REPOST: Nearly half of Los Angeles adults double up on housing, study finds

Many adults in Los Angeles share households with a non-relative to make housing costs more affordable. But economists believe that many of these house-sharers will likely move out to live on their own as the economy improves. Los Angeles Times has the full story below:

Image Source: latimes.com

When it comes to doubling up with roommates, crashing at your cousin’s or staying at your parents’ house well into your 20s, there’s no place like Southern California.

Nearly half of all working-age adults in Los Angeles and Orange counties live in a home with another adult who is not their spouse — a higher percentage than any other big city in the country, according a new report by real estate website Zillow. In second place: the Inland Empire.

Economists at Zillow crunched U.S. census numbers and found that 47.9% of adults in metro L.A. lived in “doubled-up” households in 2012, a number that has grown rapidly — up from 41.2% in 2000 — as the recession and yo-yo-ing housing market have pushed more people to share apartments.

“You’ve got a lot of households that are blending together,” said Zillow economist Skylar Olsen. “They’re doing that to make housing more affordable.”

That’s especially true in Southern California, where relatively high costs and relatively low wages combine to create what is, by some measures, the least affordable housing market in the country, especially for renters. Add in large immigrant communities for whom — at least in some cases — inter-generational living is more common, and L.A. has an exceptionally high share of shared households. A Times analysis of census data found that more than half of the nation’s most-crowded census tracts are in L.A. and Orange counties.

As the economy improves, Olsen said, at least some of those house-sharers are likely to move out on their own, probably to rental apartments. That’s going to create a lot of demand for new housing. If the number of adults per household returned to 2000 levels, Zillow estimates that there would be an additional 315,473 households in L.A. and Orange counties — a 7.5% gain — and 162,474 more in the Inland Empire, up 12.6%.

“There’s a lot of potential energy that’s ready to spring out,” Olsen said. “That’s one of the reasons we’re seeing multifamily construction pick up. There’s clearly room for developers to make some money by providing more apartments.”

However, in a market such as Southern California, it’s an open question whether they can provide them fast enough. L.A. County is short nearly 500,000 affordable apartments already, according to a study earlier this year by the Southern California Assn. of Nonprofit Housing, and homebuilding remains well below pre-crash levels. Los Angeles Mayor Eric Garcetti last week called for 100,000 new units of housing in the city by 2021, but details on how he hopes to get even that many built so far are scarce.

If nothing else, the demand that a stronger economy is expected to uncork should help spark more construction, Olsen said, by making it easier for projects to pencil out a profit. As they get built, she predicted, more people will move out on their own. That, in turn, may keep a lid on rents that have been climbing fast, due in part to tight supply.

“One of the beauties of free markets is that they adjust,” Olsen said. “You wouldn’t expect to see more renter households until supply comes back. When it does, it’ll slow the growth in rents, at least.”

Marian Khosravizadeh helps clients find properties to buy or rent in Woodland Hills and other surrounding communities in Los Angeles. Get the up-to-the-minute real estate updates from this Twitter account.

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7 Ways To Match Your First Dream Home To Your Budget

Purchasing your first dream home can be exhilarating. However, finding out its cost could yank you back to reality. This Trulia article on Forbes.com however provides seven ways on how to buy your first home within your means.

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You are ready to buy your first home. Congrats!

Although you haven’t found it yet, in your mind, it’s perfect! Open floor plan, granite countertops, a walk-in closet … the works!

Not to burst your bubble, but let’s take a step back. You are buying your very first home. It may be great, but chances are it won’t be your dream home. In fact, you may be one or two more home purchases and moves away from your “dream home.” And that‘s okay. The key to finding the right first home purchase for you is striking the right balance of a home that comes as close to your dream home requirements as possible, but still stays within your budget.

Starter Home

The term “starter home” exists for a reason. At the height of the housing market craziness, and right before the bubble burst, many first-time home buyers jumped over the starter home and into a bonafide dream home. Now, we are all painfully aware of how that all turned out. You have to accept that your first house is probably not going to be the one you’ll live in for the rest of your life. That’s okay! And the thought of what lies ahead should be exciting! When you think about the fact that your future holds salary increases and smart savings plans, the opportunity to move up becomes more real. When you’re ready to jump up to a larger, dreamier home, this first home can provide you with the funds for that purchase.

House to Condo

Yes, you are going to need to narrow down your search at some point, but as you begin to play with the choices, keep an open mind. You may be thinking about a house, but there might be a great condo with a cool balcony, a stunning view, and great amenities that could be just as dreamy. For your budget, a condo or even townhouse might get you closer to your dreams than a single family home.

Older vs New Construction

According to a recent Trulia trends report, twice as many people prefer new homes over existing homes.“New” means new construction, or homes purchased in pre-construction while “existing” means a house someone else has lived in. In many parts of the country, especially the East, Northeast and South, many of these “existing” homes are homes built anywhere from the 1920s – 1970s. For the same price, 2 in 5 of Americans (41%) strongly prefer to buy a newly-built home over an existing home. However, most new construction homes could cost you up to 20% more than a comparable older house. Buying an older home could add up to big savings and allow you to get a bigger piece of the “dream” than a brand new one.

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The Fixer

I am a huge proponent of buying a home that you can add value to, rather than paying the bigger price tag to someone else who had the work done for you. Offsetting a big price tag with some sweat equity is a very smart move. In addition, you can get much more home for your dollar, and have the option to fix up and improve it as time goes on and as you have the available cash to fund the renovations. Plus, all that original older architectural detail that comes with many fixer-uppers is a dream in the making.

Balancing Dreams and Location

You now are pretty clear about how much you can afford and the price range you need to consider. Now comes the major tug-of-war between where you want to live and what you can actually afford. Sure, we all want to live in the swankiest part of town. But your budget may not support that choice. Be prepared for this “price vs. location” battle. I warn you, it could get ugly. You can live in a slightly less desirable neighborhood, but you can’t live in a house you can’t afford!

Transitional Neighborhood

Buying in a transitional neighborhood for your first house allows you to get into the market relatively cheaply and build some equity. It may not be your dream ‘hood, or the seaside beach community you want to retire to, but clearly, it’s not going to be your ultimate dream home. If you can identify an area on the upswing, you have secured yourself lots of potential wealth building. The neighborhood may be a little rough around the edges now, but if you have gauged its transition potential correctly, in three or five years you may be sitting in the middle of a hot new trendy area, where home prices have risen substantially!

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Knowing The Must-Haves vs. Should-Haves

What makes something about a house a “must-have” and another element a “should-have?” Well, the must-have is essential in your new home. For example: “We now have a newborn baby, so we must have a two-bedroom house.” However, a should-have is not essential and it may get nixed out of the mix if price becomes an issue. For example: “We should have a three-bedroom house. That way we can save one room for guests or for a home office.” That third bedroom is not a must-have and you could or may have to live without it to get into a house you can afford. Square footage is also a must-have. For a first-time home buyer, 1,600 square feet could be a realistic minimum must-have, whereas 2,300 square feet is a should-have. A nice, clean, functional kitchen is a must-have, but a gourmet kitchen with double ovens and Viking stainless steel appliances is sadly just a should-have.

Knowing your dream house must-haves vs. should-haves really helps you prioritize, because on the ultimate hunt for your dream home — compromises are going to have to be made.

Happy hunting!

Real estate professional Marian Khosravizadeh helps first-time buyers secure their dream home without drying up their finances. Check out this blog for more tips on property buying and selling.

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REPOST: Top 10 Real Estate Investor Mistakes

Planning to make the jump to real estate investing? Heed these most common real estate investment mistakes to avoid low or negative investment returns and bankruptcy.
 

Image source: foxbusiness.com

Image source: foxbusiness.com

 
Many people have learned that investing in real estate is not as easy as it seems. At least that is true for investors trying to get a fair deal.
For those of us who have been investing for years, and learned many hard and expensive lessons, here are issues you should think through, understand, and consider before jumping into the real estate investing arena.
 
These are in no particular order, since an individual would be smart to read and think through each and every “lesson learned” in the list.
 
1. Not Penciling Out Your Real Estate Deal
 
This describes about 80% or more of real estate investors.
 
They don’t take the time to put pencil to paper and make sure that the rental revenue from the property will be more than all the property expenses – and leave some monies left over to return to one’s bank account.
 
A negative cash flow property will virtually guarantee a measly – at best – investment return on your money.
 
2. Not penciling out your deal with conservative numbers
 
For those few fortunate ones who do know how to pencil out a deal, many use unrealistic numbers. They overestimate rental income, underestimate the vacancy, then underestimate the expenses associated with operating a property. That turns into low or negative investment returns for the property owner.
 
3. Getting renovation costs wrong
 
Most buyers have little idea how much it costs to renovate a property. They listen to the home inspector, their real estate agent, and just throw out a number like $25,000 for everything. Then they start getting bids for the work and quickly see it will actually cost $80,000 for everything. Word to the wise: Always do a lot of homework and be very conservative in your renovation budget estimates.
 
4. Underestimating renovation time
 
Additionally, inexperienced investors believe a good renovation can be done in 30 days, or 60 days. Many times it takes much longer to finish these projects than originally estimated. As a real estate buyer, you should talk to others who are experienced to get a realistic expectation of the time involved in a property rehabilitation.
 
5. Thinking something can only cost ‘that much’
 
It never does. It always costs more; much, much more. So whatever the expense, renovation, service, contract, capital item, etc., chances are it will cost more than you think.
 
6. Thinking that stocks, bonds and real estate are all comparable investments
 
People often say they want to buy real estate to get better returns than their stock, bond or bank account can provide. Real estate is a unique asset that comes with clogged toilets, challenging tenants, nebbish neighbors, etc. It’s not an asset where you can invest and just look at an account statement every few months like you could with a stock, mutual fund or bond. Owning rental properties is a business, it can be time consuming and stressful. Make sure that makes sense for you before you buy.
 
7. Thinking it’s a ‘turn-key’ real estate deal
 
Earning money with almost no work on the investor’s part? Never! Not going to happen!
 
8. Believing that flipping properties is investing
 
Flipping is “speculating” for most real estate buyers. Unfortunately, most lose money. Sure, it looks easy on TV and those shows are fascinating! I personally enjoy watching them; but they are not realistic. Not everything you see on TV or the Internet is true you know…..
 
9. Thinking that real estate is low-risk
 
There are all kinds of risk issues that come along with owning real estate. Many an investor can mitigate and/or remove some of those with prudent behavior and the proper due diligence. Most investors do not do any of that, leaving them exposed to a myriad of items and issues that can and sometimes do become financially painful.
 
10. Believing what others say about their ‘profitable’ real estate investing acumen
 
There is also no way to verify what someone else is telling you about how they did on their real estate investments – unless they show you their tax returns and credit report. But since people love to boast, we often only hear about the winners, not the losers. Many times the statements from those supposed “winners” are embellished with questionable claims. Be careful, do your own homework, but verify your own conclusions.
 
Those are many mistakes that investors can make. Some are very challenging to mitigate. Experience will teach you a multitude of lessons over your real estate investing career. Just try to avoid the big expensive ones that could clobber you; and end your investing career before it even gets off the ground.

 
Marian Khosravizadeh is a realtor servicing clients in the Los Angeles County and other surrounding communities. Know the ins-and-outs of the real estate industry here.

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REPOST: 6 tips to win a bidding war for your next home

Having multiple buyers to contend with may make buying your dream home a challenge. Donna Fuscaldo of Bankrate.com writes how you can win over other buyers in a bidding war.

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The bidding wars are back. While not every local real-estate market is experiencing bidding wars, some homebuyers find themselves competing for houses because not many are for sale in their markets. The result? Many homes have 10 to 15 offers the day they go on the market, says Susan Paul, owner of Better Homes and Gardens Real Estate Move Time Realty in Scottsdale, Ariz.

To compete in a bidding war, buyers need to prepare financially for the home purchase. They have to be familiar with property values in their target neighborhoods. And they must know what they want.

While offering the most money might seem like the best way to win a bidding war, sellers don’t always choose the highest offer. Instead, sellers often prefer offers that are most likely to go through and that meet their conditions. Here are six tips to increase your chances of making the winning offer in a bidding war for the house of your dreams.

1. Have a lender on speed dial

“Too many buyers talk to a lender and start looking at homes at the same time,” says Eldad Moraru, a real-estate agent with Long & Foster Real Estate Inc. in Bethesda, Md. “You need to have everything (financial) done before you begin to look.” Then you are more likely to win a bidding war.

He suggests selecting a lender and a loan, completing everything the lender requires and having a preapproval letter in hand — all before submitting an offer.

“You need to make sure your lender is ready to issue an approval letter specific to the property at the drop of a dime,” Moraru says.

Paul recommends keeping a file folder constantly updated with your most recent pay stubs, all pages —even blank pages — of recent bank statements and any other documentation the lender may need to make a quick loan approval. Then you are ready to make an offer.

A strong preapproval is essential, especially if you are competing against buyers with cash to offer, says Alan T. Aoyama, vice president of Century 21 M&M Associates in Cupertino, Calif. Any hint that you might have trouble qualifying for financing could eliminate you from the seller’s choice of buyers.

2. Cash in your pocket plus the paperwork to prove it
“An all-cash buyer can even waive the appraisal,” Aoyama says. “If you’re a noncash buyer, you need to have a copy of your proof of funds with your offer, along with a strong preapproval. At a minimum, you should offer a down payment of 20% if you know you’ll be competing against other buyers. You need to show you have the funds to close and the ability to make up the difference if the appraisal comes in too low.”

Moraru says that in Washington, D.C., and Maryland, it’s common to supplement your offer with a financial information sheet detailing your job history, salary and bonuses, 401(k) balance, how much you have for a down payment and where the money is saved.

A higher-than-customary earnest money deposit can sometimes impress sellers when there is a bidding war, Moraru says. Just make sure you fully meet all deadlines and terms of the contract so you don’t lose your deposit.

3. Make a fast, personalized offer
To compete against other buyers in a potential bidding war, make sure you see a home the day it goes on the market, so you can move quickly, Paul says.

“Your buyers agent should talk to the listing agent to find out what is motivating the sellers and what they need — such as a quick settlement or a post-settlement rent-back,” Paul says. “Be flexible, and work that into your offer. Make it as easy on the sellers as possible so your offer is chosen above 15 others.”

‘Listed’: Make sense of paperwork when buying a home
Paul says buyers should offer to help the sellers in any way they can, such as helping them find a home for their pet if they can’t take it with them.

Moraru says while price is important, sellers want to know the buyer can finance the property and meet any other conditions. If you don’t know the date when the sellers want to settle, you can write “will settle on seller’s schedule” into the offer.

Aoyama suggests offering 30 days of free rent if the sellers want to stay in their home after settlement.

4. Keep your home inspector on alert
Most real-estate agents don’t recommend buying a home without an inspection, but making your offer contingent on an inspection can weaken your position if other buyers are waiving an inspection contingency. Aoyama says buyers should carefully read all disclosures and reports that are available, because some sellers provide a home inspector’s report for buyers. You can also have an home inspection done after your offer has been accepted that can provide information on the home’s condition.

“If you’re serious about a particular house, you can have a home inspection before you make an offer, and then make a noncontingent offer if you’re satisfied with the report,” Moraru says. “You’ll need to move fast, though, and have a home inspector ready almost the day the home goes on the market.”

Paul says you can bring a home inspector along when you first look at the home and say the inspector is a friend, just to get a feel for the condition of the home without an in-depth checkup.

“If the inspector says the house looks OK, you can feel better about waiving the home inspection contingency,” Paul says.

5. Eliminate or reduce contingencies
One of the best ways to make your offer stronger is to eliminate contingencies regarding home inspection, financing or appraisal, Aoyama says. That puts you in a more solid position to win a bidding war. If you have cash reserves to cover the gap between a low appraisal and your offer, you can waive the appraisal contingency, he says, but leave your financing contingency in place to protect yourself.

“If you can’t waive these, you can at least shorten the time frame, such as (by) reducing the loan contingency to 10 days if you know your lender can provide you with proof of financing quickly enough,” Aoyama says.

Offering to buy the home as is can be tempting, but make sure you have an accurate idea of the home’s condition with an informational inspection for safety.

Paul says buyers need to make their offer as strong as possible, so if you don’t need a home warranty or help with closing costs, don’t ask for them.

6. Try an escalation clause — maybe
An escalation clause is an addendum to a purchase offer that authorizes your agent to offer a specified amount above the best offer the seller receives. It’s a powerful way to wage a bidding war.

“Buyers are offering escalation clauses a lot less often than when the housing market was booming, unless the home is priced way below market value,” Moraru says. “I recommend that buyers who want to offer an escalation clause be very careful when choosing to go as high as they can with the understanding that they can live with the price if it goes to the maximum amount. They also need to feel that if someone else gets the house at a higher price, that buyer overpaid.”

Visit this Marian Khosravizadeh blog for more updates on real estate buying and selling.

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REPOST: How to find the right suburb

Finding the right home is easy. Finding the right home in the right town, on the other hand, is another matter entirely. Amy Hoak of MarketWatch writes about the factors in finding the right suburban town to move into.

Image Source: realestate.msn.com

Finding a suitable house to buy wasn’t difficult for the Silverbergs, who just moved from a one-bedroom apartment in Brooklyn, N.Y., to a three-bedroom, two-bathroom colonial in Glen Ridge, N.J.

Deciding what suburb to live in, on the other hand, was daunting.

“We’re both city people, in that we like to walk more than drive, and we like an eclectic mix of people,” said Sarah Silverberg, who works for a children’s summer camp organization. “We loved Brooklyn so much, we weren’t sure we were ever going to find anything.” But she and her husband, Steve, an attorney, wanted more room and access to good schools in the future for their 11-month-old son. They knew they couldn’t afford to stay where they were and get everything they wanted. 

It’s a situation in which many young, urban families find themselves. They’ve spent their young adult years living in bustling cities; now, with kids, they’re considering heading out.

And when they live in New York City, their first call may be to Alison Bernstein.

Bernstein’s firm, the Suburban Jungle Realty Group, specializes in helping families (including the Silverbergs) identify the suburb in which they want to live. Clients complete a questionnaire about their needs, then the group provides in-depth information on everything from school districts to child-care options to commute times. It then connects clients with “local town consultants,” people from all walks of life who can speak about what it’s like to live in the area; it also connects them with local real estate agents. In return, Suburban Jungle gets a cut of the seller-paid commission on any resulting home sale. The company offers services in the New York City area, with plans to expand into the Chicago market.

“There are two types of people out there. One will sacrifice anything to stay in the city. And cities are more family-friendly than ever,” Bernstein said. Then, “there are those who are saying ‘I am here temporarily, and I’m going to be here until the kids reach school age,'” she added.

Numbers back up the continued popularity of the suburbs. The fastest population growth is in suburban counties, said Jed Kolko, chief economist at Trulia, a real estate website. People are more likely to move from the city to the suburbs than the opposite; U.S. Census data shows that between early 2012 and early 2013, there were 1.8 people who moved from a city to a suburb for everyone who moved from a suburb to a city, he said.

“Suburbanization has slowed down, but it hasn’t reversed,” Kolko said.

Areas attractive to families with school-age children tend to be of lower density with affordable housing and high-performing school districts, as noted in a past Trulia analysis on the districts that people flock to and flee from. Those benefits are often weighed against longer commutes.

For those looking to make a move to the ‘burbs, “it can be overwhelming if they don’t know what they’re looking for,” said Sally Mabadi, a real estate agent with Koenig & Strey Real Living, in Evanston, Ill., a suburb of Chicago. “Every suburb has a different personality.”

Below are some of Bernstein’s tips on finding the best suburban community.

Don’t focus on the real estate. Start by picking the community in which you want to live. Focus on the features that are most important to your family, such as the schools, the commute time, the recreational amenities and housing affordability. “It’s easy to get sucked into a great house,” Bernstein said. “Let that come completely last.”

Don’t be influenced by Main Street. Don’t fall in love with a downtown area and let that dictate where you begin a home search. The Main Street may have charming shops and cafes that are a delight to shop in, but often they don’t offer everything a family needs to sustain itself year-round. There’s a good chance your regular errands, such as grocery shopping, will be done elsewhere.

Understand the school system. Schools are much more than how well the students perform on standardized testing. Tour them. Learn about class sizes. Go to preschool drop-offs to scope out how parents interact with each other. If the arts are important to your family, make sure that they’re adequately funded in the district. Even if your little one isn’t in kindergarten yet, think about whether the high school district is one you’d want them to attend.

Know what your commute would be like. “Don’t just look at the train schedule,” Bernstein said. Understand where the station is and how long it would take to get there. If you’re driving to the station, know whether parking is an issue. If you’re taking another form of transportation, research how long of a commute time you’d have.

Marian Khosravizadeh is a realtor with extensive experience in selling homes within the Woodland Hills and Los Angeles County. Visit this website for more details on her work.

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REPOST: Household wealth rises $10 trillion in 2013

As real estate property values increase, so does the country’s overall household wealth. This article from USA Today reports on the Federal Reserve’s statistics.

Image Source: www.usatoday.com

A booming stock market and recovering home values boosted Americans’ household wealth by nearly $10 trillion last year, the Federal Reserve reported Thursday.

The net worth of households and non-profits was $80.7 trillion at the end of 2013, a 14% increase from 2012. More than half of the increase — $5.6 trillion — came from stocks. Real estate holdings rose $2.3 trillion in value.

Household wealth, or net worth, reflects the value of homes, stocks, bank accounts and other assets minus mortgages, credit cards and other debts.

Last year Americans finally regained the $10.6 trillion in wealth lost in the financial crisis when both stocks and real estate prices collapsed. Household wealth bottomed at $57.2 trillion in 2008, according to the Fed’s statistics, which are not adjusted for inflation or population growth.

But the gains since the crisis have not been equally distributed. Most of the recovered wealth has come from higher stock prices, and many Americans are not in the market. The wealthiest 10% of Americans own 80% of stocks.

Even so, the economy benefits because people spend more when they feel richer. And consumer spending accounts for about two-thirds of U.S. economic activity.

Mariyan Khosravizadeh of Woodland Hills Real Estate Services works with clients who are selling or purchasing real estate properties in Los Angeles County. For more details, visit this website.

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REPOST: The first step to becoming a homeowner

If you’re a rookie in purchasing a home and need to have your questions answered, then this article from USA Today is what you’re going to need.  Read the summary of the chat between the National Foundation for Credit Counseling and first-time homeowners.

Image Source: www.usatoday.com

Don’t know the first thing about becoming a homeowner? As part of USA TODAY’s partnership with the National Foundation for Credit Counseling, the second of six weekly Twitter chats addressed issues for first-time homeowners. USA TODAY’s Hadley Malcolm moderated, while John Berry, an education specialist at consumer credit agency Money Management International, answered participants’ questions. Here is a summary of the chat.

Q: What is the first step to purchasing a home?

A: Making sure homeownership is right for you and fits into your family goals and budget. Then you can start talking to lenders about whether you qualify for a mortgage.

Q: Should you look at more than one lender? How do you choose a lender?

A: Yes, you want to compare rates and terms to make sure you are getting the best deal. A good place to start is your local bank where you already have a relationship.

Q: Can my credit score affect the interest rate on the loan for my home?

A: Absolutely. You want your score as high as possible to qualify for the best rates.

Q: Is working on your credit the hardest part of buying a home?

A: It can be, but you also need to build up savings for a down payment and closing costs.

Q: Are there still ways to buy a home with no money down?

A: Conventional and FHA loans always need money down, but VA loans can sometimes require no money down.

Q: What does someone need to take with them when they apply for a mortgage?

A: You can apply for a mortgage with just your information (name, date, Social Security number, place of employment). To get pre-approved, you may need more, such as proof of income, pay stubs, tax returns and proof of down payment.

Q: At what point do you “lock in” your mortgage rate?

A: Locking your rate allows you a certain amount of time to find a home without fear of increased rates. Rates are typically locked for periods of 30 or 90 days, but determined by the lender.

Q: How do you account for a new home purchase on your tax return? How does it affect your tax situation?

A: The interest you pay on your mortgage is tax deductible, so owning a home can sometimes yield tax benefits.

Clients looking for real estate opportunities, whether a two-story home or a one-bedroom apartment, contact seasoned realtor Marian Khosravizadeh. For the latest news on real estate, follow this Twitter account.

 

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