Gunning Daily News

Six Mortgage Tips for the Self-Employed

December 19, 2012 1:40 pm

It's no secret that mortgage lenders are requiring more information from potential borrowers than they did prior to the 2008 financial meltdown. But for self-employed borrowers, qualifying for that mortgage loan is particularly difficult. In the past, self-employed business owners were easily approved for stated-income mortgages – or, loans that didn't require tax documents or bank records to verify income.
But because of more stringent lending policies, self-employed individuals in particular can expect far more scrutiny than in the past. In particular, lenders are looking for proof of stability, or a pattern of income. Fair or not, the self-employed are not considered as "safe" a bet as someone on an established salary.

Simply stated, lenders want to establish that the borrower can sustain a mortgage over time. Accordingly, lenders are likely to require at least 2 years of the most recent tax returns as well as financial statements, and possibly a quarterly profit loss statement. In their assessment of finances, lenders will typically require an overall debt-to-income ratio of 41 percent or less, though some will be less stringent depending on other factors such as excellent credit. Speaking of credit scoring, because some lenders consider self-employed borrowers a higher risk, it is possible to offset that risk with a high credit score. A score above 740, for example, can greatly enhance a self-employed applicant's chances for approval. For self-employed applicants, the secret to success is to prepare in advance.

Here's what you can do to increase your chances for success:
1. Pay-off your debts
Since your debt-to-income ratios will be considered, paying off some of those liabilities can lower your levels to acceptable proportions.
2. Get your credit report in advance
If there is anything negative in your credit history, take action to correct it before you apply for a mortgage. And, in the process, make every effort to raise your score above 740.
3. Adjust your income accordingly
Self-employed business people are typically very aware of beneficial tax deductions that will reduce their amount of taxable income. The problem is, lenders will determine your eligibility for a loan based on your taxable income! With a deflated taxable income, it's entirely possible that you'll qualify for a loan that's far below what you need. So, a year before you're ready to apply for a mortgage, talk to your accountant and see how to maintain quality deductions, while also taking a high enough income. One solution may be to defer certain expenses to a later tax year. In fact, deferment of expenses can also enhance financial reserve levels. Remember, lenders are looking for stability – or, your ability to pay over time. Your cash reserves will be a key element.
4. Meet with your potential lenders face-to-face
Online or telephone-based lenders are extremely convenient, but for the typical challenges that confront the self-employed applicant, it's better to meet with a specialized loan officer in person. Specialized experts are far more likely to direct you to a loan package that meets your specific needs.
5. Consider a joint mortgage
If you're married to someone who draws a regular paycheck on a W-2, consider having them apply as the primary applicant – with you listed as the secondary applicant.
6. Make a bigger down payment
Lenders tend to believe that with a greater personal investment, the borrower is less likely to default. In fact, some lenders will actually require self-employed applicants to submit a down-payment of at least 20 percent.

Decorating 101: Spicing Up Your Bedroom

December 19, 2012 1:40 pm

Does your bedroom lack excitement?

When it comes to spicing up how your bedroom looks, the folks at Ballard Designs know a lot about turning a plain old bedroom into a space bursting with visual excitement. Consider these aspects:

Color - Since your bedroom is a place for repose, choose three colors that work well together and stick to the “60-30-10 color principle” - 60 percent dominant color, 30 percent secondary color and 10 percent accent color. For your dominant color, think soothing neutrals - a lighter or softer shade of a color whether it’s sand, green, gray or blue - that has a touch of earth tone in it.

Not in the mood to paint? Add color with bedding, wall décor and other accents.

Use bedding to highlight your secondary color with lighter or darker shades and varying textures of fabric, or limit the palette to two contrasting patterns and a solid in sheets, duvet and shams. Reserve bold hues and playful patterns for accent pillows, a bedside throw rug, artwork, vases and lampshades that support primary and secondary colors.

And don’t forget layering - a key decorating practice that creates the perfect combination of comfort, warmth and texture. You’ll find that most bedroom decorating ideas are in some way related to creating layers around the room.

Ballard Designs recommends considering these four features of your bedroom when layering:

  • Bedding – Sheets, a soft blanket, bedspread, quilt or duvet, along with a throw and pillows in different shapes and sizes are all building blocks that help create an inviting, sumptuous bed. Even a headboard fits in the mix and adds to the overall look, especially if it’s upholstered.
  • Windows – A simple shade or bamboo blinds under drapes create a soft, layered look while controlling the amount of light in your room.
  • Flooring – A wool or cotton rug breaks up the expanse of wood flooring or covers up old carpeting while adding an extra layer of color and warmth.
  • Lighting – Create gentle, restful lighting from multiple light sources. A floor lamp or pair of sconces adds ambient lighting, a bedside lamp provides task lighting for reading and an overhead fixture bathes the room in light when needed.


Tips to Navigate 2012 W-2 and 1099 Changes

December 19, 2012 1:40 pm

Every year brings with it new changes related to W-2 and 1099 forms and reporting requirements. Due to the government's increasing focus on the proverbial tax gap, it's more important than ever for small businesses to understand the changing W-2 and 1099 reporting environment.

Here are some of the key changes that will affect small business this year.

W-2 Form Changes and New Additions
The reduced rate of 4.2 percent for social security tax withholding (for employees only) is extended for wage payments made in 2012. Also new in tax year 2012, compensation of $600 or more that is paid to H-2A visa agricultural workers must be reported on Form W-2 if the worker furnishes a valid taxpayer identification number. If the worker does not furnish a valid taxpayer identification number, report the payments on Form 1099-MISC.

In addition to the above W-2 form changes, there are several specific form updates to various 1098 and 1099 forms. Below are several of the more prominent changes for 2012:
  • Filers of Forms 1098 (except 1098-C), 1099, and 5498 may truncate a recipient's social security number, individual taxpayer identification number, or adoption taxpayer identification number on paper payee statements for tax year 2012.
  • Form 1098: Mortgage insurance premiums paid or accrued after December 31, 2011, are no longer eligible to be treated as interest paid by the payer/borrower.
  • Form 1099-B: New boxes have been added to Form 1099-B for reporting the stock or other symbol, quantity sold, whether basis is being reported to the IRS, and state income tax withheld. Other boxes on the form have been moved or renumbered. Brokers must also report on Form 1099-B sales of covered securities by an S corporation if the S corporation acquired the covered securities after 2011.
  • Form 1099-C: Box 6 is now titled Identifiable Event Code and requires the entry of a code for the identifiable event. For 2012, all codes are optional except for Code A – Bankruptcy.
  • Form 1099-DIV: Exempt-interest dividends from a mutual fund or other regulated investment company are now reported on Form 1099-DIV. Those amounts will no longer be reported on Form 1099-INT. Boxes 12 through 14 have also been added to Form 1099-DIV to report state income tax withheld.
  • Form 1099-INT: Exempt-interest dividends from a mutual fund or other regulated investment company (RIC) are no longer reported on Form 1099-INT. Those amounts will now be reported on Form 1099-DIV. Boxes 11 through 13 have also been added to Form 1099-INT to report state income tax withheld.
  • Form 1099-MISC: Compensation of $600 or more paid in a calendar year to an H-2A visa agricultural worker and any backup withholding must be reported on Form 1099-MISC if the worker fails to provide the employer with a taxpayer identification number. If the worker does furnish a valid taxpayer identification number, report the payments on Form W-2.

Below are some important dates for filers to remember as they enter tax season:

  • January 31, 2013 – Due date to send most 1099s and Copies B, 2, and C of form W-2 to each recipient/employee
  • February 28, 2013 – Due date to send Copy A of form W-2 to the Social Security Administration (SSA) and form1099 to the Internal Revenue Service (IRS) on paper
  • April 1, 2013 – Due date to send copy A of form W-2 to SSA and form 1099 to IRS electronically (e-file)

Road Trip! Four Top Tips for Safer, Holiday Travel

December 18, 2012 6:32 pm

Whether you’re headed to Grandma’s house for an old-fashioned Christmas or to a place in the sun for some holiday relaxation, getting there can be cheaper and often more fun if you drive. But road trips can carry their own brand of mishaps if you don’t plan ahead, say the trip-meisters at the Automobile Club of America.

AAA suggests six ways to help make your family’s road trip enjoyable and worry-free:

Don’t advertise – Do not post your plans to leave town on your Facebook page or other public venues. An empty house can lure robbers, so keep your travel plans relatively quiet – although it’s wise to leave a copy of your route and itinerary with a trusted friend or relative.
Travel safe – Have your car checked out before you leave to minimize roadside emergencies. Stock it with flares, water, protein bars, blankets, your cell phone charger and kitty litter for tire traction if you will be traveling in icy regions. Also, put any maps or other evidence that you are traveling into the trunk or glove compartment when you stop for meals or a rest stop. You don’t want to alert thieves that there may be valuables in your car.
Make it comfy – If you’re traveling with kids, it’s best to keep them well-fed and entertained. Pack portable DVD players, handheld game systems, or travel versions of favorite board games. Check online for some popular road games, like license plate alphabet or G-H-O-S-T, and take along some on-the-go snacks like string cheese, granola bars or fruit.
Keep it relaxed – If there are two drivers in the car, switch off every few hours. Do not distract the driver with frequent requests to, “Look at that!” On the other hand, be alert to points of interests along the way that may be worth an unscheduled stop – or plan a stop or two in advance. If you can spare the time, such stops are a good way to keep everyone relaxed and happy.

Are You A Renter? Insure Your Stuff!

December 18, 2012 6:32 pm

I need a bunch of you – specifically you renters – to take a moment and consider an important piece of advice about your stuff. If you love it, then make an extra effort to protect it.

Did you know the majority of homeowners buy insurance, but just one in three college-aged renters insures their belongings? Even more shocking: at least half of all renters fail to buy any insurance protection for their possessions.

Way too many consumers are under the mistaken impression that their landlord’s policy will cover their losses, according to the Connecticut Better Business Bureau. BBB says renter’s insurance generally covers property damage or loss caused by theft, fire, vandalism or storms. In addition, most policies include liability coverage, which protects a tenant if someone gets hurt when visiting their home or apartment.

The cost of renter’s insurance is usually lower than homeowner’s insurance because it covers only personal property and liability, not the structure. The amount of the deductible can also affect the cost of premiums.

Two types of renter’s insurance coverage are available:

  • Actual cash value insurance pays to replace items up to the policy’s limits, minus a deduction for depreciation.
  • Replacement cost insurance pays the actual cost of replacing your possessions, regardless of depreciation, up to the limits on the policy.

Consider the value of possessions versus the cost of insurance - even a college student can have property worth several thousand dollars, such as computers, televisions, furniture, jewelry or small appliances.

When seeking a renter’s insurance quote:

  • Determine if you have specific items of high value, you also may need a rider to cover those items.
  • Ask what deductibles apply to the policy.
  • Find out whether the policy will cover living costs if you are unable to occupy your current apartment or home.
  • Inquire about exclusions, such as types of property that would not be covered.
  • Ask the insurer if they give discounts for burglar alarms, fire extinguishers, sprinkler systems or deadbolts on exterior doors.
  • If you are switching insurers, be sure that the new policy is in effect before dropping the old one.
  • As with any insurance product, BBB advises consumers to get estimates from several companies before buying a policy.


Word of the Day

December 18, 2012 6:32 pm

Condominium. Type of housing where buyers own their units outright, plus an undivided share, or joint ownership, in the common elements of the building or community.

Q: Can I Contest My Property Taxes?

December 18, 2012 6:32 pm

A: Many people do, mainly because determining value can often be tricky. This is especially true in a changing market when local prices either take off dramatically or plunge precipitously, like during the Texas oil bust of the 1980s.

While it is up to a professional assessor to evaluate property value for tax purposes, property owners are usually allowed to contest their assessment until a certain date after they are made public.

Once you contest, you will have to prove why you think your property is worth less – few homeowners contest hoping to pay more taxes! The two most popular ways for determining value are an appraisal and a comparative market analysis. With an appraisal, a professional estimates the property's market value based on recent sales of comparable properties. A comparative market analysis is an informal estimate of market value performed by a real estate agent based on similar sales and property attributes. Most agents will offer free analyses to win your business.

Contact your local tax assessor's office for procedures on appealing your property tax assessment.

Does Your Family Have a Fire Escape Plan?

December 17, 2012 6:18 pm

(Family Features) When a home fire occurs, you have to act fast. If your family doesn’t have an escape plan, this could lead to chaos and panic. Make sure to come up with a plan, and be sure it includes a working smoke alarm—more than 20 percent of American homes are without them. This means roughly 23 million homes are at risk because of non-working smoke alarms and an additional 5 million homes are at risk by not having smoke alarms. Read the following tips to make a plan for keeping your family and home safe.

Make a Plan
On average, families have less than three minutes from the time the first smoke alarm sounds to escape a fire. Installing smoke alarms on every level of the home and developing a plan of escape can give your family precious minutes to get out and get to safety.

Draw a floor plan of your home and sketch exit routes out of every room.
Make sure you have a fire escape ladder long enough to reach the ground from upstairs rooms.
Assign an outside meeting place, so you can quickly locate each other.

Room by Room
The peak time for home fire fatalities is between 11 p.m. and 7 a.m., when most families are asleep.

  • Do not trap electrical cords against walls. Heat can build up, posing a fire hazard.
  • Use only lab-approved electric blankets and warmers. Make sure cords are not worn or coming apart. Do not leave electric blankets switched on all night unless they are marked “suitable for all night use.”
  • Keep bedding, curtains and other combustible items at least three feet away from space heaters.
  • Never smoke in bed.
  • Replace mattresses made before the 2007 Federal Mattress Flammability Standard. By law, mattresses made since then are required to be safer.
  • Install smoke alarms in every bedroom and outside each sleeping area.

Living Room
  • Do not overload electrical outlets.
  • Check electrical cords for fraying or signs of damage and don’t run them under carpets.
  • Candles are responsible for almost 10,000 fires a year. Use new flameless wax candles which provide the realistic flicker of a scented wax candle without the hazard of open flame.
  • Keep battery-operated flashlights and lanterns in easily accessible places in case of power failure.

Cooking is the leading cause of reported home fires and home fire injuries in the United States.

  • Never use extension cords to plug in cooking appliances; they can overload the circuit.
  • Stay in the kitchen when you are frying, grilling, or broiling food. If you leave the kitchen for even a short period of time, turn off the stove.
  • Keep flammable items away from the cooktop.
  • Keep the cooktop, burners and oven clean.
  • Have a fire extinguisher installed in or near your kitchen.

  • Store all combustible materials in clearly marked containers away from regular sources of heat, such as water heaters, space heaters, boilers and furnaces.
  • Keep flammable products in a dedicated storage container with a closed door.
  • Get rid of stacked boxes, recycling and trash.


Travel: What's Hot in 2013

December 17, 2012 6:18 pm

(BPT) - There are two kinds of travelers out there: those who plan and those who wing it. But what they have in common is a love of travel and exploring new destinations. Whether you take two-day weekend trips or 10-day vacations, here are some must-see destinations that travel-inspiration site selected for 2013.

Two-day vacation: Birmingham, Ala.
If you're into history and like the idea of a southern road trip, then check out Birmingham. 2013 marks the 50th anniversary of pivotal events that led to the civil rights movement that ultimately ended segregation in the 1950s and 60s. Birmingham plans to celebrate all year with special exhibitions, symphonies concerts, plays and commemorative historic tours. To make it a true road trip, tack on the journey from Selma to Montgomery, which is a National Historic Trail.

Four-day vacation: Finger Lakes, N.Y.

If visiting wine country is on your bucket list, you might think a trip to California is your only domestic option. But if you want to skip the massive crowds of Napa or happen to live closer to the East Coast, the Finger Lakes region in New York State is the place to go. The area is the largest wine producer east of California, yielding more than 40,000 tons of grapes a year. Not only is wine a highlight, there are two newly created self-guided trails that highlight cheese and sweets. The two trails feature around 15 artisan cheese makers and sweet creators. Once you're full, check out the 87-mile Cayuga Lake Scenic Byway and the Corning Museum of Glass, home to the largest glass collection in the world.

Three- to seven-day vacation: Mississippi River steamboat cruise
In 2012 the American Queen Steamboat Company started running the largest steamboat ever built up the Mississippi River. You'll feel like you've stepped back in time as you rediscover the history and beauty of America's heartland. Shore excursions at destinations such as New Orleans, Memphis, St. Louis and Minneapolis are included, depending on which cruise you take, and the dining, headed by famed American chef Regina Charboneau, focuses on regional favorites.

Seven-day vacation: England

Now that the London Summer Olympics have passed, 2013 is the perfect year to visit England. The permanent venues like the aquatics center and stadium, along with the Olympic park, are being converted for public use and will open as the Queen Elizabeth Olympic Park by midsummer. Olympic Village, the former athlete basecamp, was converted into an apartment and condo complex, which is now called East Village. But don't spend all your time looking at Olympic venues. London, and England as a whole, is famous for so much more, such as literature, history, architecture, and even fish and chips.

10-Day vacation: Alaska Marine Highway System
Alaska stretches out over 656,000 square miles of space, so exploring the state is a once-in-a-lifetime memorable trip. And 2013 is the year to do it, as Alaska's Marine Highway celebrates its founding 50 years ago. Today, 11 ferries travel over 3,500 miles on the "marine highway" between Washington State and Alaska's Aleutian islands. Visitors who take this route will come away with a deep understanding of Alaska's diverse and scenic coastline and communities.

Prepare Your Home for the Holidays

December 17, 2012 6:18 pm

The holidays are upon us, and with Christmas merely a few days away, many are struggling to prep their homes for guests. Here are some tips on preparing your home for the coming festivities. From making sure your tree stays fresh to getting that extra sparkle from your silverware, take a look at these seasonal tips and make sure you stay sane this Christmas.

The secret to a long lasting Christmas tree
The secret to keeping your Christmas tree looking fresh for weeks is simply good, basic care. When you buy your tree, make sure the seller makes a fresh cut straight across the base of the trunk, removing about an inch from the bottom to aid water absorption. As soon as you get home, place the tree in a stand or sturdy bucket that holds at least two liters of water. Check the water level daily to make sure the end of the trunk is covered and position the tree away from direct sunlight, fireplaces, wood stoves and other heat sources.

How to defrost your freezer

Tons of holiday leftovers require ample room in the freezer. To make sure food stays fresh, defrost your freezer and give it a good clean. First, empty all of the food from the freezer and wrap it in newspaper (alternatively place in the coldest part of your home). Next unplug the freezer, lay towels around the bottom to mop-up any spills and place bowls of very hot water in the bottom of the freezer. Using gloves, pull away chunks of ice and pour warm water onto any stubborn blocks of ice. Once your freezer's defrosted, give it a good clean to remove any stains and odors. If your freezer regularly builds up a layer of ice, it may not be working properly.

Keep your fridge smelling fresh

Fridges often gather strong odors over time. To avoid this, start by completely emptying your fridge, then give it a wipe to remove any spilled residue. Thoroughly clean the entire interior with a cloth and a baking soda and water solution (2 cups of water / 2 tablespoons baking soda). Then cut an onion in half and place in the fridge - this will absorb any bad odors.

Clean your silverware
With Christmas around the corner, the family silver will take pride of place at the festive table. To ensure your cutlery looks as good as new, line a plastic basin with aluminum foil (shiny side up). Place the silver inside so that it's touching the foil and sprinkle in a quarter of a cup of baking soda and 1 gallon of boiling water. Leave to soak for 10 - 15 minutes. Wearing gloves, take the cutlery out of the water and polish with a soft cloth. For items that are still dirty, repeat the process. This will remove all stains and ensure clean sparkling knives and forks to compliment your Christmas roast.