5 Expenses To Remember When Buying A Home

Buying a new home is a very exciting time, so much that additional expenses can easily be overlooked.  While an estimated mortgage payment includes interest rates, homeowners insurance, and possibly mortgage insurance, it does not take into account every expense that comes along with the responsibility of becoming a homeowner. Below is a list of the top 5 expenses people tend to overlook when calculating not only a budget to buy a home but also some reoccurring monthly fees.

1. Closing Costs
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Most buyers are aware that there are closing costs involved with purchasing a house. However, not everyone is aware of exactly how much to budget for this cost. I tell my clients to estimate around 3% of the purchase price to allocate to closing costs. So if you are purchasing a house at $500,000 closing costs should be around $15,000.  Some lenders may offer different programs to  alleviate some of these costs and depending on the deal, your realtor can also negotiate for sellers to pay for some of the closing costs. But in any case, buyers should be financially able to pay all closing costs. These costs include things such as: escrow fees, lender fees, title transfer, title insurance, inspection fees, etc.

2. Maintenance Repairs
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If you were previously renting, most likely all of your maintenance problems were handled by your landlord. For all homeowners, it would be a good idea to have a separate savings account or a specific amount of money always saved up incase of any emergency situations. If you negotiated a home warranty into your purchase contract it is usually only good for one year and has limited coverage. So it is always better to be safe and prepared with any maintenance repairs that may arise.

3. Utilities and Landscape/Exterior Maintenance
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During escrow it would be a good idea to ask the previous owner about their monthly utility bills to get a general idea of what to expect. If they do not want to disclose this information to you, you can always do your own research by calling service providers or visiting your local city website. If you plan on hiring a gardener or yard maintenance service provider you can ask the local neighbors who they use and at what prices they charge.

4. Windows
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Windows can easily be looked over and not taken into consideration as a cost. Depending on the seller, they may have customized window curtains or blinds that they may take with them during the move. If the house is a remodel, there is a chance that there may not be any window coverings. Keep this factor in mind when touring homes and make a mental note of approximately how many windows you will need to budget for.

5.Taxes
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Most lenders will recommend setting up an impound account to collect a certain amount of money on a monthly basis (usually factored into your monthly mortgage payment) to set aside for taxes so that you are not hit with a large tax bill at the end of the year with no money to pay for it. However, what a lot of people forget is that being a homeowner has the benefits of being able to use the monthly mortgage interest as an annual tax deductible.

Becoming a homeowner is a big responsibility, but if you do your research and budget correctly you can enjoy the benefits with peace of mind in your real estate investment!

If you are looking to buy or sell a home at this time and would like additional information feel free to email me at LaurenW@hmsold.com or visit my website http://www.LaurenTWeber.com

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Count Your Blessings Every Day and Dream Big! 

Hello my Weber Weekly readers!
This week I wanted to give you guys a little inspiration to take with you whether you are interested in buying or selling real estate or not. Over the past couple of weeks I have been reflecting a lot on the importance of having a positive attitude and mindset. It’s easy to get caught up in the drama of everyday life and we are all guilty of sometimes stressing over the little stuff, but what helps me get through these things is taking a moment to pause and reflect on all the amazing things that I am blessed with in my life. One little shift in my thought process can make all the difference to push me over almost any hurdle or challenge. It’s the motivation and positivity that helps me clear my mind to find a solution which I would have otherwise been blinded from had I remained focused on problem at hand. To begin this change of mindset you can start small with the things immediately surrounding you. Thinking things like “I am blessed to have air in my lungs, I am grateful for the roof over my head, I am thankful to have clothes on my back and food in my stomach…” The list can be endless if you count every little blessing, leading up to “I am thankful to have the opportunity to overcome this challenge to learn from and grow as a person”.
It may sound silly, but the next time you feel yourself frustrated or stressed out give it a try. Step away from the issue, breath, count your blessings, and then make a decision to move forward once you can start to feel your warm your heart.

As Winston Churchill once said:
“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”

I choose to be an optimist and I try to apply this in my personal and professional life. Along with being an optimist I am also a dreamer. I believe that you can do anything you set your mind to. If you have a goal in mind, create a roadmap of how you are going to get there, and if you have the right attitude to be consistent and persistent you will eventually get there.

It is with this attitude of being an optimist and a dreamer that I can truly say I LOVE what I do. How cool is it that I get to help people pursue their own dreams of becoming a home owner or selling their home for a new opportunity in their life! With this I will leave you with some of my favorite quotes. It is with my highest hopes that you can take something from this weeks blog and apply it to your life wherever you see fit. Have a fabulous day, the choice is yours!

“Opposition is a natural part of life. Just as we develop our physical muscles through overcoming opposition – such as lifting weights – we develop our character muscles by overcoming challenges and adversity.”

-Stephen R. Covey

“Cherish your visions. Cherish your ideals. Cherish the music that stirs in your heart, the beauty that forms in your mind, the loveliness that drapes your purest thoughts, for out of them will grow all delightful conditions, all heavenly environment; of these, if you but remain true to them, your world will at last be built.”

– James Allen

“Never underestimate the power of dreams and the influence of the human spirit. We are all the same in this notion: The potential for greatness lives within each of us.”

Wilma Rudolph

And…. one of my favorite inspirational speeches.

Capital Gain Tax Exclusions

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Hello my Weber Weekly readers! This week I wanted to address capital gain taxes and guidelines on how to avoiding these. First, let me clarify that capital gain taxes differentiate tremendously between investors verse people who use their property as their primary residence. Today I will be elaborating on the latter- primary residence property.

Homeowners Exclusion Rules under 2013 California Real Estate Tax Law states that:
-Single homeowners can exclude up to $250,000 of capital gain from taxes
-Married couples filing jointly can exclude up to $500,000 of capital gain from taxes
-Unmarried people who jointly own a home and separately meet the test can exclude up to $250,000 of capital gain from taxes

Three tests that qualify for Homeowners Exclusion Rule:
1. Ownership: Seller owned the home for at least two of the five year period before the closing date.
2. Use: Seller used the property as a principal residence for two years of that five year period.
3. Waiting Period: The exclusion wasn’t used during the preceding two year period.

Qualifications for married couples:
1. They must file a joint return for the year.
2. Either spouse meets the ownership test (described above).
3. Both spouses meet the user test
4. Neither spouse has recently excluded a gain fro the sale of another home after May 6, 1997
If either spouse does not satisfy all these requirements, the exclusion is figured separately for each spouse as if they were not married. This means both spouses may qualify separately for part or all of the $250,000 exclusion under 2013 California real estate tax law.

If you do not fall within these guidelines you may still qualify for a partial or prorated tax break.
-Moving  due to unemployment
-Doctor recommendation to move
-Unforeseen circumstances ie: death in family, divorce, nursing home move.
The portion of this tax break would be calculated on the portion of the two-year period which you lived there. For calculations you would take the number of months you lived there before the sale and divide it by 24.

Calculation example and what to include in deductions:
Many people do not know to include items such as closing costs and capital improvements as part of their deductions in capital gains. For example people would assume if they bought a house for $100,000and sold it for $400,000 it would be a gain of $300,000 which is $50,000 over the exclusion. This is incorrect.
Things you can deduct include:
-Closing costs
-Broker’s commissions
-Title insurance,
-Advertising costs,
-Administrative costs
-Escrow fees
-Inspection fees
-Legal fees (if any)
-Tax basis in the property
(Your basis is the original purchase price, plus purchase expenses, plus the cost of capital improvements, minus any depreciation and minus any casualty losses or insurance payments).

After implementing some of the deductions and using the same example above it would look more like: They bought a home for $100,000 sold for $400,000 but invested $20,000 in home improvements, $5,000 in fixing up the place and $25,000 in closing costs leaving them with NO capital gains tax at all.

***Because every home, sale, escrow, and individual cases are different I would advise that you consult with your CPA or tax attorney before making any claims and to make sure you are deducting as much as you are allotted for***

I hope this week’s blog has given you a better insight on how capital gain tax exclusions work. As always, please fee free to reach out to me if you have any questions or would like to be pointed in the right direction of a great tax advisor.

Congratulations Charles and Sowon!

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Congratulations to this lovely couple I had the privilege of meeting and working with this past month! Charles is an acupuncturist (be sure to check his work out at www.angelshandus.com ) and Sowon is a nurse and by fate and luck they found each other through an online dating website!  After three years of dating, they recently tied the knot and got married this year. To complete their fairy tale story they just closed escrow last week and now have a home to call their own. It has been a true pleasure getting to know these two and I couldn’t be happier to have helped in their new journey and chapter in life together. If meeting them wasn’t enough of a gift in and of itself, they were so kind to treat me to Korean BBQ to celebrate. Lucky me!

Hope everyone is having as great of a week as I am! Happy Weber Weekly Wednesday!