Atlanta Mortgage News

        

Weighing the Options: Mortgage Refinance

Want to know more about refinancing? Call 678-467-2330

Ever heard the old rule of thumb that says you should only consider refinancing if the new interest rate will be at least one point below your present one? That may have been valid years ago, but with refinancing dropping in cost over the last few years, it's a good time to think about a new mortgage loan! A refinance can be worth its cost many times over, factoring in the advantages that may come, as well as a reduced interest rate.

Advantages

You may be able to bring down your interest rate (sometimes substantially) and reduce your mortgage payment amount with a new mortgage. You may also have the option to "cash out" some of your equity, which you can use to take care of higher interest debts, make home improvements, or take a vacation. You might be able to refinance to a shorter-term mortgage, giving you the ability to build up your equity faster.

Expenses and Fees

All these benefits do cost something, though. When you refinance, you are paying for many of the same things you paid for during your current mortgage loan. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math - or call and have me do it.

You might look into paying discount points to receive a lower interest rate. The money you'll save over the life of the mortgage might be substantial  and any paid points can be deducted on your taxes.  Please talk to a tax professional before acting.

Speaking of taxes, if your interest rate is reduced you will also be lowering the paid interest amount that you can deduct from your federal income taxes.. Call us at 678-467-2330 to help you do the math.

In the end, for most borrowers the total of up-front costs to refinance are quickly recouped in monthly savings. ll work with you to find out which mortgage program is perfect for you, looking at your cash on hand, the likelihood of selling your home in the next few years, and how refinancing will impact your taxes.

Posted by Elizabeth Washburn on August 11th, 2020 5:49 PM

SKIPPING THE MORTGAGE PAYMENT  March 28, 2020

Have you heard the news talk about skipping a mortgage payment? Or perhaps the news discussed forbearance options and delayed foreclosure or evictions? This is always the last resort because you signed a legal agreement to pay the mortgage payment if you want to keep the house. A home is not a right in this country.

    Some borrowers will be tempted to skip payments whether they need to or not. Before you cancel that auto-draft, go to your lender‘s website which it has lots of options, mights and maybe’s. The note you signed with the attorney at the closing table has NO mights or maybes. Don’t be deceived. Those skipped payments are NOT forgiven but mIght or maybe delayed or restructured, resulting in a large lump sum or higher interest rate with a restructured mortgage payment months later. 

    If you have the financial resources, you should continue to make payments, as skipping payments will likely cause significantly more financial strain at a later date. If you really have no money and absolutely can not make your payment, don't just stop paying. Call your lender and discuss the options thoroughly so you understand the full consequences of your next step. The hold times and recordings may be long, but knowing their next step will be worth the wait.

UPDATE 4/30/2020-   It seems the lenders and the government are working together to make reasonable adjustments to mortgage payment plans and provide solid information for those in need.  The particulars are going to be unique with each lender and borrower, so please get the mortgage adjustments they offer in writing including whether they will be reporting these delayed payments to the credit bureau.  If you have any problems where a lump sum payment  for all the skipped payments is immediately requested after the relief, reach out to the CFPB for further assistance.  The maximum relief  which I have heard is 12 months of deferred payments, but your negotiations and personal circumstances will determine what is available to you.  Be safe my friends!

Posted by Elizabeth Washburn on March 28th, 2020 10:22 AM

Did You Know? 

Making one extra principle and interest payment a year will knock about 7 years off your mortgage and save you thousands of dollars.

Beware of Mortgage Reduction Services/ Savings Program Scams

"Bi-Weekly" mortgage payment programs  charge fees and do for you what you can easily manage. They say they save you an impressive amount of money on your mortgage and reduce the number of years you pay on your mortgage. 

This is true, but you  don't NEED them to get those savings, and by doing it yourself, you save even more money!

This is how they typically work: The company places your 1/2 mortgage payment in their account every two weeks, then they hold the payment until all of the mortgage payment is collected.  During the course of a year 26 deductions will be made from your account. With the extra 2 deductions, the "Service" makes one additional mortgage payment every year. In other words rather than making 12 mortgage payments, 13 payments are made.

The enticement is that they are providing a special service when you don't have the time or discipline to make it happen.

The real story is that there is an easier way to do this - with no payment shock- and your mortgage company will immediately credit the payment to your account. Just deduct your mortgage payment automatically from your account each month with an additional 1/12 of your principle and interest payment applied to the principal balance each month. (Extra money is automatically applied to principle unless you tell your mortgage company to do something else with it.)

          New Monthly Payment = Monthly Payment  + (Principle & Interest /12) . 

At the end of 12 months, you will have made an additional mortgage payment and you won't pay any fees to a servicer nor will you have had your money held in limbo. Now that just makes cents!

Remember me when you are talking homes!

I'm passionate about helping people achieve their home dreams

with the best possible financial options. 

Posted by Elizabeth Washburn on April 24th, 2018 8:05 AM

   

The Changes for 2018 Taxes

Two lost housing deductions pop off the new tax bill which you should know about, and I've also included one reminder of an unchanged deduction.

MOVING EXPENSES 

They are no longer deductible if you are not active military. Before they were deductible if you moved over 50 miles for a job.  There were more specific terms, however, now it is simple.  You can't deduct the expense.

HOME EQUITY LINE

This product's interest has been deductible forever, but no more. This essentially kills the benefits of the piggy back loans (getting a first and second mortgage combination product), though they have decrease in popularity over the last five years. 

Having that handy equity line available is still nice due to its low interest rate, but it is no better than a low interest credit card and potentially worse for you, since it is tied to real property. This makes it a much more secure bet for the lender and gives you no added benefit for allowing the lender to hold a piece of your property’s equity. You can't deduct the expense.

Here's more information: https://www.marketwatch.com/story/most-home-equity-loan-borrowers-dont-understand-how-trumps-tax-code-affects-them-2018-02-02

 

MORTGAGE INSURANCE

Having no deduction on the equity line make mortgage insurance more appetizing.  Yes, I never thought I was say that either, but the legislature did not touch the mortgage insurance deduction. 

So, you could go get a fixed rate second mortgage at 9% or so, or you could have the dream that the mortgage insurance is going to go away in a few years, and during the life of the mortgage insurance, it could be entirely tax deductible. Not a bad dream, sort of, until you get to the “however”. And here it is. However, it’s only tax deductible up to a point.  If your adjusted gross income exceeds $109,000 or $54,500 if married and filing separately, the IRS prohibits you from deducting mortgage interest premiums.

Here is more information:  https://investormint.com/tax/property-tax-deduction

WHAT ARE MY CHOICES IF I HAVE AN EQUITY LINE!?!?!?

1 -Bite the Bullet and Endure

Honestly, it might not matter. The “might” is the problem, so take the second choice.

2 - Review your debt allocation and consider whether a refinance will benefit you.

If you want to look into rolling the first and equity mortgage together, let’s take a look.  Even if you need a bit of mortgage insurance for a time, it may still be beneficial due to the tax deduction. We can look at your gross adjusted income, how much you pay in interest with your current mortgage profile, and what is deductible currently vs. the future, then you can consult your tax advisor too.*  Shoot me an email or text for a review.

*As you know, I am a mortgage broker, not a tax advisor.

 

 

 

Posted by Elizabeth Washburn on February 3rd, 2018 10:08 AM

Georgia Homestead Exemption Links

Put a quick reminder on your to-do list.  If you moved your residence in 2016, you need to file for property tax homestead exemption.  This will reduce your property tax burden between 30-40%.  Usually the county requires the filing be postmarked by April Fool’s Day; however, technology makes it so you may not need a stamp.  Below are the links for some metro counties to make your life a little bit easier. 

 

FULTON

http://www.qpublic.net/ga/fulton/homestead_inst.html

 

GWINNETT

http://gwinnetttaxcommissioner.publicaccessnow.com/PropertyTax/HomesteadExemption/AboutHomesteadExemptions.aspx

 

DEKALB

https://taxcommissioner.dekalbcountyga.gov/TaxCommissioner/homesteadOnlineApp/TChomesteadOnline.asp

 

COBB (By Mail or In Person Only!)

https://www.cobbtax.org/_fileUploads/files/2017%20In%20House%20Exemption%20Application%20(Barcode%20Friendly)%20(3)(1).pdf

Be a friend to your friends.  Share this blog as a reminder

Posted by Elizabeth Washburn on January 19th, 2017 2:18 PM

About this time every year, your lender is obligated to review your escrow account to keep their monthly bill in line with the actual insurance and tax costs. When they do this evaluation, they send you a summary of their review and either a check, or an opportunity to send them more money. If there is a deficit, they are usually willing to either increase your monthly payment or allow you to send them a lump sum. We are either gleeful for a check for the post-holidays, or grimacing with the new larger house payment.  Most of us stop our evaluation here, however, I encourage you to read further.

What is the Mortgage Escrow Account?

Your Mortgage Escrow Account is established by the lender to pay on-going expenses while their loan is on your home. These expenses generally include property taxes, home insurance, and mortgage insurance. When you first established your loan with the lender, most likely at closing, the lender set up a separate account consisting of several months of your estimated taxes, a year’s worth of home insurance, and maybe a month or two of mortgage insurance. Every month after that, you’ve made on-going contributions with your monthly mortgage payment.

Evaluating your property tax bill

If you’re not already disputing your tax bill, the next thing you want to check on your county’s website is your homestead exemption, especially if there was a huge tax jump. Make sure it is in place, and it is indicated on most tax bills as a percentage reduction in the home’s taxable value.  Is the air conditioned square footage correct and correlating with your appraisal?  If not, you may be overtaxed.

If you are also eligible for the elderly exemption, take the time to do it!   You might have to head to the local court house to present your tax returns, but I have seen thousands of dollars unnecessarily spent because it was “too much of a hassle.”  My belief it that earning those thousands might be more work than a trip to the local government office!

Evaluating your home insurance

Take the opportunity to crosscheck what your home insurance bill is and what the lender says it is.  Get aware of any increase, or change in deductible, and shop it out again if needed. I personally have had significant jumps over time and saved bundles by taking the time to review annually, but it does take time.  Something that can’t be earned back easily.

Evaluating Mortgage Insurance

How is the equity on your home?  Is it time to call your favorite Real Estate Agent for their realistic value of your home?  If you are encouraged, take the next step and call the lender to see what items they need for verifying your value and ridding yourself of that old mortgage insurance payment.  Conventional loans only need 20% equity.  Old FHA loans can get rid of the insurance as well, though you do need more than 20% equity. Call to find out how much.  The changes in the FHA laws over time make it impossible to determine without evaluating your exact loan.  New FHA loans have mortgage insurance for the life of the loan.  A few phone calls and you will know what the possibilities are!

Examine your Interest Rate

Is your rate competitive with the current interest rates?  If not, give me a call.  We can fix that!

Proactive Consumers

In summary, be proactive with your bills like you are with your assets.  I had one friend who confessed he had been paying for a boat’s radio for 10 years after he sold the boat because the bill was grouped in with other vehicles. Being proactive with debt allows you to not only be aware of where your money goes, but also find the savings that are likely in the escalating bills we all see every year. 

Have a fantastic and fiscally sound New Year!!!

Elizabeth Washburn

Posted by Elizabeth Washburn on December 29th, 2016 3:36 PM

As my client, you are one of the 22% or 40 million people that use this deduction yearly. Based on the article, a lowering of the total deduction to $100,000 would not affect you.  The problem lies in it being completely repealed. Get to know about before your legislator votes.

  Check out this Article at CNBC Published Today

Posted by Elizabeth Washburn on December 1st, 2016 3:43 PM

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