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Thursday, April 17, 2014

Mortgage Application Tips #2 - Proving your Employment and Income

Last week we discussed the basic information that you would need to bring with you in order to begin filling out your mortgage application.  Among those things is proof of your employment and income. These are very important things to lenders. Your ability to make the monthly payments on the mortgage and to afford the costs associated with owning a home are vital to the approval process.

Things to prove:

  • At least two years employment history. We will want to know all about your job including your employer's name and address, your job title or position, length of time of the job, salary, bonuses, commissions, and average overtime pay.
  • Recent one full month's paycheck stubs and Federal W-2 forms for the past two years. Keep in mind that you might also need to show full Federal tax returns if you own rental property, are self-employed or are commission based.
  • Records of dividends and interest received from investment.
  • If you are self employed, we will need full tax returns and financial statements for two years. Also, you will need to have your profit-and-loss statement for the current year to date.
  • A written explanation for any possible gaps in your employment record. This may be due to illness or layoff or other circumstances.
  • If you are relying on income from other sources, proof of this will be needed. This may include rental property, Social Security, disability payments, child support, etc.

Once we have all that information, we will have you sign a general credit authorization, which will be sent to your employer to verify that everything you told us is true. We may also do this over the phone. Remember to bring all of those things and we will take care of the rest!

If you have any questions or would like our help in getting this process going, we can be reached at 877-828-8851.

Thursday, April 10, 2014

Mortgage Application Tips #1 -The Basics

Are you planning on purchasing a home soon?  When applying for a loan or a mortgage, there is a lot of information that you will need to fill out the forms. You can't get the loan until you are approved and that can be a very intense process for some. We are here to make it more simple for you.

Here are the basics of what you need to know prior to starting the loan application process:

Be sure to gather all of your information together in one place so you have it easily accessible. This includes your personal finances, your bank account numbers and their balances, your current loan amounts and payments, and your credit card account numbers. Also bring your employment and financial history, and forms of identification such as your driver's license and your SSN card.

You will need all the information possible about the property that you are wanting to purchase as well. This includes a complete copy of the sales contract for the property, a set of plans if the house is to be built, the mailing address, age and legal description of the property, and contact info for your real estate agent who will assist in the appraising process.

You may be asked to bring more information than this, but these are the most important to get your application started.

More information is to come in our next blog post. Please check back again soon to learn more!  If you have an immediate question, feel free to call us at 877-828-8851.

Thursday, April 3, 2014

To Refinance or Not To Refinance?

Have you ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least 2 points lower than your current one? Maybe that was good advice several years ago, but since refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced loan is often worth its cost many times over, considering the advantages that it brings, in addition to a reduced interest rate.

Advantages

When you refinance, you may be able to lower your interest rate and mortgage payment , perhaps significantly. You might also have the option to "cash out" a portion of your equity, which you will be able use to take care of higher interest debt, make home improvements, or plan a vacation. You could be able to refinance to a shorter-term mortgage loan, enabling you to add to your home equity faster.

Fees and Expenses

All of these advantages do cost something, though. You will pay the same kinds of expenses and fees as you did with your current mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might consider paying points to reduce your interest rate. Your savings on the life of the loan might be significant if you've paid up front about three percent of the new loan total. You might be told that points may be tax deductible, but because tax regulations can be ever-changing, we urge you to consult with your tax professional before making decisions based on this.
Another thing about taxes is that when your interest rate is reduced, naturally you'll also be lowering the interest amount that you can deduct on your taxes. This is another expense that some borrowers take into account. We can help you do the math.

In the end, for most borrowers the total of initial costs to refinance are paid back very quickly in savings each month. We'll work with you to figure out what mortgage loan program is ideal for you, considering your cash on hand, how likely you are to sell your house in the next few years, and how refinancing might effect your taxes. We would love to get you started.

For even more information about why you should consider refinancing, view this article here.

If you'd like to know more about refinancing your home,  call us at 877-828-8851.

Thursday, March 27, 2014

Tax Tip #7: Home Equity Loans

This is the last tax tip in this series of posts. Thank you for reading. If you have more questions, we urge you to seek the counsel of an experienced tax professional.

#7:  Home Equity Loans

Unfortunately in this economy, people sometimes need to take out a home equity loan to pay for things other than their home that they couldn't normally afford, such as tuition. Can you get a tax break for that? Perhaps. It depends on the situation. Part or all of the interest that you pay on the loan could be deductible for up to $100,000 ($50,000 if you are married filing separately).

The amount that you can deduct interest on is the difference between what your home is worth and what you owe on your mortgage. (Example: if your home is worth $250,000, and your mortgage is worth $200,000, you are able to deduct interest on $50,000. If you take out a loan larger than that, such as $80,000, you cannot deduct interest on the extra $30,000.)

If you are faced with the alternative minimum tax (AMT), you won't be able to deduct any of the interest on a home equity loan. This applies if you use the money for tuition or something else not related to your property.

If you did use the money to renovate and improve your property, you will be able to deduct all of the interest whether you are faced with the AMT or not. (But still only the $50,000, not the full $80,000, as per the example above.)

Click here to view Tax Tip #6.

Once again, if you have any questions about your own specific mortgage situation, call Crosscountry Mortgage at 877-828-8851. We can help!

Thursday, March 20, 2014

Tax Tip #6 - Mortgage Discount Points

#6 - Mortgage Discount Points

Sometimes people choose to pay a point toward their mortgage upfront at closing so they can get a lower interest rate. Each point is the equivalent of 1 percentage of your loan. This can save you money in the long run, even if it doesn't go toward actually paying off the loan. Many people do this. If you opted to go this route too, you may able to deduct them if you meet all of the following criteria:
  • The loan was used to buy, improve or build the home
  • The loan is secured by your primary residence
  • Paying points is normal where you live
  • The points are calculated as a percentage of the loan principal
  • The points are clearly outlined on the buyer's settlement statement
  • The amount of cash you put into buying your home is as least equal to the amount you were charged for the points you paid on the loan
Also, if you paid points to refinance your home, you are able to deduct a portion of what you paid each year, spread out over the life of the loan. Ask a tax professional for more specific details about this if you need help calculating it for your own specific situation. To learn more about mortgage discount points or any other mortgage-related topics, feel free to call us at 877-828-8851.

Click here to view Tax Tip #5.

Thursday, March 13, 2014

Tax Tip #5: Disaster Damage to your Home

#5 - Home Damage Caused by a Disaster

If your home experienced damage from a disaster, such as a tornado, hurricane or fire, you may be able to deduct the amount that was not reimbursed by your home insurance. To find out how much you are able to deduct, first figure out what your Adjusted Gross Income is. This refers to the amount that you will actually be taxed on after you subtract all of your expenses and deductions. These are also known as your "above the line" deductions.

Once you know what your AGI is, multiply it by 10%. Add $100. Then subtract that from the amount of damage not reimbursed. This gives you your damage deductible. If you need help, seek the advice of a tax professional.

For any mortgage-related questions, feel free to call Crosscountry Mortgage at 877-828-8851. Click here to view Tax Tip #4.

Thursday, March 6, 2014

Tax Tip #4: Adding "Green" Home Improvements

#4 - Energy Efficient Home Improvements

Did you have a big remodeling project this year? You may be able to deduct some of those expenses if they were energy-efficient improvements by way of the Nonbusiness Energy Property Credit. Doing things like installing insulation, new windows or furnaces qualify. However, you can only claim $500 over your lifetime.

If you have installed a solar electric system, solar hot water heaters, wind turbines, fuel cell property, or geothermal heat pumps in your home, look into the Residential Energy Efficient Property Credit. This credit will give back 30% of what you spend on running those features. There is currently no cap on the amount of credit, except for on the fuel cell property. Find out if your home qualifies!

In fact, the IRS is suggesting that before you purchase energy-saving home improvement items, make sure to check for a certification statement first. You can find these on the packaging of the item, or through the company that sells them. For more information, view form 5695. Going green can really pay off!

If you have any questions, call us at 877-828-8851! Click here to view Tax Tip #3!

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