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Mortgage Rates Again at Historic Lows

 Wednesday February 24th, 2016  First Time Home Buyers, For Buyers, Move-Up Buyers

Just two weeks ago, we posted an article discussing where mortgage interest rates may be heading over the next twelve months. We quoted projections from Fannie Mae, Freddie Mac, the Mortgage Bankers’ Association and the National Association of Realtors. Each predicted that rates would begin to rise slowly and steadily throughout 2016.

However, shaky economic news and a volatile stock market have actually caused rates to drop six out of the last seven weeks, and have remained at 3.65% for the past two weeks.

Rates have again fallen to historic lows yet many experts still expect them to increase in 2016. The only thing we know for sure is that, according to Freddie Mac, current rates are the best they have been since last April.

Bottom Line

If you are thinking of buying your first home or moving up to your ultimate dream home, now is a great time to get a sensational rate on your mortgage.

To see how this could work for you, call, text or email.

Thinking of Buying A Home? What Are You Waiting For?

With spring right around the corner, you may be wondering if you should wait to enter the housing market. Here are four great reasons to consider buying a home today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.3% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.4% over the next year. The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report projects home values to appreciate by more than 3.2% a year for the next 5 years.

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have remained below 4%. Most experts predict that they will begin to rise over the next 12 months. TheMortgage Bankers Association, Freddie Mac & the National Association of Realtors are in unison projecting that rates will be up almost three-quarters of a percentage point by this time next year.

An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

3. Either Way You Are Paying a Mortgage

As a paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Bottom Line

If you are ready and willing to buy, find out if you are able to. Let's get to together to discuss finding you your dream home.

When you are ready to stop just thinking about buying your first or next home, call, text or email.

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Prep your yard for Spring

What Every Homeowner Should Do to Prep Their Yard for Spring

By: Stacey Freed

Preparing your lawn for spring is easy with these five no-sweat steps.

In recent winter months, snowmen were the only detectable "life" in your yard. But now that Frosty has succumbed to puddlehood, it's time to get ready for spring! Jumpstart your lawn resuscitation as soon as the ground defrosts, and you'll avoid a muddy disaster zone come April -- not to mention ignite your neighbors' envy. Here's what to do:

1.  Assess the Mess

"As soon as you can stand being outdoors for an extended period of time, see what hand you've been dealt by Mother Nature," says Missy Henriksen, vice president of public affairs for the National Association of Landscape Professionals.

Case your property for thrown branches, dead leaves, and other debris. Clear it away so you're able to do a general inspection of your soil, lawn, trees, shrubs, and garden structures. See what grass is coming back -- or not. Get rid of broken tree limbs; call an arborist if they look dangerous. Now's the time to take stock and make a plan.

Related: How to Tell If Your Tree Is About to Fall Over
2.  Rake and Wake

Just as you like to hunker down on those dark winter days, so, too, do your grass and trees. "As soon as the snow fades, vigorously rake that grass to wake it up and begin to get it to grow," says Walt Nelson, horticulture program leader for the Cornell Cooperative Extension in Monroe County, N.Y.

Rake out areas of thatch -- dried, dead grass that can be thick and deep. If you don't, thatch will keep oxygen and sunlight from other plants and grass. Check for fungus and mold growth. Don't worry if you run across "snow mold" -- a pinkish or gray web over matted blades of grass, or possibly just a slimy brown mess. Despite its name, it's rarely serious. Gently rake it out and it will dry. "You'd need 100 consecutive days of snow for snow mold to kill the grass," says Tony Koski, extension turf specialist at Colorado State University in Ft. Collins.

The grass may be a bit brown, but that doesn't mean it's dead. There are two types of grasses. "Cool season grasses green up in early spring. Warm season grasses green up really slowly in spring," Koski says.

3.  Weed Out Weeds

Finding a lot of crabgrass out there? It's decision time. Will you avenge the scourge? If your crabgrass is out of control or you're just hell-bent on getting rid of it, here's what you need to know: Preventing crabgrass is all about timing. You want to nix the nasties before they start germinating. You need to use a preemergent crabgrass control before the soil temperature hits about 55 degrees and the crabgrass begins growing.

"But most people aren't walking around with thermometers to measure their soil's temperature," Koski says. "Blooming forsythia is a good indicator you should put out your crabgrass preventer. That will be a different time in Michigan than in Virginia."

You can choose a toxic or an organic preemergent such as corn gluten meal, but understand that with the organic, Nelson says, it will take two to three years of applications to be effective.

Oh, and if you're eager to get seeding, note that you can't put out grass seed until at least eight weeks have passed since you applied crabgrass control.

4.  Trim the Trees (and Shrubs!)

Move on to trees and shrubs as the world defrosts, but the garden is not yet growing. "Trim out the dead, and it's off to the races on another growing season," Nelson says. "You can do the shrubs on your own, but if you're concerned about trees, hire a professional."

The important thing about trimming is to "be careful about trimming growth," Henriksen says. "You want new growth to get healthy enough to sustain itself in case of a second cold snap." For flowering shrubs, wait until flowers bloom so you don't cut off limbs that will be producing flowers or fruit.

5.  Go Beyond the Grass

Winter is hard on other garden elements. Henriksen recommends making sure your irrigation system works properly, and checking to see if there's damage to any garden lighting. Fix broken or damaged patio furniture and any wooden structures. Even clean off and refresh your deck once it's warm enough that power-washing won't create a deck ice rink.

Don't forget to tune up the lawn mower and string trimmer. Clean, sharpen, and oil your pruning shears so they'll be ready when the temperatures start to rise.

Prepping the yard won't be just a single weekend event, but if you get the heavy lifting out of the way early, it won't be long before you're leaving your socks and boots behind, and feeling the warm, soft grass between your toes.

If you are ready to sell that yard or looking for a new yard, call, text or email

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Finally a mention of a PROVEN way to increase family wealth

Homeownership Finally Makes Political Debate

This is not a political post!

Finally, the issue of homeownership has become a platform talking point in this year’s presidential debate. Yesterday, one of the candidates running for President spoke out about the importance of homeownership in America.

Hillary Clinton detailed a new economic agenda yesterday. In announcing her new agenda, she remarked:

“Homeownership is about more than just owning a home. It is about putting roots down in a community with better schools, safer streets and good jobs. And it is about building wealth, as homeowners build equity in their home one mortgage payment at a time…We must make sure that everyone has a fair shot at homeownership.”

This post isn’t political!

It doesn’t matter that it was Clinton who said it first. It doesn’t matter that she is a Democrat.

What matters is that EVERY candidate for our country’s highest office realizes the important role homeownership plays in the development of our nation.

The fact that homeownership was finally brought to the forefront of the debate is great news – no matter which way you lean politically.

Put Your Cost of Housing to Work for You

Homeowner’s Net Worth is 45x Greater Than a Renter’s

Every three years the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).

In a Forbes article the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun predicts that in 2016 the net worth gap will widen even further to 45 times greater.

The graph below demonstrates the results of the last two Federal Reserve studies and Yun’s prediction:

Put Your Housing Cost to Work For You

Simply put, homeownership is a form of ‘forced savings’. Every time you pay your mortgage you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth.

The latest National Housing Pulse Survey from NAR reveals that 85% of consumers believe that purchasing a home is a good financial decision. Yun comments:

“Though there will always be discussion about whether to buy or rent, or whether the stock market offers a bigger return than real estate, the reality is that homeowners steadily build wealth. The simplest math shouldn’t be overlooked.”

Bottom Line

If you are interested in finding out if you could put your housing cost to work for you by purchasing a home, let's schedule an appointment to guide you through the process.

Just call, text or email.

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Harrisburg Market Report Through January

To see how this applies to the home you want to sell or buy, call, text or email.

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Winter Home Improvement Projects

Since you are not likely to be doing improvement projects outside, since they may be buried under snow, here are some ideas to take care of inside.

When you have real estate questions or concerns, call text or email.

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Easy Steps form This Old House Magazine

22 Little Ways to Go Green

Here are some low-stress steps to take around the house to reduce your carbon footprint, create a healthier home, and lower your monthly bills to boot

JEANNE HUBER THIS OLD HOUSE MAGAZINE

It seems everybody knows you can help the planet—and save yourself some cash—with big changes: adding spray-foam insulation to open walls, say, or installing a tankless water heater. But there are lots of simpler, lower-cost ways to improve your eco-scorecard, too. Here are some low-stress steps to take around the house to reduce your carbon footprint, create a healthier home, and lower your monthly bills to boot.
WORKSHOP
1. Unplug your power tools. Figure out which cordless tools (like drill/drivers) get the most use, then unplug the chargers on all the rest. Most cordless tools have nickel cadmium (NiCad) batteries, which will hold some charge for up to a year. They lose 15 to 20 percent of their juice each month, but only take a couple of hours to power up again. Newer tools with lithium ion batteries lose just 2 to 5 percent of their charge each month, so they'll be ready to go even if you haven't charged them in ages.
2. Spread sawdust on your floor. Take the superfine shavings captured by your dust collection system, wet them down, then push them around with a stiff broom to sweep your concrete garage or workshop floor. The mix is as good as a power-guzzling shop vac at picking up dust but doesn't swirl it into the air. 

3. Up the wattage on lights. Where you still use incandescent bulbs (with dimmers or three-ways) on multiple fixtures in a room, try consolidating. One 100-watt incandescent emits more light than two 60-watt bulbs combined but requires 17 percent less power. The 100-watter also uses the same energy as four 25-watt bulbs, but pumps out twice as much light. Just be sure your bulbs don't exceed the maximum wattage recommendation for each fixture.

more

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9 Easy Mistakes Homeowners Make of Their Taxes

By: G. M. Filisko

Published: January 12, 2016

Don’t rouse the IRS or pay more taxes than necessary — know the score on each home tax deduction and credit.

As you calculate your tax returns, be careful not to commit any of these nine home-related tax mistakes, which tax pros say are especially common and can cost you money or draw the IRS to your doorstep.

Sin #1: Deducting the wrong year for property taxes

You take a tax deduction for property taxes in the year you (or the holder of your escrow account) actually paid them. Some taxing authorities work a year behind — that is, you’re not billed for 2013 property taxes until 2014. But that’s irrelevant to the feds.

Enter on your federal forms whatever amount you actually paid in that tax year, no matter what the date is on your tax bill. Dave Hampton, CPA, a tax department manager at the Cincinnati accounting firm of Burke & Schindler, has seen homeowners confuse payments for different years and claim the incorrect amount.

Sin #2: Confusing escrow amount for actual taxes paid

If your lender escrows funds to pay your property taxes, don’t just deduct the amount escrowed. The regular amount you pay into your escrow account each month to cover property taxes is probably a little more or a little less than your property tax bill. Your lender will adjust the amount every year or so to realign the two.

For example, your tax bill might be $1,200, but your lender may have collected $1,100 or $1,300 in escrow over the year. Deduct only $1,200 or the amount of property taxes noted on the Form 1098 that your lender sends. If you don’t receive Form 1098, contact the agency that collects property tax to find out how much you paid.

Sin #3: Deducting points paid to refinance

Deduct points you paid your lender to secure your mortgage in full for the year you bought your home. However, when you refinance, you must deduct points over the life of your new loan.

For example, if you paid $2,000 in points to refinance into a 15-year mortgage, your tax deduction is $2,000 divided by 15 years, or $133 per year.

Sin #4: Misjudging the home office tax deduction

The deduction is complicated, often doesn’t amount to much of a deduction, has to be recaptured if you turn a profit when you sell your home, and can pique the IRS’s interest in your return.

But there’s good news. There’s a new simplified home office deduction option if you don’t want to claim actual costs. If you’re eligible, you can deduct $5 per square foot up to 300 feet of office space, or up to $1,500 per year.

Sin #5: Failing to repay the first-time homebuyer tax credit

If you used the original homebuyer tax credit in 2008, you must repay 1/15th of the credit over 15 years.

If you used the tax credit in 2009 or 2010 and then within 36 months you sold your house or stopped using it as your primary residence, you also have to pay back the credit.

The IRS has a tool you can use to help figure out what you owe.

Sin #6: Failing to track home-related expenses

If the IRS comes a-knockin’, don’t be scrambling to compile your records. File or scan and store home office and home improvement expense receipts and other home-related documents as you go.

Sin #7: Forgetting to keep track of capital gains

If you sold your main home last year, don’t forget to pay capital gains taxes on any profit. You can typically exclude $250,000 of any profits from taxes (or $500,000 if you’re married filing jointly).

So if your cost basis for your home is $100,000 (what you paid for it plus any improvements) and you sold it for $400,000, your capital gains are $300,000. If you're single, you owe taxes on $50,000 of gains.

However, there are minimum time limits for holding property to take advantage of the exclusions, and other details. Consult IRS Publication 523. And high-income earners could get hit with an additional tax.

Sin #8: Filing incorrectly for energy tax credits

If you made any eligible improvements in 2015 and 2016, such as installing energy-efficient heating and cooling system, you may be able to take a 10% tax credit, up to of $500. With some systems your cap is lower than $500. For instance, you can only claim $200 on windows. But keep in mind, this is a lifetime credit. If you claimed the credit in any recent years, you're done.

Installing a solar electric, solar water heater, geothermal, or small wind energy system can also make you eligible to take the Residential Energy Efficient Property Credit.

To claim the deduction, you have to use the complicated Form 5695, which can mean cross-checking with half a dozen other IRS forms. Read the instructions carefully.

Sin #9: Claiming too much for the mortgage interest tax deduction

Taxpayers are allowed to deduct mortgage interest on home acquisition debt up to $1 million, plus they can also deduct up to $100,000 in home equity debt.

This article provides general information about tax laws and consequences, but shouldn't be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice.

For any real estate question, call, text or email

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Why Leasing Your Car Could Keep You From Buying a Home?

Getting a mortgage can be difficult. Sometimes, to increase the odds of being approved or to qualify for a larger loan, prospective borrowers will pay down debts or eliminate existing loan obligations. Often, the process for doing so is simple, but there’s one type of financing that could trip up your efforts: a car lease.

Here’s a breakdown of why—and what you can do to avoid any snags.

What’s your debt-to-income ratio?

When you apply for a mortgage, a broker is going to tally up all of the monthly payments you make on existing obligations, including credit cards, student loans, personal loans, car debts, and other mortgages. That number gets measured against your income. This debt-to-income ratio helps determine your monthly mortgage payment. (So does yourcredit score. You can see where yours currently stands by getting your free credit scores, updated each month, on Credit.com.) Sounds easy and simple enough, right?

Well, the concept is, but if more than 25% of your income is already going toward debts, you may not be able to buy as much home as you think. When you have other existing obligations, your ability to borrow can be reduced tremendously. That $300 per month car lease, for example, can be severely hampering your buying power.

Mortgage tip: Remember, lenders will use only what you’re obligated to pay on existing loans in calculating your debt-to-income ratio. Choosing to pay more onyour debts can be a good financial move, but mortgage lenders generally don’t give you any benefit for choosing to do so.

Why a car lease can trip you up

Unlike an auto loan, a car lease can be trickier to work around if you’re trying to pay off debt to qualify for a mortgage. Let’s say your credit report shows a car lease payment of $300 per month. There is a balance on the credit report of $6,000 due, which is the remainder of the lease. If you had a car loan with these exact terms, you could write a check to pay off the $6,000 obligation. Case closed.

Unfortunately, that option doesn’t apply to a car lease. You can give the car back and pay the $6,000 balance that is due. However, to qualify for a bigger mortgage, the lender will need to verify there is no obligation due for car. If you give the car back, the mortgage company may ask what you’re going to drive instead—especially if there is a commute time from where you work to where you plan on residing.

Should you find yourself in this predicament, here are some options to consider.

• Call your car dealer. You can ask if it has any specific options for getting out of the lease. You’ll need to make it crystal clear that you must be out of the lease obligation completely.
• Transfer the lease to someone else. Your mortgage company should be OK with this option as long as you can show and verify the obligation is completely out of your name and that there is no obligation associated with it. You can search online for options if your car dealer doesn’t have any transfer suggestions.
• Pay out. Give the car back, pay the balance due, and either buy a new vehicle in cash, removing any debt-to-income ratio predicament, or finance a car that has a lower monthly payment. The key here is that the payments need to be reduced or totally removed if you want to maximize your buying power.
• Consider your priorities. A great deal on your car lease may not matter if you are serious about buying a home, plain and simple. Ask yourself: Is the car more important than the house?

Paying off debt for a mortgage

Paying off debt to qualify for a mortgage usually needs to be documented in the following ways.

• Money used to pay off the obligation cannot come from the reserve requirement your lender almost certainly has. Lenders usually want you to have at least three to four mortgage payments in the bank, called reserves, as a cushion when granting your loan request.
• You’ll need to produce a paper trail showing money leaving your bank account and going to the creditor to pay off debt or provide a copy of the canceled check to show you no longer owe the obligation.

All of these steps may seem unnecessary and overly repetitive, but they are a byproduct of the current mortgage lending world. Remember, stringent underwriting requirements help to ensure lenders are making good loans and, more importantly, that you can actually afford the house you are looking to buy.

———

This article was written by Scott Sheldon and originally published on Credit.com.

Before you do anything be sure to get in touch so we can discuss your unique situation face to face with a lender.

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Harvard on Why Owning a Home Makes Financial Sense

Harvard: Why Owning A Home Makes Sense Financially

 Monday February 1st, 2016  First Time Home Buyers, For Buyers

There are lots of reasons to buy a home. Do these from Harvard make sense to you?

We have reported many times that the American Dream of homeownership is alive and well. The personal reasons to own differ for each buyer, with many basic similarities.

Eric Belsky, the Managing Director of the Joint Center of Housing Studies at Harvard University expanded on the top 5 financial benefits of homeownership in his paper -The Dream Lives On: the Future of Homeownership in America.

Here are the five reasons, each followed by an excerpt from the study: 

1.) Housing is typically the one leveraged investment available.

“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

2.) You're paying for housing whether you own or rent.

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.” 

3.) Owning is usually a form of “forced savings”.

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

4.) There are substantial tax benefits to owning.

“Homeowners are able to deduct mortgage interest and property taxes from income...On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

5.) Owning is a hedge against inflation.

“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”

Bottom Line

I realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially. If you are one of the many considering a purchase this year, let's get together to discuss your options!

When you want to investigate home ownership, call, text or email.

Remember that I'm never too busy for your referrals