Are you a first time home buyer?

Below I have a link to a study that shows the life-cycle of the components of a home.  Avoid being surprised and without a plan when your roof needs replacing or your HVAC goes out.

Read this study..Print it off and keep a copy.

When considering a home to purchase, check out the age on the components of the home.  Compare

the ages to the life expectancy on this report.  This will give you a good idea of what components will need replacing in the near future.  This will help you to know if the house is something that you can afford.  If you still feel you can afford the home, then buy it and make sure you budget the appropriate funds in your savings to replace these items.  This will help you hold your homes value.

The National Association of Home Builders has recently compiled life-cycle data from scores of product manufacturers and testing labs.

CLICK THIS LINK —–>Study of Life Expectancy of Home Components

The Study of Life Expectancy of Home Components goes through 25 different types of components in your home and explains how long they should last.  This is an excellent study that will not only benefit first time buyers, but also long time home owners.

So what is a short sale?  A short sale is a sales transaction in which the seller’s mortgage lender agrees to accept a payoff of less than the balance due on the loan.  In this blog, I am going to cover the affects a short sale has on your credit and the possible taxes that may be incurred afterwards.

Here is a to a video clip from The Early Show. Ray Martin chats with Hannah Storm about the advantages of the short sale.  If you don’t want to watch the video, I have taken an excerpt from his report on short sales.

http://www.cbsnews.com/video/watch/?id=2960979n

Lose the House, but Not Your Credit
According to sources in the mortgage industry, people who agree to a short sale with the lender do far less damage to their credit rating than those who go through foreclosure.
While in both cases, short sale and foreclosure, the delinquent mortgage will negatively affect their credit rating, at least short sellers avoid

having a “debt discharged due to foreclosure” on their credit reports. Mortgage and credit experts say that, after bankruptcy, having a foreclosure on your credit report is the worst result and will reduce your credit score by over 250 points. You could also have to wait up to three years to qualify for a mortgage at a reasonable rate.
Short sales show up on a credit report as a “pre-foreclosure in redemption” status and can result in a credit score reduction of 100 points or less. After the sale, the mortgage may show up as “discharged.” People who successfully complete a short sale may also qualify for a mortgage at a reasonable interest rate in as little as 18 months. So, if buying a home is a future goal, then a short sale is the better option for many.
Homeowners cannot simply decide that they want to unload a home with a short sale; the lender must agree to it. The key to getting a lender to go along is to demonstrate two things: that you have no other financial resources to pay the mortgage, and that the sale price the buyer is willing to pay is the fair price the market will bear. If a lender believes it can get more for the house by taking possession of it and selling it themselves, then they will not go along with a short sale.
To begin the process of a short sale, you first need to call the lender and speak directly with the person in the loan workout or short sale department. At GMAC ResCap, a large residential mortgage lender, there is a “foreclosure prevention department” with people trained to work with homeowners in exactly this situation. Their motivation is summed up by Steve Nelson at that company: “We pretty much know what our loss is going to be if we foreclose. If a short-seller results in a payoff that’s better than that number, we’re talking all day long with people who want to put a short sale together.” Some lenders report a three- to four-times rise in the number of short sales over the past year.
People who want to go this route should contact a local real estate firm and ask to work with a real estate agent who has actual experience with short sales. These specially trained agents will know the process and deliver the documentation that the lender requires to authorize the short sale. The agent can also find a buyer that is qualified to complete the transaction.
If all goes as planned, the lender will receive all of the proceeds, typically not enough to pay off the loan. The remaining balance of the loan is discharged. But a homeowner agreeing to a short sale should also get legal advice to protect his or herself from future claims of the lender. In some states, only purchase mortgages are fully discharged. For all other types of debt (equity loans, refinancing, etc), the homeowner can be held personally liable for repayment in the future. For this reason, a lawyer’s advice will include getting the lender to agree to fully discharge all mortgage debt involved in the short sale.]

One thing that Ray Martin did not cover in this excerpt is that you need to seek professional tax advice regarding the possible tax consequences of selling your home.  I have listed some tips below from my REALTOR magazine.

How Debt Forgiveness Works
With a short sale, the lender has three possible ways to handle the deficiency balance, which is the portion of the mortgage debt not covered by the sale of the home. First, the lender can attempt to collect the deficiency balance from the seller after the property has closed. Second, the lender may require the seller to sign an unsecured promissory note for the deficiency balance as a condition of agreeing to the short sale. If the new note is for less than the balance of the original debt, the difference would be considered canceled, or forgiven, debt. Third, the lender may agree to cancel the entire deficiency balance.
On the surface, option three would be seem to be the best alternative for a seller. However, the IRS considers any canceled mortgage debt ordinary income. This means that the amount forgiven is taxed at the same rate — somewhere between 15 percent and 30 percent — as the sellers’ salaries. In addition, because the IRS requires the lender to file a 1099-C form stating the amount of the canceled debt, Uncle Sam will have a record of the exact amount of the debt that was cancelled. A seller will also receive a copy of the 1099-C to use in filing income taxes. The seller’s home state would also consider the cancelled debt as ordinary income.

4 Exceptions to the Rule
The IRS does recognize four situations in which cancellation of debt will not result in tax liability for the seller. A seller may avoid tax liability:

• When the borrower receives a bankruptcy discharge and the deficiency was included in the bankruptcy
• When the borrower is insolvent at the time of the cancellation of the debt. Insolvency would occur when a borrower’s liabilities exceed assets. Note that seller would have to prove this insolvency to the IRS when filing a tax return.
• When the debt was secured by a nonrecourse loan. Under a nonrecourse loan, the lender does not have the legal right to collect a deficiency judgment from any assets of the debtor not pledged to secure the loan. While most home mortgages are do not fall into this category, purchase money loans on a person’s residence are nonrecourse in some states.
• When the tax liability from the cancellation of debt on an investment property can be offset against other business liabilities and expenses. This exception does not apply to properties occupied as a residence by the mortgagor.
  In many short sales, a seller would be able to qualify under the first two of these exemptions, especially since it was almost certainly necessary to show financial hardship in order to convince the lender to agree to a short sale. However, it is the seller’s responsibility to notify the IRS why the amount in the 1099-C should not be counted as ordinary income. Otherwise, the IRS will consider the forgiven debt as income and penalize the seller for unpaid taxes.
  

In a Dickson Herald article this week we read that

Thornton, a local real estate attorney, issued the following statement to The Herald yesterday.
“Subject to gathering some additional information about the project and the schedule for the planned improvements, my business partners and I will be happy to donate 10 acres in Crestview Park for the purpose of establishing a higher learning facility in Dickson County,” Thornton said. “Having this type of facility located in the center of Dickson would be beneficial to many of our local hotels, businesses, restaurants and downtown merchants. This could have a significant positive impact on

our community. White Bluff, Charlotte, Burns, Vanleer or Dickson - I simply would like to see it happen in Dickson County.

Last week I shared with you that land was donated in White Bluff for the same purpose.  It is encouraging to see that Dickson County citizens are being so generous with their land for the bettering of our community.  I believe that bringing in college campuses will only help our local economy by bringing in more business and jobs and need for real estate.  With our economy the way it is, I can’t see how this could be a negative thing.  This will also help people in our community be able to further their education without having to leave home which otherwise may not be possible for them to do. 

I would love to hear from what my readers think about this.

The biggest thing Dickson County Schools is facing now is that we need more schools because we have so many people moving in to our wonderful little town.

On a higher level of Education… a 4 year college campus is being proposed for White Bluff off of Hwy 47.  In the mean time, Tennessee Technology Center and the Renaissance Center both offer college level courses right here in the city of Dickson, TN.

Now for our town’s sad news..  Dickson County Public Library and Lifelong Learning Center had a fire this morning and will be closed indefinitely.

My friend Nathan recently got to test drive the brand new Neuton CE 6.2 lawn mower.

 It is a battery operated lawnmower that is powerful enough to cut bermuda grass.  You can read his review at http://www.lawncareguide.org/lawn-mowers/neuton-mower-giveaway/ .   If you leave a comment, you will automatically be entered to win the

one he tried out. 

If you happen to win, please come back and let me know.  I would love for one of my readers to win.

Sunlight has the greatest potential of any power source to solve the world’s energy problems, said Nocera. In one hour, enough sunlight strikes the Earth to provide the entire planet’s energy needs for one year.

With energy costs on the rise, it is becoming harder for people to consider purchasing a real estate or even doing repairs and upkeep to their existing homes.  Most citizens that I have talked to in Dickson are putting all their extra money towards their gas and electric bills.  MIT’s Daniel Nocera says that their goal is for this solar power to be

completely mainstreamed in less than 10 years.  That is excellent news for the real estate world.

Check out Anne Trafton’s story.