With the start of a New Year, it’s a great time to look at what you want to accomplish financially over the next twelve months.  Who has time for that?  You do!

Sometime over the next few months, you are going to have to collect all that paperwork for preparing your taxes.  This is a perfect time to add an extra hour to the process and consider this list – do it for yourself and your financial safety & Success:

1. Build an Emergency Fund – make sure you have some cash that can tide you over if something goes wrong.
2. Pay off any debts that aren’t increasing your wealth – Credit cards and Car Loans keep you from building wealth
3. Make sure you have the right insurances in place – protect the important things: Your Health, Income and Lifestyle can all be protected.
4. Re-balance all your assets – The location of your money
5. Review your mortgage – don’t spend too much on interest and make sure you are paying it off on your timeframe.
6. Buy an Investment Property – Great alternative to mutual funds for building wealth over time and diversifying your assets.  Maybe buying your retirement home this year is the right thing to do. (See #11)
7. Or, Help Someone buy their first home – gift a down payment to a family member to help them get started while homes are more affordable than ever!
8. Increase your 401k or IRA savings – make sure you are putting away the right amount.
9. Save for your kids College Education – it’ll be here before you know it.
10. Buy the home you really want – home prices and low interest rates make this the best time to move in years.
11. Buy your retirement home now, and then rent it until you need it.  Let someone else pay down the mortgage and you get the tax deductions until you retire.
12. Download this free ebook to see how to pull all this advice together or contact me for a free consultation.

Whatever you decide – here’s the number one tip:  Write it down!  Writing down your goals somehow helps to make them happen.  Here is more on how SMART goals work.

With the last minute tax legislation that passed in December of 2010, the IRS won’t be ready to accept some tax returns until Mid-February.  For some home buyers in Charlotte, this could mess up their plans to buy a house in the Spring of 2011.

According to a recent article in the Wall Street Journal, taxpayers who itemize their deductions will have to wait until the IRS is ready to accept their tax returns – if not, the IRS will reject the return and you would have to re-file when they are ready for you.

If you are thinking of buying a house in Charlotte in 2011, this could affect you – many lenders will need to see your 2010 tax returns to qualify you for a home loan, and a delay in filing the return could delay your home closing.

With recent Mortgage Guideline changes, not only do you have to file your taxes, but the lender will need to get a copy of your tax return transcripts from the IRS – a process that can take up to 10 weeks after you file your taxes.

If you are looking to buy a house in the first half of 2011, file your taxes as soon as you can – even if you have to pay taxes, so that your home closing doesn’t get delayed.

Thinking of buying a new home in Charlotte?  A new survey reports that most home owners still think home ownership is still a good investment and most home owners made a profit on their long-term homes.  Key points:

• 8,449 home buyers from July 2009 to July 2010 responded to this survey – that seems like a large enough number to be meaningful.
• Long Term – sellers were in houses for 8 years, buyers expect to stay in house for 10 years
• 24% increase - The mean gain for sellers who sold after 8 years was a 24% gain on the sale ($33,000)
• First Time Home Buyers bought 50% of the homes purchased

New Orleans, November 05, 2010:

Home buyers today have affirmed a long-term view of home ownership, the typical seller is experiencing positive returns and the vast majority of home owners see their property as a good investment, according to the latest consumer survey of home buyers and sellers. The study was released here today at the 2010 REALTORS® Conference & Expo.

The 2010 National Association of REALTORS® Profile of Home Buyers and Sellers is the latest in a series of large national NAR surveys evaluating demographics, preferences, marketing and experiences of recent home buyers and sellers.

Although typical sellers had been in their previous home for eight years, up from seven years in the 2009 study, first-time buyers plan to stay for 10 years and repeat buyers plan to hold their property for 15 years.

… “This underscores two simple facts – home ownership encourages stability, and the longer you own, the better your investment.”

Even with several years of price declines, the typical seller who purchased a home eight years ago experienced a median equity gain of $33,000, a 24 percent increase, while sellers who were in their homes for 11 to 15 years saw a median gain of 40 percent.

“Sellers who purchased at the top of the market and had to sell in a short time frame were hurt by the price correction, but the vast majority who are able to stay for a normal period of home ownership generally built enough equity to make a trade-up purchase,”

… “Eighty-five percent of recent home buyers see their home as a good investment, and nearly half think that investment is better than stocks,” he said. “Even with the turmoil created by the housing boom and bust, this indicates the long-term view of home ownership as a fundamental goal and value remains sound. In fact, the single biggest reason most people buy a home is the simple desire to own a home of their own, cited by 31 percent of respondents, including 53 percent of first-time buyers.”

…The number of first-time home buyers rose to a record high 50 percent of all home sales from 47 percent in the 2009 study, building on success of the home buyer tax credit which began in 2009. The previous cyclical high for first-time buyers was 44 percent in 1991; records date back to 1981.

Fifty-six percent of entry level buyers financed their purchase with an FHA loan, while another 7 percent used the VA loan program.

Forty-four percent of sellers offered incentives to attract buyers, such as home warranties or assistance with closing costs. The typical home sold for 96 percent of the listing price, compared with 95 percent in the 2009 profile.

Buyers use a wide variety of resources in searching for a home: 89 percent surf the Internet, 88 percent use real estate agents, 57 percent yard signs, 45 percent attend open houses and 36 percent look at print or newspaper ads. Although buyers also use other resources, they generally start the search process online and then contact an agent.

Not surprisingly, for-sale-by-owner transactions reached a record low, accounting for 9 percent of sales in the 2010 study, down from 11 percent in 2009. The share of homes sold without professional representation has trended down since reaching a cyclical peak of 18 percent in 1997. “In a market as challenging as today, it’s clear most home sellers need professional assistance,” Bishop said.

The 2010 National Association of REALTORS® Profile of Home Buyers and Sellers can be ordered by calling 800-874-6500, or online at www.realtor.org/prodser.nsf/Research.

The National Association of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

If you are thinking of buying  a home in Charlotte, NC, consider the following:

• Interest rates are making house payments more affordable than ever
• Home Prices are lower than in years past
• If you are going to stay in one place for more than a few years, the pride of ownership and the equity buildup are worth the risk of ownership

A opinion piece in Investment News claimed that ‘For young couples, renting may be a better option”.  I hate headlines like that  – they are designed to get your attention, but most people don’t have the time to read the article.  They end up with this piece of random advice floating around their head that can cause them to doubt their decisions.

Here’s a good rule to follow – don’t take advice from newspapers and magazines!  Why?  First of all, you don’t know who wrote the article.  Was it written by a 23 year old journalism apprentice that has never owned a home?  If so, do you really want to take home buying advice from him?  Or, does the writer have a bias or an incentive to push a particular viewpoint?  For example, a proponent of reverse mortgages is also a paid spokesperson for a reverse mortgage lending company.  Do you think their advice is fair an balanced? 

So, should young couples rent or buy?  Right now, the interest rates, homes for sale, and the home prices are all reasons to consider buying.

The Investment News article says the strongest reason to not buy right now is that prices could fall further.  This surprises me, as the industry that uniformly teaches ‘Buy and Hold’ rather than trying to time the market with stocks or mutual funds turns around and says, “Time the Market!”.  Waiting for prices to fall further is a sure setup for disappointment.  Think about it, even if prices fall further, will rates be higher when that happens?  Will the loan program that you can qualify for today still exist then?  What if prices fall, but rates are 1-2% higher than they are now? 

What if you did not buy a $250,000 house today because you ‘knew’ prices were going to drop by another 10% in the next 12 months?  Didn’t you make a good choice?  Well, if interest rates rose from 5% to 6.5% (from where they are today to where they were 1 year ago), your payment on the lower priced home next year would actually be $77 higher than if you bought right now.  Couple that with the money you threw away in 12 more months of rent (and for some, the loss of the $8,000 tax credit), and you are talking about a significant difference.

Why not buy now?  Don’t buy if you are going to move in less than three years.  Don’t buy if you haven’t been stable in your employment for the last few years.  Don’t buy if you don’t want to stay in the town in which you are looking to buy.

Fear or uncertainty of the future are never valid reasons for not taking action – there will always be economic uncertainty, change, and surprises.  If you aren’t going to buy because the ‘economy is bad’, then realize you are forcing yourself into a situation where,

1. You will never buy a home as the economy will always be bad, just starting to recover, or starting to get bad.
2. You’ll never buy because you don’t know what tomorrow will bring
3. You will buy, but only when the economy is strong, in which case you will be buying a house in a strong market, which means the prices and interest rates will be higher.

You can find a million reasons to buy a home or not buy a home right now.  Separate the facts from the headlines, consult with an independent professional and let them guide you through a sound decision making process.  Don’t take advice from a newspaper or magazine article as everyone’s circumstances are different.  Evaluate your choices in light of your unique circumstances. 

We offer a free, no obligation, Rent or Own Analysis to help you see the differences between continuing to rent and buying a house.  The numbers aren’t the only reason to buy a house, but they are important.  Then, add your personal story to the numbers to make a great decision.

Is it better to rent a Charlotte home, or to buy one? The answer may not be as clear-cut as you think. In this balanced, 3-minute joint interview from NBC’s The Today Show, you’ll hear the case for both sides.

From the pro-renting part of the talk, there’s valid points about the economic impact of low credit scores and/or no cash for downpayment, and the ongoing, annual cost of home maintenance — estimated at 2% of a home’s value.  Plus, renters have the ability to “follow a job” to a new town or region whereas a homeowner may be restricted, somewhat.

From the pro-purchase part, however, there’s excellent points that were made, too:

• Mortgage rates are low and each 1% drop to rates equates to a 9% drop to home price
• Buyers can zero in on a particular area with particular schools or walkability, for example, better than renters
• A home can a piggybank over the long-term; a place for “forced savings” for families that want it

Thanks to Rick Melville, a Sr. Mortgage Planner at Fairway Independent Mortgage in Charlotte for this guest blog post:

Winston Churchill once said that “a pessimist sees the difficulties associated with every opportunity and that an optimist sees the opportunities associated with every difficulty.”

Just for fun I decided to do a little math problem this week. Rates actually hit 4.375% on some 30 year fixed rate programs last week (of course remember – rates are very situation-dependent, and subject to change with market conditions). Can you believe it?! There are people who are on the sidelines waiting for prices to fall further before they make the leap of faith that we have finally hit bottom.

Here’s what that looks like, if they wait for house prices to fall and stabilize while interest rates creep back to the level of just a few months ago (at 5.375%).

• $250,000 mortgage at current rates of 4.375% equals a Principal and Interest Payment of $1248.21.
• That same payment of $1248.21 at 5.375% would only get you a mortgage of $222,906.

In other words, the house they wanted at $250,000 would have to fall another $27,094 before the payment would just be the same as it is NOW at the higher price. Well, that’s another 11%! I’d say there is a greater risk of rates rising than prices falling that much further.

If affordability and payment are important to a buyer, then trying to time the low in house pricing could make for higher payments. For a family who plans to stay in their house for a long while, buying now is the opportunity being created by our current difficulties and WOW!

What an opportunity we have now.

Great points – today’s low rates could be better than a further 10% decline in home prices.  If you aren’t happy living where you are now – the low rates are making affordable homes even more affordable.

All day, every day, conforming and FHA mortgage rates in North Carolina are changing.  Rates move in response to hundreds of factors as mortgage backed bonds are traded on Wall Street.

Among the biggest influences on mortgage rates is the threat of inflation.  When traders expect future inflation, they will sell low yielding mortgage bonds in order to protect their investors.  If inflation is tame, like it is now, mortgage bond prices will rise, and interest rates will fall.

What is inflation, exactly?  Most people think inflation means ‘stuff’ costs more.

By definition, inflation is when a currency loses its value; when what used to cost $1.00 now costs $1.10. inflation really means that a dollar buys less.

As consumers, we recognize inflation by the items we buy on a daily basis becoming more expensive.  However, it’s not that goods are more expensive — it’s that the dollars we’re using to buy them have become worth less.

With mortgage bonds, the holder of that bond will get the principle and interest back with dollars that can’t buy as much anymore.  If an investor expects this, they would want more interest paid to compensate them.

Mortgage rates move opposite of bond prices, as inflation takes hold, mortgage rates rise as the bond prices fall.

Lately, inflation has been exceptionally low. The Federal Reserve acknowledged as much in its last statement to the markets, and available data backs that position.  This, after predictions that inflation would be “runaway” in 2010.

There is not much threat of inflation right now in the economy, so for a while at least, you can expect rates to stay lower, until the traders start to fear inflation in the future – when that happens, rates could shoot higher.

Today, in its first meeting in 5 weeks, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged.

The Fed Fund Rate remains within its target range of 0.000-0.250 percent.

In its press release, the FOMC said that, since April, “the economic recovery is proceeding” and that the jobs market “is improving gradually”. Business spending “has risen significantly”, too, with the exception of commercial real estate.

Today’s statement is the 8th straight press release in which the Fed shows optimism for the U.S. economy, dating back to June 2009. Since that time, the Fed has terminated all of the programs it created to support the economy through the economic crisis.

And, although the Fed’s statement acknowledged economic growth, it did highlight lingering threats, too.

1. Employers are still reluctant to hire new workers
2. European debt concerns could spill-over to the U.S.
3. Bank lending is contracting

Also, as expected, the Fed re-affirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period”, citing that “inflation has trended lower” recently.

Mortgage market reaction has been positive thus far. Mortgage rates in North Carolina are slightly improved post-FOMC.

The FOMC’s next scheduled meeting is August 10, 2010.