Good Afternoon,
I hope you enjoyed the first weekend of winter (I mean spring). First, a big thanks to all Of you for helping spread the The Mortgage Call around. On Friday, we added our 200th recipient to the list. Let’s keep sharing this! Second, and I don’t mean to soapbox, but if you’re at all interested in the food you eat, read up on HR Bill 933 section 735. This is an epic failure on the part of Congress and it will have long-lasting ramifications. Anyway...
On today's call: Markets, Housing, Real Estate & Taxes part 3, Interest Rates
The markets opened a little sluggish this morning despite the news a bailout agreement reached in Cyprus over the weekend. The Dow is on track for its best first-quarter gain (by percentage) in 15 years, but the markets remain somewhat cautious as investors believe that global growth is going to be problematic…and slow. No major news came of the FOMC’s committee meeting last week, other than they will continue on their bond-purchasing program and work to keep interest rates low.
In housing, the latest Home Price Index from Lender Processing Services showed that prices, in general, were up almost 7% from 2012. We are still a ways away from reaching the average price from a few years ago but who knows if we’ll ever get back to that point. Mortgage rates are expected to reach as high as 4.5% in the next year, according to the Mortgage Bankers Association. This is exactly why, if you’re looking to move/move-up, many homeowners should not waitto list. The price of the move-up home will increase faster than the price of the home you’re leaving behind.
Part 3 of the Real Estate & Property Tax series focuses on repairs and improvements to your home. If you’ve added value to your home (basically added something new), you’ll need to know what the gain is on that capital improvement when you sell the house. Repairs are different, though, and can sometimes be confused. For example, fixing an air conditioner is a repair; replacing it is an improvement. Tax rules let you add capital improvement expenses to the cost basis of your home. A higher cost basis lower the total profit (capital gain) you’re required to pay taxes on. Then again, most home owners are exempted from taxes on gain on primary residences up to $500,000 ($250k if you’re single) so this doesn’t apply to many.
Interest rates are trying to gain some momentum downward thanks to the sluggish markets to start off the week. The 30 year fixed is still in the mid-3% range, (hint: it’s hovering above the popular 3.5% threshold. I really wish Bankrate.com would go away, though…the offerings on that site aren’t attainable for most people (without paying a fortune in points) and the class-action lawsuit against them didn’t do too much to lessen its popularity. Oh well, hopefully people will learn that online mortgage shopping is not a good idea as a mortgageshouldn’t be treated like a commodity, but a unique investment.
Have a great week everyone…and have a safe holiday weekend as well. Please pass this along if you feel so inclined and let me know if you have any questions.
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