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Negotiate Your Best House Buy

by G. M. Filisko

 

Here are six tips for negotiating the best price on a home.

1. Get prequalified for a mortgage

Getting prequalified for a mortgage proves to sellers that you’re serious about buying and capable of affording their home. That will push you to the head of the pack when sellers choose among offers; they’ll go with buyers who are a sure financial bet, not those whose financing could flop.

2. Ask questions

Ask your agent for information to help you understand the sellers’ financial position and motivation. Are they facing foreclosure or a short sale? Have they already purchased a home or relocated, which may make them eager to accept a lower price to avoid paying two mortgages? Has the home been on the market for a long time, or was it just listed? Have there been other offers? If so, why did they fall through? The more signs that sellers are eager to sell, the lower your offer can reasonably go.

3. Work back from a final price to determine your initial offer

Know in advance the most you’re willing to pay, and with your agent work back from that number to determine your initial offer, which can set the tone for the entire negotiation. A too-low bid may offend sellers emotionally invested in the sales price; a too-high bid may lead you to spend more than necessary to close the sale. 

Work with your agent to evaluate the sellers’ motivation and comparable home sales to arrive at an initial offer that engages the sellers yet keeps money in your wallet.

4. Avoid contingencies

Sellers favor offers that leave little to chance. Keep your bid free of complicated contingencies, such as making the purchase conditional on the sale of your current home. Do keep contingencies for mortgage approval, home inspection, and environmental checks typical in your area, like radon.

5. Remain unemotional

Buying a home is a business transaction, and treating it that way helps you save money. Consider any movement by the sellers, however slight, a sign of interest, and keep negotiating. 

Each time you make a concession, ask for one in return. If the sellers ask you to boost your price, ask them to contribute to closing costs or pay for a home warranty. If sellers won’t budge, make it clear you’re willing to walk away; they may get nervous and accept your offer.

6. Don’t let competition change your plan

Great homes and those competitively priced can draw multiple offers in any market. Don’t let competition propel you to go beyond your predetermined price or agree to concessions—such as waiving an inspection—that aren’t in your best interest.

 

10 Clever Uses for Hydrogen Peroxide

by Courtney Craig

 

Is hydrogen peroxide a non-toxic weapon in your green cleaning arsenal? It should be!

 

In Your Kitchen

1. Clean your cutting board and countertop. Hydrogen peroxide bubbles away any nasties left after preparing meat or fish for dinner. Add hydrogen peroxide to an opaque spray bottle — exposure to light kills its effectiveness — and spray on your surfaces. Let everything bubble for a few minutes, then scrub and rinse clean. 

2. Wipe out your refrigerator and dishwasher. Because it’s non-toxic, hydrogen peroxide is great for cleaning places that store food and dishes. Just spray the applianceoutside and in, let the solution sit for a few minutes, then wipe clean.

3. Clean your sponges. Soak them for 10 minutes in a 50/50 mixture of hydrogen peroxide and warm water in a shallow dish. Rinse the sponges thoroughly afterward.

4. Remove baked-on crud from pots and pans. Combine hydrogen peroxide with enough baking soda to make a paste, then rub onto the dirty pan and let it sit for a while. Come back later with a scrubby sponge and some warm water, and the baked-on stains will lift right off.

In Your Bathroom

5. Whiten bathtub grout. If excess moisture has left your tub grout dingy, first dry the tub thoroughly, then spray it liberally with hydrogen peroxide. Let it sit — it may bubble slightly — for a little while, then come back and scrub the grout with an old toothbrush. You may have to repeat the process a few times, depending on how much mildew you have, but eventually your grout will be white again.

6. Clean the toilet bowl. Pour half a cup of hydrogen peroxide into the toilet bowl, let stand for 20 minutes, then scrub clean. 

In Your Laundry Room

7. Remove stains from clothing, curtains, and tablecloths. Hydrogen peroxide can be used as a pre-treater for stains — just soak the stain for a little while in 3% hydrogen peroxide before tossing into the laundry. You can also add a cup of peroxide to a regular load of whites to boost brightness. It’s a green alternative to bleach, and works just as well.

Anywhere in Your House

8. Brighten dingy floors. Combine half a cup of hydrogen peroxide with one gallon of hot water, then go to town on your flooring. Because it’s so mild, it’s safe for any floor type, and there’s no need to rinse.

9. Clean kids’ toys and play areas. Hydrogen peroxide is a safe cleaner to use around kids, or anyone with respiratory problems, because it’s not a lung irritant. Fill an opaque spray bottle with hydrogen peroxide and spray toys, toy boxes, doorknobs, and anything else your kids touch on a regular basis. You could also soak a rag in peroxide to make a wipe.

Outside

10. Help out your plants. To ward off fungus, add a little hydrogen peroxide to your spray bottle the next time you’re spritzing plants. Use 1/2 cup of hydrogen peroxide added to one gallon of water for your plants.

Another underutilized cleaner and problem-solver: The humble onion.

Source: National Association of Realtors

8 Dirty Secrets in Your Home

by Alyson McNutt English

 

Steel yourself: We help you expose — and purge — your home’s dirtiest little secrets.

 

Deep breath ...

1. Cruddy undersides of rugs
2. Disgusting disposal
3. Greasy kitchen vent hood
4. Crumby kitchen crevices
5. Grimy fans and ceilings
6. Grungy toilets
7. Debris-filled crawlspace
8. Linty dryer vents

1. Cruddy undersides of rugs

Look under your area rugs for a nasty surprise -- a sea of grit and dust -- despite regular vacuuming. What to do:

  • Move furniture, fold over the rug, and vacuum dirt and dust from its underside. Sweep and mop the floor, too.
  • While you’re under the hood, check the rug’s condition. If there’s no staining or discoloration, a good floor cleaning and vacuuming of the rug’s underside is enough. 
  • If pets, kids, or wine have left their mark, invest in a professional cleaning. A pro will run between $1.50 and $3 per square foot of rug, depending on the type of rug. Delicate natural fibers are usually more costly to clean than synthetics.

2. Disgusting disposal

Your kitchen has more germs than even your bathroom. And your garbage disposal and its splash guard flaps just might be the most disgusting place in the house — slimy, smelly, and befouled with old food. What to do:

  • Scrub the underside of the rubber flaps with an old toothbrush and warm, soapy water.
  • Pour a 1:1 ratio of white distilled white vinegar and baking soda down the drain. Let it sit overnight and flush with boiling water to sanitize.
  • Toss frozen cubes of white vinegar (just freeze it in an ice tray) down the disposal while it’s running. This will sharpen and sanitize the disposal’s grinding blades.
  • Freshen up the drain with slices of lemon or other citrus fruit. Peels are OK, but if you have fruit to spare, the citrus acids will help disinfect and freshen. 

3. Greasy kitchen vent hood

Your range vent hood works hard to absorb smoke, steam, and grease. Just like you change air filters to extend the life of your HVAC, you should clean the vent filter. Not only will this make the vent more efficient, it’s a safety measure. Should you have a grease fire, a greasy hood and filter can spread the fire into your home’s duct work. What to do:

  • Remove the hood filter according to directions for your vent hood model. If you don’t have the paper manual anymore, search online for a copy. 
  • Soak the filter in a kitchen-grade degreaser.
  • Once most of the grease has dissolved, rinse the filter with soapy water. 
  • While you’re soaking the filter, clean the greasy interior of your vent hood.
  • Use a kitchen-grade degreaser for the hood like the one you’re soaking the filter in. 
  • Wipe the hood's interior with a sponge or rag.

4. Crumby kitchen crevices

No matter how spotless your kitchen surfaces are, crumbs, morsels, and drips of stuff have fallen into the crannies between appliances and countertops, tempting bugs and vermin. What to do:

  • For appliances with a bit of ground clearance, like a refrigerator, use the vacuum crevice attachment to suck out the yuck. 
  • For appliances with less room to maneuver, attach microfiber cloths to a yardstick with rubber bands. Slide and grab under and between appliances.
  • Sneak an old-school feather duster between counter cracks or under appliances. Get one with an extra-long handle ($15-$25) or use a flexible duster specifically designed to slide under appliances.

5. Grimy fans and ceilings

Dispatching the out-of-sight, out-of-mind dust (sloughed-off skin cells, dust mites, and outdoor allergans) that lives on ceiling fans and light fixtures means better indoor air quality and fewer allergy problems. What to do:

  • Dampen the inside of a pillowcase and slide it over each ceiling fan blade. As you slide it off, run your hands along the sides of the blade to wipe up dirt and dust so the dreck doesn’t rain down on you. Get a spotter if you’re balancing on a ladder or chair.
  • For less-dusty ceiling fans, use a microfiber duster that'll grab the blades. ($7-$20)
  • For oily or grimy buildup on ceilings, especially in the kitchen or bathroom, run a flat mop tool with a microfiber or soap-cloth attachment along the ceiling. Dish soap will do nicely. 
  • Remove light shades or covers from ceiling fixtures to wipe out dust and bugs. But turn the light off first. 

6. Grungy toilets

You’re not getting down-and-dirty with your toilet until you scrub where the commode meets the bathroom floor. What to do:

  • Check that the caulk at the base of the toilet is sealing the area. If it's worn, remove the remaining caulk with a utility knife. Then re-seal it. For extra germ-fighting, choose a caulk with Microban. 
  • Slide a feather duster behind the tank to brush off any dirt or dust, and use a sponge or damp microfiber cloth to scrub all the way around the porcelain base.

7. Debris-filled crawlspace

No one wants to crawl around under the house — except bugs and rodents. If you suspect critters are playing house, skip the DIY and consult a pro. Otherwise, it’s a good idea to check your crawlspace annually to check for water penetration and clean out debris. What to do:

  • Wear personal protective equipment, such as coveralls, a dust-mask, goggles, and gloves. 
  • If you see mold, don’t disturb it. Call a professional mold remediation company. 
  • If you don’t see mold, check your vapor barrier for holes, deterioration, or uncovered areas. If you’re handy and comfortable with working in cramped crawlspace conditions, you can fix it yourself with supplies from your local hardware or home store. Otherwise, call a handyman. If the problem seems more extensive (major holes or large uncovered areas), call a foundation specialist. 
  • Make sure there’s no standing water on top of the vapor barrier. That could mean water is coming from leaking pipes or gutters. It’s a recipe for mold and rot. Call a pro who specializes in foundation or crawlspace work pronto. 
  • Push out trash through the nearest vent or access door. When you go outside to collect the debris, secure vents and doors so nothing else will blow, crawl, or slither in. 

8. Linty dryer vents

This is one of the most important dirty jobs, because cleaning your clothes dryer’s lint trap and vents will extend its life, improve its efficiency, and save your life. Clothes dryers cause more than 15,000 structural fires, injuring 400 and killing 15 people on average each year. "Failure to clean" is the leading contributing factor to these fires.

What to do:

  • Use a dryer vent cleaner (about $15), a long, flexible, thick metal cord that snakes through the dryer vent’s dark corridors, to sweep out lint and dust. 
  • Use your vacuum’s crevice tool to suck out hangers on in the lint trap. 
  • Vacuum underneath and around the back of the dryer to clear out any remaining lint colonies.

 

Source: National Association of Realtors

Cleaning House: Secrets of a Truly Deep Clean

by Jane Hoback

 

Deep clean your house and you’ll brighten rooms and help maintain your home’s value.

 

De-bug the light fixtures

See that bug burial ground within your overhead fixtures? Turn off the lights and carefully remove fixture covers, dump out flies and wash with hot soapy water. While you’re up there, dust bulbs. Dry everything thoroughly before replacing the cover.

Vacuum heat vents and registers

Dirt and dust build up in heat vents and along register blades. Vents also are great receptacles for coins and missing buttons. Unscrew vent covers from walls or pluck them from floors, remove foreign objects, and vacuum inside the vent. Clean grates with a damp cloth and screw back tightly.

Polish hardware

To deep clean brass door hinges, handles, and cabinet knobs, thoroughly wipe with a damp microfiber cloth, then polish with Wright’s or Weiman brass cleaner ($4). Dish soap shines up glass or stainless steel knobs. Use a Q-tip to detail the ornamental filigree on knobs and handles.

Replace grungy switch plates

Any amateur can wipe a few fingerprints off cover plates that hide light switches, electric outlets, phone jacks, and cable outlets. But only deep cleaners happily remove plates to vacuum and swipe the gunk behind. (OK, we’re a little OCD when it comes to dirt!) Make sure cover plates are straight when you replace them. And pitch plates that are beyond the help of even deep cleaning. New ones cost less than $2 each.

Neaten weather stripping

Peeling, drooping weather stripping on doors and windows makes rooms look old. If the strip still has some life, nail or glue it back. If it’s hopeless, cut out and replace sections, or just pull the whole thing off and start new. A 10-ft. roll of foam weather stripping costs $8; 16-ft. vinyl costs about $15.

Replace stove drip pans

Some drip pans are beyond the scrub brush. Replacing them costs about $3 each andinstantly freshens your stove.

Don't Miss Home Tax Breaks

by Dona DeZube

 

From the mortgage interest deduction to energy tax credits, here are the tax tips you need to get a jump on your returns.

 

Mortgage interest deduction
Private mortgage insurance deduction
Prepaid interest deduction
Energy tax credits
Vacation or second home tax deductions
Home buyer tax credit repayment
Property tax deduction

Mortgage interest deduction

One of the neatest deductions itemizing home owners can take advantage of is themortgage interest deduction, which you claim on Schedule A. To get the mortgage interest deduction, your mortgage must be secured by your home — and your home can even be a house trailer or boat, as long as you can sleep in it, cook in it, and it has a toilet.

Interest you pay on a mortgage of up to $1 million — or $500,000 if you’re married filing separately — is deductible when you use the loan to buy, build, or improve your home.

If you take on another mortgage (including a second mortgage, home equity loan, or home equity line of credit) to improve your home or to buy or build a second home, that counts towards the $1 million limit.

If you use loans secured by your home for other things — like sending your kid to college — you can still deduct the interest on loans up $100,000 ($50,000 for married filing separately) because your home secures the loan.

PMI and FHA mortgage insurance premiums

 

 

Helpfully, the government extended the mortgage insurance premium deduction through 2013. You can deduct the cost of private mortgage insurance as mortgage interest onSchedule A — meaning you must itemize your return. The change only applies to loans taken out in 2007 or later.

What’s PMI? If you have a mortgage but didn’t put down a fairly good-sized down payment (usually 20%), the lender requires the mortgage be insured. The premium on that insurance can be deducted, so long as your income is less than $100,000 (or $50,000 for married filing separately).

If your adjusted gross income is more than $100,000, your deduction is reduced by 10% for each $1,000 ($500 in the case of a married individual filing a separate return) that your adjusted gross income exceeds $100,000 ($50,000 in the case of a married individual filing a separate return). So, if you make $110,000 or more, you lose 100% of this deduction (10% x 10 = 100%).

Besides private mortgage insurance, there's government insurance from FHA, VA, and the Rural Housing Service. Some of those premiums are paid at closing and deducting them is complicated. A tax adviser or tax software program can help you calculate this deduction. Also, the rules vary between the agencies.

Prepaid interest deduction

Prepaid interest (or points) you paid when you took out your mortgage is 100% deductible in the year you paid them along with other mortgage interest. 

If you refinance your mortgage and use that money for home improvements, any points you pay are also deductible in the same year. 

But if you refinance to get a better rate and term or to use the money for something other than home improvements, such as college tuition, you’ll need to deduct the points over the term of the loan. Say you refi for a 10-year term and pay $3,000 in points. You can deduct $300 per year for 10 years.

So what happens if you refi again down the road?

Example: Three years after your first refi, you refinance again. Using the $3,000 in points scenario above, you’ll have deducted $900 ($300 x 3 years) so far. That leaves $2,400, which you can deduct in full the year you complete your second refi. If you paid points for the new loan, the process starts again; you can deduct the points over the term of the loan.  

Home mortgage interest and points are reported on IRS Form 1098. You enter the combined amount on line 10 of Schedule A. If your 1098 form doesn’t indicate the points you paid, you should be able to confirm the amount by consulting your HUD-1 settement sheet. Then you record that amount on line 12 of Schedule A.

 

Energy tax credits

The energy tax credit of up to a lifetime $500 had expired in 2011. But the Feds extended it for 2012 and 2013. If you upgraded one of the following systems this year, it’s an opportunity for a dollar-for-dollar reduction in your tax liability: If you get the $500 credit, you pay $500 less in taxes.

  • Biomass stoves
  • Heating, ventilation, air conditioning
  • Insulation
  • Roofs (metal and asphalt)
  • Water heaters (non-solar)
  • Windows, doors, and skylights
  • Storm windows and doors

Varying maximums

Some of the eligible products and systems are capped even lower than $500. New windows are capped at $200 — and not per window, but overall. Read about the fine print in order to claim your energy tax credit.

  • Determine if the system is eligible. Go to Energy Star’s website for detailed descriptions of what’s covered. And talk to your vendor.
  • The product or system must have been installed, not just contracted for, in the tax year you'll be claiming it.
  • Save system receipts and manufacturer certifications. You’ll need them if the IRS asks for proof.
  • File IRS Form 5695 with the rest of your tax forms.

Vacation home tax deductions

The rules on tax deductions for vacation homes are complicated. Do yourself a favor and keep good records about how and when you use your vacation home.

  • If you’re the only one using your vacation home (you don’t rent it out for more than 14 days a year), you can deduct mortgage interest and real estate taxes on Schedule A.
  • Rent your vacation home out for more than 14 days and use it yourself fewer than 15 days (or 10% of total rental days, whichever is greater), and it’s treated like a rental property. Those expenses get deducted using Schedule E.
  • Rent your home for part of the year and use it yourself for more than 14 days and you have to keep track of income, expenses, and divide them proportionate to how often you used and how often you rented the house.

Home buyer tax credit

There were federal first-time home buyer tax credits in 2008, 2009, and 2010.

  • If you claimed the home buyer tax credit for a purchase made after April 8, 2008, and before Jan. 1, 2009, you must repay 1/15th of the credit over 15 years, with no interest.
  • If you used the tax credit in 2009 or 2010 and then sold your house or stopped using it as your primary residence, within 36 months of the purchase date, you also have to pay back the credit. Example: If you bought a home in 2010 and sold in 2012, you pay it back with your 2012 taxes.
  • That repayment rules are less rigorous for uniformed service members, Foreign Service workers, and intelligence community workers who get sent on extended duty at least 50 miles from their principal residence.

Members of the armed forces who served overseas got an extra year to use the first-time home buyer tax credit. If you were abroad for at least 90 days between Jan. 1, 2009, and April 30, 2010, and you bought your home by April 30, 2011, and closed the deal by June 30, 2011, you can claim your first-time home buyer tax credit.

The IRS has a tool you can use to help figure out what you owe.

Property tax deduction

You can deduct on Schedule A the real estate property taxes you pay. If you have a mortgage with an escrow account, the amount of real estate property taxes you paid shows up on your annual escrow statement.

If you bought a house in 2012, check your HUD-1 Settlement statement to see if you paid any property taxes when you closed the purchase of your house. Those taxes are deductible on Schedule A, too.

This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.

Source: National Association of Realtors

How to Deduct Your Mortgage Interest & Equity Loan Costs

by Richard Koreto

 

Know your loan limits

A good place to check out what you can deduct before you borrow is the chart on page 3 of IRS Publication 936. It'll walk you through the requirements you must meet to deduct all of your home loan interest. 

The first hurdle you'll run into is the total amount of your loan or loans. In general, individuals and couples filing jointly can deduct up to $1 milllion ($500,000 if you're married and filing separately) on the interest they pay on mortgage debt in combined home loans. The money must have been used for acquisition costs, that is the cost to buy, build, or substantially improve a home, explains Scott O'Sullivan, a certified public accountant with Margolin, Winer & Evens in Garden City, N.Y. Any interest paid on loan amounts above the $1 million threshold isn't deductible.

The same $1 million limit applies whether you have one home or two. Buying a vacation home doesn't double your loan limits. And two homes is the max; you can't deduct a mortgage for a third home. If you have a mortgage you took out before Oct. 13, 1987, you have fewer restrictions on claiming a full deduction. The calculations for "grandfathered debt" can get complex, so get help from a tax professional or refer to IRS Publication 936.

Whatever you do, don't forget that you can also deduct the points and fees associated with a first or second mortgage when you initially buy your home, says Jeff Rattiner, a CPA with JR Financial Group in Centennial, Colo. If you refinance the same house, you have to deduct those costs over the entire term of the loan. If you refinance again, you can deduct all the costs from the earlier refi in the year you take out the new loan.

Spend loan proceeds wisely

The other limitation on how much you can borrow and still get your deduction comes into play when you take out a home equity loan or HELOC that you don't use to buy, build, or improve your home. In that case, you can deduct up to $100,000 ($50,000 if married filing separately) of interest on outstanding home equity debt. This loan limit also applies in a cash-out refi, in which you refinance and take out part of the equity you've built up as cash, says John R. Lieberman, a CPA with Perelson Weiner in New York City.

That means if you decide to take out a $115,000 home equity loan to buy that Porsche, you can deduct the interest on the first $100,000 but not on the $15,000 that exceeds the limit. Use the same $115,000 to add a new bedroom, however, and the full amount is allowable under the $1 million cap. Keep in mind, though, that the $115,000 gets added into the pot of whatever else you owe on your other home loans. In many cases, points and loan origination costs for HELOCs are deductible.

Consider this simplified scenario: You borrow $250,000 against your home at 8% interest. That means you'll pay $20,000 in interest the first year. Spend the $250,000 on home improvements, and all of the interest is deductible. Spend $150,000 on improvements and $100,000 on your kids' college tuition, and all the interest is still deductible.

But spend $100,000 on improvements and $150,000 on tuition, and the improvement outlays are deductible, though $50,000 of the tuition expense isn't. That'll cost you $4,000 in interest deductions. Preserve the $4,000 deduction by coming up with the extra money for tuition from another source, perhaps a low-interest student loan or by borrowing from a retirement plan. For someone in a 25% bracket, a $4,000 deduction lowers taxes by $1,000, plus applicable state income taxes.

Beware the dreaded AMT

Even if you've followed all the loan limit rules, you can still get stuck paying tax on mortgage interest. How come? It's all thanks to the Alternative Minimum Tax. Congress created the AMT, which limits or eliminates many deductions, as a way to keep the wealthy from dodging their fair share of taxes.

Calculating the AMT can be complex, but if you make more than $75,000 and have several kids or other deductions, you might well be subject to it. Problem is, if you fall into the AMT group, you may not be able to deduct interest on a home equity loan, even if the loan falls within the $1 million/$100,000 limit. If you're subject to the AMT and borrow money against the value of your home, you'll have to use it to buy, build, or improve your place, or you may not have a chance to deduct the interest, says Rattiner, the Colorado CPA.

This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice.

Source: National Association of Realtors

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