No 3.8% Sales Tax on Homes

The internet rumor mill is a powerful force indeed. The inquiries about the tax included in the Healthcare Legislation deemed “Obamacare”, continue to roll in. NAR has done a superb job at addressing the tax, which is actually a tax on capital gains for high income earners who meet certain other criteria – which may include the sale of real property.

Here’s how the tax works. For individuals earning $200,000 a year or more and married couples earning $250,000 a year or more, certain investment income above these income levels might be subject to the 3.8 percent tax on a portion of that income. I say “might” because whether the tax applies or not depends on many factors having to do with the kind and amount of the investment income the household receives.

Investment income includes capital gains, dividends, interest payments, and, for those who own rental property, net rental income.

Importantly, the $250,000 (for individuals) and $500,000 (for married couples) capital gain exclusion on the sale of a principal residence remains in place. So, if you’re a married household that sold a house for a $500,000 gain (that’s gain, not sale proceeds), that amount remains excluded from your income calculation.

Let’s take a look at a married couple that has $325,000 in adjusted gross income (AGI), plus $525,000 in capital gains from the sale of their house.

This household would be considered upper-income by most standards. Not only is their income relatively high, at $325,000 (adjusted gross income, or AGI), but they’re receiving a $525,000 gain on their house sale. Presumably, they bought their house years ago and it’s appreciated over the years, so upon selling it, their gain is a relatively high $525,000.

For this household, only $25,000 in investment income would be subject to the 3.8 percent tax. That would amount to $950. That’s because it’s the $25,000 over the $500,000 capital gains exclusion that’s taxable.

Before they would know that, though, they would have to do a calculation that involves their adjusted gross income. They would have to add their capital gain of $25,000 to the amount of their income above the $250,000 income trigger (for married couples). Since their income is $325,000, they would add the $25,000 to $75,000 ($325,000 – $250,000), which would equal $100,000. Then they would compare the $25,000 to that $100,000, and apply the tax to the lesser of the two, which is the $25,000. Thus, $25,000 x 3.8% = $950.

So, you have a household that had income of $850,000 for the year, and its tax on investment equaled $950.

This is a simplification. Other tax issues could come into play. But it shows that the tax applies to just a portion of investment income for certain upper-income households and that the capital gains exclusion remains untouched.

Nobody likes taxes, and this tax was inserted into the legislation at the 11th hour as a “pay-for,” that is, as a revenue generator to help offset some of the costs of the reform. It’s expected to generate $325 billion over eight years.

NAR has prepared a brochure that looks at how the tax might apply under eight income scenarios: 1) sale of principal residence (which we just looked at), 2) sale of a non-real estate asset, 3) gain, interest, and dividend from securities, 4) real estate investment income, 5) rental income as sole source of earnings, 6) sale of second home with no rental use, 7) sale of inherited investment property, and 8. purchase and sale of investment property.

You can download the brochure for free. It’s written in plain language and I think you’ll find it organized efficiently, so you can see at a glance the potential considerations for the different scenarios. Of course, it’s just guidance: each household’s situation will be different, so you would want to suggest to your customers and clients that they consult with a tax adviser to make sure the tax is applied correctly in their case.

You can also get a good sense of how the tax works in the video above, in which Goold walks through a sample income scenario.

Source: NAR

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Raleigh Housing Market Improving for 2012

Good News for our Market Recovery

July 2012 was an amazing month with building permits up 57% higher from the same month in 2011. This huge jump increases the overall number for 2012 to 28% over last year during the same time period. Single family permit value jumped to $558 million for the year with a total value of $998 million (almost $1 billion) for all permits. (source: HBA of Raleigh-Wake county)

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Sales of $1 million-plus homes rose 19% in July from a year earlier,

Sales of $1 million-plus homes rose 19% in July from a year earlier, according to the National Association of Realtors.

‘Jumbo’ Home Loans Set Hot Pace

By most measures, the housing market’s recovery has been slow. But private-market “jumbo” mortgages—larger, higher-cost home loans that aren’t guaranteed by the federal government—are making a much faster comeback.

Private-market jumbo loans accounted for about 15% of the total dollar amount of mortgages distributed by Bank of America Corp. BAC +0.50% during the second quarter of 2012, up from 4% a year earlier, says a spokesman for the bank. At Wells Fargo & Co., WFC -0.09% private jumbo volume more than doubled in the first half of the year from the same period last year, according to Brad Blackwell, portfolio business manager for the bank’s home-mortgage unit. Citigroup Inc. C +1.91% also says it has increased jumbo lending.

In all, lenders doled out $38 billion in private jumbo mortgages during the second quarter of 2012, up 65% from a year earlier, according to new data compiled by Inside Mortgage Finance, a trade publication. That is the highest quarterly dollar amount since the first quarter of 2008.

“This is a real positive for the entire marketplace, and hopefully this is the first sign that credit markets will open up,” says Jack McCabe, an independent housing analyst in Deerfield Beach, Fla.

Unlike smaller mortgages, many jumbo loans aren’t eligible to be purchased by the governmental-chartered agencies known as Fannie Mae and Freddie Mac, so they tend to be more expensive for borrowers. In most of the country, private-market financing is needed for loans exceeding $417,000; the cutoff points are higher in more expensive markets.

Demand for these loans has been driven in part by a surge in luxury home sales. Sales of $1 million-plus homes rose 19% in July from a year earlier, according to the National Association of Realtors.

But private jumbo mortgages also have become more affordable than in the past. Rates on 30-year jumbos now average 4.22%, down from 4.82% a year ago and 5.27% two years ago, according to, a website that tracks mortgage data. Those rates are currently about half a percentage point higher than those on regular mortgages; in 2008 and 2009, that spread was more than twice as wide.

For lenders, says Frank Donnelly, president of the Mortgage Bankers Association of Metropolitan Washington, the appeal of jumbo loans is clear: They are more profitable. Despite the recent rate decreases, private jumbo mortgages still provide a bigger-than-usual spread between the interest banks receive and what they are paying on deposits.

Because they keep most of these loans on their own books, the lenders incur all the losses if a borrower defaults. Keith Gumbinger, a vice president at, says lenders have been able to take on such risks because their balance sheets are in better shape and because they are subjecting borrowers to rigorous screening.

Borrowers typically need a 20% to 25% down payment on a private jumbo loan, and on mortgages over $1 million, that can jump to 30%, says Joel Berinson, president of Ultra Mortgage, a mortgage broker in Marlton, N.J. Still, Mr. Berinson says his firm has sold roughly 30% more in private jumbos so far this year than it had at this point last year.

Corrections & Amplifications
Frank Donnelly is president of the Mortgage Bankers Association of Metropolitan Washington. An earlier version of this article incorrectly identified him as president of the Mortgage Bankers Association.

Source: WSJ and AnnaMaria Andriotis at

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Raleigh is Where the jobs are

Wake County North Carolina, home to Raleigh, Cary and Wake Forest NC recently ranked 12th for job growth by CNN Money.

Towns include: Cary, Raleigh
Job growth (2000-2011): 36.5%

Wake County is North Carolina’s Capital County in more ways than one. While it’s home to Raleigh, the seat of the state government, it’s also a major magnet for business capital. IBM, GlaxoSmithKline and Cisco Systems are among the corporate heavyweights that operate here.

At the heart of the county’s job success is its 7,000-acre Research Triangle Park. Duke, the University of North Carolina and North Carolina State provide a strong talent pool, which attracts Fortune 500 companies and entrepreneurs alike.

At least 1,740 new jobs have been added in Wake County since the start of the year by employers ranging from open-source software firm Red Hat to start-up Evatran, which develops charging systems for electric vehicles.

Source: Money-CNN

Relocation to Raleigh / Durham NC is easy. We are here to help

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Raleigh Home Buying Workshop

Home Buying Workshop Tuesday September 18th 6:30- 8:30 pm

Come learn, grow and have some fun!

Learn how to create the best deal on your home purchase, the steps involved, how to avoid costly mistakes and get the best loan with the least money…

Please bring your questions and your friends….

<a href=";” target=”_blank”>Click Here to Reserve Your Seat!

Feel free to email or call me with any questions on home financing!
We would love to help any of your clients.

Have a great week!

Amy Bonis

The AmyBonis MortgageTeam

VIP cell (919) 414-4430

Tell Amy that Tom Bohmann sent you.

We are to help.

Start your home search here.

Posted in Pre Qualfing to buy a home, Raleigh Area Real Estate, Raleigh home for sale, Wake Forest NC homes for Sale, Wake Forest Real Estate Agent | Tagged , , , ,

0 money down property to end . . .

The USDA is one of the largest providers of 100% financed or no money down loans. USDA loans are mostly in rural areas of the country. USDA Home Loans Click here

As of October 1 2012, these “eligibility areas” are changing. Eligibility qualifications may also change too. These qualifications include, income earned per house hold, Number of ppl in the house hold, job history and credit scores.

Contacting your Realtor is your best opportunity to see if you qualify for a USDA loan, and where these “eligibility areas’ are located.

Veterans will still have their VA loans of Zero Down or 100% financed programs.

There are also housing assistance programs that maybe available in some cities. These housing assistance programs also have qualifications as to the location, house hold income, number of ppl in the house, job history and credit scores.

Not all 100% financed programs are ending, but the rules are changing. The BEST way to find information about these programs is to contact a REALTOR.

We are here to help.

Posted in Down payment Assistance, No Down Payment 100% Financing, Pre Qualfing to buy a home, VA loan, Wake Forest NC homes for Sale | Tagged , , , , , , ,

Raleigh Homes: Priced to Sell QUICKLY.

If home lacks features of recent comps, it’s time to subtract value.

A first-quarter survey of homebuyers and sellers done by, a real estate services website, revealed that 76 percent of homeowners believe their home is worth more than the list price recommended by their real estate agent.

SOLD by Tom

Homebuyers usually have a better grasp of current market value in the area where they’re looking to buy than do sellers who own and live there. Buyers look at a lot of new listings. They make offers, know what sells quickly and for how much, and what doesn’t and why. HomeGain reported that homebuyers still think sellers are overpricing their homes.

Your home is worth what a buyer will pay for it given current market conditions. This may not be the same as your opinion of what your home will sell for, or what you hope it’s worth. Relying on emotion rather than logic when selecting a list price can lead to disappointing results.

The prime opportunity for selling a home is when it’s new on the market. This is when it is most marketable. Buyers wait for the new listings. Usually, listings receive the most showings and have the busiest open houses during the first couple of weeks they are on the market.

This is the opportunity to show your house off to advantage with a list price that attracts buyers’ attention. Listings that sell today are priced right for the market. Buyers need to feel comfortable that they are getting a good deal.

Buyers won’t overpay if they feel home prices are still declining, and in some areas of the country, they still are. In areas of strong sales, buyers may shy away from multiple-offer situations if they feel the recovery is fragile and that prices may slide further before stabilizing. Even in areas where home sales have been strong in the first half of 2012, local practitioners wonder how long the uptick will last.

HOUSE HUNTING TIP: When selecting a list price, it helps to understand how real estate agents and appraisers establish an expected selling price or price range for your home. They research the recent listing inventory for homes similar to yours that sold. The most recent sales give the best indication of the direction of the market.

They analyze these comparable sales giving more value to your home for attributes that it has that the comparables don’t, like a remodeled kitchen. Value is subtracted from your home for features it lacks when compared to the sold comparables, like an easily accessible, level backyard.

It’s difficult for sellers to step back and take an attitude of detached interest in their home. But it’s essential to do so if you want to sell successfully in this market. For example, your home could actually sell for less, not more, than a comparable sale because you added a swimming pool in an area where most homebuyers would rather have a yard with a generous lawn.

If the comparable sale information suggests that the value of homes like yours is declining, select a list price that undercuts the competition to drive buyers — and hopefully offers — to your home. You can take a more aggressive stance on pricing if the comparables show that prices are moving up.

If there is high demand for homes like yours, you may receive more than one offer. But don’t list too high. It’s better to stay in the range shown by the comparables and expose the house to the market before accepting offers. The market will drive the price up if it’s warranted.

THE CLOSING: Don’t rely on rumors circulating in the neighborhood about how high a home sold. Prices tend to get inflated when passed from one person to another. Select your list price based on hard facts.

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of “House Hunting: The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide.”
Contact Dian Hymer:

Looking to Sell your Home? We can help

Posted in Cary NC homes for Sale, Chapel Hill Homes For Sale, New Home Communties, No Down Payment 100% Financing, Raleigh home for sale, Raleigh NC homes for Sale, Wake Forest NC homes for Sale | Tagged , , , , ,

Housing: Supply vs Demand and Its Impact on Prices

For some time now, we have attempted to shed light on the fact that pricing in today’s real estate market, as it is in the markets for every other saleable item, will be determined by the concept of ‘supply and demand’.

According to, “the relationship between supply and demand determines the price of a commodity. This relationship is thought to be the driving force in a free market.”

In real estate, supply and demand is represented as the current month’s supply of homes for sale (the number of homes for sale divided by the number of homes sold in the previous month).

Most real estate professionals know, or at least have a good idea of, the month’s supply of inventory in their market. But why? Because of its effect on pricing moving forward.

While there is no steadfast rule that will apply to pricing in every category of housing, here is a great guideline by which to go:

1-4 months’ supply creates a sellers’ market where there are not enough homes to satisfy buyer demand. Appreciation is guaranteed.
5-6 months’ supply creates a balanced market. Historically home values appreciate at a rate a little greater than inflation.
7-8 months’ supply creates a buyers’ market where the number of homes for sale exceeds the demand. Depreciation follows.

When you discuss home values with either a seller or buyer, you should be prepared to show what the supply of, and demand for, homes is in the same category of home they are thinking of selling or buying. You should also be prepared to discuss any projected change in those numbers (such as a potential shadow inventory of distressed homes or a projected increase in demand because of a new plant opening).


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540 Updates – Aug 2012

The newest multicolor map of possible routes for the 540 Outer Loop is an upside-down rainbow spread across southern Wake County. But everybody knows that Orange is still the favorite color.

State and local road planners will unroll the many-hued map at a meeting Wednesday morning with federal and state regulators. They hope the regulators eventually OK their new strategy to restart a stalled project to build the next leg of 540 as an extension of the Triangle Expressway toll road from Holly Springs to Interstate 40 near Garner.

Their ultimate goal is to win approval by 2014 for a route that makes a good road without causing undue harm to homes and businesses or to sensitive wetlands – and without raising hackles in the town of Garner.

But in their second attempt to navigate tortuous federal environmental regulations, they figure they’ll have to take a few steps backward before they can move forward.

The U.S. Army Corps of Engineers and other agencies have rebuffed a proposal by the state Department of Transportation to forge ahead with an option known as the Orange Route. It has been the favored corridor for 540 since the 1990s, when DOT took legal steps to protect it from development.

DOT rejected other routes over the past couple of years because they would destroy too many homes, and for other reasons. One option, the Red Route, was outlawed by the state legislature in 2011 because it would bulldoze churches, parks, subdivisions and an industrial park in Garner.

But the Orange Route would trample sensitive wetlands that are home to an endangered stream mussel. The regulators said they could not approve it unless DOT gave them a good alternative for comparison. They threatened to cut off federal funding.

Now DOT and local planners have added two new colors to the map of alternatives. Early evidence shows that the new Lilac and Plum routes would hurt more homes and neighborhoods than the Orange Route, but they would cause less wetlands damage.

At the same time, road planners are proposing to change the way they define the turnpike project, in order to give more consideration to local economic development plans in Garner and other towns. The new criteria are permitted under environmental laws, and they should make it easier to justify ruling out the Red Route and other options.

But it means again evaluating discounted options, including the unpopular Blue and Purple options DOT introduced in September 2010 and eliminated a few weeks later – because they would destroy shopping centers and subdivisions in Holly Springs and Fuquay-Varina.

“The thought is that the Red Route fails miserably at being considered with any sort of plan Garner has been trying to follow for the last 20 or 30 years,” said Ed Johnson, executive director of CAMPO, a Wake-area transportation planning agency. “And very likely the Blue and Purple routes will fail, as well.”

The new strategy was developed under the guidance of Washington consultants who previously worked as federal regulators themselves. Southern Wake mayors met recently to give grudging approval. Tim Maloney, the Wake County planning director, briefed the county commissioners at their meeting Monday.

“If things would fall into place as we would expect and hope, the analysis of alternatives would clearly show that the original Orange Route and at least one of the other alternatives, possibly the Plum and the Lilac, would move forward with further detailed study,” Maloney said.

He outlined a timetable of reports and reviews required by environmental laws, leading to final approval of a TriEx route in 2014.

Several commissioners lamented the years of uncertainty and delay, and they voted to reaffirm their preference for the Orange Route. Commissioner Joe Bryan of Knightdale said it wasn’t right for southern Wake residents to be thwarted by unelected regulators.

“We’ve got an Orange corridor that we have protected,” Bryan said. “And now we’re going to draw some new lines on a map and impact more people that have been sitting there for almost 20 years, because an agency says we’ve got to look at something else.”

Staff writer Thomas Goldsmith contributed.

Read more here:

State and local road planners have a timeline for winning the approval of regulators and local residents for a route to extend the Triangle Expressway and the 540 Outer Loop across southern Wake County, from Holly Springs to Interstate 40 near Garner.

October-November: Evaluations of possible route corridors, including some that were eliminated previously. These would weigh project costs and environmental and community impacts.

December: Public meetings to discuss the route evaluations, with some routes to be eliminated.

April 2013: New report eliminates more options, advances study of two or three.

November 2013: Draft environmental impact statement, possibly making the case for one recommended route. Public hearings follow.

2014: Final environmental impact statement and approval of 540 route by state and federal regulators.

Then the state Department of Transportation moves ahead with design, engineering, financing, land acquisition and construction – all not yet scheduled.

No timetable is available for the final phase of Triangle Expressway in eastern Wake County, from Garner to Knightdale. Planners have informally recommended a Green Route shown on some maps, but other options have been mentioned as well.

Source: N.C. DOT

Read more here:

History of 540 news

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Mortgage Mistakes

During the 2007-2009 financial crisis, the United States economy crumbled because of a problem with mortgage foreclosures. Borrowers all over the nation had trouble paying their mortgages. At the time, eight out of 10 borrowers were trying to refinance their mortgages. Even high-end homeowners were having trouble with foreclosures. Why were so many citizens having trouble with their mortgages? Let’s take a look at the biggest mortgage mistakes that homeowners make.

1. Adjustable Rate Mortgages

Adjustable rate mortgages seem like a homeowners dream. An adjustable rate mortgage starts you off with a low interest rate for the first two to five years. They allow you to buy a larger house than you can normally qualify for and have lower payments that you can afford. After two to five years the interest rate resets to a higher market rate. That’s no problem because borrowers can just take the equity out of their homes and refinance to a lower rate once it resets.

Well, it doesn’t always work out that way. When housing prices drop, borrowers tend to find that they are unable to refinance their existing loans. This leaves many borrowers facing high mortgage payments that are two to three times their original payments. The dream of home ownership quickly becomes a nightmare.

2. No Down Payment Loans

During the subprime crisis, many companies were offering borrowers no-down-payment loans to borrowers. The purpose of a down payment is twofold. First, it increases the amount of equity that you have in your home and reduces the amount of money that you owe on a home. Second, a down payment makes sure that you have some skin in the game. Borrowers who place down a large down payment are much more likely to try everything possible to make their mortgage payments since they do not want to lose their investment. Many borrowers who put little to nothing down on their homes find themselves upside down on their mortgage and end up just walking away. They owe more money than the home is worth. The more a borrower owes, the more likely they are to walk away.

3. No Doc, No Income verification loans or “liar Loans”

The phrase “liar loans” leaves a bad taste in your mouth. Liar loans were incredibly popular during the real estate boom prior to the subprime meltdown that began in 2007. Mortgage lenders were quick to hand them out and borrowers were quick to accept them. A liar loan is a loan that requires little to no documentation. Liar loans do not require verification. The loan is based on the borrower’s stated income, stated assets and stated expenses.

They are called liar loans because borrowers have a tendency to lie and inflate their income so that they can buy a larger house. Some individuals that received a liar loan did not even have a job! The trouble starts once the buyer gets in the home. Since the mortgage payments have to be paid with actual income and not stated income, the borrower is unable to consistently make their mortgage payments. They fall behind on the payments and find themselves facing bankruptcy and foreclosure.

4. Reverse Mortgages

If you watch television, you have probably seen a reverse mortgage advertised as the solution to all of your income problems. Are reverse mortgages the godsend that people claim that they are? A reverse mortgage is a loan available to senior citizens age 62 and up that uses the equity out of your home to provide you with an income stream. The available equity is paid out to you in a steady stream of payments or in a lump sum like an annuity.

There are many drawbacks to getting a reverse mortgage. There are high upfront costs. Origination fees, mortgage insurance, title insurance, appraisal fees, attorney fees and miscellaneous fees can quickly eat up your equity. The borrower loses full ownership of their home. Since all of the equity will be gone from your home, the bank now owns the home. The family is only entitled to any equity that is left after all of the cash from the deceased’s estate has been used to pay off the mortgage, fees, and interest. The family will have to try to work out an agreement with the bank and make mortgage payments to keep the family home.

5. Longer Amortization

You may have thought that 30 years was the longest time frame that you could get on a mortgage. Are you aware that some mortgage companies are offering loans that run 40 years now? Thirty five and forty year mortgages are slowly rising in popularity. They allow individuals to buy a larger house for much lower payments. A 40-year mortgage may make sense for a young 20-year-old who plans to stay in their home for the next 20 years but it doesn’t make sense for a lot of people. The interest rate on a 40-year mortgage will be slightly higher than a 30 year. This amounts to a whole lot more interest over a 40-year time period, because banks aren’t going to give borrowers 10 extra years to pay off their mortgage without making it up on the back end.

Borrowers will also have less equity in their homes. The bulk of payments for the first 10 to 20 years will primarily pay down interest making it nearly impossible for the borrower to move. Besides, do you really want to be making mortgage payments in your 70s?

6. Interest Only Loans

Some homeowners simply did not understand what they were getting themselves into. Lenders came up with all sorts of exotic products that made the dream of home ownership a reality. Products like interest only loans which can lower payments 20-30%. These loans let borrowers live in a home for a few years and only make interest payments. Name your payment loans let borrowers decide exactly how much they want to pay on their mortgage each month.

The catch is that a big balloon principal payment would come due after a certain time period. All of these products are known as negative amortization products. Instead of building up equity, borrowers are building negative equity. They are increasing the amount that they owe every month until their debt comes crashing down on them like a pile of bricks. Exotic mortgage products have led to many borrowers being underwater on their loans.

The Bottom Line

As you can see, the road to homeownership is riddled with traps. If you can avoid the traps that many borrowers fell into, then you can keep yourself from financial ruin.

Mark Riddix is founder and president of New Horizons Financial Management, an independent investment advisory firm that provides personalized consulting services in investment and asset management. Riddix has a degree in finance and has worked in investment management for the past five years. He has also written a personal finance column for Baltimore and Washington metropolitan newspapers and writes a financial blog at


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