Category: Mortgage and Financing

Yes, Interest on Home Equity Loans is Still Deductible

Original post on the National Association of REALTORS® blog. 

There’s been confusion since the big tax law was enacted over the deductibility of interest on home equity loans. NAR has been saying that the interest is still deductible for the part of the loan that’s used for home repairs, renovations, and additions. And that’s the correct interpretation, according to the IRS. The agency confirmed that in a memo about a week and a half ago.

VRE 82 image

The part of the loan that’s used on the house to fix something or improve it remains deductible under the new tax law. Loan proceeds that are used for personal living expenses or anything not related to improving the home are not deductible.

The clarification is looked at in the latest Voice for Real Estate news video from NAR.

 

Robert Freedman

Robert Freedman is director of multimedia communications for the NATIONAL ASSOCIATION OF REALTORS®. He can be reached at [email protected]

Mortgage Interest Rates Have Begun to Level Off

Mortgage Interest Rates Have Begun to Level Off | Keeping Current Matters

Whether you are a buyer searching for your first home, or a homeowner looking to move up to your next home, you should pay attention to where mortgage interest rates are heading.

Over the course of 2018, according to Freddie Mac’s Primary Mortgage Market Survey, rates have increased from 3.95% in the first week of January to 4.40% in the first week of April.

At first glance, the difference between these numbers in such a short amount of time could be concerning, but if we look at the graph below, we’ll see that rates have already started to level off and return to the mark set in February.

Mortgage Interest Rates Have Begun to Level Off | Keeping Current Matters

This is great news for anyone looking to buy a home this spring! The spring is always one of the busiest seasons for home buying, and with rates increasing even more, buyers have come off the fence to lock in great rates! This is still great advice as the experts believe that rates will continue to rise throughout the year.

Every month, Freddie Mac, Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors release their projections for where they believe mortgage rates will be in the coming months. If we take the average of what each of the four organizations is predicting for the second quarter, rates are expected to rise to about 4.48% by June.

That average climbs to 4.73% by the end of this year.

So, what does this mean?

Waiting until the end of the year to buy, with rates still projected to increase, will end up costing you more money on your monthly mortgage payment. For every $250,000 you need to borrow to purchase your dream home, you will spend $49.21 more per month, $590.52 per year, and over $17,700 by the end of your 30-year mortgage.

And that’s just the impact of your interest rate going up!

Bottom Line

If you are ready and willing to purchase a home, find out if you’re able to by sitting with a local real estate professional who can evaluate your needs and help you with next steps!

The Cost of Waiting: Interest Rates Edition

The Cost of Waiting: Interest Rates Edition [INFOGRAPHIC] | Keeping Current Matters

Some Highlights:

  • Interest rates are projected to increase steadily heading into 2019.
  • The higher your interest rate, the more money you end up paying for your home and the higher your monthly payment will be.
  • Rates are still low right now. Don’t wait until rates hit 5% to start searching for your dream home!

The Mortgage Process: What You Need to Know

The first step in the home buying process? Knowing what you can afford by getting a loan pre-approval (or having a proof of funds letter from your bank, if you are a cash buyer).

The Mortgage Process: What You Need to Know [INFOGRAPHIC] | Keeping Current Matters

Some Highlights:

  • Many buyers are purchasing a home with a down payment as little as 3%.
  • You may already qualify for a loan, even if you don’t have perfect credit.
  • Take advantage of the knowledge of your local professionals who are there to help you determine how much you can afford.

View this previous post on the dos and don’ts when applying for a mortgage. 

Thinking of buying? Contact us today! (708) 529-5839


Where Are Mortgage Interest Rates Headed in 2018?

Where Are Mortgage Interest Rates Headed in 2018? | Keeping Current Matters
The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search.

Below is a chart created using Freddie Mac’s U.S. Economic & Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily over the course of the next 12 months.

Where Are Interest Rates Headed? | Keeping Current Matters

How Will This Impact Your Mortgage Payment?

Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.

According to CoreLogic’s latest Home Price Index, national home prices have appreciated 7.0% from this time last year and are predicted to be 4.2% higher next year.

If both the predictions of home price and interest rate increases become reality, families would wind up paying considerably more for their next home.

Bottom Line

Even a small increase in interest rate can impact your family’s wealth. Meet with a local real estate professional to evaluate your ability to purchase your dream home.

Should I Buy a Home Now? Or Wait Until Next Year?

Should I Buy a Home Now? Or Wait Until Next Year? [INFOGRAPHIC]| Keeping Current Matters

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 4.4% by next year.
  • CoreLogic predicts home prices to appreciate by 5.0% over the next 12 months.
  • If you are ready and willing to buy your dream home, find out if you are able to!

What to Do After the Equifax Data Breach

(via Thefederalsavingsbank.com )

On Sept. 7, credit bureau Equifax announced it discovered a data breach, which gave hackers access to personal information on about 143 million U.S. consumers, plus that of some Canadian and U.K. citizens.

The data breach lasted from mid-May through July. Hackers could see names, dates of birth, addresses, Social Security numbers and some driver’s license numbers. Further, about 209,000 U.S. consumers’ credit card numbers and about 182,000 U.S. consumers’ dispute documents –
which contain personal identifying information – were accessed.

In short, hackers may have accessed enough information to open unauthorized accounts or lines of credit.

Consumers can protect themselves by taking matters into their own hands. Here’s what you can do to keep your personal and financial information under wraps:

Step 1: Find out if you were affected

Equifax created a website – www.equifaxsecurity2017.com – so consumers could determine if they were one of the 143 million whose personal information was accessed. The site requires your last name and the final six digits of your Social Security number.

Whenever you’re entering sensitive information – partial Social Security numbers, credit card numbers, or answering any security questions – it’s not wise to be on a public Wi-Fi network. Do this at home or on a secure network you trust; the hotspot at your favorite cafe doesn’t count.

Security blogger Brian Krebs wrote that some consumers found that, after entering the same information at different times, received different results. Krebs notes that it might be prudent to just assume that you are one of the many who were affected.

Step 2: Pull your credit report

There’s an easy way consumers can find out if someone has tried to open an account or line of credit in their name. This is through annualcreditreport.com, a website mandated by Congress so that consumers can access one free credit report every year from each of the major three credit bureaus: Equifax, TransUnion and Experian.

Everyone should make a habit of doing this anyway. Now is the perfect time to start if you aren’t doing this already.

Step 3: Sign up for credit monitoring

Equifax is offering free credit monitoring services to consumers through www.equifaxsecurity2017.com. Krebs explains that these types of services alert you if someone steals your identity, but doesn’t prevent the theft from occurring in the first place.

Still, it can help you take the right steps in the aftermath of identity theft.

Step 4: Initiate a credit freeze

A credit freeze prevents anyone who has your personal information (yourself included) from opening an account or line of credit in your name. This is the most secure way to protect yourself from fraud or identity theft.

According to the Federal Trade Commission, to initiate a credit freeze, you need to contact each of the three credit bureaus individually by phone. Here are their numbers:

Equifax: 1-800-349-9960
TransUnion: 1-888-397-3742
Experian: 1-888-909-8872

You’ll need to provide information like your name, Social Security number, address and birth date.

When you freeze your credit, you’ll receive a unique PIN. This is the key you’ll use to unlock your credit if you decide to open a new account. Keep this in a secure location.

If you have any questions about how this breach may affect the mortgage lending process, reach out to The Federal Savings Bank.

I specialize in helping clients purchase and refinance homes in all 50 states.
I can finance your primary residence, vacation home, and investment property.
Please call or email me today if I can help you or anyone you know!

 

Brian Kohlstedt PhotoBrian Kohlstedt
Senior Vice President, NMLS# 216947
direct:(312) 738-8440
fax:(312) 491-5303
[email protected]om
http://www.thefederalsavingsbank.com/briankohlstedt
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Equal Housing Lender Member FDIC

Number of Buyers Putting Down Less Than 10% Hits 7-Year High

Number of Buyers Putting Down Less Than 10% Hits 7-Year High | Keeping Current Matters

According to Black Knight Financial Service’s Mortgage Monitor Report, 1.5 million Americans have purchased a home with down payments under than 10% over the last 12 months. This is great news for buyers as this marks a 7-year high.

Many mortgage programs offered by agencies like Freddie Mac and Fannie Mae allow buyers to put down as low as 3% to purchase their dream homes. The strength of the housing market has aided buyers who used low-down-payment programs to buy. As a recent CNBC article points out,

“Defaults on recent low down payment loans, so far, are slow, but that is as much a factor of the good credit quality as it is the strength of the housing market. Home prices are rising incredibly fast, meaning those borrowers are gaining equity in their homes quickly.”

Low down payments aren’t just great for first-time homebuyers. These programs have allowed homeowners who want to capitalize on the equity they have in their homes to use the profit from their sale to pay off high-interest credit cards, fund education or even start a business.

According to a new Census Report, the Annual Survey of Entrepreneurs , home equity was used to start 7.3% of all businesses in the United States, which equates to over 284,000! The industries that saw the most growth from home equity are accommodation & food services, manufacturing and, retail trade.

Bottom Line

Gone are the days of ‘20% down or no mortgage.’ What could you build with the equity in your house? Contact us today – (708) 529-5839 cell –  real estate professionals who can evaluate your ability to achieve your dreams. We work with many first-time home buyers.

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Mortgage Rates by Decade Compared to Today

Mortgage Rates by Decade Compared to Today [INFOGRAPHIC] | Keeping Current Matters

Some Highlights:

  • The interest rate you secure for your mortgage greatly influences your monthly housing costs.
  • In the 1980s, 30-year fixed mortgage rates averaged in the high 12s making the monthly principal and interest payment over $2,000.
  • Interest rates are still at historic lows; this is a great time lock in your housing cost and protect yourself from increasing rents, or refinance your current mortgage.

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Thinking of Buying a Home? This Should Be Your First Step…

…getting a loan pre-approval so you know what you can truly afford (what you should know about the mortgage process.)

(or getting the proof of funds letter from your bank if you are not taking out a loan – cash buyer).

 In many markets across the country, the amount of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search. Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach. Freddie Mac lays out the advantages of pre-approval in the My Home section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.” Freddie Mac describes the 4 Cs that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

What you should do (and not do) when applying for a loan.

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.