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Friday, January 29, 2016
Money Matters - Choose your title company when purchasing a home
The
purchase of a home – whether it be your first house or your fifth – can be a
whirlwind experience. So why should you be thinking about one more thing? Why
should you be thinking about your title company?
Title
companies are most often chosen by the buyer’s lender. But it is a law in the State
of Maine that the buyer has the right to choose their own title company. In
this article, I go through exactly what a title company does, and in a future
article, I will discuss how to choose the right one for you.
First
and foremost, the title company performs a title search, which determines if
the person selling a property truly has the right to do so, and that the
potential buyer is receiving all of the rights to the property (title) that
they are paying for. The reason a title company conducts this search is to
ensure the property is conveyed with free and clear title with no liens,
outstanding mortgages, and that real estate taxes, water and sewer, are
currently paid up.
When
the title search is complete, the title company will then issue a ‘commitment’,
which states the conditions under which it will insure the title. The title
company processors then become the point of contact for the buyer, seller,
brokers and lender. It is the processor’s responsibility to plug in all of the
monetary figures associated with the transaction. Once all of the figures have
been established and the lender has given the clear to close, the processor
then contacts all parties to coordinate the closing date, time and location.
At
this point, the processor awaits the lender’s documents and puts together the
closing package with all of the necessary paperwork – some generated in-house
and some from the lender. It is then handed off to the closing attorney who
will facilitate the actual closing with the buyers, sellers, brokers and
lender.
The
title company’s closing attorney will walk you page by page through each of the
many documents you will be required to sign, and there are a lot of them! It is
very important for the title company to explain everything being signed. Once
that is done, the transaction is complete and the new owners may officially
move into their new home.
However, work continues behind the
scenes! The title company must record certain documents, such as the deed and
mortgage, at the Registry of Deeds. They are also responsible for sending the
proper paperwork to the lender, and paying off mortgages, home equity loans,
water/sewer bills, property taxes and HOA/condo fees, among other possible
payments.
Usually within one month from the
transaction closing date, the buyer will receive their
final correspondence from the title company in the form of a letter which
includes their owner’s title insurance policy and their recorded deed.
Title companies are truly a part of
the home purchasing process, and I will explain in the next article how to
choose the right one for you.
Money Matters - Investing for college earns grant money thorugh NextGen
It’s
never too early to plan ahead for college for children through Maine’s NextGen
529 college savings plan. The benefits for Maine residents can add up to a lot
of money. When you open an account for a child over a year old, get a $200
matching grant with a $50 deposit. For children born this year, they can get an
$500 Alfond Grant to be used for higher education.
The
second way to get grants in the Next Gen program is to make contribution and
get a 50 percent NextStep Matching Grant up to $300 per year. Finally, for
those who set up automatic contributions from a payroll or bank account, they
receive a $100 automated funding grant.
The
second way to get grants in the Next Gen program is to make contribution and
get a 50 percent NextStep Matching Grant up to $300 per year. Finally, for
those who set up automatic contributions from a payroll or bank account, they
receive a $100 automated funding grant.
“You
invest in your child’s future every day, whether cheering them on at school
activities, helping with homework or even just offering a supportive hug.
Opening and contributing to a NextGen account can help your child succeed too.”
The
money in a 529 plan are earmarked for higher education no matter the age of the
student. The money grows tax free and beneficiaries can be changed.
529
plans can be set up by financial advisors like those at Modern Woodmen in
Windham.
For
more information on the Alfond, visit www.500forbaby.org. For more about
NextGen, visit www.nextgenforme.com.
Money matters - Avoid these top ten most common tax mistakes
Every
year, due to common mistakes, billions of dollars in refunds are left
uncollected by taxpayers from the Internal Revenue Service (IRS). Liberty Tax
examines the Top 10 tax mistakes made each year by taxpayers in hopes to
prevent them from repeating errors that may cost them money.
• Staying Up-to-date on The Tax
Code: The biggest tax news of late is the Affordable Care Act and how Americans
will be responsible for the Shared Responsibility Payment if they do not have
health insurance and are not exempt from obtaining coverage. Taxpayers need to
research the latest changes to the tax code before filing their own taxes.
• Not Claiming All Earned Income: If
examiners find money a taxpayer earned and did not report, the taxpayer could
owe interest and penalties, in addition to the tax that would be owed on the
income.
• Number Errors: Another common
mistake that could cost taxpayers is entering numbers on a tax form. A costly
error, for example, could be entering in the wrong bank account number when
requesting a refund to be direct deposited. The refund could actually be
deposited into someone else’s bank account.
• Math Errors: Careless math
mistakes cost taxpayers each year.
• Filing Under the Correct Status: With
five different options available under filing status, the most accurate one for
a taxpayer’s situation may not be easily determined. Each filing status could
have an impact on the tax liability outcome.
• Mismatched Names: If a taxpayer’s
name does not match the name and Social Security number the IRS has on file,
the tax return could get kicked back or the process could slow down.
• Paying Multiple State Taxes: Many
taxpayers forget that income earned in another state must be reported. If
taxpayers fail to file this return, they could face fines, fees, and penalties,
in addition to the taxes owed.
• Forgetting to Sign the Forms: It
is an all-too-common mistake to forget to sign on the bottom line. For those
who owe and wait until the deadline to file, forgetting to sign their tax
return could cost them a late fee and penalty when the IRS kicks it back for
signature and April 18th has passed.
• Falling for Tax Schemes: If a
taxpayer believes he or she may be at risk for identity theft, the taxpayer should
contact the IRS Identity Protection Specialized Unit, toll-free at
1-800-908-4490.
• Missing a Deduction or Tax Credit:
While penalties and fees mentioned above could cost a taxpayer plenty, missing
a deduction or tax break could cause the taxpayer to owe more than he or she
should or get a lower refund than what they earned.
This article was brought to you by
Liberty Tax Service. “Tax preparers at Liberty Tax Service constantly undergo
training to stay updated on the current tax laws and changes. It’s not just our
customer service that keeps people walking through our doors every year, it’s
the peace of mind they get with our tax preparers,” said Adams, owner of
Liberty Tax Service in Windham.
Changes to Social Security claiming strategies
The
Bipartisan Budget Act of 2015 included a section titled “Closure of Unintended
Loopholes” that ends two Social Security claiming strategies that have become
increasingly popular over the last several years. These two strategies, knows
as “file and suspend” and “restricted application” for a spousal benefit, have
often been used to optimize Social Security income for married couples.
Tip:
If you are age 66 or older before the new rules take effect, you may still be
able to take advantage of the combined file-and-suspend and spousal/dependent filing
strategy.
If
you have not yet filed for Social Security, it’s important to understand how
these new rules could affect your retirement strategy.
Depending
on your age, you may still be able to take advantage of the expiring claiming
options. The changes should not affect current Social Security beneficiaries
and do not apply to survivor benefits.
File
and suspend
Under
the previous rules, an individual who had reached full retirement age could
file for retired worker benefits – typically to enable a spouse to file for
spousal benefits – and then suspend his or her benefit. By doing so, the
individual would earn delayed retirement credits (up to 8 percent annually) and
claim a higher worker benefit at a later date, up to age 70. Meanwhile, his or
her spouse could be receiving spousal benefits. For some married couples,
especially those with dual incomes, this strategy increased their total
combined lifetime benefits.
Under
the new rules, which are effective as of April 30, 2016, a worker who reaches
full retirement age can still file and suspend, but no one can collect benefits
on the worker’s earnings record during the suspension period. This strategy
effectively ends the file-and-suspend strategy for couples and families.
The
new rules also mean that a worker cannot later request a retroactive lump-sum
payment for the entire period during which benefits were suspended. (This
previously available claiming option was helpful to someone who faced a change
of circumstances, such as a serious illness.)
Tip:
If you are age 66 or older before the new rules take effect, you may still be
able to take advantage of the combined file-and-suspend and spousal/dependent filing
strategy.
Restricted
application
Under
the previous rules, a married person who had reached full retirement age could
file a “restricted application” for spousal benefits after the other spouse had
filed for Social Security worker benefits. This allowed the individual to
collect spousal benefits while earning delayed retirement credits on his or her
own work record. In combination with the file-and-suspend option, this enabled
both spouses to earn delayed retirement credits while one spouse received a
spousal benefit, a type of “double dipping” that was not intended by the
original legislation.
Under
the new rules, an individual eligible for both a spousal benefit and a worker
benefit will be “deemed” to be filing for whichever benefit is higher and will
not be able to change from one to the other later.
Tip:
If you reached age 62 before the end of December 2015, you are grandfathered
under the old rules. If your spouse has filed for Social Security worker
benefits, you can still file a restricted application for spouse-only benefits
at full retirement age and claim your own worker benefit at a later date.
Basic
Social Security claiming options remain unchanged. You can file for a
permanently reduced benefit starting at age 62, receive your full benefit at
full retirement age, or postpone filing for benefits and earn delayed
retirement credits, up to age 70.
Although
some claiming options are going away, plenty of planning opportunities remain,
and you may benefit from taking the time to make an informed decision about
when to file for Social Security.
File bankruptcy or not?
Bankruptcy is a way to give people a
“fresh start” after struggling with debt and can be done once every eight
years. There are many myths of bankruptcy, for example, you will lose
everything you own, bankruptcy hurts your credit for 10 years and you are a bad
person for declaring bankruptcy.
With the money you have available each month after paying your current living expenses, can you pay off your existing debts at the current interest rates in three years? If the answer is yes, you might not need to file for bankruptcy.
If you cannot reduce expenses, increase income, negotiate rates or sell assets to make that possible, than bankruptcy may be a realistic opportunity for you. Filing bankruptcy is nothing to be ashamed about. The law is designed to give people a “fresh start”. Think about where you will be in three to five years. If you continue to struggle to stay ahead of your debt, let alone pay it off, think about where you will be in the same period of time if that debt were gone, now.
Only a skilled bankruptcy attorney can help you decide which alternative is best for your particular situation. Don’t wait until you have lost everything to get the help you need.
There are options to try to avoid
bankruptcy on your own, according to bankruptcy lawyer Karen JM Mitchell, Esq. Exploring
bankruptcy alternatives such as creating a budget for your realistic, monthly
expenditures for current living, including mortgage and car payments, but
exclude all other existing debt could be an option.
With the money you have available each month after paying your current living expenses, can you pay off your existing debts at the current interest rates in three years? If the answer is yes, you might not need to file for bankruptcy.
If you cannot reduce expenses, increase income, negotiate rates or sell assets to make that possible, than bankruptcy may be a realistic opportunity for you. Filing bankruptcy is nothing to be ashamed about. The law is designed to give people a “fresh start”. Think about where you will be in three to five years. If you continue to struggle to stay ahead of your debt, let alone pay it off, think about where you will be in the same period of time if that debt were gone, now.
Only a skilled bankruptcy attorney can help you decide which alternative is best for your particular situation. Don’t wait until you have lost everything to get the help you need.
Money Matters - Put your financial "puzzle" together - from Edward Jones
January 29 is National Puzzle Day,
with puzzle celebrations and events taking place at museums, libraries and
other venues across the country. Why this date was chosen – or why National
Puzzle Day even exists – is something of a mystery. But as an investor, you can
find value in the concept of a puzzle – specifically, in putting together the pieces
of your financial puzzle.
What are these pieces? Here are the essential ones:
What are these pieces? Here are the essential ones:
- Growth – At different times in your life, you will have various goals – purchasing a first or second home, sending your children to college, enjoying a comfortable retirement, and so on. While these goals are diverse, they all have one thing in common: To achieve them, you’ll need some growth potential in your investment portfolio. The nature and the extent of the growth-oriented vehicles, such as stocks and stock-based instruments, in your holdings will depend on your specific goals, risk tolerance and time horizon – but growth opportunities you must have.
- Income – Income-producing investments, such as bonds and dividend-paying stocks, can help supplement your earned income during your working years and provide you with a valuable income stream when you’re retired. Plus, bonds and other income-producers can help balance a portfolio that might otherwise be too heavy in growth vehicles – which, as you know, are typically higher in risk.
- Taxes – Taxes will always be part of the investment equation. Whenever possible, you’ll want to take advantage of those accounts that let you make tax-deductible contributions and that provide the opportunity for tax-deferred growth, such as a traditional IRA and your 401(k) or other employer-sponsored retirement plan. You may also find that you can benefit from tax-free investments, such as some types of municipal bonds and a Roth IRA. (Your Roth IRA contributions are not tax-deductible, but your earnings grow tax free, provided you’ve had your account at least five years and you don’t start taking withdrawals until you reach 59½.)
- Protection – You can’t just invest for your future – you also have to protect it. If something were to happen to you, would your family be able to remain in your home? Would your children still be able to go to college? To help ensure continuity and security in your family’s lives, you’ll need to maintain adequate life and disability insurance. Also, you will need to protect your independence in your retirement years, as you no doubt would want to avoid burdening your grown children with any financial burden. To attain this type of freedom, you may have to guard against the potentially catastrophic costs of long-term care, such as an extended nursing home stay. A financial professional can suggest ways of meeting these expenses.
- Legacy – After working hard your whole life, you’d
probably like to leave something behind to your children, grandchildren,
other family members and possibly even charitable institutions. To create
the legacy you desire, you will need to create a comprehensive estate plan.
Because such a plan may involve a will, living trust and other complex
legal documents, you will need to work with your legal and tax advisors.
Try to put these pieces together to help complete your financial “puzzle” – when you do, you may well like the picture that emerges. - This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
Local photo contest announced - By Michelle Libby
The Windham Planning Department is currently sponsoring a photo contest to be used in the Comprehensive Master Plan Update and possibly future projects. They are looking for images of Windham that represent who the residents of Windham are, how they live, the history and the places and things that are important to them.
Categories
are community, history, nature, public events and leisure activities. There
will be two divisions, one for students in grades k through 12 and an open
division for everyone else. The contest is open now and will accept entries
until Tuesday, March 1st, which is when public voting will begin. Public
voting ends on March, 31, 2016.
Prizes
will be award to the two winners and two runners up for each division. The
winner will receive a $100 gift card and the two runners up will receive a $50
gift card each.
The
photos will remain property of the person who submitted it, but the Town of
Windham will have use of it for any of its projects, including the
Comprehensive Plan update.
The
only ones not able to enter are Town of Windham employees and their families.
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