FINANCE

Invest In Real Estate

Home Financing Avoid Foreclosure How To Fix The Housing Market Bank Locally Protect From Natural Disasters Protect Property And Possessions Help Veterans Stay In Their Homes

The New Face Of Real Estate Investors

(NAPSI)--It may seem surprising to some, but real estate investors can not only do well for themselves, they can do good for the community, too.

Here's How

Back when the housing market went bad, investors got a lot of the blame. They were accused of taking on more properties than they could afford, which resulted in increased foreclosures. Now, however, investors are finding valuable opportunities and earning a more respectable reputation.

In several areas that were hit hard by the housing and economic recessions, investors are playing a key role in the turnaround. Many of today's investors are ordinary people, simply buying a second home in their own neighborhood and turning it into a rental property.

So why the surge in real estate investment? These investors see the "perfect storm" of opportunity: historically low interest rates, attractive home prices and a great selection. The new breed of investor also removes many damaged and vacant properties off the market and makes much-needed repairs to improve the value of their investment and the neighborhood.

Because rental demand is strong, today's investor can realize a positive cash flow and hold the property for appreciation over the long term. Also, Fannie Mae now allows financing for up to 20 properties for individual investors, in addition to financing that will cover both the property purchase and remodeling costs.

During any real estate downturn, all eyes fall on real estate investors. Their activity level often indicates how stable real estate markets are and signals other buyers when it's a good time to make a move—typically when investors sense prices have stopped declining.

Investors are sending a strong message about their confidence in the current market by making up over 20 percent of all residential real estate buyers.

Expert's Opinion

"Real estate is and has always been a sound long-term investment," said Margaret Kelly, CEO of the real estate franchise company RE/MAX, LLC. "More and more of the folks next door are taking steps to secure one or two rental properties or a vacation home in their favorite locations in hopes of adding to their nest egg."

Interested buyers don't have to have a large sum of cash on hand to start investing. In fact, it's even possible to use retirement funds, such as an IRA, to invest in real estate, using an approved custodian to manage the investment.

Many budding investors may not be aware of the stimulus they provide a challenged industry and a struggling economy. Investors reduce the foreclosure inventory, make improvements and provide housing for families that can't qualify for a mortgage. All this adds to the momentum of the current housing recovery.

Anyone thinking of investing in real estate, however, should seek out professional advice and assistance.

"Real estate agents know their communities and can identify the best opportunities. And many real estate agents have obtained specific training to help those looking for investment property," Kelly added.

Learn More

You can find a nearby, experienced real estate agent and more information on real estate investing at www.remax.com/invest. The site also features millions of properties and attracts more visitors than any other real estate brand website. RE/MAX agents lead the industry in productivity and are specifically trained to help with short sales and investors.

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Getting Your Financial House In Order

(NAPSI)—If you're thinking—or just dreaming—about becoming a homeowner, before even setting foot on potential properties, it's critical to make sure your financial house is in order.

Here are tips that can help:

• Ensure that you can truly afford your home. Take into account your entire financial picture. A number of online tools can help you estimate the price of a home you can afford based on your income, debts and other obligations. For example, there's Front Door's affordability calculator at www.frontdoor.com. There are also mortgage calculators that can show you how a larger down payment can lower your monthly mortgage payment.

• Consider the positives—and the negatives—of homeownership. Homeowners can reap considerable benefits including tax breaks, home appreciation and the opportunity to build personal wealth. Today, home equity—the value of the house minus the balance owed—represents a large portion of a typical family's wealth.

However, it's important to remember that owning a home comes with a number of financial obligations. Having to replace a roof, an appliance or something larger can cause considerable hardship if not properly planned for.

• Start building equity from day one. If you have a down payment of less than 20 percent, mortgage insurance is often necessary. This is typically obtained through either the government-backed Federal Housing Administration (FHA) or a private mortgage insurer. Private mortgage insurance is commonly used when putting at least 5 percent down, while FHA loans can require as little as 3.5 percent. While many first-time borrowers believe 3.5 percent is the better option, the added costs layered on top of the mortgage—in addition to recently increased FHA insurance premiums-are significantly more expensive than with a 5 percent down payment on a privately insured loan. By putting the 5 percent down, you can enter a home with more equity and build equity faster.

• Remember the additional costs of homeownership. These can include closing costs; homeowner's insurance; city and county property taxes; utilities; and, if you buy in a planned subdivision or a condominium, homeowner's association fees.

Before you buy a home, it's important to understand the full cost of ownership. When you do, you can have a home you love and the peace of mind that comes with knowing you're prepared.

Learn More

To learn more, visit www.SmarterMI.com.

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How Short Sales Help Homeowners Avoid Foreclosure

(NAPSI)—For many families, the best financial move they've made in a long time is a short sale. That's because for struggling homeowners, a short sale can help avoid foreclosure and prevent a big hit to their credit. So many people have discovered this valuable tool that short sales have become commonplace during the housing crisis, with the numbers reaching record levels in 2012.

A short sale is a real estate transaction in which a borrower's mortgage lender agrees to a sale of the property for less than the balance due on the loan.

Lenders benefit from a short sale because it allows them to avoid the lengthy and more costly foreclosure process.

Homeowners benefit because they can stay in their home until it's sold and credit damage is less severe, making a future home purchase easier.

Additionally, many of the nation's mortgage lenders now offer their clients cash relocation assistance of up to $30,000 based on a percentage of the sales price.

The Mortgage Forgiveness Debt Relief Act allows homeowners who close a short sale to be free of income tax on the amount of their mortgage that is not paid off from the sale of their home. However, anyone considering a short sale should be aware that the Act is set to expire on December 31, 2013 and after that the amount of a mortgage that is not paid off becomes taxable income.

Short sales offer homeowners a number of benefits, but for many, the process can be challenging. "Short sales can be tricky transactions because of the paperwork and the negotiations that take place between seller and lender," says RE/MAX CEO Margaret Kelly. "That's why it's critical to work with a real estate agent who is specifically trained to close short sales. And our RE/MAX agents lead the industry with this expertise."

In response, most lenders have refined the short sale process, making the transaction even more attractive.

In addition, new policies at Fannie Mae and Freddie Mac will further streamline the short sale process and open it up to an even wider group of participants. Homeowners simply need to demonstrate a financial hardship and no longer have to be behind on their mortgage payments to qualify. Paperwork requirements have also been greatly reduced or, in some cases, eliminated.

Not only can buyers now get to the closing table more quickly, but struggling homeowners—who might otherwise wind up in foreclosure—benefit from a more responsive process.

RE/MAX has embraced short sale training with over 20,000 agents having earned the Certified Distressed Property Expert (CDPE) designation or the Short Sales and Foreclosure Resource (SFR) certification. You can find a short sale-trained agent at www.remax.com.

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How To Fix The Housing Market

(NAPSI)—At the height of the financial crisis in 2008, the U.S. government bailed out our nation's banks and nationalized our home mortgage system.

Four years later, most of those bailouts have ended and taxpayers have been repaid in full. Unfortunately, that is not the case for mortgage giants Fannie Mae and Freddie Mac. Remarkably, they remain in government control, continue to dominate the mortgage market, and still owe taxpayers over $140 billion.

Neither Congress nor the White House has a viable plan to get that money back or to get the government out of housing finance. As a result, taxpayers—not banks or investors—are now on the hook for trillions of dollars of mortgage risk. And the government continues to add to that risk, accounting for over 90 percent of new mortgage credit today, double the amount it provided just a few years ago. Even worse, recent actions in Washington threaten to make Fannie Mae and Freddie Mac permanent wards of the state.

Moreover, millions of potential homeowners cannot get a mortgage because private sources of housing credit are scarce. Many of those private sources cannot compete with the government.

Your elected representatives in Washington aren't paying attention to this problem!

But there is a plan to fix it. Former officials from the Obama and Bush administrations, Jim Millstein and Phillip Swagel, have crafted a way to restart private housing markets, ensure access to affordable 30-year mortgages, protect taxpayers from future bailouts, and repay them for saving the two largest sources of housing finance in our country: Fannie Mae and Freddie Mac. Millstein and Swagel discussed their plan in their recent article for The Washington Post.

Call your representatives in Congress. Let them know that we need to end the last bailout and the nationalization of our home mortgage system. Go to www.whoismyrepresentative.com to tell them that you support housing finance reform.

Under a new proposal to restructure the housing market, the mortgage guarantee businesses would be privatized.

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Consumers Encouraged To Bank Locally With A Community Bank

(NAPSI)—Some maintain that "all politics is local" and others claim that there are multiple benefits to eating locally grown food and patronizing local merchants.

Now an initiative is applying that same point of view to banking. If a consumer is going to make an effort to shop locally, supporters of the initiative ask, "why not bank locally?"

That's the idea behind an effort called Go Local. Sponsored by the Independent Community Bankers of America (ICBA), its goal is to inspire consumers and businesses alike to invest in their community by banking with their local community bank.

The American Spirit

According to Jeff Gerhart, ICBA chairman and chairman of Bank of Newman Grove, Nebraska, "Community banks proudly embody the American spirit of Main Street by lending to local small-business owners, helping area families achieve financial stability and enabling their local economy and community to thrive."

Small-Business Supporters

Located in small towns, suburbia and big-city neighborhoods, community banks under $10 billion work to improve the nation's communities by lending to local customers and funding nearly 60 percent of all small-business loans between $100,000 and $1 million in the U.S.

"As small businesses themselves, community banks are relationship lenders that only thrive when their customers and communities do the same, so taking care of their customers and looking out for the best interest of their community is the way they do business," said Camden R. Fine, ICBA president and CEO.

And while community banks are locally based financial institutions, they certainly aren't small potatoes when it comes to lending and creating jobs.

Of the more than 7,000 community banks across the country, nearly 5,000 are ICBA members. Representing more than 24,000 locations nationwide and employing nearly 300,000 Americans, ICBA members hold more than $1.2 trillion in assets, $1 trillion in deposits and nearly $750 billion in loans to consumers, small businesses and the agricultural community.

For more information and to find a community bank near you, visit www.banklocally.org.

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Protect Financial Information From Natural Disasters

(NAPSI)—Natural disasters can happen to just about anyone at almost any time—but there are steps you can take to protect yourself, your family and your finances.

What You Can Do

First, realize there's more to disaster planning than dealing with the first few days. Once you're safe and life is returning to normal, you'll need to figure out your finances.

That's why it's wise to take a room-by-room inventory of personal and business belongings. Document, photograph or video record belongings as proof of value for insurance, tax and casualty loss purposes. The Internal Revenue Service (IRS) offers workbooks and Publication 584 for inventory resources.

Save copies of your inventory and key documents on an external drive, CD or secure website. Documents may include home closing statements, homeowner and other insurance records, tax returns and W-2s. Consider keeping copies in multiple locations.

Safeguard your financial data—and know the basic tax benefits available. "Protecting your financial and tax information should be part of your disaster planning," says Jessi Dolmage, spokesperson for TaxACT. "Having that information handy after a natural disaster can mean faster and more financial recovery for you and your family."

Tax Facts

If you are ever affected by a natural disaster, keep these tax tips in mind.

• The IRS often grants deadline extensions for tax return filing and payments in federally declared disaster areas. The agency may also offer lesser or waived penalties to individuals and businesses.

• You don't typically need to contact the IRS for tax relief, as it can automatically identify the areas. However, you should call the IRS disaster hotline if you own property in a designated area but reside or have a business outside it. If you move outside the declared area, be sure to provide the IRS with your new address.

• Casualty losses related to your home or business, household items and vehicles not covered by insurance or other reimbursements may be deductible on your federal tax return. Depending on when the federally declared disaster happens, you may have the option of claiming related losses on the previous or current year's return.

• Casualty losses for federally declared disasters can be claimed as a miscellaneous deduction. If you claimed the standard deduction last year and your casualty loss plus other itemized deductions total more than the standard deduction, you may benefit more by amending last year's return.

• Amending last year's return can mean faster cash for repairs, rebuilding and replacing personal property. However, depending on your income the year of the disaster, you may increase your tax savings by waiting to claim losses on the current year's return.

• To determine an item's deductible amount, subtract any insurance reimbursement from the value of the item (accounting for normal wear and tear or progressive deterioration) and then subtract $100. After totaling all losses, reduce the amount by 10 percent of your adjusted gross income.

• As with all deductions, Dolmage recommends keeping detailed documentation and receipts for each casualty item you claim on your tax return.

Learn More

Visit www.fema.gov and www.irs.gov for more disaster preparation tips and resources. For step-by-step guidance in claiming losses on current and previous year returns using TaxACT, visit www.taxact.com.

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Preparation For Icy Weather: More Critical Than Ever

(NAPSI)—We've already seen some of the effects of severe winter weather this year and with more expected to come, taking action now may minimize the harsh effects on your family, possessions and property.

"Recent studies indicate total losses during the last 50 years have totaled over $35.2 billion due to winter storms," says Karen McCague, claims operations manager, Liberty Mutual Insurance.

"Ensuring adequate preparation for blizzards, high winds, ice, hail, sleet and heavy snow conditions will minimize your chances of experiencing significant losses due to inclement winter weather this year."

McCague recommends following what she calls "The Three Ps of Preparation" to ensure safety of people, property and possessions.

People

When a storm strikes, you and your family may need to remain indoors for several days. Prepare a safety kit and educate your family to ensure everyone understands what steps to follow during severe weather.

Also, ensure driveways and walkways are clear of ice to prevent slippery conditions, which could result in injury.

Property

There are several steps you can take to prepare your property as well. Insulating pipes prevents freezing and bursting. Cleaning gutters regularly prevents formation of ice dams, which can result in water damage. It is also important to check the structural integrity of your home's roof and ensure that carbon monoxide and smoke detectors function properly.

Possessions

Finally, remember to prepare your vehicle by keeping your gas tank and antifreeze reservoir full. It is also important to ensure there are plenty of blankets, extra clothes, and fuel to operate a generator or portable heating device.

For more information about preparing for rough weather, visit www.libertymutual.com/winter.

 

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Helping Veterans Stay In Their Homes

(NAPSI)—Even in today's housing market, the American dream remains a reality for most veterans.

The Department of Veterans Affairs (VA) has guaranteed 20 million home loans since its program was established in 1944 as part of the original GI Bill of Rights for returning World War II veterans. The program has grown significantly in the past five years. Currently, there are 1.7 million VA-guaranteed home loans in existence with a total value of $284 billion.

The program makes home ownership more affordable for eligible veterans, service members and surviving spouses by permitting no-down-payment loans with no requirement for mortgage insurance—features that will alone save borrowers whose loans originated in the past year $13 billion over the life of their loans. VA loans are also attractive within the mortgage industry because they protect lenders from loss if the borrower fails to repay the loan.

Mortgages guaranteed by VA have had the lowest foreclosure rate for the last 17 quarters and the lowest delinquency rate for the last 14 quarters compared to all other types of home loans in the nation, including prime loans, according to a report by the Mortgage Bankers Association.

Much of the strength of VA's home loan program stems from the efforts of VA and its industry partners nationwide to ensure that veterans receive every possible opportunity to remain in their homes and avoid foreclosure. Since 2009, VA's efforts have resulted in more than $8 billion in savings to taxpayers in foreclosure avoidance.

"At the center of the home loan guaranty program is the idea that veterans and their families are a safe bet," said Allison A. Hickey, VA's Under Secretary for Benefits. "As a result of their service and sacrifice, as a group, they prove to be disciplined, reliable and honorable-traits that are ideal for this kind of national investment."

Veterans can get a certificate of eligibility for a VA-guaranteed home loan through the joint Department of Defense-VA web portal eBenefits at www.ebenefits.va.gov. For more information, visit www.benefits.va.gov/homeloans.

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