait until the last minute to start packing
Square Cow Movers puts it perfectly: “The sooner you start packing the less stressful the process will be.” Start packing as early as possible, beginning with items that are rarely used. You won’t miss off-season clothes, lawn equipment, and recreational gear if they spend a few weeks boxed up. And by packing it now, you spare yourself added stress when you’re busy closing a sale and moving. Packing early also gives you ample time to downsize your stuff so you don’t pay to move unwanted items.
Buying a home that’s all yours is a lot different than moving to a new rental. Searching for homes, applying for a mortgage, and closing on a sale are all complicated and time-consuming. Rather than navigate your first home purchase alone, hire a team of professionals to help you through the process. You’ll not only save yourself stress, you’ll buy feeling confident about your purchase.
Are you growing tired of paying rent each month and not building your net worth? Being stuck in the ‘rental trap’ isn’t much fun, but if you are determined, you can break out. Let’s explore some of the steps that you can take to make 2018 the year that you become a homeowner.
Rent Money Is Lost Money
First – why homeownership? As you may already understand, money spent on rent is ‘lost’ money. Each month you pay your rent, but you do not build any equity, own any property or get any other benefits in return. When you own a house, the money you spend each month is being invested in the home. You are building value in the home over time which you can then realize if and when you decide to sell.
Choose Your Home And Location Wisely
Do you know where in the local area you want to live? And what kind of home you want to live in? If you are a single young professional, a condo or apartment might be the perfect starter home. However, if you are married and have a family, there will be other factors such as schools and amenities to take into consideration. Invest some time in going through local real estate listings and making a short list of communities that seem like a good fit.
Polish Up That Credit Score
Ask yourself: how is your credit score looking? Is it perfectly spotless? Or do you have some past issues that need cleaning up? It is worth checking in with one of the major credit reporting agencies to find out your credit score and if there are any blemishes that need to be taken care of. You can request a free credit report once per year, so take advantage today.
Get Your Down Payment Saved Up
Finally, if buying a home in 2018 is going to be realistic, you will need to ensure that you have your down payment saved up. Although it is possible to buy a house or condo with no down payment, there are pros and cons to this approach. If you can save 10 or 20 percent of the cost of the home, it will go a long way in helping to get your mortgage approved and the sale closed.
If you are ready to break out of the rental trap and start down the path to homeownership, contact us today.
Do you know the difference between a mortgage pre-approval and pre-qualification? Take moment to watch this short video, it will help you understand the basics of pre-approvals and pre-qualifications. If you still have questions contact our office or the real estate professional who shared this link with you.
Yesterday we started talking about some Massachusetts only tax breaks. Did you recently replace a septic system or connect to your town sewer? If so, there is a septic tax credit that is available to you to offset your Massachusetts income tax. The amount of the credit is 40% of the cost, up to $15,000, for the design and construction expenses to repair or replace a failed septic system or for connecting to a public sewer system. That means you can reduce your Massachusetts income tax dollar for dollar by up to $6,000. However, you’re only allowed to take $1,500 of the credit each year and if you received a low or no interest loan to help pay for the cost, the credit needs to be reduced by the amount of interest subsidy you received. Do you have an older home that has lead paint? If so, you may be eligible for a credit equal to the cost of the removal of the lead paint up to $1,500.
Yesterday we started talking about some Massachusetts only tax breaks. Did you recently replace a septic system or connect to your town sewer? If so, there is a septic tax credit that is available to yo