Mortgage Interest. For most homeowners, the bulk of your mortgage payment is going towards interest – and that’s a big tax break for you! The mortgage interest on your primary residence is fully tax deductible, unless, of course your loan is more than $1 million.

You can also deduct late payment charges as home mortgage interest as long as the payment was not late due to a specific service received in connection with your home loan. Also, if you pay off your mortgage early and incur a prepayment penalty, you can deduct that penalty as home mortgage interest (subject to the same requirements for late payments).

Property Taxes. Your property taxes – the annual taxes based on the assessed value of your property – can also be deducted. Your mortgage interest statement may list the amount of real estate taxes you paid if your taxes and homeowners’ insurance went into an escrow account when you closed on your mortgage. You can also review your cancelled checks to determine your total real estate tax deduction.

Loan Points. Any points you paid to get a better rate on a home loan, are tax deductible in the year you made the purchase as long as:

• The loan is secured by your primary residence and it was used to buy, improve or build the home.
• Paying points is an established business practice in your area;
• The points are computed as a percentage of the loan principal;
• The points are clearly defined on the buyer’s settlement statement; and
• You put cash into your home purchase in an amount at least equal to the points you were charged.  

Loan Points on a Refi. The points you paid on a refinanced loan may also be tax deductible, however in most cases, the points must be deducted over the life of the new loan. So if you paid $2,000 in points to refinance a 30-year mortgage, you can deduct $5.56 per monthly payment, or a total of $66.72 if you made 12 payments in one year on the new loan.

Interest on a Home Equity Loan. The interest on a home equity loan may be tax deductible up to $100,000. However, if your home equity loan, when combined with your first mortgage amount, increases the debt on your home to an amount more than the property’s actual value, you’ll face deductibility limits. In these cases, the IRS allows you to deduct the smaller of interest on a $100,000 loan or your home’s value less the amount of your existing mortgage.

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Listing Commissions

Discount commissions
It wasn’t to long ago that commissions below the “going rate” for an area were all but unheard of.  These days though, there are many brokers and agents willing to list your home for considerably less than the 7% that might be typical for the area.  You need to be aware though, that lower commissions are nearly always tied to lower levels of service.  Most agents willing to list your home for a bargain commission rate aren’t going to do any advertising or marketing of your home.  They will probably just list it with the local MLS and put a sign in your yard, and that’s about it.  Meanwhile, a full service, full rate agent will probably spend considerable time and money to advertise and market your home – particularly to other agents in the area.  So, when considering a low commission, be sure you know exactly what you’ll be getting, and what you’ll be giving up.

Often, lower commissions will be part of a package deal where you agree to use a particular mortgage broker or you agree to buy your next home through the same agent that sells your present one.  There are some good bargains to be had with these package deals.  But again, it pays to examine the details closely, and make sure the whole package fits your needs.

Paying commissions
It’s important to understand how commissions are earned, and when they are paid.  Your specific listing agreement will spell out the details.  In general, a broker is considered to have held up his end of the bargain when he brings you a “ready, willing and able” buyer.  If the broker finds such a buyer, and you change your mind and back out of the deal at the last minute, the broker is probably going to expect you to pay the commission anyway, since he did his job.

Buyers Commission:  Buyers do not have to pay a commission when purchasing a home! …unless the buyer hires an agent to find a suitable home and is willing to pay for the agent’s work and time. In this senario there should be a specific, written contract to  make sure both parties agree and understand the terms.

In general when a home has been entered on the local Multiple Listing Service (MLS) for sale, the listing agent points out how the commission will be shared in case another agent brings in a willing and able buyer.  Common practice is that the listing agent and the buyer’s agent share the total commission in a 50/50 split.

Changing your passwords to log on to your computer or access critical stored information gets you in the habit of having a different one every so often. At the same time, it reduces the chance that someone else will be able to “break in” to your computer files or online information. Experts caution though that you should n’t “sequence” your passwords to make them easier to remember. If someone gets hold of an old password of yours, “green03,” and it doesn’t work, it won’t take long for your average computer hacker to guess the new password is “green04″ or “green05.”

It’s a good idea to have different passwords for different things. This can be hard to do in practice because there are so many things needing passwords. Experts say having a couple different passwords can be helpful. Use one for less important things like your log on to the New York Times online or an Internet message board, and another, more complex one for more important things like your online banking or the place you store sensitive business documents on your hard drive.

Try to vary your passwords by using things that aren’t easy to guess or find out, like your Social Sec urity number, your birthday, or child’s name. Another good idea, experts say, is including both letters and numerals in passwords. A good way to do this is to substitute numbers that look most like the vowels for a, e, i and o. “A” can be “4″, “E” can be “3″, “I” can be “1″ and “O” can be “0″. A password for an “agent” might be “4g3nt.” These letter/number combinations are harder to guess but also, harder for a hacker to remember if they somehow are able to see them very briefly.

Whatever you do to make it easy for you to remember your passwords but hard for others to guess, consider changing your passwords when you change your clocks, detector batteries and replace any broken sprinkler heads. You may be very glad you did!

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With the legislation passed that extends the homebuyer tax credit until April 30th, 2010, you have a great opportunity to get into a new home this year. If you sign a purchase agreement before April 30th and close the transaction by July 1st, you can get up to $8,000 as a credit on your tax return and even put it towards the down payment on an FHA-insured home.

If you’ve been thinking about purchasing a new home, now is the best time to get the ball rolling. Don’t delay it any further; this is not an opportunity you want to pass on by.

Many of you bought your home in 2008 and 2009 using the $8,000 tax credit.   

Here are some usefull links directly from the IRS to help you file the tax credit properly:

• Basic Information
• Claiming the credit on your tax return
• Homes purchased in 2008
• Homes purchased in 2009
• Scenarios

In case you do file your tax return your self  and need help you can visit the official IRS website by clicking here.

News you can use:  February Newsletter is here and it is, as always, full of useful tips and information that you can use. 

Topics included in this month’s Newsletter: 

• How to repair your home without damaging your wallet
• Exterior remodeling proves best bang for your buck
• Homebuyer tax credit boosts economy
• Understanding the buyers mindset
• View current mortgage rates 
• January round up: mortgage rate trends

If you have any ideas or tips on topics for next month please share it with me; I would be glad to research it and publish it.

Image by joiseyshowaa via Flickr

Do you live near intersection or high traffic areas?  Here are some useful tips on how to reduce the traffic noise, enjoy your outdoor activities and have a nicely landscaped backyard, all at the same time:  How to dampen traffic noise

Following are the statistics for the month of January, 2010: 

• Actively listed properties: 207

             Almost the same as it was in December 2009 (208) 

• Homes that went “Pending Sale” for the last week of January:  34

             This is just a bit lower than it was for the same period in December (27)

• Number of homes “Sold” in the month of December: 92

              This is a significant drop compared to the previous month when

              the number of sold home was 148 

• The Average Days on the market of the Sold Properties: 46

             In December last year this number was 62.  

• Average Listing Price: $296,75 
• Average Sale Price: $244,573

 The charts below reflecting these numbers as well:

If you would like to have detailed statistics for other areas of the Central Valley, please feel free to call or email me – I would be glad to provide it for you.

Here is your chance to check your knowledge about your neighborhood: I would like to know if you could guess how much this home has been sold for recently:

Address: 597 Whintey Court, Tracy Ca 95377

Listing price: $260,000, Short Sale

4 bedrooms, 2.5 baths, 2 story house with a 3 car garage,

built in 1999, features an inground, fenced-in swimming pool.

Sold date: January 20, 2010

Give it your best shot and send me your guess for this home’s SOLD price!…

My husband and I live on the outskirt of Tracy, in midst of country properties. Most of the homes are sitting here on one to two acres, so homes are pretty far set from each other.  Our neighborhood is very quite, rarely any chance to talk to anyone. 

It was a Thursday afternoon, garbage pick up day. My husband, John, is a cautious and alert guy, receptive to any changes. As he was coming home from work noticed that our only neighbor on the right side, a retired gentleman who lived alone, still had his garbage tote out front, which was unusual.  He always took care of it right after the garbage truck left, but not on this day. 

John pulled the tote into the drive way, not sure where he supposed to put it.  He was thinking that there is something not right; maybe our neighbor got sick, or he is gone for a few days, or who knows what.  

As he was getting closer to the entrance, our neighbor opened his front door and asked my husband why he does this.  My dear husband replied:  it was so out of routine for him to leave the garbage can outside, that John got worried, thinking perhaps something wasn’t right.  The man was obviously so surprised, he couldn’t find words right away.  He was thanking John for being such a caring neighbor and said that he would have never thought anyone is looking out for him.  Right there he made a promise to pay more attention to us and the surrounding neighbors from now on.

 Folks, you never know what will happen in the future; you may need such caring action form your neighbor or you may not.  Nevertheless, neighbors are important, not only because they might help you some day, but because they are the ones, along with you, who are shaping your neighborhoods to be desirable and giving value to your homes and to the area where you live.   So, when next time one of the homes around you will be listed for sale, the Realtor can, with good conscience, write it into the marketing “Located in a Very Nice, Established Neighborhood” without hesitance, because it will be the truth.