Real Estate News

    • How Starting a 529 College Savings Plan Early Helps

      24 January 2020

      Even if your children are just a few years away from starting college, it’s not too late to start a college savings account. But it’s never too early to start one, either. 

      Saving for college is something parents may not think about, or act on, until their child is 7 years old or so. That’s better than starting when children reach high school, but a college fund can also be started at birth or earlier. 

      Money in 529 plan accounts—named from a section of the federal tax code—grows tax free and is tax free when withdrawn and spent on eligible expenses like tuition, fees, housing, meal plans, books and equipment. It can pay for private school from elementary school onward.

      Here’s how saving early can add up. Suppose you start saving right after a child is born, investing a $2,000 lump sum to start and continuing with monthly $300 contributions until age 18. By the time the child enters college, the account grows to $130,077, assuming an average annual return of 6.21 percent, according to research by RBC Wealth Management. 

      By delaying the same savings method until the child turns 6, the account grows to $73,026, or about 44 percent less. If parents didn’t start saving until the child turned 12, the total value would reach $33,284. 

      Not only is less money invested if saving starts later, but there’s less interest to compound. Also, the most popular investment options for 529 plans automatically shift funds from stocks to bonds as the child ages, typically creating less risk and lower returns. Opening an account later, such as at age 7, means that you’re missing out on potential gains from early, more aggressive investments. 

      A model that Morningstar based on average allocations for stocks and bonds in age-based portfolios found that with a $50,000 investment divided into equal monthly installments, someone who began saving when a child was 7 could expect a median balance of almost $81,000 by age 18. 

      Starting a year earlier at age 6, the median balance would be almost $4,000 higher. If opened at birth, the account would be $30,000 higher.

      Contributing to a college savings plan late, such as when a child is in high school, can be leveraged for long-term gain by using it if the child pursues a graduate degree years later.

      But forget about the above figures for a moment. Whenever you start saving for your children’s college fund, show them the balance  each month as an incentive for both of you to save more.

      Published with permission from RISMedia.

    • IRS Audit Red Flags Retirees Should Watch Out For

      24 January 2020

      Only about 1 percent of Americans are audited in a given year, and most of those are weighted toward people with high incomes. Still, it’s something you don’t want to take a chance on. 

      Retired taxpayers should be aware of some red flags that could lead to an IRS audit. And we’re talking about more than a few math errors, which may draw an IRS inquiry on their own, but are unlikely to result in a complete exam of their tax returns.

      Here are some red flags worth knowing: 

      Not Reporting ll Taxable Income
      This is an error that the IRS computers will easily find because they get copies of all the 1099s and W-2s that show what you were paid. They also get 1099-R form copies reporting payouts from retirement plans, 401(k)s and IRAs, as well as 1099-SSA forms reporting Social Security benefits. 

      So failing to report taxable income from wages, dividends, pensions, IRA distributions, Social Security benefits and other income sources is a red flag by itself because the government already has those documents from the reporting agencies and will check if they match your tax return.

      High Income
      The more income you have, the higher the chance that you’ll be audited. It’s a fact of how the IRS works. Audits on taxpayers earning $200,000 or more are almost 3 percent of returns, and for those earning $1 million or more, it doubles to about 6 percent. 

      There’s nothing wrong with being audited if you’re accurately reporting your income and earn $1 million or more per year. But if there are mistakes on your return, expect the IRS to seek to get them fixed. 

      Large Deductions
      If your tax deductions or charitable deductions are higher than the average, there’s a higher chance you’ll be audited. If you have the proper documentation for your deduction, then claim it. 

      Retirees may have given more to charity than others, so if you make noncash donations over $500, be sure to file Form 8283, or you could be shooting up a red flare to the IRS. 

      Not Taking Minimum Distributions
      There are laws for the required annual minimum distributions from retirement plans, and not taking them as a retiree is a red flag the IRS will likely see. 

      You generally have to start taking withdrawals by age 70-1/2, though Roth IRAs don’t require withdrawals until after the owner has died. People who don’t take out the proper amount can be hit with a 50 percent penalty of the shortfall. If you retire early and take payouts before age 59-1/2, be sure you qualify for an exception, or you’ll face a 10 percent penalty on the early distributions. One exception is using an IRA to pay your medical insurance premium after a job loss.

      Published with permission from RISMedia.

    • Why You Shouldn’t Apply for a New Credit Card While Shopping for a House

      24 January 2020

      If you’re looking for a new house and plan to apply for a mortgage, the lender will closely scrutinize every aspect of your finances. If a lender approves your application, it will check your credit again shortly before closing to see if there have been any changes that are cause for concern. Applying for a new credit card while looking for a house could jeopardize your chance of getting approved for a mortgage at a competitive interest rate, or of getting approved at all.

      How a Credit Card Application Could Affect Your Mortgage
      If you applied for a credit card, the issuer would check your credit report. That is known as a hard inquiry, and it could negatively affect your credit score. The drop might be relatively small and temporary, but it could make a difference when applying for a mortgage.

      A FICO score is based in part on the average age of your accounts. A new credit card would lower the average age of your accounts and could have a particularly large impact if you had few other accounts.
      Even a small drop in your credit score could have a significant effect. If your lender has strict guidelines, a decrease of just a few points could cause you to get a higher interest rate than you otherwise would have, which means you could pay thousands of dollars extra over the life of the loan. Your mortgage application might also get rejected altogether.

      A new credit card application could create uncertainty in the eyes of the lender, even if you had a good credit score. The company might worry that you would accumulate a lot of debt and struggle to pay your mortgage.

      When to Apply for a New Credit Card
      A hard inquiry could stay on your credit report for a year, and your credit score would gradually rebound after taking an initial hit from the inquiry. If you want to apply for a new credit card, do it at least three to six months before you submit a mortgage application. That will give your credit score a chance to recover from the effects of a hard inquiry and allow you to show the lender that you didn’t go overboard on spending and that you paid your bills on time. If possible, wait to apply for a credit card after you close on a house to avoid any negative effects on your credit score.

      Don’t Jeopardize Your Chance to Purchase a Home
      If you need to buy furniture, appliances, and other things for your new house, you may think it makes sense to apply for a credit card, especially one with a low interest rate and/or rewards. The fact is that doing so could hurt your chance of getting a mortgage at a low interest rate, or even of getting a mortgage at all. Keep your finances in the best shape you can and don’t give the lender any reason to be concerned about your ability to repay a loan.

      Published with permission from RISMedia.

    • Budget-Friendly Bathroom Upgrades

      23 January 2020

      Bathrooms, though some of the smallest rooms in a home, can require the most work when it comes to upgrades. If your budget just isn’t ready to take on a remodel, taking the DIY path can be the best choice...and the most fun! With a quick trip to your local hardware store and the will to get creative, these budget-friendly projects can spruce up your bathroom:

      Frame Your Mirror
      No matter the size, a bathroom mirror is an essential piece that all eyes are naturally drawn to. Give the room a finished look by framing the mirror. Most hardware stores will cut wood to size and offer tips for staining or painting, so you can construct the perfect frame for the look you’re going for. Alternatively, you can purchase a frame that fits your mirror and intended style. 

      Install Wall Hooks
      Instead of the old dorm-style over-the-door hooks, add sophisticated functionality to your bathroom by installing beautiful wall hooks to hang your bathrobes and towels. Get creative with placement to create an artistic flair. Search online and in local craft and hobby stores to find unique hooks that you can mix and match for an added touch of style. 

      Paint the Vanity Cabinets
      With a single can of paint, you can completely change the look of your bathroom. Choose a light color, like blue or yellow, to brighten up a tiny room and make it feel more spacious. Or, go for a deeper color, like a charcoal gray, to create a more luxurious tone. Paint or swap out hardware as a stylish finishing touch. 

      Add More Storage Space:
      For especially small bathrooms, space for storage can be limited. Adding shelves or cabinets at eye level keeps foot space free and can be done in many ways to accent the ambiance of the space. For example, a ladder shelf or floating shelves can be placed over a toilet, where wall space is rarely used. Or you can go big and install a few cabinets, giving you a hidden place to hide your towels, toilet paper and many other items you may not want on display. 

      Published with permission from RISMedia.

    • How to Properly Babyproof Your Home

      23 January 2020

      Babyproofing your home is an essential step to keeping your child safe. All over the house, spanning from the bathroom to the fireplace, their nursery to your kitchen, there are potential threats and risks that can cause serious harm. 

      First things first, you’ll want to take a good look at common factors throughout your home, such as electrical outlets, smoke and carbon-monoxide detectors and doorways. Each of these commonalities can create a potentially dangerous situation that can be easily avoided.

      Outlets, for example, are generally low to the ground and accessible for walkers and crawlers. Cover each open outlet with a plastic cap, and for those where items are plugged in, you can either move a large piece of furniture in front to block the cord or purchase plastic cord covers.

      Be sure to check all smoke and carbon monoxide detectors. If batteries are low or have never been changed, change them! You can also consider upgrading the tech in your home and purchasing detectors that you can keep an eye on from your phone, featuring notification updates before a service is required. 

      Baby gates are another great safety solution. If you live in a home that doesn’t have an “open” floor plan, you risk your baby crawling or walking into another room unsupervised. With a baby gate, you can keep your baby confined to the area where you can keep an eye on them, even when you’re cooking, cleaning or doing laundry. These are also important to keep at the top and bottom of a staircase, preventing your baby from a potential fatal fall or injury.

      Next, go room by room, inspecting features that could cause harm or pose a threat to your baby. 
      Start in the kitchen, where you get easily preoccupied - cooking, cleaning and conversing - and will inevitably turn your back from your child. Remove all the cleaning supplies from under your sink or any other low cabinet and place them into a top cabinet. Add safety latches to the lower doors, however, ensure that whatever is inside is safe for a baby to get a hold of, such as pots and pans and tupperware. Also purchase stove-knob covers and avoid the possibility of a small child turning on a burner. 

      Move into the living room, where there are most likely low tables and plenty of sharp corners that you will want to guard with corner bumpers. If you have a fireplace with a hearth, be sure that it’s properly secured or blocked off. Fireplaces themselves should also be blocked off, especially when lit. Buy a screen or gate to ward off babies and small children from getting close to the flames. Be sure to mount or secure large bookshelves and televisions so they can’t topple over. It’s also helpful to install cordless blinds and store away delicate items that can be easily broken.

      Now for the bathroom. Like a kitchen, a bathroom can be one of the most dangerous rooms in a home for a baby. Again, remove all cleaning supplies and store them in a closet on a high shelf, out of reach. Keep medicines and razors in a medicine cabinet with a latch for added safety. Also get yourself a thermometer to test the temperature of bath water, making sure it’s not too hot. Remember to never leave your baby or small child alone in a bathroom, especially in a bathtub filled with water, to avoid drowning. 

      Lastly, take a final look at the nursery. This room will likely be the safest in the house, as well as where your baby may spend most of their time playing and exploring. Be sure to purchase a crib that meets safety standards. If you happen to acquire a hand-me-down crib, check that all safety regulations are met before you take a chance. Keep toys and stuffed animals in reach, as long as they aren’t small enough to be a choking hazard. 

      Double check that all safety precautions are taken in each room of your house. You’ll want to avoid as many potential injuries or risks as possible, so ask other family members to play a part in making sure that your house is prepped for safety and ready for a baby.

      Published with permission from RISMedia.