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Thursday, July 25, 2019
Saturday, July 13, 2019
5 Biggest Student Loan Myths to STOP Believing
Student loan debt is one of the biggest barriers to homeownership for millennials. Despite the ability to afford a monthly mortgage payment, many first-time home buyers are unable to buy a home because of their inability to save for a down payment due to student debt repayment.
Responsible student loan debt management is the first step toward being able to purchase a home. One of the first steps toward responsible student loan debt management is to stop believing these student loan myths.
1. You’re stuck with your interest rate.
You have the opportunity to secure a lower interest rate with student loan refinancing. If you have built a good credit score, typically 680 or higher, and are in good standing with your loan repayment you can apply for a student loan refinance with the same or another lender. Underwriting criteria will vary based on the lender who issues your student loan refinance. If you do not qualify for a student loan refinance on your own, a qualified co-signer could help you qualify.
2. Everyone is eligible for student loan forgiveness.
The “Obama Student Loan Forgiveness” program, unfortunately, does NOT exist. However, there is a Public Service Loan Forgiveness Program for eligible federal student loans, but not private student loans. According to Forbes, some of the qualifications for Public Service Student Loan Forgiveness includes “student borrowers who are employed full-time in an eligible federal, state, or local public service job or 501(c)(3) non-profit who have made 120 eligible on-time payments over 10 years and are enrolled in a federal repayment program.”
3. Applying to multiple lenders for refinance will lower your credit score.
Just like when you are shopping for a car, “interest rate shopping” inquiries made during a short period of time, within 30 days for example, will have little to no impact on your credit score. In fact, applying to multiple student loan lenders for a refinance can actually improve your chances for approval. Shop around within a specific time frame to find the best interest rate for your student loan refinance.
4. There is an early payoff penalty.
While some loans have a penalty for paying off early, your student loans do not. In some cases, extra student loan payments can help you save on costly interest. Before making any extra payments toward your student loans it is best to run the numbers or consult a financial advisor to see which payoffs would benefit you the most.
5. Federal student loan consolidation will lower your interest rate.
One of the most common student loan myths, is that federal student loan consolidation will lower your interest rate. When federal student loans are consolidated, the interest rate is equal to a weighted average of each loan’s existing interest rate, rounded up to the nearest 1/8%. So, this interest rate may be lower than the interest rates on some existing loans, but it will be higher than others because it is an average. If you are seeking a lower interest rate, you should consider a student loan refinance instead.
Although student loan debt is one of the biggest barriers to homeownership, responsible repayment and management is one way to better position yourself for homeownership. If you have any questions about how your student debt will impact your ability to own a home, give us a call.
Aundrea Beach-Greco
NMLS 333739
info@aundreabeach.com
www.AundreaBeach.com
NMLS 333739
info@aundreabeach.com
www.AundreaBeach.com
Sources: Forbes
Tuesday, July 09, 2019
How much can a seller pay towards closing costs when buying a home?
Mortgage closing costs range from 2-5% of a home’s purchase price and that can add up quickly. But, many sellers are willing to pay for some of your closing costs in order to sell their home faster.
There is a limit however to how much a seller can pay for. Depending upon your loan, each loan type — conventional, FHA, VA, and USDA — sets maximums on the seller-paid contributions.
Seller-paid costs are also known as sales concessions, seller credits, or seller contributions. Whatever you want to call them, new and experienced homebuyers can get help on costs with help from the seller.
Seller contributions by loan type
Each loan type has slightly different rules when it comes to seller contributions. The percentage each loan type allows varies as well. It’s important to understand the seller-paid maximums for your loan type, so you can take full advantage when it comes time to buy.
Maximum seller-paid costs for conventional loans
Fannie Mae and Freddie Mac are the two rule makers for conventional loans. They set maximum seller-paid closing costs that are different from other loan types such as FHA and VA. While seller-paid cost amounts are capped, the limits are very generous.
A homebuyer purchasing a $250,000 house with 10% down could receive up to $15,000 in closing cost assistance (6% of the sales price). This dollar figure is a lot more than the typical seller is willing to contribute, so the limits won’t even be a factor in most cases.
FHA seller contributions
For all FHA loans, the seller and other interested parties can contribute up to 6% of the sales price or toward closing costs, prepaid expenses, discount points, and other financing concessions.
If the appraised home value is less than the purchase price, the seller may still contribute 6% of the value. FHA indictors that the lessor of the two (purchase versus appraised) values may be used.
VA loan seller contribution maximum
The seller may contribute up to 4% of the sale price, plus reasonable and customary loan costs on VA home loans. Total contributions may exceed 4% because standard closing costs do not count toward the total.
According to VA guidelines, the 4% rule only applies to items such as:
- Prepayment of property taxes and insurance
- Appliances and other gifts from the builder
- Discount points above 2% of the loan amount
- Payoff of the buyer’s judgments and debts
- Payment of the VA funding fee
For example, a buyer’s core closing costs for things like appraisal, loan origination, and the title equal 2% of the purchase price. The seller agrees to prepay taxes, insurance, the VA funding fee, and a credit card balance equal to 3% of the sales price.
This 5% contribution would be allowed because 2% is going toward the core loan closing costs.
USDA seller contributions
USDA loan guidelines state that the seller may contribute up to 6% of the sales price toward the buyer’s reasonable closing costs. Guidelines also state that closing costs can’t exceed those charged by other applicants by the lender for similar transactions such as FHA-insured or VA-guaranteed mortgage loans.
Interested party contributions
Seller-paid costs fall within a broader category of real estate related funds called interested party contributions or IPCs. These costs are contributions that incentivize the homebuyer to buy that particular home. IPCs are allowed up to a certain dollar amount.
Who is considered an interested party? Your real estate agent, the home builder, and of course the home seller. Even funds from down payment assistance programs are considered IPCs if the funds originate from the seller and run through a non-profit.
Anyone who might benefit from the sale of the home is considered an interested party, and their contribution to the buyer is limited.
Why set maximum seller-paid closing costs?
Mortgage rule makers such as Fannie Mae, Freddie Mac, and HUD aim to keep the housing market fair by keeping values and prices sustainable.
Here’s an example of how rampant seller-paid closing costs and other interested party contributions could inflate prices.
Imagine you are buying a home worth $250,000. The seller really wants to sell the home fast, so he offers $25,000 to pay for your closing costs and says you can keep whatever is left over. But, in exchange he changes the home price to $275,000.
He then illegally pays the appraiser to establish a value of $275,000 for the home.
A number of negative consequences arise:
- You paid too much for the home.
- Similar homes in the neighborhood will start selling for $275,000 (and, more if the cycle is repeated).
- The bank’s loan amount is not based on the true value of the home.
In a very short time, property values and loan amounts are at unrealistic levels. If homeowners stop making their payments, banks and mortgage investors are left holding the bill.
Can the seller contribute more than actual closing costs?
No. The seller’s maximum contribution is the lesser of the sales price percentage determined by the loan type or the actual closing costs.
For instance, a homebuyer has $5,000 in closing costs and the maximum seller contribution amount is $10,000. The maximum the seller can contribute is $5,000 even though the limits are higher.
Seller contributions may not be used to help the buyer with the down payment, to reduce the borrower’s loan principal, or otherwise be kicked back to the buyer above the actual closing cost amount.
Creative ways to use excess seller contributions
While seller contributions are limited to actual closing costs, you can constructively increase your closing costs to use up all available funds.
Imagine the seller is willing to contribute $7,000, but your closing costs are only $5,000. That’s a whopping $2,000 is on the line.
In this situation, ask your lender to quote you specific costs to lower the rate. You could end up shaving 0.125%-0.25% off your rate using the excess seller contribution.
You can also use seller credits to prepay your homeowners insurance, taxes, and sometimes even HOA dues. Ask your lender and escrow agent if there are any sewer capacity charges and/or other transfer taxes or fees that you could pay for in advance. Chances are there is a way to use all the money available to you.
You can even use seller credit to pay upfront funding fees for government loan types like FHA.
Use seller contributions for upfront FHA, VA, and USDA fees
All government-backed loan types allow you to prepay funding fees with seller contributions.
FHA loans require an upfront mortgage insurance payment equal to 1.75% of the loan amount. The seller may pay this fee. However, the entire fee must be paid by the seller. If you use excess seller credit, but it’s not enough to cover the entire upfront fee, then you cannot use the funds toward the fee.
VA loans allow the seller to pay all or part of the upfront fee (2.15%-3.3% of the loan amount). The fee counts towards VA’s 4% maximum contribution rule.
USDA requires an upfront guarantee fee of 2.0% of the loan amount. The buyer can use seller contributions to pay for it.
Seller contributions help many become owners
Seller contributions and other interested party credits reduce the amount of money it takes to get into a home.
Zero-down loans such as USDA and VA require nothing down. But, opening any loan involves thousands in closing costs.
A seller credit can remove the closing cost barrier and help buyers get into homes for little or nothing out-of-pocket.
Many home shoppers are surprised that they not only qualify, but that initial homeownership costs are much lower than they expected.
Saturday, May 18, 2019
How Divorce Affects Getting a Home Loan
Those who find themselves having to make a fresh start in the wake of a separation or divorce are confronted with many uncertainties and decisions. There are 3 important things we cover in this video - refinancing, quit claims and child support/alimony. An experienced mortgage professional can help divorced individuals take advantage of home finance opportunities.
Check out this quick video
https://youtu.be/tjLY1JiUE4Q
Questions? Call or text 702.326.7866 www.AundreaBeach.com Share your favorite part of this video with us in the comments section below. PS- If you want help finding one of the best mortgage advisors in the nation, a Certified Mortgage Planning Specialist (CMPS), please let me know. I'm here to help! Want to know more about Las Vegas real estate, mortgages or about buying a house in Las Vegas? Send me a message, I'm here to help! Have an amazing day! -Your Trusted Local Mortgage Expert, Aundrea Beach-Greco Contact info: AUNDREA BEACH-GRECO Mortgage Advisor, CMPS NMLS 333739 Call/Text: 702-326-7866 Email: info@aundreabeach.com CMG Financial 8337 W. Sunset Rd, Suite 300 Las Vegas, NV 89113 Designations- Certified Mortgage Planning Specialist (CMPS) Find me online: www.AundreaBeach.com Twitter: https://www.twitter.com/AundreaBeachLV Instagram: http://www.instagram.com/AundreaBeach... Facebook: http://www.facebook.com/Aundrea.Beach...
Friday, May 10, 2019
Sunday, March 31, 2019
Putting your mortgage into a trust
You may, or may not, have a trust in place. If not, I strongly suggest you consider the benefits of a living trust and move title into the name of a trust when/if you have one in place.
What is a living trust and how is it different from a last will.
A living trust (sometimes called an "inter vivos" or "revocable" trust) is a written legal document through which your assets are placed into a trust for your benefit during your lifetime and then transferred to designated beneficiaries at your death by your chosen representative, called a "successor trustee."
On the other hand, a will is a written legal document with a plan of distribution of your assets upon your death. Your executor, as named in the will, oversees this process, and notably, nothing in your will takes effect until after you die.
1. A Living Trust Avoids Probate
One of the first benefits of a living trust is that it avoids probate. With a valid will, your estate will go through probate, the court proceedings through which your assets are distributed according to your wishes by the executor. A living trust, on the other hand, does not go through probate, which often means a faster distribution of assets to your heirs—from months or years with a will down to weeks with a living trust. Your successor trustee will pay your debts and distribute your assets according to your instructions. Notably, both documents allow you to choose a guardian for your children in the event of your death.
2. A Living Trust May Save You Money
Remember this really all depends on your financial situation. At first, drafting a living trust will likely cost more than drafting a will as it is a more complex legal document. Moreover, you must also transfer your assets such as bank accounts, stocks, and bond accounts and certificates to the trust through separate paperwork; simply writing up a living trust does not actually "fund the trust."
Other procedures involved in an estate plan with a living trust could also include changing the beneficiary on your life insurance policy to the trust, appropriately dealing with your IRA or 401(k) plan, and also creating a "pour-over will" that will provide for the distribution of any assets acquired after the creation of the living trust but before your death or any assets inadvertently excluded.
Note that the pour-over will, just like any will, will have to go through probate.
While a will costs less to draft, a living trust can save your estate money at the time of your death as the distribution of assets in the trust will not go through probate; court costs for probating your will are taken from estate, although note that for a simple, uncontested will, costs are often nominal.
Regarding contests, living trusts will likely hold up better in the event that someone comes forward contesting the distribution of your assets; accordingly, court costs to cover any will contests may also need to be considered.
As far as savings of income and estate taxes, there is often no substantial difference between living trusts and wills, although living trusts may provide savings for married couples in the form of joint living trusts.
Note that for people with simple estate plans and for young married couples with no children or significant assets, a living trust is probably not financially beneficial.
3. A Living Trust Provides Privacy
One big difference between the two legal documents is the level of privacy offered with a living trust. As a living trust is not made public, upon your death, your estate will be distributed in private. A will, on the other hand, is public record and so all transactions will be public as well.
Another difference is the handling of out-of-state property you own upon your death. With a will, that property will have to go through probate in its own state; a living trust can help you avoid probate.
What other benefits does a living trust provide?
Beyond the top three main benefits, another benefit is that a living trust is written so that your trustee can automatically jump into the driver's seat if you become ill or incapacitated.
On the other hand, if you simply have a will without a durable power of attorney, the court will appoint someone to oversee your financial affairs who will have to report to the court for approval of expenses, sales of property, etc. One widely reported public example of this is the conservatorship of Britney Spears' father over his daughter's financial affairs.
Note that if you draw up a durable power of attorney, including one for health care decisions, you can avoid a court-appointed conservator for your affairs.
With a living trust, however, your handpicked successor trustee can manage your affairs without court intervention, and since the trust is revocable, if you dispute your incapacity, you can retain control yourself.
While a living trust makes sense for some people, wills are just fine for others. A general rule among tax planners is that the larger the value of the estate, the greater need there is for a living trust—although even this is not foolproof.
Are you interested in setting up a living trust, but not sure where to start, or who to go to? I would be more than happy to refer you to a trust attorney. Please call/text/email me if you have any questions.
What is a living trust and how is it different from a last will.
A living trust (sometimes called an "inter vivos" or "revocable" trust) is a written legal document through which your assets are placed into a trust for your benefit during your lifetime and then transferred to designated beneficiaries at your death by your chosen representative, called a "successor trustee."
On the other hand, a will is a written legal document with a plan of distribution of your assets upon your death. Your executor, as named in the will, oversees this process, and notably, nothing in your will takes effect until after you die.
1. A Living Trust Avoids Probate
One of the first benefits of a living trust is that it avoids probate. With a valid will, your estate will go through probate, the court proceedings through which your assets are distributed according to your wishes by the executor. A living trust, on the other hand, does not go through probate, which often means a faster distribution of assets to your heirs—from months or years with a will down to weeks with a living trust. Your successor trustee will pay your debts and distribute your assets according to your instructions. Notably, both documents allow you to choose a guardian for your children in the event of your death.
2. A Living Trust May Save You Money
Remember this really all depends on your financial situation. At first, drafting a living trust will likely cost more than drafting a will as it is a more complex legal document. Moreover, you must also transfer your assets such as bank accounts, stocks, and bond accounts and certificates to the trust through separate paperwork; simply writing up a living trust does not actually "fund the trust."
Other procedures involved in an estate plan with a living trust could also include changing the beneficiary on your life insurance policy to the trust, appropriately dealing with your IRA or 401(k) plan, and also creating a "pour-over will" that will provide for the distribution of any assets acquired after the creation of the living trust but before your death or any assets inadvertently excluded.
Note that the pour-over will, just like any will, will have to go through probate.
While a will costs less to draft, a living trust can save your estate money at the time of your death as the distribution of assets in the trust will not go through probate; court costs for probating your will are taken from estate, although note that for a simple, uncontested will, costs are often nominal.
Regarding contests, living trusts will likely hold up better in the event that someone comes forward contesting the distribution of your assets; accordingly, court costs to cover any will contests may also need to be considered.
As far as savings of income and estate taxes, there is often no substantial difference between living trusts and wills, although living trusts may provide savings for married couples in the form of joint living trusts.
Note that for people with simple estate plans and for young married couples with no children or significant assets, a living trust is probably not financially beneficial.
3. A Living Trust Provides Privacy
One big difference between the two legal documents is the level of privacy offered with a living trust. As a living trust is not made public, upon your death, your estate will be distributed in private. A will, on the other hand, is public record and so all transactions will be public as well.
Another difference is the handling of out-of-state property you own upon your death. With a will, that property will have to go through probate in its own state; a living trust can help you avoid probate.
What other benefits does a living trust provide?
Beyond the top three main benefits, another benefit is that a living trust is written so that your trustee can automatically jump into the driver's seat if you become ill or incapacitated.
On the other hand, if you simply have a will without a durable power of attorney, the court will appoint someone to oversee your financial affairs who will have to report to the court for approval of expenses, sales of property, etc. One widely reported public example of this is the conservatorship of Britney Spears' father over his daughter's financial affairs.
Note that if you draw up a durable power of attorney, including one for health care decisions, you can avoid a court-appointed conservator for your affairs.
With a living trust, however, your handpicked successor trustee can manage your affairs without court intervention, and since the trust is revocable, if you dispute your incapacity, you can retain control yourself.
While a living trust makes sense for some people, wills are just fine for others. A general rule among tax planners is that the larger the value of the estate, the greater need there is for a living trust—although even this is not foolproof.
Are you interested in setting up a living trust, but not sure where to start, or who to go to? I would be more than happy to refer you to a trust attorney. Please call/text/email me if you have any questions.
 | Aundrea Beach-Greco NMLS# 333739 Mortgage Advisor, CMPS | CMG Financial Mobile: (702) 326-7866 Branch NMLS# 929754 8337 West Sunset Road, Suite 300 | Las Vegas, NV 89113 |
Friday, March 29, 2019
CA HOMEOWNERS: How the insolvency & non-recourse exceptions work for forgiven mortgage debt (Updated 2019)
WHAT CALIFORNIA HOMEOWNERS NEED TO KNOW ABOUT FORGIVEN MORTGAGE DEBT
The tax break for forgiven mortgage debt expired January 1, 2017, for most homeowners across the United States. This means that you may be required to pay income taxes on any debt that's forgiven you this year. For example, if the lender forgives you $50,000 in debt, and your income tax bracket is 25%, you may owe the IRS $12,500!
However, there are two exceptions to this:
Exception #1:
"Insolvency" There's no tax on the forgiveness of debt if you are "insolvent" at the time of debt cancellation. Insolvent simply means that your total debts are greater than your total assets.
In our example, assume your total assets are $20,000 and your total liabilities are $70,000. This means that your net worth would be negative $50,000. This would make you "insolvent" according to the IRS, and you wouldn't have to pay any taxes at all on the $50,000 in forgiven mortgage debt!
Keep in mind that when you calculate your assets, you need to include everything you own, including exempt assets beyond the reach of creditors under the law, such as interest in a pension plan and the value of your retirement account.
Exception #2:
"Non-Recourse" If you live in California, we have what's known as an "anti-deficiency statute". This means that a mortgage lender is not allowed to pursue you for the difference between the sales price and what owe on the loan.
Using the example above, assume the lender allows you to do a short sale, but you still owe an extra $50,000. The $50,000 may be considered "non-recourse".
This means that the lender cannot require you to pay that extra $50,000 in the event of a short sale or foreclosure. In most cases, the loan must have been used to buy, build or improve your primary residence in order to qualify for this special "non-recourse" status. This means that forgiven mortgage debt on your vacation home or investment property may not qualify. You may need to pay income taxes if that debt is forgiven you. You may also have to pay taxes if the forgiven mortgage debt was a cash-out refinance on your primary residence, and you didn't use the funds from the mortgage for home improvements.
PLEASE NOTE: THIS LETTER AND OVERVIEW IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL, TAX, OR FINANCIAL ADVICE. PLEASE CONSULT WITH A QUALIFIED TAX ADVISOR FOR SPECIFIC ADVICE PERTAINING TO YOUR SITUATION. FOR MORE INFORMATION ON ANY OF THESE ITEMS, PLEASE REFERENCE IRS PUBLICATION 4681.
Source: CMPS Institute
The tax break for forgiven mortgage debt expired January 1, 2017, for most homeowners across the United States. This means that you may be required to pay income taxes on any debt that's forgiven you this year. For example, if the lender forgives you $50,000 in debt, and your income tax bracket is 25%, you may owe the IRS $12,500!
Exception #1:
"Insolvency" There's no tax on the forgiveness of debt if you are "insolvent" at the time of debt cancellation. Insolvent simply means that your total debts are greater than your total assets.
In our example, assume your total assets are $20,000 and your total liabilities are $70,000. This means that your net worth would be negative $50,000. This would make you "insolvent" according to the IRS, and you wouldn't have to pay any taxes at all on the $50,000 in forgiven mortgage debt!
Keep in mind that when you calculate your assets, you need to include everything you own, including exempt assets beyond the reach of creditors under the law, such as interest in a pension plan and the value of your retirement account.
Exception #2:
"Non-Recourse" If you live in California, we have what's known as an "anti-deficiency statute". This means that a mortgage lender is not allowed to pursue you for the difference between the sales price and what owe on the loan.
Using the example above, assume the lender allows you to do a short sale, but you still owe an extra $50,000. The $50,000 may be considered "non-recourse".
This means that the lender cannot require you to pay that extra $50,000 in the event of a short sale or foreclosure. In most cases, the loan must have been used to buy, build or improve your primary residence in order to qualify for this special "non-recourse" status. This means that forgiven mortgage debt on your vacation home or investment property may not qualify. You may need to pay income taxes if that debt is forgiven you. You may also have to pay taxes if the forgiven mortgage debt was a cash-out refinance on your primary residence, and you didn't use the funds from the mortgage for home improvements.
PLEASE NOTE: THIS LETTER AND OVERVIEW IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL, TAX, OR FINANCIAL ADVICE. PLEASE CONSULT WITH A QUALIFIED TAX ADVISOR FOR SPECIFIC ADVICE PERTAINING TO YOUR SITUATION. FOR MORE INFORMATION ON ANY OF THESE ITEMS, PLEASE REFERENCE IRS PUBLICATION 4681.
Source: CMPS Institute
Friday, March 22, 2019
How the insolvency exception works for forgiven mortgage debt (Updated 2019)
WHAT YOU NEED TO KNOW ABOUT FORGIVEN MORTGAGE DEBT
The tax break for forgiven mortgage debt expired January 1, 2017. This means that you will be required to pay income taxes on any mortgage debt that's forgiven you. For example, if the lender forgives you $50,000 in debt, and your income tax bracket is 25%, you would owe the IRS $12,500!
THE "INSOLVENCY" EXCEPTION
Here's an interesting twist: there's no tax on the forgiveness of debt if you are "insolvent" at the time of debt cancellation. Insolvent simply means that your total debts are greater than your total assets. In our example, assume your total assets are $20,000 and your total liabilities are $70,000. This means that your net worth would be negative $50,000. This would make you "insolvent" according to the IRS, and you wouldn't have to pay any taxes at all on the $50,000 in forgiven mortgage debt! Keep in mind that when you calculate your assets, you need to include everything you own, including exempt assets beyond the reach of creditors under the law, such as interest in a pension plan and the value of your retirement account.
PLEASE NOTE: THIS LETTER AND OVERVIEW IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL, TAX, OR FINANCIAL ADVICE. PLEASE CONSULT WITH A QUALIFIED TAX ADVISOR FOR SPECIFIC ADVICE PERTAINING TO YOUR SITUATION. FOR MORE INFORMATION ON ANY OF THESE ITEMS, PLEASE REFERENCE IRS PUBLICATION 4681. Source: CMPS Institute
The tax break for forgiven mortgage debt expired January 1, 2017. This means that you will be required to pay income taxes on any mortgage debt that's forgiven you. For example, if the lender forgives you $50,000 in debt, and your income tax bracket is 25%, you would owe the IRS $12,500!
Here's an interesting twist: there's no tax on the forgiveness of debt if you are "insolvent" at the time of debt cancellation. Insolvent simply means that your total debts are greater than your total assets. In our example, assume your total assets are $20,000 and your total liabilities are $70,000. This means that your net worth would be negative $50,000. This would make you "insolvent" according to the IRS, and you wouldn't have to pay any taxes at all on the $50,000 in forgiven mortgage debt! Keep in mind that when you calculate your assets, you need to include everything you own, including exempt assets beyond the reach of creditors under the law, such as interest in a pension plan and the value of your retirement account.
PLEASE NOTE: THIS LETTER AND OVERVIEW IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL, TAX, OR FINANCIAL ADVICE. PLEASE CONSULT WITH A QUALIFIED TAX ADVISOR FOR SPECIFIC ADVICE PERTAINING TO YOUR SITUATION. FOR MORE INFORMATION ON ANY OF THESE ITEMS, PLEASE REFERENCE IRS PUBLICATION 4681. Source: CMPS Institute
Friday, March 15, 2019
WHEN IS MORTGAGE INTEREST TAX DEDUCTIBLE? (Updated for 2019)
Contrary to popular belief, mortgage interest is not always tax deductible.
Here's the inside scoop for 2019:
1. DO YOU ITEMIZE YOUR TAX DEDUCTIONS?
You cannot take the mortgage interest deduction if you are taking the standard deduction. In 2019, the standard deduction is $12,200 for single taxpayers, $18,350 for heads of household, and $24,400 for married taxpayers filing a joint return. Please see a CPA for details.
2. IS YOUR HOME A "QUALIFIED RESIDENCE"?
Mortgage interest is only deductible if the mortgage is attached to a "qualified residence". Taxpayers can generally deduct the mortgage interest on two qualified homes: One Primary Residence; and, One Vacation Home
3. IS YOUR MORTGAGE CLASSIFIED AS "ACQUISITION INDEBTEDNESS"?
Your mortgage or home equity line of credit is considered "acquisition indebtedness" if it was used to buy, build or improve a qualified residence. Generally, you can deduct the interest on mortgage balances up to $750,000 of Acquisition Indebtedness.
Here are two examples:
A) Jane buys her $500,000 primary residence using a $400,000 mortgage. Jane would be able to deduct the interest on the $400,000 mortgage as acquisition indebtedness because (1) the mortgage was to buy a qualified residence; and, (2) the mortgage falls within the $750,000 limit.
B) Janice buys her $500,000 primary residence with cash. A year later, Janice does a cash-out refinance and puts a $400,000 mortgage on the home. The funds are not used for home improvements. Janice would NOT be able to deduct the interest on the new $400,000 mortgage because the funds were not used to buy, build or improve the house.
THREE PITFALLS TO AVOID
As you can see, it's very important to structure your mortgage in a way where it can be classified as "acquisition indebtedness"! Here are three common mistakes that many people make when choosing a mortgage strategy and deducting their mortgage interest: Pulling cash out of a primary residence to buy a vacation home, and then illegally deducting the interest on that cash-out mortgage (in these cases, it's often better to place a mortgage on the vacation home itself so that it can be classified as "acquisition indebtedness") Paying cash for a home, taking out a mortgage later on, and then illegally deducting the interest on that cash-out mortgage Illegally deducting the interest on mortgage balances that do not qualify as acquisition indebtedness
DISTINCTION BETWEEN A QUALIFIED RESIDENCE AND AN INVESTMENT PROPERTY
Everything mentioned above pertains to a mortgage transaction involving a primary home or vacation home that is elected as a “qualified residence” for tax purposes. If your transaction involved an investment property, see IRS Publication 527.
PLEASE NOTE: THIS ARTICLE AND OVERVIEW IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL, TAX, OR FINANCIAL ADVICE. PLEASE CONSULT WITH A QUALIFIED TAX ADVISOR FOR SPECIFIC ADVICE PERTAINING TO YOUR SITUATION. FOR MORE INFORMATION ON ANY OF THESE ITEMS, PLEASE REFERENCE IRS PUBLICATION 936.
Aundrea Beach-Greco
Mortgage Advisor, CMPS
NMLS: 333739
CMG Financial
info@aundreabeach.com
(702) 326-7866
8337 W. Sunset Road, Suite 300, Las Vegas, Nevada 89113
Corporate NMLS: 1820
Illustrates the rules surrounding acquisition indebtedness - last updated 01-2019
Here's the inside scoop for 2019:
1. DO YOU ITEMIZE YOUR TAX DEDUCTIONS?
You cannot take the mortgage interest deduction if you are taking the standard deduction. In 2019, the standard deduction is $12,200 for single taxpayers, $18,350 for heads of household, and $24,400 for married taxpayers filing a joint return. Please see a CPA for details.
2. IS YOUR HOME A "QUALIFIED RESIDENCE"?
Mortgage interest is only deductible if the mortgage is attached to a "qualified residence". Taxpayers can generally deduct the mortgage interest on two qualified homes: One Primary Residence; and, One Vacation Home
3. IS YOUR MORTGAGE CLASSIFIED AS "ACQUISITION INDEBTEDNESS"?
Your mortgage or home equity line of credit is considered "acquisition indebtedness" if it was used to buy, build or improve a qualified residence. Generally, you can deduct the interest on mortgage balances up to $750,000 of Acquisition Indebtedness.
Here are two examples:
A) Jane buys her $500,000 primary residence using a $400,000 mortgage. Jane would be able to deduct the interest on the $400,000 mortgage as acquisition indebtedness because (1) the mortgage was to buy a qualified residence; and, (2) the mortgage falls within the $750,000 limit.
B) Janice buys her $500,000 primary residence with cash. A year later, Janice does a cash-out refinance and puts a $400,000 mortgage on the home. The funds are not used for home improvements. Janice would NOT be able to deduct the interest on the new $400,000 mortgage because the funds were not used to buy, build or improve the house.
THREE PITFALLS TO AVOID
As you can see, it's very important to structure your mortgage in a way where it can be classified as "acquisition indebtedness"! Here are three common mistakes that many people make when choosing a mortgage strategy and deducting their mortgage interest: Pulling cash out of a primary residence to buy a vacation home, and then illegally deducting the interest on that cash-out mortgage (in these cases, it's often better to place a mortgage on the vacation home itself so that it can be classified as "acquisition indebtedness") Paying cash for a home, taking out a mortgage later on, and then illegally deducting the interest on that cash-out mortgage Illegally deducting the interest on mortgage balances that do not qualify as acquisition indebtedness
DISTINCTION BETWEEN A QUALIFIED RESIDENCE AND AN INVESTMENT PROPERTY
Everything mentioned above pertains to a mortgage transaction involving a primary home or vacation home that is elected as a “qualified residence” for tax purposes. If your transaction involved an investment property, see IRS Publication 527.
PLEASE NOTE: THIS ARTICLE AND OVERVIEW IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL, TAX, OR FINANCIAL ADVICE. PLEASE CONSULT WITH A QUALIFIED TAX ADVISOR FOR SPECIFIC ADVICE PERTAINING TO YOUR SITUATION. FOR MORE INFORMATION ON ANY OF THESE ITEMS, PLEASE REFERENCE IRS PUBLICATION 936.
Aundrea Beach-Greco
Mortgage Advisor, CMPS
NMLS: 333739
CMG Financial
info@aundreabeach.com
(702) 326-7866
8337 W. Sunset Road, Suite 300, Las Vegas, Nevada 89113
Corporate NMLS: 1820
Illustrates the rules surrounding acquisition indebtedness - last updated 01-2019
Thursday, January 10, 2019
5 Super Important Questions to Ask A Mortgage Lender
Let’s be real ... it’s way more fun to search for homes online and attend open houses than it is to find a home loan. After all, what’s not to like about house hunting—you get to see beautiful homes and imagine yourself living in them.
As fun and exciting as that is, it’s the financing that stops most of us and could prevent you from getting into a home altogether.
If you’re like many potential homebuyers, you’re not really sure where to start when it comes to your home loan. In fact, a Consumer Financial Protection Bureau (CFPB) survey found that nearly half of homebuyers don’t shop around for a mortgage lender at all—they just go with the first one that comes their way.
Question: Would you marry the first person that came your way based on a single date? Or would you date around a bit to be sure they’re the right one?
You’d date around, of course. Which is what we suggest you do when you’re looking for a mortgage lender—date!
With all that in mind, here are five essential questions you should ask when you interview prospective mortgage lenders—way before touring your dream home. By asking these important questions, you’ll find that you can zero-in on the one that’s right for you.
Ready to get started? Great. Here are the questions:
1. What is your process for preapproval and closing?
Make sure the lender’s timelines line up with your home buying goals. Understand when they will pull your credit score. Don’t open or close any accounts during that time, or take out credit for any other large purchases. Ideally, you should check your own credit score first to review for any errors or issues you’ll need to address that may negatively impact your credit score.
What information will your lender need to preapprove you for a home loan? Ask how long the preapproval will be valid. Typically, it’s for 60 – 90 days and can be updated as needed.
Ask about the lender’s closing process. Where will it take place? Do they work with a particular law office or do they do it in house? Some lenders may offer a closing at your home or even online.
2. How do you communicate with homebuyers?
You never want to be the last to know. Ask how they will manage your loan process and all the steps along the way. Will you have an account representative who will inform you of updates? Do they offer an online system with notifications? Think about how you like to communicate and what works for your schedule.
3. What will be my down payment requirement?
Your minimum down payment will depend on the type of loan your lender recommends for you. Talk to your lender about what you have saved, how much you’d like to put down and your goals for a monthly payment.
The good news is that 20 percent down is not required today. Several loans today offer a 3 – 5 percent down payment. FHA loans, popular with first-time homebuyers, have a 3.5 percent minimum down payment. And, if you are a veteran or member of the military, you have access to VA loans which offer zero percent down. Most low down payment loans require a minimum credit score of 620.
4. Do you participate in any down payment assistance programs?
There are more than 2,500 homeownership programs available across the country that can help you save on your down payment and closing costs. State and local housing agencies administer a wide range of programs, including grants, second mortgages, affordable first loans and tax credits. They develop and manage the program, review applications and approve lenders who can issue loans with these programs.
Most homebuyer programs have multiple participating lenders. Find out what special low down payment programs and accompanying down payment assistance programs they may offer. Some lenders offer they own proprietary down payment help as well.
Check out the programs available in your market and discuss with your lender and Realtor.
5. What fees will be included in my loan and what fees will be due at closing?
Lender fees will be associated no matter what loan product choose. They include origination fees, the cost of writing the loan and closing costs. Fees are just as important as your interest rate, and there are ways to lower your interest rate with additional fees.
Interest rates today are low and they are determined by the Federal Reserve. You can also lower your interest rate by paying “points.” A point is equal to 1 percent of your loan amount. For example, you might have an interest rate of 5%, but it could be lowered to 4.5% by paying 2 points at closing.
The cost of your loan is determined by several factors, including your loan terms (15 years, 30 years, etc.), your credit score and your loan type. Ask your lender to outline fees based on your personal situation and by different loan options.
According to the Know Before You Owe mortgage disclosure rule, your lender should provide you with the Loan Estimate and the Closing Disclosure to help you understand your fees. The rule also requires that you get three business days to review your Closing Disclosure and ask questions before you close on a mortgage.
Improve your bottom line by shopping around for your home loan and interviewing lenders. Research by the CFPB found that a borrower taking out a 30-year fixed rate conventional loan could get rates that vary by more than half a percent. That could translate into saving thousands on your mortgage.
Wednesday, January 09, 2019
Is the Recent Dip in Interest Rates Here to Stay?
Interest rates for a 30-year fixed rate mortgage climbed consistently throughout 2018 until the middle of November. After that point, rates returned to levels that we saw in August to close out the year at 4.55%, according to Freddie Mac’s Primary Mortgage Market Survey. After the first week of 2019, rates have continued their downward ...
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Friday, December 21, 2018
3 Tips for Renters prepping for 2019
The New Year always screams goal setting, right? It’s time to look forward and envision where you see yourself this time next year. Is owning a home on your list of goals?
Before you stumble upon that dream home while out looking at holiday lights, take these three simple year-end steps that will jump-start your journey to homeownership. You’ll be well on your way to a new home before that New Year’s Eve countdown begins.
1. Simple budget creation and review
2. Talk with a lender
3. Look at your down payment options
2. Talk with a lender
3. Look at your down payment options
How much are you currently spending each month on cars, credit cards, student loans, rent and other housing related expenses, like utilities? What is that amount annually? Do you anticipate any rent increases?
Take a look at your other expenses too. You want to have a solid understanding of your monthly income and expenses so you know what you can handle for a mortgage payment. This exercise will keep you from jumping into a mortgage payment that stretches you and your family too far.
And, with homeownership comes home maintenance so it’s important to have a cushion for those necessary (and sometimes fun!) projects.
Mortgages are not one size fits all. You want to work with a lender who is experienced and can listen to your goals and budget to find the best loan that fits your needs. Make a plan to talk to a lender before year end. Learn about their low down payment options, fees and the monthly and lifetime cost of your mortgage.
Check out our five essential lender interview questions for a guide on what to ask prospective mortgage lenders.
Do you know about homebuyer programs that can help you save on your down payment and closing costs? Down payment programs can give you a major homeownership boost in the form of grants, forgivable loans and tax credits. But, they also require approvals and paperwork so you want to get your options on the table soon.
Investigate what’s available in the area you plan to buy. Use our down payment assistance program finder to answer a few question about your household to narrow down your options.
Good luck and happy New Year!
I am here to help, and if you need guidance on starting a budget just reach out.
I am here to help, and if you need guidance on starting a budget just reach out.
Aundrea Beach-Greco
Mortgage Advisor, CMPS - NMLS 333739
702-326-7866
info@aundreabeach.com
Mortgage Advisor, CMPS - NMLS 333739
702-326-7866
info@aundreabeach.com
Go online to learn more >> www.AundreaBeach.com
Sunday, December 16, 2018
FHA Mortgage Loan Limits Increase in 2019
FHA boosts its loan limits for 2019 by nearly 7%
Come January 1, 2019, the Federal Housing Administration's (FHA's) loan limits are set to increase across most areas in the country. The U.S. Department of Housing and Urban Development (HUD) announced that FHA loan limits would be increasing in more than 3,000 counties.
FHA is required by the National Housing Act, as amended by the Housing and Economic Recovery Act of 2008, to set single-family forward loan limits at 115% of median house prices, subject to a floor and a ceiling on the limits. FHA calculates forward mortgage limits by Metropolitan Statistical Area and county.
FHA’s 2019 minimum national loan limit, or floor, of $314,827 is set at 65% of the national conforming loan limit of $484,350. This floor applies to those areas where 115% of the median home price is less than the floor limit.
Any areas where the loan limit exceeds this floor is considered a high-cost area, and HERA requires FHA to set its maximum loan limit "ceiling" for high-cost areas at 150% of the national conforming limit.
NEVADA - CLARK COUNTY
Mortgage maximums as of Tuesday January 01, 2019
(1 records were selected, 1 records displayed.)
| MSA Name | MSA Code | Division | County Name | County Code | State | One-Family | Two-Family | Three-Family | Four-Family | Median Sale Price | Last Revised | Limit Year |
| LAS VEGAS-HENDERSON-PARADISE, NV | 29820 | CLARK | 003 | NV | $322,000 | $412,200 | $498,250 | $619,250 | $280,000 | 01/01/2019 | CY2019 |
LOAN LIMITS - 2019
| The CY2019 basic standard mortgage limits for FHA insured loans are: | ||||||||||
| One-family | Two-family | Three-family | Four-family | |||||||
| FHA Forward | $314,827.00 | $403,125.00 | $487,250.00 | $605,525.00 | ||||||
| HECM | $726,525.00 | |||||||||
| Fannie/Freddie | $484,350.00 | $620,200.00 | $749,650.00 | $931,600.00 | ||||||
| High-cost area limits are subject to a ceiling based on a percent of the Freddie Mac Loan limits The ceilings for CY2019 are: | ||||||||||
| One-family | Two-family | Three-family | Four-family | |||||||
| FHA Forward | $726,525.00 | $930,300.00 | $1,124,475.00 | $1,397,400.00 | ||||||
| HECM | $726,525.00 | |||||||||
| Fannie/Freddie | $726,525.00 | $930,300.00 | $1,124,475.00 | $1,397,400.00 | ||||||
| Section 214 of the National Housing Act provides that mortgage limits for Alaska, Guam, Hawaii, and the Virgin Islands may be adjusted up to 150 percent of the new ceilings. This results in new CY2019 ceilings for these areas of: | ||||||||||
| One-family | Two-family | Three-family | Four-family | |||||||
| FHA Forward | $1,089,775.00 | $1,395,450.00 | $1,686,700.00 | $2,096,100.00 | ||||||
| Fannie/Freddie | $1,089,775.00 | $1,395,450.00 | $1,686,700.00 | $2,096,100.00 | ||||||
FHA Motgagee Letter
Call me for details and to get pre-approved today!
Aundrea Beach-Greco
NMLS 333739
702-326-7866
info@aundreabeach.com
www.AundreaBeach.com
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