Hope Leitner, Realtor®, CRS

Here's the scenario: you have a project and need to borrow some money, but you want to do it in the most economic manner.   You've got a low rate on your existing first mortgage and don't want to do a cash-out refinance and pay a higher rate.   Is a home equity loan an option? Prior to 2018, homeowners could have up to $100,000 of home equity debt and deduct the interest on their personal tax return.   The Tax Cuts and Jobs Act of 2017 eliminated the home equity deduction unless the money is used for capital improvements. Regardless of the deductibility, lenders will still loan money to owners who have equity in their home and good credit.   The most common reasons people borrow against their home equity are: Consolidate debt with higher interest rates Make improvements on their home Refinance an existing home equity line of credit Down payment for another home or rental investment Creating reserves or available access for potenti...

For centuries, people in this country have seen homeownership as part of the American Dream. Whether they were born here or immigrated from another country, they wanted to own a piece of America. With so many prominent societal changes over the last few decades, it is fair to ask if people in America still feel the same way about owning a home. The answer was made abundantly clear in two separate reports released earlier this month. In their market trends report, As Housing Trends Shift, So Does Renter, Buyer and Seller Sentiment, Trulia revealed that: “After two years of no change, the share of Americans who say that homeownership is part of their personal “American Dream” ticked up from 72 percent to 73 percent of Americans.” At the same time, the National Association of Realtors released their Aspiring Home Buyers Profile. As the report explained: “For both homeowners and non-homeowners alike, homeownership is strongly considered a part of the American Dream. For non-owners, ...

Homeowners who purchase their homes before the age of 35 are better prepared for retirement at age 60, according to a new Urban Institute study. The organization surveyed adults who turned 60 or 61 between 2003 and 2015 for their data set. “Today’s older adults became homeowners at a younger age than today’s young adults. Half the older adults in our sample bought their first house when they were between 25 and 34 years old, and 27 percent bought their first home before age 25.” The full breakdown is in the chart below: The study goes on to show the impact of purchasing a home at an early age. Those who purchased their first homes when they were younger than 25 had an average of $10,000 left on their mortgage at age 60. The 50% of buyers who purchased in their mid-twenties and early-30s had close to $50,000 left, but traditionally had purchased more expensive homes. Many housing experts are concerned that the homeownership rate amongst millennials, those 18-34, is much lower...

A loaf of bread used to be a nickel. A movie ticket was a dime. Not anymore. Houses were also much less expensive than they are now. Inflation raised the price of all three of those items, along with the price of almost every other item we purchase. The reason we can still afford to consume is that our wages have also risen over time. The better measure of whether an item is more expensive than it was before is what percentage of our income it takes to purchase that item today compared to earlier. Let’s look at purchasing a home. The COST of a home is determined by three major components: price, mortgage interest rate, and wages. The big question? Are we paying a greater percentage of our income toward our monthly mortgage payment today than previous generations? Surprisingly, the answer is no. Historically, Americans have paid just over 21% of their income toward their monthly mortgage payment. Though home prices are higher than before, wages have risen as well. And, the most i...

Generally speaking, when you need an inventory of your personal belongings, it is too late to make one.   Sure, you can reconstruct it but undoubtedly, you'll forget things and that can cost you money when filing your insurance claim. Most homeowner's policies have a certain amount of coverage for personal items that can be 40-60% of the value of the home. Homeowners who have a loss are usually asked by the insurance company for proof of purchase which can come in the form of a receipt or current inventory of their personal belongings. The most organized people might find it difficult, if not impossible, to find receipts for the valuable things in their home.   Think about when you're rummaging around a drawer or closet looking for something else and you discover something that you had totally forgotten that you had. An inventory is like insurance for your insurance policy to be certain that you list everything possible if you need to make a claim.   Systematicall...

Some Highlights: •The cost of waiting to buy is defined as the additional funds it would take to buy a home if prices & interest rates were to increase over a period of time. •Freddie Mac predicts interest rates to rise to 5.1% by the end of 2019. •CoreLogic predicts home prices to appreciate by 4.8% over the next 12 months. •If you are ready and willing to buy your dream home, find out if you are able to!

Some Highlights: •With interest rates still around 4.5%, now is a great time to look back at where rates have been over the last 40 years. •Rates are projected to climb to 5.0% by this time next year according to Freddie Mac. •The impact your interest rate makes on your monthly mortgage cost is significant! •Lock in a low rate now while you can!

The Tax Cuts and Jobs Act of 2017 increased the standard deduction to $24,000 for married couples.   There will be some instances that homeowners may be better off taking the standard deduction than itemizing their deductions.   In the past, homeowners would most likely be better off itemizing but the $10,000 limit of state and local taxes (SALT) adds one more issue to consider. Let's look at a hypothetical homeowner to see how a strategy that has been around for years could benefit them now even though they haven't used it in the past.   The strategy is called bunching; by timing the payments in a tax year so that they can be combined to make a larger deduction. Let's say that the married couple filing jointly has a $285,000 mortgage at 5% for 30 years that has about $14,000 in interest being paid.   The property taxes are $6,000 and they have $4,000 a year in charitable contributions for a total of $24,000 of allowable itemized deductions on Schedule A. Sin...

Interest rates for a 30-year fixed rate mortgage climbed consistently throughout 2018 until the middle of November. After that point, rates returned to levels that we saw in August to close out the year at 4.55%, according to Freddie Mac’s Primary Mortgage Market Survey. After the first week of 2019, rates have continued their downward trend. As Freddie Mac’s Chief Economist Sam Khater notes, this is great news for homebuyers. He states, “Mortgage rates declined to start the new year with the 30-year fixed-rate mortgage dipping to 4.51 percent. Low mortgage rates combined with decelerating home price growth should get prospective homebuyers excited to buy.” In some areas of the country, the combination of rising interest rates and rising home prices had made some first-time buyers push pause on their home searches. But with more inventory coming to market, continued price growth, and interest rates slowing, this is a great time to get back in the market! Will This Trend Contin...

Mortgage insurance premium can add almost $200 to the payment on a $265,000 FHA mortgage.   The decision to get an FHA loan may have been the lower down payment requirement or the lower credit score levels, but now that you have the loan, is it possible to eliminate it? Mortgage Insurance Premium protects lenders in case of a borrower's default and is required on FHA loans.   The Up-Front MIP is currently 1.75% of the base loan amount and paid at the time of closing.   Annual MIP for loans with greater than 95% loan-to-value is .85% per year.   For loans with FHA case numbers assigned before June 3, 2013, when the loan is paid down to 78% of the original loan amount, the MIP can be cancelled.   The borrower may need to contact the current servicer. However, for loans greater than 90% with FHA case numbers assigned on or after that date, the MIP is required for the term of the loan. Most homeowners with FHA mortgages are not eligible to cancel the MIP bec...