Compare Before Deciding on the Standard Deduction
The TCJA of 2019 dramatically increased the standard deduction so that many homeowners benefit from taking that rather than itemizing their deductions. Taking the standard deduction may result in a larger deduction even if you have no expenses that qualify for claiming itemized deductions. Another thing reinforcing taking the standard deduction was low rates at the time and the interest plus property taxes were less than the standard deduction. In 2022, mortgage rates more than doubled, so, anyone who purchased a home or refinanced at the...
read moreNegotiate a Buydown to Get into a Home Now
If you are a prospective homebuyer, things have changed in the past year. Most notably, mortgage rates have more than doubled which has created an affordability gap that has taken approximately 15 million buyers out of the market. Inventories are growing but it isn’t because more people are deciding to sell their homes; it is because it is taking longer to sell properties because less people are qualified. Current housing inventory is a little more than a quarter of what it was in 2008. Buyers are wondering when the market will return...
read moreIf you’re on the sidelines, at least get ready…
If you’re on the sidelines to buy a home, there are things you can do to be ready when you do get back in the game. Improve your credit score to qualify for the best mortgage rate available which are reserved for those with the highest scores. Get a copy of your current credit reports from all three of the main credit bureaus: Equifax, TransUnion, and Experian. You can get them at AnnualCreditReport.com without paying for them. While you won’t see a credit score on these reports, you will see a history of your available credit...
read moreNegotiating Your Position
The seller wants the most for their home and the buyer wants to pay the least possible. From the very beginning of the homebuying process, there are adversarial positions between the principals. If you happen to be in a multi-offer situation, it just complicates things further. Then, there are the emotions that tend to cloud the decision making on both sides of the transaction. Sellers have lived in the home for years, possibly, with cherished family experiences and maybe, having put considerable effort and money into capital improvements. On...
read moreTurn Back Time
As the expression goes, "if I could turn back time", maybe you’d would do some things differently. If you’re wanting to buy a home, the regret may come from not getting a mortgage when rates were half of what they are today. There may not be a way to literally "turn back time" but you may still be able to get a mortgage with last years’ rates. Let’s say a home was sold in the fall of 2021 for $350,000 with a 3% FHA loan. Today, winter of 2023, the home is on the market for sale at $400,000. There...
read moreBuy Now, Refinance Later
The dilemma facing would-be buyers today is to wait until things settle down or move ahead in this unsettling economic environment. More specifically, the question should be, what are you waiting to settle down: mortgage rates, or prices or both? Mortgage rates haven’t been this high since 2002, so it could be considered plausible that the high rates are temporary. That leads to the question of how long before they do start coming down. If we look back further, the average 30-year fixed-rate mortgage, dating back to April 1971 is 7.81%,...
read moreDoes high inflation discourage your from buying a home?
Inflation devalues the purchasing power of money and the interest earned on savings is almost always less than inflation. Tangible assets like your home consistently become more valuable over time. In inflationary periods, a home is a good investment and a hedge against inflation. Borrowing money at fixed rates during times of inflation can be very advantageous…like buying a home. The rate stays the same over the term of the mortgage and so does the payment instead of going up at the rate of inflation. In September 2022, rents rose by...
read moreDid you know this about your credit?
Credit scores are used to assess risk and determine whether a borrower is approved or declined for a mortgage, credit card or some other type of credit. The score is a numerical value ranging from a low of zero to a high of 850 or 900 depending on the credit bureau. The higher the score, the more likely the lender will be repaid in a timely manner. A higher credit score could help you get a lower interest rate You can get a free credit report from all three major bureaus at www.AnnualCreditReport.com. Your credit score doesn’t have to...
read moreWaiting for the Mortgage Rates to Come Down
Waiting for the mortgage rates to come down before you buy a home may not be a good decision. If you are correct, and the rates do come down by two percent, the savings you benefit from a lower rate will most likely be devoured by the appreciated price increase. As of 12/8/22, the 30-year fixed-rate was at 6.33% which is close to the highest level since mid-2008. If the rate drops to 4.7% in three years but the price increases by 5% a year, a $400,000 home today, will cost $463,050 three years from now. An increasingly, popular option that...
read moreDownsizing Options
Opportunities exist for a subset of homeowners, possibly in their 60’s to 70’s, who want to downsize to smaller homes for convenience, less maintenance, change of lifestyle, or to save money. These homeowners are more likely to have large equities and will not feel the same constraints that are keeping younger owners in their homes due to the substantial increase in mortgage rates in the past year. In some cases, there may be enough equity in their relinquished home to pay cash for the replacement. In other situations, the...
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