Archive for March, 2016

Understanding Mortgage Tax Benefits and How They Save You Money in the Long Run

Posted in Home Mortgage Tips by Michigan Real Estate Expert on March 31st, 2016

Understanding Mortgage Tax Benefits and How They Save You Money in the Long RunIf you’re considering whether home ownership is the right decision for you, there are lots of different factors you’ll want to take into account. Do you want to keep moving around, or are you ready to lay down roots in a community? Are you prepared for the additional upkeep that home ownership requires?

But one of the big factors in home ownership that few potential buyers consider is the tax benefits of getting a mortgage. Although it may seem counterintuitive, getting a mortgage on a property that you own can reap lots of dividends come tax time.

So how does a mortgage work for you and help you keep more of your hard-earned money? Here’s what you need to know.

Mortgage Interest Deductions: How Your Mortgage Interest Saves You Money

If you’re a homeowner in the United States, your mortgage interest is tax deductible. The mortgage interest tax deduction was introduced in 1913, and is one of the longest standing and most used tax deductions out there. The deduction allows you to deduct all of your mortgage interest payments from your federal taxes.

But in order to deduct your interest payments, you’ll need to meet certain basic eligibility requirements. Firstly, you’ll need to file Form 1040 and itemize your deductions on Schedule A in order to be eligible. You’ll also need to be the primary borrower named in the mortgage – you can’t deduct interest on someone else’s mortgage, even if you’re the one making the payments.

And finally, you need to (at some point) make a payment on your home. Note that rental properties are not usually eligible for a mortgage interest deduction (though there are some exceptions).

First-Time Buyer? Mortgage Credits And Other Buyer Programs Keep More Money in Your Pocket

If you’re a first-time buyer (and even if you’re not), you’ll have access to a variety of new buyer incentives and mortgage tax credits that other buyers don’t receive. Firstly, as a first-time buyer, you’re able to take out $10,000 from your traditional or Roth IRA at any point during your lifetime – without paying the 10% penalty for withdrawing early. There are also several credit programs for buyers, including the Residential Energy Credit, which gives you up to $500 toward any home improvement project or equipment purchase that makes your home more energy efficient.

It may seem like getting a mortgage is a great way to spend money, but it’s also a great way to save money through various government tax programs and rebates. A trusted real estate agent is the best way to learn more about the various tax credits and incentives available for home buyers, and we’d love to help!

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Case-Shiller Report Shows Home Prices Rose in January

Posted in Financial Reports by Michigan Real Estate Expert on March 30th, 2016

Case-Shiller Report Shows Home Prices Rose in JanuaryHome prices were 5.70 percent higher year-over-year in January according to S&P Case-Shiller’s 20-City Home Price Index. Top year-over-year gains were posted by Portland, Oregon at 11.80 percent, San Francisco, California at 10.80 percent and Seattle Washington posted a year-over-year gain of 10.70 percent. Denver, Colorado, which had top gains in recent months, posted year-over-year home price growth of 10.20 percent.

Lowest year over-year gains for January were posted by Chicago, Illinois at 2.10 percent, Washington, D.C at 2.20 percent and New York, New York at 2.80 percent.

Average home prices remained about 12 percent below their summer 2006 peak, but have recovered to 2007 levels.

Rising Home Prices and Short Inventory of Homes Impacts Buyers and Sellers

David M Blitzer, Managing Director and Chair of the S&P Indices Committee expressed concerns over rapidly rising home prices and the shortage of available homes. Mr. Blitzer said “would-be sellers seeking to trade up are having a hard time finding a new larger home.” Analysts also noted that home prices are escalating faster than wages, which were growing at a rate of 2.20 percent annually as of February.

New construction is not keeping up with demand; the current supply of available homes is below the normal six month inventory. Mr. Blitzer said that home building is the segment of the housing sector that creates economic growth.

Rapidly rising home prices and low inventories of available homes are potentially sidelining first-time and moderate income buyers. This trend also sandwiches homeowners who want to buy larger homes between a short supply of available homes and finding qualified buyers for their current homes. Mr. Blitzer said that high amounts of education debt and consumer debt are contributing to younger buyers’ inability to qualify for mortgages. Mortgage lenders have loosened mortgage qualification requirements somewhat, but Mr. Blitzer said that lenders haven’t forgotten what happened 10 years ago; they remain reluctant to further ease lending requirements.

Pending Home Sales Rise in February

In related news, the National Association of Realtors reported that pending home sales rose 3.50 percent in February as compared to an expected reading of 1.80 percent and January’s negative reading of -3.0 percent February’s reading for pending home sales was the highest in seven months.

Analysts and real estate pros use pending home sales readings s as indications of future closings and mortgage loan activity.

NAR Chairman Lawrence Yun cited lower mortgage rates as the driving force behind February’s jump in pending home sales. Mr. Yun said that building more homes is essential for boosting home sales; he cautioned that failure to increase the current supply of available homes could cause home sales to “plateau.”

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The FHA Mortgage Minimum Credit Score Has Been Reduced. Here’s What You Need to Know…

Posted in Home Mortgage Tips by Michigan Real Estate Expert on March 29th, 2016

The FHA Mortgage Minimum Credit Score Has Been Reduced. Here's What You Need to KnowCredit is of considerable concern when it comes to buying a home, but if you’re on the market for a new place in the next few months there may be some timely news that applies to you. If you haven’t heard about the changes to the Federal Housing Administration’s (FHA) credit score minimum, here’s some information on the recent reduction and how it may impact your home purchase.

Information On The FHA

Started in 1934, the FHA is the organization responsible for insuring the loans that are available to homebuyers in the United States. These loans are not provided directly by the FHA, rather the FHA serves as the insurer for the loans that are leant by financial institutions of the United States. While there are a number of guidelines that must be met by borrowers in order to ensure the FHA will back their loan, a lowered mortgage minimum credit score means that those with a less-impressive credit profile may have a better opportunity for home ownership.

The Minimum Credit Score Reduction

The strength or weakness of your credit history has a significant impact on whether or not you will qualify for a mortgage or even pre-approval, so for those whose credit has suffered the recent drop in the minimum will be good news. Previously, the FHA required a score of 640 so that a borrower could be approved for a mortgage, but the reduction by 60 points to a credit score of 580 means greater possibility for those who might fit into a lower credit category.

A Lower Mortgage Minimum And The Market

With the opportunity for home ownership that will be opened up to potential buyers, there is a strong possibility that the market will experience a noticeable shift. Many millennials are poised to enter the real estate market this year, and with more people considering a house as a result of a reduction, there could be an increased demand in housing purchases. While the prices in rural areas have been dropping off, the housing in metropolitan areas may experience a sizeable upsurge.

With the reduction of the mortgage minimum credit score by the FHA, there are likely to be some shifts in the real estate market in the coming year that will affect demand and price. If you’re on the market for a new home and are interested in a purchase that will align with your finances, you may want to contact your local real estate professional for more information.

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What’s Ahead For Mortgage Rates This Week – March 28, 2016

Posted in Financial Reports by Michigan Real Estate Expert on March 28th, 2016

What's Ahead For Mortgage Rates This Week - March 28, 2016Increasing Home Prices Good For Sellers

The National Association of Realtors (NAR) reported lower sales of pre-owned homes in February. Would-be buyers were discouraged by rapidly rising home prices. Short supplies of available homes sidelined potential buyers as higher home prices and cash buyers squeeze out buyers who need mortgages to buy homes. Multiple offers resulting in bidding wars have also deterred buyers in high demand markets. According to NAR’s February report, sales of existing homes fell 7.10 percent to their lowest level since November.

NAR has predicted that rapidly rising home prices would eventually damage housing markets. While analysts weren’t certain whether February’s report indicated a temporary lull due to weather and anomalies related to new closing regulations and seasonal influences, NAR Chief Economist Lawrence Yun said, “The main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers.”

During the housing bubble, buyers jumped into the market as speculators or to buy before home prices increased beyond their reach. NAR surveyed renters last week and found that the percentage of renters who believed that it’s currently a good time to buy a home decreased.

Respondents to Fannie Mae’s February Home Purchase Sentiment Index forecasted a 1.70 percent increase in home prices year-over-year. One year ago, respondents expected home prices to increase by 2.50 percent year-over-year. This may suggest that home prices are cooling. This can be expected as the number of buyers declines as home prices become increasingly unaffordable.

New Home Sales Up in February

New home rose in February according to the Commerce Department. Based on a revised reading of 502,000 new home sales in January, February’s reading was 2.00 percent higher than January’s reading, but was 6.10 percent lower than for February 2015.

Builders have held back on increasing construction due to concerns about ups and downs in the economic recovery. Short supplies of labor and available land have also kept home builders from meeting current demand.

Mortgage Rates Trend Lower

According to Freddie Mac, average mortgage rates fell across the board last week. The rate for a 30-year fixed rate mortgage fell by two basis points to 3.71 percent; the rate for a 15-year fixed rate mortgage fell three basis points to 2.96 percent and the rate for a 5/1 adjustable  rate mortgage fell four basis points to 2.89 percent.

New jobless claims rose to 265,000 from the prior week’s reading of 259,000 new claims. Last week’s reading matched analyst expectations.

Whats Ahead This Week

This week’s scheduled economic news includes reports on inflation, pending home sales, Case-Shiller’s Home Price Index reports and government and private sector employment data. Weekly reports on mortgage rates and new jobless claims are also scheduled. 

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Accent Walls: 3 Easy Ways to Spice up Your Space

Posted in Around The Home by Michigan Real Estate Expert on March 25th, 2016

Accent Walls: 3 Easy Ways to Spice up Your SpaceFor those who love to decorate and are always excited to test out the latest trends in design, the accent wall is a concept that’s become popular in recent years. If you’re not sure how to use this feature to twist any room on its side, here’s how to go about painting your very own and instantly dressing up the look of your favorite room.

Pick The Perfect Wall

When deciding on the ideal location for an accent wall, it’s important to consider which space in your home will benefit from a splash of color and still be complimented by this unique look. Whether you decide on a wall in your bedroom or living room, the location of your accent wall should be somewhere it can have a positive impact on the look of your room without overpowering its natural ambiance.

Decide On A Color You Can Live With

Once you’ve picked the perfect place for your paint, you’ll want to narrow down the list of color options to ones that will work best for the wall. It can be tempting to go from the most brilliant of colors to really indulge in accent, but think of this wall as a way to merely boost the look of a room you already enjoy. By choosing a color that is both vibrant and understated – and goes with your design aesthetic – you can use this wall to maximum, nuanced effect.

Any Additional Accents?

If you’re just wading into the water with home decorating, it’s entirely likely that an accent wall will be enough for now, but if you’re just beginning you may want to consider some other interesting design details as well. While you could choose more than one color to brighten things up or draw a makeshift frame around the border of each wall, if you’re interested in something funky you may want to use some stencils – like hearts or stars – to instantly add a whimsical effect!

There are no hard and fast rules when it comes to home decorating, but if you’ve been considering an accent wall for a while you might want to test it out first before diving in with neon colors and funky stencils. If you’re making some changes to your home because you’re thinking of selling in the next few years, you may want to contact one of our local real estate professionals for more inside information.

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Selling Your Half of a Jointly-owned Home? Here’s What You Need to Know

Posted in Home Seller Tips by Michigan Real Estate Expert on March 24th, 2016

Selling Your Half of a Jointly-owned Home? Here's What You Need to Know

There are many factors to consider when it comes to selling your home, and if you own your home with someone else the details involved can be even more confusing. If you’re wading into your co-ownership options and are curious about your next steps, here’s a short list of some things to think about.

Buyout: Selling Your Half

If you own your home with a friend, family member or former partner who would like to keep the property, the first thing you’ll want to do is contact an appraiser who will provide you with the market value of your home. Once you know this amount, you can discuss it with your co-owner and decide on the amount they can pay you for a buyout. While some co-owners will decide to get a loan and pay a lump sum, they may also want to schedule monthly payments until the buyout amount is completely paid off.

Partition Sale: Leave It To Legal

In the event that both you and the co-owner of your home would like to get rid of your property without any fuss, you have the option of a partition sale which means that the court will take care of your property sale for you. Once this occurs and any fees are paid, the total purchase price that is made from the home will be divided between the co-owners and the property will no longer be an issue for either party. If one owner has invested more into the home, it’s possible that one party may benefit more than the other.

Voluntary Sale: Coming To An Agreement

There are many situations involving property and personal possessions where the fence cannot be mended, but in the event that you want to sell your portion of a property it is in your best interest to sell together. While a partition sale provides the opportunity to get the property off the co-owner’s hands quickly, there’s a good chance that some of the money earned will be caught up in legal fees. If you’re able to come to an understanding, you may both reap a larger sum.

Whether you’re moving on to the next chapter of your life or experiencing a settlement, there are many available options for selling a home that is co-owned. If you’re considering putting your co-owned home on the market, please contact one of our real estate professionals for more information.

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5 Photo Shoot Tips for Amazing Listing Photos

Posted in Home Seller Tips by Michigan Real Estate Expert on March 23rd, 2016

5 Photo Shoot Tips for Amazing Listing Photos

Pick The Right Light

It won’t even be worth your while to pick up the camera if the lighting is off, so make sure you capture your home in the middle of the day when natural light is at its peak. Instead of morning or night, when spaces can appear dim, turn on the lights during the day, let the sunlight flow in and shoot away!

Keep It Clutter Free

While it’s common sense to clean up your home before committing anything to photography, it’s also important to be aware of any items that may catch the eye of the viewer and deflect interest away from your property. While there may be certain things you’re used to, if they stand out in the picture it might be better to move them outside of the frame.

Don’t Forget The Details

It’s easy to be focused on the exterior and room shots, but a few minor details here and there can give the viewer a better feel for your home, and may enable them to remember it. If you have striking kitchen tiles or a claw foot tub, don’t forget to add up-close images of these to your listing.

Capture The Exterior

The rooms and amenities of your house are definitely going to be what piques the buyer’s interest, but don’t forget about the exterior in all the shuffle. The outside of your home is the first thing that potential buyers will see, so catch it during the last hour of sunlight for maximum effect.

Hire A Professional

It’s entirely possible that you’re so busy looking for homes and getting organized that taking pictures is just another task to add to the list. Instead of taking on the photography yourself, you may want to contact a professional to do it for you who will know all the tricks of the trade.

The best impression your house will make should be in person, but it’s important to have great listing photos so you can draw potential buyers in. If you’re getting ready to put your home on the market, you may want to contact one of our real estate professionals for more information.

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3 Things You Need to Consider Before Buying That Fixer-Upper Home

Posted in Home Buyer Tips by Michigan Real Estate Expert on March 22nd, 2016

3 Things You Need to Consider Before Buying That Fixer-upper Home

What Will It Cost?

If you’re going into a home expecting a few renovations costs, a minor detail here or there may not add up to much. However, if you’re not interested in spending the big bucks on making changes, you’ll want to estimate an approximate amount of how much the renovations you don’t want to live without will amount to. By including all the necessary labor and materials, you’ll be able to determine if the price-point of your offer will be worth it. Keep in mind that if there are any serious issues with the house, it may not be worth your while to consider the purchase at all.

Will Renovations Increase The Value?

In the event that you’re buying a home for its investment value, it’s going to be particularly important to consider if the renovations required will actually increase its market value. While adding another bedroom or upgrading a bathroom may not add significantly to a home’s overall price, certain more inexpensive improvements like painting, refinishing and new siding can actually add a lot to the look (and worth) of your home.

How Much Are You Willing To Take On?

It’s easy to think that you’re prepared to do the dirty work when faced with a fixer-upper, but getting down to brass tacks may not be so simple when the time comes. Before taking on a home that needs a lot of renovation, consider how much you’re willing to do so that you can determine if fixing it up will even be an economic boon after all the labor that may go into it. If you’re not a DIY kind of person, you may want to avoid a house that has a long list of repairs.

A fixer-upper can be tempting for those who want to invest or save on a home purchase, but you’ll want to carefully consider if it will be a good choice when it comes to selling time. If you’re currently perusing the market for a home, you may want to contact one of our real estate professionals for more information.

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What’s Ahead For Mortgage Rates This Week – March 21, 2016

Posted in Financial Reports by Michigan Real Estate Expert on March 21st, 2016

What's Ahead For Mortgage Rates This Week - March 21, 2016Housing Starts Up in February

Shortages of available homes are a major factor in rising home prices; shortages also make it more difficult for buyers to find homes they want. Housing starts in February rose, which is good news for the peak spring and summer home buying season. Other housing related news released last week included the Fed’s decision not to raise the target federal funds rate and Housing Starts and Building Permits reports issued by the Commerce Department. Consumer Sentiment was also released along with regularly scheduled releases on mortgage rates and weekly unemployment claims.

Builder Confidence Holds Steady, Real Estate Pros Call for More Construction

According to the NAHB/Wells Fargo Housing Market Index for March, home builder confidence held steady at a reading of 58. Analysts expected an uptick to 59 based on February’s reading of 58. Any reading above 50 indicates that more builders have confidence in housing market conditions than those who do not. The overall HMI reading is based on three components including builder perception of current market conditions, market conditions within the next six months and buyer foot traffic in new home developments.

Builder confidence in current market conditions held steady at a reading of 65. Builder confidence in market conditions within the next six months dropped three points to 65. Builder confidence in buyer foot traffic increased four points to a reading of 43. Confidence in buyer foot traffic has not topped a reading of 50 since 2005.

High demand for homes coupled with a short supply of affordable suburban single family homes compelled NAR Chief Economist Lawrence Yun to comment, “Imbalances in supply and demand and unhealthy levels of price growth in several metro areas have made buying a home an onerous task for far too many first-time buyers and middle class families.” Mr. Yun called for builders to double their focus on building single family homes.

Housing Starts Hit 9-Year High in February

Reports on housing starts and building permits issued indicate good news for the shortage of available homes.

The Commerce Department reported that housing starts rose from January’s reading of 1.120 million starts to an annual level of 1.178 million starts. Analysts expected a reading of 1.153 million starts. Building permits also increased from January’s reading of 1.120 million permits to 1.167million permits issued. Analysts forecasted a reading of 1.210 million in February.

Mortgage Rates Rise, Fed Holds Interest Rate Steady

The Federal Reserve announced its decision not to raise the target federal funds rate on Wednesday. The current rate is 0.250 to 0.50 percent. Policymakers cited concerns over global economic developments as a reason for their decision. This decision quickly showed an impact on Thursday. Freddie Mac reported average rates rose across the board. The rate for a 30-year fixed rate mortgage rose five basis points to 3.73 percent. 15-year mortgage rates averaged 2.99 percent, which was three basis points higher than the prior week’s reading. The average rate for a 5/1 adjustable rate mortgage rose by one basis point to 2.93 percent. Discount points averaged 0.50, 0.40 and.50 respectively.

Weekly jobless claims rose to 268,000 against expectations of 268,000 new claims and the prior week’s reading of 258,000 new jobless claims.

Consumer sentiment dropped to 90.00 in March against an expected reading of 92.10 and February’s reading of 91.70. Consumer outlook is important to housing markets as the decision whether or not to buy a home is typically based on potential buyers’ evaluations of job stability and affordability of available homes.

What’s Ahead This Week?

This week’s scheduled economic releases include reports on new and existing home sales as well as usual weekly releases on mortgage rates and new jobless claims.

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Worried about Your FICO Score? 4 Easy Strategies to Fix It Up

Posted in Home Buyer Tips by Michigan Real Estate Expert on March 18th, 2016

Worried about Your FICO Score? 4 Easy Strategies to Fix It UpIf you’re worried about your bad credit, you’ll want to do everything in your power to improve your rating as quickly as possible – especially if you have a major purchase coming up. Improving your credit rating can give you access to better interest rates on mortgages or even help you to get that job you’re after.

IMPORTANT! If you are currently involved in a home loan transaction, speak with your trusted real estate advisor before taking any action regarding your credit!

So how can you boost your FICO score quickly and easily? Here’s what you need to know.

Get Your Credit Report And Dispute Any Errors

Credit reporting agencies don’t always keep 100% perfect records, and there’s a good chance that your credit report contains at least one error. One recent FTC study found that 25% of consumers have an error on their credit report, and that in 5% of cases, the errors were actually severe enough to impact the loan terms that borrowers were able to negotiate.

You can get your annual credit report from all three credit reporting agencies for free. Carefully read over it. If you see any errors – if your name is misspelled, if they have the wrong address on file, or if there are late or unpaid charges that you didn’t make – you can dispute the items in question.

Still Overdue? Negotiate Payment Terms With Your Creditors

If you’re overdue on a payment, it will weigh heavily on your credit score. As your payment history makes up a full 35% of your FICO score, this is one area where you’ll want to invest a great deal of time and effort.

Contact any creditors you owe money to and ask if you can negotiate your bill. The ideal outcome for you is to have the creditor report your debt as paid in full, so see if you can secure that promise in writing in exchange for an accelerated payment schedule.

Try Maintaining A Lower Utilization Ratio

Your utilization ratio refers to the amount of credit you use at any given time. If this number goes beyond 30 percent, you’ll start to see your credit score drop. Ideally, you should aim for a utilization ratio below 10 percent – this will prove to your lender that you can responsibly pay for the credit you use.

Have Recurring Bills? Automate Your Payments

Automating your monthly payments can be a great way to boost your credit score. Whether it’s your mortgage, your credit card, or your student loan, a pre-authorized monthly payment will ensure that everything gets paid on time and give you a great credit history.

Your FICO score is a number that will determine your eligibility for mortgages and other loans. These are general tips to help with your credit score and improve the overall reporting of your credit.

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