Category: property investing


Keep Your Credit Score In Check

Banks are becoming very strict when it comes to granting loans. These days, getting one requires people to exert more effort and be more mindful of any potential problems. Not even people with very good credit are exempt, as they are ‘forced’ to go through a lot of things in order to avoid being branded as a risky borrower. People looking to improve their credit can employ a number of techniques that not only increases the chances of having a loan approved, but also command a better interest rate.

Paying bills on time is an obvious tactic. But this can be made even more effective by making sure to not overextend on credit. Someone who has a credit limit of $10,000, but only owes $1,000, is much more attractive to a lender than someone who has the same limit but owes $8,000. By paying down the credit before applying for a loan, a borrower increases the chances of improving the credit score.

Borrowers have to be careful in paying down debts, however, as some creditors actually reduce credit limits as the debt slowly gets paid off. When this happens, borrowers need to ask for the credit limit to be maintained, or raised, or just switch to a different credit card. It is also important that the account is kept open. This makes sure lenders can see the borrower’s whole credit history, which can help in their decision.

The next thing a borrower can do is to check their credit score on a regular basis, or before the application for any type of loan or second mortgage is submitted. This is because the U.S. Public Interest Research Groups have shown that nearly 8 in 10 reports have discrepancies and errors. This allows the borrower the chance to fix or dispute any discrepancies in the report. There is no harm in asking for your own report, so feel free to get them as you wish. There are three credit bureaus that can give this information, all of which can be accessed at annualcreditreport.com.

There are companies that will offer free credit reports, in exchange for signing-up for a service. These services will usually have a monthly fee, though, so be very careful of these companies.

Some might be intimidated by all of these requirements, and might not find getting good credit worth all the trouble. However, having good credit, especially in a continuously-changing economy, is very important. Not only does it ensure a lifeline should troubling times come, but it also prevents having high interest rates, high insurance premiums, and high rental rates. In addition, good credit sometimes improves one’s eligibility when it comes to employment, as many employers will prefer people who can demonstrate a good grasp of responsible money management.

Managing your credit at least once a year is very useful, and may help you avoid having to seek a bad credit home mortgage refinance.

Property Investing And Tax Breaks

Property investing has many tax advantages and can be molded into a business empire.  There are too many to list but I would like to cover three important tax saving strategies.

Any decent size business has tax advantages in and of itself, if that business happens to be real estate investing you have even more tax saving potential.  Even if you don’t care to grow a real estate portfolio you can still take advantage of several tax breaks.  Here are two of the most common and one more you can take advantage of if you want to start investing.

Break one- Your mortgage interest can be used as a deduction.  Most loans are a simple liability but your mortgage can be written off.  In fact you can write off mortgage interest on as many properties as you own.  Good to know if you want to purchase some investment property or if you simply want to own a few homes for personal use.

Break two- Property taxes.  Property taxes can also be written off.  It seems that property taxes continue to rise but that is not all bad news.  Even though we still want to pay as little property tax as possible it still can be written off.  These taxes can also be written off of all properties owned.

Break three- Capital gains.  If your property increases in value you will have to pay capital gains taxes on the increase.  In the eyes of the IRS your house is an investment and any money earned on that investment is considered capital gains.  The way around that used to be the 1031 tax deferred exchange.  The 1031 allowed you to re-invest the gains into a similar property as to defer capital gains.  Theoretically the gains could be deferred over and over until death making the gains tax free.

Now there is a law that says you don’t have to pay taxes on any capital gains 250,000 or 500,000 if married or less.  Over that amount you still will have to pay taxes or do a 1031 exchange.

Although not everyone wants to be a real estate millionaire, owning your own house is still one of the best tax shelters around.  Property investing is very exciting as a business and as a tax shelter.

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