These dwellings are having their shining moment, thanks to an increased demand by both first-time buyers and Boomers alike! Both appear to be seeking the appeal for walkable communities in which the amenities are grand, you can get a great bang for your buck, and often less maintenance (big perk for both busy, young families and Boomers alike!).
Nationally, the number of townhouses built last year increased 18% percent over 2014. Here on the Island, the number is even more incredible!
70 townhomes were sold between September 15, 2015 – September 15, 2016
44 townhomes were sold between September 15, 2014 – September 15, 2015
That’s a whopping increase in townhome sales! The long-run prospects for townhouse construction are positive given the large numbers of homebuyers looking for high density “neighborhoods,” near the action (eh em, the new Marina District perhaps?) that offer proximity to the happenings along with community amenities.
Perk #1: Own That Land, You American Dreamer You!
What’s the main difference between a condo and a townhome you ask? It’s simple. As a condo owner, you own only your unit, nothing below or above you. As a townhome owner, you own the planet Earth beneath you, and the sky above you. And, as the Homeowners Association will nearly always maintain the complex grounds, you can be a lazy bum and still have a nice yard, albeit likely small.
Perk #2: That HOA Though…
So you own a nice patch of grass, or maybe a cute pom pom bush. Your HOA will take care of it! Many HOAs will even allow owners to plant that desired petunia border you’ve always dreamt of, just ask. So long as you pay your monthly dues, your grass will be mowed, your exterior painted, your roof re-shingled, your pool cleaned, your exterior insurance paid, and the list can go on. Now, each HOA will be different, and each will have a list of items they maintain and don’t maintain, so make sure you know what’s agreed upon and who does what in the yard. As many prefer to keep the fronts looking manicured and uniform, you may have to plant your Sneezewort Yarrow in the back.
Perk #3: Don’t Ever Leave!
When you buy a townhouse, it often comes with a community, and that community has amenities. Some developments have a pool, a laundry room, possibly boat slips (if on the canal) maybe a recreational room, etc. You may not have to leave but to go do your grocery shopping! This can be very appealing. And as an owner, you own a percentage of each of the common facilities.
Perk #4: Save Some $$
Although this isn’t a steadfast rule here on Padre, townhouses can be less expensive than single-family residences. Townhouses sometimes have the fancy upgrades built right in that you otherwise couldn’t afford in a house, like granite countertops, high-end appliances, or eco-friendly materials. And although they are often multilevel that share a side wall or two with another unit, they can have as many bedrooms and bathrooms as will fit in the floor plan, just like a single-family house. The point is, you can get a lot of the same stuff in a townhouse that you can find in a regular house, but you typically pay less for it.
Perk #5: Tight-Knit Community
Having Mrs. Kravitz nearby isn’t always a bad thing! With units that are close, and parking areas that may be shared, it’s possible that you and your neighbors see and know what’s going on with one another. As most townhomes on the Island do not allow short-term rentals, the neighborhood is often more stable in terms of less turnover and more face familiarity. This can be desirable for the young family who needs neighborly help watching kids, or the more “medically fragile” older couple who may find peace of mind knowing that their neighbors could check on them if they go sight unseen for a day or two. Travel a lot? Now Nosie Nelly doesn’t seem so bad, as she’ll be able to stink eye anyone who looks out of sorts lurking around your townhome.
With 84 townhomes currently for sale on the Island, maybe it’s time to pay them some attention!
You got your home under contract! You’re so excited, a buyer loves your home as much as you do! Then, inspections are set up. The three inspections typically performed on a home here are the general inspection, the pest inspection, and the plumbing inspection.
It’s this last one that seems to be an inspection that, as of late, has been causing some unease among sellers.
Fear not, sellers! The truth is, this is not at all a scary or intrusive test. But it is an important one. The only way to calm a fear or unease is to be well informed. Here I’ll break it down so that when the time comes, as either a buyer or a seller, this test is nothing to think twice about.
Definition: A hydrostatic test is a way in which pressure vessels can be tested for strength and leaks.
Don’t let the word pressure fool you. There is a common misconception that pressure is put on your system during this test. That is far from the truth. What the plumber does is quite simple. They will find your sewer cleanout/sanitary drain pipe and insert a testball/balloon into the piping and inflate it near the perimeter of the foundation. Next, they’ll simply fill the system up with water. They will then find a commode and/or shower on the lowest level and monitor the water levels. If the water maintains its level (they’ll typically watch for roughly 15 minutes) then there are no leaks! IF the water happens to fall, there is indication of a leak somewhere in the system.
Leaks often occur when foundations have shifted. Because we are built on sand here on the Island, it’s relatively rare to have a failed hydrostatic test as foundations move less on sand. In the case of a failed test, the next step is to find where the leak actually is. That test is slightly more involved, but still not dangerous to the system. An Isolation Test is what should be scheduled next, and this test finds the actual source of the leak. It’s smart to have a different plumber perform this test to eliminate the possible suspicion of an intentional failed test to get more business (as the isolation test is far more expensive).
The entire inspection/hydrostatic test takes roughly 20 minutes. Like a ninja in the night, you may not even know they were there! Our local plumbers are knowledgeable, true professionals who are happy to answer your questions or concerns.
Note: This test typically costs around $85, and only a licensed plumber is to perform this inspection.
Did you know? A hydrostatic test is DIFFERENT than a static test. They are sometimes accidentally interchangeably used in casual conversation regarding the plumbing inspection, and there’s where some confusion can occur in terms of whether pressure is put on your system during a hydrostatic test. A STATIC test is what indicates pressure, and you can do it yourself – it’s a gauge that you can purchase at any hardware store that you screw on to your hose bib. Then, turn the water on and the gage will tell you how much pressure it is outputting. Don’t let a static test be confused with a hydrostatic test.
Your home is likely your largest asset, and therefore, deserves special attention at tax time. Be sure you’re handling them correctly this year, using these tips!
Deduct from the correct year:
Here, we’re billed in arrears on our taxes, which can be confusing when taking the tax deduction. You’ll want to be sure to enter the amount you actually paid in that tax year, no matter what the date on your tax bill says. Because of this, it can be easy to confuse your payments and actually claim the incorrect amount.
Note: If taxes were paid from your escrow account, do not just deduct the amount escrowed. That’s because sometimes the amount you pay from this account can be a little bit higher or a little bit lower. Your lender will align the two to make sure they end up matching.
For example: Your property taxes were $6,000. Your lender collected $5,800. Or, maybe your lender collected $6,200. You’ll deduct $6,000, the actual taxes paid. This number will be the amount noted on your Form 1098.
Deduct your mortgage interest:
A home mortgage interest deduction allows you, the taxpayers who owns your home, to write off any interest you paid on a loan secured by your home (main home or a second home). The loan may be a mortgage, a line of credit, or a home equity loan. This allows you to reduce your taxable income by the amount of interest paid on the loan.
Note: You must file Form 1040 and itemize deductions on Schedule A (Form 1040), and prove your mortgage is a secured debt on a qualified home in which you own.
Exceptions: You cannot deduct mortgage interest on a mortgage that is over $1,000,000, or you have over $100,000 in home equity debt.
If you’ve refinanced, you’ll be deducting points over the life of your new loan (as opposed to your regular mortgage, where you’ve been deducting points based on what you paid your lender to secure your mortgage over the course of your loan’s life – 15 years, 30 years…)
For example: Let’s say you paid $3,000 in points for a refinance of 30 years. You’ll divide 3,000 by 30 and pay $100 a year.
If you made any energy improvements, such as installing solar electric, solar water heater, geothermal, any energy-efficient systems…you may be able to take a 10% tax credit up to a certain dollar amount. However, these are one-time credits. If you claimed your new energy-efficient windows last year, you can’t do it again.
Note: See Form 5695, Residential Energy Credits
Don’t forget to:
- Keep track of your home-related expenses.
- Track your capital gains (If you sold your main home last year, you’ll have to pay capital gains taxes on your profit from that sale). Keep your receipts as long as you own the property plus three years.
- Deduct your home office (If you’re eligible, you can deduct $5 per sq. ft. up to 300 feet, or up to $1,500 a year).
- Keep your mortgage payoff statements forever. You never know when you may need that proof.
- Keep your appraisal or valuation used to calculate depreciation as long as you’re the owner plus three years.
- Keep your property tax payment, year-end mortgage statement, PMI payment, and energy tax credit receipt for three years after the due date of the return showing the deduction.
It’s no longer just a refinance tool, but now also for use with purchases!
First let’s review what a reverse mortgage is. It’s a loan available to homeowners who are at least 62 years old, where instead of making monthly payments to a lender, the lender makes payments to the borrower. The idea is to aid elders and retirees who have wealth in their homes, but have limited income, to cover their basic living expenses and health care expenses.
BUT there is a new program that we should know about. It is called the Home Equity Conversion Mortgage (HECM) for Purchase product. This can greatly enhance the real estate service options we can offer our senior customers who would like to purchase a new home while still maintaining their retirement goals. Many mortgage companies in our Coastal Bend now have departments offering this option, which could be valuable for many seniors looking to relocate closer to family members, downsize, upgrade, or move to an active adult community.
This is an exciting option for qualified homeowners who are purchasing a home. This mortgage option allows homeowners to keep the home in their name while not having any monthly payments.
If you are 62 or older, will use the home as your primary residence, have no federal debt delinquency, can pay annual property taxes and homeowners insurance, vow to keep the property presentable, the property meets FHA guidelines, and agree to participate in a counseling session, YOU are qualified!
So how does it work?
When bundling the HECM with a new home purchase, the buyer can buy the property by mixing the HECM loan proceeds along with the proceeds from their previous home sale and/or savings to complete the transaction.
For example: Charlie is looking to downsize. He receives $700,000 from the sale of his home. He buys a home for $300,000. HECM loans Charlie $160,000 ($10,000 to cover closing costs). Charlie puts $150,000 as his downpayment. The remaining $400,000 goes straight into Charlie’s pocket!
- It involves financing that doesn’t require monthly principal and interest mortgage payments
- It includes increased purchasing power for those who are upsizing or downsizing
- It has a streamlined closing process as the buyers are purchasing and getting a HECM all in one transaction
- It may include supplemental income to support a better retirement, including a growing line-of-credit
Just like other loans, the HECM loan must be repaid. But it is unlike traditional loans in that this repayment isn’t due until the owner has sold the home, no longer uses it as their primary residence, or passes away. When one of these scenarios occurs, the HECM and any accrued interest and mortgage insurance must be paid, but the perk is that the homeowner will never pay more than the home’s market value at the time of repayment.
So run, don’t walk! Your dream retirement home is waiting…