Any homeowner knows that that the beginning of each new year represents a new tax season, and with each tax season come new opportunities to use your home as an excellent way to save money through valuable deductions.

Federal tax laws have made it advantageous to own a home. Federal tax credits have been issued to do two specific things: to offset the cost of owning a home and to motivate new buyers to keep the housing market hopping.

Just like other federal laws that benefit the populace, tax laws are never guaranteed for more than a few years.  Therefore, a wise home owner will take advantage of all the available tax benefits while they are still viable options.

This article presents a brief introduction to the most popular and lucrative tax benefits for homeowners.  This information should not be considered tax advice, and it is always a good idea to check with your federal taxing agency or even a tax professional to find out which options are applicable to your individual tax situation.

Deduct the Interest Paid on Mortgage Loans
This is perhaps the absolute best tax deduction that any homeowner could hope for.  Taking full advantage of this deduction can save you potentially thousands of dollars, depending on the principal and structure of your mortgage. Generally, as long as your mortgage is for less than one million dollars, you can deduct the interest.

During the first few years that you own your home, you will learn that most of your payment amount is used to pay down the interest rather than the principal.  Therefore, this tax break was designed to be most beneficial to new buyers.  Of course, as mentioned above, it really just depends on the type of loan you selected when you purchased your home.

Homebuyers who have opted for a balloon or interest-only mortgage may discover that this deduction makes owning a home much less expensive.
When you deduct the interest that you have paid, your taxable income is lowered, reducing the amount of tax that you owe. The mortgage interest deduction and any other deduction resulting from a home equity loan (see below) can be shared among filers who do not file jointly.
If you have borrowed a home-equity loan, it is important to realize that the interest is deductible. However, such deductions are almost always limited to loans of no more than $100,000, just as deductions are limited to standard mortgages of no more than one million dollars.  The amount that is deductible may actually be the fair market value of your home, rather than the $100,000. If you are considering deducting the interest paid on a mortgage or home-equity loan, consult with a tax professional for advice.

Deduct the Interest Paid on Home-Improvement Loans
The calculation of the deduction that corresponds to interest paid on a home-improvement loan differs from that of the other interest deductions described above.  The calculation is fairly complicated, but if you are using the loan proceeds to make improvements that will increase the home´s value, extend the life of the home, or adapt the home to meet changing needs (such as adaptations for the elderly or disabled), then you can probably deduct ALL of the interest paid on the loan.

Sometimes home-improvement loans are used to fund smaller projects, such as painting and minor updating.  In these cases, you can usually deduct some of the interest paid on the loan.  However, the largest tax benefits from repairs result when you sell your home.

Deduct The Points You Pay at Closing
A point represents one percent of the amount of the mortgage that you are borrowing.  In most cases, you pay points to the lender at the time of the closing.  Points are fully deductible, as is interest, during the year in which you purchase a home.

Points are deductible when you opt to refinance, too. The difference is that in order for points on refinancing loans to be deductible, they must be amortized over the life of the loan.  If you find it advantageous to refinance again in the future, you can immediately deduct the remaining points from the original refinance loan when the new points have been amortized over the life of the new loan.

Deduct Your Real-Estate or Property Taxes
When you pay real-estate and/or property taxes, you may deduct the amount from your federal taxes.  There is a caveat, however. If you receive any refund of your local or state property taxes, it will reduce the amount of your federal deduction eligibility by the same amount.  Find a tax professional to help you understand your eligibility for this tax deduction.

When You Sell, Take Advantage of the Capital Gains Exclusion
The Taxpayer Relief Act of 1997 gives real-estate investors the ability to retain the profit earned when their home sells.  The restriction is that the home owner must have lived in the property during two of the last five years that the property was owned. When taking advantage of this tax break, homeowners may retain up to $500,000 ? tax-free ? from the profit on the home sale. There is no restriction on how many times homeowners may use this tax benefit, so long as they qualify and meet the residency requirement.

Deduct Your Home Office
Many taxpayers do not realize that when some portion of the home is used exclusively as a home office for a business, a percentage of the costs associated with the home may be deducted.  A specific percentage of utility bills, painting fees, insurance premiums, and depreciation may be deducted by homeowners who use space in their home as an office.

This deduction is restricted if your home is partially owned by your business, and if any capital gains would be divided between you and your business. Again, work with a tax professional to understand the details.

Sellers´ Expenses Reduce Capital-Gains-Tax Liabilities
When you sell a home, you incur selling costs.  These costs include, but are not limited to, advertising, title insurance, inspections, painting, decorating, landscaping, legal fees and agent commissions.  As long as repair, painting and upgrade costs were incurred within 90 days of your home´s sale, they are deductible.

This deduction will reduce your amount of capital gain for tax purposes.  The way that this deduction is calculated will depend primarily on your home´s value.  Ask your realtor or a tax advisor for additional information about deducting sellers´ expenses.

Deduct Moving Costs When You are Relocating for Work
When you must move for your job, you can almost always deduct the moving costs that you incur.  You must meet certain criteria, including moving within one year of relocation to a new location at least 50 miles from your current home and working full-time at the new location for at least 39 weeks during the year following your move.  These deductible expenses can include travel costs, storage costs, hotel costs and mover costs.

Smart consumers make financial decisions by weighing the advantages and disadvantages of every possible option. Buying a home is no exception. Whether you already own your home, or are considering the purchase of a new home, you need to become familiar with the many tax deductions offered to homeowners. Your realtor is an excellent source of general information about local taxation, taxing authorities and possible tax deductions.  Begin your research by requesting general information from your realtor and then contact a tax professional or financial planner to learn about the best tax deductions for your particular situation.

Contact me today for more information!  Rod Potter/ Email: rpotter@carolina.rr.com / Phone: (704)840-4137

As you consider buying your first home, you undoubtedly have hundreds of questions about the process. These questions begin as soon as you start thinking about moving and continue far beyond the closing. What should I expect? How can I prepare? Am I ready to own a home?  These questions are perfectly normal and are to be expected from first-time buyers.

In order to make the home-buying process as easy and smooth as possible, you need to know exactly what to expect .  By reviewing the following information, you will be well prepared to begin the process of buying your first home.

How Much Can You Afford?
The first step in buying a home for the first time is making sure that you can afford the home you plan to purchase. Even if you haven´t already found the home of your dreams, you probably have a fairly good idea of the type of home you would like to purchase.  However, you may or may not realize how much you can actually afford to spend on housing each month.  Surprisingly, speaking to a lender about your financial situation may not be the best place to start.

Lenders look at your debt-to-income ratio and not necessarily at your day-to-day spending habits.  Therefore, they will know if you have several credit cards that are responsibly maintained and a car loan that was paid off in full last month.  But they may not realize that you opt to spend several hundred dollars each month on the latest fashions or videos.  Begin tracking where and how your money is being spent and how much of that spending can or will be curtailed when you purchase a home.

Financial Counseling and Pre-Qualification
A financial advisor can help you to assess your financial information and determine how much home you can afford to purchase.  Speak with a financial advisor before beginning the search for your first home ? and know that there is one other thing you can do to ensure that you are looking at the right homes for your price range.

Most mortgage lenders are happy to complete a pre-qualification process for potential buyers who need to find out ahead of time what size of mortgage they can qualify for.  The pre-qualification process is not a guarantee that the lender will offer you funding, but it does takes into consideration your credit score and income level in order to determine how much the lender might be willing to offer through a mortgage program.  The process will also enable you to begin comparing the mortgage programs offered by different lenders.

Shopping for Lenders
With interest rates declining, you need to make sure that lenders are giving you the most competitive mortgage options and interest rates.  Talking to several lenders will help you decide which one can best serve your interests.

Ask the lender about the details of each program that you are considering, including the closing-cost requirements, down-payment percentage, and any early-payoff costs that your might face. Mention that you are a first-time buyer, because this could potentially make a difference in the types of programs that a lender offers to you.

Once you have selected a lender, make sure that the specific mortgage program you are considering is right for your borrowing needs. I can help you find a mortgage professional if you like, I have a list of individuals that I can recommend to you  that reside in Charlotte/surrounding areas.

Here are two of the most common types of mortgage programs:

Traditional 15- or 30-Year Fixed-Rate Mortgage
This type of mortgage loan usually has a 15- or 30-year payoff (amortization) schedule.  Over the years, you make equal payments that are applied to the interest and principal in varying proportions until you completely pay off the loan.  The interest rate does not change.

15- or 30-year Adjustable-Rate Mortgage (ARM)
The ARM is declining in popularity as a result of better fixed-interest rates with traditional mortgage programs.  However, sometimes a new homebuyer will want or need to purchase a home that is more expensive than what he or she can afford at the time of the purchase.  ARMs, which come with low introductory interest rates that are almost always locked-in for the first five years, can be a good option.  After the introductory period, the interest rate becomes variable and may drop or skyrocket, changing throughout the life of the loan according to a pre-defined time schedule and market interest rates.

Finding an Agent
First-time buyers often call the listing agent for homes that interest them, but this may not be the best way to protect your interests throughout the purchase process.  When a potential buyer works with a listing agent to purchase a home that is listed by that particular agent, the result is double agency. Double agency simply means that the buyer and seller have the same agent, who represents both parties and therefore cannot release information that could harm either party.

To find an agent, consider the area in which you want to buy. A local agent will be familiar with the area and can recommend specific neighborhoods for people with your particular lifestyle.  You can also request recommendations from friends and family members.

Before signing a contract with an agent, ask about the commission rate, although this cost is generally covered by the seller´s portion of the closing expenses.

Make sure that your agent understands what you are looking for and how much you are prepared to spend on your home.  As a first-time buyer, you need to work with an agent who is familiar with programs and lenders who specialize in working with first-time buyers. Please let me be that agent. I can be reached on my cell phone at (704)840-4137. My name is Rod Potter, I can help you find a home.

First-Time Homebuyer Programs
Many programs are designed specifically to assist first-time homebuyers with benefits like down-payment assistance and no closing costs.  Others offer first-time buyers competitive interest rates designed to make borrowing easier.  First-time homebuyer assistance programs almost always apply to anyone who has not purchased a home within the past three years.  Therefore, even if you are not a true first-time buyer but you have not bought a home in the past three years, you may qualify for these programs.

Conclusion
First-time homebuyers who approach the home-buying process with adequate preparation can be some of the best customers for lenders and agents.  If you are thinking of buying a home for the first time, do your research and plan for your home purchase.  Doing so will make you an educated consumer and give you a good chance of finding the best home for the best price.

Contact me today for more information!  Rod Potter/ Email: rpotter@carolina.rr.com / Phone: (704)840-4137