Refinancing in the Current Marketplace: Reasons It Makes Sense
When it comes to refinancing a mortgage there are multiple factors that can make it beneficial to do so. Of course, in the current marketplace with interest rates at record lows, the first reason to refinance is most always a lower interest rate. However, there are other reasons as well that make sense to refinance and today we will discuss some of these reasons.
The first reason to refinance is to get a lower interest rate on your mortgage. Even with the downturn in interest rates, there are still many homeowners who have not refinanced.
Of course, many borrowers would like to refinance, but can't because they have little or no equity due to falling home values.
However, for those with some equity, that have not taken advantage of or are unaware of how low current interest rates are then this is the first reason to look into a refinance in the current marketplace.
The second reason to refinance is to move to a more stable fixed rate loan from an adjustable rate loan. In this regard, many borrowers do have low interest rate loans, but those rates are not long term fixed rates, but rather adjustable rate mortgage rates that will sooner or later adjust and will do so upward when rates inevitably rise again. For these borrowers a fixed rate, even if it is not tremendously lower makes sense over the long term.
Even more so, there are borrowers who do not plan on staying in a home long term, but with adjustable rate mortgages in the current market also being extremely low it even makes sense for the borrower who is only going to spend five more years in a home to refinance into for instance a new five year fixed rate mortgage. Over those five years the savings can still be enough to justify the process of a refinance.
On the other hand for even those that do not necessarily have a home completely paid off, but still do have equity in their homes, a cash out refinance can also make sense when it is used to pay off debt or for certain investments as well.
Cash out refinances were in vogue as property values rose during the real estate boom of the early 2000's, but for certain borrowers who still have equity in their homes, cash out refinances with rates at record lows, still make sense.
Finally, yet another reason to refinance would be to combine two existing loans into a single home loan on the property. Many homeowners who have second mortgages have either non-fixed rate home equity loans or higher interest rate fixed loans and thus it makes sense to combine both loans into one lower fixed rate loan.
Of course, this will require that a borrower not be upside in their home, as is the case with many homeowners, but combining two loans into one makes a lot of sense in the current marketplace as well.
These are just some of many reasons to refinance in the current marketplace and if you fall into any of the above scenarios it may be time to look at refinancing your current home loan.
Bill Kamboukos of Strategic Mortgage
August 16, 2010
Good News when Selling Your Home
Home Capital Gains Tax Exclusion $250,000/$500,000
One homeowner can avoid capital gain taxes up to $250,000. The exclusion increases to $500,000 of capital gains if married and filing jointly. The homeowner is not required to buy a replacement home in order to be eligible for this exclusion. Homeowners can use the exclusions as often as every two years.
The old tax law allowed one-time $125,000 tax exclusion on capital gains for home owners that were 55 years of age or older. This exclusion only allowed these capital gains to be deferred. The home owners were required to purchase another property that was of greater value.
With this newer tax law from 1997, homeowners are never required to pay capital gains for their primary residence, as long as they meet all of the IRS’s guidelines. The requirements to qualify for this exclusion are as follows:
1. The home must serve as the taxpayers principal residence for a total of 2 years during the 5-year period ending on the date of the sale. The two years of residency do not have to be continuous. The IRS provides some exceptions for military service, disability, partial residence and other reasons.
2. The taxpayer cannot use this exclusion more than once in a two year time period. There are exceptions due to change in employment, illness, or other unforeseen circumstances. Some examples of unforeseen circumstances as given by the IRS are as follows: natural disasters, acts of war, acts of terrorism, change in employment or unemployment that left you unable to meet basic living expenses, death, divorce, separation, or multiple births from the same pregnancy.
3. If a married couple is filing jointly, only one of the spouses needs to meet the 2-year ownership requirement.
Written by Pat Egan
August 6, 2010
Market Statistics for July 09 through July 10 by City
We know foreclosures and short sales are selling, but can a "standard" home sell (one that is not a foreclosure or short sale)? Yes, it can! Check out this webpage.
http://www.statsforagents.com/docs/744/MCR%20August%202010%20Maricopa.pdf
August 5, 2010
Some Common Mistakes Made by First Time Home Buyers!!
1. They don’t ask enough questions of their lender and end up missing out on the best deal.Let me help you through that first home buying experience!
2. They don’t act quickly enough to make a decision and someone else buys the house.
3. They don’t find the right agent who’s willing to help them through the homebuying process.
4. They don’t do enough to make their offer look appealing to a seller.
5. They don’t think about resale before they buy. The average first-time buyer only stays in a home for four years.
Source: Real Estate Checklists and Systems, http://www.realestatechecklists.com/.
WASHINGTON (July 1, 2010) – Following a surge driven by the home buyer tax credit, pending home sales fell with the expiration of the deadline for qualified buyers to sign a purchase contract, according to the National Association of Realtors®. I thihk this is important because it shows that our market is STILL very much a buyers market and will remain so for some time to come.
The Pending Home Sales Index,* a forward-looking indicator, dropped 30.0 percent to 77.6 based on contracts signed in May from a reading of 110.9 in April, and is 15.9 percent below May 2009 when it was 92.3. The falloff comes on the heels of three strong monthly gains as home buyers rushed to take advantage of the tax credit.
The data reflects contracts and not closings, which normally occur with a lag time of one or two months. However, many closings have been delayed recently from a rush of buyers into the system and slow processing of short sales, in addition to the heavy volume and a more thorough loan underwriting process. As many as 180,000 buyers who signed contracts by April 30 may have missed the June 30 closing deadline for the tax credit. However, Congress passed legislation yesterday to extend the deadline for delayed contracts and President Obama is expected to sign.
NAR chief economist Lawrence Yun said, “Consumers are rational and they rushed to meet the tax credit eligibility deadline in April. The sharp decline in contract signings in May is a natural result with similar low levels of sales activity anticipated in June,” he said. “Surprisingly, though, some local markets such as Portland, Maine, and Jacksonville, Fla., actually experienced an increase in contract signings from a year ago without the tax credit.
