Dave Davis, Realtor, Columbia, Missouri

After You Buy
Reassemble Your Finances, Moving and Services, Moving with Family, Tax Assessments, Refinancing, Keep Receipts for Improvements

Reassemble Your Finances
Mortgage lenders want to be paid on time. Many mortgages have stipulations for penalties equal to 5 percent of the amount of the mortgage payment if your payment is late. If your payment is one whole month late, a 5 percent penalty works out to an annualized interest rate in excess of 60 percent! Even being one day late can trigger this penalty. Late charges also show up on your credit report.

Sign up for your mortgage lender's automatic-payment service to have your mortgage payment sent electronically from your checking account to the lender on the same day each month.

Moving and Services
Our goal is to provide you with a complete home ownership experience. So, in other words, our job doesn't end when the purchase is final. After the transaction is complete, your agent will provide you with some valuable property transfer services that are designed to make the move from your old home to the new one, smooth and efficient.

Miscellaneous moving checklist

Automobile registrations - remember to update driver's licenses and auto club membership.
Medical records - arrange for medical and dental records to be transferred. Ask your physician for a referral.
Employment recommendations - have teenagers obtain written recommendations from their current employers.
Empty and defrost the freezer. Have appliances serviced for moving.
Plan for special needs of infants.
Carry currency, jewelry, and documents yourself.
Double-check all rooms, closets, drawers, and shelves.
Leave old keys and garage door openers with your real estate agent.
Change the locks in your new home for safety.

Moving with Family
Moving to a new home is an exciting experience. Comprehensive pre-planning, organization and family meetings can help establish each person's responsibilities and will go a long way in maintaining harmony and efficiency.

Helping children make the move
Tell them about your plans as soon as possible and give them a chance to express their concerns while sharing some of your own.

Scrapbooks are a good way to preserve memories of your current home, and all of the ties that go with it. Give your child an address book for noting names and addresses of friends in their current neighborhood and remind them to leave room for their new friend's names.
If possible, take your children to their new neighborhood so they can become familiarized with their surroundings. If you are moving from out of state, provide them with photographs of their new home and school. Visit or provide photographs of parks, schools, and other nearby attractions.
When you have made the move, introduce them to teachers and the new neighbors.
Involve them in packing up and provide them with their own "packing labels" for marking personal possessions.
Have a going-away party so they can say good-bye to their friends.
Involve your children in planning, arranging, and decorating their new bedrooms.

Helping pets make the move

It is best to transport your animal using a pet carrier.
Have your current veterinarian recommend a clinic near your new home, and request that your pet's paperwork be forwarded to them.
It is not unusual for pets to experience some level of anxiety during the early stages of a move, as they get used to their new environment.
Some pets actually try to return to their old home directly after a move, so it's important to keep a close eye on them.

Tax Assessments
In most communities, real estate property taxes are based upon an estimate of your home's value. If home prices have dropped since you bought your home, you may be able to appeal your assessment and enjoy a reduction in the property taxes that you're required to pay.

Contact your local Assessor's Office to inquire as to the local procedure for appealing your property taxes. Generally, the process involves providing comparable sales data in writing to the assessor to prove the reduced value of your home. If you need help with this exercise, contact your John L. Scott real estate agent.

Refinancing
Refinancing means that you take out another new (lower cost) mortgage to replace your old (higher cost) one. If interest rates decrease from where they were when you took out your mortgage, you may be able to refinance your mortgage and save yourself money.

If rates have dropped at least one full percentage point since you originally took out your loan, start to contemplate and assess refinancing. In some cases it's even worthwhile to consider refinancing if interest rates drop only one-half point from your current rate. You will want to speak to a mortgage representative about your individual options.

To figure how much you will really reduce your mortgage cost on an after-tax basis, take your tax rate and decrease your monthly payment savings you expect from the refinance by that amount. If you're a moderate-income earner, odds are that you're in the 28 percent tax bracket. So if your mortgage payment would drop by $150, and if you were to reduce that $150 by 28 percent (to account for the lost tax savings), then (on an after-tax basis) your savings would actually be $108 per month.

Keep Receipts for Improvements
Money spent on your home should be tracked and documented for tax purposes in order to minimize the capital gain that you may owe tax on in the future. Capital gain simply means the difference between what you receive for the house when you sell it less what it cost you to buy the house -- with one important modification. The IRS allows you to add the cost of improvements to the original cost of your home in order to calculate what's known as your adjusted-cost basis.

Capital Gain = Net Sale Price - (Purchase Price + Capital Improvements)

For example, if you buy your home for $150,000 and, over the years, it appreciates so that (after paying the costs of selling) your net selling price is $200,000, your capital gain is $50,000. Keep in mind that the IRS allows you to add the value of the capital improvements that you make to your home to your purchase price.

A capital improvement is defined as money you spend on your home that permanently increases its value and useful life. For example, putting a new roof on your house rather than just patching the existing roof. If you made $10,000 worth of improvements on the home you bought for $150,000, your capital gain would be reduced to $40,000. Money spent on maintenance, such as fixing a leaky pipe or replacing broken windows, is not added to your cost basis.

Before you sell your home, be sure to understand the tax consequences of such a transaction. Many homeowners are eligible to shelter a large amount of their home's capital gain from taxation when the time comes for them to sell.