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A Bridge Loan Makes the Path to Your New Home Easier Than You Think

By Bill Palm, Newburyport.Com Correspondent VP, Senior Residential Loan Officer NMLS# 33986, Direct Phone (978) 462-1500
I’ve been helping people buy homes in the greater Newburyport area for almost 25 years. It’s rewarding to use Newburyport Bank’s competitive loan programs and rates to find the perfect loan product for each client. My specialty is construction/renovation lending and finding creative solutions for my clients. I’m a graduate of Salem State University, where I studied finance. In my free time, I boat, ski, watch the Bruins and Patriots, and spend time with my family.
Newburyport Bank
Bridge Loan from Newburyport Bank

Every day, countless people in our community purchase homes without knowing the financing programs available, including the bridge loan. Some are buying their very first, while others are closing on their dream retirement property. When you embark on the journey of buying a new home, there are important things you should know so you can do it well.

First off, everyone has different preferences, from the furniture you buy to the location you choose. You want everything to be perfect. Another area that should fit you just right is the financing. (So many decisions to make!) Be sure you know all your financing options including how a bridge loan works.

Often a certain loan can help you land the home you want—when you want it—without any type of contingency in place. For instance, Newburyport Bank offers something called a bridge loan for home purchase (aka contingency buster). As a lender who serves this community (including many friends, families and neighbors), I’m always reminding my clients that the journey to your new home doesn’t need a contingency.

What is a bridge loan?

Our bridge loan program allows a potential home buyer to use the equity in their current home as down payment toward the new home, without it being sold first. Since Newburyport Bank is a community bank, we’re really focused on serving the needs of homeowners who live right here in our communities. And a bridge loan has proven to be extremely useful.

Bridge loan financing is a transitory loan (meaning it’s temporary) that eliminates the need to present an offer on a new home with a contingency to sell your current house. Think of it as a bridge gap loan or short-term loan. It creates so many possibilities for homeowners who want to buy a home without the worry of having to sell their current house first.

Since our bridge loan eliminates the need to present an offer with a contingency to sell a current home, you have a better chance of getting your offer accepted—and the appropriate financing to support your new adventure.

With bridge loan financing, you:

  • Can present an offer without a contingency to sell current home
  • Can use the equity in your current home as down payment toward your new home, without it first being sold
  • Can qualify for a higher purchase price on the new home since no payment on the current home is used in qualifying; only the proposed new home payment is used in qualifying
  • Can avoid maxing out a mortgage on a current home by taking out a HELOC to purchase a new home
  • Can get a free recalculation of the principal and interest payment on the new home mortgage if you choose to use the additional equity realized from the sale of the old home to lower the payment; this removes the need and expense of refinancing

Buying a new home is like going on an exciting adventure! You don’t want anything to get in the way of achieving your homeownership dreams. As a lender who loves to support and guide people on this exciting journey, I don’t want anything to get in the way of your dreams, either.

The Biggest Financial and Non-Financial Benefits of Owning A Home

In the midst of a global pandemic, our homes have become much more than a space that provides a roof over our heads. We’ve experienced sheltering in place for several months, so having a place we can call our own has become invaluable. For many, our homes have also turned into our workspaces and even schools for our children.

Moreover, a recent survey by Gallup just ranked real estate as the best long-term investment among several options—with 41 percent of Americans seeing it as superior to stocks, gold, savings accounts, and bonds.

But unlike other investment options where the benefits are purely financial, owning a home provides both financial, non-financial, and social advantages that allow every homeowner to take great pride in. As National Homeownership Month kicks off this June, we’ll cover some of those benefits that will hopefully make you more excited to kickstart your homeownership journey, or even celebrate if you already have a place to call your own.

Building equity

Home equity refers to the value of your property that “you truly own.” It is your property’s current market value minus the amounts owed on any mortgages or liens against the property. Owning a home builds equity because equity grows with each payment you make toward your mortgage, which brings you closer to owning more of your home. It’s opposed to making monthly payments to your landlord if you’re a renter, where you will own nothing no matter how long you stay there. Performing routine maintenance on your home and other renovations that help increase its resale value is also another way to build equity.

Your home equity is a form of forced savings that is essentially part of your net worth, which means you’re preparing for your future since you can use it down the road to help you accomplish other huge financial goals.

 

Helps build a strong credit history

A mortgage is considered “good debt” so as long as you’re consistently making your monthly loan payments on time, you are showing to other lenders that you are a good borrower. This helps to build your credit and proves your credit-worthiness, which can be helpful when you may want to consider other loans in the future, such as for buying a car, remodeling your home, or getting a business loan. It’s an additional perk that many buyers may not consider at first but will prove to be beneficial later on.

 

 

Better control and stability over housing-related costs

One of the most significant financial benefits of being a homeowner, and the biggest advantage versus being a renter, is that you will have better control over your monthly housing payments. Unlike rent costs that continue to go up each year, you’ll have peace of mind knowing that your monthly mortgage payments remain relatively steady despite rising interest rates and periods of inflation, especially if you have a fixed-rate mortgage where the cost of your home is locked in for the term of your loan.

Other costs of owning a home like property taxes and insurance premiums may fluctuate, but this doesn’t typically happen as often as rising rents. You can also choose to install energy-efficient appliances and features that can help save you thousands of dollars in utility bills every year. With this kind of control, you can budget accordingly and make better short- and long-term financial decisions.

 

Tax deductions

Another financial perk of being a homeowner is that you qualify for many tax deductions and tax credits. To make it clear, a tax deduction reduces your adjusted gross income, which in turn reduces your tax liability. Meanwhile, credits represent money taken off of your tax bill.

While we won’t elaborate on them further, the most common tax deductions for homeowners include:

 

 

  • Mortgage interest

  • Points

  • Real estate taxes

  • Private Mortgage Insurance (PMI)

  • Home office deduction

  • Medically-necessary home improvements

  • Capital gains tax exclusion

On the other hand, tax credits may be available for those who were issued a Mortgage Credit Certificate (MCC). You can also check if your state offers tax credits or rebates for energy efficient-improvements you’ve made to your home.

Increased privacy and security

In the 2020 National Housing Survey from Fannie Mae, one of the top three reasons Americans value homeownership is because it helps them achieve a sense of privacy and security. Unlike when living in an apartment where you often have to deal with thin walls and be able to hear almost every move of your neighbors, you are less likely to experience this when you own a home. You are also more likely to have the same neighbors for many years, increasing trust among the community. Moreover, privacy and security were proven to have become even more valuable as we’ve dealt with the challenges of the recent health crisis.

 

Freedom and control over your living space

Owning a home means you have a space that is uniquely yours. You have the freedom to customize it to your liking; accomplish renovations to make your home look exactly how you want it. In the National Housing Survey mentioned above, 91 percent of respondents said homeownership could help them achieve control over what they do with their living space.

Many renters have rules and limitations over the color they can paint the rooms or changes they can make to the appearance of their living spaces to make it feel like home, or even against having pets. But when you own, you’re free to create the space you want and renovate how you see fit (but still within the boundaries of your homeowner’s association and local zoning rules). It’s a liberating feeling that can never be taken for granted, especially if you’ve been a long-time renter first before finally owning your space.

Increased civic participation

Unlike their renter counterparts, homeowners often settle in their area for longer periods and don’t have to worry about moving anytime soon. This in turn adds a certain degree of stability to the neighborhood. With their stronger connection to their community, homeowners are often more committed to volunteer work. They are likely to contribute to the maintenance of their properties and surrounding areas. They are also more likely to get involved in community organizations and build relationships with other people in their neighborhood, potentially leading to an overall increase in civic participation.

 

 

Pride of ownership

The feeling of accomplishment and the sense of pride that comes along with homeownership is something that can never be underestimated. In the Fannie Mae survey, 87 percent of consumers believe owning a home is important to “living the good life.” Having a place where you can settle and raise your family, make memories, celebrate holidays and other special occasions, and spend time with family and friends is an important milestone that contributes to your overall health and well-being, which ultimately leads to a better quality of life. This sense of stability and life satisfaction is the reason why homeownership continues to represent the American dream for thousands of families each year.

Our Checking Accounts Make Your Money Work for You

By Carrie Dick, Newburyport.Com Correspondent
After an extensive career in banking that started in 1998, I took the position of AVP, Business Development Manager at Newburyport Bank in 2017. This allowed me to be closer to home and spend more time with my two young daughters. Throughout my banking career, I’ve guided customers to success with their banking, lending (home equity and mortgage), life insurance and investment needs. I also really enjoy home decorating—and even received my Certified Interior Decorators license in my spare time. Working for a local community bank helping customers achieve their financial goals is an incredibly rewarding experience. I look forward to it every day.
Newburyport Bank
checking account, Newburyport Bank

As a banker who serves this community, my goal is to help you journey well. While each person’s journey is unique, most life journeys are improved when your money works for you. This might surprise you but getting your money to work for you starts with one important tool—your checking account.

Often, customers come to Newburyport Bank seeking advice on how best to manage their accounts, grow their money, and prepare for the future. After meeting with the customer to get a better understanding of their financial picture, I usually recommend they look at their checking account.  Is it interest-bearing and low-cost? Does it earn rewards and include online banking tools that make managing money easier? If not, you are not taking advantage of every opportunity to make your money work for you. Our Rewards Checking Account was designed to help you save well and spend well, so you can journey well.

The way you manage your money day-to-day can have a lasting impact on your finances—both today and in your future. It is essential to be aware of how you approach money (are you a saver or spender?), your financial goals, and the best tools to help you reach those goals.

A checking account, after all, is the center of your financial operations. It’s the one account that usually touches all money coming to you and departing from you. You want your checking account to serve you well, whether you’re spending or saving. At Newburyport Bank, we offer a Rewards Checking Account. For just $10, you can open it and start earning a competitive interest—2.00% APY*

This checking account requires the use of other valuable financial tools such as online and mobile banking, which gives you financial clarity, and you have total access to your funds around the clock.

This low-cost and low-maintenance account helps you build your savings more quickly due to the competitive interest rate it offers. You don’t have to worry about transferring money from your checking to savings to earn interest. You earn 2.00% APY on the first $15,000.00 in the account, as long as you meet the account requirements. And even if you don’t meet the account requirements, the account still earns 0.01% interest. Finally, you get up to $20 in foreign ATM surcharge fees reimbursed with this checking account, which is another way it helps you to save well.

Our Rewards Checking Account accommodates the spender. To earn the competitive rate, you have to make a minimum of 12 signature-based debit card purchases in the statement cycle over $10 each.

Another requirement is to have a direct deposit minimum of $100 in the statement cycle. Direct deposit is a great tool to help you organize your finances and optimize your cash flow because checks are deposited immediately after being issued, so you don’t have to pick them up from your workplace and go to the bank. With funds deposited in your account immediately, you have more time to build that interest.

*The Annual Percentage Yield (APY) for the Rewards Checking account is 2.00% as of 5/1/21. To qualify for the Rewards Checking preferred interest rate and receive up to a $20 reimbursement for foreign ATM fees per statement cycle, you must meet the following monthly requirements: the minimum account balance is $10; the maximum account balance is $15,000; enrollment in online banking; enrollment in eStatements; a direct deposit in the account of at least $100 per statement cycle; have at least 12 POS ATM signature debit card purchases per statement cycle with a minimum of $10.00 for each purchase; no more than 16 days delinquency on any loan. Notice: monthly statement of account will reflect credit card days delinquent at 0 as this is not a requirement to receive the preferred interest rate. If the account does not meet one of the criteria above, the account will earn 0.01% interest. Rate is subject to change.

Fees may reduce earnings.

Monitor Your Credit Score & Improve Your Mortgage Rate

By Bob Pezzella NMLS# 112811, Residential Mortgage Services, NMLS#1760 Equal Housing Opportunity
Why Bob Pezzella for your mortgage needs? Because my 26 years of lending experience coupled with the lending powerhouse that is Residential Mortgage Services, Inc. (RMS) we will streamline your mortgage and home buying process. After the crazy rate fluctuations of the late 1990s through the tumultuous 2000’s first decade and beyond I have navigated the mortgage process every step of the way for my clients. I pride myself on a thorough, consultative approach to understanding customer needs and goals and match your criteria with the parameters of available down payment monies and income level. Whether it makes sense to make a smaller or larger down payment, help raise a credit score, or pay off / refinance current debt, I will find the mortgage solution that is right for you. I will help you evaluate the array of mortgage options from the traditional 30-year fixed rate, through the various state housing programs to the government programs FHA, VA, USDA and together Residential Mortgage Services, Inc. (RMS) and I will guide you home! There is no affiliation between Residential Mortgage Services and any other company.
Residential Mortgage Services, Inc.
credit score, Residential Mortgage Services, Newburyport, MA

I left off last time talking about how important it is to “be prepared” with respect to having your credit in order prior to applying for home financing.  Your credit score is so critical to your qualifying loan options and corresponding Annual Percentage Rate (APR) I feel compelled to briefly revisit the topic given the time of the year and recent political events.

We have just come through the holiday shopping season and many of us took advantage of large discounts at the cash register simply for agreeing to open a new store credit card.  Although the savings was great, these transactions inevitably lower your credit score:

  • The credit inquiry itself lowers your score.
  • The amount borrowed compared to the limit set by the store can further lower your score.
  • The number one zinger is if the store got your billing address incorrect when the cashier was keying your information in to the computer. Zip code or street number off by a digit and your bill goes to the wrong address, you potentially forget about the new account and miss a payment.

Please, exercise extreme due diligence in tracking down any of these new accounts and make sure these new bills get paid in a timely manner!

Recent national events are costing us more money too. Regardless of your political affiliation, national politics has affected the cost of borrowing money. The result of the presidential election  has  strengthened a bull market, trading off the idea that lower personal and corporate income taxes will stimulate the economy, coupled with the belief that deregulation has been constraining growth. The Dow Jones Industrial Average (DOW)  is flirting daily with a record 20,000-point level and the Federal Reserve Board (FED) raised its benchmark interest rate recently for just the second time since the financial crisis of 2008. These factors have helped inch up home interest rates costing new mortgage customers more money per month. Although there is little we can do about these national events, you can protect and monitor your credit scores ensuring that you qualify for the best interest rate available.  Consider this: a half- point difference in APR on a 30-year fixed rate $300,000.00 mortgage can cost $88.00/month more in your payment, $1,056.00/year and $31,680.00 more if you were to stay in the mortgage for the life of the loan.

Friends, my message here is very simple. Although credit is not the only qualifying lending criteria, good credit helps you qualify for the best rates and programs. If you need a hand assessing your credit and your qualifying criteria, I would be more than happy to assist you!

Trends in Massachusetts Divorce Law: Equality and Structure

By Damian Turco, Newburyport.Com Correspondent
Principal Attorney and Owner of Turco Legal, Attorney Turco is highly regarded as an expert in the areas of divorce and family law. He has represented hundreds of clients through divorces, modifications, contempt matters, and other family law matters from beginning to end. He sits on multiple committees for the Mass Bar Association, has been recognized by Massachusetts Lawyers Weekly as one of the state’s upcoming top 25 lawyers of 2015. Attorney Turco’s donates considerable time to help within the community. He serves on the board of LARC, a legal non-profit that helps thousands of lower income folks get desperately needed legal help. He also volunteers his time monthly delivering legal assistance at homeless shelters, day shelters, and soup kitchen’s in Boston, Lowell, Lawrence, and Salem.
Turco Legal
Turco Legal, Divorce Law Trends, Newburyport MA

Divorce law trends are moving in a direction of equality and structure. Divorce may seem like a modern issue.  That is, it sometimes seems like one of those problems with society that’s far worse now than it used to be.  Perhaps that’s because it’s the type of thing that nobody seems to discuss until it’s happening to them, especially not in a tight community like Newburyport.  Or maybe because it is consistently ranked as one of the greatest challenges one may face in his or her lifetime.  Who wants to talk about that?

Actually, despite it not being talked about much, it’s been an important and impactful part of society since shortly after the existence of marriage.  Its prevalence has fluctuated over the thousands of years of recorded history and the trend has largely followed the influence of religion on government and society generally.

While there is disparity around the world as to the popularity of divorce, it is clear that in Massachusetts, like most states, the law is trending from what we would consider traditional to a system of equality and structure.  Here’s how the main issues in divorce are treated in Massachusetts and are trending nationally today.

“Child custody” is still the terminology used in Massachusetts, but many states have done away with it, instead opting for more neutral terms such as “time sharing”, reflecting a growing national view of co-parenting that makes it a point to not characterize children as property or either parent as the “primary” one.  While most divorces with children still result in one parent having about a third of the time and the other having two thirds, there are more judgments granting equal time between parents than ever.  Family Law Judges in Massachusetts continue to have broad discretion in fashioning parenting schedules, so putting the relevant facts about ones case into evidence is just as critical as ever.

Child support is treated as a statutory calculation, considering the income of the parties, the parenting schedule, employment-related child care, and health insurance in nearly every state.  While there is not much movement nationally on this issue, every state periodically adjusts the guidelines figures, so the amount set for child support tends to go up over time.

Alimony is perhaps the most inconsistently treated issue across the country, recently having been overhauled in Massachusetts in 2011.  While some states have actually done away with permanent alimony altogether, Massachusetts has added more structure and limitation into the law.  Permanent alimony is now generally only available in Massachusetts when the marriage lasted over 20 years, with shorter term types of alimony are more tailored to the situation.  Generally, the longer you’ve been married, the longer the alimony is likely available, if available at all.

Property division is unique in Massachusetts, with judges having more discretion than in most other states.  That’s because in Massachusetts all property is part of the marital estate subject to division by the court including premarital property, gifts, and inheritances.  Many states carve these types of assets out of the marital estate, but in Massachusetts we give judge’s more authority to determine an equitable or fair result.

Massachusetts divorce law is quite sophisticated.  We live in a community of highly intelligent, hardworking, family-focused individuals who for many can’t avoid the realty of the breakdown of a marriage.  There will always be an element of loss associated with divorce and that comes with a grieving period.  But, when properly educated on divorce law and with the right counsel and support, more parties can and do move on to a better life.  So, if you’re facing divorce and living in our community, don’t be afraid of the issues.  While you may not want to discuss it over drinks at Adiamo’s or while the kids circle you at Gelato, there are plenty of Newburyport divorce lawyers, including me, who will help you through the process.

 

Call Early for Your Moving Services Estimate – Enjoy Big Savings!

By Heather McDonald, Newburyport.com Correspondent
Heather is the Office Manager for Ferrick Bros. Moving Company. From start to finish Heather gathers all important details about client moving needs, she sends quotes and executes contracts. She helps coordinate move logistics and convey important client needs to the folks facilitating the moves. Heather is there to help answer questions, confirm critical details and she is there in the end to follow up with clients and gather feedback about their moving experience.
Ferrick Brothers Moving Company
moving services

Most people and businesses planning their next move tend to forget something really important before they’ve even gotten started: a moving services estimate. Whether you’re planning a same-city “mini-move” or a long-distance relocation, calling early for a moving-services estimate could save you a lot of money – up to 50% on moving costs, in fact.

Ferrick Bros. Moving Company is a family-owned regional moving company serving commercial, residential, and industrial customers in the Newburyport area and beyond. As a locally owned and operated moving and storage company, Ferrick Bros. offers highly competitive pricing compared to national chains.

Be sure to get your FREE Moving Services Estimate as soon as you begin the moving process! Visit our website for a same-day online estimate or, for best accuracy, we’ll come to you. Online estimates are not as accurate as getting a quote from the owner, Bob Ferrick, either on the telephone or a free, in-house estimate.

Click here to get your moving coupons from Ferrick Bros!

  • $25 off any job between $500-$999
  • $50 off any job between $1,000-$2,000
  • $100 off any job over $2,000

Call us anytime 24/7 at 1-978-476-4229 for additional cost-saving moving services and storage tips. Same-day service available.

Ferrick Bros. also provides packing, unpacking, and pad-wrap services, and free boxes and other packing supplies are available upon request. We also understand that some moves require storage options as well. Ferrick Bros. offers furniture storage and portable storage facilities to fit any storage need.

Let Ferrick Bros. Moving Company do your heavy lifting for relocating your business office and equipment, moving into a new house or apartment, and/or transporting your specialty items with care.

Our strong reputation in the Newburyport area reflects our emphasis on best value and excellent customer service. Call or visit us online now to find out how much you could save on your next big move. You can’t afford not to!

Finding the Best Agent Just Got Easier

By Robert Bentley, Newburyport.Com Correspondent
CEO/Owner & Residential/Commercial Sales Specialist for Bentley's, Robert has been the #1 agent in the Greater Newburyport market for the past six years. Robert's success is due to his dominance with on-line real estate marketing, strong negotiation skills, and good old fashioned work ethic. Robert has a strong sales, marketing, and finance background and always does what is necessary to get the deal done, and make his clients happy. Experience and proven reputation are key when you are making the largest financial transaction of a life time.
Robert Bentley
Finding the best agent just got easier, Newburyport MA

Finding the best agent just got easier.  In partnership with Zillow and Trulia, RealTrends.Com is a national site that provides rankings of Real Estate Agent performance.  They have been tracking Real Estate Agent performance at the agent, team, and brokerage level for the past eight years and provide consumers the data necessary to make an educated decision.

Buying and selling a home is typically one of the largest financial transactions you will make in your life time.  Therefore it is critical to choose a local experienced agent with a proven track record.  Do you purchase or sell a car without checking ratings websites?  Almost all people research properties online, but researching agents is also an important part of the equation.  You need someone you can count on to get the job done.

In real estate, like many other fields, the more transactions an agent has done, the more capable they are of effectively advising their clients.  At the end of the day, you don’t need a new best friend, you need someone with extensive knowledge and experience, which directly correlates with sales performance.

Emergency Funds: Preparing for the Unexpected

By Steve Blanchette, Newburyport.Com Correspondent
President of Blanchette Financial Group, Steve is a CFP®, AIF® offering tremendous experience with all aspects of financial planning and wealth management.
Blanchette Financial Group
Blanchette Financial, Newburyport MA

You’ve probably heard how important it is to establish and maintain an emergency fund. Unfortunately, most people don’t fully realize this until a money emergency is upon them. Are you financially prepared for a leaky roof? How about a broken-down car? If you lost your job, how long would you be able to support yourself and your family until you got a new one?

An emergency fund is money that you’ve set aside for these unexpected situations, be it to handle a minor home repair or to pay for something more serious, like medical bills. Despite the clear importance of having an emergency fund, however, more than three in five Americans have accumulated no savings for unforeseen expenses, according to a recent Bankrate report.

Set a goal
How much you need to save depends on a variety of factors. Generally speaking, your emergency fund should cover three to six months of living expenses. (Start with three months and aim to work your way up to six months.)

There are plenty of free online tools that can help you figure out how much you should have on hand. HelloWallet’s emergency savings calculator, for example, offers instant insight into this planning consideration.

Keep your funds accessible
It’s important to have easy access to your emergency fund when you need it. Consider keeping a portion of your money in a regular savings account, as it will provide some return and you’ll be able to withdraw it at any time without penalty. For longer-term funding, you might want to use a savings vehicle with higher interest, such as a certificate of deposit (CD) or multiple CDs.

Avoid savings pitfalls 
Naturally, there may be obstacles to overcome as you build your emergency fund. Take a look at some of the most common pitfalls and ways to avoid them:

  • Using your credit card as an emergency fund. Although credit cards are convenient, there is a lot to consider before turning to plastic. Using your credit card may resolve the immediate need, but when you consider interest on the debt and possible penalties, it may not be worth it in the long run.
  • Cheating other accounts to fund your emergency stash. Withdrawing money allocated to other resources, particularly your retirement savings account, can do long-term damage to your financial picture. For example, if you borrow from your retirement account and default on the loan, you could face serious tax implications and penalties. Think of it this way: taking cash out of your retirement account is like stealing from yourself in your golden years.
  • Thinking you can’t afford it. The most common excuse for not maintaining an emergency fund is that you don’t make enough money to save. Although your budget may be tight, you don’t need to put away hundreds or thousands of dollars all at once. Starting small works just as well. Try brewing your morning coffee at home instead of buying it or bringing a bag lunch to work instead of going out. The savings may not be dramatic initially, but they will add up.

Start today!
Establish your savings goal, figure out how much money you need to put away every month, and stick to the plan. Remember: it’s better to have an emergency fund and never use it than to face hard times with no means to support yourself and your family.

Certificates of deposit (CDs) typically offer a fixed rate of return if held to maturity, are generally insured by the FDIC or another government agency, and may impose a penalty for early withdrawal.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

© 2015 Commonwealth Financial Network®

Avoid Tax Scams With Awareness Of IRS Process

By Michael Capo, Newburyport.Com Correspondent
President of Michael Capo CPA, P.C. Mike has over 25 years of accounting and finance experience in corporate, individual, independent and government environments. Mike's extensive knowledge is invaluable to his clients and allows him to provide a consultative approach personalized to each of his business and personal tax clients.
Tax Scams, Newburyport MA, Michael Capo, CPA

Protect yourself, your family, and close friends against common tax scams.  Take the time to understand key facts that can help you know if you are being legitimately contacted by the IRS, or if you are being approached as part of a common tax scam.  Please read the links below and if you have any questions, feel to free to call the office of Michael Capo to discuss at 978-499-4300.

The IRS will not call you as initial contact for a tax matter.  You will always receive a letter from the IRS if you have a tax issue.  This is a confirmed tax scam.  Do not give them banking or credit card information over the phone.

https://www.irs.gov/uac/newsroom/irs-repeats-warning-about-phone-scams

CP2000 email / Affordable Care Act
The IRS will not email you any tax related notices.  The CP2000 notice can be a valid IRS document however it will come via USPS not email. If you believe that you have an issue with the Affordable Care Act, call the IRS directly at 800-829-1040.

http://www.accountingtoday.com/news/tax-practice/irs-warns-about-fake-tax-notice-scam-79334-1.html

We proactively share information with clients regarding many important tax related topics.  Highlighting tax scams is just one example.  We strive to provide awareness of tax related issues as well as impacts/ramifications of key tax related decisions.  We work to ensure that our customers are armed with information necessary to make informed decisions related to their specific circumstances.

We pride ourselves on  providing top notch accounting services for both individuals and businesses and we offer a broad scope of services.  We assist many clients with a basic personal returns, and for other clients we are managing important tax related elements of their business such as invoicing, payroll taxes, preparation of 1099’s as well as training on accounting tools such as QuickBooks.  Call to schedule an appointment as we welcome the opportunity to assist you with your tax and accounting needs.

Secure Your Dream Home By Being Prepared

By Bob Pezzella NMLS# 112811, Residential Mortgage Services, NMLS#1760 Equal Housing Opportunity
Why Bob Pezzella for your mortgage needs? Because my 26 years of lending experience coupled with the lending powerhouse that is Residential Mortgage Services, Inc. (RMS) we will streamline your mortgage and home buying process. After the crazy rate fluctuations of the late 1990s through the tumultuous 2000’s first decade and beyond I have navigated the mortgage process every step of the way for my clients. I pride myself on a thorough, consultative approach to understanding customer needs and goals and match your criteria with the parameters of available down payment monies and income level. Whether it makes sense to make a smaller or larger down payment, help raise a credit score, or pay off / refinance current debt, I will find the mortgage solution that is right for you. I will help you evaluate the array of mortgage options from the traditional 30-year fixed rate, through the various state housing programs to the government programs FHA, VA, USDA and together Residential Mortgage Services, Inc. (RMS) and I will guide you home! There is no affiliation between Residential Mortgage Services and any other company.
Residential Mortgage Services, Inc.
Being Prepared with Residential Mortgage Services, Newburyport

Be prepared! A truly great motto, not only for the Boy Scouts of America, but also for anyone embarking on today’s new mortgage process. Through my own quest for Eagle Scout, the many rigors of the high school and college years, and on to gainful employment, marriage and raising a family, “being prepared” has always been a cornerstone of my life. If you’re beginning today’s mortgage process either as a first time buyer or as an experienced homeowner, I cannot stress this old motto enough!

The first step in getting prepared for your new mortgage is going through the “pre-qualification” process with your loan officer. Don’t wait until you are excited at an open house and want to make an offer on a new home or until you have the “for sale” sign on the home you are selling. Get organized well in advance!

My pre-qualification typically begins with a 10-minute phone interview. Here I gather all of the pertinent personal and employment/assets information so that I can be organized and efficient in our follow-up face-to-face meeting. In terms of your preparedness, we are going to want to assess two factors as soon as possible: your goal for a comfortable, affordable monthly mortgage payment and a thorough review of your current credit report.

Many people compare the amount of their present rent payment as a benchmark for a comfortable, affordable mortgage payment. The mortgage industry considers PITI or PITIMI (principal & interest, insurance, taxes, mortgage insurance and also condo fee if applicable) as “total monthly payment”. Utilities, cable, credit card, auto, student loans etc. are not a part of this figure but are obviously a part of your total budget. If you are living with family and do not pay rent or if you have a mortgage and are selling your current house I highly recommend giving this concept of “comfortable affordable monthly payment” some serious consideration. If you study your budget and arrive at “your monthly payment” then we can more effectively target a purchase price point that you should be shopping for.  This really maximizes your time and helps you not to over-extend yourself with a monthly mortgage payment.

The second step for your initial preparedness is a thorough evaluation of your current credit report. Today’s mortgage rates are tied to your credit or FICO score. Credit scores are tiered, for example 680-700, 700-720, 720-740 etc. and a score of 740 or higher helps you to qualify for the best interest rate. If you are near a tier cut-off there might be simple steps you can take to improve your score and help yourself to qualify for a better interest rate.  It’s also important to evaluate your credit beforehand because you may have errors on your report, trade lines that are in dispute, old medical or other collections, or even authorized use of a family member’s credit card that has a high monthly payment or late notice damaging both the amount of mortgage you may qualify for and your interest rate. If you have student loans that are in deferment these inevitable monthly payments have to be calculated as future debt. Many of these situations require your attention and can take a substantial amount of time to resolve.  If you take the time to be prepared you will get off to a much better start to your mortgage process and really enable yourself to focus on what’s most important – your beautiful new home! Give me a call if I can help answer questions or if you’re ready to pursue your dream home!

Next time I’ll talk about down payments and sourcing funds, two other areas that compliment good home-buying preparation!

 

S Corporation Advantages and Disadvantages

By Michael Capo, Newburyport.Com Correspondent
President of Michael Capo CPA, P.C. Mike has over 25 years of accounting and finance experience in corporate, individual, independent and government environments. Mike's extensive knowledge is invaluable to his clients and allows him to provide a consultative approach personalized to each of his business and personal tax clients.
S Corporation Advantages, Michael Capo, Newburyport

What are S Corporation advantages and disadvantages?  Frequently, this question arises whenever a client is just starting a business, or has been operating as a sole proprietor and may be wondering about the tax advantages of incorporating as an S Corporation.  Also, many clients assume it will be too costly or time-consuming to incorporate—but neither is the case.  The following is a brief outline and comparison of an S Corporation advantages and disadvantages.  However, please feel free to set up a consultation to discuss your specific business opportunity needs and whether or not an S Corporation is right for you.

What is an S corporation?

Essentially, an S corporation is a corporation that is treated, for federal tax purposes, as a pass-through entity through an election made with the Internal Revenue Service (IRS) to be considered an S Corporation. What does that mean?

As a corporation, an S corporation is created through filing Articles of Incorporation with the Mass. Secretary of State. It issues stock and is governed as a corporation. The owners, who are called shareholders, have the same protection from liability as shareholders of a C Corporation.  An S corporation shareholder’s personal assets, such as personal bank accounts, cannot be seized to satisfy business liabilities.

However, like a sole proprietor or a partnership, an S corporation passes through its income and loss items to the shareholders. Unlike a regular corporation, there is no “double taxation,” once at the corporate level and again on the individual shareholder level. Each shareholder is subject to his or her own individual tax rate on the income (or losses) passed through to him or her at year-end. The following are S Corporation advantages and disadvantages to consider.

S corporation advantages

The advantages of an S corporation often outweigh any perceived disadvantages. The S corporation structure can be especially beneficial when it comes time to transfer ownership or discontinue the business. These advantages are typically unavailable to sole proprietors and general partnerships. S corporation advantages include:

  • Protected assets. An S corporation protects the personal assets of its shareholders. A shareholder is not personally responsible for the business debts and liabilities of the corporation as long as there is no personal guarantee. Creditors cannot pursue the personal assets (house, bank accounts, etc.) of the shareholders to pay business debts. In a sole proprietor or general partnership, owners and the business are legally considered the same—leaving personal assets vulnerable.
  • Pass-through taxation. An S corporation does not pay federal taxes at the corporate level.  Any business income or loss is “passed through” to shareholders who report it on their personal income tax returns. This means that business losses can offset other income on the shareholders’ tax returns. This can be extremely helpful in the startup phase of a new business.
  • Tax-favorable characterization of income. S corporation shareholders can be employees of the business and draw salaries as employees. They can also receive distributions from the corporation that are tax-free to the extent of their investment (basis) in the corporation. A reasonable characterization of distributions as salary or dividends can help the owner reduce self-employment tax liability, while still generating business expenses and wages paid deductions for the corporation.  This is one of the major advantages why an S Corporation is preferred by most privately owned businesses.
  • Straightforward transfer of ownership. Interests in an S corporation can be freely transferred without triggering adverse tax consequences. (In a partnership or an LLC, the transfer of more than a 50-percent interest can trigger the termination of the entity.) The S corporation does not need to make adjustments to property basis or comply with complicated accounting rules when an ownership interest is transferred.

S corporation disadvantages

An S corporation may have some potential disadvantages, including:

  • Formation and ongoing expenses. To operate as an S corporation, it is necessary to first incorporate the business by filing Articles of Incorporation with the Mass. Secretary of State and pay the appropriate fees. Massachusetts also imposes ongoing yearly fees, such as an annual report and excise tax fees. Although these fees usually are not expensive, and can be deducted as a cost of doing business, they are expenses that a sole proprietor or general partnership will not incur.
  • Stock ownership restrictions. An S corporation can have only one class of stock, although it can have both voting and non-voting shares. Therefore, there can’t be different classes of investors who are entitled to different dividends or distribution rights. Also, there cannot be more than 100 shareholders. Foreign ownership is prohibited, as is ownership by certain types of trusts and other entities. Typically, this is not an issue with locally private owned businesses.
  • Closer IRS scrutiny. Because amounts distributed to a shareholder can be dividends or salary, the IRS scrutinizes payments to make sure the characterization conforms to reality. As a result, dividends may be re-characterized as wages, which subjects the corporation to employment tax liability.  This is one particular area that needs to be discussed in great lengths to assure that a shareholder is taking the proper amount of salary.
  • Less flexibility in allocating income and loss. Because of the one class of stock restriction, an S corporation cannot easily allocate losses or income to specific shareholders. Allocation of income and loss is governed by the percentage of stock ownership, unlike a partnership or LLC where the allocation can be set in the operating agreement.

If you are interested in further exploring S Corporation advantages and disadvantages in regards to your specific business, contact the offices of Michael Capo, CPA. P.C. to schedule a meeting, 978-499-4300.

Market Update – When Should You Put Your House on the Market?

By Robert Bentley, Newburyport.Com Correspondent
CEO/Owner & Residential/Commercial Sales Specialist for Bentley's, Robert has been the #1 agent in the Greater Newburyport market for the past six years. Robert's success is due to his dominance with on-line real estate marketing, strong negotiation skills, and good old fashioned work ethic. Robert has a strong sales, marketing, and finance background and always does what is necessary to get the deal done, and make his clients happy. Experience and proven reputation are key when you are making the largest financial transaction of a life time.
Robert Bentley
put your house on the market, Newburyport MA

Market Update – When Should You Put Your House on the Market? Are you waiting for the Spring market because you’ve heard that is the best time to list your property?  Some will say list your house, “just after the Super Bowl, or as soon as the snow starts to melt.”  Timing of when to put your house on the market is a very common question.  The answer depends on a few factors but the most important factors are: when is your house ready to show and when are you ready.

The Greater Newburyport real estate market is currently lite on inventory, as it frequently is in the middle of Winter months.  What’s this mean to sellers in the Greater Newburyport real estate market?  It means, don’t wait if your house is ready to be put on the market.  List now and you are likely to get a better price because there are many educated, quality buyers just waiting to act when they see the right property.

The Spring market is traditionally a very popular time to list, but sellers will experience substantially more competition because buyers have more options during the busy Spring market.  There are many very educated buyers in the Greater Newburyport real estate market place right now, many of which have been searching for quite some time.  These folks are sitting on the sidelines patiently waiting for the right property, and they clearly recognize when a great property comes along.   Don’t over-analyze when to put your house on the market.  This is a simple supply versus demand equation.  If your house is ready, jump in now and you are likely to get premium pricing while buyer demand is at its highest.

Call, text 781.858.5115 or email RobertBentley@Newburyport.com  to schedule a meeting to discuss listing your home or condo.

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