Is a lease purchase right for you?

A lease purchase is a true sale, but includes a delayed and pre-determined closing date that usually falls six months or more in the future. It’s a perfect option for sellers who need to move immediately but whose house hasn’t sold yet. It’s also useful for a strong buyer who needs time for his or her house to sell, or to accumulate additional time on the job to qualify for a mortgage loan.

As with any sale, a purchase agreement is drafted and an earnest money deposit is taken. If the buyer doesn’t close the purchase, any and all of the default provisions listed in the purchase agreement would apply, including the loss of earnest money deposit – just as with a traditional home-purchase agreement. Because the buyer will be in the house before the deal closes, sellers are smart to get as much earnest money as possible. This works as a great motivator to close the sale and can help cover necessary property prior to closing.

One thing to remember when considering a lease purchase is before you accept the contract, make sure that the buyer is pre-approved for the mortgage. Any experienced Texas REALTOR® will tell you this is a crucial part of the homebuying process no matter what kind of purchase. It also gives you peace of mind.

Safety tips for home sellers

If you’re selling your house, there are some safety tips you should be aware of to keep yourself and others safe during the process. The fact is, whether you’re using the services of a Texas REALTOR® or have decided to attempt selling your home on your own, you are leaving yourself open to a parade of strangers walking through your house. The vast majority of homebuyers are safe, honest people, but you should take some security measures for the rare possibility that one person could see your home as an opportunity to commit a crime.

• Never leave a message on your answering machine telling callers you are not at home.
• Never set an appointment with anyone to see your home unless you have their name and number and have called back to verify that number.
• Remember to remove keys, credit cards, jewelry, and other valuables from the home or lock them away during open houses.
• Never discuss your personal schedule or habits with potential buyers.
• Carry a mobile phone with you in case you need to make a call to the authorities or to emergency personnel.
• After an open house, check all the windows, doors, and other entrances to make sure they are locked.

These tips are to help you stay safe while selling your home. If you do choose to enlist the services of a Texas REALTOR®, your agent will put you and your family’s safety above all else. Talk to your REALTOR® about other tips for selling your home safely.

Determine the financial benefits

If you are still wondering if buying a home is right for you, you should consider sitting down with your Texas REALTOR® and weighing the benefits of homeownership. And there are plenty. Owning your home provides stability and opportunities for financial security and personal wealth. While stocks may fluctuate dramatically, real estate typically is not as volatile. In addition to home-price appreciation, other financial benefits associated with homeownership include mortgage interest deduction and capital gain exclusion.

The interest – typically the largest portion of your mortgage payment for the first 10 years or so – is 100 percent tax deductible, if you itemize your taxes. And as long as you have lived in your home for two of the past five years, you can exclude up to $250,000 for an individual or $500,000 for a married couple of profit from capital gains on the sale of your home. The law states that you don’t even have to buy a replacement home. And you can use this capital gain exclusion every two years.

And finally, the more you pay on your home, the more you build in equity. That equity may be used in the future for a reverse mortgage or perhaps another type of equity loan. The more you know about the benefits of owning your own home, the less scary the process will seem. Just ask your Texas REALTOR®.

Tax-free capital gains

According to the Internal Revenue Service, you may be able to make up to a $250,000 gain on the sale of your home and not have to pay capital-gains taxes. That figure increases to $500,000 for married taxpayers filing jointly.

To be eligible, your home must have been owned by you and used as your main home for a period of at least two out of the five years prior to its sale. You are eligible for this exemption every time you sell your home, but typically no more than once every two years. Talk to your REALTOR® about additional tax perks associated with selling your home.

Ensure return on investment with new deck or patio

As excited as you may be about getting a new deck or patio, it’s crucial not to go overboard if you want your money’s worth at resale time. As a general rule, the total of improvement costs plus the current market value of your house should not exceed the value of any house in your neighborhood by more than 20 percent. So, if you own a $95,000 house in a neighborhood where the top houses are worth $100,000, limit your spending to $25,000 or less.

However, adding a deck can give you one of the best returns on investment (ROI), especially if you do it yourself. A do-it-yourself deck will average a little more than $1,000 but should add about $1,500 to the value of your home. And you may be able to recapture 40 percent or more of the cost of hiring a professional to install your deck, which can cost up to $3,500.

With careful planning and smart decisions, you can enjoy your home’s outdoor space now and get a return on investment later when you decide it’s time to sell.

Tax tips for homebuyers

Did you know there are several tax advantages to buying a house? As a homeowner, you can deduct points used to obtain your mortgage, mortgage interest paid during the year, and property taxes.

Most consumers have to take out a mortgage when purchasing a home, and mortgages come with all kinds of costs, including a loan origination fee. This fee is usually a percentage of the loan amount, generally expressed as points. For example, one point on a $150,000 loan would be $1,500. One and a half points on the same loan amount would be $2,250, and so on. When you buy a home, points are deductible in the year they’re paid, providing they meet certain requirements.

You can also deduct your mortgage interest. Once you begin making payments on a property, you will receive statements from your lender indicating just how much interest you have paid on that home in the past tax year. The IRS allows the interest portion of your mortgage payment to be deducted from your federal income taxes.

And finally, your property taxes are deductible as well. While the IRS looks favorably on homeowners, there are some things you cannot deduct, including homeowner’s association fees and mortgage-insurance premiums. Your Texas REALTOR® can be a great source for tax information, but it’s also wise to hire an accountant to help you wade through the details.

Texas Association of Realtors®