6 Tax Benefits of Owning a Home: A Complete Guide for Filing This Year

,

You may recall the Tax Cuts and Jobs Act—the most substantial overhaul to the U.S. tax code in more than 30 years—went into effect on Jan. 1, 2018. The result was likely a big change to your taxes, especially the tax perks of homeownership. This revised tax code is still in effect today.

You may remember that during the height of the COVID-19 pandemic, the Internal Revenue Service delayed filing season by about two weeks. But just like last year, there are no extensions and the date for filing is April 18, 2023. (According to the IRS, “The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia for everyone except taxpayers who live in Maine or Massachusetts. Taxpayers in Maine or Massachusetts have until April 19, 2023, to file their returns due to the Patriots’ Day holiday in those states.”)

You might be wondering what else you need to beware of before filing your 2022 taxes, like whether your work-from-home setup might qualify for a tax deduction.

Whatever questions you have, look no further than this complete guide to all the tax benefits of owning a home, where we run down all the tax breaks homeowners should be aware of when they file their 2022 taxes in 2023. Read on to ensure you aren’t missing anything that could save you money!

Homeowners, Here's How to Get More Money Back on Your Taxes - CNET

Tax break 1: Mortgage interest

Homeowners with a mortgage that went into effect before Dec. 15, 2017, can deduct interest on loans up to $1 million.

“However, for acquisition debt incurred after Dec. 15, 2017, homeowners can only deduct the interest on the first $750,000,” says Lee Reams Sr., chief content officer of TaxBuzz.

Why it’s important: The ability to deduct the interest on a mortgage continues to be a significant benefit of owning a home. And the more recent your mortgage, the greater your tax savings.

“The way mortgage payments are amortized, the first payments are almost all interest,” says Wendy Connick, owner of Connick Financial Solutions. (See how your loan amortizes and how much you’re paying in interest with this online mortgage calculator.)

Note that the mortgage interest deduction is an itemized deduction. This means that for it to work in your favor, all of your itemized deductions (there are more below) need to be greater than the new standard deduction, which the Tax Cuts and Jobs Act nearly doubled.

And note that those standard deduction amounts increased for the 2022 tax year. For individuals, the deduction is now $12,950, and it’s $25,900 for married couples filing jointly. The deduction also went up to $19,400 for the head of household. And if you’re 65 or older, you can add on an extra $1,400 per person if married and filing jointly or an extra $1,750 if you’re a head of household or a single filer.

As a result of these increased standard deductions, itemizing your deductions may simply not be worth it this filing season.

So when would itemizing work in your favor? As one example, if you’re a married couple under 65 who paid $20,000 in mortgage interest and $6,000 in state and local taxes, you would exceed the standard deduction and be able to reduce your taxable income by itemizing.

Tax break 2: Property taxes

This deduction is capped at $10,000 for those married filing jointly no matter how high the taxes are. (Here’s more info on how to calculate property taxes.)

Why it’s important: Taxpayers can take one $10,000 deduction, says Brian Ashcraft, director of compliance at Liberty Tax Service.

Just note that property taxes are on that itemized list of all of your deductions that must add up to more than your particular standard deduction to be worth your while.

And remember that if you have a mortgage, your property taxes are built into your monthly payment.

Tax break 3: Energy efficiency upgrades

According to Bishop L. Toups, a taxation attorney in Venice, FL, qualifying solar electric panels and solar water heaters are good for a credit of up to 30% of the cost of the equipment and installation.

And you can also nab an energy-efficient home improvement lifetime credit of a $500 for improvements made to your home through December 31, 2022. Energy-efficient upgrades include things like exterior windows, doors and skylights, insulation, and the cost of home energy audits.

Here’s some more good news, the IRA passed an extension and expansion of the credit, so starting January 1, 2023, the amended credit will be worth up to $1,200 per year for a qualifying property.

Tax break 4: A home office

Good news for all self-employed people whose home office is the principal place where they work: You can deduct $5 per square foot, up to 300 square feet, of office space, which amounts to a maximum deduction of $1,500.

For those who can take the deduction, understand that there are very strict rules on what constitutes a dedicated, fully deductible home office space. Here’s more on the much-misunderstood home office tax deduction.

The fine print: The bad news for everyone still working remotely? Unfortunately, if you are a W-2 employee, you’re not eligible for the home office deduction under the CARES Act, even if you spent most of 2022 in your home office.

Tax break 5: Home improvements to age in place

To get this break, these home improvements will need to exceed 7.5% of your adjusted gross income. So if you make $60,000, this deduction kicks in only on money spent over $4,500.

The cost of these improvements can result in a nice tax break for many older homeowners who plan to age in place and add renovations such as wheelchair ramps or grab bars in bathrooms. Deductible improvements might also include widening doorways, lowering cabinets or electrical fixtures, and adding stairlifts.

The fine print: You’ll need a letter from your doctor to prove these changes were medically necessary.

Tax break 6: Interest on a home equity line of credit

If you have a home equity line of credit, or HELOC, the interest you pay on that loan is deductible only if that loan is used specifically to “buy, build, or improve a property,” according to the IRS. So you’ll save cash if your home’s crying out for a kitchen overhaul or half-bath. But you can’t use your home as a piggy bank to pay for college or throw a wedding.

The fine print: You can deduct only up to the $750,000 cap, and this is for the amount you pay in interest on your HELOC and mortgage combined. (And if you took out a HELOC before the new 2018 tax plan for anything besides improvements to your home, you cannot legally deduct the interest.)

 

For this and related articles, please visit Realtor.com

/by

8 Surprising Signs a Bathroom Is Plagued by Bad Design

When touring a home you’re considering buying, the kitchen and living room might be the first places you size up. The bathroom might be a place you glance at, but beyond checking that it exists, few lavish much attention on the loo.

But we’re here to say you should give each and every bathroom a closer look.

Think about it: The bathroom is often where you begin and end your day. So if it’s a nicely designed space, this can really put a spring in your step as you set out to face the world, or pave a smooth path to a restful night.

But if your bathroom is cramped or poorly designed, it can throw a real wrench in your mornings and nights. Plus, fixing a bathroom via renovation can be expensive, since moving plumbing fixtures is rarely a walk in the park.

All of this is to say that, when you’re shopping for a home, it’s important to make sure the bathrooms are up to snuff. To help clue you in on what to look for in a bathroom, here are some red flags that spell trouble.

1. No shampoo niche

Look for a cutout or built-in shelf in the shower.

(Getty Images)

It’s a small thing to be sure, but details matter in the bathroom. A spot for shower products, a razor, and a bar of soap keeps clutter off the floor and removes potential tripping hazards.

“You could add a niche later or just hang up a wire basket to hold shampoos, but I always look for a cutout or built-in shelf in the shower,” says Elise Armitage, the design pro at What the Fab.

2. Too few towel bars

Many bathrooms don’t have a towel rack, or the rack is inconveniently placed.

(Getty Images)

Draping your wet towel over the door frame is unsightly, and no one wants to exit the shower and traverse the room while dripping water in order to grab a towel.

This is a huge pet peeve for Pamela O’Brien of Pamela Hope Designs.

“Many bathrooms either don’t have a towel rack or it’s inconveniently placed, so we like to install robe hooks near the shower or tub as they don’t take up much space and work for both wet and dry towels,” she says.

Towel bars are relatively easy to install, says Cristina Miguelez, a home improvement expert at Fixr, “but some people will want to purchase them from the same company that makes the faucet to get a matching finish and style.”

3. Few or poorly placed power outlets

Outlets are usually the last things buyers check when touring a home.

(Getty Images)

Not having enough outlets is a huge red flag, but spotting this flaw is tricky, notes Kara Harms, the design mind at Whimsy Soul.

“Outlets are usually the last things buyers clock when touring a home—but they end up being one of the most important elements to look for,” she shares.

In fact, Harms recently visited a home without a single outlet in the master bath.

“How are you supposed to use styling tools or charge your electric toothbrush?” she asks.

4. Paltry storage

Space for one tiny cabinet won’t hold more than a few rolls of toilet paper and maybe the plunger, which means you have no room for cleaning supplies, personal care items, and other bathroom necessities.

Good bathroom storage (even in small half-baths), on the other hand, has mounted shelving, a nook for extra rolled towels, and maybe a built-in hamper.

5. Exposed toilet

No one wants to see the toilet when they’re coming down the hallway. What’s worse, of course, is if the toilet lid and seat are up, allowing everyone who passes by to see deep inside the bowl. And yet, if the toilet is positioned right in front of the entrance, there’s just no hiding it.

A better look is a swap of the toilet and sink so that the sink is the fixture that’s on view when the door is open. An equally costly fix would involve installing the toilet in its own section, cordoned off by a pocket door.

6. Poor ventilation

No ventilation is a major red flag.

(Getty Images)

Many bathrooms don’t have a window, but proper ventilation must be present to pass code, says Miguelez.

“No ventilation is a major red flag, so look for a vent that at least carries humidity up and out of the house—not to the attic or space above—and this will fight mildew and odor,” adds Miguelez.

7. Cramped toilet

Pros suggest at least 15 inches between the toilet and any walls.

(Getty Images)

Enough space around the toilet to maneuver is critical. If the toilet is too close to the wall, sprays and splashes are inevitable. If the bowl abuts the sink in any way, standing over the sink is simply awkward. The pros suggest at least 15 inches between the toilet and any walls and at least 24 inches in front of the bowl (or the bidet, if that’s the type of fixture you have).

8. Loose shower door

A poorly mounted or loose shower door is a hazard, says Miguelez.

“It should close securely, without dragging in any way, and if it’s a sliding door, it shouldn’t rattle in its frame,” she says.

Your best bet? Test the doors in the showers you tour to see if they bump along or glide smoothly.

 

For this and similar articles, please visit Realtor.com

/by

The 2022 Mortgage Interest Deduction: Your Guide To Limits And Qualifications

,

There isn’t much about taxes that gets people excited, except when it comes to the topic of deductions. Tax deductions are certain expenses you incur throughout the tax year that you can subtract from your taxable income, thus lowering the amount of money you pay taxes on.

And for homeowners who have a mortgage, there are additional deductions they can include. The mortgage interest deduction is one of several homeowner tax deductions provided by the Internal Revenue Service (IRS). Read on to learn more about what it is and how to claim it on your taxes this year.

Man filling out tax papers.

What Is The Mortgage Interest Deduction?

The mortgage interest deduction is a tax incentive for homeowners. This itemized deduction allows homeowners to subtract mortgage interest from their taxable income, lowering the amount of taxes they owe. This deduction can also be taken on loans for second homes as long as it stays within IRS limits.

Mortgage Interest Tax Deduction Limit: How Much Can I Deduct?

Signed in 2017, the Tax Cuts and Jobs Act (TCJA) changed individual income tax by lowering the mortgage deduction limit and putting a limit on how much you can subtract from your taxable income.

 

Before the TCJA, the mortgage interest deduction limit was on loans up to $1 million. Now the loan limit is $750,000. That means for the 2022 tax year, married couples filing jointly, single filers and heads of households could deduct the interest on mortgages up to $750,000. Married taxpayers filing separately could deduct up to $375,000 each.

 

However, there were a few exceptions:

  • Any mortgage taken out before October 13, 1987, is considered grandfathered debt and is not limited. All of the interest you pay is fully deductible.
  • Any home purchased after October 13, 1987, and before December 16, 2017, is still eligible for the $1 million limit ($500,000 each, if married filing separately).
  • Any home that was sold before April 1, 2018, is eligible for the $1 million limit – only if there was a binding contract entered before December 15, 2017, to close before January 1, 2018, and the home was purchased before April 1, 2018.

 

What Loans Qualify For A Mortgage Interest Deduction?

There are a many types of home loans that qualify for the mortgage interest tax deduction. These include a home loan to buy, build or improve your home. Home equity loans, home equity lines of credit and second mortgage may also qualify.

 

You can also use the mortgage interest deduction after refinancing your home. Just make sure the loan meets the previously listed qualifications (buy, build or improve) and that the home in question is used to secure the loan.

How To Claim The Home Mortgage Interest Deduction On Your 2022 Tax Return

Tax forms can help walk you through your filing step by step. Knowing which forms to fill out can be confusing. To make sure you are getting and filing the right form, follow these steps for deducting your mortgage interest on your 2022 taxes.

1. Choose A Standard Deduction Or An Itemized Deduction

If you choose the standard deduction, you will not need to complete more forms and provide proof for all of your deductions. It’s more of the “no questions asked” deduction, with a flat dollar amount that’s the same for most people. For the 2022 tax year, which will be the relevant year for April 2023 tax payments, the standard deduction is:

  • $12,950 for single filing status
  • $25,900 for married, filing jointly
  • $12,950 for married, filing separately
  • $19,400 for heads of households

If you choose an itemized deduction, you can pick and choose from various deductions. These include mortgage interest, student loan interest, charitable contributions, medical expenses and more. To itemize your deductions, you’ll need to fill out additional forms to list each one and be prepared to provide records, receipts and other documents that validate them.

 

Both standard and itemized deductions reduce your taxable income.

 

Mortgage Interest Deduction Example

 

So how do you decide which one to do? It all comes down to which method saves you more money. If your standard deduction saves you more money than your itemized deduction, take the standard deduction. Or vice versa.

 

Here’s an example. You itemize the following deductions as a single individual: mortgage interest ($6,000), student loan interest ($1,000) and charitable donations ($1,200). These deductions add up to $8,200. In this case, you would want to take the standard deduction of $12,950 instead because an additional $4,750 would be deducted from your taxable income.

 

Now let’s say your mortgage interest is $11,000 and the other deductions remain the same. Your itemized deductions would total $13,200. In this case, you would want to take the itemized deduction because it reduces your taxable income by $250 more than the standard deduction would.

 

Don’t forget: If you’re paying someone to prepare your taxes for you, it may cost more to have them itemize your taxes since this requires more work. Make sure you factor in the extra cost when deciding which method saves you the most money.

 

One of the most important things to know about taking either the itemized or standard deduction is that you can’t take both. You must choose one or the other.

2. Get Your 1098 From Your Lender Or Mortgage Servicer

To fill out the information about the interest you paid for the tax year, you’ll need a Form 1098 from your mortgage lender or mortgage servicer (the company you make your payments to). This document details how much you paid in mortgage interest and points during the past year. It’s the proof you’ll need for your mortgage interest deduction.

 

Your lender or mortgage servicer will provide the form for you at the beginning of the year your taxes are due. If you don’t receive it by mid-February, or have questions not covered in our 1098 guide and need help reading your form, contact your lender.

 

Keep in mind, you will only get a 1098 Form if you paid more than $600 in mortgage interest. If you paid less than $600 in mortgage interest, you can still deduct it.

3. Choose The Correct Tax Forms

You’ll need to itemize your deductions to claim the mortgage interest deduction. Since mortgage interest is an itemized deduction, you’ll use Schedule A (Form 1040), which is an itemized tax form, in addition to the standard 1040 form.

 

This form also lists other deductions, including medical and dental expenses, taxes you paid and donations to charity. You can find the mortgage interest deduction part on line 8 of the form. You’ll put in the mortgage interest information found on your 1098 in that section. Pretty easy.

 

Now comes the tricky part. If you make money from the home – whether using it as a rental property or using it for your business – you’ll need to fill out a different form. That’s because the way interest is deducted from your taxes depends on how you used the loan money, not on the loan itself.

 

You may need to use the following forms depending on your situation:

  • If you are deducting the interest you pay on rental properties, you must use Schedule E (Form 1040) to report it. This form is used for supplemental income from rental real estate.
  • If you use part of your house as a home office or if you use money from your mortgage for business purposes, you may need to fill out a Schedule C (Form 1040 or 1040-SR) to report it. This form is used for profit or loss from a business you owned or operated yourself.

You’ll list mortgage interest as an expense on either of these forms. Whatever mortgage interest you’re deducting and whatever form you’re using, it’s important to know what qualifies as interest and what isn’t deductible. If you’re itemizing your deductions, read on.

What Qualifies As Deductible Mortgage Interest?

There are a few payments you make that may count as mortgage interest. Here are several you may consider deducting.

Interest On The Mortgage For Your Main Home

This property can be a house, co-op, apartment, condo, mobile home, houseboat or similar property. However, the property will not qualify if it doesn’t have basic living accommodations, including sleeping, cooking and bathroom facilities. The property must also be listed as collateral for the loan you’re deducting interest payments from. You can also use this deduction if you got a mortgage to buy out an ex’s half of the property in a divorce.

 

You can still deduct mortgage interest if you receive a non-taxable housing allowance from the military or through a ministry – or if you have received assistance under a State Housing Finance Agency Hardest Hit Fund, an Emergency Homeowners’ Loan Program or other assistance programs. However, you can only deduct the interest you pay. You can’t use any interest that another entity pays for you.

Interest On The Mortgage For A Second Home

You can use this tax deduction on a mortgage for a home that is not your primary residence as long as the second home is listed as collateral for that mortgage. If you rent out your second home, there is another caveat. You must live in the home for more than 14 days or more than 10% of the days you rent it out – whichever is longer. If you have more than one second home, you can only deduct the interest for one.

Mortgage Points You Have Paid

When you take out a mortgage, you may have the option to buy mortgage points, which is a form of prepaid interest. Each point, which costs 1% of your mortgage amount, can get you about 0.25% off your mortgage rate. Mortgage points are paid at closing and must be paid directly to the lender to qualify you for the deduction.

 

In certain instances, points can be deducted in the year they are paid. Otherwise, you have to deduct them ratably over the life of the loan. If you have questions, you should consult a tax professional.

Late Payment Charges On Your Mortgage

As long as the charge wasn’t for a specific service, you can deduct late payment charges as home mortgage interest. However, just because you can deduct this, you should still never make late payments on your mortgage; doing so can result in damage to your credit score, along with other penalties.

Prepayment Penalties

Some lenders will charge you if you pay off your mortgage early. If you have to pay a prepayment penalty, you can deduct that as mortgage interest. However, the penalty must be from paying the loan off early and can’t be from a service or additional cost incurred from the loan. Rocket Mortgage® doesn’t charge prepayment penalties.

Interest On A Home Equity Loan

A home equity loan is money borrowed from the equity you have in the home. You can receive it in a lump sum or as a line of credit. For the interest you pay on a home equity loan to qualify, the money from the loan has to be used to buy, build or “substantially improve” your home. If the money is used for other purposes, such as buying a car or paying down credit card debt, the interest isn’t deductible.

Interest Paid Before Selling Your Home

If you sell your home, you can still deduct any interest you paid before the home was sold. So, if you sold the home in June, you can deduct the interest you paid from January through May or June, depending on when you made your last mortgage payment on the home.

What’s Not Deductible?

Mortgage interest isn’t the only expense you’ll incur when you purchase and own a home. Many people believe these other expenses are tax-deductible, but they aren’t. Here’s a list of some of the most common expenses that are mistaken for being tax-deductible:

  • Homeowners insurance: Your homeowners insurance premiums won’t qualify.
  • Mortgage insurance premiums: Mortgage insurance premiums, VA funding fees and USDA guarantee fees are no longer considered deductible mortgage interest.
  • Other closing costs: Title fees, legal costs, recording fees, title insurance, agent commissions, home inspection expenses and credit check fees can’t be used.
  • Moving expenses: Unless you’re an active-duty service member, your moving expenses also can’t be deducted from your taxes.
  • Deposits, down payments or earnest money: If you forfeited any of these during the home buying process, you can’t claim them.
  • Interest accrued on a reverse mortgage: Since you don’t pay interest until the loan comes due, you can’t get a deduction on something you aren’t paying yet.
  • Rent: Any payments made while living in the home before the purchase was finalized can’t be used on your taxes since it’s considered rent.

Remember, the mortgage loan’s interest can only be deductible if the home you purchased with the loan is used as collateral. For example, if you own a rental property and borrow against it to purchase a home, the interest doesn’t qualify because the home isn’t being used as collateral (the rental property is instead).

Special Circumstances

No two situations are alike, so naturally, there’ll be odd circumstances regarding the mortgage interest deduction. Here are a few examples:

  • If you’re a co-op apartment owner, you can deduct your share of the interest you pay on the building’s total mortgage.
  • If you rented out part of your home, you could treat the rented portion as part of your living space. You can do this as long as the rented portion is used as living space, it doesn’t have separate sleeping, cooking and toilet facilities, and you don’t rent to more than two people who have separate sleeping spaces.
  • If the home was a timeshare, you can treat it as a home or second home and deduct mortgage interest as long as it meets the standard requirements.
  • If the house is under construction, it can still qualify for up to 24 months as long as it becomes your qualified home after construction is complete.
  • If you used part of mortgage proceeds to pay debt, invest in a business or for something else unrelated to buying a house.
  • If your house was destroyed, it might still qualify for the mortgage interest deduction, but you must rebuild the home and move back in or sell the land within a reasonable period of time.
  • If you were divorced or separated and you or your ex paid the mortgage on a home you both own, you or your ex can deduct half of the total payments you made. The other person must include the other half as alimony.

For even more special circumstances, check out Pub. 936 from the IRS.

Mortgage Interest Deduction FAQs

Is all mortgage interest deductible?

Not all mortgage interest can be subtracted from your taxable income. Only the interest you pay on your primary residence or second home can be deducted if the loans were used to purchase, build or improve your property, or used for a business-related investment. If the interest doesn’t meet those requirements, then it doesn’t qualify.

Why is some mortgage interest not tax deductible?

As mentioned above, the deductibility of mortgage interest is also dependent on whether your loan is secured by the value of the mortgaged property being used as collateral. If the loan is unsecured, like a personal loan, the interest typically cannot be deducted. What’s more, if you’re looking to have the interest on a home equity loan or HELOC deducted but have used it for purposes other than purchasing or improving your home, like paying off credit card debt, you will likely be unable to do so.

What other tax deductions are there for homeowners?

In addition to the mortgage interest deductions discussed above, some homeowners might be eligible for deductions on their property taxes, state income taxes or capital gains taxes.

 

If you aren’t able to qualify for any tax deductions, tax credits might be another avenue to look into. A mortgage interest credit, for example, allows qualified homeowners to claim a credit on their tax return that’s worth a percentage of the mortgage interest they paid over the course of a given tax year.

Can you deduct mortgage interest after refinancing your home?

If you refinanced your primary or secondary residence, you might still be able to use the mortgage interest deduction. Mortgage interest can be deducted as long as the money from the refinance was used to increase the value of the home.

The Bottom Line

Consult your financial advisor or tax professional to get more assistance with filing your 2022 tax return. They can provide even more information about your mortgage interest deduction and help you decide what to deduct based on the type of loan you have and your financial situation.

 

For this and related articles, please visit Rocket Mortgage

/by

How Soon Can You Refinance a Mortgage?

Refinancing a mortgage is a big financial decision, and it largely depends on the reason you are refinancing and the amount of time from purchasing the home or your last refinance. Some types of home loans will let you refinance almost immediately, while others may require a period of time to elapse before refinancing. However, others may require you to wait at least six months to refinance.

It is always best to talk to lenders to see your options, as there are multiple types of refinancing available that could work for you. If you are not sure how soon you can refinance a mortgage, this article will explore why you should refinance a loan and the different kinds of refinance options available.

Why should you refinance a loan?

There are many reasons to consider refinancing a home loan, and doing so can have long-term benefits. If you decide to refinance your loan, it can help you save money. Some of the reasons to refinance a loan might include the following:

Change interest rate & lower your monthly mortgage payments

One of the main reasons for refinancing is to get a better interest rate. You may not want to shorten the loan’s payment period, but switching to a lower interest rate is another way to save money per month. A lower interest rate means less money to interest every month which puts that excess cash in a borrower’s pocket.

Change loan term

Mortgage refinancing is also beneficial if you want to change your loan terms. It is primarily used to switch length of the loan. For example, you could go from your original mortgage, which had a 30-year repayment period, to a shorter, 15-year loan. As a result, you will save on interest payments in the long term while also being able to pay off your loan more quickly. By changing to a shorter loan term, your monthly payment will most likely increase but it will allow you to pay off your loan sooner.

Get cash-out of your home

Refinancing can also be a suitable option if you have recently purchased a property and would like to pull cash out of the property. If you want to convert home equity into cash, refinancing could be the right choice. However, getting cash out of your home through refinancing will vary based on the type of loan. Conventional loans require you to wait six months, but other programs may require you to stay 12 months from the purchase and demonstrate a pattern of on-time payment.

Credit score has improved

If your credit score was low at the time of getting the loan, you might have gotten terms that were not financially beneficial or higher interest rates. As circumstances change and credit scores improve, refinancing allows you to take advantage of competitive interest rates and mortgage terms rather than staying locked into your current options. If your credit score has improved since the original mortgage, it is definitely worth exploring refinancing to see what terms are available to you now versus before.

Eliminate private mortgage insurance (PMI)

Depending on the current value of your home, refinancing can be an option to eliminate PMI and save money. Eliminating PMI is possible if your home equity has increased by a minimum of 20% and you do not opt for a cash-out refinance. If your loan had a higher interest rate, you might also be able to benefit from refinancing to a mortgage option where PMI is not a requirement. There are a few different options available through refinancing when it comes to PMI, so it is worth seeing if refinancing could help you eliminate costs such as PMI.

Ways to refinance your mortgage

If you have decided that refinancing is the right option for you, several types of mortgage refinance options are available. How soon you are able to refinance your mortgage will, of course, depend on the type of loan and the terms of the loan. However, you can always see what lenders are willing to offer when it comes to refinancing and explore the various kinds of refinancing to see what would be most beneficial for you. Ways to refinance your mortgage can include:

Rate and term refinance

A rate and term refinance, or a regular refinance, refers to a type of refinance whereby you can change the terms of your current loan. With a rate and term refinance, you are in the driver’s seat and get to replace the terms with options that are more favorable to you. For example, refinance  to give yourself more or less time to pay off the loan, receive a lower interest rate or amend your monthly payment amount.

Cash-out refinance

A cash-out refinance enables you to take advantage of the increase in the value of your home and the payments you have made to the mortgage principal over time. With a cash-out refinance, you essentially take on a larger mortgage in exchange for cash. By borrowing more than you owe on the mortgage (since your home equity has increased and you have been paying towards the principal).

FHA 203(k) refinance

If you are planning remodels or renovations for your home and intend to stay in your home for an extended period of time (i.e., you are not planning on selling your home in the next few years), the FHA 203(k) refinance could prove to beneficial for you. An FHA 203k refinance allows you to pay for home improvements as part of your mortgage payment. FHA 203k refinances are not limited to FHA loans and can be used with any kind of mortgage. The benefit of using an federal housing administration 203k refinance is that it gives you a longer period for prepayment without the high-interest rates of a personal loan and could also lower your current rate depending on the mortgage type.

FHA Streamline Refinance

For those with an FHA loan and looking to reduce their monthly mortgage payments, the FHA Streamline Refinance could be the right choice. As the name might suggest, the FHA Streamline Refinance aims to have a simplified, easy process that can be used to get a lower interest rate and reduce monthly payments with an existing FHA loan.

CrossCountry Mortgage’s Refinance Options

CrossCountry Mortgage offers various refinance options based on your needs to make your mortgage work for you. CrossCountry Mortgage refinance options are available for conventional mortgage loans, VA interest rate reduction refinance loans, FHA 203(k), and FHA Streamline Refinance. Our team works with you to understand what you are looking for to provide tailored recommendations and advice for refinancing that will help you accomplish your financial goals.

 

Please visit CrossCountry Mortgage for more information

/by

The 7 Habits of Highly Effective Homebuyers Today

,

There was a point, not too long ago, when buying a house was fairly straightforward: You’d schedule some tours, make an offer, and boom, you’re in the house before you know it.

Today, though, the housing market is a very different animal—fast, ferocious, and ever-changing. In such an environment, it’s no longer a given that all homebuyers will easily find a house and seal the deal. And even more surprisingly, those lucky folks who do succeed aren’t just sitting on piles of cash. On the contrary, real estate agents and other experts we spoke to say that successful homebuyers today simply possess a particular mindset and behaviors that help them persevere in today’s market.

So what are these qualities, you might ask?

1. They’re persistent

If your first, second, or third offer doesn’t get accepted, don’t give up.

(Getty Images)

While the market might be slowing down in some places, in other areas buyers are still facing intense competition for available properties. This means you might have to make offers on a few homes before one is accepted. As a result, persistence pays off more than ever before.

“Persistent [homebuyers] may still continue to find success,” Danielle Hale, chief economist for Realtor.com®, noted recently.

Indeed, she adds, recent data “showed that homeownership rates increased from a year ago, both overall and for nearly every age and racial and ethnic group.”

The lesson here is if your first, second, or third offer doesn’t get accepted, don’t give up.

2. They keep their emotions in check

Successful buyers don’t take rejection personally.

(Getty Images)

Buying a home can be a highly emotional process, particularly if you’re in a hot market where you’re competing in a multiple-offer situation. And if you fall in love with a certain home, watch out! The heartbreak that ensues if your bid is rejected might bring you to tears and, worse, despair.

While it’s understandable that feelings can run amok, try to not let your mind wander toward the dark side where you start thinking “What’s wrong with me?”

Successful buyers “don’t take rejection personally,” says Ashley Chambers, a partner at ASAP Cash Offer in Miami. “If a house doesn’t work out, they know there will be others.”

Try as best you can to lean on logic during emotional moments—and do your best to never allow yourself to get too attached to a house before the deal is done.

3. They’re open-minded and willing to move

With flexible work arrangements still available, home shoppers are able to consider homes farther afield of the office.

(Getty Images)

Traditionally, if you were shopping for a home, you would look within a very small radius, particularly one that gave you a manageable commute to work. But now, with the rise of working from home, those rules have changed—and homebuyers’ standards should adjust along with it.

“One factor driving the success of home shoppers is an incredibly strong labor market that is giving workers the ability to negotiate remote or hybrid working arrangements, even as in-person work is growing more common,” explains Hale.

“With flexible work arrangements still available, home shoppers are able to consider homes farther afield of the office, in the more affordable suburbs or even in a new, less expensive state altogether, enacting their own personal plan to combat cost-of-living increases,” adds Hale.

If you have flexible work options available to you, consider expanding your home search beyond where you’d traditionally look. You might discover other options that will give you more value for your money.

4. They’re not afraid to ask questions

Bringing your questions to your real estate agent will ensure that you enter into your transaction with confidence.

(Getty Images)

Before making the biggest purchase of their life, smart shoppers would have questions—about the property they hope to buy, the homebuying process itself, all of it. Yet in a fast, competitive market, some might feel pressure to keep questions to a minimum just to keep the deal moving, as though you should feel lucky a home seller accepted your offer at all.

Despite any reservations you might have, Rinal Patel, co-founder of We Buy Philly Home in Philadelphia, suggests bringing your questions to your real estate agent so that you can enter into your transaction with confidence.

“When looking at homes with your agent, be sure to ask them plenty of questions. Not only will this help you get a better understanding of the home and the market, but it will also give your agent a good sense of what you’re looking for,” he advises. “The more you know, the better equipped you’ll be to make the right decision.”

5. They see beyond how a home looks

The most successful buyers today are able to look beyond cosmetic repairs.

(Getty Images)

Everyone wants the perfect home. However, in this market, it’s likely that you will have to make some compromises. Inventory is still low and multiple buyers are competing for the same few homes, all of which means that you’ll be more likely to find success if you’re willing to compromise.

“The most successful buyers today are able to look beyond cosmetic repairs,” says Ashley York, managing broker and owner of Realtopia Real Estate in Lockport, IL. “They can visualize the potential of a property that other homebuyers may overlook in trying to find that perfect home that everyone else also wants right now.”

6. They can draw a firm line between wants and needs

While needs can remain non-negotiable, be willing to be flexible when it comes to your wants.

(Getty Images)

While house hunters of the past might have been able to snag their dream home without too much struggle, today’s homebuyers must be realists. And one way they do this is by knowing the difference between what they want and what they need in a home.

“I encourage buyers to make a list of needs versus wants,” says Marie Bromberg, an agent with Compass in New York City. “If the list of needs outweighs the wants, then they might need to reevaluate their criteria.”

While needs can remain non-negotiable, be willing to be flexible when it comes to your wants, especially if they are things that you can add to the property later on. This is what it takes if you ever hope to buy a home today.

7. They’re flexible and available

If your real estate agent calls you at the last minute with a great new listing, you should go as soon as you can.

(Getty Images)

“Being flexible is another essential habit to adopt as a homebuyer,” says Kerry Sherin, a consumer advocate with Ownerly in Austin, TX. Since homes are selling at an extremely fast pace, waiting until the weekend to see it might be too late.

“If your real estate agent calls you at the last minute with a great new listing, you should go as soon as you can,” advises Sherin.

And if you do make an offer, Sherin adds that it also pays to be “flexible and accommodating when it comes to contract negotiations.”

If a home seller has multiple offers, the easygoing homebuyer is bound to stand out more than one who demands tons of repairs or other stipulations to close the deal.

 

For this and related articles, please visit Realtor.com

/by