2018 Down Payment Strategy

Thursday, February 1st, 2018

Picking the right house is just one of the big decisions you’ll face when buying property. Deciding on the down payment is another. Low inventory continues to pressure potential buyers into making bigger down payments to gain a competitive edge. But the possibility of rate increases in the coming year and new rules on mortgage-interest deductions may also affect how much buyers put down. The median down payment for financed home-purchases in the third quarter of 2017 was a record $20,000, or 7.6% of the median sales price of $263,000, according to the Wall Street Journal. That is up from […]

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Tax Reform: What it Means for Mortgages

Friday, December 29th, 2017

The landmark tax reform bill officially passed both houses last week. The big winners appear to be people who rent, corporations, and high-earners. Real estate and mortgages were affected negatively, but it could have been much worse. The mortgage interest deduction was maintained although cut to $750,000 from $1 million. However, doubling the standard deduction will stop many homeowners from itemizing and taking the mortgage deduction. There remains a fair amount of confusion over deductibility of home equity loan interest. It appears you will not be able to deduct interest for anything other than acquisition and home improvement. You will […]

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Tax Plan Cuts Incentives to Homeowners

Friday, December 1st, 2017

President Donald Trump and Senate Republicans scrambled earlier this week to make changes to a Republican tax bill in an effort to win over holdout GOP senators and pass a tax package by the end of the year. The pending plan will reduce or eliminate virtually all of the tax incentives of homeownership, promising to reshape an industry that accounts for nearly one-sixth of the U.S. economy and drives the biggest financial transaction most Americans make in their lifetimes. The proposed legislation would cut in half the size of loans that qualify for deductions of mortgage interest, to $500,000 from […]

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Trump’s Fed Decision May Spook Rates

Tuesday, October 31st, 2017

President Trump may spook the bond market this week when he decides who will head the Federal Reserve next year.  The higher mortgage interest rates that prevailed last week were partly driven by rumors indicating that John Taylor was surging to the forefront as the President’s choice for Chairman of the Federal Reserve.  Of the four candidates under consideration, Mr. Taylor appears to be least favored by credit market participants – and the most favored by congressional Republicans. If President Trump chooses Fed Chair Yellen or current board member Jerome Powell, investors will likely breathe a sigh of relief since […]

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Equifax, Credit Freezing & More

Monday, October 2nd, 2017

Until the Equifax Inc. hack, many consumers didn’t know what a credit freeze was.  Credit freezing prevents lenders from being able to get copies of prospective customer’s credit reports. That prevents scammers from opening credit cards or other loans but also places that same limit on the legitimate customers unless they undo the freeze. Currently, lenders can call up a credit score within minutes. When a credit report is frozen, it typically requires a customer to first unlock it with a password and then verify its release via a phone call. Often, customers forget their passwords, and it can take […]

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Tapping Home Equity for Cash Is Back

Tuesday, September 5th, 2017

Rising home prices are getting borrowers comfortable again with the idea of tapping their homes for cash. Home equity lines of credit (HELOCs) and ‘cashout’ refinances, two products that let borrowers spend their equity of home ownership before selling, are back in vogue with borrowers according to a recent Wall Street Journal article. The trend reflects growing confidence and is a potential benefit to the U.S. economy as homeowners have more money to spend. The main engine driving demand: rising home prices. The median sale price of an existing home rose to $263,800 in June, the highest on record, up […]

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Renovation Financing Via Credit Card?

Saturday, July 1st, 2017

Maybe those credit card rewards are just too tempting.  A 2017 Wall Street Journal survey found that many homeowners plan to use credit cards to pay for renovation projects.  In the survey from earlier this year, 32% said they would pay with plastic, up from 26% in 2016. For those able to pay off the bill in full when it arrives, using a credit card is not a bad option since no balance will be maintained and they’ll likely receive the benefit of getting airline miles or other rewards. But for those who maintain a balance, paying by credit card […]

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When The Buyer Gets Cold Feet

Thursday, June 1st, 2017

The offer has been accepted and the mortgage has been approved. What happens when the buyer gets cold feet and wants to back out of the deal? According to an online survey of 2,241 adults conducted for finance website Nerdwallet.com earlier this year, homebuyer’s remorse isn’t uncommon. Nearly half (49%) of homeowners who responded said they would do something differently if they had to go through the process again. Broken down by age group, 61% of Generation Xers (the mid-1960s through the 1970s) and 57% of millennial homeowners (born in the early 1980s through about 2004) indicated they had regrets. […]

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Tapping Home Equity Without Payments

Monday, May 1st, 2017

A company on the west coast called Point Digital Finance is shaking things up in the Home Equity market.   Like many lenders, they typically buy an equity stake of about 10% of the current value of a home in exchange for cash.  But unlike regular home equity loans, homeowners make no monthly payments. Instead, when the home is sold or refinanced, Point takes back the amount it paid to the owner—10% of the home’s value at the time of the original transaction—plus a larger than 10% share of any appreciation in the home since then, meaning it ends up with more than 10% of the home’s […]

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Hybrid Adjustable Rate Mortgages Are Heating Up

Monday, April 3rd, 2017

With interest rates on the rise, it may be time for home buyers to take a fresh look at some alternatives to the 30 year fixed rate mortgage, which has dominated the mortgage market since the 2008 financial crisis. While many non-traditional loans got a black eye after the housing collapse, today’s versions lack the toxic features—such as negative amortization and prepayment penalties—that tripped up many borrowers during the housing bubble a decade ago So-called hybrid adjustable-rate mortgages, or ARMs, are especially suitable for borrowers who expect to move before any rate increases can wipe out the savings in the early years. They’re also […]

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