Tax Tip #2: Paying Interest on a Mortgage

With the tax deadline around the corner, we thought we would provide a few homeowner-related tax break tips over the next couple weeks that may help you.

#2: Paying Interest on a Mortgage

Your lender will be sending you a 1098 form that details how much interest you paid last year. Most likely your loan is less than $1 million (or $500,000 for those married but filing separately). In that case, you are allowed to deduct 100% of your interest and property taxes.

If your mortgage exceeds this, the IRS will limit the amount that you can deduct. In order to claim this deduction, however, a bit of itemization is required. To do this, you must calculate your total itemized deduction, compare it to the standard deduction from the IRS and then take whichever is higher.

Click here to view Tax Tip #1.  As always, if you have any mortgage-related questions, Crosscountry Mortgage would gladly answer them! 877-828-8851.

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Tax Tip #1: Selling your home and making a profit

The tax season is now upon us. We will be posting homeowner-related tax break tips over the next couple weeks that may help you.

#1: Selling your home and making a profit:

Congratulations! This is hard to do in this economy. Selling your home for more than you paid gives you a "capital gain". This gain that you made on your home is exempt from income taxes as long as you meet the following criteria:

• The gain is less than $250,000 single, or $500,000 for married couples filing jointly
• You owned the home for at least two years
• You lived in it for two out of the last five years before selling

If you do not meet these requirements, the IRS will only partially tax you if you had to sell your home because of one of the following:

• Death
• Divorce or legal separation
• Multiple births from one pregnancy
• Damage from a natural or man-made disaster
• Loss of a job that grants you unemployment compensation
• Change in employment that makes paying the mortgage and other basic expenses difficult
• Involuntary conversion under eminent domain law by the local government

For more specific information about this, please visit the IRS website directly.  If you have any mortgage-related questions, call Crosscountry Mortgage at 877-828-8851.

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California Homeowner Bill of Rights

Homeowners in California have been dancing on the edge of foreclosure, but now help is in sight. Attorney General Kamala D. Harris has recently announced a $1 million California Homeowner Bill of Rights (HBOR) grant to be implemented into The National Housing Law Project. This bill is a set of laws that will extend key mortgage and foreclosure protections to California homeowners and borrowers.

“Californians were hit hard by the mortgage crisis and many people are still struggling to stay in their homes,” Attorney General Harris said. “The California Homeowner Bill of Rights gives borrowers more opportunities to stay in their homes, and this grant will help make sure the law is applied across the state and that everyone gets the protection they are entitled to.”

The laws took effect at the start of 2013 and will restrict dual-track foreclosures, guarantee struggling homeowners a reliable point of contact at their lender, impose civil penalties on fraudulently signed mortgage documents, and require loan servicers to document their right to foreclose.

The goal of this grant is to maximize consumer benefits from the HBOR and minimize abuses of the law by training consumer and housing attorneys in both private and non-profit firms.

The grant will be implemented by the National Housing Law Project and its partners, the "Western Center on Law and Poverty", and the "National Consumer Law Center" and "Tenants Together."  They will be using the grant to provide training to more than 800 lawyers on how to maximize the HBOR's protections. They will be reporting the HBOR's statewide impact as time progresses.

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2 Million Homeowners Freed from Negative Equity in 2012

At the end of 2011, the percentage of homeowners with negative equity, or an underwater mortgage, sat at 31.1%.  Q4 of 2012 saw that percentage fall to 27.5%. This means that nearly two million homeowners were freed from negative equity in 2012.

To spell out just how many homeowners those percentages point to, in 2011, 15.7 million people owed more on their mortgages than their homes were worth. That number now rests at 13.8 million homeowners as of Q4 2012. On top of those statistics, it is evaluated that those 13.8 million homeowners were collectively underwater by more than $1 trillion.

This information comes from Zillow's Negative Equity Report. They further predict that by Q4 of 2013, the negative equity rate will fall to at least 25.5%. That figure would mean that more than 999,000 additional homeowners nationwide would be freed.  This is all determined by Zillow's method of applying anticipated appreciation or depreciation rates to a home, assuming all other factors remain constant.

"As home values continue to rise and more homeowners are pulled out of negative equity in 2013, the positive effects on the housing market will be numerous. Freed from negative equity, homeowners will have more flexibility, and some will likely choose to list their home for sale, helping to ease inventory constraints and moderating sometimes dramatic, demand-driven price increases in some markets," said Zillow Chief Economist Dr. Stan Humphries. "But negative equity is still very high, and millions of homeowners have a very long way to go to get back above water, even with current robust levels of home value appreciation in most areas. As a result, negative equity will remain a major factor in the market for the foreseeable future."

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Take Advantage of a Foreclosure Review

The Federal Reserve has offered homeowners a chance to have a foreclosure review. This basically investigates whether or not you were treated fairly if you had a foreclosure. It is a deal from the Fed and the Office of the Comptroller of the Currency that has been extended until September 30th. Many homeowners, though, are not taking advantage of this review: only 196,000 have. The participating mortgage servicers are expected to choose more cases to review on their own for a total of 338,400 reviews. However, that only accounts for 7.5% of the 4.5 million borrowers who are covered by this enforcement action. In order to qualify for a review, a borrower must have a loan that was serviced by a participating lender, and the house's loan must have been active in the foreclosure process between January 1, 2009 to December 31, 2010. There is no cost for a review. If you are eligible, you should have already been contacted. If not, get in touch with your servicer.

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Obama's Foreclosure Prevention Plan

How would you like to save $3,000 per year on your mortgage? That's exactly what President Obama is working to do for American Homeowners. He announced on February 1st that he has a plan to help homeowners like you to refinance your mortgage. Why? The goal is to help stabilize and boost the housing market again. Although, this plan is expected to cost between $5 billion and $10 billion to put into effect. Obama plans to get the funds for this by putting a fee on large banks.

The programs associated with this plan will give lenders and other stakeholders the tools they need to help borrowers with their mortgage woes and to ultimately increase the country's confidence in the real estate finance system.

The Obama Administration, Congress and the National Association of Home Builders will continue looking for ways to increase refinancing opportunities, to reduce the inventory of foreclosed homes and to hopefully prevent additional homes from falling into foreclosure.

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Economic Struggle: Underwater Mortgages Hindering Job Search

Many American homeowners are finding it increasingly difficult to apply for jobs because of their housing situation. Homeowners who are strapped to the mortgage of an underwater home seem to be having difficulty leaving it. This means that job relocation rates are suffering.  The number of people who are willing to relocation during this recession is at 13.2%, but the average relocation rate since 2009 has been around 7.9%.

Despite needing jobs in this rough economy, many are forced to stay where they are and pass up far-away employment opportunities because of their mortgages and financial burdens. This in turn effects employer's long-range growth. Once they run out of local options, they will need to rely on those willing to relocate  in order to prevent their company's expansion plans from stalling, which would ultimately effect the economic growth of the country. Unfortunately at this point, most employers will not cover an employee's relocation costs and even fewer will help lessen the impact of selling an undervalue home. All of these factors add up to very little incentive for a job seeker to take a chance on moving to a new location.

It seems as though moving really is a last resort for the majority of job seekers. There are not many who are willing to take such a big loss on the sale of their home for a job position that may not last long or pay off well. Overall, people are a bit stuck. This could be one of the biggest obstacles for Americans in this economic recovery.

Hopefully the American people will take advantage of all the mortgage help that is being offered lately such as the impending bank deal that will help those facing foreclosure to restructure their loans. There's also HARP's new guidelines that are allowing homeowners to refinance at today's lower mortgage rates. And if absolutely necessary, Freddie Mac will be allowing unemployed borrowers an additional 6 months of forbearance on their mortgages.

So if you are one of the homeowners who feel stuck because of a lack of job opportunities and the impossibility of leaving your home, hold tight. The help is coming. Recovery is on the horizon. Here's to hoping that it truly will help Americans to climb back out of the holes caused by unemployment rates and underwater mortgages.

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The American People Place High Value on Homeownership

According to a recent nationwide survey of American voters, We The People really value homeownership. After all, it is the American dream to own your own house, complete with a yard and a white picket fence! So it's not surprising, then, that Americans are overall opposed to any government efforts to weaken or eliminate the mortgage interest deduction. People expect the feds to have a role in helping qualified home buyers obtain 30 year mortgages at affordable rates.

If we want to maintain a somewhat thriving middle class economy, the government needs to realize how important homeownership really is to the American public. A good, healthy and stable market would do wonders for the country.

3 out of 4 voters find it appropriate for the government to promote homeownership by way of new tax incentives to keep stimulating the economy. And two-thirds of people feel as though the feds should actually help home buyers to afford long-term fixed-rate mortgages. So much so that 73 percent of voters are against the elimination of the mortgage interest deduction, (and 68% of people would be less likely to vote for a candidate who proposed to abolish it).

People are also against proposals to reduce the mortgage interest deduction, or to eliminate the deduction for interest paid for a second home. They don't want to see any limits either.

Homeownership is definitely a cornerstone of America. So much so that 96% of homeowners are happy with their decision to own a house. Even those who are "underwater", a whopping 84% of voters say that they too are happy to own, despite the mortgage costing more than their home is worth. In fact, owning a home is considered to be the best long-term investment that could possibly be made, despite the ups and downs of the market.

We hope that the government, and those running for office, will take all of these feelings of the American people into serious consideration.

Source

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HARPs New Guidelines for Homeowners to Refinance

Good news for homeowners from the federal government! The Home Affordable Refinance Program (HARP) has recently changed its guidelines to allow homeowners to refinance at today's lower mortgage rates even if their homes have declined in value. Depending on the loan they choose, homeowners can now refinance without LTV limits. This will help them to improve cash flow to pay off their mortgages easier and, hopefully, not be hesitant to become a homebuyer again in the future. HARP works with primary residences, second homes and investment properties.

HARP was established in 2009 to help homeowners with good payment history to refinance into more affordable mortgages despite declining home values. Originially, HARP capped LTVs at 125 percent for fixed rate loans, and 105 percent for adjustable rate loans. It maintains its ARM cap, but now there is not a limit for the LTV for a fixed rate mortgage of 30 years or less. However, if the loan is for more than 30 and up to 40 years, it is still capped at 105 percent.

This is very good news for those who are in states that were hit hardest by declining home values such as Arizona, California, Nevada and Florida. Mortgage rates are at the lowest levels in decades. Now is an opportune time for homeowners to take advantage of HARPs new policy and reduce their interest rate and monthly payments. They could then pay off their loans faster due to shortening the loan terms. This could lead to them making more real estate investments in the future as well.

To qualify for HARP, the property cannot have been refinanced by HARP before. The loan needs to have been originated before May 31st 2009 and be associated with Fannie Mae or Freddie Mac. No private mortgage insurance is required if it wasn't needed for the original loan and income documentation is not necessary. The amount of the loan just can't exceed the conforming loan limits for the property's location. The loan must be current and the borrower cannot have made late payments in the last six months, and no more than one late payment in the last 12 months.

If you feel as though you are drowning in the stress of being behind on your mortgage, HARP urges you to take advantage of this once-in-a-lifetime opportunity while you can! HARP wants to help bring you back into the home buying market with these low rates. Look into it today!

Source

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