Arizona state refunds

It may seem unusual to report state tax refunds as income on your federal tax return, but it’s important if you itemize deductions. Because state taxes are deductible on federal returns, a prior-year refund changes your overall liability retroactively. So, paying tax on a refund may seem a tad odd, but it corrects an “over-deduction from the previous year,” the National Association of Enrolled Agents says.

401(k)s

Workplace 401(k) plans offer a solid tax incentive for participants, allowing them to exclude contributions from current taxes and to enjoy tax-sheltered growth of investments.

Fidelity Investments says the average balance among 401(k) accounts it oversees rose to a record $71,500 in 2010. For investors who participated throughout the decade, average balances vaulted to $183,100, from $59,100 in 2000.

Americans are getting wealthier: Americans’ wealth increased 3.8 percent in the final three months of 2010, the Associated Press reports. Most of the growth is attributed to gains in stock portfolios.

Overall, household net worth increased to $56.8 trillion last quarter, despite a drop of 1.6 percent in real estate holdings, the Federal Reserve reported Thursday. Net worth–which is the value of assets such as homes, checking accounts, and investments, but minus debts such as mortgages and credit cards–has increased two consecutive quarters after dropping last spring.

More gains in wealth could prompt Americans to spend more and strengthen the overall economy, experts say.

Meanwhile, companies are also starting to feel a little more rich. The boost to companies’ cash-flow is expected to bring about a boost to job hiring in the coming months.

There is new hope for struggling homeowners who have lost their jobs.Mike Trailor is director of Arizona’s Housing Department.Trailor said they’ve just kicked-off a new homeowner assistance program, with the help of $36 million in federal funding.The program targets unemployed homeowners, who would get their monthly mortgage paid for up to 24 months, if they qualify.”It’s a bridge to get you from unemployment, to hopefully employment to where you can sustain your home ownership,” said Trailor.However, like many of the recent federal homeowner assistance and loan modification programs, this one has some potential problems.CBS-5 has learned that a homeowner who took out a second mortgage for anything other than purchasing the house isn’t eligible for the unemployment-mortgage assistance program.Trailor said discussions are now under way to make the program’s requirements more flexible.”Whether it’s with a percentage of the purchase price, or money used for medical purposes or home improvement,” said Trailor, “we’re trying to make sure the program serves as many people as possible.”Money to help Arizona’s unemployed homeowners comes from $250 million Arizona was given by the federal government last year, as part of the Hardest Hit Housing Program, which helps homeowners avoid foreclosure.

Plenty of signs point to the housing market finally bottoming out and moving into rebound mode this year, experts say in a recent article in The Wall Street Journal.

Investors, who were burned when the housing bubble burst in 2006, are back on the market, betting on a rebound, and snagging up houses and condos in all-cash deals.

What’s more, housing is at the most affordable it has been in decades nationwide — when home prices and average incomes are taken into account, according to analysts at Moody’s Analytics. The cost of a house is equal to about 19 months of income for an average family, which is at the lowest level in 35 years. (Prices generally average nearly two years of pay.)

“Pricing is down so much in some markets that when you analyze renting versus owning it makes much more sense to own,” Michael Larson, a real-estate analyst at Weiss Research in Jupiter, Fla., told The Wall Street Journal.

Housing prices likely will bottom in 2011, says Scott Simon, a managing director at the money-management firm Pimco in Newport Beach, Calif. While he expects housing prices to possibly drop another 5 percent, he says that is a small amount when in some markets prices have dropped by half or more since housing prices started falling in 2006.

Scottsdale realtors, Real Living Success Realty and the Gary May Group, invite you to invest in Scottsdale, Arizona.  Scottsdale boasts national and international renown as one of largest, most desired, and fastest growing communities in America. Yes, Scottsdale epitomizes the premier location to invest in real estate.

Aware of the current challenges in today’s real estate markets, Real Living Success Realty and the Gary May Group tout Scottsdale as the answer to those challenges.  They know investing in Scottsdale is a smart move in 2011:

Residents love Scottsdale’s resort-like feel!  The beautiful tranquil environment and the unmatched temperate weather produce year round outdoor fun. With a climate as excellent as this, there is no better place to live.

Outdoor living is unparalleled! Scottsdale offers spectacular activities like hiking and/or golfing. Numerous walking paths, parks, lakes and recreational areas thread throughout the city for year round family activities. Those who enjoy snow and cooler weather hobbies need only travel two hours outside of Scottsdale for winter sport enjoyment.

Rightly dubbed one of the most “livable cities” in America, Scottsdale delivers on that claim.  More than 1000 new homeowners come to Scottsdale every month. That is why the Scottsdale/Phoenix area ranks the lowest in the investment risk index!

Real estate investment abounds in Scottsdale! Single family homes, condominiums, town homes, and patio homes are many of the great choices available to call home.  For those seeking business investments, Scottsdale offers a wealth of commercial property choices for your business to call home.

Our grand homes and estates add to the appeal of living here.  Further, our numerous, well-planned communities create a solid infrastructure of health care, education, and entertainment facilities.

What about the Scottsdale job market? The presence of many national and international companies makes job potential yet another strong reason for investing in Scottsdale.

Yes, Scottsdale’s ever increasing population strengthens real estate investment returns. Appreciation rates make your real estate investment in Scottsdale, the best “bank for the buck.”

Let us help you invest in Scottsdale. For more information contact Real Living Success Realty and the Gary May Group

A new Federal Reserve rule that takes effect April 1 is expected to lead to lower costs for borrowers, but some experts say it’s going to hurt the mortgage industry.

Under the new rule, borrowers who get their mortgages through brokers likely will pay less for services and brokers will be required to offer borrowers the lowest possible interest rate and fees that they qualify for. Most banks and other direct lenders, including some mortgage companies that operate like banks, are exempt from the rule.

The new Federal Reserve rule–the “Loan Originator Compensation amendment to Regulation Z”–is to help prevent borrowers from being steered into high-cost or risky loans.

Mortgage brokers used to earn more money on a loan the higher the interest rate and points. But the new rule covers how a loan originator is paid, setting a fixed commission and no longer tying the amount to the loan terms.

Some in the mortgage industry aren’t happy with the new rule, saying it makes mortgage brokers less competitive against the big banks.

“I will now get paid the same amount to process a plain-vanilla loan as I will a complex loan of equal size that requires more work,” says Mark Yecies, an owner of SunQuest Funding, a mortgage broker and lender in Cranford, N.J.

Officials with the National Association of Mortgage Brokers also have expressed concerns, saying the rule would likely put a lot of independent brokers out of business.

The Obama administration announced on Friday plans to reform the housing finance market, including winding down government-controlled mortgage giants Fannie Mae and Freddie Mac and turning most of the market over to the private sector, as well as requiring larger down payments. The White House proposed three approaches to replacing Fannie Mae and Freddie Mac rather than offering up one final plan.

The administration’s proposal is expected to reshape the way Americans buy and own homes.
Among the plans outlined in the administration’s “white paper”:

▪ Shrinking the size of the portfolio of mortgages held by Fannie Mae and Freddie Mac by at least 10 percent a year.
▪ Creating an insurance fund for mortgages, supported by premiums paid by lenders.
▪ Winding down government subsidies of mortgages by raising the fees charged to cover the risk of default.
▪ Raising fees for borrowers and requiring larger down payments for home loans.

The administration also recommended measures to make government-backed mortgages more expensive in order to allow the private-sector to better compete in the mortgage market. For example, it called for reducing by this fall the size of mortgages Fannie and Freddie may purchase from $729,750 to $625,500.

Raising Rates?

Some critics of the proposal are concerned that the administration’s overall plan would raise mortgage rates.

Treasury Secretary Timothy Geithner said that mortgage costs likely will rise in the coming years, as government support is withdrawn and the private sector takes on a bigger role. Credit Suisse has estimated that rates on a 30-year fixed mortgage may rise as much as 2 percentage points if the government withdraws its backing of Fannie Mae and Freddie Mac.

Higher borrowing costs could be a thorn for a recovering housing market, since interest rates greatly affect how much buyers can afford, experts say.

“Reducing the government’s involvement in the mortgage finance market is necessary for a healthy market, but should not be done at the expense of the economy or home buyers,” NAR President Ron Phipps said in a public statement in response to the Obama administration’s plan. “Any proposal for increasing fees and borrowing costs beyond actuarially sound levels will only make it harder for working, middle-class individuals to achieve home ownership, and only the wealthy will be able to achieve the American dream.”

NAR’s economists estimate that a retreat of capital from the housing market will negatively impact the economy too. For every 1,000 home sales, 500 jobs are created for the country, NAR notes.

Geithner estimates that reducing the government’s role in the mortgage market may take five to seven years for the transition.

“Most people in Congress understand that this is a very political, contentious issue,” says David Berson, a former Fannie Mae chief economist. “It’s going to be a very volatile ride as we move toward what ultimately will be the future of Fannie and Freddie. It’s hard to know what that’s going to be.