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Monday, March 31, 2008
Last-Minute Home Owner Tax Primer
As April 15 approaches,
here’s what home owners need to know about the deductibility of mortgage interest and property taxes.
Taxpayers may deduct on
Schedule A of Form 1040 mortgage interest on the purchase or home equity debt on two residences, their primary home and another
dwelling, including a boat or a mobile home. These dwellings must have sleeping, cooking, and toilet facilities to qualify
for a loan interest deduction. Interest paid on vacant land isn’t deductible.
Real estate taxes are deductible on all properties
owned by the taxpayer — not just the first two. The deduction must be taken in the year the taxes are paid. Taxes placed
in escrow are deductible when they are paid to the taxing authority, not when the money is put in escrow. Penalties and interest
on late tax payments aren’t deductible.
Also, in order to deduct taxes and interest, the taxpayer must itemize instead
of taking the standard deduction.
Source: Houston Chronicle, Shannon Buggs (03/27/08
Is Your Home Office Deduction a Red Flag to the IRS?Claiming the Deduction is Not a Red Flag when Done Right
Although 44 million people work regularly work from home, fewer that three million claim the home-office deduction. While
many don't qualify, others are confused by all the conflicting information about it. Also, too many people who legitimately
deserve to take this expense fear they'd be inviting an audit. Not true.
As with any tax deduction,
the way to make the IRS happy is to follow the rules and keep good records. Once you understand the danger zones, there are
few grounds to fear taking the home-office deduction. And the amount of money saved (on average $2500) is well worth your
trouble. The home-office deduction needs to be well understood by anyone in the real estate profession—whether
they take it themselves, or they advise buyers or sellers who have a home-based business. Danger
zones, where people get confused: - What qualifies for the deduction
- Exclusive
use test
- Primary use test
- Issues that arise upon sale of the residence
Qualifying for the Home Office Deduction The deduction allows
you to deduct a pro-rata portion of your residential costs as a business expense when it's used as your principal place
of business. The percentage of allowable expense (found by dividing the square footage of the office by the home's total
square footage) can be applied to mortgage interest, insurance, property tax, rent, depreciation, utilities, and other home-related
expenses. The two requirements:
1. The space is exclusively used for business
2. You
must regularly conduct some kind of business activity in the space The home office deduction can
only be taken if a portion of the home is used "exclusively and primarily" for business. That means the designated
space cannot be used for any other purpose, like a guest room. Although the space must be "separately
identifiable," it needn't be blocked off with a permanent partition. This deduction can also apply to a separate
structure not attached to the dwelling unit. Your Home Office Needs to be Your Principal Place
of Business More taxpayers qualify since the definition of "principal place of business"
was broadened to include a place where administrative or management activities are conducted on a substantial basis, if there
is no other fixed location where they conduct substantial administrative or management activities (Taxpayer Relief Act of
1997). In short, this means that a self-employed person needs to spend more time running their business from home, not the
brokerage sales office. In my experience, real estate agents often fail to qualify for this deduction
because they already have a brokerage sales office, where most of their activities in running their business are conducted.
Also, if you are an employee who works at home, the rules state that the home office must
be for your employer's convenience, rather than your own. As popular as tele-commuting has become, make sure this point
is clarified with your employer. That way you can document that the office space is specifically required by them. One caveat for anyone taking this deduction. It cannot be taken for any year when the amount claimed will generate
a net loss for the business. However, the untaken deduction can be carried forward to a year when there is sufficient profit
to avoid that limitation. Selling a Residence with a Home Office In
December, 2002, the US Treasury approved a change that removed a major negative for those who'd been taking the home office
deduction. (And for those who feared taking it.) Normally, gain on the sale of a principal residence (where you resided
two or more years) is tax free. Until that change, homeowners who sold would owe tax on the gain allocated to the office portion
of their home. The new Treasury rules change mean that a seller must no longer allocate the amount
of gain between their business and personal use. The home office had to be within the house, however. And the new rules don't
excuse any depreciation recapture that may have been taken for the home office. Make Your House
"Pay its Way" Whether taking the home office deduction
is tax-wise depends on your circumstances. Study the details in IRS Publication 587 http://www.irs.gov/publications/p587/ Here's a tax strategy that every self-employed person should reconsider. Especially since several of the "traps"
regarding the home-office deduction have been dismantled. Its tax advantages are substantial and could bring you significant
savings—year after year.
Friday, March 28, 2008
MORTGAGE TAX DEDUCTIONS
WASHINGTON – March 27, 2008 – Many qualified taxpayers are
preparing to claim their first-ever tax deduction for mortgage insurance premiums on home loans that closed in 2007.
The tax deduction was first approved by Congress in late 2006 and applied to loans with mortgage insurance that closed in
2007. In an important move to further assist borrowers, Congress voted in December of last year to extend the mortgage insurance
tax deduction through 2010. Extension of the tax deduction for mortgage insurance premiums was part of the Mortgage Forgiveness
Debt Relief Act of 2007.
The deduction allows households with an adjusted gross income of $100,000 or less to deduct
the full cost of their government or private mortgage insurance premiums on their federal tax returns. Families with incomes
between $100,000 and $109,000 are eligible for a reduced deduction.
“For the first time, many low- and moderate-income
families who purchased homes with private or government mortgage insurance, will be able to deduct those premiums when they
file their 2007 federal tax returns next month,” says Kevin Schneider, president of the Mortgage Insurance Companies
of America (MICA). “On average, this year’s tax break could be worth $350 per taxpayer – an annual deduction
that qualified homeowners can take each year through 2010.”
“Like many other populations, our community
relies on homeownership to build wealth. Government and privately insured mortgages help low- and moderate-income families
gain a foothold in the housing market and realize their piece of the American Dream,” says Timothy Sandos, president
and chief executive officer of the National Association of Hispanic Real Estate Professionals (NAHREP).
Realtors see signs that housing market is improving, thanks to Amendment 1
TALLAHASSEE, Fla.
– March 27, 2008 – Only weeks after Florida voters passed Amendment 1 in late January, Florida Realtors have noted
signs of increased interest from potential homebuyers heartened by the measure’s property tax relief benefits, especially
the portability provision.
In a recent online poll conducted by the Florida Association of Realtors (FAR), about
one-third – 35.5 percent – of the Realtor respondents answered yes, when asked if more property owners were interested
in buying or selling property, thanks to portability.
Property tax portability is one of the benefits now made
law under Amendment 1, which allows Florida homeowners to transfer their Save Our Homes tax benefits from their old homestead
to a newly purchased home. Portability applies to homes purchased in 2007 and later, and the benefit is capped at $500,000.
FAR’s informal survey also asked Realtors if “the property tax relief afforded by Amendment 1 is encouraging
prospects to get off the fence and buy.” Again, of those polled, about one-third – 30.4 percent – said yes.
The online survey was conducted on FAR’s member Web site at www.floridarealtors.org from March 5 through March 10, 2008.
“This is only the beginning,” says 2008 FAR President Chuck Bonfiglio.
“Conducted just seven weeks after passage of Amendment 1, this poll shows that many of our Realtor members are starting
to see heightened interest in the state’s housing market and reporting signs of increased activity. That’s encouraging
news, and the ink on this new law has barely had time to dry.”
Gov. Charlie Crist joined Bonfiglio and a
crowd of nearly 1,000 Realtors from across Florida in Tallahassee to share their concerns with legislators during Great American
Realtor Days, March 25-26. He thanked Realtors for their efforts in supporting Amendment 1 to its successful passage by Florida
voters. While talking to the Realtor audience about issues such as property tax relief and property insurance, Crist noted
that homeowners saw their home insurance premiums decrease by about 16 percent following legislative action last year. He
added that, by 2013, Florida homeowners should expect property taxes to drop by about $25 billion.
The online survey
was conducted for the Florida Association of Realtors during a six-day period from March 5 through March 10 and powered by
Vovici EFM on FAR’s member website at www.floridarealtors.org. A total of 1931 completed responses were received to the survey during this time.
Friday, March 21, 2008
Why only some see benefit from Fed’s cuts
NEW YORK – March 20, 2008 – The Federal Reserve has
lowered interest rates for the sixth time since September, but the campaign is helping with only certain kinds of borrowing.
Rates on home-equity lines of credit, credit cards and auto loans have all dropped. In addition, millions of homeowners
won’t face higher rates as their adjustable-rate mortgages reset.
But for new-home buyers and those looking
to refinance their mortgage, the Fed’s rate-cutting campaign has provided little relief.
Rates on 30-year
mortgages fell to about 5.75 percent earlier this week, amid anticipation that the Fed would slash its key federal-funds rate
by a full percentage point. After the Fed on Tuesday instead cut rates by three-quarters of a point, rates on 30-year mortgages
bounced back to about 6 percent for some lenders. That’s only about a quarter-percentage point lower than in September,
even though the fed-funds rate has fallen three percentage points since then.
What’s up? Blame the investors
who buy packages of mortgages on Wall Street.
Burned by the subprime-lending scandal and a rising level of defaults,
these investors, who include pension funds, insurance companies and bond mutual funds, are demanding a greater premium for
mortgages over risk-free investments such as U.S. Treasurys. That’s a big change from recent years, when investors viewed
mortgages as a generally low-risk product.
If the mortgage market were functioning normally, rates would be in
the low 5 percent range for a 30-year mortgage, says Frank Trotter, president of EverBank Direct, which originates mortgages.
Mortgage rates typically follow the 10-year Treasury and have historically traded at about 1.8 percentage points above the
10-year Treasury yield. Those Treasurys currently yield about 3.451 percent.
The best strategy for home buyers:
Comparison-shop. Mortgages aren’t all priced alike. Some banks keep the mortgages they write on their books; others
sell them on Wall Street (as long as investors are buying). And investors’ fickleness these days can whipsaw rates.
Buyers should also be willing to act quickly. Daniel Schwartz of Marina del Rey, Calif., took advantage of a brief
dip in rates earlier this year and refinanced his 30-year fixed-rate mortgage at 5.125 percent, down from 5.875 percent, resulting
in a savings of about $150 to $200 a month. While the 31-year-old computer analyst was able to “nail” that rate,
by the time he told his friends, he says, that rate was gone. “Most people haven’t been able to get a good rate
on a mortgage even though the Fed has been cutting rates,” he says.
Consider how erratic adjustable-rate
mortgages have been acting in recent weeks. So-called 5/1 ARMs – with rates that are set for five years and adjust annually
thereafter – plunged in late-January to 5.26 percent, down nearly a full percentage point from mid-December. On Tuesday
morning, however, ARM rates surged to 6.75 percent. The reason is that “several lenders were liquidating their ARM portfolios
to raise cash,” says Michael Menatian, president of Sanborn Mortgage Corp., a mortgage bank in West Hartford, Conn.
To entice investors, newly issued ARMs must sport higher rates.
Home buyers who can afford higher payments might
consider a mortgage with a shorter payment schedule. One of the effects of the current credit crisis is that mortgage investors
are keen on buying 15-year mortgages “because they perform better in terms of delinquencies, the borrowers are a better
risk, and the mortgages aren’t refinanced as quickly,” says Mr. Menatian. He says his firm locked in more than
20 mortgages between Monday night and Tuesday afternoon, “and every single one of them was a 15-year.”
Even in areas where rates are falling, such as loans tied to the prime rate, the credit crunch is making it tougher for
consumers to take advantage.
Rates on home-equity lines of credit have dropped to 6.27 percent from 8.25 percent
since September of last year, according to Bankrate.com. Partly as a result, the amount that homeowners borrowed against their
lines of credit rose slightly in the fourth quarter of 2007 - the first such rise since early 2005, according to data from
Equifax Inc. and Moody’s Economy.com. Rates on home-equity lines of credit should fall further after the Fed’s
latest cuts, but that might have less effect than would ordinarily be expected, as some banks make these loans harder to get.
In recent months, Countrywide Financial Corp., Washington Mutual Inc., and others have reduced or frozen the amount
of credit available to certain borrowers to protect themselves against falling home values and rising delinquencies. Indeed,
banks are expected to post a jump in losses from home-equity loans amid a rise in delinquencies. About 4.65 percent of fixed-rate
home-equity loans and 2.01 percent of home-equity lines were delinquent in the fourth quarter of 2007, up from 3.11 percent
and 1.07 percent, respectively, a year earlier, according to Equifax and Economy.com.
Indeed, mortgage brokers
say their customers are having a harder time borrowing against the equity in their homes. “We’re seeing a lot
of lenders freezing whatever is outstanding,” says Mitch Ohlbaum, a mortgage broker with Legend Mortgage Corp. in Los
Angeles. He says some clients, worried about getting cut off from existing lines of credit, have started drawing down their
lines in a pre-emptive move.
“They’re putting the money into savings accounts and CDs because they’re
afraid they’re going to lose access to the funds,” he says. “It’s their safety net.”
When it comes to credit cards, average rates on variable-rate cards have fallen to 12.36 percent from 13.97 percent last
fall, according to Bankrate.com. But for some cardholders, Tuesday’s Fed rate cut may not have as much impact as previous
rate cuts because of the presence of so-called floor rates, or predetermined points below which rates won’t fall, no
matter how low interest rates go, says Greg McBride of Bankrate.com. The last time consumers hit floor rates was between late
2001 and 2003, when interest rates were falling.
A rate cut isn’t likely to have a big effect on new-car
loans, in part because many auto loans are already offered at reduced rates because of heavy manufacturer incentives. Average
rates on five-year new-car loans have dropped to 7.22 percent from 7.72 percent in early September, according to Bankrate.com.
Nevertheless, lower interest rates will help make it less costly for auto makers and lenders to offer lower-cost loans and
more-attractive leasing deals. Already, car makers are sweetening their financing rates, rebates and lease deals on a wider
range of models than usual.
Fri, March 21, 2008 | link
Property-tax plan forces hand of lawmakers
TALLAHASSEE, Fla. – March 20, 2008 – The tax cut that
voters will be asked to approve in November will do more than save property owners money. It will force lawmakers to do what
they have refused to do for nearly 70 years: modernize sales-tax rules to raise revenue from products and services that have
never been taxed.
That is exactly what the powerful Taxation and Budget Reform Commission intended Monday when
it asked voters to eliminate the schools portion of all property taxes and replace it with a penny hike in the sales tax and,
potentially, new taxes on services such as charter boats, symphony tickets, dry cleaning and limousines.
With a
21-4 vote, the politically diverse panel accomplished what former Senate President John McKay and current House Speaker Marco
Rubio couldn’t do at the height of their legislative power: produce a constitutional amendment that delivers property-tax
cuts while broadening the state’s sales-tax base. “It’s an attempt to change the structure and make it more
fair and resilient,” said McKay, a commission member and the amendment’s sponsor.
When McKay was Senate
president in 2001-02, he tried to revamp the sales-tax system to raise enough money to meet the growing state’s needs
while shielding Florida’s aging population from a rising tax burden. He failed again in 2004 to do it through a voter
petition drive.
Now, the state’s struggling economy, stagnant real estate market and voter demand for property
tax relief provided the extra impetus McKay needed to win the votes for a plan to force the Legislature to expand Florida’s
shrinking sales-tax base.
The tax commission, which meets every 20 years, has the power to put on the ballot proposals
it believes are needed to prepare the state’s tax and budget system for the next two decades.
McKay’s
proposal converged with a key goal of Rubio’s, who last year tried to repeal all property taxes on primary homes and
replace the money with up to 2 cents in sales taxes and massive cuts in government spending. Rubio’s plan failed when
he couldn’t get support in the Senate.
Perfect marriage
So when McKay
suggested replacing the portion of property taxes that pay for schools with a penny increase in the sales tax and other revenue,
he found in Rubio a strong and vocal ally.
“It was like the perfect marriage,” said Martha Barnett,
a Tallahassee lawyer and commission member who voted for the amendment. “Like the king of England marrying the princess
of Spain. We had people of very different starting points finding common ground on something that accomplished different agendas.”
To commission member Carlos Lacasa of Miami, a former legislator, it’s the perfect way to force the Legislature
to do the tax changes it has resisted for decades.
“The commission exists to make decisions free of political
considerations and we have done that,” Lacasa said. “It gives the Republican majority political cover when they
have to levy taxes.”
Rubio leapt at the chance to push the new McKay plan and claim victory for his tax-swap
idea. He allowed Commissioners Patricia Levesque and Lacasa to use House staff to draft elements of the proposal that were
merged into the McKay plan. He also lent help from House economic advisor Donna Arduin, the former state budget director for
governors Jeb Bush and Arnold Schwarzenegger, who helped persuade conservative members of the panel that the approach made
sense.
Finally, late last week when it came time to count the votes before Monday’s meeting, Rubio and others
went to work. Rubio called the seven members of the commission he had appointed, told them not to miss the meeting and urged
them to support the plan. They all did.
Former Gov. Jeb Bush, who as governor had sparred with McKay over expanding
the tax base, also stepped in. He called members of the commission he knew well and urged them to vote for the plan.
Arduin answered commissioner’s questions and argued that property taxes are “the worst form of taxes”
because they are levied on an asset year after year and people have no control over them, unlike, say, how much they spend
at a store.
Her argument was buoyed by the state’s chief economist, Amy Baker, who told the commission that
the state’s sales-tax revenue, as currently set up, would decline as the population ages and many elderly residents
become poorer.
In a presentation last year, Baker told the commission that Florida’s economic growth is fueled
by population growth and, in the next 20 years, most of the growth will come from people ages 60 and older, with fewer newcomers
of working age.
“An increasingly smaller percentage of individuals will assume the bulk of the tax burden
as the number of elderly increases and the demand for services continues to grow,” Baker said.
Because the
elderly tend to spend less on big-ticket items such as furniture and cars, revenue under the current sales-tax system will
increase more slowly than in the past, she said. And property taxes, traditionally opposed by seniors because they depend
on fixed incomes and have no children in schools, will become increasingly unpopular.
Compelling
Those demographics became a driving force in the deliberations of the commission, said Levesque.
“When
[Baker] connected sales taxes with property taxes, it was so compelling,” Levesque said. “She showed how much
of the sales tax came from furniture, painting, home repairs – all of the things that come along with people moving
and buying homes. We’re seeing this lull in our sales-tax revenue because of the real-estate slowdown.”
Commissioners also held public hearings and heard stories from property owners.
“Everywhere in the state
we heard from little mom-and-pop businesses who came with their bills and we’re being taxed out of sight,” said
Jim Scott, the commission vice chairman and a former Broward County commissioner.
To McKay and Rubio, the proposal
that goes before voters in November vindicates them.
“I give a lot of credit to members of the House,”
Rubio said. “Because if we hadn’t discussed and debated a tax swap, people might not have had this much comfort
in doing it.”
Said McKay: “My goal has always been to structure a tax system that is fair and resilient
in the 21st century.”
Copyright © 2008 The Miami Herald, Mary Ellen Klas. Distributed by McClatchy-Tribune
Information Services.
Fri, March 21, 2008 | link
Wednesday, March 19, 2008
Panel delivers recommendations to make insurers’ rate filings accountable
TALLAHASSEE, Fla.
– March 14, 2008 – A special Senate panel investigating how insurers set homeowner rates delivered a broad set
of recommendations for the current legislative session and beyond.
Several recommendations delivered Thursday to
Senate President Ken Pruitt by the Senate Select Committee on Property Insurance Accountability cover how insurers can calculate
profits and forecast losses in their rate filings and how they should account for the cost of back-up insurance coverage.
The senators, who took testimony from insurance company officials, reinsurers and regulators, were surprised to learn
that although the computer models insurers use to help estimate future losses have to be approved by the state, some companies
modified the models with data that hadn’t been approved.
Sen. Steve Geller, a Democrat from Cooper City who
co-chaired the panel with Jeff Atwater, the North Palm Beach Republican senator, said he had believed state “law was
clear, but obviously not.”
Geller noted that there’s one controversial recommendation that would prohibit
insurers from buying additional back-up insurance from the private market after they’ve purchased cheaper coverage from
the Florida Hurricane Catastrophe Fund.
But if insurers are meant to rely in large measure on the back-up coverage
from the CAT fund, perhaps lawmakers might consider putting the full faith and credit of the state of Florida behind the fund,
said Geller.
Another proposal that may not sit well with insurers would require companies to provide a rate filing
if they decide to drop a large percentage of their policies. Geller said rates would then need to reflect the company’s
greatly reduced risk.
The goal of the panel, set up in January, was to investigate why insurance rates hadn’t
dropped as much as lawmakers and regulators expected after an insurance reform bill required insurers to pass on savings achieved
from buying cheaper reinsurance from the state.
The catastrophe fund was expanded to provide up to $28 billion
in coverage. But rather than double-digit reductions expected, many insurers lowered rates less than 10 percent. Some companies,
such as Allstate Floridian and Florida Farm Bureau, filed for hefty rate increases.
Insurance Commissioner Kevin
McCarty said the bulk of the panel’s recommendations increase protections for Florida residents. These include putting
limits on profits and reinsurance charges.
Another recommendation is eliminating the “use and file”
provision, which allows insurers to put in place a rate increase and then file the necessary paperwork with regulators. There
are already bills in the Senate that either eliminate or further extend the ban already in place.
Other recommendations
include providing additional money for a state program to give free inspections and matching dollars for people who want to
harden their homes against storms.
Belinda Miller, deputy commissioner of the Office of Insurance Regulation, said
the recommendations would beef up the state’s ability to oversee the insurance industry.
“These are
crystal clear and everybody has to follow the same rules,” Miller said Thursday.
But Sam Miller at the Florida
Insurance Council, an insurance industry trade group, said these recommendations “fly counter to so far successful efforts
by the state to attract new insurers to Florida to help control the growth of Citizens.”
The recommendations
from the Atwater-Geller panel will now go to the Senate Banking and Insurance committee, with the expectation that the committee
will draft a bill to include many of the suggestions.
On the other side of the capitol, the House Insurance committee
is holding a special session Friday from 9 a.m. to 3 p.m. to examine in more detail the claims-paying ability for Citizens
Property Insurance and the CAT fund.
Committee chairman Rep. Don Brown, R-DeFuniak Springs, called the meeting
after Citizens officials told the Senate insurance committee that the continuing turmoil in the credit markets could hurt
the insurer’s financials. Its liquidity could be further constrained – already Citizens has bought back about
$2 billion of variable-rate securities it had sold in previous years to avoid being hit with higher rates on these bonds.
The House committee is doing its own analysis of whether the state’s current strategy to have sufficient funds
on hand to pay claims after a major storm – through the CAT fund and Citizens – would be sufficient.
Miller said the Senate committee’s recommendations don’t address these growing financial concerns.
Tuesday, March 18, 2008
HUD unveils reformed mortgage-term disclosure form for consumersProspective home buyers would get easier-to-understand information on
mortgage terms and save an average $700 in closing costs under a proposal to be unveiled Friday by President Bush.
The proposed overhaul to a 1974 law requiring lenders to give what’s called a “good faith estimate” is
aimed at making it simpler for consumers to comparison shop when they buy a house or refinance a mortgage.
It’s
the latest in a series of White House initiatives to help end a housing market crisis that has stalled the U.S. economy and
sparked global financial market turmoil.
“A lot of the mortgage problems we see today are directly related
to the fact that few people understand (the mortgage lending) process,” Alphonso Jackson, secretary of the Department
of Housing and Urban Development, said in a statement.
The mortgage broker industry is expected to oppose the proposal
because it also calls for lenders’ payments to brokers, known as yield-spread premiums, to be disclosed to borrowers.
Brokers receive the premiums for steering customers toward certain lenders although consumer advocates argue that
the practice prevents consumers from getting the most competitive interest rate and loan terms on mortgages.
About
12.5 million Americans buy or refinance a home each year. HUD’s proposed revision to the 34-year-old Real Estate Settlement
Procedures Act would mandate a federal disclosure form to be given to consumers who refinance a mortgage or borrow to buy
a home.
The form is simpler than private-industry disclosure forms, which can vary widely state by state. It includes
a summary of loan terms, interest rate and monthly payment, whether the interest rate and principal balance can increase and
by how much, whether the loan has a prepayment penalty or balloon payment, settlement costs and other details.
HUD
tested the proposed form over several years, which allowed consumers in nearly every instance to better compare home loan
terms offered by different lenders, agency officials said.
After a 60-day public comment period, the HUD proposal
could go into effect before the summer.
“Buying a home can be very intimidating. Consumers have had no assurance
that the loan terms and closing costs they are offered will reflect what they confront at the settlement table, and that’s
been one of the factors driving the current housing downturn. Our proposal fixes that,” Jackson’s statement said.
Friday’s proposal follows recommendations made Thursday by Treasury Secretary Henry Paulson to regulate mortgage
lenders more strictly, all part of a broad federal effort to encourage recovery in the beleaguered housing market.
Paulson’s proposal covers regulations for mortgage lenders and other financial institutions as well as investors,
regulators and Wall Street credit-rating agencies.
Tue, March 18, 2008 | link
Monday, March 10, 2008
Credit ProtectionHave you checked your
credit report lately? It might be a really good idea to start checking it regularly and put some safety measures in place
to protect it, if you aren’t already doing so. I read an article in the Florida Times Union (www.jacksonville.com ) today which gave the following statistics: 3.2 million victims were cases of their credit cards being fraudulently used by thieves. 3.3 million were hit by
thieves using accounts other than credit cards such as checking or saving accounts, or telephone accounts. 1.8 million American discovered their personal
information was used by thieves to open new accounts. Right now one of the major hurdles we are faced with in Real Estate is the ability of the buyer to obtain
a mortgage due to new restrictions and low credit scores. In my opinion you should do everything you can to protect your credit
by paying attention to the threats against thieves that can ruin your credit and make life very difficult for you. The good news is there are several ways
to protect your credit; some are even FREE identity theft safeguards: Obtain a free credit report annually from each of the three nationwide consumer credit reporting
companies every 12 months at www.annualcreditreport.com or call 877.322.8228. Place
a fraud alert on your credit report warning potential creditors they must take steps to verify the identity of the person
seeking credit by contacting each of the three major credit reporting agencies – Equifax, Experian and TransUnion. This
takes a little more effort on your part, for example Eqifax requires you to make a phone call to them or put it in writing,
but if it prevents someone from fraudulently obtaining credit in your name its well worth it. I think this is the best one of all – Place a block on pre-screened offers of credit and
insurance. If you don’t want those offers in the mail go to www.optoutprescreen.com or call 888.567.8688 to place a 5 year or PERMANENT block. Just think of the hours of your precious time and all the trees
you will save by not having to shred anymore of those offers!
Friday, March 7, 2008
New FHA and Fannie Mae- Freddie Mac conforming loan limits have been released by the U.S. Department of Housing and Urban
Development.New FHA and Fannie Mae-
Freddie Mac conforming loan limits have been released by the U.S. Department of Housing and Urban Development. To find out the new limits in your area,
simply click on this
link: http://go-to.realtor.org/r/KE05DP/184GQ/9ZUI9F/QPVIU/EDO22/B7/t It will take you to the
"mortgage limits" page at the HUD web site. On that page, enter your state and county information, chose the type
of loan from the "Limit Type" drop-down box (FHA Forward, Fannie/Freddie or HECM). [Note: FHA Forward is what HUD
is calling the temporary FHA loan limit.] Then click the "send" button at the bottom of the page. On the results
page, you'll see the new loan limit for the type of loan you selected for your area. You can also find a county-by-county
listing of the new FHA and Fannie Mae-Freddie Mac loan limits at REALTOR.org by following this link: http://go-to.realtor.org/r/KE05DP/184GQ/9ZUI9F/QPVIU/HEV7M/B7/t The new loan limits for
FHA and Fannie Mae and Freddie Mac are now calculated at 125 percent of the HUD published median prices, with a floor of $271,050
and $417,000, respectively, not to exceed $729,750. We expect the impact of these loan limit increases on the housing market to be significant because of
the infusion of capital into the mortgage market, which should result in lower interest rates across the board. In addition,
there will be a direct impact on high-cost areas that previously required borrowers to take out costlier jumbo mortgages.
As NAR research points out,
increasing FHA loan limits will help an additional 138,000 Americans achieve the dream of home ownership and will allow nearly
200,000 homeowners to refinance and potentially keep their home. In addition, NAR believes that increasing the loan limits
for Fannie Mae and Freddie Mac will bolster the housing finance market, which continues to be severely stressed, by providing
an immediate infusion of much needed liquidity to the nation’s mortgage market. An economic impact study conducted by NAR in January
2008 estimated that increasing the GSEs’ conforming loan limits would result in as many as 500,000 refinanced loans
and could help reduce foreclosures by as much as 210,000. In addition, over 300,000 additional home sales could be generated,
housing inventory would be reduced and home prices would be strengthened by two to three percentage points. HUD was mandated in the Economic Stimulus Act to publish new loan limits within 30 days of the
bill's signing by President Bush on February 13.
Saturday, March 1, 2008
HUD: Fhasecure Product Has Helped 100,000 Homeowners So FarU.S. Housing and Urban Development Secretary (HUD) Alphonso Jackson announced
that HUD’s FHASecure product has helped 100,000 homeowners refinance their mortgages and avoid foreclosure.
Since September 2007, FHASecure has enabled families – who are current on their home loans or past due because their
teaser rates reset – to close on loans refinanced through HUD’s Federal Housing Administration (FHA), which is
backed by the full faith and credit of the government.
“Homeowners are cutting their monthly mortgage payments
by an average of $400 a month compared to their exotic subprime loans,” says Jackson. “They no longer have anxiety
about finding foreclosure notices in their mailboxes, thanks to the safe mortgage alternative that FHASecure offers.”
According to Jackson, FHASecure remains on pace to offer refinancing to 300,000 families by the end of this year.
Sat, March 1, 2008 | link
Rates On 30-Year Mortgages RiseRates on 30-year mortgages rose for a third straight week, hitting the highest level in more than three
months. Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages
averaged 6.24 percent this week, up from 6.04 percent last week. That is the highest level since
the week of Nov. 15 when 30-year rates also averaged 6.24 percent. It marked a significant reversal from the beginning of
the year when 30-year rates dropped below 6 percent for six straight weeks reflecting a significant slowdown in the economy.
That slowdown prompted the Federal Reserve to aggressively cut the short-term interest rate it controls by 1.25 percentage
points in January, the biggest one-month cut in this rate by the Fed in more than a quarter-century. While
Federal Reserve Chairman Ben Bernanke again signaled during congressional testimony this week that the Fed was prepared to
cut rates further in an effort to stave off a recession, investors have grown concerned about what inflation might do to their
bond investments. The government has reported that consumer and wholesale inflation jumped sharply in January. The inflation
worries have helped push up mortgage rates, which are set in bond markets. Frank Nothaft, chief
economist at Freddie Mac, said the rise in mortgage rates would likely put a damper on the recent surge in mortgage refinancings. During January, refinancings had hit a 12-month high as homeowners sought to take advantage of falling mortgage rates
to lower their monthly payments. In other rate moves this week, rates on 15-year mortgages, a
popular choice for refinancing, rose to 5.72 percent, up from 5.64 percent last week. Rates on five-year adjustable-rate mortgages
rose to 5.43 percent, up from 5.37 percent last week. Rates on one-year ARMs climbed to 5.11 percent,
compared to 4.98 percent last week. The mortgage rates do not include add-on fees known as points.
Thirty-year mortgages and 15-year mortgages both carried a nationwide average fee of 0.5 point. Five-year adjustable-rate
mortgages had a fee of 0.4 point while one-year adjustable-rate mortgages carried an average fee of 0.7 point. A year ago, 30-year mortgages stood at 6.18 percent, rates on 15-year mortgages were at 5.92 percent, five-year adjustable-rate
mortgages averaged 5.93 percent and one-year ARMs were at 5.49 percent.
TAX PORTABILITY DEADLINE
If you bought a homestead in 2007, remember that Monday, March 3,
is the deadline to apply for homestead exemption and portability of Save Our Homes tax benefits. Taxpayers who sold a homestead
in 2007 and purchased a new home before Jan. 1, 2008, are eligible to apply some or all of their Save Our Homes tax benefits
to the new home. The Save Our Homes benefit is the difference between the assessed value and market value of a homestead property
due to the annual limit on increases in assessed value (the Save Our Homes constitutional amendment). Taxpayers who already
applied for a homestead exemption on their new home must complete a separate application by March 3, 2008, to transfer the
Save Our Homes benefit to the new homestead. Application forms for portability are available from the local property appraiser
and from the Florida Department of Revenue Web site: http://dor.myflorida.com/dor
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All information deemed reliable but not guaranteed.