Wednesday, April 27, 2011

Why Get Pre-qualified for a Home Mortgage?

You get pre-qualified for your mortgage because it's good to know before you go. You should find out how much you can actually spend on your new home purchase before you start your serious shopping expeditions. Look at it this way: If you can afford to shop at Nordstrom's, why shop at J.C. Penny? If your budget calls for shopping at J.C. Penny, you will just get upset if you go to Nordy's only to find items that are out of reach.

And, just so you know, it is not an arduous or long process to get pre-qualified. Your Broker will be able to do this for you. The data doesn't even need to be submitted to a lender for the pre-qual. The only cost is for a credit report, and the whole pre-qual should be able to be done in an hour or less. You will need to provide data to the Broker about your income, assets and debts as part of the pre-qual process. I always give my clients a short list of documentation to bring in with them. That way they don't have to try to remember the data.

Lender guidelines have changed over the past few years, and your Broker will know these changes. Most conventional lenders like to see 20% down right now, but some buyers will qualify for loan programs that require less down payment. Then there is always an FHA loan which can require as little as 3.5% down. And there is a VA loan that veterans can qualify for which requires no money down. Where do you fit in? That is what the Broker can find out for you.

There is no reason you can't start looking at neighborhoods and going to open houses to get an idea of what is currently on the market. But your serious shopping should occur after you have been pre-qualified. Then you can pick the right neighborhood and the right house, and not get heart-broken along the way.

My wife and I have been helping buyers find homes in Santa Clara County for over 20 years. We are experienced Realtors® s well as Loan Agents.

Call me so I can get you pre-qualified to purchase YOUR new home.

My direct number is 408-202-2089.

Geoffrey Gault

The William Jefferies Co

Wednesday, April 13, 2011

Deferring Capital Gains Tax on Real Estate Sales

The IRS wants some of the money from the sale of your investment property. No surprise there. But an investor could be in for a real surprise at the amount of capital gains tax he has to pay. Worst-case scenario is that it can be as high as 40% of the profit. BUT, there is a way to defer paying that tax using section 1031 of the IRS tax code known as a 1031 Exchange.


To qualify for this you have to use the capital gains from the sale of your property to buy another "like-kind" property which is of equal or higher value. The properties that you sell and buy must be business related or an investment property such as a rental. Note that the requirement is not "single-family to single-family" or" duplex to duplex." It is like-kind property; property of the same nature or character, even if they differ in grade or quality.



One of the benefits of this is that the investor can often find a property with better cash-flow, or a property with better equity. Also, he can continue to "buy up" and never have to pay the taxes as long as he owns the property.

Just this month in April, I helped an investor sell his duplex and do a 1031 Exchange into a 14-unit apt building. The new property has great cash flow. It had 2 vacancies when we closed escrow, and we had both units rented to good tenants in about a week. This was an excellent win-win for the investor. His capital gains taxes were deferred, and he rolled into a property with a much higher cash flow which will put discretionary income into his pocket every month.

If you are interested in selling your current investment property in order to "buy up" into a property with higher equity or better cash flow, please call me so we can discuss how to make this happen for you.

If you are ready to jump into real estate investment, I can help you find the right property for you.

There are some really good deals in the market right now. Get in now while interest rates are low.

Please call me directly at 408-202-2089.

Geoffrey Gault, San Jose Realtor (R) 408-202-2089 direct
CA DRE # 01129916 NMLS# 346758