Hope Leitner, Realtor®, CRS

When loans are quoted by lenders, most buyers pay attention to the interest rate but not so much to the points that may be charged along with the rate. A point is one-percent of the mortgage amount and considered pre-paid interest that affects the yield on the loan. Buyers or sellers can pay points but there can be limits based on underwriting guidelines for different types of loans. A lower note-rate would obviously make the payments less. However, with a little analysis, you can determine how much points paid up-front can save a borrower or whether you'll recapture the additional costs in the anticipated time in the home. In the example below, two choices are compared; a 4.25% loan with no points vs. a 4.00% loan with one point. If the buyer stays in the home at least 69 months, he will recover the $2,700 cost for the point on the lower interest rate. If the purchaser stays ten years, he’ll save two thousand dollars over the cost of the point. A less obvious advantag...

In Trulia’s recent report, Rent vs. Buy: Roommate Edition, they examined the impact that renting with a roommate has in determining whether it is more expensive to rent or buy. The study explains: “Since we started keeping track in 2012, it’s been a better deal to buy than rent in America’s largest housing markets – and for much of that time it hasn’t been close.” It then goes on to ask the question: “But does the equation change for renters who share their rent with a roommate?” The report reveals: “While the standard rent vs. buy analysis reveals buying is cheaper than renting in all of the nation’s 100 largest metros, this doesn’t hold true for those choosing between renting with a roommate and buying a starter home.” It seems obvious that sharing the cost of renting your living space by taking in a roommate dramatically decreases your housing expense (which is exactly what the report concluded), but it got us thinking. What if you purchased a home and took in th...

The Mortgage Debt Forgiveness Act,  originally passed in 2007,  was extended three times to protect homeowners from paying income tax on debt that was relieved due to foreclosure, short sales or deed in lieu of foreclosure.   The law expired on December 31, 2016 and unless it is extended again, homeowners with debt relief in 2017 may be subject to tax. A homeowner might feel a sense of relief without the obligation of a delinquent mortgage but just because the payments are no longer due doesn’t mean that there isn’t another obligation that replaces it. If a lender cancels or forgives debt, a taxpayer must include the cancelled amount in their income for tax purposes depending on the circumstances. The tax significance could be serious. This previously allowed relief only applied to a taxpayers’ acquisition indebtedness of their principal residence which did not include second homes and investment property. The maximum amount was limited to ...

Some Highlights: • Historically, the choice between renting or buying a home has been a tough decision. • Looking at the percentage of income needed to rent a median-priced home today (29.2%) vs. the percentage needed to buy a median-priced home (15.8%), the choice becomes obvious. • Every market is different. Before you renew your lease again, find out if you can put your housing costs to work by buying this year!

There is no doubt that it is easier to sell your house when using the services of a local real estate professional. The agent will provide: Greater exposure to more buyers The skills of a professional negotiator A layer of protection from possible legal liabilities Professional guidance in navigating any pitfalls that may arise A level of safety while showing the home There is no doubt that these services are valuable to any family that decides to sell. The only question is – how valuable? One of the main reasons For Sale By Owners (FSBOs) don’t use a real estate agent is because they believe these services are not worth the fee an agent charges. But, what if those services didn’t cost the seller a penny? A study by Collateral Analytics, however, reveals that FSBOs don’t actually save anything and, in some cases, may be costing themselves more by not listing with an agent. In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The...

If your house no longer fits your needs and you are planning on buying a luxury home, now is a great time to do so! We recently shared data from Trulia’s Market Mismatch Study which showed that in today’s premium home market, buyers are in control. The inventory of homes for sale in the luxury market far exceeds those searching to purchase these properties in many areas of the country. This means that homes are often staying on the market longer which can eventually lead to a price change. Those who have a starter or trade-up home to sell will find buyers competing, and often entering bidding wars, to be able to call your house their new home. The sale of your starter or trade-up house will aid in coming up with a larger down payment for your new luxury home. Even a 5% down payment on a million-dollar home is $50,000. But not all who are buying luxury properties have a home to sell first. In a Washington Post article, Daryl Judy, an associate broker with Washington Fine P...

Buying Remains Cheaper Than Renting in 39 States! In the latest Rent vs. Buy Report from Trulia, they explained that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States. The updated numbers show that the range is an average of 3.5% less expensive in San Jose (CA), all the way up to 50.1% less expensive in Baton Rouge (LA), and 33.1% nationwide! A study by GoBankingRates looked at the cost of renting vs. owning a home at the state level and concluded that in 39 states, it is actually ‘a little’ or ‘a lot’ cheaper to own (represented by the two shades of blue in the map below). One of the main reasons owning a home has remained significantly cheaper than renting is the fact that interest rates have remained at or near historic lows. Freddie Mac reports that the current interest rate on a 30-year fixed rate mortgage is 3.91%. Nationally, rates would have to reach 9.1%, a 128% increase o...