Do You Know How Mortgage Insurance Can Be Cancelled?
Did you know that when you have paid down your mortgage loan balance, or your property value has increased, you may be eligible to eliminate your monthly mortgage insurance?
Step One: Know Your Rights – The Homeowners Protection Act mandates that a homeowner can request the elimination of mortgage insurance when the unpaid principal balance of your loan reaches 80% based on the original value of your home
Important to Know: If you live in an area that has seen appreciation in home values or you purchased a home under market or fixed one up, you can request early termination based on the current value of your property.
Step Two: Contact your servicing company – This is the company you make payments to.
Step Three: Ask for a “MI Termination Request”.
Step Four: Discuss your options with your servicer. For instance, if you have not paid down your loan balance to 80% of the value or below, then you will need to request cancellation based on the current value of your home.
Requesting MI Termination Based on Current Value of Home
In many cases, your servicer has access to a system that will tell them the current value of your home. If this value shows that your loan to value is 80% or less, the servicer can terminate your mortgage insurance, and this should not cost you anything.
If the system does not show that your value has increased, you always have the option to pay for an appraisal of your property. However, you will be responsible for paying for that appraisal whether or not the value is sufficient to terminate mortgage insurance.
Are Closing Costs Tax Deductible Under the New Tax Law?
Here’s the scoop on what’s tax deductible when buying a house.
Are closing costs tax deductible? What about mortgage interest? Or property taxes? The answer is, maddeningly, “It depends.”
Basically, you’ll want to itemize if you have deductions totaling more than the standard deduction, which is $12,000 for single people and $24,000 for married couples filing jointly. Every taxpayer gets this deduction, homeowner or not. And most people take it because their actual itemized deductions are less than the standard amount.
But should you take it?
To decide, you need to know what’s tax deductible when buying or owning a house. Here’s the list of possible deductions:
The one-time home purchase costs that are tax deductible as closing costs are real estate taxes charged to you when you closed, mortgage interest paid when you settled, and some loan origination fees (a.k.a. points) applicable to a mortgage of $750,000 or less.
But you’ll only want to itemize them if all your deductions total more than the standard deduction.
Costs of closing on a home that aren’t tax deductible include:
Real estate commissions
Mortgage refi fees
Mortgage interest and property taxes are annual expenses of owning a home that may or may not be deductible. Continue reading to learn more about those.
Yearly, you can write off the interest you pay on up to $750,000 of mortgage debt. Most homeowners don’t have mortgages large enough to hit the cap, says Evan Liddiard, CPA, director of federal tax policy for the National Association of REALTORS®. But people who live in pricey places like San Francisco and Manhattan, or homeowners anywhere with hefty mortgages, will likely maximize the mortgage interest deduction.
Note: The $750,000 cap affects loans taken out after Dec. 17, 2017. If you have an loan older than that and you itemize, you can keep deducting your mortgage interest debt up to $1 million. But if you re-fi that loan, you can only deduct the interest on the amount up to the balance on the day you refinanced – you can’t take extra cash and deduct the interest on the excess.
Home Equity Loan Interest
You can deduct the interest on a home equity loan or a second mortgage. But — and this is a big but — only if you use the proceeds to substantially improve your house, and only if the loan, combined with your first mortgage, doesn’t add up to more than the magic number of $750,000 (or $1 million if the loans were existing as of Dec. 15, 2017).
If you use a home equity loan to pay medical bills, go to Paris, or for anything but home improvement, you can’t write off the interest on your taxes.
State and Local Taxes
You can deduct state and local taxes you paid, including property, sales, and income taxes, up to $10,000. That’s a low cap for people who live in places where state and local taxes are high, says Liddiard. To give you an idea of how low: The average amount New Yorkers have taken in state and local tax deductions in past years is about $22,000.
Loss From a Disaster
You can write off the cost of damage to your home if it’s caused by an event in a federally declared disaster zone, like areas in Florida after Hurricane Michael or Shasta County, Calif., after a rash of wildfires.
This means standard-variety disasters like a busted water pipe while you’re on vacation or a fire caused because you left the toaster on aren’t deductible.
This deduction is also only for some. You can deduct moving expenses if you’re an active member of the armed forces moving to a new station.
And by the way, no matter who you are, if your employer pays your moving expenses, you’ll have to pay taxes on the reimbursement. “This will be a real hardship to many because it’s non-cash income,” says Liddiard. Some employers may up the gross to provide cash to pay the tax, but many likely will not.
This is a deduction you don’t have to itemize. You can take it on top of the standard deduction, but only if you’re self-employed. If you are an employee and your boss lets you telecommute a day or two a week, you can’t write off home office expenses. You claim it on Schedule C.
Anyone paying a mortgage and a student loan payment will be happy to hear that the interest on your education loan is tax-deductible on top of the standard deduction (no need to itemize). And you can deduct as much as $2,500 in interest per year, depending on your modified adjusted gross income.
Ways to Increase Your Eligible Deductions
There are some other itemize-able costs not related to being a homeowner that could bump you up over the standard deduction. This might allow you to write off your mortgage interest. Charitable contributions and some medical expenses are itemize-able, although medical expenses must exceed 7.5% of your adjusted gross income.
So if you’ve have had a hospital stay or are generous, you could be in itemized-deduction land.
Also, if you’re a single homeowner, it could be easier for you to exceed the standard deduction, Liddiard says. The itemized deductions on your house will probably more quickly break the $12,000 standard deduction threshold than a couple’s similar house will break their $24,000 threshold.
Tax-Savvy Home-Buying Ideas
If you’re a prospective homeowner with an eye to making the most efficient use of your tax benefits, here are a few ways to buy smart:
Especially in expensive areas, buy a less expensive home so you don’t hit the cap on mortgage debt and local and property taxes, says Lisa Greene-Lewis, a CPA and tax expert for TurboTax.
If you’re buying a higher price home, make a bigger down payment so your original mortgage doesn’t exceed the $750,000 cap.
How to Decide If You Should Itemize
To see whether you should consider itemizing, plug your numbers into this clever tool from TurboTax, and you’ll get their recommendation in just a few seconds.
Though every homeowner’s tax benefits will be a little different, in the end, you’re building equity, you’ll likely make money when you sell, and you have the freedom to paint your walls any color you want and get a dog.
elps consumers make smart, confident decisions about all aspects of home ownership. Made possible by REALTORS®, the site helps owners get the most value and enjoyment from their existing home and helps buyers and sellers make the best deal possible.
Are You Getting the Home Tax Deductions You’re Entitled To?
Owning a home can pay off at tax time.
If you’re eligible, take advantage of these home ownership-related tax deductions and strategies to lower your tax bill:
Mortgage Interest Deduction
To claim the mortgage interest deduction, you must itemize using Schedule A, and your mortgage must be secured by your pirmary or second home. That home can be a house, trailer, or boat, as long as you can sleep in it, cook in it, and it has a toilet.
Interest you pay on a mortgage of up to $1 million — or $500,000 if you’re married filing separately — is deductible when you use the loan to buy, build, or substantially improve your home.
If you take on another mortgage (including a second mortgage, home equity loan, or home equity line of credit) to improve your home or to buy or build a second home, that counts towards the $1 million limit, and the interest is still deductible.
If you use loans secured by your home for other things — like sending your kid to college — you can still deduct the interest on loans up $100,000 ($50,000 for married filing separately) because your home secures the loan. However, this rule changes for 2018, and the interest on such loans will no longer be deductible unless the proceeds are used to substantially improve a home.
Beginning with tax year 2018, the mortgage interest deduction cap is $750,000, and fewer people will likely itemize (and therefore take the MID) because of the increase in the standard deduction.
Prepaid Interest Deduction
Prepaid interest (or points) you paid when you took out your mortgage is generally 100% deductible in the year you paid it along with other mortgage interest. However, you must itemize to take it.
If you refinance your mortgage and use that money for home improvements, any points you pay are also deductible in the same year.
But if you refinance to get a better rate or shorten the length of your mortgage, or to use the money for something other than home improvements, such as college tuition, you’ll need to deduct the points over the life of your mortgage. Say you refi into a 10-year mortgage and pay $3,000 in points. You can deduct $300 per year for 10 years.
So what happens if you refi again down the road?
Example: Three years after your first refi, you refinance again. Using the $3,000 in points scenario above, you’ll have deducted $900 ($300 x 3 years) so far. That leaves $2,400, which you can deduct in full the year you complete your second refi. If you paid points for the new loan, the process starts again; you can deduct the points over the life of the loan.
Home mortgage interest and points are reported on Schedule A of IRS Form 1040.
Your lender will send you a Form 1098 that lists the points you paid. If not, you should be able to find the amount listed on the closing docs you got when you purchased your home or refinanced.
Property Tax Deduction
Again, for 2017, you can deduct on Schedule A the real estate property taxes you pay if you itemize, without limit. If you have a mortgage with an escrow account, the amount of real estate property taxes you paid shows up on your annual escrow statement.
For tax year 2018 and beyond, you can deduct local and state taxes, including property taxes, up to $10,000 combined. This again depends on whether you itemize, which many homeowners will not be able to do in 2018 due to a large increase in the standard deduction.
If you bought a house this year, check your closing documents to see if you paid any property taxes when you purchased your house. Those taxes are deductible on Schedule A, too.
Vacation Home Tax Deductions
The rules on tax deductions for vacation homes are complicated. Do yourself a favor and keep good records about how and when you use your vacation home.
If you’re the only one using your vacation home (you don’t rent it out for more than 14 days a year), you deduct mortgage interest and real estate taxes on Schedule A.
Rent your vacation home out for more than 14 days and use it yourself fewer than 15 days (or 10% of total rental days, whichever is greater), and it’s treated like a rental property. Your expenses are deducted on Schedule E.
Rent your home for part of the year and use it yourself for more than the greater of 14 days or 10% of the days you rent it and you have to keep track of income, expenses, and allocate them based on how often you used and how often you rented the house.
This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.
elps consumers make smart, confident decisions about all aspects of home ownership. Made possible by REALTORS®, the site helps owners get the most value and enjoyment from their existing home and helps buyers and sellers make the best deal possible.
Ideal Lending Solutions meets with you to discuss loan options and help you determine the right loan choice for your situation and financial goals.
Ideal Lending Solutions issues your pre-approval and you start looking for a home with a real estate agent.
SEARCH FOR YOUR HOME
You search for your home. It is suggested to use a real estate agent, as they can help guide you in your search and negotiate the property price.
MAKE AN OFFER
Once you find your dream home, your real estate agent presents an offer. Once the offer is accepted, a closing date is set.
You review and sign your contact with your real estate agent.
Any remaining documents are required at this time. Once the contract has been submitted to Ideal Lending Solutions, the loan goes into processing.
APPRAISAL & INSPECTION
Ideal Lending Solutions orders appraisal, title report, insurance binder and other necessary documents. A home inspection takes place to determine any repairs needed.
Receives and reviews all the documents, verifies all information and prepares the file for underwriting.
Loan is conditionally approved or declined and underwriter asks for conditions. Homebuyer provides conditions.
A copy of the property appraisal and mortgagee clause must be provided to secure homeowners insurance policy.
CLEAR TO CLOSE
Final approval is issued and any final conditions are collected and satisfied. Loan is clear to close, closing documents are sent to the title company.
It’s time to schedule the closing! You and your Realtor will be notified that your loan is clear to close and a closing date is scheduled.
FINAL WALK THROUGH
Borrowers complete one final walk-through of the property to approve condition of the home.
All parties sign the closing documents to finalize the purchase of your home.
IT’S MOVING TIME!
You’ve closed on your home and it’s time to move in. After closing, we will send you a customer satisfaction survey. We appreciate your participation and referrals.
*A pre-approval does not constitute a loan com-commitment or guarantee of a loan. Pre-approval is subject to a satisfactory appraisal, satisfactory title search, and no meaningful change to borrower’s financial condition.
6 Costs Homeowners Overlook and How to Pay for Them
For many people, a house is the biggest investment they’ll ever make. And whether you’re a first-time homeowner or you’re buying your third property, you’re bound to end up covering some unexpected expenses. Here are six costs homeowners tend to overlook and how to pay for them:
1. Property taxes
Be prepared to pay property taxes and keep in mind that they rarely decrease. Homeowners often pay them every month along with their mortgage payments. If your loan is backed by the Federal Housing Administration, you’re required to have an escrow or impound account.
If you don’t have to make property tax payments through an escrow account, they may be due at the end of the year. In some counties, you might pay them in installments.
2. Homeowners association fees
Whenever you move into a new home or condominium, you become part of a community. In many cases, there are fees associated with the maintenance and general upkeep of shared common areas. The money collected might cover snow removal, landscaping or repairs to a meeting room.
Monthly homeowners association (HOA) fees for standard single-family homes tend to cost between $200-$300, but rates can vary depending on several factors, including how recently a housing community was built and the kinds of amenities that are available. That’s why it’s best to know how much fees cost upfront. In West Hollywood, Calif., for example, residents in Sierra Towers condos get access to a 24-hour concierge service and valet parking, but spend around $4,000 per month on HOA fees.
3. Insurance premiums
If you own a home, another cost you should include in your budget is insurance. The average annual homeowners insurance premium costs $1,120, according to recent data provided by the National Association of Insurance Commissioners, but the amount you pay may be higher or lower based on where you live and the kind of policy you choose.
Homeowners insurance typically covers personal possessions, liability for injuries that take place on your property, the structure of your house and additional costs associated with living elsewhere if your home is severely damaged. If you live in an area prone to natural disasters, you might need a supplemental policy like flood insurance.
4. Repair and maintenance costs
Repairing or replacing a roof, furnace or air conditioner can be expensive, and at some point, you might have to address plumbing issues or trade in some old appliances.
The cost of home maintenance is another thing you’ll have to factor into the cost of homeownership. You’ll need money to keep your yard, gutters, carpet and everything in between in tip-top shape.
Financial experts generally recommend setting aside 1 percent of your home’s value to cover the cost of unexpected repairs and maintenance. If you’re trying to save money, you’re better off doing some of the work yourself. Just make sure you have enough funds for the materials you need to get the job done.
5. Costs associated with selling a home
Having a home that’s well-maintained not only lets you enjoy your house while you’re living there, but also prevents you from being saddled with additional costs when you’re ready to sell it.
Replacing your roof or furnace might be something you want to put off, but failing to make necessary repairs or meet demands made by potential homebuyers could hurt your market value or cost you a sale.
6. Pest control costs
Pests are a real concern for many homeowners. Over time, all sorts of critters—like termites, ants, spiders and rodents—might invade your home. Depending on how serious the problem is, you might need to fumigate your house.
If you’re interested in buying a home, make sure you hire an inspector to check for bugs and termites that could cause structural damage. While lenders don’t always require homebuyers to pay for pest inspections, it’s important to have one done. You don’t want to close on a house only to find out later that there’s an issue. Termite inspections generally cost between $75-$150, according to Angie’s List.
Build a rainy day fund!
It’s always better to be prepared for a storm than to be caught in a downpour without an umbrella. Despite the high costs, owning your own home can be a rewarding experience.
Hope for the best and prepare for the worst by keeping enough money in your savings account to cover unforeseen costs. Make sure you account for all of the hidden expenses and fees associated with buying a home and budget accordingly.
Hippo is an InsureTech company that’s reimagining home insurance through the lens of homeowners. Hippo Insurance is available to homeowners in 10 states throughout the U.S. and will be available to more than 60 percent of the nation’s homeowners by the end of 2018.
West Palm Beach Mortgage Lender – Ideal Lending Solutions
Are you looking to buy a home in South Florida? If so, join the line!
In a recent article posted on the Sun Sentinel, the author noted that home prices continue to rise in not only South Florida but also across the entire nation.
In Palm Beach, Miami-Dade and Broward counties, overall home prices jumped by nearly 7% in December 2016 compared to December 2015. This increase was the sixth-largest out of 20 metropolitan areas tracked by the housing index mentioned in the article.
In the United States, the annual average price hike of 5.8% was as high as it has been in 30 months. Although home prices are rising, many experts believe that the rate they are increasing isn’t cause for concern.
When we narrow in on West Palm Beach, the median price increased by 23% in January 2017 compared to January 2016, good for a total jump of over $38,000. The median sale price for homes in the area has increased at a steady pace over the past 5 years, according to Trulia. Last month, the median sale price on a home in West Palm Beach was $202,000.
The number of home sales has experienced several more ups and downs compared to the median price. After reaching a near-historic low of 593 homes sold in June 2016, home sales have recovered nicely. In January 2017, there were 916 units sold.
Over the past three months, the median sale price for a 4-bedroom home was $365,000, up by 5.2% over the same period last year. The median price for a 3-bedroom home was $250,000 (+9.2%), a 2-bedroom home was $115,000 (+2.7%) and a 1-bedroom home was $36,000 (+18%) over the same period.
Last month, the median rent in West Palm Beach was $1,600, a typical amount for this time of year. Additionally, the number of rental units increased to 386 in January 2017 from 299 in December 2016.
If you’re considering buying or selling a home in South Florida, consulting a West Palm Beach mortgage lender at Ideal Lending Solutions can provide you with the experience, knowledge and expertise needed to get your dream home.
Four things you can do to prepare financially for buying a home
Let’s face it, you don’t buy a house every day. Even if this isn’t your first time, you want to be sure to avoid any surprises that might affect your chances of being approved for a mortgage loan. Here are five things you can do to prepare and avoid anything that might slow down the approval process and put your dream home at risk.
1. CHECK YOUR CREDIT REPORT
To get a combined report from the three primary credit bureaus – Transunion, Equifax, and Experian, go to freescoreonline.com. Review the report for any inaccuracies. Look for accounts that don’t belong to you, or have outstanding past-due bills you know have been addressed. Instructions on how to request changes are here as well.
2. ELIMINATE DEBT WHEREVER POSSIBLE
Take a close look at your monthly income in comparison with your spending. Identify an area where you could cut back. Ideally, your monthly expenses should be no more than 29% of your gross household income. Use this opportunity to review and tighten up your household budget.
3. SAVE FOR YOUR DOWNPAYMENT
Paying down credit cards and other debts enables you to begin saving for that all-important down payment, the more money you’re able to put down upfront the more home
you can afford and/or the more manageable you monthly mortgage payment will be.
4. AVOID ANY ADDITIONAL DEBT
As you get closer to applying for a mortgage you want to avoid opening new credit card accounts or making large purchases, such as a car, loan that affects you monthly cash flow and could raise a red flag with a potential lender. Avoiding new debt is even more critical during the application approval process itself as any change to your overall financial situation will require updating documentation for underwriting, all of which could jeopardize your final approval.
Ideal Lending Solutions has locations across the great state of Florida to assist you.
*AFN is not a credit repair agency and provides no credit repair services. **AFN is not a tax or financial advisor, and individual tax circumstances may vary. Please consult a licensed tax professional and appropriate government agencies to determine the tax consequences of homeownership.
Kathleen Williams nominates local hero for Christmas Miracle
Wellington, FL – Wellington’s own everyday hero Frank G. was nominated by Kathleen Williams, NMLS# 1066793 of Ideal Lending Solutions to be a recipient of Homes for Heroes 12 Days of Christmas Miracles.
A Little About Frank G.
Frank G. is a firefighter in Wellington, Florida, and him and his wife are currently taking on the responsibility of giving two young girls a chance at an amazing life.
Frank’s niece has had a troubled life and on top of that has two young girls that she is unable to care for. In the midst of trying to better the lives of all involved, Frank’s sister-in-law, the grandmother of the two girls, recently suffered a stroke and is now unable to take care of her granddaughters and daughter. With help from a family from church, Frank and his wife have been able to step in and care for the girls and are now filing for full custody of them.
While knowing this is what has to be done to ensure a safe and loving home for the girls, the entire process has been financially straining. Frank and his wife are using all possible resources to keep the girls together and make them a part of their family.
Giving A Christmas Miracle
Kathleen Williams along with Stacey Somers of Keller Williams, Boynton Beach and Homes for Heroes was able to give Frank and his family a total of $1,100, which includes the $500 from Homes for Heroes. They were also able to provide him with a $25 gas card and a Christmas Eve family dinner, which is being donated by local restaurant, Oli’s Fashion Cuisine. Frank said he is using the money to make sure all the kids are able to have a wonderful Christmas.
Homes for Heroes mission is to provide extraordinary savings to heroes who provide extraordinary services to our nation and its communities every day. Click here to view the original post.
Increases in the Max Conforming Loan Limits May Give Your Clients Access to More Expensive Properties
West Palm Beach, FL – It’s no secret that home prices have been on the rise. Current median home price have actually exceeded 2007, pre-recession values by 1.7% while properties in high-cost areas of the country exceed the baseline loan limit by 115%. As a result of these increases, the Federal Housing Finance Agency or FHFA has raised the baseline maximum conforming loan limit as required by the Housing and Economic Recovery Act of 2008 or HERA. These new limits set a cap on the size of mortgages that can be bought or guaranteed by Fannie Mae and Freddie Mac. These are the first such hikes by the FHFA in more than a decade.
2017 increases are as follows:
From $417,000 to $424,100 for one-unit properties in the majority of the country
From $625,500 to $636,150 for high-cost one-unit properties in the contiguous US
Hawaii, Alaska, Guam, and the US Virgin Islands, currently have a baseline of $636,150 but limits have been raised for specific locations*
This is great news for your customers who’ve found rising home prices putting their hope of homeownership just out of reach. As always, AFN has the loan programs your customers need to afford their piece of the American Dream.
If there is anything we can do to further clarify these new loan limits or assist you and your clients in any other way, please don’t hesitate to contact us directly.
A list of the 2017 maximum conforming loan limits for all counties and county-equivalent areas in the country can be found here. A map showing the maximum loan limits across the country can be found here.
Ideal Lending Solutions is your premier home mortgage lender in Florida. At Ideal Lending Solutions your clients will work one-on-one with a dedicated mortgage professional who can explain loan programs and offer great mortgage rates to meet their financial goals.
West Palm Beach, FL – Ever since we were children, we’ve heard and repeated familiar sayings about money. One favorite of parents everywhere is, “Money doesn’t grow on trees.” But what if it turned out that most of the conventional wisdom about money wasn’t true, at least wasn’t helpful? For instance, while it’s literally true that money doesn’t grow on trees, that saying can lead us to believe in scarcity rather than abundance—so scarcity is what we end up with! Here are three other equally destructive money myths:
A penny saved is a penny earned. While saving and investing is an essential part of any financial plan, it’s not enough to make you rich. You have to focus on the “earning” part of that saying. With most current salaries, there’s no way we can save our way to wealth. So we need to find ways to increase our earning power, by taking extra training, becoming an entrepreneur, having both spouses work, investing in revenue property, etc.
There’s no better place for your money than a bank. This may have been true for our parents or grandparents when savings accounts were earning as much as 10-15%. But with today’s interest rates hovering near zero — actually below the inflation rate — putting your money in a bank account is like throwing much of it away.
Your home is your best investment. The fact is your home is a place to live. By thinking of homes as investments that you can buy and sell to make money, you’re putting yourself and your family at financial risk. Housing bubbles can burst, unexpected maintenance bills can be huge, closing costs and Realtor fees add up fast, and property taxes just keep rising. The best approach is buying an affordable house you actually want to live in, then as money becomes available for investment, buy rental properties that generate income and tax deductions.
For more advice on achieving financial security, please give us a call today!
Ideal Lending Solutions is your premier home mortgage lender in Florida. At Ideal Lending Solutions you will work one-on-one with a dedicated mortgage professional who can explain loan programs and offer great mortgage rates to meet your financial goals.
American Financial Network, Inc. is an Equal Housing Lender. As prohibited by federal law, we do not engage in business practices that discriminate on the basis of race, color, religion, national origin, sex, marital status, age (provided you have the capacity to enter into a binding contract), because all or part of your income may be derived from any public assistance program, or because you have, in good faith, exercised any right under the Consumer Credit Protection Act. The federal agency that administers our compliance with these federal laws is the Federal Trade Commission, Equal Credit Opportunity, Washington, DC, 20580.
American Financial Network, Inc. is not acting on behalf of or at the direction of the federal government, and this offer is not being made by an agency of the government.