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THE BASICS OF ESCROW

by Vicki Graham, #1 Properties, Vicki@GrahamHouse.com

THE BASICS OF ESCROW

The multitude of steps and terminology involved in buying a house can be overwhelming.  While a good Realtor will walk you through everything you need to know, it helps to have a firm understanding of some things before you get pre-approved and start making offers.

One key component involved in nearly every sale is the escrow, or impound account.  This is an account set up by your mortgage lender to pay certain property-related expenses on your behalf (property taxes and homeowner’s insurance).  Many (mortgage) lenders require an escrow account, to insure that the property is not at risk.  The fees can vary from year to year, and are generally rolled into monthly mortgage payments.

Many states require an escrow account, but even if yours doesn’t, it’s prudent to have.  Without an escrow account, homeowners will be responsible for large property-related bills in lump sums, and not always at convenient times.  Failure to pay property taxes in a timely manner will also result in fines and fees.

5 Ways to Boost Your Credit Score

by Vicki Graham, #1 Properties, Vicki@GrahamHouse.com

Mortgage Settlement Benefits Many Homeowners

by Vicki Graham, #1 Properties, Vicki@GrahamHouse.com

Tips to Navigate 2012 W-2 and 1099 Changes

by Vicki Graham, #1 Properties, Vicki@GrahamHouse.com

Tips to Navigate 2012 W-2 and 1099 Changes

Every year brings with it new changes related to W-2 and 1099 forms and reporting requirements. Due to the government's increasing focus on the proverbial tax gap, it's more important than ever for small businesses to understand the changing W-2 and 1099 reporting environment.

Here are some of the key changes that will affect small business this year.

W-2 Form Changes and New Additions
The reduced rate of 4.2 percent for social security tax withholding (for employees only) is extended for wage payments made in 2012. Also new in tax year 2012, compensation of $600 or more that is paid to H-2A visa agricultural workers must be reported on Form W-2 if the worker furnishes a valid taxpayer identification number. If the worker does not furnish a valid taxpayer identification number, report the payments on Form 1099-MISC.

In addition to the above W-2 form changes, there are several specific form updates to various 1098 and 1099 forms. Below are several of the more prominent changes for 2012:

  • Filers of Forms 1098 (except 1098-C), 1099, and 5498 may truncate a recipient's social security number, individual taxpayer identification number, or adoption taxpayer identification number on paper payee statements for tax year 2012.
  • Form 1098: Mortgage insurance premiums paid or accrued after December 31, 2011, are no longer eligible to be treated as interest paid by the payer/borrower.
  • Form 1099-B: New boxes have been added to Form 1099-B for reporting the stock or other symbol, quantity sold, whether basis is being reported to the IRS, and state income tax withheld. Other boxes on the form have been moved or renumbered. Brokers must also report on Form 1099-B sales of covered securities by an S corporation if the S corporation acquired the covered securities after 2011.
  • Form 1099-C: Box 6 is now titled Identifiable Event Code and requires the entry of a code for the identifiable event. For 2012, all codes are optional except for Code A – Bankruptcy.
  • Form 1099-DIV: Exempt-interest dividends from a mutual fund or other regulated investment company are now reported on Form 1099-DIV. Those amounts will no longer be reported on Form 1099-INT. Boxes 12 through 14 have also been added to Form 1099-DIV to report state income tax withheld.
  • Form 1099-INT: Exempt-interest dividends from a mutual fund or other regulated investment company (RIC) are no longer reported on Form 1099-INT. Those amounts will now be reported on Form 1099-DIV. Boxes 11 through 13 have also been added to Form 1099-INT to report state income tax withheld.
  • Form 1099-MISC: Compensation of $600 or more paid in a calendar year to an H-2A visa agricultural worker and any backup withholding must be reported on Form 1099-MISC if the worker fails to provide the employer with a taxpayer identification number. If the worker does furnish a valid taxpayer identification number, report the payments on Form W-2.


Below are some important dates for filers to remember as they enter tax season:

 

  • January 31, 2013 – Due date to send most 1099s and Copies B, 2, and C of form W-2 to each recipient/employee
  • February 28, 2013 – Due date to send Copy A of form W-2 to the Social Security Administration (SSA) and form1099 to the Internal Revenue Service (IRS) on paper
  • April 1, 2013 – Due date to send copy A of form W-2 to SSA and form 1099 to IRS electronically (e-file)

Six Mortgage Tips for the Self-Employed

by Vicki Graham, #1 Properties, Vicki@GrahamHouse.com

Six Mortgage Tips for the Self-Employed

It's no secret that mortgage lenders are requiring more information from potential borrowers than they did prior to the 2008 financial meltdown. But for self-employed borrowers, qualifying for that mortgage loan is particularly difficult. In the past, self-employed business owners were easily approved for stated-income mortgages – or, loans that didn't require tax documents or bank records to verify income.
But because of more stringent lending policies, self-employed individuals in particular can expect far more scrutiny than in the past. In particular, lenders are looking for proof of stability, or a pattern of income. Fair or not, the self-employed are not considered as "safe" a bet as someone on an established salary.

Simply stated, lenders want to establish that the borrower can sustain a mortgage over time. Accordingly, lenders are likely to require at least 2 years of the most recent tax returns as well as financial statements, and possibly a quarterly profit loss statement. In their assessment of finances, lenders will typically require an overall debt-to-income ratio of 41 percent or less, though some will be less stringent depending on other factors such as excellent credit. Speaking of credit scoring, because some lenders consider self-employed borrowers a higher risk, it is possible to offset that risk with a high credit score. A score above 740, for example, can greatly enhance a self-employed applicant's chances for approval. For self-employed applicants, the secret to success is to prepare in advance.

Here's what you can do to increase your chances for success:

1. Pay-off your debts
Since your debt-to-income ratios will be considered, paying off some of those liabilities can lower your levels to acceptable proportions.

2. Get your credit report in advance
If there is anything negative in your credit history, take action to correct it before you apply for a mortgage. And, in the process, make every effort to raise your score above 740.

3. Adjust your income accordingly
Self-employed business people are typically very aware of beneficial tax deductions that will reduce their amount of taxable income. The problem is, lenders will determine your eligibility for a loan based on your taxable income! With a deflated taxable income, it's entirely possible that you'll qualify for a loan that's far below what you need. So, a year before you're ready to apply for a mortgage, talk to your accountant and see how to maintain quality deductions, while also taking a high enough income. One solution may be to defer certain expenses to a later tax year. In fact, deferment of expenses can also enhance financial reserve levels. Remember, lenders are looking for stability – or, your ability to pay over time. Your cash reserves will be a key element.

4. Meet with your potential lenders face-to-face
Online or telephone-based lenders are extremely convenient, but for the typical challenges that confront the self-employed applicant, it's better to meet with a specialized loan officer in person. Specialized experts are far more likely to direct you to a loan package that meets your specific needs.

5. Consider a joint mortgage
If you're married to someone who draws a regular paycheck on a W-2, consider having them apply as the primary applicant – with you listed as the secondary applicant.

6. Make a bigger down payment
Lenders tend to believe that with a greater personal investment, the borrower is less likely to default. In fact, some lenders will actually require self-employed applicants to submit a down-payment of at least 20 percent.

Source: http://www.realtypin.com

What causes a foreclosure?

by Vicki Graham, #1 Properties, Vicki@GrahamHouse.com

Q: What causes a foreclosure?
 

A: A lender decides to foreclose on, or repossess, a property when the owner fails to pay the mortgage. Unfortunately, thousands of homes end up in foreclosure every year.  

Many people lose their homes due to job loss, credit problems, divorce, unexpected expenses, and during periods of economic instability.

Failure to pay property taxes may also cause a homeowner to lose his home.  Trouble can also arise when owners neglect to pay local water bills and home insurance premiums.
 
Graham, #1 Properties

Vicki Graham, #1 Properties

Question of the Day

by Vicki Graham, #1 Properties, Vicki@GrahamHouse.com

Q: Which is better, a 15-year or 30-year loan?


A: The 15-year mortgage offers you a chance to save thousands of dollars over the life of the loan. This is because the interest rate is typically lower and amortization is half that of the 30-year loan, which means that the total interest paid on the 15-year note, as compared to a 30-year note, is significantly less because of the shorter borrowing period. 

Put another way, a 15-year loan accrues principal much more quickly than a 30-year loan, so you get to own your house in half the time. 

However, because you are building equity faster and paying down the loan sooner, a 15-year mortgage requires higher monthly payments. 

Get a lender to help you calculate the overall savings of the 15-year loan versus the 30-year mortgage. In the end, though, base your decision on your circumstances and overall financial plan, such as whether you are nearing retirement age and also will have to shell out college expenses for children, in which case a 15-year loan may not be for you. Remember that your spending habits, budget, and financial goals should all be considered before making a final decision.


Displaying blog entries 1-7 of 7

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Photo of Vicki Graham, Broker Associate Real Estate
Vicki Graham, Broker Associate
#1 Properties
6106 Yellowstone Rd.
Cheyenne WY 82009
(307) 631-6884
307-773-8454