Category Archives: Mortgage Business

New Tax Law Impacts Homeowners

Impacts Are Complex

The new tax law brings many changes for individuals and corporations. Much has been written about the provisions of the law which goes into effect in 2018, and this coverage will focus upon how the changes might affect homeowners or those who are considering purchasing. In general, the tax benefit for owning will be lessened. Here is why:

· Lower tax rates. Though the tax rates will not come down for individuals as sharply as they will for corporations, any reduction in tax rates will reduce somewhat the tax benefits of having a home loan. For example, if someone was in a 25% tax bracket and now is in a 22% tax bracket, there would be a 12% reduction in benefits. How much your tax benefit will be reduced will vary, not only by gross income, but also because of the elimination of personal exemptions and the enlargement of the standard deduction.

· Larger standard deduction. The larger standard deduction will mean that married couples financing lower-cost homes are likely to see little or no tax benefit from having a home loan. For example, if a married couple has mortgage interest of $15,000 per year and no more than $9,000 in additional deductions, they will be better off taking the standard deduction. The tax benefit is reduced even for those who exceed the $12,000 (for singles) or $24,000 (for married couples) caps and do itemize, since the tax benefit accrues only toward the amount above these caps.

· Maximum loan size. The maximum home loan which can be written off will move from one million dollars to $750,000. This lower cap will affect those who own expensive properties and/or live in high-cost areas, though existing loans are exempted from the lower cap.

· Maximum state deductions. The $10,000 cap on state and local income and property tax deductions again will have a greater effect upon those who have higher incomes, own more expensive homes and/or live in higher cost areas. It should also be noted that the deduction for moving expenses is also going away.

· Home equity loans. The new law keeps the deduction for debt on second homes, but does not allow the deduction of home equity debt. Apparently, this provision applies to existing home equity debt. This might change how owners pay for expensive renovations, or perhaps they skip the renovations and purchase a new home.

While these changes may look like a negative for home ownership, the net-effect upon housing could be positive. Putting more spending money in the hands of consumers could boost the economy which creates jobs and more demand for housing. The tax law also did not change the benefit of owning and then selling a home as compared to other investments, as the capital gains exclusion for primary residences was not touched. Therefore, while the tax write-off may become less important, a home could become an even better investment. Homes also provide protection against inflation and forced savings plans, while renting provides none of these benefits.

Note that the tax law is very new, and the IRS has not issued regulations or instructions to implement the law. This information provided is based only upon what has been published by the media reporting upon the law. We expect many clarifications, and perhaps even technical amendments, to the law in the coming months. We suggest you speak with your accountant for tax advice based upon the new law and for updates as they are issued.

New Conforming Loan Limits for 2018

Jeff Baxter
Fairway Independent Mortgage
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Higher Loan Limits Nationwide

The Federal Housing Finance Agency (FHFA) announced the maximum conforming loan limits for home loans to be acquired by Fannie Mae and Freddie Mac in 2018. In most of the U.S., the 2018 maximum conforming loan limit for one-unit properties will be $453,100, an increase from $424,100 in 2017. The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price. According to FHFA’s seasonally adjusted, expanded-data HPI, house prices increased 6.8 percent, on average, between the third quarters of 2016 and 2017. Therefore, the baseline maximum conforming loan limit in 2018 will increase by the same percentage.

In addition, the new maximum loan limit for one-unit properties in high-cost areas will be $679,650 — or 150 percent of $453,100. Areas which exist between the base limits and maximum high-cost areas may have increased as well. For a list of the 2018 maximum loan limits for all counties and county-equivalent areas in the U.S. click here. It is expected that FHA and VA will follow suit with increased loan limits.

Source: The FHFA

Canny Ways to Use Reverse Mortgage Money

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More than 1 million senior homeowners have now taken out reverse mortgages. There’s a good chance you might, too, once you reach age 62. But the question of how to use the money from the loan is just as important as the question of whether or not to get the loan in the first place.Canny Ways to Use Reverse Mortgage Money

A laundry list of celebrity spokespeople have tried to explain how these “backwards” loans work. Here’s how the most recent one — gravelly voiced actor Tom Selleck — explains it in a commercial for a reverse lender: “A reverse mortgage loan is a simple idea really — you turn your home’s equity into cash and you pay it back when you leave the house.”

Reverse mortgages are making a comeback from their hottest years in 2007, ‘08 and ’09, when more than 100,000 loans were made every year. According to the National Reverse Mortgage Lenders Association (NRMLA), 45,000 of these home equity conversion mortgages have been recorded so far in fiscal 2017, most of them through the Federal Housing Administration.

That tips the total to over 1 million since the first ones were originated back in 1990. There’s a good bit of equity to tap, too: NRMLA puts total equity for homeowners 62 and older at $6.3 trillion as of the first quarter of this year.

How much can you get with this type of loan? It depends on a number of factors, but it could be as much as 50 percent of the built-up equity in your home.

What to do with the money? You could always take it to Vegas and bet it all on red. But there are a lot of better ways to use the proceeds. NRMLA recently devoted an issue of its magazine, Reverse Mortgage, to the topic. They advertised 25 ways to use your home equity, with a few extra ideas thrown in for good measure.

NRMLA members were asked by the magazine how their clients put their money to use. Many of the answers are pretty obvious: Pay down debt, replace a salary, pay off a first mortgage, send a grandchild to college. But others are pretty clever.

One of the biggest fears about reverses is that they are just another way for the bank to repossess your house. Or as Selleck puts it, “Like you, I thought that reverse mortgages had to have some kind of catch — just a way for banks to get your house. Right?”

They’re not, as the commercial assures. But in fact, foreclosures are possible with reverse mortgages if the owner-borrower doesn’t maintain the property or pay the taxes and insurance. So one use for the money is to create a set-aside fund to pay the taxes and insurance.

“One of the heaviest burdens for older homeowners is paying property taxes and insurance,” notes Jon Maiolatesi, a loan officer with 1st Financial Reverse Mortgages in Michigan. He describes an older couple living on Social Security: “The monthly budget was tight, but they made it work from month to month. However, twice a year when the property tax and insurance bills arrived, there was often not enough in the checking account to cover them.”

When the couple pursued a reverse mortgage, they found they could arrange for a Life Expectancy Set-Aside (LESA) to pay the taxes and insurance. Funding the LESA does reduce the balance of funds available to you immediately, but it also prevents foreclosure.

Here’s another smart idea: People who take out reverse mortgages generally want to stay in the house a long time, since they have to repay the loan once they move out (or once the home is no longer their principal residence). So why not use the proceeds to redesign your living space to make it responsive to your needs as you age?

Pete Mendenhall, a sales director at Liberty Home Equity Solutions in Coppell, Texas, tells of a widow whose home needed a lot of repairs, even before it could be retrofitted for things like grab-bars and wider doorways.

“Universal design updates allowed (the client) to live more comfortably, with increased wheelchair mobility, and to age in place with dignity. Universal design and other types of upgrades would also help with resale value when the time comes.”

Proceeds can also be used to build living space for an aging parent or a caretaker. You can even use the money to buy a new home.

Dennis Loxton, a sales manager with Liberty in Fort Wayne, Indiana, says one of his borrowers used her equity to do what’s called a “HECM for Purchase.” The borrower used a Home Equity Conversion Mortgage (HECM) on the new home to provide 50 percent of its purchase price. The balance was paid in cash from the proceeds of the sale of her existing house plus other assets, so there were “no monthly repayments thereafter,” said Loxton.

Source: Lou Sichelman, The Housing Scene

Brought to you by: Jeff Baxter | Fairway Independent Mortgage

32895 S Coastal Highway, Suite 201A, Bethany Beach, DE 19930 | 302-542-8250 / 302-260-7089
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| Baxter Mortgage Team Blog

NMLS ID 191033 | NMLS Entity ID#2289

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What to Do About the Recent Equifax Security Breach

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REGARDING THE RECENTLY REPORTED EQUIFAX SECURITY BREACH

As many of you are likely aware, it’s been recently reported that Equifax suffered a security breach from mid-May through July that has compromised the personal identifying information of as many as 143 million or more consumers in the United States, UK and even Canada. Because names, addresses, social security numbers, birthdates and even driver license numbers were accessed by the perpetrators, many consumers are in obvious panic mode wondering what to do and how to immediately protect their identities from being used in fraudulent situations.

The FTC has issued instruction this morning directed to consumers that informs of what to do. These instructions can be easily shared through Facebook, Twitter and LinkedIn. It’s highly recommended that YOU follow the steps indicated in the article and also pass this information on to help educate as many consumers as possible about the breach and the steps they can take to have best chance at protecting their identities. They will appreciate your sharing the guidance with them.

Summary of Quick Steps Everyone Can & Should take NOW:

  • Visit Equifax’s website, equifaxsecurity2017.com. Click on the “Potential Impact” tab and enter your last name and the last six digits of your Social Security number. Your Social Security number is sensitive information, so make sure you’re on a secure computer and an encrypted network connection any time you enter it. The site will tell you if you’ve been affected by this breach.
  • Whether or not your information was exposed, U.S. consumers can get a year of free credit monitoring and other services. The site will give you a date when you can come back to enroll. Set a calendar reminder of the date and come back to the site and click “Enroll” on that date. You have until November 21, 2017 to enroll.
  • Order your free annual credit report from the bureaus (not just Equifax, but all of them if you are able). Review the reported data for accuracy and assure no credit is reporting that you did not personally authorize. If you find any questionable tradelines or inquiries that do not belong to you, dispute them by explaining you did not authorize the opening of such credit and fear your identity has been used as a result of the Equifax security breach.
  • If you indeed do find new tradelines or inquiries you did not authorize, file a formal complaint with the FTC at gov.
  • You may wish to place a fraud alert or security freeze on your credit files at the bureau level to implement an added layer of protection.
  • A fraud alert warns creditors that you may be an identity theft victim and that they should verify that anyone seeking credit in your name really is you.
  • A credit freeze makes it harder for someone to open a new account in your name. Keep in mind that a credit freeze won’t prevent a thief from making charges to your existing It is intended to stop fraudsters from opening any new credit using your identifying info.
  • Be sure to monitor your bank and credit card statements to assure no unauthorized charges are reporting. Alert your financial institutions to watch for patterns of charges that do not coincide with the account use you’ve displayed prior to the breach period and that you wish to be alerted of any questionable charges or new patterns.
  • Review the new IRS Taxpayers Guide to Identity Theft which explains the new identity theft procedures being implemented by IRS for 2017 tax filing season. You will want to file your income taxes as soon as possible in the next tax season. Note: The IRS identity theft procedures are changed from prior year instructions so you will want to make sure you are informed and educated about them.
  • Visit the FTC’s Site gov/databreach to learn more about protecting yourself after a data breach.

For consumers with additional questions, Equifax has established a dedicated call center. The call center is available at 866-447-7559, every day (including weekends) from 7:00 a.m. – 1:00 a.m. Eastern time.

Contact me today for more information.
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alt_text Steven Baxter
Sales Manager
NMLS 191033
Direct 302-260-7089
Mobile 302-542-8250
Fax 866-685-6528
jeff.baxter
32895 S Coastal Highway, Suite 201A
Bethany Beach, DE 19930
www.jeff-baxter.com

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Mortgage Market in Review-September 11th, 2017

Newsletter-September 11th, 2017
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Jeff Baxter
Sales Manager
NMLSR ID #191033
Fairway Independent Mortgage Corporation
Phone: 302-260-7089
Fax: 866-685-6528
Cell Phone: 302-542-8250
E-Mail: jeff.baxter
Website: http://www.jeff-baxter.com
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Market Comment

Mortgage bond prices finished the week slightly positive which helped rates remain favorable. Factory orders declined 3.3% as expected. Stock weakness early in the week set the tone. Weekly jobless claims printed at 298K and continuing claims, a summation of all receiving benefits, at 1,940K. Expectations were for claims at 239K and continuing claims at 1,945K. Productivity in Q2/2017 rose 1.5% and unit labor costs increased 0.2%. Economists expected productivity to rise 1.2% and labor costs to rise 0.3%. The Fed’s Beige Book indicated the economy continued to expand at a moderate rate and noted that “reports were mixed regarding auto production, and contacts in many Districts expressed concerns about a prolonged slowdown in the auto industry.” We ended the week better by approximately 1/8 to 1/4 of a discount point despite some negative movements Wednesday and Thursday mornings.


LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
Treasury Auctions Begin Monday, Sept. 11,
1:15 pm, et
None Important. 3Y Monday, 10Y Tuesday, 30Y Wednesday. Strong demand may lead to lower mortgage rates.
Producer Price Index Wednesday, Sept. 13,
8:30 am, et
Up 0.2%,
Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
Consumer Price Index Thursday, Sept. 14,
8:30 am, et
Up 0.1%,
Core up 0.1%
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates.
Weekly Jobless Claims Thursday, Sept. 14,
8:30 am, et
286K Important. An indication of employment. Higher claims may result in lower rates.
Retail Sales Friday, Sept. 15,
8:30 am, et
Up 0.8% Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
Industrial Production Friday, Sept. 15,
9:15 am, et
Up 0.3% Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization Friday, Sept. 15,
9:15 am, et
76.8% Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates.
U of Michigan Consumer Sentiment Friday, Sept. 15,
10:00 am, et
96.7 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Consumer Price Index

The Consumer Price Index is widely accepted as the most important measure of inflation. The CPI is a measure of prices at the consumer level for a fixed basket of goods and services. The National Statistics Office and the Bureau of Agricultural Statistics of the Department of Agriculture collect price data for the computation of the CPI. Since it is an index number, it compares the level of prices to a base period. By comparing the level of the index at two different points in time, analysts can determine how much prices have risen in that period.

Unlike other measures of inflation, which only factor domestically produced goods; the CPI takes into account imported goods as well. This is important due to the ever-increasing reliance of the US economy upon imported goods. Analysts primarily focus on the core rate of the CPI which factors out the more volatile food and energy prices. Oil prices are always a concern from an inflation perspective. Inflation, real or perceived, erodes the value of fixed income securities such as mortgage bonds.

Copyright 2017. All Rights Reserved. Mortgage Market Information Services, Inc. www.ratelink.com The information contained herein is believed to be accurate, however no representation or warranties are written or implied.

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MORTGAGE MARKET IN REVIEW Newsletter-September 11th, 2017

Homes, Loans and Milestones: 5 Real Estate Marketing Trends in 2017

FAIRWAY INDEPENDENT MORTGAGE CORPORATION
5 Real Estate Marketing Trends in 2017
(Content pulled from the article “Five Real Estate Marketing Trends Defining 2017” on Inman.com)

Inman recently did a little research on what savvy real estate professionals are doing in 2017 to rise above the market clutter – some of the information isn’t a surprise, while other insights might require a little practice to perfect the process.

5 Real Estate Marketing Trends in 2017

  1. Live Streaming and Video Marketing: This strategy might take a little practice and a few trial runs to get comfortable in front of the camera. But consider hosting a virtual open house, where you are the featured host showing prospective buyers through your listed property. Not ready for live streaming? Consider using Facebook and even Instagram to post a short teaser video highlighting a desirable feature of the home.
  2. Robust Content: Become the subject matter expert of the neighborhoods where your homes are listed… tell folks about the great BYOB farm-to-table cafes, walking trails, dry cleaner and more. The more you can demonstrate that you know your stuff, the more prospective buyers will pay attention.
  3. Target Your Audience – Or Personalization: Think about features of your listings that might appeal to certain demographic audiences – for example: millennials might be more interested in access to public transit, proximity to outdoor activities and energy-efficient features of the home. The more you know about your audience, the more they feel you are talking to them personally.
  4. Digital Showings: More and more listings are featuring virtual tours of the property – 360-degree views of the rooms and outdoor space. It’s a great way for buyers to hone in on their ideal place and then follow up with their real estate professional to do a walk through. At this point, the prospective buyer is more interested and engaged.
  5. Social Media Advertising: Last week we discussed a new marketing tool offered by Facebook… the social media networks are all offering ways to "boost" your post to reach a broader audience for a relatively small investment, and you are able to define your audience by demographic features such as age, zip code, preferences, and lifestyle.

In addition to these suggestions above, the Inman article pointed out the value of drone footage as a way to showcase your listing and stand out from your competition. These days, a little promotion goes a long way – as does working with your referral sources. Teaming together with your mortgage professional can create a great dynamic when building your business.

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038c6e06fb884be8b45b3596c5505e97.jpg Steven Baxter
Sales Manager
NMLS ID# 191033
Direct 302-260-7089
Mobile 302-542-8250
Fax 866-685-6528
jeff.baxter
32895 S Coastal Highway, Suite 201A
Bethany Beach, DE 19930
www.jeff-baxter.com
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6 Tips to Help Credit-challenged Clients Improve Scores
By Steve Cook, Inman.com

How many buyers have you met who walk in your door with a rotten credit rating and confidently promise to fix things up before they apply for a mortgage?

That’s never a good sign, even in times like these when first-time buyers can plan on hunting four months or more to find a property they can afford and would buy.

READ MORE

Share with Clients:

What Does Contingent With No Kick-Out Mean? A Clause That Affects Your Offer
By Cathie Ericson, Realtor.com

Should You Invest That Down Payment?
By Jeff Brown, US News

You Could Be Wrecking Your Home — And Not Know It (Yet)
By Amy Howell Hirt, Houselogic

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How email templates can save real estate agents much needed time
By Brandon Doyle, Inman.com

It’s not a surprise that when you hear email templates, you automatically assume it must have to do with bulk emails or mass newsletter emails.

And you’re not wrong, but in this case, it’s more important to think about email templates as one of the easiest ways to personalize your emails to larger groups of people in your network while still saving yourself big chunks of time.

READ MORE

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Could Value Range Pricing Become a Thing?
Daily Real Estate News

Value range pricing, also known as variable range pricing, is when a listing indicates sellers are looking for offers between two suggested prices, such as "$450,000 to $500,000," rather than just one price, such as $475,000. This tactic is still relatively rare, but it’s becoming more popular because it offers advantages to both buyers and sellers, according to realtor.com®.

READ MORE

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