November 13, 2019

THE 14 QUESTIONS YOU SHOULD ASK A LENDER

. . . Before you sign anything!

Mortgage lending in Washington State is not a regulated industry.  There are hundreds of lenders in our area.  Choosing the right lender for your real estate needs can be confusing.  It is especially difficult when you speak with several different lenders and they seem so convincing.  There is a way to determine who is the most likely to succeed in getting you the loan package best suited for your needs. The key is knowing the right questions to ask.

This list provides you with questions to ask your prospective lender.  The list will not only help you select the right lender, but will also get you the very best from the one you choose.
          Click here to order “The 14 Questions.”

5 TO WATCH . . . NEWS AND TRENDS TO WATCH


1. Texting While Driving

Nineteen states, plus the District of Columbia and Guam, now ban text messaging for drivers. Congress is trying to get into the act, too; last year a bill was introduced that would strip states of some of their federal Highway Trust Fund money if they don’t take action on the problem.

 AAA says distracted driving accounts for up to 8,000 accidents a day, though it does not break out figures for texting and other distractions.

 2. Definition of Green Features
In an effort to put rigor behind use of the term “green” in describing homes listed for sale, a number of multiple listing services (MLSs) are adding data fields so buyers can know with certainty what in a listing makes it green. With these new fields providing data on a wide range of green features—from energy-efficient appliances to electric carports—claims that a house is green are “verifiable, understandable, and certifiable.”  

National Association of Realtors (NAR) Green Resource Council estimates that as many as 50 MLSs have added some version of green data fields. The Council will be releasing a tool kit in 2010 on best practices for greening the MLS.

 3. Lead-safe Remodeling
U.S. Environmental Protection Agency rules taking effect April 22 require remodeling work on homes built before 1978 to be undertaken only by contractors certified by the agency in lead-safe practices. (An EPA-certified contractor is not necessary if the work does not disturb the paint, but that can be hard to know up front.)

The National Association of the Remodeling Industry recommends that home owners assume lead is present if their home was built before 1978 unless they’ve had it tested and found it lead-free. Certified remodelers are required to display their EPA-certified training certificate to home owners. 

4. Securities-Based Loans
Getting sales closed today might require Buyers to look at options other than traditional mortgages. Buyers with significant stock investments, for example, might look into a product that’s underwritten based not on the property they want to buy but on the stocks they own. Securities-based loans aren’t new, but lenders in the past year have started offering them up for home purchases.  

The loans are viable for households that have at least a modestly high net worth. Borrowers get a nonrecourse loan with an advantageous fixed interest rate (ranging from 2.5 percent to 4.5 percent in early 2010) with none of the underwriting and credit scoring issues of a mortgage loan, because the collateral isn’t the house but the stocks.

 Among the drawbacks: the loans can’t be prepaid, and if the stock value declines to less than the loan amount, the borrowers have to make up the gap.

5. Corporate Largesse
The U.S. Supreme Court in late January swept away a long-standing prohibition on direct political spending by corporations, but it will take time before the full force of the ruling is clear.

Under Citizens United v. Federal Election Commission, corporations can spend without limit on ads for or against candidates during an election as long as their efforts are undertaken independently of political campaigns. Before the ruling, corporations were prohibited from using corporate treasury funds for political communications and were required to set up separate political funds using only personal contributions from corporate employees.

HIDDEN TREASURE AWAITS YOU!

Tax day is just around the corner, and many homeowners forget that they’re sitting on a wealth of potential savings — in their home. Tax deductions for homeowners are plentiful, so keep these guidelines in mind as you prepare your return this year.

First, know that if you deduct home expenses, you have to file form 1040 (also known as the long form) and itemize your deductions on Schedule A. While it can be a headache, the rewards are usually worth it.

Remember that the mortgage on your home is deductible — at least the real estate taxes, qualifying interest and premiums, for a loan up to $1 million, according to the IRS. Note that fire or homeowner’s insurance premiums and the principal mortgage amount are not deductible. Here’s how to calculate what’s deductible: Enter your total real estate taxes for the year, and enter the number of days in the property tax year that you owned the property. Divide the number of days by 366, and multiply that number by your total real estate taxes for the year.

Paid off your mortgage early? The prepayment penalty you might have received is tax deductible as home mortgage interest, as long as it’s not for a specific service performed or a cost connected with your mortgage loan.

You may have heard that home repairs can qualify for tax deductions, but home improvements are the real winners. An improvement is classified as anything that adds to the value of the home — for instance, making a room handicapped accessible or adding a deck to the back of your home. Always keep receipts and records — and remember, if you borrowed money for that improvement, the interest on the loan is tax deductible, just as it is with the mortgage payments.

Another item many homeowners forget is deductions for loan origination fees, better known as “points.” One point is equal to 1 percent of your loan. Depending on how many points you’ve accumulated, you may be eligible to deduct them. There are rules about deducting points, but a financial professional can help you sort through them.

And finally, don’t forget that if you upgraded to energy-efficient Energy Star windows, stoves or water heaters, those may be eligible for a tax credit. Check www.energystar.gov to see if your improvements are included.

HOME AND WEALTH . . . Keep your home costs under control.

These days, most people are trying to control their expenses a little more tightly. Often they don’t realize how much they’re paying to live in their homes. So let’s take a look at that home budget and see if we can’t do a better job of staying on top of the costs. 

1. Your largest expense is probably your mortgage. These days mortgage rates are historically low, so you might be able to refinance and lower your monthly payment.   Contact me for a referral to a QUALITY lender who will let you know if this makes sense.

2. Another major expense is likely to be your homeowner’s insurance. Check in with your agent once a year to see if you’re getting the right coverage at the best price. 

3. Next look at your real estate taxes. The higher the assessed value of your property, the higher your real estate taxes.  So the next time you receive your King County notice of assessed value, contact me to help with your homework.  I will provide you with values of comparable homes in your neighborhood.

4. Recurring monthly expenses: 

  • If you pay for public water, public sewer  or a homeowners’ association, those are probably fixed expenses you can’t cut. 
  • But if you pay for private trash collection, snow removal, lawn and gardening services, periodically look around for cheaper rates. Even if  you’re happy with your current supplier, this information could help you get a better deal.
  • Phone, internet and cable TV services should be reviewed at least once a year to see if competitors offer better prices.
  • Energy costs. Oil companies should be reviewed once a year, before heating season begins. And if you think oil may be going up, pick a supplier who will lock in the price. In a growing number of areas, you can also find competing electric companies. Find out who has the best deal. If you heat and air condition with gas, ask your local gas company about special offers.

5. Maintenance and repairs. It is always cheaper to fix a problem as soon as it comes up, rather than letting it go. It costs very little to re-caulk around a bathtub, but if you ignore it, you could wind up replacing a wall. Put aside $500 to $1,000 a year to take care of minor repairs and maintenance.

6. Major improvements. If you have you heart set on updating a kitchen or bath, installing a deck, or even putting on a new addition, get a rough cost estimate and decide how many months from now you’d like to start. Divide the cost by the months and begin putting money away for it each month.

Your home is your biggest investment. But with a little effort you can make your home costs smaller.

What is happening with interest rates?

Mortgage rates are near historic lows, BUT the Federal Reserve Board’s mortgage backed securities purchase program is set to expire. The Fed has already scaled back its purchases over the last few months, allowing rates to rise on mortgages. Once the Fed stops the purchases entirely at the end of the first quarter, rates are expected to rise a half per cent or more.

The deadline for the Home Buyer Tax Credit is for contracts written on or before April 30th (and set to close no later than June 30th).
 

All of this adds up to a big “don’t wait!” If you or someone important to you is thinking about buying a home, please have them call or email me today.

“SHORT SALES”

The short sale of a home can be done faster under new Treasury Department rules.  People whose principal residence is worth less than the mortgage on it may be eligible if:
1.  they are delinquent on payments or default seems likely
2.  the loan was made before Janaury 1, 2009
3.  the loan is for less than $729,750
4.  their monthly mortgage payment is more than 31% of their gross income.

Caution:  Mortgage companies do not have to start using these criteria until April 5thWhat to do:  Talk to the bank holding your mortgage to find out whether you qualify under the new rules.