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Getting married this summer? Here are some important tips from the IRS!

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Congratulations! You’ve tied the knot and cut the cake. Newlyweds have a lot to think about and taxes might not be on the list. However, there is good reason for a new couple to consider how the nuptials may affect their tax situation.

The IRS has some tips to help in the planning. Here are some simple steps to make your first income tax return together less stressful.

Step 1: You should check your withholding at the beginning of each year or when your personal circumstances change — like after you’re married. This year, it’s even more important to check following major changes from the new Tax Cuts and Jobs Act. Using the IRS Withholding Calculator is a good way to check your withholding. If you need to change your withholding, submit a new Form W-4 to your employer.

Step 2: Marriage can mean a change in name. If you legally change your name, it’s important to report that change to the Social Security Administration (SSA). The name on your tax return must match what is on file at SSA. If it doesn’t, it could delay any refund.

Step 3: If marriage means a change of address, the IRS and U.S. Postal Service need to know. To do that, send the IRS Form 8822, Change of Address. Notify the postal service to forward mail by going online at USPS.com or at a local post office.

Step 4: If you receive advance payment of the premium tax credit, it’s important that you report changes in circumstances to your Health Insurance Marketplace as they happen. Certain changes to your household, income or family size may affect the amount of your premium tax credit. These changes can alter your tax refund, or cause you to owe tax. Reporting these changes promptly will help you get the proper type and amount of financial assistance. You should also notify the Marketplace when you move out of the area covered by your current Marketplace plan. Advance payments of the premium tax credit provide financial assistance to help you pay for the insurance you buy through the Marketplace. Reporting changes will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance.

Step 5: Choose the best filing status. Your marital status on December 31 determines whether you’re considered married for that year. Generally, the tax law allows married couples to choose to file their federal income tax return either jointly or separately in any given year. Use the Interactive Tax Assistant  to help determine what is best for you.

When it comes to wedding planning, details are important. Take these steps now to be sure your first tax season as a married couple goes smoothly as well!

 

6 Key Home Buying Terms Made Clear

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If you’re buying a home for the first time, familiarizing yourself with the wealth of information available is often a welcomed challenge. Learning all of the terms and procedures relevant to your eventual closing process can be exciting and motivating. It’s a lot to learn, but once you understand the terminology and how it relates to your home buying experience, you can proceed confidently. Here are some key terms and definitions you will may encounter during your home buying process.

Amortization

When you sign a typical 30-year fixed interest mortgage, the 30 years is your amortization period. Each month, a portion of your mortgage payment goes towards paying interest, and another portion goes toward paying down the principal amount. As the principal loan amount decreases, the portion of your payment going to interest each month decreases with the principal amount increasing at the same rate.

Equity

A common misconception is that equity is the difference between the purchase price of your home and your current principal balance. In fact, equity is the difference between your home’s current market value and your balance. As you pay your principal down over time, your equity increases. However, your equity will fluctuate with the current value of your home. Another important relationship to understand is that as your home rises in value, your equity also rises.

Mortgage Insurance

Also known as private mortgage insurance, PMI is insurance purchased, usually by the borrower, to insure the lender if the borrower defaults (fails to pay back) on the loan. PMI allows lenders to safely underwrite loans with as little as 5% down knowing that even if the borrower cannot make the payments, a significant portion of their losses will be covered. Typically, a lender will require that PMI remain in place until the lender has achieved 20% equity in their home. If home values are rising and you are near that 20% mark, it may benefit you to have the home appraised to determine if your equity has exceeded 20%, allowing you to cancel the PMI payments.

Escrow

To ensure that the borrower is able to make the yearly tax and insurance payments, lenders require that the estimated yearly cost be broken up into 12 monthly payments, which are added onto the borrower’s mortgage payment. Each month, this money goes into what is known as an escrow account. This amount is held by a third party until the tax or insurance payment is due, at which time the escrow disburses the funds to the servicer. Because insurance and tax amounts can change from year to year, the amount paid in escrow may change, resulting in a different mortgage payment amount owed by the lender.

PITI

Principal, interest, taxes, and insurance. These are the four components that make up your total monthly mortgage payment, usually known as PITI.

Servicer

The loan servicer is the organization that sends your mortgage statements, and to whom you make your monthly loan payments. The servicer may not be the same as the company you received your loan from originally, and may change over the life of the loan. The servicer also distributes the payments for insurance and taxes.

Understanding key terms can go a long way toward making the process of homebuying easier and more enjoyable. We also recommend working with knowledgeable advisors like those at HOMEteam to assist you in making the right financial decisions. HOMEteam helps first time home buyers navigate the mortgage process, renters save for home ownership, and home owners preserve and protect their investment in their home. Contact us to get the guidance and educational tools to help you transition from buyer to owner with confidence.

About HOMEteam

HOMEteam is an independent organization dedicated to providing consumers with objective tools and information that will help them prepare for and protect their biggest investment – their home. Through a series of workshops, one-on-one counseling, and other resources, HOMEteam helps first time home buyers navigate the mortgage process, renters save for home ownership, and home owners preserve and protect their investment in their home.

Whether you’re a renter, a first-time home buyer or a long-time homeowner, HOMEteam is here to help. Contact us today to get started!

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This article originally appeared in NeighborWorks® Southern New Hampshire’s March 2016 Neighborhood Minute Newsletter. To view the entire newsletter, please click here.

This past year HOMEteam has expanded home buyer and home owner services to meet the needs of New Hampshire residents. Along with our partners at NeighborWorks® Southern New Hampshire, CATCH Neighborhood Housing and Laconia Area Community Land Trust, we have broadened our outreach to now include Grafton, Sullivan, Cheshire and Western Rockingham Counties. Over the next year, we will be offering classes and seminars in new locations in the state; from Lebanon and Newport to Derry and Londonderry. We will continue to host classes in Laconia, Concord, Manchester, Nashua and Keene. The charts below illustrate who we served in 2015.

 

Hard work brings New Hampshire family home

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When Jeremy Charron lost his construction job in the wake of the 2008 housing crisis, he and his wife Siobhan had no choice but to file for bankruptcy.  They thought their credit would never recover, even after they got back on their feet, and that their dream of owning a home would remain a fantasy.  With three small daughters and Siobhan’s father and grandmother living with them, renting was not ideal, as it wasn’t always easy to find a house to rent that fit their specific needs.  That all changed when she saw a HOMEteam IDA program brochure.

The young couple met with a HOMEteam housing counselor only one year after their bankruptcy, and they found getting into a home of their own may not be as impossible as they had previously suspected.  Jeremy and Siobhan had to learn to budget strictly, something they had never done before.

“We couldn’t have done it without the help of the [IDA] program and the HOMEteam counselors.” Siobhan said.

The Individual Development Account [IDA] helps families like the Charrons commit to saving for major purchases, such as buying a home, or attaining higher education.  It matches the savings of an individual as they work towards their goal, and fosters good savings habits. In the Charron’s case, they each had an account, and saved enough to put towards their down payment, closing cost and other expenses associated with buying a home.

“Going through the IDA program and then doing the Home Buyer and Financial Capabilities Seminars, it really taught us a lot – how to use your credit, how to make it better, and how to prepare for the future and the unexpected… we really are grateful,” Siobhan said.

The paperwork involved in the application process was substantial; however the Charron family was able to complete what was necessary and not miss a class.  “We maximized the payments [into the IDA accounts], and we struggled. We were tight on things like groceries, but we knew we had to do it to meet our goal” Jeremy commented.

They saved and put money towards their IDA for a year before they started the home buying process, at times saving $200 a month, no small feat with two small girls and parents to feed.  They attended classes with HOMEteam, received counseling, and eventually found a home they were interested in.  It seemed nearly perfect for their situation.  It had enough bedrooms to accommodate their two children and Siobhan’s father and grandmother, and even had two bedrooms and a bath on the first floor, providing accessibility to her aging parents.  It was a little out of their price range, but the seller eventually agreed to meet them at a more affordable price point.

It was at this moment the lender suddenly rescinded their pre-approval, and it nearly cost them a chance at owning a home. “We were devastated,” Siobhan recalls.

Crestfallen and ready to fold, they called Ryan Tufts, their Home Ownership Coach at HOMEteam, for help.  Jeremy’s new employer had referred him to his lender, and without a secondary recommendation they were weary to try just any lender.  Ryan recommended several lenders who often work with HOMEteam’s clients.  Siobhan and Jeremy found a lender who was able to work with them and their unique situation to get the approval they needed to get into their new home.

Now owners living and working in their new home, Siobhan and Jeremy are proud of what they accomplished, “Now we are here, and we feel like we are through the hardest parts. We are truly grateful to be here.  There are always new challenges, but at least we are home.”

Pursuing a loan mod? Let us help you with that.

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Perhaps you’ve heard that the federal government has imposed new regulations on Servicers (entities who collect mortgage payments on behalf of investors) with the intent of improving the loan modification process.

The Consumer Financial Protection Bureau (CFPB) imposed regulations on large Servicers effective January 10, 2014. Below is a partial list of timeline regulations imposed that should get you an answer to your loan modification, short sale, or deed-in-lieu request in 30-45 days.

• If a loss mitigation package is submitted to your Servicer 45 days before a foreclosure auction date you will be protected by the CFPB regulations.
• If the package is submitted 45 days before the sale date, the Servicer must provide you a missing items list by mail. If submitted 37 days prior to the sale date, you must contact them to find out what items, if any, are missing.
• After a file is considered complete, it should be submitted to underwriting and be decided in 30 days. Failure to do that is in violation with CFPB regulations.
• Foreclosure proceedings cannot begin until a borrower is more than 120 days late.

Did you know that the number one reason for denial on a loan modification request is “incomplete package?” How do you know if you’re sending the right documents? I know many people who keep sending documents by fax, email and mail to their Servicers and still don’t get positive results. Why? Let us help you.

Through NeighborWorks® Southern New Hampshire, a HUD approved housing counseling agency, HOMEteam’s certified foreclosure prevention experts are prepared to help you FREE OF CHARGE.

If you’ve been trying to get a loan modification and are getting the “run around,” please attend one of our information sessions. We’d love to help.

Good News in the Morning

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Oh what a beautiful morning!  First call of the day started on a happy note.  A former client, who had her first mortgage permanently modified on the Treasury’s “Making Home Affordable Modification Program” (also called “HAMP”) back in November, called to say her second mortgage was just modified on the Second Lien Modification (2MP) program.  What that means is her interest rate on the second mortgage dropped to 1% for five years, and it then changes to market rate for the remaining term.  These terms mirror those on her first loan modification, reducing her monthly payment by 80%. WOW!!!  I am so happy this family now has an affordable payment.  She said, “I feel like we can live again!”

Of Lambs and Lions

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Looks like March 2014 came in like a lion and out like a lamb.  Well, maybe not weather wise but definitely on the loan modification front.  In March, I received notification of eleven loans that were approved to begin a trial payment for a loan modification, one loan approved for a forbearance plan, one loan for a moratorium, and executed three permanent loan modification documents.  Could this mean that the new Consumer Financial Protection Bureau (CFPB) Regulations are helping both in getting loans reviewed in a timelier manner and with positive outcomes? I hope so; here’s to new beginnings!