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If You Are In It, The IRS Wants You!
In the budget submitted to Congress, The Internal Revenue Service is again requesting an increase in their enforcement funding. The goal is to reduce the tax gap. The Tax Gap is defined by the IRS as “the difference between the amount of tax that taxpayers should pay and the amount that is paid voluntarily and on time. The tax gap can also be thought of as the sum of non-compliance with the tax law.”
For the year of 2001 (which are the latest figures I’ve seen) that sum is 345 billion. According to IRS Commissioner Mark W. Everson; “The magnitude of the tax gap highlights the critical role of enforcement in keeping our system of tax administration healthy.” The IRS is determined to improve tax compliance “through increased and better targeted enforcement and through increased taxpayer service and outreach efforts.”
According to the IRS 80% of the tax gap is due to underreported taxes. “Nonfiling and underpayment of tax comprise the rest of the tax gap.” Audits in 2005 totaled 1.2 million which was a 20% jump from the year before. 04/07, Kazwell Newsletter
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Mortgage brokers are more cost effective then banks for many borrowers according to a joint study done by economists at George Washington and Oklahoma State Universities. The study analyzed loans closed By brokers and “traditional lenders” (banks) between 1995 and 2003. It focused on the “sub-prime borrowers” which are those who have any situation which is considered less than ideal. These situations can include matters of employment, self employment, divorce, credit history, bankruptcy and much more.
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Not all loans are created equal. For that matter, neither are loan professionals. Picking the right person to help you with your mortgage needs can make a difference whether your loan closes or not. This is even more true in these troubled times. We recently received a phone call from a newly divoriced woman trying to buy a home. This was her second attempt. It seems that the loan officer she originally called had pre-qualified her over the phone and she was all set to move. At least this is what she thad been told. On the day of closing, however, she was informed her that her loan would not close. When she called us she was frantic. The very first thing she did was request to be prequalified for a mortgage. but she was told we did not work that way. There are to many variables and we need to know what they are before we start promising. Simply stated, being pre-qualified for a mortgage is worthless.
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It May Be Hazardous To Your Health. . . A new study suggests that it’s best not to have a heart attack on the weekend. It seems that the quality level of health care is lower on the weekends and the incidents of death are greater. 04/2007, Kazwell Newsletter
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Many mortgage professionals have been chastized for over-promoting option ARM loans before the mortgage meltdown. Mortgage brokers have been particularily scandalized over the issue and many indeed minimized the risks while playing up the positives. Nonetheless, not all lenders and brokers were guilty of such wrecklessness. A case in point the the following article which appeared in the February, 2007 issue of the Kazwell Newsletter. Take Caution With
1% or 2.9 % Mortgage Ads I have two words for you, negative amortization. Personally, I find those words to be very scary. I’ll explain in a minute. You’ve probably seen the advertisements touting “1% Interest” or “Pay only 2.9%”. They go by different names and are very popular these days. They certainly sound attractive. . . “Pay as little as $643 (1%) a month on your $200,000 mortgage.” While that is technically true, it is only part of the truth! Even people who understand them well can find themselves in a lot of trouble. They are neither illegal nor immoral and are fabulous for certain circumstances. They can also be very treacherous for many borrowers. Here’s the deal. Let’s say you have one of these mortgages that gives you the option of paying just 1% or $643 on your $200,00 loan. Wow, that’s great. Your mortgage however will be charged at a higher rate, maybe 6.5% interest. The payment due on a 6.5% interest rate on a 30 year loan is $1264. $1264 principal & interest due -$643 1% minimum payment =$621 differance. This is where the term negative amortization comes in.
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So you are thinking about doing some remodeling. That is a great idea. It is part of the fun and work of having your own home. It can be very rewarding and profitable. Depending on what and how you do it, it can also be a mistake. Before you start, it is important that you understand why you are remodeling.
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