Improved Mortgage Availability

In 2008, credit standards have been extraordinarily tight.  As years go by, the credit standards became stricter and stricter.  But according to the latest survey from Fannie Mae, loan availability is improving.  Majority of potential home owners believe that it is easier to get a mortgage as compared before.

Mike Fratoni, Chief Economist for MBA said, "The market continues to adapt to the new QM (Qualified Mortgage) regulation by eliminating products that do not fit inside of the QM box. This tightening is being offset, both in the market for higher balance loans, where lenders continue to loosen terms for jumbo loans, and in the refinance market, where more lenders are offering streamline refinance programs."

However, there could be other factors that make credit more available.  One factor is the mortgage delinquency rate.  According to Transunion, a credit reporting agency, the mortgage delinquency rate for Q4 2013 was 3.85%, down from 5.08%.

Another factor can be the home sales and rising prices.  Before the crisis, there was approximately five months of inventory available in the market.  During the crisis, the months of inventory doubled as the home sale price declined sharply.  Meaning, home sellers had to wait for a longer period and lower their selling price to sell their home because there was a shortage of buyers.   At present, the market is back to its pre-crisis levels.  According to Mortgage Bankers' Association (MBA), home prices grew by more than 10% in 2013.
 

Lenders are braver now when it comes to lending due to the government backing and settlements. 

With employment rate improving, mortgage delinquencies is expected to continue declining.  The latest January employment rate rose to 58.8%. 

As credit standards loosen up, lower interest rates and improved employment rate, buyers should feel more confident in purchasing home in 2014.

If you need help in obtaining a mortgage loan, I can refer you to mortgage professionals that will guide you through every step of the mortgage process.

Additional Tax Benefits for Anchorage and Mat-su Home Buyers

There are 2 kinds of kinds of property tax exemptions for Alaska homeowners.  1.)  Exemptions that are required by law; 2.) Optional exemptions granted by state law.  Exemptions may vary depending on each municipality. Each municipality must grant the tax exemptions that are mandated by state law. 

Anchorage Exemptions 

All applications for exemption must be filed by March 15th of the applicable year for the homeowner to be qualified for the exemptions.However, if the homeowner have applied for exemptions the previous year and there have been no changes then he/she is not required to resubmit an application for exemption. 

Several types of property exemptions are available for Anchorage homeowners and these are: (Source: www.muni.org)

1. Senior Citizen Exemption

a.) Up to $150,000 of the assessed value may be exempt for;

b.) Property owned and occupied as the primary residence and permanent place of abode by a (Senior) resident 65 years of age or older;

c.) A resident at least 60 years old who is the widow or widower of a person who qualified as a Senior.

2. Disabled Veteran Exemption

a.) Up to $150,000 of the assessed value may be exempt for;

b.) Property owned and occupied as the primary residence and permanent place of abode by a Disabled Veteran; 

c.) A resident at least 60 years old who is the widow or widower of a person who qualified as a Disabled Veteran.

3. Residential Exemption 

a.) 10% of the assessed value up to a maximum of $20,000 may be exempt for;

b.) Property must be occupied by the owner. 

4. Disaster Exemption 

Tax relief is available for owner occupied residential property at least 50% destroyed by fire.  Application must be submitted within 60 days of the fire.

5. Fire Protection Exemption 

Up to 2% of the assessed value may be exempted if the property contains an approved fire protection system.

6. Nonprofit Exemption 

Properties that are used for nonprofit religous, charitable, cemetery,hospital, educational or community purposed are exempted from taxes.

7. Business Property Exemption 

Provides a tax exemption of $20,000 of assessed value for business personal property. 

Mat-su Borough 

All applications for exemption must be filed on or before April 30 of the applicable tax year. 

Tax exemptions available for Mat-su homeowners are: (Source:www.matsugov.us)

1. Senior Citizen Exemption

a.) Property must be owned and occupied as the primary residence and permanent place of abode on January 1 of the exemption year;

b. Senior resident must be 65 years of age or older by January 1 of the exemption year;

2. Disabled Veteran Exemption

a.) Property must be owned and occupied as the primary residence and permanent place of abode on January 1 of the exemption year;

b.) Disabled Veterans must have a 50% or more service connected disability effective January 1 of the exemption year.

3. Fire Relief Exemption 

Homeowner can claim for reduction of assessment and abatement of taxes on property affected by fire.  Application must be submitted within 60 days of the fire.

There are several types of additional tax exemptions available to homeowners and it varies for each municipality.  This article can serve as a guide for filing your income taxes.  Make sure to contact the local assessor's office for an updated list of those exemptions in your area. If you have further questions, please contact our office and we can refer you to Tax Professionals to assist in your inquiries.

Additional Tax Benefit Information for Home Buyer

April 15 is a date dreaded by some. As what Anthony Hopkins said in the movie Meet Joe Black, the only things you can't avoid in life are "death and taxes". BUT, you can avoid paying for high income taxes.

Filing and paying for taxes should not be dreaded - especially for homeowners because they are entitled to many valuable tax deductions.  All the deductions in the world won't do you any good unless you know how to take advantage of them. You do not want to pay taxes you don't need to pay.  

Here are some information you need to know to maximize your deductions and avoid common tax deduction mistakes. You do not want to pay taxes you don't need to pay.

1. Mortgage Interest Deduction 

Mortgage interest are paid during the first few years of the mortgage term.  Through the home mortgage interest deduction, homeowners are allowed to reduce their taxable income by deducting the amount of interest paid on the loan which is secured by their principal residence.  On a mortgage of up to $1 million, they can deduct the interest they've paid at settlement if they itemize their deductions on Form 1040.  

2. Property Taxes 

Property tax paid to the local municipality are deductible. The new home owner do not need to pay income tax on money that was spent on property taxes.  However, money held in escrow for the purpose of paying property taxes are not deductible - until the money is actually taken out of escrow and paid the property tax.

3. Selling Costs

Selling costs on the sale of your home can be claimed as tax deductions.  Closing fees, repairs, capital improvements costs, broker's fees and advertising/marketing expenses required to sell their home will be deducted on the gain on sale of their home.  Provided that the repairs were made within 90 days of the sale.  Maintenance items such as painting the home and changing the carpet are usually not considered as capital improvement.

4. Mortgage Insurance Premiums Deduction

Homeowners that paid less than 20% down payment on their homes are required to pay Mortgage Insurance Premiums or MIP to protect the lender in case the borrowers default on the loan.  MIP payers can deduct those insurance payments as tax deduction when they file their returns. 

5. Energy Efficient Upgrade/Repair Deduction

The cost of the building materials used for energy efficient upgrades can be deducted on the total tax payable, not just a reduction in the taxable income.

6. Home Office Deduction 

Homeowners can deduct a percentage of their mortgage, utilities and repair bills dedicated their office space. However, the home office must be the primary office location of the business or it is used as storage area for your business (i.e. samples, inventory, etc)

7. Construction Loan Interest Deduction

If a home owner has borrowed money to build a home, he/she may qualify to deduct the interest.  The interest deduction will only be applicable for the first 24 months of the loan even if the actual construction takes longer.

8. Home Improvement Loan Interest Deduction

There's also tax deduction on the interest on the loans used for home improvements. Home improvements like adding square footage, upgrading or repairing damage from a natural disaster are tax deductible. Painting a home or changing the carpet are not included in the capital improvement projects. 

9. Profit on Sale of Real Estate Deduction 

A homeowner can claim up to $250,000 of profit (for single individual) and $500,000 (for married couples) from the sale of the real estate property. Provided that the it is the primary residence of the homeowner/s and they have lived in it for two of the past 5 years. 

This article can serve as a guide for filing your income taxes.  If you have further questions, please contact our office and we can refer you to Tax Professionals to assist in your inquiries. 

Why Mortgage Rates Are Not Increasing

Most experts predicted that mortgage rates will rise in 2014.  However for the past month, rates have not really moved.  If anything, they've moved slightly lower. What happened? Was the prediction inaccurate?  

Guy Cecala, Inside Mortgage Finance editor-in-chief said, "The simple answer is that the rate hike due to the Fed's tapering really took effect last May/June - despite the fact that the tapering didn't begin until December."  The mortgage rate jump up at the start of last summer. 

Based from Mortgage Bankers Association weekly report, total number of mortgage applications are down 52% from a year ago, while refinance applications and purchase applications are down nearly 63% and over 12% respectively. 

Federal Reserves has cut its mortgage-bond purchases by $5 billion in January but it has had no effect on rates for one simple reason - according to the publisher of TheMortgageReports.com, the reason why Fed's tapering had no effect on rates is because investors are filling the void. When stock market falls, investors put their money elsewhere such as bonds. When the Feds are cutting its purchase of bonds, other investors have stepped in to fill the void. 

So, is the prediction going to come true this 2014? Experts say, probably yes, but not because of Fed's moves or more mortgage regulation. As a general rule, mortgage rates tend to increase with an improving economy and a strong stock market - and that it is beginning to look like where we are headed!!  If you, or anyone you know, is interested in buying, selling, or learning more about real estate please contact us.  We specialize in Alaska Real Estate and also have amazing Realtors we refer in other housing markets Nationwide!! Call us today and we would happy to help!!