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.

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Were Your Loan Documents Forged?

It is estimated that there are more than 9 million people who are in foreclosure today with the numbers of foreclosures increasing by the day. There is a silver lining for some of them. Documents pertaining to some home loans were not correct and in some instances were even forged. In such circumstances these homeowners have a chance of getting their foreclosures waived.

Only those who have an in-depth knowledge about property laws and loan regulations will be able to figure out who might qualify. The loan papers are thoroughly examined by these professionals and checked for any discrepancy. There are certain laws pertaining to mortgages that must be adhered to. It is a violation of law if an omission or error is made by the agents of the lender or the lender themselves. It is here where the experts take over.

After checking the loan audits, they note any violations in the loan documents. They use the same to initiate litigation with the lender in question. In such situations the lender will be held accountable for laws and/or loan documents that may have been fudged. On completion of the audit and identification of the loan violations, the organization will help you through US legal advisors to find an attorney who can assist you to follow up the case with any requisite legal action required against the lender.

If you think your loan may have been forged in any way, it might be time to take action and save yourself from the impending threat of foreclosure. Before your lender terminates you of your rights through foreclosure and takes over your property, you should file a case against them if you suspect fraud in any way, and it can be verified.