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March 14, 2019

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How Long Does Mortgage Pre-Approval Last?

March 7, 2019
courtneyk/iStock; realtor.com

If your pre-approval is about to expire, that doesn’t mean you have to apply from scratch all over again. Just prepare to provide updated financial statements to your lender to prove there’s been no change to your income, debts, or credit scores.

How long does mortgage pre-approval last? If you’re hoping to buy a home, it’s smart to ponder this question, since even after you receive a lender’s stamp of approval for financing, weeks or even months could pass before you actually buy a house. Will that pre-approval you received a while back still be valid by then?

Since lenders realize that buying a house does take time, pre-approval does have a shelf life, but not an indefinite one. While the length of time varies, in general pre-approval is good for about three months. Here’s what home buyers need to know about how to make the most of this time frame—and what to do if your pre-approval is at risk of running out before you buy a house.

What is mortgage pre-approval, anyway? The first step to buying a home

If you want to purchase a home, your first step should be to prove that you have the financial means to do so. This is where pre-approval comes in.

“Pre-approval is the process by which a mortgage professional such as a broker or bank account executive examines a loan application to determine whether a potential home buyer will qualify for a mortgage,” says Matthew Reischer, an attorney and real estate agent at New York’s Flushing Real Estate. Find homes for sale on 

Pre-approval is also key to understanding what your home-buying budget is, adds Michelle Mumoli, CEO of the Mumoli Group at Keller Williams City Life in Jersey City. Since a lender will let you borrow only up to a certain amount, that’s the price range you should stick to when shopping for a house.

How do you get pre-approval?

To obtain pre-approval, buyers need to provide a mortgage lender with information like their employment history, credit score, income, and debts. During this process, the lender will want to see bank statements, pay stubs, and tax returns. It can feel invasive, but lenders are just looking to protect their interests by not loaning money to someone who could be considered high risk. These are people who have high outstanding debts, inconsistent income, or a history of late payments.

Once a lender reviews your finances, it will give you what’s known as a pre-approval letter detailing a good-faith willingness to extend mortgage financing based on its preliminary examination of your assets, income stream, and creditworthiness. The letter will also detail the actual loan amount you qualify for.

How do you use pre-approval?

Real estate agents will submit a pre-approval letter to solidify your offer on a home to the seller, says Mumoli. That’s because most sellers simply won’t accept an offer unless the buyers can prove they can obtain a mortgage. Sellers see a pre-approval letter as evidence that a buyer is not only serious but also has the means to buy the home.

As such, pre-approval is something you need at the very beginning of your home-buying search. It doesn’t make sense to look for properties without first having a pre-approval letter in hand.

How long does pre-approval last?

Although there is no definite duration for the validity of a pre-approval letter, the custom within the real estate industry is that pre-approval is good for between 90 to 180 days, says Reischer. But many may consider it too old after three months.

The reason? In three months, your financial life can change drastically. You could lose your job, buy a car, or do plenty of things that might affect your home-buying prospects. So, lenders and sellers alike will just have a hard time trusting a pre-approval letter that’s more than a few months old.

Want to know how long your pre-approval is good for? The actual time frame will be on your letter. If you want a longer time frame, ask for that upfront.

What to do if your pre-approval will soon run out

Since pre-approvals do have a shelf life, it’s generally best to not get it until you’re seriously looking for a home. If you’re just window shopping, it may not be worth the trouble unless you want to know what price house you can afford. (But to find a ballpark estimate yourself, you can also enter your info into an online home affordability calculator.)h

From: Realtor.com

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117 – I can help.

Bonus Points for Bonus Rooms

March 1, 2019
Courtesy: Pinterest

Home buyers love to get the most space for their money. In fact, a recent survey revealed that 66% of millennials cite more living space as the No. 1 reason for buying a house. So if you’re selling a home with a bonus bedroom, a finished basement, or an extra-large landing on the second floor that could be used for something, you’re adding a lot of extra value.

But are you really highlighting the glorious potential of that space to buyers? 

Remember, you’re not just selling a house; you’re selling an aspirational lifestyle! So whether you’re showcasing an attic hobby room, a gamer’s paradise in the basement, or a wellness retreat on the second floor, consider these strategic staging tips to make that flex space shine. 

1. Avoid giving rooms a split personality

For optimal results when selling, execute a single theme in your bonus room, says Howard Andrews, a licensed broker with Knipe Realty in Portland, OR. 

Someone who craves a spot to paint landscapes probably doesn’t want one that also crams in an elliptical trainer and a double bed. And a young couple imagining a sweet nursery won’t be impressed if their future baby’s room is also a makeshift potting shed with hydroponic herbs sprouting below bright lights. 

“You really want potential buyers to be able to imagine themselves in your house,” Andrews says. 

2. Get physical with a yoga studio or gym

The number of Americans practicing yoga and meditation has surged in the past couple of years, according to a recent study from the National Institutes of Health. So staging your bonus space as the perfect spot to get healthy makes it an attractive alternative to the gym (and a budget-savvy one, too), says Michael Sinatro, broker-owner of the Sinatro Co. and an accredited home stager in West Hartford, CT. 

“When buyers come across a home that has a meditation or yoga room—a calming, Zen kind of place—people’s gut reaction is how they wish they had one,” he says. “In our overscheduled digital world, people are yearning for peace, mindfulness, and a moment of quiet.” 

Sinatro suggests keeping the decor simple: a yoga mat or two, some plants, and a nook in the corner piled with comfy pillows. 

“A home gym is also appealing, especially when you have things like rubber mats, a water cooler, and mirrors on the wall,” he adds. But skip the giant stair-climbing machine if the room has low ceilings—it will only draw attention to that feature. 

3. Consider getting crafty

There’s no reason to spend piles of cash to stage an extra room for a nonexistent purpose, but if you’re passionate about a hobby and can showcase the space attractively, do so. A new survey conducted by the Pew Research Center showed that 1 in 5 Americans finds hobbies make their lives more meaningful. 

“My wife would probably fall in love with a house that has an organized sewing and crafting space, and I think that’s true for a lot of couples, because we’re seeing a lot more of the do-it-yourself crowd becoming more mainstream,” says Andrews. 

“Buyers also value extra storage everywhere, so built-in storage is a great asset for a hobby space. Good lighting is also a must.” 

An industrial-style long table and freestanding bookshelves also help define a hobby room. 

4. Gear up for a gaming room

One recent survey reported that 65% of U.S. households regularly play video games. Buyers who love gaming will appreciate a space with plenty of electrical outlets that can accommodate consoles or charge wireless joysticks, gaming computers, and even vintage arcade machines. 

“A gaming space has to be a large enough to accommodate a table with about 3 feet around every side of the table—it gives people enough room to get around each other,” says Andrews. 

5. Trick out an office with awesome storage

With nearly 4 million U.S. employees telecommuting at least half the time, home offices are hugely desirable. But don’t just stick a cheap desk in a room, slap a lamp on it, and call it an office. Create the kind of office where people can picture themselves producing their best work. 

“You’re selling what buyers picture themselves to be,” Sinatro explains. 

Add some tall storage with lots of shelving that’s well-designed, plus a small seating area, and you’ll show all the options in a nice space, he says. 

6. Create a dream closet and dressing room

According to the National Association of Home Builders, more than 40% of first-time home buyers consider a walk-in closet essential. So if your home’s master bedroom is short on storage, consider spending about $1,500 to transform an adjacent bedroom into an Instagram-worthy walk-in closet, with tons of hanging space and shoe cubbies—and maybe even a storage island in the center of the room. 

7. Don’t forget the Big Ds: Declutter and depersonalize

Spare rooms that just showcase piles of things you can’t find space for is a surefire way to tank a sale, no matter how great your home is. 

“People might be very forgiving when they see a cluttered garage, but if your third bedroom is full of boxes, it’s really hard to get past that cluttered impression,” Andrews says. 

8. Downsizing? Stage your space authentically

If you’re new empty nesters planning on moving to a condo, you might be tempted to stage your home so a young family sees themselves there. But resist the temptation to revamp the entire house. 

“While you want to appeal to as many buyers as possible, you don’t want to fake a playroom if you don’t have children,” Sinatro says. 

Similarly, if you’re not an artist, staging a bedroom as a bright art studio just won’t work. 

“If something is genuinely your passion, that will come across to buyers, as long as it’s clean and simple,” he adds.

By: Wendy Helfenbaum

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117 – I can help.


7 Tax Benefits of Owning a Home: A Complete Guide for Filing Now and Next Year

February 21, 2019
WilshireImages/iStock; Neustockimages/iStock
davidmariuz/iStock; ChristianChan/iStock

As with any financial matter, please consult with your tax professional to see what is right for you.

What are the tax benefits of owning a home? Homeowners might be wondering this right around now as they prepare to file their taxes. Especially since thenew Tax Cuts and Jobs Act—the most substantial overhaul to the U.S. tax code in more than 30 years—went into effect on Jan. 1, 2018. You might even be wondering how the new plan affects the tax perks of homeownership.

Well, look no further than this complete guide to all the tax benefits of owning a home. We break down exactly what’s changed, and all the tax breaks homeowners should be aware of when they file their 2018 taxes.

Read on to make sure you aren’t missing anything that could save you money!

Tax break 1: Mortgage interest

What changed: In the past, one of the most lucrative tax breaks for homeowners was the deduction for mortgage interest. The new tax code didn’t eliminate the deduction, but it did change substantially. The new tax bill allows homeowners with a mortgage that went into effect before Dec. 15, 2017, to continue to deduct interest on loans up to $1 million.

“However, for acquisition debt incurred after Dec. 15, 2017, the tax reform only allows the homeowner to deduct the interest on the first $750,000,” says Lee Reams Sr., chief content officer of TaxBuzz.

Why it’s still important: The ability to deduct the interest on a mortgage continues to be a big benefit of owning a home. And the more recent your mortgage, the greater your tax savings.

“The way mortgage payments are amortized, the first ones are almost all interest,” says Wendy Connick, owner of Connick Financial Solutions. (See how your loan amortizes and how much you’re paying in interest with this mortgage calculator.)

Note that the mortgage interest deduction is an itemized deduction. This means that for it to work in your favor, all of your itemized deductions (there are more below) need to be greater than the new standard deduction, which the Tax Cuts and Jobs Act nearly doubled to $24,400 for a married couple (it used to be $12,700). For individuals the deduction is $12,200, and it’s $18,350 for heads of household.

As a result, only about 5% of taxpayers will itemize deductions this filing season, says Connick. “In the past it was more like 30%.”

For some homeowners, itemizing simply may not be worth it this year. So when would itemizing work in your favor? As one example, if you’re a married couple who paid $20,000 in mortgage interest and $6,000 in state and local taxes, you would exceed the standard deduction and be able to reduce your taxable income by an additional $2,000 by itemizing.

Tax break 2: Property taxes

What changed: In the past, property taxes in their entirety had always been deductible. (Here’s more info on how to calculate property taxes.) But now, this deduction is capped at $10,000 for those married filing jointly no matter how high the taxes are.

Why it’s still important: Taxpayers can still take one $10,000 deduction, says Brian Ashcraft, director of compliance at Liberty Tax Service. Just note that this year, property taxes are on that itemized list of all of your deductions that must add up to more than the standard deduction ($24,000 for a married couple) to be worth your while. And remember that if you have a mortgage, your taxes are built into your monthly payment.

Tax break 3: Private mortgage insurance

What changed: If you put less than 20% down on your home, odds are you’re paying private mortgage insurance, or PMI, which costs from 0.3% to 1.15% of your home loan. Good news! The new tax bill extended the ability to deduct the interest on this insurance, a deduction that was set to expire, says Connick.

Why it’s still important: The PMI interest deduction is also an itemized deduction. But if you can take it, it might help push you over the $24,000 standard deduction. And here’s how much you’ll save: If you make $100,000 and put down 5% on a $200,000 house, you’ll pay about $1,500 in annual PMI premiums and thus cut your taxable income by $1,500. Nice!

Tax break 4: Energy efficiency upgrades

What changed: Nada. The Residential Energy Efficient Property Credit was a tax incentive for installing alternative energy upgrades in a home. Most of these tax credits expired after December 2016; however, two credits are still around. The credits for solar electric and solar water heating equipment are available through Dec. 31, 2021, says Josh Zimmelman, owner of Westwood Tax & Consulting, a New York–based accounting firm.

Why it’s still important: You can still save a tidy sum on your solar energy. And—bonus!—this is a credit, so no worrying about itemizing here. However, the percentage of the credit varies based on the date of installation. For equipment installed between January 1, 2017, and December 31, 2019, 30% of the expenditures are eligible for the credit. That goes down to 26% for installation between Jan. 1 and Dec. 31, 2020, and then to 22% for installation between Jan. 1 and Dec. 31, 2021.

Tax break 5: A home office

What changed: In the good ol’ days of 2017, if you worked from home at all, your office space and expenses could be deducted. Now this deduction is gone completely for employees who have an office to go to but work from home occasionally.

Why it’s still important: Good news for all self-employed people whose home office is the main place they work, you can still take a $5-per-square-foot deduction for up to 300 square feet of office space, which amounts to a maximum deduction of $1,500. Understand, however, that there are strict rules on what constitutes a dedicated, fully deductible home office space. Here’s more on the much-misunderstood home office tax deduction.

Tax break 6: Home improvements to age in place

What changed: Not much, except that for this filing season, these home improvements will need to exceed 7.5% of your adjusted gross income. So if you make $60,000, this deduction kicks in only on money spent over $4,500.

Why it’s still important: The cost of these improvements can result in a nice tax break for many older homeowners who plan to age in place and add renovations such as wheelchair ramps or grab bars in slippery bathrooms. Deductible improvements might also include widening doorways, lowering cabinets or electrical fixtures, and adding stair lifts. Caveat: You’ll need a letter from your doctor to prove these changes were medically necessary.

Tax break 7: Interest on a home equity line of credit

What changed: In the past, people used these loans to do all sorts of things: pay for college, throw a wedding, or make improvements to their home. And they could legally deduct the interest. Not anymore, even if you took out the loan before the new tax plan.

Now if you have a home equity line of credit, or HELOC, the interest you pay on that loan is deductible only if that loan is used specifically to “buy, build, or improve a property,” according to the IRS.

Why it’s still important: You’ll still save cash if your home’s crying out for a kitchen overhaul or half-bath. Major note: You can deduct only up to the $750,000 cap, and this is for the amount you pay in interest on your HELOC and mortgage combined.

Article from Realtor.com

Consider me your #1 resource for all things Real Estate!  I ❤️ working on behalf of my clients.  If I can be of assistance to you,  just send me an email or call 619-888-2117. 


8 Ways to Make Your Real Estate Agent ❤️ You

February 13, 2019

From: Lighter Side of Real Estate

With Valentine’s Day fast-approaching, there’s no denying love is in the air. Let’s think for a moment about the person who’s always there for you, helping to make your dreams come true. We’re talking about your real estate agent, of course.  ❤️

Just what does it take to make the agent who’s done so much for you swoon? There are plenty of ways to build a harmonious, lasting, and fulfilling relationship that will take you from starter home to happily ever after. 

Check out this list of things that’ll make your agent fall head over heels in love with you.

1. Refer your friends and family

Talking up your real estate agent to friends and family is the greatest gift you can give. Being a connector is a wonderful way to help your favorite agent build and grow their business. Go ahead, brag about how amazing your agent is; they’ll adore you for it.

2. Make sure your open house is pet-free

Barking dogs, loose hamsters, and roaming lizards are a huge turn-off to potential homebuyers. Securing your pets or taking them off-premises will mean the world to your agent, who probably has better things to do than herd your cats. 

3. Get pre-approved

Getting pre-approved for a mortgage means you’re a serious buyer, and if you find “the one” you’re good to go. Agents don’t have any time to waste. Knowing that you can come up with the funds at the closing is a weight off their minds. (It also means that you’re not just spending weekends looking at homes because you cancelled cable and can’t think of anything else to do.) 

4. You’ll show your home at a moment’s notice

Because no one can predict when a buyer might want to see a home, sellers who are open to a last-minute showing make an agent’s job that must easier. Letting interested parties take a tour when it’s convenient for them may just sell your home that much faster, which is a win for everyone.

5. Commit to keeping your home clean

Nothing makes a house shine quite like keeping it clean and uncluttered. Ensuring your place is “show ready”—from the moment it’s first listed until the closing—eliminates any worries your agent may feel as buyer agents and their clients come to view your house… and that peace of mind is priceless.

6. Up your curb appeal 

Recognizing that the front of the home is the first thing would-be buyers see, it’s crucial to keep the exterior well-maintained. Sellers who are on top of cutting the grass and raking the leaves make a great first impression—and as they say, you only have one chance to make a first impression.

7. Take your agent’s advice

Whether it’s about recommended staging, or an item that needs to be fixed before the home inspection, following the advice of your expert is beneficial for all parties. After all, you’ve hired a pro, so why not heed their wisdom and reap the rewards?

8. Leave a glowing review on social media or offer a testimonial

Again, sharing the love is a big part of helping your agent gain new clients. Offer to write a testimonial for their website, or share your experience on social media and let the world know you’re crazy about him or her.


 

Consider me your #1 resource for all things Real Estate!  I ❤️ working on behalf of my clients.  If I can be of assistance to you,  just send me an email or call 619-888-2117.

 I do appreciate testimonials on:
Social Media, Zillow, Yelp and Realtor.com

 

Don’t Get Sidelined

February 7, 2019

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest?

Just send me an email or call 619-888-2117 – I can help.

Crystal Ball – 2019 San Diego Housing Market Forecast

January 28, 2019

2018 HOUSING MARKET IN REVIEW

In California, in 2018, for the first time in four years, home sales ended at a lower level.  The economic forecast by the California Association of Realtors (C.A.R.) predicts that in 2019, single family home sales will decline approximately 3.3 percent.

In San Diego  home prices were consistently up in most markets in 2018 but at reduced levels compared to recent years. High demand for homes fueled price increases, but evidence is mounting that inventory will improve in 2019. This may apply some downward pressure on prices for home buyers. A fourth interest rate hike by the Federal Reserve in 2018 spooked the stock market to close out the year. The Fed has indicated that the number of rate increases in 2019 will be halved.

Closed Sales decreased 22.9 percent for Detached homes and 42.9 percent for Attached homes.

The Median Sales Price was up 5.8 percent to $725,000 for Detached homes but decreased 6.7 percent to $418,250 for Attached homes.

Days on Market increased 25.0 percent for Detached homes and 50.0 percent for Attached homes. Supply increased 43.8 percent for Detached homes and 100.0 percent for Attached homes.

Unemployment rates remained remarkably low again in 2018, and wages continued to improve for many U.S. households. It is generally good for all parties involved in real estate transactions when wages grow, but the percentage of increase, on average, has not kept pace with home price increases. This created an affordability crux in the second half of 2018. Housing affordability will remain an important storyline in 2019.

 

2019 HOUSING MARKET FORECAST

As mentioned in the 2018 recap above, C.A.R. has predicted a slower housing market in California in 2019.

Here are some of the indicators to watch for: 

Higher Interest Rates

While sales are projected to decline next year in California, the cause behind this trend will not be higher prices. According to the forecast, the median home price in California will increase only 3.1 percent to $593,450 in 2019, compared to a projected seven percent increase in 2018. C.A.R. estimates that home prices will temper in 2019, however interest rates could go up, which will compound housing affordability challenges. The C.A.R. forecast shows that in 2019, the average interest rate for a 30-year fixed home loan will increase to approximately 5.2%, against an average rate of 4.7% in 2018.

Drop in Existing Home Sales

Existing homes sales are predicted to decline in 2019. These estimates from C.A.R. mark a significant shift from the hot demand the housing market in California experienced in the past four years. That period witnessed consistent rise in demand and price gains driven by bidding wars. However, things have changed in 2018, and the declining trends are likely to continue in 2019.

Price Reduction Predicted

C.A.R.’s chief economist and senior VP, Leslie Appleton-Young said that the rise in home prices over the last few years occurred due to a shortage of housing supply. This trend shifted at the end of 2018 and although California is not yet fully a buyer’s market, the trends are pointing in that direction.

 

If you have questions about the market in your specific area, please email me or call 619-888-2117. 📲

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