TIPS FOR FIRST TIME HOME BUYER
Buying real property for the first time can be a challenge. The following
are some basic suggestions for people who are making their first purchase:
1. Pre-qualify. You need to know what you can afford to purchase. Go to
a lender to determine the amount of loan you can obtain. Most lenders
will pre-qualify you. There is no charge for this. This will provide you
a price range for the property you can afford.
When you meet with your prospective lender, you should have documentation
of your salary, bonus and income history, and other income. Often, your
tax returns or W-2 will provide this information. You should be aware
of the current balance of your savings and checking accounts, the value
of your investments, and the value of your personal property.
2. Shop for Financing. Most lenders also will charge points for the financing.
A point is one percent (1%) of the amount borrowed. Different lenders
will charge different rates and charge different number of points. You
should also ask your lender whether you qualify for any special programs.
3. Shop for your Property. A home is usually one of the most expensive
purchase you will make during your lifetime. Look at several properties
and compare the properties. Assess their advantages and disadvantages.
This will give you some feel as to what is available in your price range.
You may consider being a bit conservative. You may wish to consider purchasing
property slightly below your means. There are always unforeseen circumstances
that may affect the ability to pay your mortgage payments.
4. Choice. There are condominiums, town homes, and single family homes.
Your personal desires and your price range will more than likely dictate
what you purchase. People with children should check the quality of schools
and the property's proximity to regular activities. People who are purchasing
condominiums should be careful to check the declaration, the by-laws and
house rules of the condominium being considered. It may also be useful
to review the minutes of the recent Board meeting.
5. Use a Broker. Most sellers will have a broker and will typically pay
that broker a 6% commission whether the buyer has a broker or not. If
you, as a buyer have a broker, your broker will be paid part of the commission
that will be paid anyway by the seller. Thus, it costs the buyer nothing
to have a broker. Why not have the advice and the assistance of a professional?
6. Ask Questions. You should ask questions of your realtor and of people
in the neighborhood of the property you are considering purchasing. Those
people know the area and often will share their insights with you.
7. Anticipate Additional Costs. In addition to the purchase price of the
property, the buyer will be paying closing costs. Closing costs will include
such charges as escrow fees, recording fees, and allocation of recurring
expenses such as real property taxes. In calculating the cost of the property
being purchased, your calculations should also consider the closing costs
and the costs for financing.
Buying a home takes some effort. Do your homework! You will be well rewarded.
**************
Two old ladies had played bridge together on a daily basis for over thirty
years. One day during their game, one lady suddenly looked up at the other
and said, "I realize we have known each other for many years, but
for the life of me, I just can't bring it to mind... would you please
tell me your name, dear?" There was dead silence for a couple of
minutes. Then the other lady responded, "How soon do you need to
know?"
**************
Nancy Evans Tudor, CPA has written an informative article on record keeping
that should be of interest to all of us. We have, with her permission,
reprinted her article. We have added one note to her article.
"What records should you keep - and for how long?"
by Nancy Evans Tudor, CPA
Like most people, you probably have several bulging files of tax and
financial records, but are never quite sure which documents to keep or
how long to keep them.
Well-organized financial records will save you time and money - not only
in accounting fees, but also in taxes. Now may be a good time for some
midyear organizing.
Here are some guidelines to help you.
Tax returns. Federal tax returns generally can be audited for up to three
years after filing; however, that time is extended to six years if underreported
income is involved. Therefore, all records substantiating items reported
on a tax return should be kept for seven years. This includes things such
as W-2s, 1099s, travel logs, receipts, cancelled checks, and credit card
statements.
Keep copies of filed tax returns permanently.
Home. Expenditures to maintain your home fall into two categories: "repairs"
(such as routine plumbing and painting) and "improvements" (usually
big-ticket items such as room additions).
Discard repair receipts once the warranty period expires, but keep receipts
for improvements indefinitely. Improvements add to the tax basis of your
home, which can reduce your capital gain if a later home sale is subject
to taxes.
Investments. Keep confirmation slips for as long as you own an investment,
plus an additional seven years.
For mutual funds, money market accounts, and limited partnerships, keep
the original prospectus, the most recent account statement, and each year's
cumulative annual statement or Form K-1.
Keep any documents for taxable accounts that show reinvested dividends.
You can toss all of your old proxy statements, brochures, and interim
account statements for investments.
Investment real estate. Keep all cancelled checks for purchases of property,
along with substantiation for improvements made to the property. Keep
written appraisals and tax depreciation schedules.
Individual retirement accounts. Keep copies of Forms 5498, 8606, and 1099R
until all money has been withdrawn from your IRAs. Good records are necessary
so that you aren't taxed on nontaxable withdrawals.
Insurance. Keep your current policies and 12 months' worth of cancelled
checks and statements. Ask your insurance agent about discarding expired
policies. Your liability for prior years can vary.
Estate planning documents. In your home, keep a copy of your current will,
any trusts, and any special directives. Give the originals to your attorney,
and consult your attorney about destroying all out-of-date documents.
[Note: We recommend keeping originals in a secure location and advising
those who should know the location of those documents.]
Business. If you own your own business, good recordkeeping is essential,
not only for tax reporting purposes, but also for the success of the business.
Call your accountant if you need details on exactly what business records
you need and how long they should be kept.
Keep it simple. In most cases, you don't need an elaborate recordkeeping
system to keep your affairs in order. File tax returns separately by year,
and file investment records by broker. For expenses, even an accordion
file tabbed by category works wonders.
**************
FROM THE DESK OF HAROLD CHU...
This time of the year always seems so hectic. There is so much to do
and so little time. During these busy times, we should not lose sight
of what's really important. The September 11, 2001 tragedy has reminded
many of us of how precious and fleeting life is.
We hope that you have the opportunity to share joy and love with those
who are close to you and that you can take a moment to appreciate and
enjoy the really important things in your life.
My staff and I extend to you the warmest of holiday wishes. We have
enclosed in this newsletter a tip chart and some stick-up calendars that
hopefully you will find useful.
Thank you for your confidence in our firm and for the support you have
given us. May you have a wonderful and happy Holiday Season and a very
happy New Year!
**************
NOTICE
Our firm traditionally is open a half day on December 24 and on December
31. Since those days fall on a Monday this year, our firm will be closed
for the entire day on December 24, 2001 and December 31, 2001.
**************
GIFT NOW!
Hawaii has experienced an economic slump for the last few years. Hawaii's
economy was slowly showing signs of a recovery, but the September 11,
2001 tragedy may forestall that recovery. These factors have resulted
in lowered values for real property and stock holdings. For clients who
are in the position to do so and wish to do some estate planning, now
is an excellent time to consider gifting.
Many consultants and accountants suggest that you consider gifting now.
The reason for this is that the current economic climate makes it possible
now to make a gift of assets that are at their lowest valuations in years.
Any gifts should be made as part of your overall estate plans and after
consultation with your advisors.
**************
HUMOR
The following are bumper stickers that had been spotted around the country.
Some of them are indicative of various statements I have made in prior
newsletters. Others are applicable to legal matters that we routinely
handle. Some are just simply funny.
"As long as there are tests, there will be prayer in public schools."
"When you do a good deed, get a receipt, in case heaven is like the
IRS."
"I took an IQ test and the results were negative."
"When there's a will, I want to be in it."
"Warning: Dates in calendar are closer than they appear."
"Give me ambiguity or give me something else."
"Make it idiot proof and someone will make a better idiot."
"Very funny, Scotty. Now beam down my clothes!"
"Be nice to your kids. They'll choose your nursing home."
"Diplomacy is the art of saying 'Nice doggie!' until you can find
a rock."
"There are 3 kinds of people in this world: those who can count &
those who can't."
**************
To our clients and friends, we extend
our sincerest best wishes for a Happy Holiday Season
and a prosperous New Year.
Harold
Cora Jan
Attorney:
Harold Chu
hchulaw@lava.net
Publisher/Editor:
Cora Anderson
canders@lava.net
Secretaries:
Cora Anderson
canders@lava.net
Printer:
NewTech Imaging
Phone: (808) 523-7544
Fax:: (808) 526-1231
E-mail: hchulaw@lava.net
http://www.attorneyhawaii.com
|
