Mortgage Insurance Premium – Who Needs MIP in Bucks County?
First-time homebuyers in Yardley, Newtown and Bucks County can wonder why they may be required to pay an extra fee each month on top of their regular mortgage payment. Before you make a choice on a mortgage loan, make sure you understand the mortgage insurance premium, and how you can reduce it and put the money toward building up your equity.
Here’s a tip for potential FHA buyers of Bucks County real estate: Paying extra principal on your mortgage loan can help you remove the required monthly mortgage interest premium (MIP) faster, which will lower your monthly loan payment, reduce your overall interest, and build equity faster on your home.
FHA loans require mortgage insurance premium to cover a possible loss to the lender if the property has to be foreclosed and sold. The premium is sizeable and does nothing to help build equity in your home. Eliminating the MIP would reduce the payment considerably, and help you keep more cash in your pocket.
FHA loans require that MIP remain in effect for five years. But after that time, the MIP requirement will be released if you have paid down your loan to at least 78% of the original purchase price. With that extra payment removed, your monthly payment will go down. Since amortization is affected by interest rates, the normal time to reach this 78% point could be from 9 to 12 years at today’s interest rates.
Contact your mortgage professional for more information about your particular situation.
Continue Reading > Add a Comment |Paying Down Your Rate with Points – Tax Implications
If you are in process of procuring a mortgage to purchase a home in Yardley or Newtown, or any home for sale in Bucks County, it’s important to understand the tax implications of “buying down” your interest rate with pre-paid points.
Pre-paid interest, sometimes called “points”, can be tax deductible when a person pays them in connection with buying, building or improving their principal residence. Be aware however, that when you pay points on a refinance, they are not a current deduction, but have to be pro-rated over the life of the mortgage.
For example, if you pay $3,000 up front in points when refinancing a 30 year mortgage, you can deduct $100 per year. If you sell the home and pay off the mortgage, or you refinance again, the balance of any un-deducted points may be then deducted in that tax year.
You must inform your tax professional of any of these situations so that he can accurately reflect the deduction in your return. The most common situation today is where homeowners are refinancing their home for the second, third or even fourth time. If there are points that have not been completely deducted from these refinances, they need to be handled during the year of refinancing.
For more information, see the “points” topic in IRS Publication 936; there is a section on refinancing in this publication. Contact your tax professional for advice considering your specific mortgage situation.
If you already have yourself pre-approved for a mortgage and our looking to purchase a Bucks County home before the end of the year, then contact me to see some great homes!
Continue Reading > Add a Comment |Choose your Yardley, Newtown & Bucks County Mortgage Lender Wisely
This summer has brought out more real estate buyers in Yardley, Newtown and all of Bucks County. Here is a video that I posted a few years ago about choosing your mortgage lender, and I think it is still very applicable today, especially for first time home buyers.
In my many years of experience with Yardley Real Estate and Lower Makefield Township Home transactions, I have come to the conclusion that using a local mortgage lender has many benefits over going with a large, national mortgage company or bank. My video tells an actual experience I had with one of my buyer clients when they used a large company based out of state.
I feel that you can receive better service and better communication if you choose a lender based right here in Bucks County. Local mortgage brokers have daily experience with local and state guidelines, a relationship with our local title companies, and can produce a quicker turnaround for you. This is so very important in the case of clients who are selling one home and buying another in a matter of days, or sometimes hours.
Watch the video for the story. I would not like to see this stressful situation happen to any of my other clients.
If you are interested in more about Bucks County homes, feel free to contact me. I’ll be glad to work with you.
Continue Reading > Add a Comment |Upsizing Your Bucks County Home in the Current Market – Can it be done?
There are many Bucks County residents who want to sell their homes and buy bigger ones, but are waiting for the market to improve. It is understandable that home owners want to get the most equity out of their property sale so that there is a good chunk for the down payment on a larger home.
However, the benefits to upsizing in a down or recovering market may outweigh the drawbacks of having less profit from the sale of your current home. Now may be the perfect time to purchase that home of your dreams.
Upsizing in a recovering real estate market like we have now can be an advantage for you. Although you might get less for the home you sell, you can also purchase a larger home for less. For example, a Bucks County home owner could sell a $200,000 home for 10% less (or $20,000) than desired, but immediately purchase a $300,000 home for 10% less (or $30,000), putting the owner $10,000 ahead.
Additionally, the benefit of locking in a loan at the current low rates can save hundreds per month in payments, and thousands of dollars in savings over the course of the loan. Depending on your current loan’s interest rate, your new payment on a bigger house could even be the same or less! Check with a financial consultant or mortgage specialist to determine if upsizing now could be beneficial to you.
Contact me when you are ready to take the plunge and purchase that home you’ve been patiently waiting for.
Continue Reading > Add a Comment |Perfect Time to Invest in Rental Properties – Yardley, Newtown, Bucks County, PA
Whether you are a regular real estate investor, or you just want to take advantage of all of the current market opportunities, purchasing rental real estate is a great decision right now.
Rock bottom mortgage interest rates allow for less expensive entry into rental investment, and strong rental demand allows for steady and strong income. And with home prices still recovering, it is the perfect time to invest in rentals.
A quote from an article on the MSN real estate website states that, “When the money is cheap to borrow and the houses are cheap to buy, it’s absolutely the best time to invest.” That is the current market we have right now.
Please contact me if you are interested in finding some investment properties in Yardley, Newtown or anywhere in Bucks County.
Continue Reading > Add a Comment |More Record Mortgage Rates Add to Housing Recovery – Yardley, Newtown, Bucks County
Residents of Yardley, Newtown and Bucks County, the news keeps getting better! Once again mortgage rates have dropped to an all-time low. The average 30-year fixed rate mortgage dropped last week from 3.62% from 3.66%. This has followed a downward trend for the last eleven weeks! The 15-year fixed rate fell as well to 2.89%, down from 2.94%.
These falling mortgage rates provide another boost to housing markets across the nation, which a recent Inman News article states is finally on the rise. The article states that the housing slump has definitely bottomed out and is on the upturn, bringing increased demand for new construction, loosening of restrictions by lending institutions, and rising home prices. It seems that the strong economic indicators of 2012 should continue.
Contact me if you are interested in learning how the changing housing market in Bucks County will affect you as a buyer or seller of real estate. I’m always glad to assist you.
Continue Reading > Add a Comment |Bucks County Buyers: Make an Offer They Can’t Refuse
The real estate market has heated up in Yardley, Newtown and all of Bucks County, PA. I was making appointments to show a buyer client of mine 6 houses tomorrow, and 5 of the 6 are under contract and no longer available. Several of my own listings have been on the market for several weeks, and have recently gone under agreement. For buyers, it is important to present the most attractive offer possible, given your particular circumstances. Here are a few tips to put your best foot forward to a seller and still give yourself a great home buying deal.
First Things First – The Offer Price
The first thing sellers will observe on an offer is the proposed sales price. Be realistic with your offer price Try and base your offer on the last six month sale prices in the neighborhood. Make sure your offer per square foot is in the ballpark. Homes do not necessarily sell based upon a common price per square foot, but it is a good idea to check and see if your offer generally matches the average selling price for the area.
Don’t forget to take into consideration the current market climate. Here in the Yardley, Newtown area, and in most of Bucks County, the spring market has been stronger this year than it has been in a number of years. You should keep this in mind, when making offers.
Try to Determine Seller Motivation
You may not always be able to find out why the seller is selling, but there are other ways to interpolate his motivation. Public records can provide information on the home’s last sales price and the seller’s current mortgage amount. These bits of information can help you determine a seller’s mindset as to what price they want or need, and how much of a hurry they are to sell. Often, an unoccupied house with a high mortgage amount may signify a seller who is paying on two houses, and may be more motivated to sell.
Also discover the home’s market history. A home that’s been listed more than once or has spent many days on the market might suggest a seller who is more motivated to get their home sold, and more willing to negotiate.
Don’t Forget the Other Important Elements
Be sure to make the other negotiable items in your offer attractive to the seller. Make realistic financing terms, and be sure to note if you are already pre-approved for a loan. It is more eye-catching to a seller to see that a buyer has done his financing homework.
Also consider the seller’s reaction to other elements of the offer:
Other Contingencies – such as inspection repair terms
Concessions – such as seller-paid closing costs
Conveyances – what extra items are to be included in the sale
Earnest Money – the typical amount common for your area to show the seller good faith that you are a serious buyer
An offer with all of these elements considered can provide the most enticing deal to your sellers. If you are looking to purchase a home in the Bucks County, PA area, I would be happy to work with you. Please contact me for more information on making the best offer in the current real estate market.
Continue Reading > Add a Comment |Mortgage Interest Deduction – Will Homeowners Still Benefit?
Homeownership is supposed to be the American Dream, and the government has long supported offering tax advantages to homeowners. The question is: Will this tax benefit continue? With the government looking for more revenue, and mortgage interest being one of the highest dollar tax deductions, a change to the laws may be in our future.
As it Stands
Currently, homeowners are able to deduct interest on loans up to $1.1 million for first and second homes. The opinion is that this deduction is no longer necessary, and benefits mostly the wealthy, who are more likely to have multiple homes and large dollar mortgage loans.
Recent Proposals
In 2009, there were talks about allowing deductions for first homes only, and only for loans up to $500,000. In 2011, other ideas included eliminating the deduction all together and replacing it with a straight tax credit. Still more talks revolved around a mortgage interest deduction based as a percentage of adjusted gross income. President Obama’s 2013 federal budget proposes limiting the tax deduction for families with incomes over $250,000.
What it Means to You as a Bucks County Homeowner
During this election year, we can probably not expect to see too many strong opinions about changing or limiting the mortgage interest deduction. Most voters are homeowners, and politicians don’t want to ruffle feathers at this time. However, this issue will certainly be revisited as long as there is a continuing need for increased federal revenue. The effect on home values is yet to be determined.
I’ll continue to keep you updated on issues that affect you as a home buyer or home seller in Yardley, Newtown or anywhere in Bucks County, PA. Please contact me for more information about Bucks County real estate.
Continue Reading > Add a Comment |
Lowest Interest Rates in History – What it Means to Bucks County, PA
Interest Rate News
Freddie Mac announced on May 3, 2012 that the 30-year fixed-rate mortgage interest rate is at an all time record low. Lowest-ever rates and still-recovering property values are creating an interesting real estate market for both buyers and sellers.
According to Frank Nothaft, vice president and chief economist at Freddie Mac, “Signs of slowing economic growth and inflation remaining subdued allowed yields on Treasury bonds to ease somewhat and brought most mortgage rates to new all-time record lows this week.”
The national 30-year fixed rate averaged 3.84%, down from 3.88% last week. 15-year rates averaged 3.07%, down from 3.12% last week. Freddie Mac has been keeping records of interest rates since its inception in 1970. See Freddie Mac’s site for more interest rate history.
What it Means to Bucks County
As I have been observing for the past few months, the real estate market in Yardley & Newtown and all over Bucks County has experienced the most active spring market, especially for sellers, in years.
Correctly priced houses are selling much quicker than they have in the past few years, and we have even seen a few multiple offer situations.
Everyone knows that interest rates have been incredibly low, for some time. The recent announcement by Freddie Mac, confirms exactly how low, historically, interest rates are.
I believe that one of the factors that may be helping the increase in activity this spring, is that buyers are slowing coming to the realization that interest rates will not stay at this level forever. I think that we are seeing a bit of an increase in buyer motivation, because many buyers do not want to miss this incredibly opportunity to take advantage of lower home values, along with incredibly low interest rates.
I also believe that many sellers are afraid of the market, because of all of the negative publicity, so sellers who can avoid selling in the current market environment are not putting their houses on the market. So in many cases we see lower inventory, along with increased demand.
This is not to suggest that we are back to the double digit, crazy days of real estate. I am suggesting that the dynamics in the Yardley, Newtown and Bucks County real estate market are much more balanced today than they have been in years.
Continue Reading > Add a Comment |Considering refinancing in Bucks County, rates are down by a point, since April.
30-year fixed mortgage rates rose last week, marking the first time in a month that rates failed to fall week-to-week.
The data sources from Freddie Mac, one of the government’s major mortgage securitizers and a sister entity to Fannie Mae. Each week, Freddie Mac collects mortgage rate data from more than 120 lenders nationwide and publishes the results in a report called the Primary Mortgage Market Survey.
According to this week’s PMMS, the 30-year fixed rate rose 0.02% and now averages 4.21% nationally. The average accompanying cost is 0.8 points.
1 point is equal to 1 percent of the loan size.
Note, though, that these are just averages. Just as real estate markets are local, mortgage rates can be, too. As an illustration, look how this week’s rates break down by region:
- Northeast : 4.22 with 0.8 points
- Southeast : 4.30 with 0.8 points
- N. Central : 4.19 with 0.8 points
- Southeast : 4.23 with 0.7 points
- West : 4.17 with 1.0 points
The rate-and-fee combination you’d get in your home state of Pennsylvania , in other words, is different from the rate-and-fee combination you’d get if you lived somewhere else. In the West, rates are low and fees are high; in the Southeast, it’s the opposite.
The good news is that, as a rate shopper, you can have it whichever way you prefer. If getting the absolute lowest mortgage rate is worth the extra cost to you, have your loan officer structure to structure your loan as such. Or, if you prefer higher rates and lower costs, you can go that route, too.
Banks offer multiple mortgage set-ups to meet every type of budget and, with rates down 1.00% since April 8, there’s good cause to call your loan officer about a mortgage refinance. See what set-up will work best for you.
Continue Reading > Add a Comment |Chat With Marty