Buyer Proposal

X

very home is a masterpiece!

Paying Rent Is Like Throwing Money Down The…

WHY RENTING JUST DOESN’T MAKE SENSE:     

No interest deduction.

Can’t itemize tax deductions.

No savings or appreciation.

Receive unexpected rent increases.

Continue paying your landlord’s mortgage.

OWNING YOUR OWN HOME GIVES YOU FREEDOM     

FREEDOM...to

have pets or children or both!

FREEDOM...to have your home painted/decorated the way you want it! To plant flowers of your choice.

FREEDOM...from a 30 day notice to move, or a 24-hour notice to inspect, or a notice that your rent is going up.

FREEDOM...from relying on a landlord to fix something.

FREEDOM...from buying a retirement nest egg for your landlord.

Have the pride and joy of ownership. A place you can really call your own. A place you can really call “HOME”.

HOME IS A KEY TAX ADVANTAGE

By Ann Perry SD Union Tribune 3/27/2002

Prospective buyers struggling to make their $1,500 monthly rent payments often ask, “How in the world can I make a $2,000 mortgage payment?” Here’s how...

R

ichard J. Venegas, an Escondido certified public accountant, doesn't accept new clients unless they are homeowners. His job is to help people save on their taxes. "If someone doesn't have a house," he says, "I just can't help."

Owning a home not only offers numerous tax advantages, it often permits taxpayers to take advantage of other tax breaks, too. Venegas, who is also a certified financial planner, calls home ownership "the gateway to itemized deductions."

It's that and more, says John M. Smith, a certified financial planner and co-owner of Mission Mortgage in Mission Gorge, who works with first-time buyers.

I advise my clients that the purchase of a home is the first, most important step in a secure financial future," he says. "The basis for family wealth is the family home. That is the first investment you should be making."

What helps make the American home a source of wealth are several different and often lucrative tax breaks, from the moment of purchase to the date of sale: Buying a home. Entering the housing market where a starter home costs more than $200,000 can be challenge. But the sizable tax breaks from home ownership can make a purchase possible.

The tax code allows homeowners to deduct the interest on their mortgage payments and also their property tax.

Smith offers this example, assuming a typical San Diego home price of $280,000, with 10 percent down, a $252,000, 30-year, fixedrate loan of 7 percent, and a mortgage payment of $2,089 a month.

He often sees prospective buyers who are struggling to make their $1,500 monthly rent payments. They ask, "How in the world can I pay $2,000 a month?" Here's how.

For a married couple who earn $75,000 annually and pay $13,653 in federal and state taxes, buying the home would reduce their income taxes to $8,387, for savings worth $439 per month. For a single taxpayer making $75,000, and paying $19,865 in combined taxes, the purchase would reduce taxes to $12,870, for a savings of $582 per month.

If your home-purchase loan has points, or 1 or 2 percentage points of interest paid upfront, you are allowed to deduct the entire amount the year you buy.

(However, when you refinance, you can only deduct points by amortizing them over the life of the loan. Should you refinance again, though, you can deduct the entire balance of the points from the first refinancing in one year -- but you must amortize the points on the new loan.)

One note of caution: In their eagerness to have Uncle Sam help them with their house payments, some taxpayers overestimate the amount of tax savings they'll get in the first year and are too aggressive in changing their tax withholding. This tends to happen more often when homes are purchased in the later part of the year and thus the first year's tax benefits are lower than in following years.

Borrowing against your home. Not only can you deduct the interest on the mortgage you take out to buy your home, the tax code also allows you to write off interest on other loans against your property -- in certain instances You can deduct the interest on a first mortgage of up to $1 million. Beyond your first mortgage, you can write off the interest on a home equity loan of up to $100,000, and use the proceeds however you like, to buy a car or start a business. In addition to your first mortgage and your equity loan, you can also take the interest deduction on loans of theoretically any size against the house that are used to improve the property.

Getting a tax-favored loan is certainly a good deal compared with other loans. Smith says the most popular are the prime-rate home equity line of credit, which charge 4.75 percent interest-only for 10 years, then must be repaid. That's an after-tax cost of borrowing of 3.2 percent, for a homeowner in the 33 percent combined tax bracket.

But the low rates could come back to haunt today's borrowers, says Smith, who advises clients to repay the loans aggressively: "Today's low short-term borrowing costs are very attractive compared with other rates, but beware, they will not stay low forever."

And they can be too much of a good thing for consumers with a habit of racking up credit

card debt. Venegas advises, "You want to make sure you do this only once.

Selling your home. Thanks to tax rules that were greatly liberalized in 1997, most taxpayers who sell their homes can pocket the appreciation tax-free.

A married couple who used their home as their principal residence for two of the five years prior to selling can take up to $500,000 profit without paying capital gains tax. For single taxpayers, the limit is $250,000.

"Tax-free income is almost impossible to get," notes Venegas. "And this is one way to get it legally."

The exclusion can be so substantial, says John W. Roth, federal tax analyst for the tax publishing firm CCH, that the "profitable sale of a longtime family residence is often one key to financing retirement."

Under the rules, your principal residence can be a houseboat or a recreational vehicle.

The period of residency doesn't have to be continuous, so occupying a house in the first and fourth year of a five-year period would qualify. Homeowners can take the exemption on their residences, then move into their rental or vacation homes and repeat the process in two years.

Widows and widowers can claim the full $500,000 exemption rather than the $250,000 for single persons if they sell in the same year that their spouses died.

The law does offer some hardship exemptions to the two-year rule. For example, if a homeowner spent just one year in his home before entering a nursing home, he could count the time in the facility toward the two years.

If you need to move more than 50 miles from your home because of work, you can pro -rate your exclusion. For example, if you move after one year and you have a $100,000 gain, $50,000 of that would be tax-free.

There are almost no tax downsides to owning a home, says CCH, except that big property tax deductions can sometimes trigger the alternative minimum tax.

And, says Smith, there are important nonmonetary benefits: "There's a sense that owning your own home gives you some control over your own life."

To Date

To Date

To Date

Month

Month

Month

Month

To Date

Year 9 Month

To Date

Year 10

89,785 1,474 107,475 1,548 126,048 1,625 145,551 1,706 166,028

97,948 1,608 117,245 1,689 137,507 1,773 158,783 1,862 181,122

1,100 13,200 1,155 27,060 1,213 41,613 1,273 56,894 1,337 72,938 1,404

1,200 14,400 1,260 29,520 1,323 45,396 1,389 62,066 1,459 79,569 1,532

1,500 18,000 1,575 36,900 1,654 56,745 1,736 77,582 1,823 99,461 1,914 122,434 2,010 146,556 2,111 171,884 2,216 198,478 2,327 226,402

1,400 16,800 1,470 34,440 1,544 52,962 1,621 72,410 1,702 92,831 1,787 114,272 1,876 136,786 1,970 160,425 2,068 185,246 2,172 211,309

1,300 15,600 1,365 31,980 1,433 49,179 1,505 67,238 1,580 86,200 1,659 106,110 1,742 127,015 1,829 148,966 1,921 172,014 2,017 196,215

97,704 1,407 114,589 1,477 132,319 1,551 150,935

81,623 1,340

87,934 1,266 103,130 1,330 119,087 1,396 135,841

91,671 1,182 105,855 1,241 120,748

To Date

Year 8

78,163 1,126

To Date

Year 7

65,298 1,072

To Date

Year 6

972 53,046 1,021

Month

Year 5

1,000 12,000 1,050 24,600 1,103 37,830 1,158 51,722 1,216 66,308 1,276

926 41,377

Month

Year 4

73,461 1,206

882 30,264

Month

Year 3

992 34,047 1,042 46,549 1,094 59,677 1,149

945 22,140

900 10,800

To Date

840 19,680

Month

Year 2

9,600

800

Month To Date

Year 1

Based on 5% Annual Inflation (add lost tax benefits to rent)

RENT ACCUMULATION TABLE

DON’T PUT OFF BUYING

Year Rent Mortgage

(assuming 5% yearly rent increase) $1200 rent plus $300 in extra taxes paid

7000 6483

6000

4838

5000

4179

3610

4000

3118 2694

3000

2347 2010 1736

2000

1500

1000 0

1500

1500

1

3

1500

6

1500

9

1500

12

1500

15

1500

18

1500

21

1500

24

1500

27

30

HOUSING APPRECIATION RATES

Rate

Home Price

5 Years

10 Years

20 Years

30 Years

5%

$300,000

$382,884

$487,560

$790,587

$1,281,949

7%

$300,000

$420,766

$587,620

$1,146,064

$2,235,224

10%

$300,000

$483,153

$771,692

$1,968,623

$5,022,052

5%

$400,000

$510,513

$650,080

$1,054,116

$1,709,265

7%

$400,000

$561,021

$783,493

$1,528,085

$2,980,299

10%

$400,000

$644,204

$1,028,923

$2,624,831

$6,696,069

5%

$500,000

$638,141

$812,600

$1,317,644

$2,136,581

7%

$500,000

$701,276

$979,366

$1,910,106

$3,725,373

10%

$500,000

$805,255

$1,286,153

$3,281,039

$8,370,086

5%

$600,000

$765,769

$975,121

$1,581,173

$2,563,897

7%

$600,000

$841,531

$1,175,239

$2,292,127

$4,470,448

10%

$600,000

$966,306

$1,543,384

$3,937,246

$10,044,104

5%

$700,000

$893,397

$1,137,641

$1,844,702

$2,991,214

7%

$700,000

$981,786

$1,371,113

$2,674,148

$5,215,523

10%

$700,000

$1,127,357

$1,800,615

$4,593,454

$11,718,121

5%

$800,000

$1,021,025

$1,300,161

$2,108,231

$3,418,530

7%

$800,000

$1,122,041

$1,566,986

$3,056,169

$5,960,598

10%

$800,000

$1,288,408

$2,057,845

$5,249,662

$13,392,138

CALL US IF YOU

...READ AN AD

...SEE A HOME ON THE INTERNET

...SEE A SIGN

...HEAR ABOUT A PROPERTY FOR SALE

...SEE AN

FOR SALE ABC REALTY

FOR SALE

BY OWNER

NEW HOME CONSTRUCTION

WHAT ABOUT FOR SALE BY OWNERS?

You may see signs for ‘For Sale By Owner’ properties as you are out and about. These properties may or may not be listed on the Multiple Listing Service (MLS). If you see one of these CALL US! REMEMBER: This is the biggest investment of your life.

Is it worth the risk to venture into this alone without professional guidance? Most sellers are trying to save themselves the commission—not give you a better price. In addition, they often try to avoid the laws of the state of California by not disclosing things to the unsuspecting buyer.

Our services are FREE and will help protect YOU!

MONTHLY PAYMENTS OVER 30 YEARS

LOAN AMOUNT

LOAN AMOUNT

Interest Rate %

4.75%

5.00%

5.25%

5.50%

5.75%

6.00%

6.25%

6.50%

6.75%

7.00%

7.25%

$1,000.00

$5.22

$5.37

$5.53

$5.68

$5.84

$6.00

$6.16

$6.33

$6.49

$6.66

$6.83

$10,000.00

$52.20

$53.70

$55.30

$56.80

$58.40

$60.00

$61.60

$63.30

$64.90

$66.60

$68.30

$50,000.00

$261.00

$268.50

$276.50

$284.00

$292.00

$300.00

$308.00

$316.50

$324.50

$333.00

$341.50

$100,000.00

$522.00

$537.00

$553.00

$568.00

$584.00

$600.00

$616.00

$633.00

$649.00

$666.00

$683.00

$805.50

$829.50

$852.00

$876.00

$900.00

$924.00

$949.50

$973.50

$999.00 $1,024.50

$150,000.00

$783.00

$200,000.00

$1,044.00

$1,074.00 $1,106.00

$1,136.00 $1,168.00 $1,200.00 $1,232.00 $1,266.00

$1,298.00 $1,332.00 $1,366.00

$300,000.00

$1,566.00

$1,611.00 $1,659.00

$1,704.00 $1,752.00 $1,800.00 $1,848.00 $1,899.00

$1,947.00 $1,998.00 $2,049.00

$350,000.00

$1,827.00

$1,879.50 $1,935.50

$1,988.00 $2,044.00 $2,100.00 $2,156.00 $2,215.50

$2,271.50 $2,331.00 $2,390.50

$400,000.00

$2,088.00

$2,148.00 $2,212.00

$2,272.00 $2,336.00 $2,400.00 $2,464.00 $2,532.00

$2,596.00 $2,664.00 $2,732.00

$450,000.00

$2,349.00

$2,416.50 $2,488.50

$2,556.00 $2,628.00 $2,700.00 $2,772.00 $2,848.50

$2,920.50 $2,997.00 $3,073.50

$500,000.00

$2,610.00

$2,685.00 $2,765.00

$2,840.00 $2,920.00 $3,000.00 $3,080.00 $3,165.00

$3,245.00 $3,330.00 $3,415.00

$550,000.00

$2,871.00

$2,953.50 $3,041.50

$3,124.00 $3,212.00 $3,300.00 $3,388.00 $3,481.50

$3,569.50 $3,663.00 $3,756.50

$600,000.00

$3,132.00

$3,222.00 $3,318.00

$3,408.00 $3,504.00 $3,600.00 $3,696.00 $3,798.00

$3,894.00 $3,996.00 $4,098.00

$650,000.00

$3,393.00

$3,490.50 $3,594.50

$3,692.00 $3,796.00 $3,900.00 $4,004.00 $4,114.50

$4,218.50 $4,329.00 $4,439.50

$700,000.00

$3,654.00

$3,759.00 $3,871.00

$3,976.00 $4,088.00 $4,200.00 $4,312.00 $4,431.00

$4,543.00 $4,662.00 $4,781.00

$750,000.00

$3,915.00

$4,027.50 $4,147.50

$4,260.00 $4,380.00 $4,500.00 $4,620.00 $4,747.50

$4,867.50 $4,995.00 $5,122.50

$800,000.00

$4,176.00

$4,296.00 $4,424.00

$4,544.00 $4,672.00 $4,800.00 $4,928.00 $5,064.00

$5,192.00 $5,328.00 $5,464.00

Interest Rate %

7.50%

7.75%

8.25%

9.50%

8.00%

8.50%

8.75%

9.00%

9.25%

9.75% 10.00%

$1,000.00

$7.00

$7.17

$7.34

$7.52

$7.69

$7.87

$8.05

$8.23

$8.41

$8.60

$8.78

$10,000.00

$70.00

$71.70

$73.40

$75.20

$76.90

$78.70

$80.50

$82.30

$84.10

$86.00

$87.80

$50,000.00

$350.00

$358.50

$367.00

$376.00

$384.50

$393.50

$402.50

$411.50

$420.50

$430.00

$439.00

$100,000.00

$700.00

$717.00

$734.00

$752.00

$769.00

$787.00

$805.00

$823.00

$841.00

$860.00

$878.00

$150,000.00

$1,050.00

$1,075.50 $1,101.00

$1,128.00 $1,153.50 $1,180.50 $1,207.50 $1,234.50

$1,261.50 $1,290.00 $1,317.00

$200,000.00

$1,400.00

$1,434.00 $1,468.00

$1,504.00 $1,538.00 $1,574.00 $1,610.00 $1,646.00

$1,682.00 $1,720.00 $1,756.00

$300,000.00

$2,100.00

$2,151.00 $2,202.00

$2,256.00 $2,307.00 $2,361.00 $2,415.00 $2,469.00

$2,523.00 $2,580.00 $2,634.00

$350,000.00

$2,450.00

$2,509.50 $2,569.00

$2,632.00 $2,691.50 $2,754.50 $2,817.50 $2,880.50

$2,943.50 $3,010.00 $3,073.00

$400,000.00

$2,800.00

$2,868.00 $2,936.00

$3,008.00 $3,076.00 $3,148.00 $3,220.00 $3,292.00

$3,364.00 $3,440.00 $3,512.00

$450,000.00

$3,150.00

$3,226.50 $3,303.00

$3,384.00 $3,460.50 $3,541.50 $3,622.50 $3,703.50

$3,784.50 $3,870.00 $3,951.00

$500,000.00

$3,500.00

$3,585.00 $3,670.00

$3,760.00 $3,845.00 $3,935.00 $4,025.00 $4,115.00

$4,205.00 $4,300.00 $4,390.00

$550,000.00

$3,850.00

$3,943.50 $4,037.00

$4,136.00 $4,229.50 $4,328.50 $4,427.50 $4,526.50

$4,625.50 $4,730.00 $4,829.00

$600,000.00

$4,200.00

$4,302.00 $4,404.00

$4,512.00 $4,614.00 $4,722.00 $4,830.00 $4,938.00

$5,046.00 $5,160.00 $5,268.00

$650,000.00

$4,550.00

$4,660.50 $4,771.00

$4,888.00 $4,998.50 $5,115.50 $5,232.50 $5,349.50

$5,466.50 $5,590.00 $5,707.00

$700,000.00

$4,900.00

$5,019.00 $5,138.00

$5,264.00 $5,383.00 $5,509.00 $5,635.00 $5,761.00

$5,887.00 $6,020.00 $6,146.00

$750,000.00

$5,250.00

$5,377.50 $5,505.00

$5,640.00 $5,767.50 $5,902.50 $6,037.50 $6,172.50

$6,307.50 $6,450.00 $6,585.00

$800,000.00

$5,600.00

$5,736.00 $5,872.00

$6,016.00 $6,152.00 $6,296.00 $6,440.00 $6,584.00

$6,728.00 $6,880.00 $7,024.00

BUYING UP IN A DOWN MARKET PRICE

$800,000

$768,000

= $32,000

(-4%) Home B (your new home)

$500,000 $480,000

= $20,000 Savings = $12,000

Home A (your current home)

TIME

A declining market can be an excellent time to make a move up to a higher priced home. In this example, the owners of Home “A” have experienced a 4% decline in value. By itself this seems like a negative outcome. When the market softens, the prices of homes go with it. Home “B” also experienced a decline, but by a greater amount. By taking the “loss” in the sale of a Home “A”, they realize a net gain of $12,000 in overall transaction.

20 Things The Joles Group Does For Their Buyers 1. Best Deals– We specialize in finding the best deals for our clients!

2. Exclusive Clients– We work with 3-4 exclusive clients at a time so that we can provide superior service to each of them.

3. Buyer Agency– We represent your interests and we negotiate on your behalf. We make sure you don't pay too much for your home. We want

to get you the best price we can!

4. Exclusive Concierge Service have a team of professionals with a proven track record working for you. Lenders, Home Inspectors, Title and

Escrow Companies, Insurance Agents, and many more ready and waiting to give you exceptional service not only during the transaction but after you’ve moved into your new home too..

5. We Leave No Stone Unturned- We’ll contact the For Sale By Owners, check out the new housing projects in the neighborhoods you’re interested in and check the multiple listing daily while we are actively looking for your home. You’ll be the first to know about any Windermere Real Estate SoCal listings that may meet your needs.

6. Patience- No matter how long it takes for you to decide to buy a home, we won’t give up on you.

7. Flexible Hours- Mon-Fri 9a.m.-6p.m. with evening and weekend appointments available. We work with your schedule.

8. Home Buyers Scouting Report– Access to your personal home search website. A customized the site to meet your needs.

9. Loan Advice- We’ll put you in contact with the most reputable lenders so that you can get the best financing possible.

10. Homebuyer’s Guide- A booklet of everything that is going to be happening through the home-buying process. It also includes the offer to purchase you will be using so that you can read through it before you ever put in an offer on a home.

11. No Surprises- We do our best to prepare you every step of the way so that you know exactly what is going to happen from offer to purchase to closing. Part of that preparation is the homebuyers guide.

12. Tech Savvy- I keep myself continually educated in the tech end of my business so that you’re not left behind in your home search needs.

13. Timely Communication- You determine the best mode of communication e-mail, phone, fax, carrier pigeon :-) telegraph, western union... You will never say that you never heard from us.

14. Crime and School Reports– We will provide information of crime statistics and school reports to the neighborhood that you’re interested in.

15. Close on time– We will do everything in my power to make sure we close on the date agreed upon in your offer.

16. Evaluate Your Needs– and determine what your “dream home” is.

17. Determine a Fair Asking Price– Once we find the home that suits your needs we will help you determine its market value.

18. Paperwork, Paperwork, Paperwork– We will assist you with the offer to purchase, counter offers, deciphering disclosures, etc.

19. Stay Involved– We will be with you every step of the way. We do not stop until keys are in your hand and even then we are here for you as a resource in case you have any questions that need answers.

Last But Not Least

You have our commitment that we’ll take care of things.



You can count on us that we’re going to do what's best for you.



We promise you no one will do a better job for you than we will.



It is our goal to become Your Personal Realtor For A Lifetime.

Commitment We are committed to the following: 1. We will be HONEST about every aspect of the home buying process. This will allow you to make difficult decisions with confidence and peace of mind.

2. We will be AGGRESSIVE in our SEARCH for your potential HOME. Our active search techniques have helped many families move fast.

3. We will COMMUNICATE to you, in the way you choose, all events relating to the purchase of your home.

You will NEVER have to say, “We never heard from our Realtor”.

4. We will give your family EXCEPTIONAL SERVICE, care genuinely for your needs and earn the right to become Your Personal Realtor for a Lifetime.

5. We promise NO one will WORK HARDER for you than we will.

In Today’s Competitive Real Estate Market, Commitment Makes All the Difference.

Make the Right Decision!