The Lure of the Snowbird Lifestyle — Is it Right for You?

25 Dec 2015 · by Virtual Results PubSub

The Lure of the Snowbird Lifestyle—Is it Right for You?

If you’re entering your retirement years, you may be considering buying a second home in a warmer (or cooler) clime. Perhaps your goal is to escape the winter weather. Or, maybe you want a loft nearer to the grandkids.

Whatever your purpose for wanting that second loft, here are some things to consider as you make that decision:

Income Tax

Several states do not have state income tax. Creating a second loft in one of these states could reduce your tax burden. These include Alaska, Florida, Nevada, New Hampshire*, South Dakota, Tennessee*,Texas, Washington and Wyoming.

*NOTE: While New Hampshire and Tennessee do not require residents to pay income tax on regular wages, they do tax dividend and interest income.

However, it is important to note that different states tax retirement income differently, and others have very specific criteria that identify your responsibility to pay income tax in that state even if you only live there a few months of the year. Before you buy a second loft in a different state based on an income tax strategy, speak with a knowledgeable tax advisor. For more information on state income taxes, check here.

Property Tax

Another tax that can wreak havoc on your retirement savings is property tax. Just because a state does not have income tax, it may not be the best place for you to set up your retirement residence. For example, Texas does not have state income tax, but Texas is among the 10 states with the highest property taxes, as is New Hampshire. Even so, your personal tax burden may benefit from shifting your state of residency to one of these states, so again, discuss your specific situation with you tax advisor.

Access

Of course, if access to your grandchildren is of primary concern, you’ll want to move as near to them as possible, so the tax consideration might be low on your list. If not, be sure you have access to the things you do want.

As you age, however, the possibility that you might become ill rises. Make certain that along with access to your family you have access to top-notch, affordable medical services. Investigate local access to care before you buy your second home.

Alternative Income Stream

Some folks buy a second home for possible rental income, planning to move into the loft after retirement. If this is in your plans, here are some things to be aware of: Regardless of what you might read or hear about holiday rentals, they don’t always pay for themselves. Most holiday areas have high seasons and low seasons. If you can’t make enough rental income in the high season to cover the entire year, this might not be a good option for you. Even in resort area, inclement weather can take a big bite out of your potential rental income. Additionally, you still have all of the costs of maintenance, upkeep, insurance and repairs to contend with. Of course, with online rental portals like airbnb.com or homeaway.com you might have an easier time finding qualified guests these days. Most experts warn that rental income from holiday rentals rarely covers your entire mortgage though, so don’t plan on that as a motive to buy.




What to Ask Santa For — A Downpayment!

17 Dec 2015 · by Virtual Results PubSub

downpayment

You’ve been saving for a downpayment and you’re almost there.

Almost!

You just need a little more money in that account and you can make an offer on your starter Loft. Now, your parents and grandparents want to give you a gift of money toward your new Loft.

Gifts for downpayments can come from a variety of sources. Mortgage lenders will let you use a cash gift toward a plethora of loan options as well. These include FHA loans, VA loans (which only need a down payment if they exceed the threshold), USDA loans, conventional loans and even jumbo loans. In fact, affording a twenty percent downpayment puts you in position for a conventional loan backed by the Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac), potentially saving you money over the life of your loan.

Before you ask Santa for that gift, however, you need to understand how it should be wrapped! If not done properly, you might just end up with a lump of coal in your pocket.

Here’s the skinny of how it works.

When you accept a downpayment gift, you cannot just deposit it into your bank account and co-mingle it with the funds you have there. You need to follow the required process for documenting the gift so that your loan isn’t denied.

  1. Write a “gift letter” that notes the following:
  • The amount of the gift
  • Who gave you the gift and your relationship to the giver
  • A note specifying that the gift is REALLY a gift and not just a loan you’ll have to pay back in the future
  • The property address you intend to buy
  • The signatures of the givers and the recipients
  • Don’t add anything extra to your gift letter either. Make it simple and strait forward.
  • Write a separate letter for each gift
  1. Keep a paper trail:

The gift should be in the form of a check in the exact dollar amount you noted in your letter. (Do not just have the money transferred to your account.)

  • Make a photocopy of the check
  • With the check in hand, take it to your bank (the same bank your other downpayment money is in) and deposit that check alone (nothing else in the transaction) into the account.
  • Make certain you get a receipt

If you receive more than one gift, deposit each one separately and get a separate receipt for it.

When applying for your loan, give copies of the gift letters along with copies of the checks and deposit receipts to the underwriter. Your underwriter will use the letters in the effort to get your loan approved and funded.

One side note: there may be tax implications for both the givers and receivers of financial gifts. Be sure to check with your tax advisor if you have questions or to find out how a gift might affect your situation.




Selling? Should You Exchange That Carpet for Hardwood

11 Dec 2015 · by Virtual Results PubSub

Selling? Should You Exchange That Carpet for HardwoodFlooring is one of the more controversial subjects when it comes to Loft improvements. There are two firm camps and rarely do they meet in the middle. When you’re planning to sell your Loft, you may think you need to replace the carpet in order to get the best price on the market.

Here are some thoughts for consideration:

Hardwood Flooring: Hardwood flooring has become central to modern design and many Loftsowners raised in wall-to-wall carpeting are easily persuaded to exchange their carpet for hardwood. Updating an older look with wood flooring might just be the key to getting your Loft sold. Before you do, however, make sure you’re doing it for the right reasons.

Visual appeal: There’s no getting around it: wood is simply beautiful. Whether you’re into dark cherry or a modern light bamboo, a wood floor can complement most décor and most tastes.

Maintenance: For many people, a modern wood floor product is easy to maintain. Usually sweeping or a light dust mop works for most cleaning. Periodically going over your floor with a damp mop using a wood safe product can pick up sticky residue or spills. In addition, they handle a lot of traffic without the “traffic patterns” that carpets pick up. Finally, if your floor gets scratched, you can have it buffed out, re-stained and coated with a clear protective coating.

Special considerations: People that suffer from allergies may find that they have fewer episodes with hardwood over carpet. Since the carpet fibers can collect pollen, animal hair and dander, dust mites and other allergens and irritants, you may find removing the carpet and replacing it with hardwood is an excellent and healthful idea.

People looking at your Loft with an eye to purchase it will find that hardwood holds a lot of attraction for them if they suffer from allergies or asthma.

A note of caution: If you’re considering a vinyl or other synthetic wood-look flooring, you might find you have fewer takers. Those with allergies tend to stay away from Household products that can release VOCs (volatile organic compounds), which make asthma worse. Laminate products and especially those products requiring glue can be a source of VOCs. A better option is engineered wood since the surface is a layer of wood veneer over several layers of wood.

In many cases, hardwood can boost your resale value above that of carpet and yet the cost to you is relatively reasonable. According to a market data study done by USA Today, hardwood flooring is one feature people are willing to pay extra for.

If you’re considering some upgrades before you put your Lofts on the market, take a look at replacing the flooring with real hardwood, or an engineered hardwood. Many retailers have end-of-the year specials on Lofts upgrade products.




Interest Rates are going up

4 Oct 2016 · by ChrisSampaio

The interest rates have been at all time lows for many years. So long that we are actually getting used to them being so low. Not anymore, the rates are due to go up in the next two weeks and that could make a big chunk on your mortgage payment.

If you were on the fence, now is time to act. I just locked my own rate at 3.375%, this is an amazing rate and I don’t think they will ever be that low again. Get off the fence!

See the Article below from the NY Times regarding the hike.

interestrates

Yellen Signals Fed on Track to Raise Rates in December

Fed chief says gains in labor market bolster her confidence that inflation will return to 2%

Federal Reserve Chairwoman  Janet Yellen signaled she’s ready to raise short-term interest rates this month barring a surprise that shakes her confidence in the economy.

She also suggested she sees dissension within her ranks, which could complicate her moves toward ending seven years of near-zero rates.

“I don’t need unanimity. I think we have to tolerate some dissent,” Ms. Yellen said Wednesday, in answer to a question after delivering a speech on the economic outlook. “I wouldn’t try to stifle dissents, and I would even expect some at critical junctures.”

In addition to some regional Fed bank presidents, two Washington-based Fed governors have expressed hesitance about raising rates, though the consensus appears to be moving against them.

“Absent information that drastically changes the economic picture and outlook, I feel the case for liftoff is compelling,” Atlanta Fed President Dennis Lockhart said in a speech in Fort Lauderdale, Fla., on Wednesday.

The Fed, which holds its next policy meeting Dec. 15-16, has said it would raise its benchmark federal-funds rate from near zero after it saw further improvement in the job market and became reasonably confident inflation will rise toward its 2% target.

Ms. Yellen on Wednesday described an economic backdrop fitting that description, a strong hint she is leaning toward lifting rates soon. She also warned that delaying a rate increase could hurt the economy, for instance by inducing risk-taking among investors that could destabilize the financial system.

“On balance, economic and financial information received since our October meeting has been consistent with our expectations of continued improvement in the labor market,” Ms. Yellen said in her speech. “Continuing improvement in the labor market helps strengthen confidence that inflation will move back to our 2% objective over the medium term.”

The latest economic data underscore Ms. Yellen’s optimism.

On Wednesday, the Labor Department reported inflation-adjusted hourly compensation for workers in the nonfarm business sector rose 3.4% in the third quarter compared with the same quarter a year ago, the second-largest jump since the third quarter of 2009. That comes after hourly compensation grew 3.3% in the second quarter over the same quarter of 2014.

Other wage measures have also shown improvement. Average hourly earnings of private-sector employees were 2.5% higher in October than a year before, the largest annual increase since July 2009, according to a separate Labor Department report.

“What the rest of the industry is seeing, what we are seeing as well, is just general wage-rate pressure,” Doug Benn, chief financial officer at the Cheesecake Factory Inc. chain of restaurants, told analysts in a conference call last month. “Being able to be fully staffed in an environment where there is an alternative—many alternatives for workers to go other places—it’s been a challenge.”

Still, inflation, by the Fed’s preferred measure, has run below its target for 42 consecutive months.

The Labor Department on Friday will deliver a report on November job growth and unemployment, a key final piece of data Fed officials will look at before making their rate decision. At this point, it would likely take a big disappointment in the report to give them pause.

Futures markets put a 75% probability on a quarter-percentage-point rate increase at the Fed’s meeting this month, according to the Chicago Mercantile Exchange.

Ms. Yellen’s comments, including a warning about the dangers of waiting too long to raise rates, did little to diminish those expectations.

“Were the [Fed] to delay the start of policy normalization for too long, we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of our goals,” she said. “Such an abrupt tightening would risk disrupting financial markets and perhaps even inadvertently push the economy into recession. Moreover, holding the federal funds rate at its current level for too long could also encourage excessive risk-taking and thus undermine financial stability.”

Stocks fell after her comments. The Dow Jones Industrial Average closed down 158.67 points, or 0.9%, at 17729.68.

The Fed lowered short-term rates to near zero in December 2008 during the financial crisis, and has held them there since to support the economy through the recession and fitful recovery.

Having convinced much of the investing public that a rate increase is coming this month, Fed officials are now trying to hammer a message that they will move gradually and cautiously after that first move.

Ms. Yellen pointed to the low level of the “neutral” fed-funds rate. This is a theoretical rate that would be compatible in normal times with consistent low U.S. unemployment and steady inflation.

Before the financial crisis, this neutral rate was widely estimated to be near 4%. Adjusted for inflation that would be close to 2%.

Since the crisis, Ms. Yellen noted, the neutral rate adjusted for inflation has been below zero. In other words, the economy hasn’t been able to bear the higher rates seen in normal times because it’s been too fragile.

Ms. Yellen said she expects the neutral rate to move up slowly as the economy strengthens, but she isn’t sure if it will rise or how much. This means the Fed will move gradually and tentatively as it proceeds, to find the economy’s new balance point.

On this front, Ms. Yellen appears to have common ground with potential dissenters. Fed governor Lael Brainard, who has expressed reservations about raising rates, dedicated a speech Tuesday to the low level of the neutral fed funds rate.

“The new normal is likely to be characterized by a lower level of interest rates than in the decades preceding the crisis, which counsels a cautious and gradual approach to adjusting monetary policy,” Ms. Brainard said.