From getting approved to buy, to finding the perfect home, hoping your offer is accepted, navigating through inspections, praying for a good apprasial and finally getting closed- Preferred Properties of Texas will be there to help you through every step.
Archives for December 2020
As you look for a home, whether it’s your first or your fifth, you’ll need to decide whether you want to get a fixed-rate or an adjustable-rate mortgage. What’s the difference? With fixed-rate mortgages, monthly payments remain the same for the life of the loan, no matter how long it runs. With an adjustable-rate mortgage (ARM), monthly payments remain the same for a set period, then may change thereafter.
While predetermined rates with a fixed-rate mortgage mean that you always know what your payment is, an ARM tends to have a lower initial interest rate and the potential for monthly payments to drop. Of course, depending on the market, your payments also could become higher over time.
There are some interesting ARMs out there: In a 5/1 ARM, the rate is fixed for five years and then changes once annually. Similarly, there are 3/1, 7/1 and 10/1 ARMs, meaning that your rate could be fixed for three, seven or 10 years before adjustments.
Many homeowners like the stability of a fixed rate because it makes it easier to budget:. With a fixed-rate mortgage, your monthly payments are predetermined. But if you want to take a chance at saving money, you’ll be able to do so with an ARM’s low initial rate. Do you want to pay more in the interest of stability? Are you willing to take a chance that payments will rise if interest rates do?
Also consider lifestyle choices: A fixed-rate mortgage works if you’re established in your career and expect to settle into your new house for years. If you expect to move in a few years, then perhaps you can opt for an ARM and save money during the initial fixed-rate period before you sell and move on. Of course, homeowners with fixed-rate mortgages can always refinance to take advantage of falling rates if they don’t mind paying out more closing costs. It may be worth it.
Some ARMs set a cap on how high your interest rate can go, and some limit how low your rate can go. In considering the pros and cons of ARMs, find out:
- How high your interest rate and monthly payments can go with each adjustment.
- How frequently your interest rate will adjust.
- How soon your payment could go up.
- Whether there is a cap on how high your interest rate could go.
- Whether there is a limit on how low your interest rate could go.
The main advantage of a fixed-rate loan is that you’re protected from sudden and potentially significant increases in monthly mortgage payments if interest rates rise. Fixed rates are easy to understand and vary little from lender to lender. The downside is that if interest rates are high, qualifying for a loan is more difficult because the payments are less affordable. Thirty-year mortgages tend to offer the lowest monthly payment. The trade-off for the low payment is a significantly higher overall cost because the extra decade or more in the term is devoted primarily to paying interest. Shorter-term mortgages cost significantly less.
Another advantage of an ARM: Its initial low payment may enable you to qualify for a larger loan, and in an environment with a falling interest rate, that allows you to enjoy lower rates without needing to refinance. Consider personal factors too, and balance them with the economic realities of an ever-changing marketplace. Your finances often experience periods of advance and decline; interest rates rise and fall, and the economy itself waxes and wanes.
Choose carefully to avoid costly mistakes.
I was browsing through a popular mortgage blog a couple days ago and this captured my attention: A recent study conducted by Porch.com revealed the top features buyers across several generations listed as being very important in their home search.
Among the top 10 were finished basements, natural sunlight, renovated bedrooms and bathrooms, and energy-efficient features. Also high on the list were finished garages, open floor plans and hardwood floors.
The number 1 must-have for survey respondents is a deck or back porch. Demand for outdoor living space has skyrocketed in recent years. In fact, many homebuyers are willing to give up square footage to have it.
What are the top features you want in your next home? When consulting with your agent on your home search, be sure to prioritize what is important to you. This process helps your agent find homes that meet your needs more quickly.
And don’t forget to contact Preferred Properties of Texas for your free, no obligation loan consultation and pre-qualification so you can begin your home search with greater confidence and buying power.
Property deeds are written and signed legal documents used to transfer ownership of real property from a previous owner, or grantor, to a new owner, or grantee. Deeds can be official or private. General warranty deeds offer the highest level of buyer protection, while quitclaim deeds typically provide the least protection. So why are they used?
Quitclaim deeds are most often used for transferring property between family members. These deeds are relatively common, and most real estate agents have experience dealing with them. Because the parties know each other, they’re more likely to accept the risks associated with the lack of buyer protection. Quitclaim deeds are used when no money is involved in property transfer ownership:
What are you getting into when you obtain property this way?
- A quitclaim deed also is called a nonwarranty deed and conveys whatever interest the grantor currently has in the property, if any. The grantor only “remises, releases, and quitclaims” his or her interest in the property to the grantee. There are no warranties or promises regarding the quality of the title.
- Accept a quitclaim deed only from grantors you know and trust. Quitclaim deeds are best for low-risk transactions between people who know each other. Quitclaim deeds are commonly used to transfer property from a parent to an adult child or between siblings or when a property owner gets married and wants to add his or her spouse to the title. Married couples who own a home together and later divorce also use quitclaim deeds. When one party acquires the home in a divorce settlement, the other may execute a quitclaim deed to eliminate his or her interest in the property.
- Quitclaim deeds can be used to clear a title defect, also known as a cloud on the title, in the recorded history of the real estate title. Title defects include issues with wording, like not complying with state standards, missing a signature or even failing to properly record the real estate documents.
- Quitclaim deeds are as effective as warranty deeds to transfer titles but only if the title is good. It’s the lack of any warranties that makes a quitclaim deed less attractive from a grantee’s perspective. If the title contains a defect, the grantee has no legal recourse against the grantor.
- A quitclaim deed affects ownership and the name on the deed but not the mortgage. If there’s still a mortgage on the property, the grantor may remain liable for the mortgage even after ownership is transferred through the execution of a quitclaim deed. Quitclaim deeds transfer titles but don’t affect mortgages. For this reason, a quitclaim deed may not be a good idea when a property still has a mortgage.
Think of quitclaim deeds as a fast way to accomplish real estate transfers among family members or to place real estate into a trust. Of course, this is just an introduction to a complicated legal issue.
The Internal Revenue Code (IRC) allows taxpayers to claim a business deduction for expenses arising from the qualified use of all or part of a residence, as long as certain conditions are met. This deduction can be a particularly attractive tax planning tool for those who meet one of the following requirements:
- The home office is taxpayer’s principal place of business. A home office must be used regularly and exclusively to conduct business. Consequently, working on the kitchen table (which is also used for purposes other than work) doesn’t qualify, but a desk set up in a bedroom might.
- The home office is where the taxpayer meets patients, clients, or customers in the regular course of business. This can be difficult to assess if the taxpayer operates out of different locations. In such cases, the IRS will look at things like the amount of time spent at the location. To assess where the principal place of business is, if a taxpayer has multiple work locations, consider the relative importance of the activities conducted in each location, the amount of time spent there, and whether another fixed location might compete as the principal place where work is done.
- A separate structure not attached to the dwelling and used in connection with the business may qualify.
- If the dwelling is the only fixed location of the taxpayer’s business, a space within it that is used regularly to store the business’s inventory or product samples may qualify as a home office.
These considerations generally apply to the self-employed, because employees who work from home are not entitled to claim a home office deduction even if the employer requires the employee to maintain a home office. (The 2017 Tax Cuts and Jobs Act eliminated employees’ ability to deduct unreimbursed job-related expenses paid with personal funds as miscellaneous itemized deductions.)
The following is something of an exception to this rule: if the employer sets up an “accountable plan,” which reimburses workers for business expenses, that reimbursement is not counted as income, and it is not subject to withholding or reported on the employee’s W-2. When setting up the plan, the employer must (1) ensure that reimbursed expenses are business-related, (2) substantiate the expenses within a reasonable period and (3) make sure that any unspent funds are returned to the employer within a reasonable period.
This means that to avoid raising red flags for the IRS that can result in the plan being treated as a nonaccountable plan, the business owner must set up the plan carefully, fully document all associated expenses and comply with any limitations or restrictions associated with deductible expenses.
Ultimately, the point is that an accountable plan is a simple way to shift deductibility of business expenses from the employee to the employer and offers the ability to mitigate tax liability by allowing business owners to choose which expenses are reimbursable and which employees will be eligible to submit reimbursements. These rules can get complicated, so be sure to work with a professional on these, and all home office tax issues.
If you are one of many homeowners thinking about taking your house off the market for the holidays, hang on. You definitely do not need to overlook the excellent selling opportunity you have right now. This is why this month will be the optimal time to be certain that your home is available for holiday buyers.
It currently sits in a 2.5-month supply at the current sales rate.
After the supply of homes for sale is as low as it’s now, it’s much harder for buyers to find homes to buy. This implies competition among buyers rises and more bidding wars occur, which makes it crucial for buyers to publish very attractive offers.
As this occurs, prices rise and sellers are in the best position to negotiate prices that satisfy their ideal terms. Consequently, if your neighbors decide to remove their listings this season, your house may quickly climb to the top of a holiday buyer’s wish list if you keep on the marketplace.
Record-low mortgage rates and a year filled with unique changes have motivated buyers to think otherwise about where they reside and also to take action. The supply of homes for sale isn’t keeping up with this high demand, which makes now the best time to sell your house.
Home prices are enjoying in today’s vendors’ market. Making your house available over the upcoming few weeks will provide you the most exposure to buyers who will be actively competing against each other to buy it.
It’s a sellers market! Give Preferred Properties of Texas a call when your ready to sell.