Mortgage, Refinance and Real Estate Investing: The Solomon Free Money Hour Radio Room

How Owning Real Estate Can Provide Tax Savings To California Investors

 Be sure you are taking advantage of all government tax incentives that are available to you.  The Solomon Free Money Hour Talk Radio Show, sponsored by Solomon Financial Mortgage & Realty, airing on Angels AM 830, Saturday, May 9th is having guest, David Solomon, from Solomon Ross, Grey and Company live at 1 pm PST.  Solomon, Ross, Grey and Co. are Certified Public Accountants.  In fact, Fred Solomon, Sr. was recently recognized as one of the top 25 CPA’s by Los Angeles Business Journal.  Many of their clients own large real estate portfolios and/or businesses.  

David Solomon will discuss many different tax incentives that are available. Often times people are not taking all their deductions and they do not even know it. Knowledge is power. David Solomon says, “When we review people’s tax returns, the amount of potential tax deductions people are leaving on the table can be eye opening -- especially, when you are talking about large companies.”   “A lot of people don’t know that you can purchase real estate with the funds from your IRA,” adds Solomon. 

There are many tax hiring benefits that people do not know about in California.  A lot of real estate investors do not know how they can benefit by accelerating the depreciation on their improvements (on investment property), and how by owning investment property can benefit you and what “chattel” means. 

Additional tax benefits are the GO Zone bonus depreciation where you can take a 50% first year bonus depreciation of the improvement – the cost of the structure (if you qualify), as well as other ways to reduce your taxes by Incorporating.

You can listen live anywhere in the world to the tax deduction discussion on The Solomon Free Money Hour at Solomon Financial's site, call in during the show live to get your questions answered or e-mail info@sfmdirect.com. For additional information, contact Solomon Financial: 800-811-7709.
www.freemoneyhour.com/the_solomon_free_money_hour.php

If you heard us Sunday on Angels AM 830 you know Interest Rates are Historically low...

Happy New Year!  I wouldn’t be letting you know with our press releases and radio show, if it wasn’t important, not just to us, but for you and those you know -- Interest rates are at all time record lows again but the problem is, is that a lot of you aren’t able to take advantage of these all-time record low rates.  So, if you are having difficulty making your monthly mortgage payment and you won’t probably qualify for a refinance, then you might just want to attend our next workshop on Saturday Jan 17th in Irvine at 9:30am (www.freemoneyhour.com/webinar6.php  ) 

 

We are here to truly help people and inform them of their options.  

If you heard our recent radio show, we went so far as to add some humor with an analogy of how HISTORICALLY LOW interest rates are:

Lisa Solomon asked Fred Solomon, "So Fred, so our listeners understand, you mean interest rates are the lowest they've been -- like since 1910?"  

His reply was, "No, Lisa, like historically low -- like since the birth of Jesus."

"Since Moses? Noah's Ark?" Kerri and Lisa continued laughing.  We had a field day with this one, reportedly.  However, factually speaking, there was no lender financing back then.  That was B.S. (not B.C.) Before Solomon.

"Seriously, folks, as Will Smith said on Oprah: If you are not making other people's lives better, you are not living," Lisa added.

 

There are so many new challenges in the economy today but there are certainly some businesses that thrive in bad times like, for example, doing loan modifications.  I have put together some valuable information in today’s economy. Go to www.FredSolomon.net 

 

We recently sent out a press release announcing our next workshop on the 17th of January.  We talk about Foreclosures, Short Sales, purchasing, refinancing & helping people who are having difficulty making their mortgage payments on time.  You can learn info like why do 95% of the people who write offers on foreclosures & short sales, never get their offers accepted.  What are the 5% doing who are getting their offers accepted? Are they paying too much or are they actually getting a good deal?  

 

Rates are at all-time historic lows.  Please call me and my Solomon Financial team at 800-811-7709 to take advantage of any of this information or you can go to freemoneyhour.com to sign up for our next workshop or we can do a free loan cost analysis to see if it makes sense for you to pay points, fees and/or closing costs. 

 

Do yourself a favor & go to our website freemoneyhour.com and scroll down to the bottom of the page to sign up for our next workshop on the 17th in Irvine on Foreclosures, Short Sales, Purchasing Refinancing, and helping people who are having a tough time with their mortgage payment.  I look forward to reconnecting with you and we hope to see you on the 17th.  We are giving away free copies of our book Put Your Money Where your House is @ the Jan 17th Event.       

 

 

 

Words from Solomon Financial - Free Money Hour Blog

To listen to our recent radio shows, click here: Radio room/Listen

Join our Meetup Networking Group.  It is because of people like you that has made Solomon Financial a success since its inception of helping homeowners from all walks of life.  People ask: "What's going on with Solomon Financial?"  Well, Solomon Financial was founded on doing things differently.  We still remain AAA Rated on the Better Business Bureau -- the highest rating you can get. We didn't do Option ARMS or were not in the subprime market is another reason people come to us for expert, sound advise.  Today, we also help people through education, workshops and more.  Hear us weekly on our radio show with radio and t.v. host Kerri Kasem.

We provide free home loan evaluations and we can certainly help you with your pre-qualification if you are looking to buy your dream home.  Go to: http://www.freemoneyhour.com/loancost.php or call us at (800) 811-7709.  We'd love to hear from you.  If you need marketing help or would like to network with us, visit Lisa Solomon's site.

Rates are down - A Global Market slow down heads the reason for this morning's big stock market drop!

Rates are down - A Global Market slow down heads the reason for this morning's big stock market drop!

Fred's YouTube: http://www.youtube.com/watch?v=bM-9kYL1VDY

Wachovia has just halted trading pending a news alert.  Brazil & Russia halted trading on their exchanges today.  Never before in history.  What are people doing?  Buying Bonds?  You got it!  When they do that guess what happens to interest rates?  That’s right, they come down. 

In many of our last year's (2007) radio show broadcasts, I told you this was going to happen.  People were so afraid about inflation and the dollar dropping and I said no way.  I just don’t see it with $1.4 Trillion of loans adjusting.  Now, they are predicting $1.4 Trillion to go into default by the end of 2008.  There are 250,000 people per month in the U.S., receiving foreclosure notices.  These numbers are growing not slowing down.  They are going to drop the rates by a 1/4 point at the next Fed meeting.

This is a perfect storm for a very negative market.  “A credit crisis & fear in the marketplace” were the words I heard on CNBC this morning.  Interest rates are down. 

The thing that stinks is that because of the liquidity crisis rates are not as low as they should be.  We are currently at 3.48 on the 10 year Treasury as of 9:10a PST.  The all-time record low on the 10 year Treasury of 3.09 was on June 9th of 2003.  Rates were 5.25% for a 30 year fixed at zero cost where we pay for title, escrow, appraisal, credit, all the costs that go into the cost of refinancing.  Right now we are in the low to mid 6’s on a 30 year fixed up to $417,000.

If your loan is above $417,000, well the maximum loan amount is $729,750 until December 31st, 2008.  Starting January 1st, 2009, this loan amount will be reduced to $625,500.  So, give us a call if your loan amount is above $417,000 and lower than $729,750 asap.  The rates are down again.  If your loan is larger than $729,750, the best loan for you would be a 5 or 7 year fixed adjustable.  Oh, by the way, those are the same loans that are causing people to go into Foreclosure.

Some personal friends I know, got into a 5 year adjustable and now can’t refinance because they don’t qualify with full documentation and their property value has dropped.  If you are one of my personal clients, you know I told you to get into a 30 year fixed loan since the day I got into this business in 1990.  In fact, we did such a good job of putting our clients in the correct loan program, that we almost put ourselves out of business because not too many people wanted to refinance into a higher rate.

So, get a 30, 20, 15, or 30 year fixed interest only (where the rate will never change over 30 years but gives you the option to pay an interest only payment for the 1st 10 years).  The payment will change after 10 years, but not the rate.  We call it the Smart Loan and we have info on all these different loan programs on our website.  Which one is the smartest for you?

If it wasn’t for fixing other people’s bad haircuts (getting them into a better loan program), we would have been a victim of this mortgage meltdown -- just like everyone else.

If you are upside down and have no lates on your mortgage, you may qualify for what is called a “Short Pay” refi.  Basically, what the Government is doing is reducing your principal balance to 90% of the current market value (writing down the principal balance).  So if you owe $600,000 and your property is only worth $500,000, the Government will allow you to write down the principal balance to $450,000 (a $150,000 principal reduction).  The tax rules will be very similar to a Short Sale (please consult with a CPA – sometimes it makes more sense to file BK and let your property go into Foreclosure).  However, the Government will participate in 50% of your future equity when you sell.  The rules and guidelines are not quite out on this program, but it is effective October 1st, 2008.  Call us if you are upside down.

If you have enough equity to refinance, it may not make sense to do “short pay” refi.  It might make more sense to do a FHA refi up to 97%.  Call us & we can figure out which situation makes the most amount of sense for you.  You will probably need to call your CPA as well.

I was talking to a client last week.  They bought their home for $140,000 20 years ago.  They currently owe about $800,000.  Their home is worth $750,000 after dropping in value about 35% over the last 18 months.  They took out cash and used their home as a cash register.  They are going to have a Capital Gain when they sell.  A real estate agent suggested they do a short sale to protect their credit.  I told them to talk to their CPA because, if the property sells for $750,000 and they bought it for $140,000, they will have a Capital Gain of approximately $610,000 minus any improvements and closing costs (real estate commissions, etc.).  If you have a capital gain above $250,000 (single) and $500,000 (married), then you will have some tax ramifications unless you can prove insolvency if they end up doing a short sale (please consult with your CPA).  There is also a 1099-c issue as well on a short sale that you don’t have on BK & Foreclosure (please consult with your CPA).  Please call us so we can help direct you & tell you what your best options are.

If you are doing a loan modification, please make sure you know which lenders will / will not send you a 1099-c.  I want to tell you right now, that WAMU will do what is called a “Lein Release” and they won’t send you a 1099-c at the end of the year.  What they will do, is make you sign something a note modification which allows them to come after you up to 10 years and collect all that money that they forgave.  Oh, and there are industry vultures that buy this paper and are looking at you to see if you hit the lottery and become solvent so they can come collect from you for the next 10 years and if they come after you, guess what, you will lose.  So, be careful & have your loan modification documentation reviewed by a CPA or Tax Attorney who understands Real Estate.  Call us and we can help you with this as well.

These are incredibly history making times, and there are incredible opportunities out there.  We are going to be bringing some incredible foreclosure opportunities to our database of over 15,000 clients.  Take advantage of these times if you are financially capable.  Come to our next workshop on October 23rd.  It is a lunch & learn.  Kerri Kasem (Casey Kasem’s daughter) is going to be speaking with us (she is extremely positive & her energy is magnetic) – http://www.kerrikasem.com. Of course, I will sharing my 18 years of real estate knowledge with you as well.

You will hear me ask questions like, how many of you think it is a good time to buy residential real estate right now?  How many people think that real estate prices are going to drop over the next one to two years?  Wait, you are telling me that it is a good time to buy Real Estate but home prices are going to drop?  If you are paying cash, I say don’t buy right now.  However, if you are financing the property, then take advantage of historic low rates.  We are 1% away from all-time record low rates of June of 2003.  We will go over an article I wrote, called The Cost of Waiting, which will change your perception in 2 seconds, guaranteed!

You can call our office to sign up for this event.  There will be a charge of $49 and lunch will be served.  I am so excited about this event because of all the opportunity available in this marketplace.  If you have or haven’t come to one of our events, you DO NOT want to miss this event.  Give us a call to sign up for this event.

Your ARM-Are you on a Ticking Time-Bomb?

Are you on a Ticking Time-Bomb with Your 3/1, 5/1, 7/1, 10/1 ARM?

Read THIS Important Decision to Make

~ By Fred Solomon

Writing articles on Current Economic News over the past 17 years, this article hits home for a lot of people. We have seen interest rates creep up to their highest levels in three years.  If rates continue to climb, what do you think is going to happen to home prices, despite what the economists predict and other market forecasters are saying?  In my opinion, there is no way home prices will stay stable with increasing interest rates, but I don’t have a crystal ball either.

Borrowing an example from my article “3/1, 5/1, 7/1, 10/1 Fixed Rate Adjustable Rate Mortgages (ARM’s) Are These the Loans For You”, I analyzed what would happen to the payment on a  $350,000 at 5.25% on a 5/1 Interest only ARM and wrote, “Let’s say rates do happen to go up 2% after the loan becomes an adjustable 5 years from now (which would still be 25 year historic lows by the way) what would happen to the payment and  how would higher rates 5 years from now, affect housing prices in 5 years?”  These are two very important questions that people need to take a close look at, especially, right now, with rates heading up.   So let’s take a close look at a $350,000 loan balance at 5.25% on a 5/1 interest only ARM and then, say, 5 years from now the rate goes up to 7.25%, do you realize that the payment would go up $998 and some change?  The reason being is that the 1^st five years most people who take those 5/1 ARM’s make the interest only payment so the balance does NOT go up or down – it stays the same.  After the 1^st five years, you lose the interest only option and now you have to start paying principal and interest and the loan is now amortized over 25 years instead of 30, hence causing that payment to go up $998 and some change. 

A couple important questions to consider:

1. “Can you afford that extra $998 today or do you want to for that matter? Could you afford that extra $998 five years ago?”

2.  Now, here’s a bigger question to think about, “If you can’t afford it today or you couldn’t afford it 5 years ago, how the heck do you plan on affording it 5 years from now?”

Do you see the potential for some more foreclosures here in the near future?

Another important question:

3.  “If rates are 2% higher in 5 years, what do you think will happen to home prices 5 years from now?” 

It is more than likely that higher interest rates will cause home prices to drop.  That is a possibility.  If that is true, in 5 years, not only will you have a higher monthly payment of $998 (just double that on a $700,000 loan – check this) but your home will be worth less – not a very good situation to be in, especially if you can’t afford the payment.  This is where one would say, “I can predict more foreclosures happening.”

To anyone who has these types of loans PLEASE – PLEASE (this is intentionally typed twice) do something about this now!  Short-term rates are going up! 

Here’s another question to ponder:

4.  “When should you lock into a fixed rate, before, or after rates go up?”

You’ll kick yourself that you read this material and then didn’t do anything about it, possibly, down the road.  The problem is that you probably aren’t looking to raise your monthly mortgage payment today and I totally understand that, but at what cost -- to potentially have a foreclosure on your credit report?  I’m sorry, but that just doesn’t make sense! 

Don’t worry, there is a solution!  A lot of my clients refinance into a 30 year fixed with a 10 year interest only option in order to keep their payments low for the first 10 years.  This loan has an interest only option for the first 10 years, but the loan remains fixed for the entire loan period and best of all, the rate will never change over the 30 year period.

This loan is a potential lifesaver today based on all these darn loans people are getting themselves into.  I am not here to scare you, just inform you, and best of all, you can get into one of these loans at zero cost.  You need to address this issue if you have one of those 1% start rate loans, one of those 3/1, 5/1, 7/1, or 10/1 interest only fixed rate ARM loans, because if you don’t, the loan will potentially FORCE you to make some choices down the road that you may not be prepared to or want to make at that time, unless you act now!  I don’t think I can make it any clearer than that.