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How Owning a Home Pays Off at Tax Time | Realtor Magazine

Homeownership-related tax deductions can prove advantageous in lowering your tax bill. HouseLogic lists some of the ways homeownership helps at tax time:

Mortgage interest deduction: Itemizing homeowners can deduct the interest they pay on their mortgage up to $1 million—or $500,000 if married but filing separately. The deductions can be made for loans issued to buy, build, or improve your home, and can apply to a house, trailer, or boat as long as it serves as your residence. A second mortgage, home equity loan, or home equity loan of credit to improve your home or buy a second home can also be included toward that $1 million limit.

Property tax deduction: The real estate property taxes paid can be another chunk of a deduction. For homeowners who purchased a home this year, they’ll want to check their HUD-1 settlement statement to see if they paid any property taxes when they closed on the purchase of the home.

Prepaid interest deduction: The prepaid interest, or points you paid when you took out your mortgage, is also deductible in the year you paid it too. This could apply to homeowners who refinanced their mortgage and used the money for home improvements. You can also deduct the points if you refinanced to get a better mortgage rate or shortened the length of your mortgage, but the deduction of the points must be over the life of your mortgage. See an example at HouseLogic.com.

PMI and FHA mortgage insurance premiums: The costs of private mortgage insurance can be deducted on loans taken out in 2007 or later. There are some stipulations, particularly if your adjusted gross income is more than $100,000, on how much you can deduct. Government insurance from the FHA, VA, and Rural Housing Service can also be deducted, but varies among agencies.

Vacation-home tax deductions: If the vacation home is used only by you, you can deduct the mortgage interest and real estate taxes. That means the home is not rented out for more than 14 days a year. If the home is rented out for more than that and used by yourself for less than 15 days, the home is classified like a rental property. Expenses are then deducted on IRS form Schedule E.

Energy-efficiency upgrades: Some energy-efficient upgrades may be eligible to be deducted via the Nonbusiness Energy Tax Credit. Among the upgrades that may qualify for the credit include: Biomass stoves; heating, ventilation, and air conditioning; insulation; roofs (metal and asphalt); water heaters (non-solar); and windows, doors, and skylights.

Why Mortgage Rates Are Dropping | Realtor Magazine

After the Federal Reserve raised its key interest rate about a month ago, mortgage rates were expected to increase as well. Instead, they’ve been dropping in recent weeks. The 30-year fixed-rate mortgage averaged 4.08 percent last week, its lowest point so far in 2017 and its fourth consecutive week for declines, Freddie Mac reported.

When the Fed raises its federal funds rate, it becomes pricier for banks to borrow money, which generally leads to higher borrowing rates for consumers. Mortgage rates, on the other hand, tend to coincide more with the 10-year Treasury note. Lately, investors have been buying them up, and the higher demand has been sending mortgage rates lower, CNNMoney reports. The 10-year Treasury yield is about 2.23 percent; a month ago, it was about 2.62 percent. Mortgage rates have moved lower as the 10-year Treasury has inched lower.

“We will probably see rates higher at the end of the year—around 4.5 percent,” says Len Kiefer, Freddie Mac’s deputy chief economist. The lower mortgage rates may have come as a welcome surprise to home shoppers this spring, particularly as many markets’ inventory woes are pressing home prices higher overall.

“We know that with every move higher with mortgage rates, it adds to the cost, but that is only going to limit purchases on the margin,” Mark Hamrick, senior economic analyst at Bankrate.com, told CNNMoney.

After the Federal Reserve raised its key interest rate about a month ago, mortgage rates were expected to increase as well. Instead, they’ve been dropping in recent weeks. The 30-year fixed-rate mortgage averaged 4.08 percent last week, its lowest point so far in 2017 and its fourth consecutive week for declines, Freddie Mac reported.

When the Fed raises its federal funds rate, it becomes pricier for banks to borrow money, which generally leads to higher borrowing rates for consumers. Mortgage rates, on the other hand, tend to coincide more with the 10-year Treasury note. Lately, investors have been buying them up, and the higher demand has been sending mortgage rates lower, CNNMoney reports. The 10-year Treasury yield is about 2.23 percent; a month ago, it was about 2.62 percent. Mortgage rates have moved lower as the 10-year Treasury has inched lower.

“We will probably see rates higher at the end of the year—around 4.5 percent,” says Len Kiefer, Freddie Mac’s deputy chief economist. The lower mortgage rates may have come as a welcome surprise to home shoppers this spring, particularly as many markets’ inventory woes are pressing home prices higher overall.

“We know that with every move higher with mortgage rates, it adds to the cost, but that is only going to limit purchases on the margin,” Mark Hamrick, senior economic analyst at Bankrate.com, told CNNMoney.

Top five reasons to sell your home in the spring season

Figuring out when it’s not a good time to sell can be easy. You’ll obviously have less potential buyers when people tend to be out of the house or busy, such as during the Christmas season and middle of Summer. Most buyers also have less money to work with during these times due to money spent on gifts and vacations.

But the better question is: when should you sell? While every sale and area is different, the majority of markets have shown that there’s no better time than Spring to put your house up for sale. Here’s why:

1. Buyers Are Ready To Purchase

Temperatures aren’t the only thing heating up come Spring season. The housing market always gets busy between the months of April and June due to an influx of eager buyers. Since winter in most places is too harsh to consider hunting for homes and relocating, early spring is when a lot of buyers finally start looking for a place— usually much warmer than their current location.

Keep in mind: since there are plenty of other sellers during this season we recommend putting your property up for sale early to get a lead on the competition.

2. Everyone Wants To Get Settled Before Summer’s End

Homebuyers are anxious to get through the homebuying process in Spring, making them more inclined to buy before the season is over. This is because relocating and getting settled takes time, especially if you have a family. Buyers want to get into their home between late Spring and early Summer so they’re prepared for the upcoming school year. It’s also great for work since it allows you to get acclimated with your new job early in the year.

3. Homes Sell Faster and For More

According researchers at Zillow, there’s no better time to sell your home than the Springtime months. Their studies showed that homes listed between mid-March and mid-April sold about 15% quicker than homes listed during any other time. People who sold their homes during this time also landed an average national premium of about $4,000 since sales numbers are around 2% higher. If a quicker sale and more money doesn’t convince you to sell in Spring, we don’t know what will.

4. More Buyers Means Better Bidding Wars

Although Spring brings out more sellers for you to compete with, it also means numerous buyers. The wave of potential homebuyers during this season means you’ll probably get more offers than any other time. If your property is an attractive option, you can expect bids to go up as people fight to claim your house as their own.

5. The Millennials Are Finally Ready This Year

The last few years have been tough on most Americans, especially millennials. Thanks to factors like high unemployment, oversaturation of college degrees, and bigger student loans than ever before, most millennials haven’t been ready to buy a home. However, 2016 is when things started turning around for everyone, making Spring 2017 the ideal time for younger buyers with money saved up to finally do what for a while seemed impossible— own a home.

What’s on Home Shoppers’ Wish Lists | Realtor Magazine

A new realtor.com® survey reveals the top desires of home buyers today: Ranch-style homes, big backyards, and updated kitchens.

More than half of home buyers say they’re on the hunt for a three-bedroom home, and 75 percent want a two-bathroom home as well, according to realtor.com®’s home buyer survey. The survey also showed a strong demand for townhouses and row homes among younger home shoppers, as 40 percent said they are looking for a townhome or row home to purchase. However, as home buyers age, single-family homes clearly are the top preference.

“The insights from our most recent consumer survey provide a glimpse into what buyers are looking at today,” says Sarah Staley, housing expert for realtor.com®. “While we often think of dream homes as being big and bold, that’s not what we’re hearing from potential buyers today. These insights can help guide potential sellers in deciding which rooms or features to invest in before listing their homes.”

Here’s an overview of some of the top features that emerged on buyers’ wish-lists, according to the survey:

The most-searched attributes at realtor.com®: Large backyards, garages, and updated kitchens

These three attributes were popular across all age groups. That said, younger home buyers with young children showed the most desire for finding a large yard and the greatest interest in living near a good school district.

The least-searched features among buyers: a guesthouse, mother-in-law suite, solar panels, and a “man cave.”

The most desired home style: Ranch homes

Forty-two percent of home shoppers say they’re looking for a ranch home, the clear leader. The second most common home style was a contemporary home at 28 percent, followed by Craftsman and Colonial styles.

The favorite room in the home: Kitchens

Eighty percent of home buyers ranked the kitchen as one of their three favorite rooms in a home, followed by master bedroom (49 percent) and living room (42 percent). (However, shoppers over 55 years old preferred garages over living rooms.)

The top goal when searching for a home: Privacy

The majority of home buyers said privacy and having a space that was solely their own was a top goal when in house-hunting mode. Buyers between the ages of 45 and 64 years old tended to value privacy the most, with privacy in the home topping other preferences like stability, family needs, and financial investment among this age group.

What motivates millennial home buyers the most: Family needs

Most millennials surveyed cited life events like an increase in family size, getting married, or moving in with a partner, as what primarily motivated them to find a new home. Home purchasers age 35 to 44 also cited family needs as the top motivation to buy. The majority of this age group also said they wanted to find a better school districts or that changing family circumstances was their motivation to buy. Home buyers over the age of 45, on the other hand, cited a chief motive to move as they were looking to downsize as they plan ahead for retirement.

10 Markets Where Rents Are Cooling the Most | Realtor Magazine

Some of the hottest rental markets in the country may have finally hit their peak. For example, markets like San Francisco and Manhattan are posting some of the highest year-over-year drops in average rents by 4.3 percent and 2.2 percent, respectively.

Nationally, rents are remaining stable. The average apartment rent is $1,312, according to data from Yardi Matrix. Rents across the country are rising, but only slightly now—by just $6 from February to March. It’s the slowest annual rent growth rate seen in three consecutive years and just half the year-over-year growth seen a year ago, where rents increased 5.7 percent over the year, Rent Café reports.  

But some markets are seeing slight declines in rents. The following 10 markets have seen the largest year-over-year drops in rents, according to Rent Café:

1. San Francisco: –4.3% (year-over-year change); $3,330 (average rent)
2. Odessa, Texas: –4.2%; $902
3. Broken Arrow, Okla.: –3.9%; $781
4. Corpus Christi, Texas: –2.9%; $945
5. Oklahoma City, Okla.: –2.6%; $716
6. Manhattan (New York City): –2.2%; $4,094
7. Fremont, Calif.: –2.2%; $2,270
8. Cambridge, Mass.: –1.8%; $2,949
9. Midland, Texas: –1.8%; $1,058
10. Tulsa, Okla.: –1.8%; $669

Mortgage Rates Set a New 2017 Low This Week | Realtor Magazine

The 30-year fixed-rate mortgage continues to drop this week, setting a new low for 2017, Freddie Mac reports in its weekly mortgage market survey. This marks the fourth consecutive week that 30-year rates have fallen.

“Following a weak March jobs report, the 10-year Treasury yield dropped about 5 basis points,” explains Sean Becketti, Freddie Mac’s chief economist. “The 30-year mortgage rate fell 2 basis points to 4.08 percent.”

Freddie Mac reports the following national averages with mortgage rates for the week ending April 13, 2017:

• 30-year fixed-rate mortgages averaged 4.08 percent, with an average 0.5 point, falling from last week’s 4.10 percent average. A year ago, 30-year rates averaged 3.58 percent.
• 15-year fixed-rate mortgages averaged 3.34 percent, with an average 0.5 point, falling slightly from last week’s 3.36 percent average. Last year at this time, 15-year rates averaged 2.86 percent.
• 5-year hybrid adjustable-rate mortgages averaged 3.18 percent, with an average 0.4 point, falling from last week’s 3.19 percent average. A year ago, 5-year ARMs averaged 2.84 percent.

The Home-Buying Process in 10 Simple Steps | realtor.com®

Wouldn’t it be great if buying a home were as simple as it is in a game of Monopoly? All you’d have to do is find a desirable neighborhood, hand the bank a few bucks, and you’d receive a house. Of course, the home-buying process is a bit more complicated in real life (especially for first-time home buyers), but it’s not impossible. Competition among buyers in many markets has gotten intense, so if you’re serious about homeownership, you’d better get your act together. To point you in the right direction, we’ve prepared a road map of the home-buying process. From choosing the right professionals to signing that final contract, here are the typical steps you need to be aware of.

Step No. 1: Chose an agent

The first step in the home-buying process is to find an agent you feel comfortable working with on what will likely be the largest financial decision of your life. Ask friends and family members for referrals, and interview several real estate agents.

“Choose a Realtor who communicates, has your best interest at heart, and puts you first,” says Naomi Hattaway of Virginia’s 8th & Home, Real Estate + Relocation.

 

Step No. 2: Find a lender

Once you’ve chosen a real estate agent you trust to be your advocate, ask him or her to recommend lenders, either an organization or a person who will lend you money so you can buy your home.

A local Realtor® has experience working with mortgage brokers and title companies and can recommend lenders. Choosing someone to handle the financial part of the home-buying process can feel like a scary step, but choosing a lender that’s competitive on rates, communicative, and available is key.

“Often mortgage companies consider you a file, not a human,” says Hattaway. “And if they aren’t available on the weekends or evenings, trouble can ensue.”

Step No. 3: Clean up your credit

Now that you have a great lender, you can ask for guidance on any credit score issues you may be facing. Whether it’s a small or large problem, the lender can provide guidance to help repair your situation and make sure you’ll be approved for a loan.

Step No. 4: Apply for mortgage pre-approval

A lender will help you determine exactly what you can afford and, therefore, which houses you should be considering. To arrive at a purchase price, you’ll factor in expenses like homeowners insurance, association dues, and utilities to make sure you can comfortably make your mortgage payments. The lender will then identify the total amount of money it’s willing to lend you.

“Having a pre-approval letter in hand when you’re ready to purchase a home adds strength to your offer, which can be an important advantage in this competitive home-buying market,” says Jill Frank, a Realtor with Wisconsin’s Coldwell Banker Success.

Step No. 5: Create a home wish list

Once you know what your purchasing power is, talk with your real estate agent about your ideal home. Come up with a few “musts,” as well as “wants” you’d ultimately be willing to compromise on. Think bigger than just the color of the kitchen or the floor plan, advises Hattaway.

For instance, do you want to be within walking distance of restaurants? Do you want space between you and your neighbors? Or is proximity to a good school the most important factor?

Step No. 6: Search the listings

Now comes the fun part: searching for homes that meet your parameters. When you begin touring homes that are on your short list, take along a notepad and jot down your thoughts as you approach each home. Can you imagine yourself living there?

“Peruse them and make note of what you like about each home,” says Hattaway.

Step No. 7: Make an offer

Your real estate agent will walk you through the steps required to make an offer on a home in your area.

“Your offer will likely include earnest money that will apply toward your down payment on the home and may include contingencies such as hiring a home inspector,” says Frank. Expect some negotiation, and discuss a competitive offer with your agent.

Step No. 8: Get final mortgage approval

Once your offer to purchase is accepted, you’ll work with your lender to get final approval for your home purchase by the date specified for the closing. The lender may require you to pay property taxes or homeowners insurance for the first year at the time of closing, so make sure you know what funds will be expected.

“Don’t make any major purchases like that big-screen TV or riding lawn mower until after closing, especially if you’d be using credit, as that can affect your mortgage qualification,” says Frank.

Step No. 9: Do your due diligence

The due diligence process usually includes getting a home inspection to make sure you haven’t missed any hidden problems on your walk-throughs. If issues are found, negotiate for the current owner to fix them or take the cost of repair off the closing costs.

Step No. 10: Attend the closing

Once all of the above steps are completed, you’ll be on your way to the closing table. This is when the deed to the home is transferred from the seller to the buyer. Every transaction varies, but plan to sign a ton of paperwork. An attorney or settlement agent will guide you through the process. Then you’ll officially be a homeowner and receive the keys to your new home. Congrats!

Immigrants Key to Homeownership Growth | Realtor Magazine

Foreign-born residents will have a “significant impact” on the housing market according to “Housing in America: Immigrants and Housing Demand,” released by the Urban Land Institute’s Terwilliger Center for Housing. The report also notes that if the current levels aren’t sustained, the industry could suffer.

“Immigrants have helped stabilize and strengthen the housing market throughout the recovery,” says Stockton Williams, executive director of the Terwilliger Center. “Immigrants’ housing purchasing power and preferences are significant economic assets for metropolitan regions across the country. This suggests the potential for much more growth attributable to foreign-born residents in the years ahead.”

Immigrants in general have strong aspirations for single-family homeownership. They’re also increasingly targeting the suburbs in search of greater employment opportunities and lower-cost housing, the study notes.

“If recent shifts in immigration flows continue, an increase in higher-income immigrants—including rising numbers from China and India—could accelerate the demand for homeownership among the foreign-born population,” according to the report. “Without sustained immigration, the housing market could weaken and in many markets the impact could be dramatic.”

Calculator for Buyers: Purchase Now or Save More? | Realtor Magazine

While nearly 40 percent of aspiring homeowners believe they need to put down 20 percent on a home purchase, the truth is the average down payment was just 11 percent in 2016, according to the National Association of REALTORS®. To help your clients understand the strength of their current financial profile when it comes to buying a home, mortgage industry blog MGIC Connects has created a Buy Now vs. Wait calculator that can show them whether they’re better off waiting and continuing to save for a bigger down payment or buying now with less money upfront.

There are hundreds of down payment assistance programs around the country. Sign up for this webcast on April 20 at 2 p.m. ET to learn how to connect your buyers to the help they need.

The calculator factors in information such as the current rent your clients are paying, amount of their monthly savings, and creditworthiness. Users can submit other information such as desired home price, current amount of savings for a down payment, and an estimated interest rate. MGIC Connects offers the following example of how its calculator works:

A consumer has saved $10,000 of the $40,000 needed for a 20 percent down payment. She can add about $6,000 a year in savings to that. She wants to purchase a $200,000 home. The calculator allows her to see the cost of the home purchase if she did a 3 percent or 5 percent down payment. The calculator also shows that if homes prices appreciate, say, at 3 percent annually, the amount she’d need for a 20 percent down payment would be $48,552, and she would need more than 6 years of savings before she could buy.

During that time, she will have paid more than $80,000 in rent, while her home equity position would be more than $72,000 had she bought six years ago. None of this is meant to encourage prospective borrowers to buy a home before they are ready. It is in everyone’s best interest for borrowers to succeed, so borrowers need to be comfortable not only with the mortgage payment but also the other responsibilities that come with homeownership.

Eighty Percent of First-time Homebuyers Put Down Less than 20 Percent Downpayment (Based on December 2016–February 2017 Closed Sales)

More first-time homebuyers take advantage of a low downpayment loan compared to all homebuyers, according to the February 2017 REALTORS^® Confidence Index Survey Report, a monthly survey of REALTORS® about their sales activity and local market conditions.[1]

Among all buyers whose transaction closed in February 2017, 62 percent of those who obtained a mortgage made a downpayment of less than 20 percent. Among first-time homebuyers who obtained a mortgage and whose transactions closed in December 2016–February 2017, 80 percent made a downpayment of less than 20 percent.[2]

Among first-time homebuyers, 65 percent put down a zero to six percent downpayment, a decrease from the 74 percent share in June 2009 when NAR started collecting this information in the RCI Survey.

 The Federal Housing Administration (FHA) and the Government Sponsored Enterprises (GSEs) have implemented policies to make credit more widely available, such as FHA’s reduction of its annual mortgage insurance premiums and the Government Sponsored Enterprises (GSEs) acceptance of three percent downpayment mortgages. However, the impact of these measures in attracting first-time homebuyers appears to be modest for a variety of reasons. Lack of information about these products may be one reason. In fact, NAR’s 2016 Q3 Housing Opportunities and Market Experience (HOME) Survey found that only 13 percent of those aged 34 or under believe they need a downpayment of five percent or less.[3] Additionally, although low downpayment loans are available, some buyers may want to save for a bigger downpayment to meet underwriting standards (e.g., debt-to-income ratios, loan-to-value ratios), save on mortgage insurance, or get a lower interest rate.