What’s Affordable?

Taxes and Home Ownership

Property Taxes

Uncommon Marketing

The Ever-Helpful IRS

Free Tax Info

Bean Counting: NJEF

Leads at Mom’s

Donating Duds

MV Inspection Hours

Corrections or additions?

First Home Buyers

These articles were published in U.S. 1 Newspaper on April 7, 1999. All rights reserved.

For first-time buyers in a dilemma about owning a home,

going to the New Jersey Housing and Mortgage Finance Agency (HMFA)

is one way to get unbiased and substantive information. HMFA will

help get mortgages with the lowest possible rates and may even be

able to help some first-time and urban buyers get access to mortgages

at below market rates.

HMFA and the Mercer County Commission on the Status of Women host

a free "Home Ownership Information Fair" on Saturday, April

10, at 9:30 a.m. at the Gallery at HMFA in Trenton for potential home

buyers. For more information about the fair, call 1-800-NJ-HOUSE.

HMFA’s mortgage products are designed for first-time home buyers,

buyers who have not owned a home in the last three years, and trade-up

buyers in HMFA target cities. "HMFA staff will be on hand at the

Home Ownership Information Fair to help determine the amount home

buyers can qualify for, provide a free credit check, and help select

the appropriate mortgage program," says Deborah De Santis,

HMFA executive director.

The core mission of the HMFA is to expand good affordable housing

opportunities for all New Jerseyans, particularly first-time and urban

area buyers. To fund this ambitious plan, HMFA issues tax-exempt bonds

to private investors. The bond proceeds allow HMFA to offer mortgages

at lower interest rates through participating lenders. Its mortgages


Low-Interest Financing: HMFA mortgages are below


loans. You save thousands of dollars in mortgage interest over the

life of the loan with an HMFA mortgage.

Fixed-Interest Rate Security: A fixed-interest rate


that your monthly mortgage payments for principal and interest will

remain the same for the entire loan term.

Low Down Payment Flexibility: An HMFA mortgage can be

obtained with as little as a three percent cash down payment. HMFA

lenders can help you determine if you can also use a loan or gift

for part of your down payment and closing costs.

These seem like unusually good terms, and not everyone is


for them. To qualify, you must either not own a home (be a


home buyer) or be a trade-up buyer in a targeted urban community.

The HMFA defines first-time home buyers as having never owned a home

or having not owned one in the past three calendar years. Home buyers

in Urban Target Areas need not be first-time home buyers. Urban Target

Areas are usually sections of a municipality and not the entire city

or town.

Income limits also apply. To qualify, the income limit for a small

family (two members or less) in Mercer County is $63,000, and for

large families (three or more members) the limit is $72,450 annually.

In Hunterdon, Middlesex, Somerset counties, the income limits are

$72,900 and $83,835 respectively.

HMFA offers a wide selection of programs for first time home buyers

and trade-up buyers in targeted cities. These programs are available

through the more than 75 HMFA-approved lenders with offices throughout

the state. These participating banks and mortgage lenders will help

you determine the exact amount you are eligible to borrow and


a mortgage that best suits your needs. In addition, there are income

and purchase price limits for each program that are based on the


of purchase and family size.

The Traditional Home Buyers Program is a low interest,

minimum down payment mortgage which is offered to qualified first-time

home buyers and urban area buyers. This program requires a down


as low as three percent of the total purchase price for single family

and townhouse buyer, and 10 percent for condominium buyers.

The Community Home Buyers Program requires a five percent

down payment, which can be reduced to three percent from the home

buyer’s savings with the other two percent coming from a gift or loan

from a family member, a nonprofit organization, or from the


The Too Good But It’s True Program is for homebuyers


in neighborhoods presently designated by the governor’s Urban


Council. They may be eligible for a below market rate mortgage using

the HMFA. "Too Good But It’s True" makes mortgages available

at very low interest rates with zero points for qualified buyers in

neighborhoods throughout Asbury Park, Camden, Elizabeth, Jersey City,

Long Branch, New Brunswick, Newark, Trenton, and Vineland. In


buyers may qualify with no money down.

The 100 Percent Financing Program which does not require

a down payment for buyers of homes in approved developments. In many

cases, depending on the appraised value of the house, closing costs

can also be included in the loan.

The Home Plus Mortgage and Modernization Loan Program

was created to allow first time and urban target area buyers the


to purchase and renovate a single-family home in need of moderate

repairs. The HomePlus Program provides acquisition mortgages for


buyers plus up to $15,000 in home repair money all in the first


The Buy It and Fix It Program allows first time home


to purchase, or home owners to refinance homes in need of substantial

rehabilitation. Mortgages include the funds for acquisition and repair

in one loan, and are available with very low down payments and


interest rates.

Community Reinvestment Act Loan Program allows households

earning 80 percent or less of area median income by county to be


for refinancing according to Fannie Mae guidelines.

Upstairs-Downtown Rehabilitation Loan Program is a


and rehabilitation loan restricted to storefront properties with a

housing component.

The HMFA lender in your area will be able to provide the current

rates, purchase price, and income limits, consumer mortgage details,

and loan availability. Call the 24 hour hotline at 800-NJ-HOUSE.

Top Of Page
What’s Affordable?

Before looking for a home, contact an HMFA lender to

help determine the price range you can afford. Compare your projected

housing expenses to what you are paying in rent. An HMFA mortgage

lender will help you determine the amount you are eligible to borrow

and recommend a mortgage.

"The best way to start the home-buying process is by taking a

realistic look at what you can expect from home ownership and what

owning your own home implies," says Susan Sands, HMFA


officer. "First time home buyers often are surprised at how costly

basic upkeep is, both in time and money. Repairs often represent an

unexpected expense. This makes it imperative that homeowners always

have an available cash reserve on hand."

The rule of thumb, says Sands, is that you can afford a house that

costs up to two and one-half times your annual gross income —

that is, the amount you make before taxes are deducted. "However,

each buyer should examine all the costs of home ownership and make

their own personal decisions on what will be affordable."

To determine what you can afford, apply the 28/36 maximum debt ratio.

That means that your projected housing debt — your monthly


payment — cannot exceed 28 percent of your gross monthly income.

Your personal debt — such as monthly credit card payments,


personal loans, and child support payments — combined with your

Housing Debt cannot exceed 36 percent of your gross monthly income.

In some cases the debt ratio can exceed 28/36, so you should consult

your lender to make that determination.

If you are buying a house with someone else, such as your spouse,

a family member, or a companion, you can also consider your


annual gross income in deciding how expensive a home you can buy.

However, your co-purchaser’s debts and credit history will also be

considered in determining how much you can borrow.

The qualification process determines how large a mortgage you are

eligible for, provided your loan application is approved. When you

apply for a mortgage, the lender will consider your income, your


debts, the purchase price of the house, the amount of your


the current interest rate that will be applied to the loan, and the

cost of the property taxes and insurance to determine the size of

the loan.

To prepare for the loan interview: Try to anticipate everything you

will need and have all of the necessary information such as names

and addresses with zip codes, phone numbers, and dates of employment

readily available. If you and your co-purchaser will both be signing

the mortgage, you should both attend the interview. Some mortgage

lenders will even bring applications to your home.

"We want to make home ownership available to everyone," says

Robert D. Prunetti, Mercer County executive. "The Home


Opportunity Fair puts experts from all fields under one roof, so that

all types of questions can be answered and the process of buying a

home can be made a little easier."

The HMFA offices are located at 637 South Clinton, Trenton.

Phone: 609-273-7400. Take the Trenton Freeway/Route 1 south to Route

129, Broad Street, Chambersburg exit. Then take the first exit, South

Broad Street, and turn left on South Broad. Go one block, turn left

on Dye Street. The parking lot is the first entrance on the left.

Top Of Page
Taxes and Home Ownership

Whether buying a first home or in the process of selling

one, home ownership can have a big effect on tax returns. Some of

the settlement fees and closing costs can be deducted in the tax year

the home is bought. These costs include certain real estate taxes,

mortgage interest and points that meet certain requirements.

Other costs may be included in the basis of the property. Basis is

a way to measure the investment in a home for tax purposes. Costs

like abstract and recording fees, surveys and owner’s title insurance

are included in the basis.

People who itemize deductions can deduct interest on most mortgages

secured by their first or second home. They can deduct qualifying

points on a loan to buy or improve their main home in the year they

paid them. And they can usually deduct real estate taxes imposed by

state or local governments.

The Taxpayer Relief Act of 1997 replaced two tax breaks for home


with a more generous one. Under the old law, those 55 and older could

exclude up to $125,000 of gain. And anyone who bought a replacement

home within two years of the sale might postpone taxes on some or

all of the gain. Under the new law, taxpayers can exclude up to


of gain ($500,000 on a joint return, if both meet the residency


from the sale of a home.

The new exclusion is allowed once every two years, but only if the

person used the home as a principal residence for at least two out

of the five years before the sale. The seller must pay tax on any

gain exceeding the exclusion — the replacement home rule no longer

applies. If a person sells before satisfying the two-year residency

requirement because of a change in employment or health, the maximum

exclusion amount ($250,000 or $500,000) is prorated by the percent

of the two-year time met. This proration also applies to anyone who

owned a home on August 5, 1997, and sells it before August 5 of this

year, regardless of whether there was a change in employment or


Because of this larger exclusion of gain, the average person may not

need to keep track of the home’s cost basis once the two-year


is met. Only if the home sells for more than the maximum exclusion

amount will the taxpayer even have to figure the gain. In that case,

one would need accurate records of all items affecting the basis.

This includes improvements such as adding a room, finishing a basement

or putting up a fence.

More information on buying, owning or selling a home is covered in

the following free publications from the IRS: Publication 523, Selling

Your Home; Publication 530, Tax Information for First-Time Homeowners;

Publication 936, Home Mortgage Interest Deduction. Call 800-829-3676

or check them out on the IRS website at


Top Of Page
Property Taxes

Most homeowners do not know if they are over assessed

and they would be shocked to find out that they do not know the


between their property assessment and the value of their home, says

the New Jersey Property Tax Authority. In a newly released booklet

"The New Jersey Homeowner’s Guide to Property Tax Appeals,"

the New Jersey Property Tax Authority outlines how home owners can

potentially save hundreds of dollars in property taxes every year.

This 35-page booklet is a guide for homeowners going through the tax

appeal process and includes blank forms for Property Profile,


Sale Verification, and Comparable Sale Check List. The booklet also

offers tips about how to handle the hearing process and how to


with the tax assessor. Here is an excerpt:

Since you will have the opportunity to ask the assessor or the

town’s expert questions, here are some to ask:

1. Did you personally inspect my property? Inside?

2. Did you personally inspect my comparable sales? Inside?

3. Did you personally inspect your comparable sales?


4. Are you aware of and did you consider: (State any


impact on your property, such as flooding, overhead power lines, close

proximity to industrial or commercial buildings, and anything that

you think impacts negatively on the value of your property.)

Do not try to sound like Perry Mason or Matlock. You are not

going to get them to break down and make them confess that you are

over-assessed. However, if you ask intelligent questions you will

sound knowledgeable and sincere. Do not get upset, loud, or


This will not help you prove the market value.

There is some information that should not be used as proof of your

property’s market value. This would include:

1. Comparing your assessment to your neighbor’s


2. How much you pay in property taxes.

3. How long you have lived in town.

4. That you are a senior citizen.

5. That you are on a fixed income.

The point is, the board is only concerned with the market value

of your property and the proper assessed value.

The booklet, published by Fairfield based Insight Marketing

Solutions can be ordered for $29.95 by calling 800-878-6942, or by

sending a check or money order to N.J.P.T.A., 397 Route 46 West, Suite

6139, Fairfield 07004.

Top Of Page
Uncommon Marketing

The most valuable letter you can write is a thank-you

letter, says Jeff Dobkin in his book "Uncommon Marketing

Techniques," a collection of 33 articles offering tips and


of low-cost marketing methods. "The time you always write it is

when you receive a business referral. A business referral is not to

be taken lightly or casually. It’s the utmost show of trust a client

or a friend can display in you. It’s the leap of faith that you’ll

perform exceptionally well."

Dobkin will share his tips at the luncheon organized by the New Jersey

Communications and Marketing Association (CAMA) on Wednesday, April

14, at 11:30 a.m. at the Forrestal Hotel. Cost: $35. Call 609-890-9207

for more information.

Dobkin is the president of the Danielle Adams Publishing Company at

Merion Station, Pennsylvania, a marketing agency and consulting


specializing in marketing and direct marketing. He has written two

books on marketing — "How to Market a Product for Under $500"

and "Uncommon Marketing Techniques." These books offer useful

how-to tips for entrepreneurs, home office pioneers, and owners of

small and medium sized businesses. Here is an excerpt from


Marketing Techniques."

"A `Thanks for your kind referral’ letter is without

a doubt the least costly and most effective piece of advertising I

can write. It has become a prime weapon in the marketing arsenal.

"A letter is a personal piece of correspondence you send to one

or two people. When you send it to a dozen (or a hundred) people,

and it’s designed to get you more business, it’s an ad. It’s a highly

stylized ad designed to look like a letter.

"Why is it so effective? For one thing, you can make the person

feel comfortable with their recommendation of you, because you’re

going to do the very best job you possibly can for their friend.


going to lean over backward to look good, and to make them look good

for giving a referral of someone so conscientious. You can’t make

them feel like this with an ad, but it’s easy to do with a letter.

"The receiver will remember it, and when the opportunity comes

up again, they will continue to refer people to you. You’ve heard

of word-of-mouth advertising as the best and cheapest form of


This is how you make it happen, again and again."

Top Of Page
The Ever-Helpful IRS

Changes in the tax law affect how self-employed people

handle income on 1998 returns and how business owners should plan

for 1999.

Health insurance. On 1998 returns, the amount of health

insurance premiums deductible by self-employed people increases from

40 percent to 45 percent. From 1999 through 2001, 60 percent will

be deductible.

Home office. Starting December 31, 1998, self-employed

people and employees may be able to take a home office deduction if

they use the office for administrative or management activities and

meet basic tests. There must be no other fixed place where the person

conducts substantial administrative or management activities and the

office must be used exclusively and regularly as a place of business.

An employee’s home office deduction qualifies if the office is used

for the employer’s convenience. One warning here: an employee’s


not to use suitable space made available by the employer can affect

the deductibility.

Paper versus electronic. The IRS will waive penalties

on businesses that use paper federal tax deposit coupons in a timely

manner while converting to the Electronic Federal Tax Payment System

(EFTPS). This penalty relief will run through June 30. It applies

to all taxpayers required to enroll in EFTPS and deposit


starting July 1, 1997, or later. Two toll-free EFTPS customer service

numbers, 800-945-8400 and 800-555-4477, can answer questions.

Too much withholding. Some employees can get more take

home pay with a tax benefit called the advance earned income tax


(advance EITC). Advance EITC allows employers to add a portion of

their employees’ earned income tax credits directly to their


To qualify, employees must expect to earn less than $26,928 in 1999,

expect to have at least one qualifying child, complete Form W-5 and

give it back to their employers. Call 800-829-3676 to get Publication

15, Employer’s Tax Guide, Circular E.

Installment payments. Those who can’t pay their tax bills

in full should fill out an Installment Agreement Request (Form 9465)

and send it to the IRS along with their tax returns. "This


form allows people to estimate a monthly payment that will fit within

their budget and allow them to pay off the taxes owed in a reasonable

period of time," explains John Dalrymple, IRS chief



The requirements for installment payments are new since July. The

amount owed must be less than $10,000, and the taxpayer must have

a five-year clean record and be unable to make immediate payment yet

able to pay in full in three years plus stay current with federal

taxes. Because the agreement costs $43 plus all interest and


penalties, a bank loan may be less expensive.

Deep in debt. A little known tax law provision, "offer

in compromise," allows some to pay an amount less than the full

amount of taxes owed. The IRS will accept this plan if a person’s

financial situation is such that it’s obvious they may never be able

to pay all the taxes owed, or there is a pending dispute regarding

the tax liability. Most will complete Form 656 and a comprehensive

financial statement showing assets, liabilities and income. The offer

must reflect the maximum they can pay. Also, they must agree to meet

all their federal tax obligations for five years or until the amount

offered is paid in full, whichever is longer. Those who fail to meet

the terms of the offer will once again owe all their back taxes in


"The IRS believes an offer in compromise makes good business


said Dalrymple. "It benefits taxpayers by giving them the


to get out from under a heavy financial burden. It gives them a fresh

start and brings them back into the tax system. It also benefits the

IRS and all taxpayers by bringing in taxes that may not be collectible

any other way." Call the IRS at 800-829-1040.

Phone-in Form 941. Millions of small businesses are


to file their Form 941 quarterly returns by telephone with the


package, including the 941TeleFile Tax Record, a payment voucher,

and a paper Form 941 for those who do not meet the filing


The call takes about 10 minutes; there is nothing to mail. The IRS

TeleFile help desk number is 901-546-2690, and it is not a toll-free


Top Of Page
Free Tax Info

Call 800-829-3676 for the Tax Guide for Small


Publication 334, with general information for sole proprietors who

file Schedule C or C-EZ.

The IRS’s 12-month wall calendar for small businesses

(publication 1518) provides tax tips ranging from starting a small

business to planning for retirement. It also shows the taxes due each

month, lists other free publications and describes ways to get tax

and business information from IRS and other agencies. Publication


A Guide to Free Tax Services (publication 910) describes

year-round tax services, tax season assistance and frequently


publications for businesses and individuals.

The IRS website (http://www.irs.ustreas.gov)

also offers forms, publications and interactive assistance. Clicking

on the "Tax Info for Business" section provides frequently

asked tax questions and the latest information on selected business

tax topics. Business owners can browse publications online or download

forms they need.

Top Of Page
Bean Counting: NJEF

Entrepreneurs deal with new terms and concepts everyday.

What does it mean when your accountant says: These numbers don’t


You have heard the term before but what exactly does "due


mean? Or "ROI" or "payback?"

Steve Murphy, director of PricewaterhouseCoopers’ technology,

information, entertainment, and communications group, will be


these and many more other concepts at the dinner meeting of the New

Jersey Entrepreneurs Forum on Thursday, April 8, at 6:30 p.m. at


Restaurant, Somerset. Cost: $45. Call 908-789-3424 for more


Murphy will be joined by Kevin Healy, a manager in


assurance and business advisory services group.

Top Of Page
Leads at Mom’s

How to get leads is always a challenge, and a group

in East Windsor aims to help. The Central Jersey Networking Group

has the distinction of allowing participants to get their beauty


it meets at 8:30 a.m. rather than at 7 a.m., on second and fourth

Thursdays for a one-hour breakfast buffet. The next meeting is


April 8, at 8:30 a.m. at Mom’s Diner, 433 Route 33, East Windsor.

Like similar groups, this one tries to limit the number of members

who from any one "category." Of 20 members, 10 to 15 show

up regularly, says Drew Tomasko, the group’s founder. A $5


includes a continental breakfast buffet. Call him at 732-792-8100

for information.

Tomasko is affiliated with a national financial services firm that

offers mutual funds, retirement funds, life insurance, and mortgages.

A chemical engineer from Rutgers, Class of 1982, he is pursuing his

MBA at Rider.

Tomasko planned the group to be very informal — no dues are


"I didn’t want it to be a big ordeal, but for it to have a life

of its own." But don’t miss three meetings in a row without


to say why. Your category will be declared vacant.

Top Of Page
Donating Duds

In the North Brunswick and Highland Park area, donations

of "gently used business clothing" for women are needed for

Women Helping Women and Women Aware. Clothing that is clean and on

hangars can be dropped off between April 12 and 23. For details call

Middlesex NJAWBO members Carol Wright of the Wright Agency at

732-238-8408 or Candice P. Howard of CPH Solutions at


Top Of Page
MV Inspection Hours

All state vehicle inspection stations that formerly

operated 51 hours a week now operate 55 hours a week. All state


are now open from 7:30 a.m. to 4:30 p.m., four days a week. There

is one extended night per week (Wednesday nights at Bakers Basin)

when stations will be open from to 7:30 p.m. On Saturdays the schedule

has been extended by two hours, from 7:30 a.m. to 12:30 p.m. to 7:30

a.m. to 2:30 p.m.

Parsons Infrastructure and Technology Group, a division of the


Parsons Inc. was awarded the contract to implement and oversee New

Jersey’s enhanced vehicle inspection and maintenance program by the

state. "This shift will result in more efficient service for New

Jersey motorists because all of the state’s 35 vehicle inspection

stations will be fully staffed at times when most people take their

vehicles for inspection," says Larry Sherwood, Parsons’

general manager.

Corrections or additions?

This page is published by PrincetonInfo.com

— the web site for U.S. 1 Newspaper in Princeton, New Jersey.

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