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Pat Argo's Blog

Pat Argo

Blog

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Home is Worth the Sacrifice

by Pat Argo

house orange.jpgThere are many reasons people want a home with the most frequent responses being a place of their own, to raise their family, share with their friends and feel safe and secure.  These are all strong motivations fueling the American Dream of owning your own home.

The motivation is so dominant that buyers are willing to make sacrifices to have their dream come true.  According to the 2014 National Association of REALTORS® Home Buyers and Sellers Survey, 72% of first-time buyers cut spending on luxury or non-essential items.  They also cut spending on entertainment, clothes and even cancelled vacation plans.

The value of getting their own home is more important than the immediate gratification of things that are considered less important.  While qualifying guidelines were increased last year, there are still more buyers purchasing homes at near record-low mortgage rates.

Sacrifices.png

Downsizing Might Make Sense

by Pat Argo, CRS

~~With roughly 12.5% of the population over 65 years of age, it is understandable that some of them are thinking of downsizing because they may not need the amount of space they did in the past.  There is something to be said for the freedom acquired by divesting yourself of “things” that have been accumulated over the years but are no longer needed.

Moving to a less expensive home, could provide cash that could be invested for additional income or savings for unanticipated expenditures.

Savings can also be recognized in the lower utility costs associated with a smaller home, not to mention, the lower premiums for insurance and property taxes.

Going from the home where you reared your family to one of the new tiny homes may be a bit extreme but downsizing to 2/3 or 50% of your current home may certainly be reasonable.  In some situations, your interests may have changed so that a different area or city might be a possibility.

At one time, IRS had a once-in-a-lifetime exclusion of $125,000 of gain from a principal residence but it was changed so that homeowner’s are eligible for an exclusion of $250,000 of gain for single taxpayers and up to $500,000 for married taxpayers who have owned and used their home two out of the last five years and haven’t taken the exclusion in the previous 24 months.

Homeowners should consult their tax professionals to see how this may apply to their individual situation.And of course, call me if I can be of service in comparing real estate changes that might work for you!

Todd is in our office regularly, as well as is available to chat by phone or meet with you about how he can best serve you. Be sure to let him know I suggested you talk with him before committing yourself to a loan. I am happy to share his latest newsletter:

~~Happy 2015!!

I could not think of a better way to start off 2015 except by sharing these pieces of great news.

The first bit of news you might have heard, rates are low! Typically low rates mean low home sales because low rates are brought on by a less than stellar economy. However, rates are low due to geopolitical issues and not negative US economic issues. This is great because we are going to have more homebuyers this year than last year, and these homebuyers can cash in on some super low rates.

The second piece of news might have gotten to you already (darn social media!)… FHA is lowering its monthly mortgage insurance. This is great because FHA is a solid mortgage option for many. Lenders have greater success getting buyers with higher debt to income ratios approved using FHA financing versus Conventional or USDA. FHA also does not impose higher interest rates for those with average credit. (Conventional financing has loan level pricing adjustments where someone with a 700 credit score gets a higher rate than someone with a 760). Lower monthly mortgage insurance makes the mortgage more affordable and more attractive to the homebuyer...

Please let me know how I can be of service to you and your clients.

Talk to you soon! 
Todd Richards | Loan Officer | NMLS #100086 | WaterstoneMortgage.com
 2699 Lee Rd. Suite 480 Winter Park, FL 32789   407.645.6312 OFFICE   407.628.2609 FAX   407.680.5717 MOBILE
 

Waterstone Mortgage Corporation (NMLS #186434) is a wholly owned subsidiary of WaterStone Bank SSB (NASDAQ: WSBF).

Information to Improve Home Ownership

by Pat Argo

After spending the Holidays with Family and Friends, this is a time of year to start thinking about changes to make lives, both personal and in business. We wanted to share one of ours with you.

Our Goal is to become your REALTOR for life. I want you to think of us when you need to buy or sell and that you recommend us to your friends and family too. That kind of trust has to be earned and I'm committed to helping you be a better homeowner even when you are not buying and selling. 

The strategy is simple. A well informed Homeowner will make better decisions. We'll periodically offer information through articles (such as my Blog here) and Social Media on a wide variety of home-related topics like maintenance tips, tax law changes, financing suggestions, insurance, equity building strategies, and rental property investments. As a Homeowner and Small Rental Investor myself, I like to stay current and enjoy sharing what I find.

Please contact me if you need a recommendation on a service provider. Our experience has built a list of reputable and reasonable contractors that you can rely upon. If you know of great servers in North-Central Brevard, I am always open to learning about them as well! I just went through my first Insurance Claim ever, (other than a roof when the hurricanes were here!) and it was an extreme learning experience.

Please contact me if you need a recommendation or service provider Experience has built a list of seasoned, reputable services that you can rely upon. When you have any kind of home related questions, I hope you'll have the confidence to call.

Happy New Year! I look forward to helping you or your friends when they have real estate needs or questions.

 

Things To Think About Before Refinancing Your Loan

by Pat Argo

Every single day, homeowners who are excited about lowering their rate have a tendency to iStock_000016148905XSmall(er).jpgignore the refinancing costs because they’re being rolled back into the new mortgage. If the payment is lower than what they’re currently paying and there’s no money out of pocket, it seems like a good deal.

Refinancing your home because a lower rate is available is one thing but the closing costs associated with that new loan could add several thousand dollars to your mortgage balance. By following some of the suggestions listed below, you may be able to reduce the expense to refinance.

• Tell the lender up-front that you want to have the loan quoted with minimal closing costs.
• Check with your existing lender to see if the rate and closing costs might be cheaper.
• If you’re refinancing a FHA or VA loan, consider the streamline refinance.
• Shop around with other lenders and compare rate and closing costs.
• Credit unions may have lower closing costs because they are generally loaning deposits and their cost of funds is less.
• Reducing the loan-to-value so that mortgage insurance is not required will reduce expenses.
• Ask if the lender can use an AVM, automated valuation model, instead of an appraisal.
• You may not need a new survey if no changes have been made.
• There may be a discount on the mortgagee’s title policy available on a refinance.
• Points on refinancing, unlike purchase, are ratably deductible over the life of the loan.
• Consider a 15 year loan. If you can afford the higher payments, you can expect a lower interest rate than a 30 year loan and obviously, it will build equity faster and pay off in half the time.

A lender must provide you a list of the fees involved with making the loan within 3 days of making a loan application in the form of a Good Faith Estimate. Every dollar counts and they belong to you.

Thinking About Refinancing?

by Pat Argo

We're constantly bombarded by lenders to refinance our mortgage under a variety of programs. The volume of offers can almost make you numb to the rational consideration.

There are common rules of thumbs that homeowners and agents use such as not refinancing more often than every two years or there must be at least 2% savings from your previous mortgage rate may not always be accurate.

The reality is that if you can refinance for a lower rate and you'll be in the home long enough to recapture the cost of refinancing, it should be considered. The costs of previous refinancing that haven't been recaptured by monthly savings may need to be added to the costs of the new refinance.

Take a look at the chart that shows the average rates according to Freddie Mac for 2012. They are lower today than they were in January of 2012 and for the ten years before that.

Refinancing may save you a substantial amount of money, especially if you're going to be in your home for a long time. It is definitely worth investigating. To get a quick idea of what your savings could be, use this refinancing calculator.

Shifting Personal Debt to Equity Debt

by Pat Argo

 

shift debt.pngThe Mortgage Interest Deduction is available to homeowners for up to $1,000,000 of acquisition debt on the combination of their first and second home. They can also deduct interest on up to an additional $100,000 of Home Equity debt.

While Acquisition Debt is used to buy, build or improve a principal residence, the Home Equity Debt can be used for any purpose. It can be used for educational or medical expenses, to purchase a personal car or boat, consolidate debts or pay off credit cards.

A homeowner with $15,000 of credit card debt at 19% and sufficient equity in their home could replace it with a home equity loan at much lower interest rate. Not only would the interest rate on the home equity loan be about 1/3 of the rate paid on the credit card, it’s would now be tax deductible.

If the taxpayer was in the 28% bracket, the net interest on a 6.5% loan would be 4.68% after tax benefits are considered.
Shifting personal debt to Home Equity debt can result in an interest deduction and probably, a lower interest rate. For more information see IRS Publication 936 page 10 and consult your tax professional.

Did You Rent Your Home vs Selling It or Losing It?

by Pat Argo

   

Temporary Rental2.pngSome homeowners, who were not able to sell during the recession, chose to rent their homes instead. In some cases, they didn't need to sell their home at the depressed prices and opted to rent it until the market recovered.

It's a valid strategy but there are time restrictions that could have serious tax implications for some homeowners.

The section 121 exclusion for gain in a principal residence requires that the home is owned and used as a main home for at least two years during the five year period ending on the date of the sale. This allows a homeowner to rent their home for up to three years and still have some part of the exclusion available.

The sale of a home with a $200,000 gain that qualifies as a principal residence would result in no tax being paid by the owner. Comparably, a rental property with the same gain could have a $30,000 or higher tax liability depending on the length of ownership and tax brackets of the investor.

The housing market has dramatically improved in the last year. If you have a gain in a home that has been your principal residence and it has been rented less than three years, you might want to consider selling it while you qualify for the exclusion.

If you are considering a sale on your principal residence that has been rented, consult with your tax professional for advice on your specific situation. For additional information, see IRS Publication 523.

How Are YOUR Comfort Systems Doing?

by Pat Argo

Some people refer to the heating and air conditioning systems as the "comfort systems." If you've ever had to be without one in the dead of winter or the heat of summer, lack of comfort may be an understatement. Simple maintenance with a HVAC checklist is something that every homeowner can perform.

Periodically

  • Change your filter every 90 days; every 30 days if you have shedding pets.
  • Maintain at least two feet of clearance around outdoor air conditioning units and heat pumps.
  • Don't allow leaves, grass clippings, lint or other things to block circulation of coils.
  • Inspect insulation on refrigerant lines leading into house monthly and replace if missing or damaged.

Annual, in the spring

  • Confirm that outdoor air conditioning units and heat pumps are on level pads.
  • Pour bleach in the air conditioner's condensation drain to clear mold and algae which can cause a clog.
  • Avoid closing more than 20% of a home's registers to keep from overworking the system.
  • Replace the battery in the home's carbon monoxide detector.

Even with the attention that perfoming this list will provide, it is recommended that you have your units serviced annually by a licensed contractor. Furnaces can be inspected for carbon monoxide leaks and preventative maintenance may help avoid costly repairs. Click Here if you'd like a recommendation.

Tax Deduction Planning for the Future

by Pat Argo

iStock_000016195030XSmall(er).jpgOne of the drawbacks to low mortgage rates is that the total interest and property taxes paid for the year may be lower than the standard deduction. A little planning might be able to help you at least every other year.

Most homeowners know they can deduct their qualified mortgage interest and property taxes on their Schedule A of their 1040 tax return or to take the standard deduction if it is greater. See Your Deduction...Your Choice.

Deductions are taken in the year that they're actually paid. If a homeowner paid their 2012 property taxes in 2013, they would not be deductible on their 2012 tax return. Then, if the 2013 property taxes were paid in 2013, both the 2012 and 2013 taxes could be deducted on the 2013 Schedule A.

By delaying the payment of the 2012 taxes until 2013, the combination of the 2012 and 2013 taxes might exceed the 2013 standard deduction and provide a higher deduction.

Other Schedule A expenses such as charitable contributions and medical expenses may be bunched also. From a practical standpoint, since most mortgage payments are due monthly, the mortgage interest would not be bunched.

This information should be discussed with your tax advisor to see how it might apply to your individual situation. The key is you must be aware of the strategy early to be able to use it.

Displaying blog entries 1-10 of 66

Contact Information

Photo of Pat Argo, Broker Assoc, CRS, GRI, RECS, SFR, S Real Estate
Pat Argo, Broker Assoc, CRS, GRI, RECS, SFR, S
Keller Williams Realty of Brevard
6905 N Wickham Road #405
Melbourne FL 32940
Cell/Text: 321-537-4721
Office: 321-259-1170
Fax: 321-435-3124