Real Estate

A home for the whole family [03/09/2002]

By Bruce Stuart

Contemporary family home on Randall Farm Road in NorthConway. Listed at $249,000.(end box)Finally, weve struck gold. This week's property is truly a family home; 3,500 square feet filled with amenities that meet the needs and wants of the entire clan. From a basketball hoop in the front yard, to a hot tub, a sauna, and even a soundproof room where Tiffany and her band friends can practice to their heart's delight.Here is a five-bedroom home with three and a half baths. Plenty of room for the family, friends and maybe a relative or two. One bedroom even has two sets of built-in bunk beds.Now, listen to the lineup. A large living room with a massive fireplace, A separate dining area. A whopper of an eat-in kitchen with all kinds of built-ins. A library with built in book shelves and a pretty garden views. A deck. And downstairs, a heated workshop.A paved driveway leads to an attached garage with easy access to the home itself. The oil/hot water heating system is zoned. All of this situated on a wooded one-acre lot in a quiet neighborhood not far from town.If you're looking for a real-life family home, this is the one. RE/MAX Presidential's Antonella Bliss has the listing. She'll be glad to show the home to the whole family. Bring your own basketball.
  • Written by Tim Dunham
  • Category: Real Estate

IRS Tax Tip

Selling your home

If you sold your main home, you may be able to exclude up to $250,000 of gain ($500,000 for married taxpayers filing jointly) from your federal tax return, according to the IRS. This exclusion is allowed each time that you sell your main home, but generally no more frequently than once every two years. To be eligible for this exclusion, your home must have been owned by you and used as your main home for a period of at least two years out of the five years prior to its sale. If you and your spouse file a joint return for the year of the sale, you can exclude the gain if either of you qualify for the exclusion. But both of you would have to meet the use test to claim the $500,000 maximum amount. If you do not meet the ownership and use tests, you may be allowed to exclude a portion of the gain realized on the sale of your home if you sold your home due to a change in health or place of employment. If you cannot exclude all the gain from the sale of your home, use Schedule D, Form 1040, to report it. For more details and information, get a copy of Publication 523, "Selling your Home," by calling 1-800-829-3676, or download it from the IRS web site at www.irs.gov.
  • Written by Tim Dunham
  • Category: Real Estate

Solutions for unsold properties [03/09/2002]

By William Kugel

A frequent question for lenders and real estate professionals is whether it is better to sell first or buy first. There are pros and cons to each. Buying first helps you know where you are going and plan your move. Selling first gives peace of mind about not having to carry the costs of two residences. Sometimes circumstances are such that borrowers must find a solution to financing the new home before the old one is sold. In this article I'll explore solutions for these situations. Many buyers find themselves purchasing at a time when they have less cash immediately available to put down than they would like. Perhaps they have a solid idea where additional funds are coming from in the future, yet they feel the time to act is now. In such situations the borrower may take a larger loan initially with the intention to pay the loan down later. I am often asked how to plan for such contingencies. A common example is the homeowner who is trading up when one or more of their present properties have not yet sold and the proceeds will be available sometime in the future (after the home they are purchasing has closed). Other examples of situations where this planning is called for include borrowers who will receive large lump sum distributions from investments, trust funds, inheritances, or employees who will receive sizable bonus compensation down the road.The first step in planning a strategy to apply a lump sum of cash to a loan is to clarify your goals. Is it your intention (when you pay the new loan down) to lower the monthly payments or to retire the loan balance faster? This preference is the central issue in choosing the right financing now. Unfortunately, the realities are that you can accomplish either lower payments or early payoff, but rarely both. So, defining which result is preferred down the road is the key to selecting the right product now. With the standard fixed rate fully amortized loan, the effect of a lump sum pre-payment is to reduce the principal balance and shorten the time when the loan will be paid off in full. It is important to know that the monthly payment, which is contracted for at the time the loan is obtained, is the monthly payment for the life of the loan. It is a fixed and level installment that will not change, even when pre-paying the principal balance.If, in the future, you will pay the loan balance down with the hope of reducing your monthly mortgage payment, then one strategy that will accomplish this is to choose an adjustable rate mortgage. Adjustable rate mortgages operate distinctly different with regard to pre-payments. With a non-negatively amortizing adjustable mortgage, the monthly payment schedule is recast at each prescribed periodic adjustment interval. As an example, with an annually adjusting loan, your new payment will determined at one-year anniversaries. The formula for determining your next payment depends on three variables: the new interest rate calculated, the number of months remaining in the original term of your loan, and the loan balance just prior to the adjustment.Thus, if a pre-payment to principal is received just prior to recasting your adjustable loan, the new monthly payment will be calculated on the basis of that lower principal balance. Be sure to read your promissory note and/or any loan disclosures you received thoroughly to confirm how your loan operates and your ability to make pre-payments without penalty. Also, contact your lender to confirm the latest point at which your pre-payment can be received in time to reduce the principal prior to recalculating your monthly payment.Another strategy for accommodating these late contributions to your down payment or equity is that of starting with a piggyback loan structure. A piggyback loan is two separate loans put on at the same time in tandem. This approach is the one case I know of that will both lower what you owe AND your monthly payments at the same time. One example of a piggyback loan is a 30-year conventional fixed rate mortgage, followed by a second mortgage for another amount. Such a second may come from a private party or from the same lender of the first mortgage. The most common private party second is what is known as the "seller carry back" loan. Second mortgages come in a variety of shapes and sizes. The most popular second mortgage in such situations is a home equity loan. Some lenders offer these free of closing costs if closed simultaneously with a first mortgage. There are both fixed and adjustable rate seconds. Seller carry-back loans and many home equity products are often interest only loans with very low minimum payments. Institutional second mortgages are available as fully amortized for 15, and sometimes 30 years. No matter what type of second is used, the point of the second in the context of our topic is it's early payoff possibilities. This tag along second can be clipped out of the picture entirely at a later date. This not only lowers the total amount owing, but it also eliminates the monthly payment on that portion of the debt.Bridge loans offer another possible solution. This is a loan against a portion of the equity on the unsold property. The bridge loan will have a higher rate of interest but the time frame of its use is short. A lower cost home equity loan can be used on the property to be sold IF done before that property is listed for sale. These are just a few strategies worth considering if you find yourself in situation where initially you must take a loan larger than what you desire for over the long term. The key is to set up a strategy now, when taking out the initial financing on your new home that will work for you down the road when you want to trim down your mortgage. The earlier you start investigating your options the better. William Kugel is author of the column MORTGAGE$ in publication for 11 years, a senior loan officer with GMAC Mortgage Corp., and a Mount Washington Valley resident. You may write him c/o of The Conway Daily Sun, visit the web site www.gmacm.net/william_kugel or send e-mail to This email address is being protected from spambots. You need JavaScript enabled to view it. Rights Reserved. Copyright 2002, W.H. Kugel.
  • Written by Tim Dunham
  • Category: Real Estate

Home of Week

By bruce stuart

Affordable lake living

Photo: ShadyThe Shady Lane home has water rights for swimming, boating and other water sports. Photo: Silver SandsThe Silver Sands Drive home has an unobstructed view of the pond.Photo: SandsMore of a home than a cottage, The Sands Drive home sits on a nicely landscaped wooded double lot. (box) Three (yes three) properties located in Kimball Lake Shores just north of Fryeburg. Take your pick. (end box) When Elizabeth Roy at Prudential Joy Tarbell Realty approached me with three listings in the Kimball Lake Shores Development, her timing was perfect. After all, the weather had turned warm earlier this week and my thoughts had turned to fishing and boating and water sports. But what really put me onto her lake property was the price. All three are in the very early $100,000s. The four-season cottage on Shady Lane has an unobstructed view of the lake with rights to swim, fish and boat. The home has four bedrooms and one bath. Theres an eat-in kitchen and a porch, as well. Asking $110,000.The Silver Sands Drive cottage also has four bedrooms and one bath. It, too, has nothing between the site and the lake. The home boasts a woodstove and cathedral ceilings. There are water rights to the lake for water activities and sports. This ones priced at $114,900. The Sands Drive property is more of a home than a cottage. This house has three bedrooms and two baths. And while it doesnt have the view, it has the same water rights as the first two. In addition, the owner has just completed new hardwood floors on the first floor; a large walk-out basement is ready for a new owner to complete; and the home is on a double lot totaling .69 of an acre. Elizabeth says the owners asking $119,900 for this one. So, if close-to-the-water living is what youre after, all with water rights to indulge yourself fishing, swimming and boating, or just plain sitting on the associations sandy beach, here are three opportunities. Elizabeth grew up in the area; shell show you the ropes.
  • Written by Tim Dunham
  • Category: Real Estate