December 28, 2017

New Tax Law - What it Means to You

Ok, we are not CPAs but we thought it was important to pass on this important information as it relates to being a homeowner in Illinois. Last week President Trump signed into law the new tax bill. By all appearances the law will provide some sort of savings to all tax payers. The final details are not clear yet, but these bullet points are some of the issues worth mentioning.

1. The Capital Gains Exemption, as it relates to selling your primary residence, will remain as is. Both the House and Senate tax bills had originally proposed increasing the length of time a homeowner would need to live in primary residence (from five out of eight years versus the current requirement to live in a primary residence only two out of five years to qualify for the Section 121 tax exclusion.) Thankfully, this proposed change did not become a part of the 2018 tax law.

2. Any home mortgage interest debt incurred before December 15, 2017, will continue to be eligible for the home mortgage interest deduction up to $1,000,000. Any home mortgage interest debt incurred after Dec 15, 2017 will be limited to no more than $750,000 qualifying for the home mortgage interest deduction.

3. Beginning in 2018, the deduction for interest paid on a home equity line of credit (HELOC) will no longer be eligible for the home mortgage interest deduction unless you're using it to acquire a second home.

4. This one's not going to be popular with Illinois home owners: Beginning next year there will be a $10,000 deduction LIMIT on all of your state and local taxes. It may make sense for you to prepay the first installment of the 2017 property taxes. Having an escrow account for taxes and insurance with your lender may complicate this process, but having a conversation with them before you decide to pre-pay is advised.

5. Investment property owners will continue to be able to defer capital gain taxes using 1031 tax-deferred exchanges which have been in the tax code since 1921. We recommend discussing your particular situation with your tax preparer to see how the new law will affect you.

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October 21, 2015

Credit Scores could be affected by Social Site Behaviors

Fair Isaac Company says it is considering what you have on your personal social media sites when determining your credit worthiness. I had to check the calendar to make sure when I first read this. When I realized it wasn't April Fools day it got me thinking.

We have all heard or read the book by Stephen Covey called the 7 Habits of Highly Effective People. These "Effective People," it can fairly be assumed, would be a good credit risk. That means anything on your social media website that gives indication that you are (1) Proactive, (2) Have vision for the future, (3) are working to improve yourself, (4) have a "Win-Win" attitude, (5) a seeker of understanding before seeking to be understood, (6) a believer in positive teamwork and (7) well balanced with personal activities such as exercise, prayer, meditation and service to society would enhance your credit worthiness.

On the other hand, posting on your social media sites with hints that you (1) do the least possible, (2) "Shoot first, ask questions later," (3) point out everyone else's faults, (4) look for what's in it for me, (5) have a closed mind, unwilling to listen to others, (6) don't play well with others and (7) are one dimensional might not enhance your chances of being approved for a mortgage loan. Just one more thing to worry about regarding your social media exploits.

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August 25, 2015

Not all Jumbo loans require a 20% Down Payment

If you are buying an expensive home and your loan amount is higher than the FHFA set maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac at $417,000 for one-unit properties in most of the country for 2015 (and up to $625,500 in some areas), you may be frustrated by the fact that most lenders require a 20% down payment.

Many affluent buyers are finding that they would prefer to put a lower down payment in order to manage their money differently. Some would rather invest their money in the stock market or would rather buy a new home without the stress of selling their existing home as a condition of obtaining new loan financing.

A perfect example is a buyer who is looking to buy a property, has an existing home with equity and only has liquid finances that allow for a 10% down payment. They do not want the anxiety that goes with buying and selling a property on the same day and they do not want to borrow from their 401k or liquidate funds (that will result in capital gains) for a 20% down payment.

If you consult the right mortgage professional like those at Expert Mortgage Associates you will find that there are jumbo lenders that will allow you to finance 90% of the purchase price (or appraisal whichever is lower) and even allow you to make a lump sum payment after a trailing property is sold thereby lowering your monthly mortgage payment. This strategy saves a borrower/buyer the expense of having to refinance after their trailing property is sold.

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New Tax Law - What it Means to You

Credit Scores could be affected by Social Site Behaviors

Expert Mortgage Associates Better Business Bureau A+ Rating

Not all Jumbo loans require a 20% Down Payment