Tag: Home equity

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.

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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 rfreedman@realtors.org.

The Great News About Rising Prices for Homeowners

The Great News About Rising Prices for Homeowners | Keeping Current Matters

Recently there has been a lot of talk about home prices and if they are accelerating too quickly. As we mentioned before, in some areas of the country, seller supply (homes for sale) cannot keep up with the number of buyers out looking for a home, which has caused prices to rise. The great news about rising prices, however, is that according to CoreLogic’s US Economic Outlook, the average American household gained over $11,000 in equity over the course of the last year, largely due to home value increases. The map below was created using the same report from CoreLogic and shows the average equity gain per mortgaged home from June 2015 to June 2016 (the latest data available).

The Great News About Rising Prices for Homeowners | Keeping Current Matters

For those who are worried that we are doomed to repeat 2006 all over again, it is important to note that homeowners are investing their new-found equity in their homes and themselves, not in depreciating assets. The added equity is helping families put their children through college, invest in starting small businesses, allowing them to pay off their mortgage sooner or move up to the home that will better suit their needs now.

Bottom Line

CoreLogic predicts that home prices will appreciate by another 5% by this time next year. If you are a homeowner looking to take advantage of your home equity by moving up to your dream home, contact an agent in your area to discuss your options!

92% of Homes Now Have Equity

(via: Realtor®) Daily Real Estate News | Wednesday, December 16, 2015

About 256,000 U.S. homes regained equity in the third quarter of this year, bringing the total number of residential properties with equity to about 46.3 million, according to CoreLogic’s latest equity report. That equates to about 92 percent of all mortgaged homes.

The number of residential properties in negative equity dropped to 8.1 percent, or 4.1 million, in the third quarter, down 20.7 percent year-over-year, according to CoreLogic’s report. Negative equity refers to properties where borrowers owe more on their mortgage than their homes are currently worth.

“Home-price growth continued to lift borrower equity positions and increase the number of borrowers with sufficient equity to participate in the mortgage market,” says Frank Nothaft, chief economist for CoreLogic.

In the third quarter, about 37.5 million borrowers had at least 20 percent equity, up from 35 million a year ago. In the last three years, the number of borrowers with at least 20 percent equity has climbed by 11 million, “a substantial uptick that is driving rapid growth in home equity originations,” Nothaft says.

The bulk of properties with positive equity is concentrated in the high-end housing market, CoreLogic’s report notes. Ninety-five percent of homes that are valued at $200,000 or more have equity compared to 87 percent of homes valued at less than $200,000.

Home prices are expected to rise at least 5 percent in 2016 and continue to build wealth among home owners in the new year, says Anand Nallathambi, president and CEO of CoreLogic.

The following 10 metros had the highest percentage of residential properties with positive equity in the third quarter:

  • Houston-The Woodland-Sugar Land, Texas: 98.2%
  • Dallas-Plano-Irving, Texas: 97.9%
  • Los Angeles-Long Beach-Glendale, Calif.: 95.4%
  • Minneapolis-St. Paul-Bloomington, Minn.-Wis.: 94.4%
  • New York-Jersey City-White Plains, N.Y.-N.J.: 94.3%

Meanwhile, the following metros had the highest percentage of residential properties with a mortgage that continued to be in negative equity:

  • Phoenix-Mesa-Scottsdale, Ariz.: 14.2%
  • Chicago-Naperville-Arlington Heights, Ill.: 13.8%
  • Riverside-San Bernardino-Ontario, Calif.: 11.4%
  • Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va.: 10.8%
  • Atlanta-Sandy Springs-Roswell, Ga.: 9.7%

Source: CoreLogic