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Tips for Choosing the Right Shutters for Your Home

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Home Shutter BasicsWindow shutters can dramatically change the appearance of your home without having you fork out some serious cash on a large remodeling project. Selecting the perfect shutters has the potential to enhance the overall charm of your home, while the wrong ones could affect its overall appeal. Here are a few tips on choosing the best window shutters for your home.

Make Sure Your Shutter Matches The Style Of Your Home

Take note that shutters for an arts and crafts home might not be right for a Victorian style home. Check out the homes in your neighborhood to determine the best shutters for your home, and choose those that do not affect its architectural style. Some of the common choices in shutters are board and batten, louvered solid panel and raised panel and Bermuda.

Size Your Shutters Appropriately

Your windows shutters should be sized to cover the windows when closed and appear as though they can be used even though they do not open. In addition, the shutters should fit perfectly to the windows, meaning that the rails should line up with muntin, lock rail, transom or other architectural features of the windows. There are many instances where shutters are installed upside down, which could be a result of an unprofessional reinstall after maintenance or painting.

Select The Right Materials

When shopping for window shutters, you will be spoiled for choice; window shutters can be made of several different types of wood including African mahogany, cypress and cedar, Pultruded Fiberglass, PVC or composite materials. These decorative fixtures can help you achieve an authentic look, while multiple coats of paint can provide old window shutters with a unique character.

Shutter Colors

When choosing shutter colors, first determine if the appearance of your home is more contemporary or traditional. If you have a traditional-style home, your best bet is to choose black or classic white shutters. But if you have a modern home, vibrant blue, bright red or other bolder hues are a great choice. Unless you’re planning on making some significant improvements to the exterior of your home, you will want your window shutters to blend perfectly with your existing paint, rock siding or brick.

Next, consider the colors of your window trim and choose a shutter color that compliments the trim and not one that matches it. Take a look at the homes in your neighborhood and choose a color that is consistent in your area especially if you may be selling your home in the future. Pick out a few shutter colors and head to the paint store along with a few photos of the exterior of your property. This will make it easier to find the paint chips that match your selected colors.

Most home color schemes consists of two or more colors, which means that you might have to match the color of the windows, the front door while choosing a different color for the trim.

Income Tax Tips For Accidental Landlords

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accidental-landlordThere could be many reasons you might have to rent out your second home or personal residence rather than selling it, which technically makes you a landlord in the books of the IRS and consequently subject to federal income taxes. So the big question you will face is what to do if you find yourself in the shoes of an accidental landlord.

Good news is that in the beginning most rental properties tend to generate taxable losses, which may result in tax savings for you. These savings are a result of deducting or shielding losses against some of your regular taxable income. But it is important to note that taxable losses are not the same as negative or positive cash flows and below we will highlight tips on doing your taxes as a new landlord.

Expenses and Income

When you file your taxes next year, you will be adding just one more form: Supplemental Income and Loss from Real Estate or IRS 1040 Form Schedule E. On this form, you will have to declare all the rental income you received the year before. After which you will have to enter all the expenses related to the property such as property taxes, mortgage interest gardening costs, maintenance repairs, HOA fees (these are now deducible because it is regarded as a rental property rather than a personal residence) and any other expenses.

The net rental income minus all the above expenses will generate a loss or income figure that will goes on Line 17 of the IRS1040 Schedule E form. Take for example, your rental income is $20,000 and your expenses are $25,000, you have a $5000 loss figure for tax purposes.

Depreciation

This is one of the better expenses that you can make against rental property, and in most cases is a large amount that can significantly reduce the amount of taxes you pay. To calculate this number, you first have to figure out the depreciable and tax basis of your rental property, which is mostly the price you initially paid for the property plus any capital enhancements made to the property in the last few years. So if you paid $300,000 for the home and you made improvements worth $50,000, your taxable basis figure is $350,000.

This basis is then divided into two components – building and land value, which is your depreciable basis amount. To determine your depreciable deduction to input just like any other expense in Schedule E, simply divide this value by 27.5 years. To avoid any mistakes in tax preparation, it is best to commission the services of a tax professional.

Putting it all Together

To understand how the income or loss reported on Schedule E is placed into your main 1040 form, simply take your net loss or income that you reported on your Schedule E form and transfer it to your 1040. A loss results in tax savings, while you will have to pay taxes when you report positive income. It is highly recommended that you speak to a tax professional and save all your receipts for maximum tax savings.

Home Disaster Preparedness In 5 Steps

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Preparing for a DisasterCertain parts of the country are more inclined to natural disasters than others, where there’s Tornado Alley right in the heartland, earthquakes in the West Coast and hurricanes in the East and Gulf coasts. But these and other types of inclement weather such as storms, floods can occur anywhere.

Owing to the fact that nature is unpredictable, it is highly recommended that you take certain measures to protect your home and keep your loved ones safe. Here are 5 tips to get you on the right track.

Determine Your Risks

It is a good idea to know the common hazards in the area where you live especially if you’ve just moved to the area in order to help you make better preparation plans. Generally, you should take preventive measures against the hazards that have the most chances of occurring in your area and work your way down the list.

A natural disaster risk map can be had from the nonprofit Federal Alliance for Safe Homes, which can help determine the hazards in your area. This would also be the right time to reexamine your insurance policies and ensure you are covered against such perils.

Take Care Of Your Home’s Vulnerabilities

Generally, homeowners often feel helpless in inclement weather, but there are a few storm specific improvement strategies that can significantly reduce the risk of damage to your home. In order to prevent damage from hurricanes, you can build a safe room, install storm shutters or mount hurricane straps to prevent your roof from blowing off in case of fierce winds. Generally, taking safety measures against one risk can help you can address other threats as well.

Pack A Stand-By Emergency Kit

Regardless of whether your home is located in a disaster prone area or not, you must have an emergency kit handy. A basic emergency kit should include the following items:

  • Non-perishable food (three day supply)
  • One gallon of water (per person per day)
  • First aid kit
  • Flashlight with extra batteries
  • Whistle
  • Traveler’s checks, change and cash
  • Cellphone with chargers

Once you’ve made this basic emergency kit, you should consider adding items that address any special needs such as pets, children or any specific medical conditions. While doing this, also consider making an emergency go bag, one that’s easily accessible in the event you need to evacuate.

Make A List Of Household Items

Compiling an inventory may seem like a daunting task, but will make it easier to recall all your items should you lose them in a disaster. This will also help when you’re making your insurance claim and applying for Federal disaster aid.

Make And Practice An Emergency Action Plan

You must create a strong emergency plan, one that addresses aspects such as family communications; escape routes, shutting of utilities such as electricity, water and natural gas. Every member of the family should be able to state the plan to be certain of no misunderstanding or miscommunication. In addition, you should rehearse this plan to ensure it is doesn’t have any weak spots.

Extreme natural disasters around the world such as the Asian Tsunami and Hurricane Katrina have made our vulnerabilities clearer, and although preparing for them is not an overnight task, taking concrete steps can greatly help reduce your risks and give you peace of mind.

What To Expect With Real Estate Inspections

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Home Inspection BasicsCongratulations on buying your first home after probably weeks and even months of shopping around for the perfect one. But this now puts you in one of the most crucial times of the entire real estate transaction; it could even be a deal breaker. This is the property inspection. It is one of the most important aspects of the real estate buying process, but inexperienced buyers are often in the dark about what to expect, so here’s a quick roundup.

The Buyer

You probably should have already researched as much as possible about the property before getting to this point. First, you should examine the seller’s property disclosures and compose a list of questions for the inspector. There may be issues that may arise during the walk-through or the marketing process that might’ve concerned you. Or the seller may have revealed that there was some unauthorized work done to a certain part of the home.

The inspection may take a few hours; so make sure you set your schedule accordingly and expect to see everyone involved in the transaction in attendance. Generally, all inspections run smoothly, but some may involve tough investigations.

The Listing Agent

In most cases the seller will not be present for the inspection process but his/her listing agent is the eyes and ears of the seller and will inform them on the results of the inspection. Property inspection is one of the last hurdles for the seller and listing agent, and one that could affect the sale of the home. This is why it is highly recommended that sellers really should thoroughly prepare for property inspection process even before the home is listed for sale.

The Buyer’s Agent

Your agent will be present to ensure you are informed about all aspects of the inspection process and experienced agents are well aware of the entire process. They know what issues to address, and if you’re getting an unrivalled deal on the home, they will most likely advice you to take care of the small fixes yourself and not bother the seller. If you’re paying top dollar for the property and some serious issues come to light, your agent will be in the best position to address them after the inspection.

The Inspector

The buyer always pays for the services of a state licensed property inspector, most often referred to by their realtor. An inspector will point out all the issues as a professional and will not get into the financial part of your deal.

The inspector will examine the home thoroughly, make detailed notes and provide you with a report on things that need to be addressed. Although the property inspector knows what he or she is doing, accompany them wherever they go, to the basement and even the roof. This will help you also make notes about the property in real time so you do not forget to bring up the issue during the final negotiations.

Too Many Cooks Spoil The Soup

Having less number of people from your side is good idea. Your relative or uncle may end up bringing up several negative things about the property, but the inspector is there to determine these issues and provide you with a report. After the property inspection, you and your agent will likely speak about the steps to take as a result of the inspection, and if it’s all good, you can be on your way to choosing your new furnishings.

Should You Have Real Estate In Your Investment Portfolio?

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Investment Property BasicsJumping In To Real Estate Investing

There’s no doubt that the real estate market is a hot one, with short sales, cheap foreclosures, and other unrivalled deals and opportunities. This may very well make you stop and wonder if real estate is right for you, but it is important to note that owning and managing real estate requires considerable effort, energy and time.

Take for example, if your kids overflowed the bathtub, which can happen with tenants as well. And just as you fixed the issue when it occurred with your children, you will have to resolve the issue for your tenants as well, it is expected under the law that you take responsibility for it.

If you do not handle the issue appropriately, it may very well lead to bigger and more expensive problems. You may feel that commissioning a property manager with put your wealth building asset on autopilot, but fact is that the more you’re involved, the greater the chances it will be a profitable experience. This positive outcome has roots that begin before you make the investment. It requires that you do the necessary research, homework, and analysis to locate properties that are potentially great investments.

Getting Your Feet Wet Or Drowning

Owning real estate requires as much hard work as a 9-5 job, and there are a few questions to ask yourself starting with if you have the time to manage your property? And if you feel that managing real estate is a piece of cake, ask around because that’s far from the truth. There are several issues to expect with rental properties including tenant problems, water leaks, neighbors, etc. and you as the owner will probably have to deal with them. So does that sound like something you can handle?

Regardless of the type of investment, before you make one you need to educate yourself on if it is worth getting into. There are just too many people who invest in real estate in the hopes that it will be worth a lot more in the near future. Hoping something will go up in value does not make you seem confident about your investment therefore it is highly unlikely that you will be successful.

Seasoned property owners do not even consider the appreciation of value when making a real estate investment, but rather focus on buying properties that will bring in positive cash flows each month. And fact is that most properties are not good investments such as prime locations, beach houses, luxurious downtown condos, etc. In a few instances, these may be negative cash flows for several decades before you or your grandkids see any positive cash flow.

Return Versus Risk

There are some very enticing instruments such as corporate bonds, securities and other financial long term and low risk investments, ones that pay out an average of 4-6 percent per year. So even if you receive positive cash from your real estate investment, a 1 percent yield in an extremely illiquid asset isn’t very appealing, is it? You need to invest in properties that bring in better cash flows, and that is not easy.

If you plan to invest in real estate for a short period of time such as 3-6 years, drop the idea. The chances of you earning a sizable return from short-term ownerships are slim to none. Some people however do get lucky, but you will in most cases not fall in this category of individuals. If you have short-term goals, you will better off skipping the idea of real estate ownership.

So if you’d like to add real estate to your investment portfolio, and you can do the proper homework, invest in great cash flow properties and manage them for a long time, then real estate is an excellent choice.

What Happens On Moving Day Depends On Preparation

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Moving Day PreparationLike other days such as weddings and graduations, moving day is not just a date on the calendar. And like those other days, how it turns out will depend very much on the preparation that you put in beforehand. You will need to have everything ready for the movers, plans for children and pets and paperwork all set to go before the day arrives. It is going to be a tiring stressful day regardless; you need to do everything you can to get off to a good start.

Get Organized And Create Checklists

Be ready to drop into bed exhausted when it’s done have a go bag or a box of things that you will most likely need immediately, such as bedding, towels or coffee maker. When get to your new home you will most likely be too tired to do anything more than the minimum to bed down for the night. Another thing to have is a folder with all of your paperwork associated with the move.

Checklists make a wonderful tool for keeping everything you need together. There are many things that need to happen and you cannot expect to remember them on the day. Your checklist should be the top item in your moving day folder. Take time to compose this list, starting as far in advanced as possible. There will be the standard items

Working With Movers On Moving Day

When the moving team arrives on moving day it will be a big help if everything is boxed up, labelled and ready to go. Make sure that your to-go boxes are either going in first or are going with you separately.

The movers may be perfectly competent to move everything themselves but there will always be last minute questions. You will need to do some last minute cleaning up. The only way to have peace of mind on the day is to be the last one out of the house. You don’t want misunderstandings or carelessness to undermine your efforts on such a final event as moving day.

Once you have everything packed up take your checklist and work your way through your old home and check off each room as you visually confirm that it has been completely cleared. Make sure that you have looked in all drawers, cabinets and closets.

Closing Down The House

Finally, be the last person out of the house after the movers. This may be a bittersweet moment as you are leaving behind a part of your life. The feeling may sneak up on you if you have been entirely focused on all of the preparations to make it happen. Before you know it you will be in your new home and all the hassles of moving day will be behind you.

When you have taken the time to carefully plan your move you will have the least amount of upset and stress possible. That does not mean that it is guaranteed to go flawlessly but when you are prepared you will be better able to take the events on moving day in your stride.

Things You Should Not Do Before Purchasing a Home

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Before You Purchase Your HomeOwning your own home is one of the great pleasures and privileges of the modern world. All too often potential home buyers make choices before they purchase a home that make the process more difficult, time consuming and expensive. When you decide that you are going to buy a home in the near future you need to exercise some financial discipline, because that is the one thing that lenders are looking for when you apply for financing.

The thing is, it is easy for them to use public information to make a judgment about whether or not you are someone who will pay your mortgage on time every month. So to get in shape for your big purchase you need to make a commitment to financial responsibility and refrain from making any big purchases or changes in your financial status.

Avoid Making These Common Financial Mistakes

Members of The National Association of Realtors have seen it all when it comes to self-defeating financial habits. Too many times from the beginning of their careers, realtors do all the groundwork with potential buyers only to find that the buyer can’t get the terms that will make the sale possible, because of something that they have recently done or is on their credit record.

Realtors either learn to qualify these things quickly or they don’t make it in the business. For that reason realtors can often seem a little non-committal until they are sure you aren’t about to go out and buy a new car or something.

Do Not Do These Things Before You Buy (Just Don’t!)

The National Association of Realtors Website has a good explanation of what not to do, because trust me, these are sore points for every experienced realtor.

  • Close credit accounts
  • Open new credit accounts or otherwise apply for credit
  • Buy a car
  • Change your job
  • Miss any payments
  • Shift bank deposits around without a clear paper trail for the money
  • Spend your savings
  • Take on new financial obligations or loans

Disappointed Spouses Are Bad News

If you are in a couple, make certain that you are both on the same page and you each understand the importance of financial restraint leading up to the time you buy your home. The disappointment of a spouse’s irresponsible actions can be devastating.

Once the process is complete and you own you home it is very rewarding to settle into your own home. A bit of financial self-discipline before you buy will make the process easier and less painful along the way.

Credit Card Debt: Three Tips To Help Reduce It

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Reducing Credit Card DebtMore always seems to be better in this age of materialistic consumerism. Who doesn’t dream of owning a lovely house and a swanky car? Knowing how to arrange money and keeping your head above the waters of credit card debt is not a skill that is taught in schools or a requirement to apply for lines of credit.

The question is: Will the banks help you to have a home loan for the home of your dream, once they learn of your credit card debts? This is the most important question that you should ask before applying for a home loan.

The Numbers Tell Your Story

One of the fundamental limits to home loan approval and the amount for which you can qualify is the amount of other debts that you have at the time of application. This is based on date-to-income ratio that is based on two things: the front- end-ratio and the back-end-ratio. On the basis of these two numbers, you will either qualify for the mortgage that you need or not.

Back-end-ratio, which also determines the fact that you will get a home loan or not, include many things such as your outstanding car loan, credit card balances, as well as other things such as child support payments; so it is important for you to know how to reduce that debt.

How To Reduce Your Credit Card Debts

If you want to go for a home loan then you should know to reduce the credit card debts because if the back-end-ratio is less than 36% then it is likely that you will get the home loan quickly. So, let’s take a look at how to reduce this debt:

Always be true to yourself

There are some people who claim that they have debt of $9,000 but in reality they have a debt of $14,000. So, it is important that you are true to yourself and you write against every card the debt you have and the interest you need to pay. If the actual numbers are not there then it means you need to face up to learning some financial skills and practicing some thrift.

This is tough advice to be sure. It means earning more and spending less, which could mean getting serious a hobby and selling items through online auction sites, getting a second job, find a better paying primary job or being more ambitious and apply for promotion with your current employer.

Alternative Financing

Seek an alternative loan that you can use to pay off your credit cards. If you can pay even a point two or three percent lower interest rate it will account for big savings. And that is why it is important to have a lower interest rate; this will also reduce the credit card debts. If you are considering a balance transfer option to another credit card watch out for front-end fees, which will instantly add four to five percent interest to the principal of the entire balance you transfer.

Pay Off The Highest Interest Rate Debt As Fast As Possible

If you think that by paying the minimum amount towards your credit card every month, you can either lower or reduce your debts, you are wrong, minimum payments are usually so low that you will take years to pay off the balance. Pay absolutely as much extra on the highest rate debt that you have until you have cleared the balance and then repeat the process with the next highest rate debt until all of your debts are cleared or at least until your back end debt to income ratio is a more acceptable level to qualify for the mortgage level that you need for the home you desire.

What Happened With Subprime Mortgages In 2007 And Can It Happen Again?

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Sub-Prime In Historical ContextOwning your own home is part of the American Dream, but the mortgage crisis in 2007 literally shattered that one hope for many in the country and around the world. Dubbed the Mortgage Mess or Mortgage Meltdown, the 2007 subprime mortgages crisis was heralded as the worst global crisis after the Great Depression of the 1930’s so what happened then and can it happen again?

Reasons For The 2007 Subprime Mortgages Crisis

The mortgage crisis was a result of flawed financial modeling and too much borrowing, mostly due to the assumption that property investments were foolproof. In addition, fraud and greed also played significant roles towards this collapse, largely the private sectors drive for short-term profits.

Owing to the low mortgage rates in the early 2000’s, borrowers were able to service more money with a lower monthly payment. Furthermore, property prices increased dramatically so buying a home was regarded as an unrivalled investment.

With property prices skyrocketing, homeowners gained plenty of equity and most of them leveraged this by taking out second mortgages or refinancing to get cash out of this equity. Some used the equity money to maintain their lifestyles, while others used it wisely; all while their wages remained stagnant. Unfortunately, all good things come to an end and the mortgage crisis began.

Property prices plunged at breakneck speeds, and homeowners who refinanced to buy more homes couldn’t afford to pay their respective mortgages. Owing to this tragedy, homeowners could do one of three things: Simply walk away from their home, wait for the bank to foreclose, or renegotiate their loan.

Banks generally recover their loaned amount from foreclosures, but they were on thin ice during the crisis as property prices had dropped to an extent where they had to take a hit on defaulted loans.

Effects Of The Subprime Mortgage Crisis

There are several other factors that contributed to the gravity of the subprime mortgages crisis such as the US economy meltdown, and rising commodity prices. Although businessmen, lawmakers, bankers and consumers scurried to level out the effects of the 2007 crisis, it unfolded a dramatic string of events, which are still felt to this day.

Can It Happen Again?

Although most financial experts consider the 2007 subprime mortgages crisis to be a unique episode, some claim that a few unresolved fundamental problems may coalesce to form the next big mortgage disaster.

The biggest issue and owing mostly to the 2007 subprime mortgages crisis, people are more hesitant to buy homes! They are much more eager to rent and statistics indicate that only 10% of apartments are unrented, which is comparatively low. This cultural transition away from home ownership could result in a whole new type of housing based economic crisis.

Should You Be Worried?

Not yet! As an example, some mortgage lenders have lowered their criterion for FHA financing from 640 to 600 and conventional financing from 660 to 620. However, to take advantage of a low credit score mortgage, you will need a sizable down payment, rock solid employment history and agree to a higher interest rate. But the fact is that banks will only profit if more homes are sold and they can only create this demand with subprime mortgages.

Why Employment And Jobs Data Affect Mortgage Rates

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Employment And Jobs Data BasicsFeatures of the main financial sectors of the economy are deeply interlinked. When you look at the figures for one type of activity in the economy, it may be affected by another and directly influence yet another piece of data in turn. So it is with Employment and jobs data and the influence they have on mortgage lending rates.

Once a month the Department of Labor’s number crunchers, the Bureau of Labor Statistics, (BLS) releases the change in employment levels from the previous month. The securities markets and banks watch this closely because it is a leading indicator of how the economy is behaving. It basically means, whichever the way employment changes, other financial indicators will fall like dominoes in a line.

The Significance Of Employment And Jobs Data

The BLS monthly employment numbers affect Federal government treasury bonds, treasuries affect all other bond markets, and mortgage bonds included. The change in value of mortgage bonds or mortgage-backed securities directly influences the market value of mortgages to investors and that causes the rates on offer for home loans to change. In this way employment and jobs data has a direct cause and effect linkage with mortgage lending rates.

When Jobs Increase What Happens?

Higher jobs tend to lead to higher interest rates. That means that the bonds behind the market that are composed of mortgage backed securities, are going to be less valuable. This is bad for the markets generally as the income from bonds is actually constant once the paper is written. The only way for them to have a higher interest rate is to discount the value of the bonds. It also means that if you are holding an adjustable rate mortgage that is due to reset after such an interest rate hike your payment will increase.

Guess What Happens When Jobs Are Lost

The opposite is true that if the fed reports decreased employment, it will cause interest rates to fall as investors rush to buy treasuries as a safe form in which to hold their assets. This ripples through the markets as all bonds reduce their interest rates in turn. The interest offered on new home loans will be lower and any pending changes to adjustable rates will be less severe, if they change at all.

The path by which employment and jobs data impacts mortgage rates is not a direct one. The impact of the change in employment levels is felt most keenly in the market for debt of the Federal government or treasuries. This debt is considered the safest investment and because the price of other bonds is competitive they set their prices relative to treasuries. Treasuries have a strong influence on the price of all other groups of bonds.

One group of these is mortgage-backed securities, bonds created from bundled home loans. The changes in mortgage backed securities directly impacts the price of new loans and so interest rates charged on new home loans change in response to the change in employment.

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