Real Estate Information Archive

One of the first things you think about when deciding to Buy a home is applying for a mortgage loan. Many people wonder if it’s better to work with a mortgage broker or a bank.  The differences are bigger than you think.

Banks, Credit Unions, and Similar Lending Institutions

Lending officers at a bank or credit union Sell and process mortgages originated by the institution they work for. Any of the types of loans banks have will originate from one lending institution.

Banks are generally more conservative in their lending process. If you don’t fit the profile in credit, job, and income, you will likely get declined or you won’t get the rate you could possibly get somewhere else.

Sometimes you can get a better deal with a bank, but they usually only offer a few loan programs, so you’ll either be approved, declined, or counter-offered. Their loan process is also very lengthy and bureaucratic.

While a bank may be more familiar with your particular financial situation than a mortgage broker, you are ultimately limited to the types of loans you can get.

Mortgage Brokers and Loan Officers

Mortgage brokers and loan officers usually work with a variety of lenders. They evaluate each person’s credit situation, job, and income to determine which loan will best fit that person’s needs. Mortgage brokers can often find a lender who will provide loans that a bank refuses. If your credit is less than perfect, a mortgage broker can still likely find a loan for you; whereas, you probably won’t get the same loan from a bank with less than ideal credit.

Unlike banks, mortgage brokers are professionals that deal with mortgage loans day in and day out. Buying a home can be stressful and complicated at times, and a mortgage broker’s professional experience is often worth paying for.

If you are self-employed or if you recently switched professions, mortgage brokers may be a better option for you as well.

Pricing with mortgage brokers can be just as competitive as a bank. Wholesale rates are generally much cheaper than retail interest rates you’ll get with banks.

When applying for a mortgage loan, you’ll want to shop around to find the best option for you. If you are seriously looking to Buy a home, contact me today to discuss your options.

Since so many people have jumped back into the real estate market buying homes, I thought I would copy this article written by Tara-Nicholle Nelson of Inman News®. Since tax season is just around the corner, make sure that you take full advantage of the tax breaks you get when buying a new home. If you have any questions or need any assistance, please give me a call.

 Q: We bought a house this year! We put $33,000 down and the bank financed $28,000. Can I write this off on my 2011 taxes? How much of it?

A: First things first: Congratulations! You've become a homeowner, and seem to have done so using an enviable financial arrangement. But now that you own a home, you might need to shift the way you think and look at some things, including your taxes and other financial matters.

Owning a home is one of those landmarks that signify financial adulthood. And one of the things that responsible financial adults do is get professional help when the situation requires it. Taxes are one of those areas that often do warrant calling the pros in.

I'm not just shilling for the tax prep industry here, either: The ultimate aim of using a tax professional is to make sure you get every deduction, credit and other tax advantage for which you qualify, without jacking up your chances at triggering the universally dreaded Internal Revenue Service audit by claiming dubious deductions.

Your mortgage debt is fairly small, as was your home's purchase price, though I don't know whether they are large or small in the context of your overall financial picture (i.e., income, assets, investments, etc.).

The fact that you saved or somehow came up with such a sizable chunk of change to put down makes me hesitate to assume that your finances are as simple as your mortgage balance might otherwise lead me to believe.

So, it might be the case that you can easily handle your own taxes -- in fact, it's even possible that your real estate-related deductions won't even outweigh the standard deductions, so that filing a simple form without even itemizing your deductions is actually the financially advantageous move.

Whether that's the case cannot be determined in a vacuum -- you may have other financial and tax issues going on. But with software and tax preparation services as inexpensive as they are, starting at under $20 for simple returns, I think it behooves you to get some professional advice and ensure you get the deductions you need.

Hiring a tax preparer might be a worthwhile investment to make, even if just this year, so he or she can brief you on what records you should keep and strategies you should do moving forward, like home repair and improvement receipts, or documentation of your use of an area of the home as a home office.

Now, let's talk more substantively about the deductions that are available to you, in the event you do decide to itemize your taxes (IRS Publication 530 offers a more nuanced view into Tax Information for Homeowners):

1. Mortgage interest deduction. Assuming this home is your personal residence, 100 percent of the mortgage interest you owe and pay before Dec. 31, 2011, is deductible on your 2011 taxes. In January, your mortgage lender will send you a form documenting the precise amount of interest you paid, although most lenders also now make this form immediately available to borrowers online.

Chances are good that you paid some amount of advance interest on your home loan at closing -- expect to see that on your statement from your lender, but you should also be able to find it on the HUD-1 settlement statement you received from your escrow agent at closing.

2. Property tax deductions. Again, assuming that this is the home you live in most of the time, you should be able to deduct 100 percent of the property taxes you've paid to your state and/or local taxing agency this year.

3. Closing-cost deductions. Discount points and origination fees paid to your mortgage lender and/or broker at closing are frequently deductible, but there are rules around this, which tax software and/or professionals can help you make sure you meet. Also, state and local transfer or stamp taxes paid at closing are generally deductible on your federal returns.

Beyond these basics, there are various home improvements (especially those that increase your home's energy efficiency), state and local tax credits for buying a foreclosure, and other tax advantages that might be available to you.

My advice is to work with an experienced, local tax preparer or, at the very least, use reputable tax preparation software to ensure that you get the maximum tax advantages available to you as a result of your new role as a homeowner.

The following is a copy of an Inman News story written by Tara-Nicholle Nelson about the steps people may need to take if they want to Buy a home after they have gone through a foreclosure themselves. I thought it was an interesting article, especially since so many people today are having to go through this unfortunate situation, and may be wondering "what do we do now?". If this information doesn't pertain to you, you most likely know someone for whom it does. Feel free to forward this blog to them if you think it could be helpful. If you or they have any questions or need any assistance, please let me know. 

The new Home Affordable Refinance Program (HARP) that will allow many underwater homeowners to refinance their homes is being modified. HARP was first introduced in 2009; however, not many homeowners utilized its benefits. The new HARP program will allow more underwater homeowners to qualify and take advantage of the program.

What are the qualifications?

• Borrowers must be current on the mortgage at the time of the refinance, with no late payments in the past six months and no more than one late payment in the past 12 months;

• Fannie Mae or Freddie Mac must back your loan;

• You must be currently employed and have a steady income;

• The mortgage must have been transferred to Fannie Mae or Freddie Mac no later than May 31, 2009; and

• The mortgage must be on a one-to four unit dwelling that serves as your primary residence.

You are not eligible for HARP if your mortgage is FHA, USDA, or a jumbo mortgage.

It’s important to remember that HARP will not delay or stop foreclosure on your home. HARP is meant to give homeowners who are currently employed, current on their mortgages, and have lost home equity a chance to refinance at the current low mortgage rates.

Borrowers will be able to take advantage of HARP even if they owe more than what their house is worth. The previous version of HARP only allowed borrowers to refinance up to 125 percent of the home's appraised value. Millions of borrowers couldn't benefit from HARP when it was first introduced because of that cap.

HARP has been extended through Dec. 31, 2013. Fannie Mae and Freddie Mac will send instructions to lenders by November 15, 2011. Some lenders may start offering refinances under the improved HARP by December 1, but the timing may vary, according to the FHFA.

If you're an underwater homeowner, this new version of HARP could finally allow you to refinance your mortgage at an all-time low interest rate you’ve heard about but couldn’t qualify for.

You keep hearing that NOW is the time to refinance because interest rates have never been lower. It’s true that interest rates are at an all-time low. Refinancing can be a great option if you’re looking to lower your interest rate, but there are some things to consider before making that decision.

It’s important to realize that when you refinance your current mortgage, you are essentially entering into a brand new mortgage loan agreement, so ask yourself the following questions:

 1. Can I lower my interest rate enough to pay for the closing costs in a reasonable amount of time?

It’s important to remember that as with any new mortgage loan, there are closing costs associated with refinancing your current mortgage. According to Dave Ramsey, “A refinance makes sense when you can lower your interest rate enough to pay for the closing costs before you plan to Sell your home. Here’s a simple example. If you have a $100,000 mortgage and you can lower your interest rate by 1% in a refinance, you’ll save $1,000 a year. If your closing costs are $3,000, it will take three years to break even on your refinance.”

Before making the decision to refinance, know what the closing costs are going to be. Closing costs usually include fees associated with: survey, appraisal, title search, title insurance, realty transfer taxes, legal services, messenger or delivery services, document copying, etc.

In general, refinancing your home loan could be worth it if you can lower your interest rate by at least one to two percent. Refinancing probably doesn't make sense if it’s going to take 5 years or more to get your closing costs back.

2. How much longer do I plan on staying in my home?

Refinancing is not the best option if you don’t plan on staying in your home for at least a few years. Most likely, if you Sell your home soon after a refinance, you won’t recoup the refinancing costs.

If you currently have a high interest rate and you plan on staying in your home for a few years, refinancing right now may be a great option for you.

As always if you have any questions, or if you or someone you know is looking to Buy or Sell real estate in the  Central Oregon area, please let me know.

Do you want to Buy a new home, but you haven’t saved up quite enough money yet for a down payment? Are you already a homeowner on a tight budget? Do you just need to save more money so you have it for a rainy day? Here are 30 money saving tips to help you achieve your goals.

1. Budget. Creating and sticking to a budget is the best way to start saving now.
2. Sell the stuff you don’t need. Have a yard sale or place items in your local classifieds or on eBay, Craigslist, or Amazon.
3. Limit eating out. By preparing your meals at home, you’ll not only save upwards of $200 each month, but you might also save some extra pounds from avoiding all the fast food you’d otherwise eat.
4. Leave the plastic home. When you go shopping, only carry cash. Once the cash is gone, there’s no credit card to fall back on.
5. Be thrifty. Don’t be afraid to shop at thrift stores or consignment stores.
6. Save energy. Turn off and/or unplug your appliances and lights when you’re not using them.
7. Skip Starbucks. Make your coffee at home instead of buying it at the coffee shop.
8. Wash your own car. You don’t need the $20 interior/exterior cleaning. With soap, water, and a little elbow grease, you can save a lot by washing your car yourself.
9. Consider eliminating cable or satellite T.V. Many people use Hulu, Netflix, and other online sources to watch T.V., movies, and sports.
10. Buy generic brands. This includes over-the-counter medications, prescriptions, when applicable, all available grocery items, etc.
11. Clip/Print coupons. Obtain coupons from newspapers, mailers, group coupon sites, etc. There are many classes offered around the nation - some of them free - to teach you how to save hundreds each month by using coupons.
12. Know before you go (shopping). Create weekly menus and shopping lists and Buy only the items on the list when you go shopping.
13. Carpool. Carpool to work with your colleagues or use public transportation.
14. Stay healthy. Exercise, eat right, and wash your hands frequently. Healthier people spend less on medical expenses than unhealthy people.
15. Use energy-efficient light bulbs. You’ll save on energy bills and since energy-efficient light bulbs last longer, you’ll Buy fewer bulbs over time.
16. Use homemade cleaning supplies. Use old-fashioned vinegar and baking soda to clean your home.
17. Avoid overpriced snacks. Avoid snacks and drinks from the gas station, convenience store, and vending machine.
18. Filter and bottle your own water. You can purchase inexpensive filtering containers for your water, such as a Brita water filter, if you want filtered water. Also, if you have a filter in your refrigerator, you can use that water. Reuse BPA-free containers to carry your own water with you to avoid buying overpriced bottled water.
19. Stay away from ATMs. If you need to get money out of the ATM, plan ahead and only withdraw it from your financial institution to avoid paying additional fees.
20. Auto-withdraw savings. Automatically withdraw a predetermined amount of money from your checking account that goes into a separate savings account. When the money is automatically withdrawn, you generally don’t even notice it’s gone.
21. Consolidate and pay off debt as soon as possible. Avoid paying too much interest by making additional payments each month or adding to your monthly payment. You may also be able to consolidate your debts to a lower interest rate.
22. Avoid overdraft fees. Be aware of your checking account balance and when automatic payments are withdrawn. Sometimes banks will set up a line of credit if you qualify so you can avoid overdraft fees.
23. Avoid credit cards with annual fees. The best way to do this is to not apply for credit cards with annual fees. The fees often don’t justify the rewards. Smaller banks and credit unions often offer credit cards with no fees.
24. Do regular scheduled maintenance on your vehicles. Don’t forget your regular oil changes. Remember to check the air in your tires often, and use the grade of fuel that the owner’s manual recommends. These small acts can significantly lengthen the life of your car, giving you years of use.
25. Cancel subscriptions. Don’t subscribe to newspapers or magazines. Almost everything we want can be found online for free.
26. Borrow books from the library. You usually only read a book once, so why pay full price for books when you can check them out at the library.
27. Drive your car as long as possible. Drive your car as long as you safely can.
28. Pass on extended warranties. A $100 two-year extension on a $300 product is just not worth it. Warranties are insurance, and we rarely need to insure such a small amount.
29. Agree to limit gift giving. Agree in advance to limit the gifts you exchange during birthdays and holidays and save everyone money.
30. Find free local activities. Explore your town’s public parks. It’s likely that your town or a nearby town has free outdoor movie nights, museum days, greenways, libraries, festivals and so much more.

If you are looking to either Buy or Sell a home in Central Oregon, please give me a call today. I am happy to help!