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January 2, 2011 It’s a common misperception that the mortgage interest deduction benefits primarily the wealthy, as argued in the Washington Post’s January 1 editorial, “Trim the Excessive Tax Subsidy for Real Estate.” In fact, the MID actually benefits primarily middle- and lower income families. Sixty five percent of families who claim the MID earn less than $100,000 per year, and 91 percent who claim the benefit earn less than $200,000 per year. As a percentage of income, the biggest MID beneficiaries are younger middle-class families. The MID helps many families become home owners by reducing the carrying costs of owning a home. The ability to deduct the interest paid on a mortgage can mean significant savings at tax time. For example, a family who bought a home last year with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 5 percent, could save nearly $3,500 in federal taxes when they file next year. That’s real money they can use to pay down other debts, save for their children’s college education, or put away for retirement. It’s no wonder, then, that most Americans support the MID. In fact, in a recent NAR survey by Harris Interactive of 3,000 home owners and renters, nearly three-fourths of home owners and two-thirds of renters said the MID was extremely or very important to them. Unlike the very rich, much of whose wealth is tied to the stock market, the wealth of most middle-class American families is connected to their home. Millions of these Americans bought their homes with the understanding that mortgage interest is tax-deductible, and many of them have steadily paid down their mortgages to build equity in their home. Eliminating or reducing the MID would destroy part of this hard-earned equity for all home owners, independent of their tax filing status. Furthermore, we also need to be mindful that home owners already pay 80 percent to 90 percent of U.S. federal income tax, and this share could rise to 95 percent if the MID is eliminated. Proposals that would remove certain tax benefits in return for lower tax rates just may hold for one or two terms of Congress before the tax rates are changed again. Americans are not naïve; they understand the nature of Washington politics. For people who don’t have hundreds of thousands of dollars in savings to buy a home outright, tax benefits like the MID help them begin building their futures through home ownership. In a time when the middle class faces increased economic pressures, you can be sure that the National Association of Realtors® will remain actively engaged to ensure that hard-working, home-owning families continue to receive this important benefit. NAR Chief Economist Lawrence Yun |
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The Daily Times-Call in Longmont did a great article on "What happened in business in 2010" in the Longmont Area. This was a wonderful article to read and learn about how much actually happened with our small and large companies. Please, follow this link below and take a few minutes to learn about places you may frequent! Happy Buying and Selling! 2010 Recap of Longmont Business http://www.timescall.com/tcBusiness/010211Business2010.asp?ID=24731 |
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Predictions for Housing in 2011
Will housing values increase in 2011? Fortune.com offers both a bullish and a bearish prediction.
The bulls say: Affordability is at its highest level. Billionaire Warren Buffet is among those who believe this is a sign the slump is about to end. Buffet writes: "Prices will remain far below 'bubble' levels, of course, but for every seller (or lender) hurt by this there will be a buyer who benefits."
The bears say: It’s not over yet. Housing is still overpriced and inventories are enormous, says Daryl Jones, an analyst at investment research firm Hedgeye. Jones warns that home prices could fall another 15 percent to 30 percent because no one is buying.
Source: Fortune.com, Nin-Hai Tseng (12/27/2010) |
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5 Reasons to Buy a Home in 2011
Michele Lerner, author of Homebuying: Tough Times, First Time, Any Time, offers reasons why real estate is likely to improve in 2011. Here are five reasons she thinks consumers should consider a home purchase next year:
▪ Mortgage rates will stay low. Even with rates climbing — maybe to as high as 6 percent by 2012 — they are still well below where they have been historically.
▪ Tax cuts could help. Extending the tax cuts could encourage a more rapid recovery for the economy.
▪ Americans want to be home owners. A recent Fannie Mae survey showed that Americans still believe a home is a safe and desirable investment.
▪ Builders are about to begin building. Home builders have been sitting on the sidelines. This year, they think pent-up demand will create an appetite for new homes.
▪ Homes are shrinking. Homes are getting smaller, which has made them more affordable.
Source: Investopedia, Michele Lerner (12/24/2010 |
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What does 2011 look like to you? What do you hope the 2011 Real Estate Market will bring?
Will rates rise? Is there "shadow inventory" lurking about? What about home prices?
There are 3 critical factors that will determine how the housing market will look in 2011. - Unemployment rate
- House prices
- Interest rates
Cherry Creek Mortgage has put together a great short presentation that examines each of these, and their effect on 2011. The last half of the presentation is particularly interesting, pointing out the effect of 10% decrease in home price vs. a 1% increase in your interest rate. Also, how that 1% jump in a rate may lead to not qualifying for the loan.
Thanks and enjoy! |
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Please Click Here for the 7 minute presentation. Very interesting. |
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Mortgage rates rose for a fourth-straight week to reach a six-month high as yields on government bonds continue to rise. The average interest on a 30-year fixed loan hit 4.61 percent, up from 4.46 percent a week ago, Freddie Mac reported.
Also, 15-year fixed loans averaged 3.96 percent, up from 3.81 percent last week; and rates for variable adjustable-rate mortgages floated higher as well.
Source: Los Angeles Times, E. Scott Reckard (12/10/10) |
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Did you know that the City of Longmont offers a Down Payment Assistance Program?
This program offers up to 8.5% of the purchase price (or up to $15,000) to be used towards a downpayment as well as closing costs! Housing must be in Boulder County, yet outside of Boulder City Limits. Currently funds are not available for Broomfield either.
Now, this is a low interest loan and not “free money”, so keep that in mind. For those that earn 51-80% of the AMI or “Area Median Income”, the loan is at 3% and amortized over 10 years. For those households that earn below 50% of the AMI, this deferred loan with no monthly payments is at 4% simple interest and the full amount (principal and interest) is due at the sale, change or ownership or refinancing of the property.
Keep in mind that there is an application process to go through as well as a few other requirements, one of which being a homeownership and budget class put on by the city. Once approved for the program, we then work to find a suitable residence.
This can be a great way to open up the world of homeownership! With interest rates as low as they are, and a down payment assistance loan at 3% or 4%, the dream may be closer than you realize.
Feel free to contact me if you have further questions about his program or if you would like me to attend a class with you!
| Boulder County Income Limits | | Household Size | 1 person | 2 person | 3 person | 4 person | 5 person | 6 person | | Maximum Income (This is the 80% figure) | $44,800 | $51,200 | $57,600 | $64,000 | $69,100 | $74,250 | | Maximum Income (This is the 50% figure) | $31,200 | $35,650 | $40,100 | $44,550 | $48,100 | $51,700 |
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A survey by American Lives, a consumer research firm in California, conducted a study for the trade magazine Builder to answer that question. Here are their conclusions:
· They are young. Most are under 45. Half said they had annual household incomes of $75,000 or less. Two-thirds are married.
· They are frugal. They consistently told surveyors they were eager to live a simple lifestyle.
· They are concerned about their financial future. About 70 percent said the economy is “not so good” with 27 percent saying it was getting worse and 27 percent saying it was getting better, and two-thirds saying it would get better in a year. Some 55 percent said they were concerned that they might lose their jobs.
· They see themselves as energy efficient but not necessarily “green.” About 32 percent said they’d pay extra for energy-efficient features but only 16 percent said they’d pay extra for recycled or renewable construction materials.
· Neighborhood is important. Ninety-five percent said they thought the community was as important as the home itself. Seventy-nine percent wanted the most square footage they could afford, but 69 percent said they’d consider a smaller home in the right neighborhood.
Source: Inman News, Mary Umberger (10/27/2010)
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Being proactive however and helping ensure that your dream home is in fact that, obtaining a home inspection is one of the most important things a buyer can do that can save hundreds and even thousands of dollars down the road.
We know buying a home is not cheap, in fact for most people it is the single largest purchase they will ever make. 10% down payment here, $4800 in closing costs there, loan application, taxes, insurance, etc, etc make it a costly venture up front. However when you Realtor recommends an inspection for lets say....$350.00...it can be a bit of an extra shock, but may also save you thousands down the road.
Need a few reasons why?
- Get a professionals opinion...not your handyman experience. All to often, buyers looking to save a few hundred will run through the home themselves looking for items needing work “Because they have put this in once before”.
- Thoroughly Looked Over - A professional inspector will not just look at the foundation, appliances, eyeball the roof and make sure the heater works. A thorough inspector will take his/her time inspecting each room and area of the property. Test each socket for power and grounding, each hose bib for leaks, look in common leak areas, see if the insulation is proper, walk on the roof to inspect not only the shingles, but the vents/windows/gutters and whatever else may be up there. Appliances are cycled, heating/ac/water heater are tested and temperatures are taken. Gas leaks are sniffed, sprinklers ran, etc, etc. As you can see, they do a lot, much much more than what I have listed.
- Know Potential Code Issues or Violations - Inspectors may notice potential violations or “code cutting” measures that may have taken place in the past.
- Get recommended care tips on each section of the home. Trust me, a good inspector has seen A LOT of homes.
- Negotiation - An inspection may also serve as a good negotiation tactic. First we negotiate price/terms....then inspect. This is an opportunity for your Realtor to work with the sellers on addressing items that are of concern to you. In some cases, this provides an “out” of the contract if repairs needed are too extensive.
- Extras - With a home inspector, you can usually get your property tested for Radon Gas Levels (Check for another blog post about this!) as well as inspecting your sewer system. Keep in mind not all inspectors inspect sewers and you may need to contract a plumber.
Since I mentioned Sewers, I thought I should add one quick note. Sewer inspections on homes are such a critical component to your evaluation and inspection! For such a small fee, a plumber will send down a scope with a camera into your main sewer line. From here they can check for breaks, bows, cracks, separations, root intrusion and more to notify your of COSTLY repairs that could be looming. To root a sewer out can be anywhere from $79-$250 in our market.....having to replace a section can be upwards of $7000-$15,000 or more. Dont get stuck in the mud on this. Inspect your home and sewer! |
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