Balancing Risk and Deductibles

16 Jan

The benefit of insurance is to transfer the risk of loss to a company in exchange for a premium. The deductible is an amount the insured pays out of pocket before the insurance starts covering the cost of the loss. The challenge is to balance the risk an insured can accept with the premium being charged.28227782-250.jpg

To manage insurance premiums, policy holders often consider adjusting their deductibles. Lower deductibles result in less money out of pocket if a loss occurs in return for higher premiums. Higher deductibles will lower premiums but require that the insured bear a larger amount of the first part of the loss.

Insurance companies offer deductibles as a specific dollar amount or as a percentage of the total amount of insurance policy. The amount is usually shown on the declaration page of homeowner and auto policies.

A small fire in a $300,000 home that resulted in $5,000 of damage might not be covered because it is less than the 2% deductible which would be $6,000. If the homeowner can afford the cost of repairs in exchange for lower premiums, it might be worth it. On the other hand, if that loss would be difficult for the homeowner, a change in the deductible for higher premiums could be considered.

Raising deductibles can save money in the present when paying the premium but could cause problems later if a claim occurs. Homeowners should review deductibles with their property insurance agent to be familiar with the amounts and make any changes that would be appropriate.

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Homeowner Tax Changes

9 Jan

The new tax law that was signed into effect at the end of 2017 will affect all taxpayers. Homeowners should familiarize themselves with the areas that could affect them which may require some planning to maximize the benefits.

Some of the things that will affect most homeowners are the following:

  • Reduces the limit on deductible mortgage debt to $750,000 for loans made after 12/14/17. Existing loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap.40009294-250.jpg
  • Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the existing mortgage being refinanced.
  • Repeals the deduction for interest on home equity debt through 12/31/25 unless the proceeds are used to substantially improve the residence.
  • The standard deduction is now $12,000 for single individuals and $24,000 for joint returns. It is estimated that over 90% of taxpayers will elect to take the standard deduction.
  • Property taxes and other state and local taxes are limited to $10,000 as itemized deductions.
  • Moving expenses are repealed except for members of the Armed Forces.
  • Casualty losses are only allowed provided the loss is attributable to a presidentially-declared disaster.

The capital gains exclusion applying to principal residences remains unchanged. Single taxpayers are entitled to $250,000 and married taxpayers filing jointly up to $500,000 of capital gain for homes that they owned and occupied as principal residences for two out of the previous five years.

Not addressed in the new tax law, the Mortgage Forgiveness Relief Act of 2007 expired on 12/31/16. This temporary law limited exclusion of income for discharged home mortgage debt for principal homeowners who went through foreclosure, short sale or other mortgage forgiveness. Debt forgiven is considered income and even though the taxpayer may not be obligated for the debt, they would have to recognize the forgiven debt as income.

These changes could affect a taxpayers’ position and should be discussed with their tax advisor.

Surprise When Renting Your Home

2 Jan

Planning to go to the Masters next April 2-9th and don’t have a place to stay. Each year, there are homeowners who rent their home for a big premium during the Masters because hotels are in short supply and demand for private homes is up.47360108-crop.jpg

Homeowners go on vacation and make tax-free income while temporary tenants rent their home. Homeowners can benefit from a little known provision in the tax code that does not require taxpayers to recognize the income derived from renting their home for less than 15 days per year. See Plan Ahead for Tax Time When Renting Out Residential or Vacation Property- special rules.

This situation can particularly benefit homeowners where there are large sporting events nearby like golf and tennis tournaments, championship games or other high attendance venues. The demand for a private residence can be more attractive than staying in a hotel which makes the price go up.

Obviously, there are challenges with personal belongings and damage but getting a premium rental rate and not having to recognize the income could be worth it. You’ll certainly want to discuss this with your tax professional prior to making this decision. You’d probably also want to get some help from an experienced real estate professional.

Prevent False Home Security Alarms

26 Dec

Some police departments report as high as 98% of calls are false alarms. Not only is this an incredible waste of police resources that could be available for legitimate emergencies, it annoys neighbors, startles pets and results in expensive false alarm fees.36192772-250.jpg

Know your codes – entering an incorrect keypad code is a common mistake leading to false alarms. The solution is to create codes that are easy for all members of the family to remember without them being obvious to potential burglars like your street number. Let everyone know when you change your code.

Secure windows and doors – be sure that all windows and doors are closed before activating your alarm. Disarm your system before opening a window or door.

House guests – tell visitors that you have an alarm system and when you normally arm it. Housekeepers, baby sitters, outside family and close friends also need to be aware of your procedures and possibly give them a code to disarm the system if it is accidentally activated.

Batteries – most systems have battery backup in case the power goes out. Know how often you need to replace the batteries; some last considerably longer than others.

Motion detectors – pets can trigger a motion detector and then, the alarm. There are sensors made for households with pets providing an alternative to turning them off. Other things that could activate motion detectors are helium balloons or curtains and plant leaves being blown in front of a sensor.

Home alarm systems are valuable to homeowners by increasing security, providing peace of mind and lowering insurance premiums. Some municipalities require a license fee for any home with an alarm. Use your alarm wisely.

ATM Safety Tips

19 Dec

During the holidays as throughout the year, getting cash from an ATM is normal for many people. ATM’s are available 24 hours a day and they’re located in bank branches, convenience stores, grocery stores, malls, airports, sports venues and on street corners.46024154-250.jpg

Unfortunately, the convenience aspect can compromise personal safety especially if you are distracted or not paying attention. Planning for an ATM withdrawal and applying common sense can help you avoid trouble.

  • Be aware of your surroundings throughout the entire transaction like people sitting in a nearby parked car or someone offering to help you.
  • Safeguard your PIN. Don’t share it with anyone. Don’t write it down. Don’t use your birthdate, last four digits of your phone number or other obvious numbers.
  • If there are other people at the ATM to make a withdrawal, shield the keypad when entering your PIN number.
  • Keep your car doors locked and windows raised, except for your driver’s window, when using a drive-up ATM.
  • Minimize the time spent at the ATM by being prepared with your card ready, what you plan to do and do not count your money until you are in a safe place away from the ATM.
  • Take your receipt with you and destroy it if you decide to discard it.
  • Be aware that some thieves use skimming devices to steal account and PIN numbers. If something doesn’t look “just right”, consider finding another machine to use.
  • Especially at night, pay attention to locations with adequate lighting and being visible from the street. Don’t compromise your safety just because it is convenient.
  • After you have your money, pay attention to see if someone might be following you. If you are concerned, go to a nearby police or fire station or well-trafficked business and call the police.
  • If you feel uneasy during a transaction, cancel it, remove your card and LEAVE.

There may be a time in the not too distant future when we don’t have a need for cash anymore. Until that time, paying attention to simple safety precautions can help protect us during the holidays and throughout the year.

LANDSTAR HOME WITH STUDY, GAME & MEDIA!

17 Dec

67541_14753 Holly Leaf Dr, Frisco TX 75035-Caydee Jennings ONSITE pic vid 3D_13-12-2017.0055

14753 Holly Leaf Drive, Frisco

4 Bedroom / 3.5 Bath / Study / Game / Media

Check out the full motion HD-video here!

This phenomenal Landstar home in sought-after Hunters Creek offers a fantastic floorplan with numerous upgrades and is within walking distance of 3 of Frisco’s finest schools. Guests are greeted with Austin stone, and custom stone landscape borders. The luxurious & spacious front entry features a winding staircase, and gorgeous lighting features. Across from an elegant formal dining with an upgraded chandelier, a large, private study with a front yard view and French doors awaits.

The family room boasts 23-foot ceilings, a fireplace with gas logs and custom double mantle open to a kitchen that would delight any chef with its upgraded 42” cabinetry, stainless steel appliances to include a gas cooktop, GE stainless double-oven, dishwasher (2015), built-in stainless microwave (2015), granite countertops, under-mount sink, walk-in pantry and a breakfast area with rustic-style fixture with Edison bulbs. The winding staircase has iron spindles and a landing upstairs, which is great for a reading or study area. Adjacent is a separate guest suite with full bath and walk-in closet. Also upstairs are two more bedrooms with walk-in closets adjoined by a Jack & Jill bath. A Texas-size game room with wet bar and sunken media room with a large TV niche and wired for surround sound are waiting for everyone to enjoy!

The master retreat offers gracious 13-foot ceilings, a soothing shade of light sage, and natural light. In the master bath is a large garden tub, a walk-in shower with glass block walls, oversized, stain-grade separate vanities, and a walk-in closet with built-in shoe storage and more. The private back yard has an extended flagstone patio and is wired for sound. With an 8-foot privacy fence, and a gas outlet for grilling, the back yard is a relaxing place. Other upgrades and features include…an elegant powder bath, 30-yr impact resistant, composition shingle roof (2014), two 20-seer A/C units upstairs & downstairs (June 2017), two water heaters with flood stops (April 2017), radiant barrier & 20 inches of extra insulation (2012), solar screens in great room (2016), garage door insulation (installed 2012), and attic tent insulation at attic entrance (2012), upgraded ceiling fans/light fixtures in upstairs bedrooms (2016), storage shelving installed above garage doors (2015), expanded driveway, and upgraded sprinkler system to add foundation watering system (2010). Priced to sell and an incredible community with parks, pools, walking trails & community events, this home will not disappoint.

Please contact Jeff Jacobs at 972-978-6539 for more information or click HERE.

For more information and other homes for sale in this area, check out www.myrealtytown.com 

GORGEOUS UPDATED HOME WITH STUDY & GAME!

13 Dec

1.67319_15650 Brookwood Dr, Frisco TX 75035-Caydee Jennings ONSITE pic vid 3D_04-12-2017.0047enfused

15650 Brookwood Drive, Frisco

3 Bedroom / 3.5 Bath / Study / Game 

Check out the full motion HD-video here!

This exquisite Highland home in sought-after Hunters Creek boasts a versatile floorplan, numerous upgrades, a gorgeous remodeled master bath & is within walking distance of 3 of Frisco’s finest schools.  A cozy front porch perfect for relaxing & custom stone landscape borders & mature trees enhance the elevation & upon entry, your guests will be greeted by gleaming hardwood floors & warm, neutral tones. Just across from an elegant formal dining with an upgraded chandelier, a large and private study with a front yard view and French doors awaits. 

The spacious family room boasts a gas fireplace with a brick hearth and is open to a kitchen that would delight any chef with its abundant 42” cabinetry, stainless steel appliances installed in 2015 to include a gas range and Bosch dishwasher, rich granite counters, updated Kohler sink,  rubbed-oil bronze faucet, large pantry & secondary pantry, or storage area and a sunny breakfast area.  By following a upgraded patterned carpet upstairs, a nice-sized game room with walk-in closet is perfect for play and there are also two other bedrooms with Frieze carpeting that both have private baths. 

The master retreat is a generous size, enjoys a backyard view and has a beautiful remodeled contemporary-styled bath with a frameless glass and deco tile shower, framed mirrors, fixtures, tile tub surround & walk-in closet. The private backyard has an outstanding and enlarged travertine patio (2016), an 8-foot Board-on-Board fence and is large enough for play & other activities.  Other upgrades & features are….an elegant powder bath, all vinyl noiseless and frameless windows (2017), Upstairs HVAC (2016), one water heater replaced (2016), 30-year roof & BOB fence (2014), updated fixtures, utility room cabinetry & more.  Priced to sell and incredible community with parks, pools, walking trails & community events.

Please contact Jeff Jacobs at 972-978-6539 for more information or click HERE.

For more information and other homes for sale in this area, check out www.myrealtytown.com 

Eleventh Hour Gifts Without Shopping

12 Dec

If you’re beginning to feel the pressure of running out of time to find the perfect gift, here are a few suggestions that may not be on their “list” but will certainly be appreciated.The perfect gift-300.png

The gift of really listening without interrupting, daydreaming or planning your response can be exactly what people want when they have something important to say.

The gift of affection with appropriate hugs, kisses and pats on the back can demonstrate your love for family and friends better than words.

The gift of laughter by sharing articles, cartoons and funny stories will say “I love to laugh with you.”

The gift of a simple, written note shows sincerity and real heartfelt sentiment that may be remembered for a lifetime and could even change a life.

The gift of a sincere compliment supports a person’s need to be accepted and appreciated. “You look great in that color”, “That was outstanding” or “I really enjoyed that” can make someone’s day.

The gift of random kindness or good deeds like holding a door or allowing someone to move ahead of you in a checkout lane shows respect for others.

Your smile, however, may be your most rewarding gift. Invariably, the person receiving the smile will in turn, smile back. The gift you gave will now be given back to you. It will be the right size and you can always use one more smile.

Don’t Pat Yourself on the Back Just Yet

5 Dec

You’ve got $500,000 in liquid assets for your retirement and you’re still 15 years away. All your bills are paid; you have a small mortgage on your home; cars are paid for and great credit. Don’t break your arm patting yourself on the back yet.31001231_s.jpg

People think more about what they’re going to do when they retire than whether they’ll have the funds to do them. Ask anyone who has retired, it takes more money than you thought it did. Let’s look at a hypothetical situation.

To retire with $125,000 income in today’s dollars with a life expectancy of 25 years after retirement, you’ll need to have a net worth of $1.5 million at retirement including what Social Security may provide. Your $500,000 will grow to $1,045,420 in 15 years which will leave you about a half million short. You’ll need to save $24,149 each year for the next 15 years to reach your goal.

Retirement Projection3.png

Is this surprising? Did you imagine that this example would be that far from its goal? It might seem staggering to save $24,000 each year but there is another way…investing in rentals.

Real estate over the long term has proven to be a solid, predictable investment. Cash flows, appreciation, equity buildup and tax advantages are the components that contribute to the rate of return. Increasing rents, available financing and solid appreciation make rentals particularly attractive in today’s environment.

Call me at (972) 978-6539 to find out more about how rental homes can help you reach your retirement goals.

FHA is a Good Option

28 Nov

FHA insured mortgages serve a sector of the market that is not necessarily being met by other loan programs.

Securing an 80% conventional mortgage that doesn’t require mortgage insurance may be the lowest cost of financing but if the buyer doesn’t have 20% down payment, it isn’t really an option.42257772-250.jpg

Securing a 100% VA loan doesn’t require a down payment or mortgage insurance but if the buyer isn’t a veteran with his/her eligibility intact, it isn’t an option either.

There are conventional loan programs with as little as 3% down payment but they not only require mortgage insurance, they also require a credit score of 740 or above which may eliminate some buyers.

For these reasons, FHA is a viable alternative to about 20% of new and existing home sales. The Federal backing of these mortgages makes it easier for first-time and low-income buyers to qualify because the requirements are not as demanding. They’re even more lenient towards buyers who have previously experienced bankruptcy, foreclosure or a short sale.

Finding the right mortgage for the right home is a team effort where both mortgage and real estate professionals work in harmony to get a buyer into their own home. Call us at (972) 978-6539 for a recommendation of a trusted mortgage professional.

General FHA loan requirements include:

  • The loan is for primary residences only but can include two, three or four units.
  • The property must be appraised by an FHA-approved appraiser.
  • The property must be safe, sound and secure, in compliance with minimum property standards as defined by the U.S. Department of Housing and Urban Development.
  • The borrower must be a legal resident of the U.S. and have a valid Social Security number.
  • The minimum credit score of 580 with a down payment of at least 3.5 percent, or a minimum credit score of 500 with a down payment of at least 10 percent.
  • The borrower may not have delinquent federal debt or judgments, or debt associated with past FHA loans.
  • The borrower must have steady employment history.
  • Documentation is required if the down payment was gifted by a family member.
  • The borrower must have a debt-to-income not exceed limits of 31% for front-end and 43% back-end ratio (some exceptions may apply).
  • Any judgments or collections on the credit report must be resolved or satisfactorily explained.
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