Housing Tax Benefits Extended

OD_BloggerHomeowners are among those who will benefit from a $760 billion tax deal that was signed into law in December. The deal includes two very important tax breaks for those who own homes. The law contains a retroactive extension of The Mortgage Debt Forgiveness Act through 2016. This law expired at the end of 2014 and, without the extension; any loan forgiveness achieved in a short sale would have been counted as income for homeowners who sold their homes for less than the amount of their home loan during 2015.

Also extended retroactively until 2016, was the deduction for mortgage insurance payments which expired at the end of 2014. Borrowers with adjusted gross incomes up to $100,000 can deduct 100% of their payments. Deductions are reduced by 10% for each additional $1,000 of adjusted gross income above $100,000. The threshold for married borrowers filing separately is $50,000 of adjusted gross income per person. Deductions are reduced by 5% for each additional $500 of adjusted gross income above $50,000. If you have questions regarding your eligibility for these tax breaks, it is suggested you contact your accountant. 

 

Low Mortgage Rates In 2016?

OD_BloggerReceived the following important information about interest rates in my newsletter this morning, had to share.

The Fed Meeting Finally Arrives

The Federal Reserve Board’s Federal Open Market Committee meets today and tomorrow. This is the most anticipated meeting of the Fed in almost a decade. It has been exactly seven years since the Fed moved short-term interest rates to close to zero and it has been over nine years since the Fed actually raised short term rates. Now the markets are expecting the Fed to raise rates from these historically low levels once again.

The Federal Reserve has indicated all along that the markets would get plenty of notice before they raise rates. This notice is designed to prevent market shocks. One must remember that the Fed is only raising short-term rates. For example, the Federal Funds Rate is the rate banks charge each other overnight as they balance their holdings. The other rate controlled by the Fed is the Discount Rate, which is also a short term rate charged to banks for borrowing money. The question is–how can these rates affect long-term rates that consumers pay for loans on cars, homes, credit cards and even student loans?

Some rates such as credit cards which are pegged to the prime rates charged by banks may go up instantly. Other loans which are based upon longer term rates such as home loans are not as easy to predict. That is where the markets come in. The markets react to what the Fed may do before they take action. For example, rates on home loans have risen in anticipation of the Fed’s move. Now the markets will listen to what the Fed will say about potential future interest moves. So let’s see what the Fed has to say in addition to whether they raise rates.

 

 

 

The Cost Of Waiting

Failing to refinance a home loan when interest rates fall can be a very costly mistake—tens of thousands of dollars in savings can be lost over the life of the loan. Yet about 20% of U.S. homeowners had fallen into this trap, according to a paper published this summer by the National Bureau of Economic Research.

The median total of lost savings for those who didn’t refinance was about $11,500 in present-value terms, the paper said (meaning actual losses over the life of the loan would amount to more than that). The Wall Street Journal spoke with Devin G. Pope, an associate professor at the University of Chicago Booth School of Business, one of the study’s three authors, about how to get more people to refinance their homes when interest rates fall.

Here is what Pope indicated — There can be real value in transferring money to homeowners as a way to stop the spiraling effect of foreclosures. Also, having people refinance their homes is a great way to put money in their pockets and stimulate the economy.

Yet if people are not refinancing, then it’s not completely working as a stimulus.” Pope continued: “We find some evidence that people with lower education and incomes are more likely to be in the group that is failing to refinance, which could indicate that financial savvy comes into play. There was also some evidence of procrastination.”

Source: The Wall Street Journal 

Florida Home Search

Controversial Rate Checker Tool Tweaked

OD_BloggerUnder strong criticism from the Mortgage Bankers Association and other industry trade groups, the Consumer Financial Protection Bureau made tweaks to its controversial Rate Checker consumer tool.

But MBA President and CEO David Stevens said the tweaks do nothing to resolve “fundamental flaws” with the tool and continue to provide “misleading” information to consumers. 

On January 13, the CFPB unveiled this new borrower education tool on its website (Click Here for Rate Checker) ostensibly to help consumers be better informed of rates and other costs when shopping for a home loan. CFPB said this Rate Checker tool will allow consumers to “see what interest rates people with similar financial situations have been offered.”

The tool uses a credit score, state; property location and a down payment percentage to generate an estimate for a borrower of rates available.

The website which indicates rate information for the rate checker is provided by a private firm who collect data from “actual lenders and is updated every business day.” “When the imprimatur of the government is associated with particular data, the public assumes the data are complete and accurate. However, the lenders’ rates incorporated in the tool include only a mix of large banks, regional banks and credit unions. Notably, rates from independent mortgage banks do not appear to be included in the data. Similarly, discount points, origination fees and mortgage insurance are not included, yet are a significant part of the cost of residential finance–and are critical for any website that purports to be a comprehensive borrower decision tool.” 

Source: Mortgage Bankers Association

 

What Tenants Should Know About Security Deposits

What is a security deposit?

A security deposit is any advance money a tenant gives to a landlord as security against damage to the rental premises or for advance rent. A security deposit may be called a “damage deposit,” “last month’s rent,” a “pet deposit,” or by another name.

How do I get my security deposit back?

A landlord is required to give you notice of his or her intention to keep all or part of your security deposit and the reason for imposing this claim. If the landlord does not plan to make a claim against the security deposit, he/she has 15 days after the premises are vacated to return the deposit. If the landlord plans to make a claim against the security deposit, he/she has 30 days to send you such notice by certified mail. Otherwise, he or she forfeits the right to keep any of the deposit.

To protect your rights, you must advise the landlord of your new address. Because the landlord is obligated only to send the notice to your last known mailing address, always give written notice of your new address to the landlord.

If after 30 days the landlord does not return your deposit or send you a letter stating why all or part of your deposit won’t be returned, you can sue him or her for the return of the entire deposit. If the landlord sends you a letter, and you disagree with the landlord, you must write back within 15 days (certified mail recommended but not required) stating that you object to the landlord’s claim on your deposit.

If you and the landlord cannot agree, you can sue, but you will have to prove that you were not responsible for the claimed damage. Photos and/or an independent inspection would be helpful.

If you do not object in writing after receiving the landlord’s letter, the landlord may deduct the amount of his or her claim and, as required, forward the balance (if any) to you within 30 days of the original notice. It is questionable whether a tenant can sue for return of the deposit if he or she has not objected.

Information provided by FloridaLawHelp.org
To locate your local legal aid or legal ser-vices office, please visit
www.floridalawhelp.org

Previous Owners Buy–Back Repossessed Homes at Present Market Value

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Fannie Mae and Freddie Mac directed to change policies relating to the sale of real estate owned (REO) properties in their current inventory by the Federal Housing Finance Agency (FHFA). The change requires real estate owned properties (REOs) to be sold to any qualified purchasers at the property’s fair market value.

Under the new policy foreclosed homeowners or a third-party purchasing on their behalf may do so at the value that applies to other purchasers. Prior to this change foreclosed homeowners or a third-party buying on owners behalf had to pay the entire amount owed on the mortgage.

This policy change is limited to Fannie Mae and Freddie Mac existing single family REO inventory of approximately 121,000 properties. Property exclusion may apply on a case by case basis. The purchase of an REO property for the benefit of the previous owner must also still be intended for use by that owner as their principal place of residence.

For more information on purchasing REOs contact: iRealtyServices

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The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.6 trillion in funding for the U.S. mortgage markets and financial institutions.

Their mission is to ensure that Fannie Mae, Freddie Mac and the Federal Home Loan Bank System are operating in a safe and sound manner so that they can serve as a reliable source of liquidity and funding for housing finance and community investment.

Source FHFA Media Release

Delayed Home Loans For Cash Buyers

icon_sellersGood news for cash homebuyers wanting to get home loans quickly after purchasing a home. You can get a cash-out refinance almost immediately, thanks to a little known Fannie Mae program. The delayed financing program allows all-cash homebuyers to refinance and take equity out as soon as they close on the home purchase.

That’s good news for homebuyers in all-cash purchases, many of which are investors or baby boomers trading down to more manageable homes. The delayed financing program gives them the option to take home even more cash while enjoying historically low interest rates on a conventional home loan.

The program comes with rules such as the sale must have been “arm’s length” (no parents selling to children), the owner can’t have more than 10 financed properties and there can’t be any other liens against the property. Why would a homeowner use the delayed financing program instead of waiting the six months to tap equity?

  • A property may be in such disrepair that a lender won’t underwrite it. With this program, a homebuyer can buy the property, make quick repairs and take money out of it before six months elapse.
  • The chain of buyers and sellers might have irreconcilable timing issues.
  • It can be used as a tactical advantage in a hot market. Many sellers would rather accept cash offers over those with a financing contingency, sometimes even when the cash offer is lower. The program allows homebuyers to present a cash offer, then replenish their liquidity once the deal is done.

Source: Mortgage Daily

Is Buying or Renting Right for You?

Homeownership builds wealth

Learn more about building wealth through home ownership by entering to win this month’s real estate book.
Beginner’s Guide to Building Wealth Buying Houses.

Homeownership is not for everyone, but it may be the best way for most working families to build long-term financial security and independence. Here are three simple ways homeownership builds financial security for you and your family.

  • Equity: The principal amount included in your monthly mortgage payments reduces the outstanding loan building equity you would not have from monthly rent payments.
  • Appreciation: While real estate markets may experience temporary downturns, homes typically appreciate in value. Over time your wealth grows as your home becomes more valuable.
  • Tax Savings: You build wealth when you have a mortgage because the Federal government allows a tax deduction for all the interest you pay on your mortgage. You build wealth by paying less in taxes each year you pay mortgage interest.

Which route is right for you? Ultimately, the answer depends on your financial situation, your future plans and the lifestyle you wish to live.

Learn more about the benefits of homeownership enter draw for this month’s free book.
Beginner’s Guide to Building Wealth Buying Houses

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The Markets

orra_housing-marketRates rebounded in the past week but stayed near their lows for the year. Freddie Mac announced that for the last week in October, 30-year fixed rates rose to 3.98% from 3.92% the week before. The average for 15-year loans increased to 3.13%. Adjustable rates were also higher, with the average for one-year adjustables moving to 2.43% and five-year adjustables increasing to 2.94%.

IS FHA Home Flipping Waiver About to End?

That’s an important question for buyers, sellers, investors and realty agents who’ve taken part in a nationwide wave of renovations and quick resale using Federal Housing Administration-backedOD_Blogger loans during the last four years.

The answer is yes — get your rehabs done soon. The federal agency whose policy change in 2010 made tens of thousands of quick flips possible — is about to shut down the program.

In an effort to stimulate repairs and sales in neighborhoods hard hit by the housing crisis and recession, FHA waived its standard prohibition against financing short-term house flips.

Under the waiver of the rule, you could buy a house, fix it up and resell it as quickly as possible to a buyer using an FHA residential loan — provided that you followed guidelines designed to protect consumers.

According to FHA estimates, about 102,000 homes have been renovated and resold using the waiver. The program has done its job, stimulated billions of dollars of investments, stabilized prices and provided homes for families who were often newcomers to ownership.

Even though the waiver program has functioned well, officials say, inherent dangers exist when there are no minimum ownership periods for flippers. Officials say it’s time to revert to the more restrictive anti-quick-flip rules that prevailed before the waiver:

The 90-day standard will come back into effect after Dec. 31.

Source: Ken Harney, The Nation’s Housing