Tag Archive for: mortgage

How Real Estate Is Changing During COVID-19

While deemed an ‘essential service’ in some states and not others, the reality is that Real Estate has had to find a way to adapt during this unprecedented time. The need for housing doesn’t stop just because a virus says it should and many people are finding themselves in a predicament where they have to enlist the help of Realtors, attorneys, mortgage brokers, home inspectors and others in order to buy or sell a house during this time. With a little creativity, Realtors and others have found ways to practice social distancing and limit the spread of Coronavirus, even while servicing their clients.

Communicating With An Agent
When it comes to buying a home, pairing up with the right agent is always key to finding your perfect property. But today, you need one who is tech-savvy and comfortable conducting meetings and business online. We are using Zoom for group consultations, online interviews, meetings and CMAs that would normally handled in person. FaceTime, text and good old-fashioned phone calls are also part of our daily communication. And although we’ve been using e-signature apps to send and receive documents digitally through email for a while now, it’s never been more important than in today’s world.

Virtual Home Tours & Online Sites
Crowded open houses with a plate of cookies for everyone to grab are a thing of the past — at least for now. Instead, everything is going online and there are several ways to virtually tour a home. Along with photos, many listings were already starting to incorporate videos or providing “hot spot” tours so you can tour the home, room by room, without physically stepping onto the property. In addition, many agents have posted floorplans, improvements and significantly more photos online to give buyers a better feel for the home. If in-person showings are allowed – as they are in Connecticut – the rules are stringent and agents, home sellers, and buyers must all be willing to make them happen. Given the risk, and if its absolutely necessary, it’s important a buyer have a good idea of what the property offers before even attempting to schedule an in-person showing.

Remote Mortgage Pre-Approval
Some lenders had already made the entire mortgage process digital long before social distancing was needed. And now, many more have jumped on board out of necessity. The first step is to get a recommendation, or interview a few loan officers over the phone or by video chat. Since mortgage interest rates are all over the map these days, it’s extremely important to shop around and compare what they’re offering — and make sure they’re comfortable conducting all steps of the transaction online. In order to get pre-approved for a loan, the lender will need to review your income, debt, credit history, and other factors, and you’ll need to submit paperwork verifying all of the above. Luckily, most of this paperwork should be available online.

Remote Home Inspections
We recently did a deal where the inspector offered the client a remote inspection. He inspected the house alone and reviewed the findings with them via a videoconference. At a remote home inspection, inspectors take a lot more pictures than they might have in the past so clients can get a good idea of where the issues are. Once the report is completed, the client participates in a video call to review every part of the report – just like an inspector would normally do in person.

Virtual Home Appraisals
Although we haven’t encountered this yet, home appraisals required by a lender are getting a virtual makeover. Appraisers are viewing the home via video or are participating in ‘desktop appraising,’ where they review available public and private data in order to value the home, including comparable property data, and produce a report. While these methods may not be to the penny in terms of value, they are relatively accurate and allow lenders to continue operating.

Remote Home Closings
In-person home closings — where all parties come together to sign contracts, swap keys, and shake hands—are, for the most part, not happening right now. However, most closings require some face-to-face interaction, since people have to sign documents and notaries need to stamp them in person. If the situation continues to develop, instead of buyers and sellers being in separate rooms and practicing social distancing with their attorneys as they do now, you may find “drive-through” closings happen or even secure video-conference closings depending on governmental regulations and oversight.

Adapted from a Realtor.com article Is It Safe To House Hunt During The Coronavirus Crisis? written by Margaret Heindenry

4 Home-Related Tax Deductions You Shouldn’t Overlook

Tax season is upon us, and if you’re a homeowner, you can claim some sizable deductions that may help reduce the amount you’ll owe.

Mortgage interest, property taxes and mortgage insurance premiums are just some of the deductions you can take if you have a mortgage on your home. Together, they can add up to thousands of dollars in savings on your tax bill.

Mortgage interest

Home mortgages are structured so that a huge chunk of each payment you make in the initial years of ownership goes toward paying down the interest on your loan and only a little goes toward the principal. The good news is that you can deduct the interest payments on your primary (and sometimes a secondary) residence — up to $1 million (or $500,000 if you’re married and filing separately).

Most homeowners count this as one of the largest deductions on their tax bill each year. It applies to home purchases and mortgage refinances, home equity lines of credit and home equity loans, sometimes called second mortgages. The deductible interest on home equity debt — regardless of how you used the money you pulled out — applies to loans of $100,000 or less throughout the year (or $50,000 if you are married and filing separately).
This deduction, filed with IRS Form 1098, can add up to thousands of dollars for most homeowners. The benefit: It reduces your taxable income so you don’t owe as much come tax time.

The key to taking advantage of the mortgage interest deduction is itemizing your deductions in meticulous detail, Poulos says. Your lender will send you a statement each year to let you know how much interest you paid; that will help you figure out if it’s worth your while to itemize.


If you bought a home in 2015, there’s another deduction (score!) you get to include on your tax bill: mortgage points. Most borrowers pay for points, which come in two forms: discount points, which allow you to prepay some of your loan interest in exchange for a better mortgage rate; and the loan origination fee. One point is equal to 1% of your loan amount. Many homeowners completely overlook this deduction, Poulos says.
Let’s say you bought a home in New York using a $500,000 loan with a 1% origination fee. That’s $5,000 you can itemize as a deduction on your tax bill, and you want to get credit for each and every dollar you spent.

Your lender should provide you with a copy of your settlement statement, with the loan origination fee and discount points listed on it, in January. If you don’t receive a copy, ask for one and verify that this information is listed on it so you can take advantage of the deduction on Form 1098.

Property taxes

Another perk of homeownership is writing off your annual property taxes. You get to deduct these taxes in the year they’re paid, not the year they were due.

Your county’s property assessor’s office typically sends out a statement at the beginning of the year showing the amount of your property taxes. One more thing to keep in mind: If you bought a home and reimbursed the sellers for taxes they had already paid for the year, you’ll see that reflected on your settlement statement, not on your 1098.

Mortgage insurance

If your down payment was less than 20% of your home’s purchase price, you’re likely paying a mortgage insurance premium. Through the end of 2016, the mortgage insurance premium deduction includes policies provided by the Department of Veterans Affairs, the Federal Housing Administration and the Rural Housing Service, as well as private mortgage insurance from conventional lenders, issued after 2006.

The IRS treats your mortgage insurance premium payment as mortgage interest that you can deduct on Schedule A of Form 1040. Although the overall amount of your premium can be counted as an interest deduction, it phases out for high-income earners, Poulos says. For instance, you can’t deduct your mortgage insurance premium if you earn an adjusted gross income of more than $109,000 (or more than $54,500 for married couples filing separately).

Items you can’t deduct

Sure, you get some pretty sweet deductions as a member of the homeowners club, but there are some exceptions. Here are a few real-estate-related costs you can’t deduct:

Home and title insurance coverage (other than mortgage insurance premiums)
Utilities, such as gas, electricity and water
Most settlement costs (other than points)
Forfeited deposits, down payments or earnest money
Home improvements paid via a private loan, cash or credit card
Homeowners association fees
Transfer taxes (stamp taxes) in a personal home sale

Check out the IRS list of special situations and other nondeductible items related to homeownership.

Bottom line

One of the major benefits of owning your home has always been the tax write-offs that come with the package. Keep in mind, though, that if your itemized deductions don’t add up to as much as the standard deduction you’re eligible for, the standard deduction would be the better way to go.

If you have a complicated tax situation or you’re unsure about certain real-estate-related deductions, it’s a good idea to consult with a licensed tax professional for guidance. You don’t want to miss out on deductions that will lower your tax burden and keep more money in your pocket.

Homeownership can have some pain points along the way, but the tax benefits you reap help make the largest investment of your life pay off in the long run.

*This article has been edited. Original article appears on NerdWallet

Mortgage Rates Drop Again; Existing Home Sales And Prices Climb

As we head into the busy spring home-selling season, homebuyers will be happy to know that mortgage rates are back on the decline. The same can’t be said of home prices, though, which continue to rise. Freddie Mac’s just-released weekly survey of lenders shows little change in the following average rates for the most popular home loan terms:

30-year fixed-rate mortgages averaged 3.62% with an average 0.6 point for the week ending Feb. 18, 2016.  A year ago, the rate averaged 3.80%.

15-year fixed rates averaged 2.93% with an average 0.5 point. The same term priced at 3.07% a year ago.

5-year adjustable-rate mortgages priced at 2.79% with an average 0.5 point. Last year at this time, the same ARM averaged 2.99%.

“Since the beginning of 2016, 30-year rates have fallen almost 40 basis points, helping housing markets sustain their momentum into this year.” Sean Becketti, chief economist for Freddie Mac, said in a release.

In the meantime, rising home prices put a damper on home loan activity, according to the Mortgage Bankers Association weekly report. Overall, mortgage loan applications dropped 4.3% from one week earlier, with an 8% slip in refis in contrast to previous weeks of gains. Purchase applications were down 4%, but are still 27% higher than the same week one year ago.

Existing-home sales, home prices climb.

A shortage of housing inventory is pushing home prices and sales to new heights, but the upward climb isn’t necessarily a good thing for homebuyers.

According to the National Association of Realtors, existing-home sales in January climbed slightly — 0.4% — to a seasonally adjusted annual rate of 5.47 million. That’s the highest annual rate since July 2015. While that’s good news for the market, homebuyers are feeling the pressure of inventory shortages, which helped push the median existing-home price up to $213,800, an 8.2% increase over January 2015.

Lawrence Yun, NAR chief economist, says that the housing market is off to a strong start this year, but a slowdown in new-home construction, as well as a lack of existing homes for sale in many markets, has the potential to keep pushing prices higher.

“The spring buying season is right around the corner, and current supply levels aren’t even close to what’s needed to accommodate the subsequent growth in housing demand,” Yun said in a release. “Home prices ascending near or above double-digit appreciation aren’t healthy — especially considering the fact that household income and wages are barely rising.”

To complicate things a bit more, new-home sales fell 9.2% in January to a seasonally adjusted annual rate of 494,000, according to the U.S. Commerce Department. A 32.1% drop in new sales in the West (where homes are typically more expensive) was the driving force behind the plunge, followed closely by losses in the Midwest.

With a stall in new housing starts during these cold winter months, homebuyers might find it difficult to get into a newly built home or resale without some fierce competition. And despite mortgage rates staying below 4%, more homebuyers might be priced out of the market as housing prices continue to rise.

*This article originally appeared on NerdWallet.