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National homeowner equity grew in the fourth quarter of 2020 by $1.5 Trillion or 16.2% year-over-year based on a CoreLogic analysis.  The study was done on the six out of ten homeowners who have mortgages on their home. The fourth quarter of 2020 also saw the number of mortgaged residential homes with negative equity decrease by 8% from the third quarter.  Compared to the same quarter in 2019, negative equity decreased by 21%. Equity is defined as the value of the home less the mortgage owed.  Negative equity means that the homeowner's debt is more than the value of the home.  Appreciation is the dynamic that is moving homeowner's equity to the positive position. On a national basis, according to National Association of REALTORS®, annual price growth for the last ten years has been 6.4%.  In the last five years, it has grown at 7.3% annually.  According to the CoreLogic Home Price Index, home prices in December 2020 were up 9.2% from the year befo...

For generations, people have begun their homeowner experience with a "starter" home.  Part of the  logic may be that by beginning with a smaller home, they can learn what it takes to run the home and discover some of the unexpected costs that come along with it.   A slightly longer view into the future could suggest a different strategy. As of March 4, 2021, the average 30-year mortgage rate according to Freddie Mac was 3.02%; up .37% from the week of January 7th this year.    At the same time, in 2020, the rate was 3.29% and in 2019, it was 4.41%.   That is a difference of 28 and 139 basis points. The principal and interest payment on a $300,000 mortgage would have been $236 higher two-years ago and $44 more one-year ago.   Today's low mortgage rates are saving buyers lots of interest especially when you factor in the median tenure for sellers is approximately ten years.   Even though prices have increased over the last two years, some people...

One of the silver linings to filing your income tax return is finding out that you are going to receive a refund that could literally open the door to owning a home.   If you happen to be one of these fortunate taxpayers, your next decision is what to do with it.   With the average tax refund near $3,000, it could be the ticket to buying a home sooner rather than later.   Regardless of the size of your refund, it can be used toward the down payment or closing costs of the home. Most people think it takes 10% or more down payment to purchase a home, but actually, it is much less because of several low down payment mortgages .   There are VA and USDA mortgages that allow for no down payment for qualified buyers.   FHA has a 3.5% down payment program and FNMA and Freddie Mac have 3% down payment mortgages for qualified creditors as well as 5% down programs. Closing costs for originating new mortgages can easily range from two to three percent of the purchase ...

Sometimes, as people approach the inevitable, they start trying to get their things "in order".   They may even have a will, but they decide to transfer title to real estate prior to their death which could be an unnecessary expense for the would-be heir. Generally, when property is passed through direction of a will, the heir will receive a stepped-up basis which means that the fair market value of the property at the time of death becomes the cost basis for the heir.   If the property were sold for that fair market value, there would be no gain and no capital gains tax due. However, if the property is gifted prior to death of the donor, along with the title to the property comes the cost basis of the property.   The transfer of title does not trigger the capital gains tax but when the property is sold, the gain is calculated by subtracting the basis from the sales price leaving a capital gain subject to tax.   In other words, the person receiving the gift does ...

Mortgage insurance benefits the lender if a borrower with less than a 20% down payment defaults on their loan.   Most conventional mortgages greater than 80% and all FHA loans require the borrower to have this coverage. Private mortgage insurance on conventional loans can range from 0.5% to 2.25% based on the loan-to-value and the credit worthiness of the borrower.   A $350,000 mortgage would have a monthly mortgage insurance premium of $146 a month at the low-end of the scale and over $600 on the high-end. You may request that your mortgage servicer cancel the PMI when the principal balance reaches 80% of the original value at the time the loan was made.   You should have received a PMI disclosure form when you signed the mortgage documents stating the date.   If you have made additional principal contributions, it will accelerate the date. Other criteria considered to cancel the PMI on your loan is: The request must be in writing. You must be cu...

This strategy is not about trying to negotiate the best price; it is about beating out the competition and buying the home.   It may be difficult to understand until you have lost a few homes to better offers but when the reality of the situation is that there are not that many homes on the market, the competition heats up and different tactics are necessary.   Sales in December were annualized at 6.76 million, a 22.2% increase year over year according to the National Association of REALTOR®.   The median sales price is $309,800 which is up 12.9% from the previous year.   Inventory for December fell to 1.9 months' supply from 3.0 months' supply in December of 2019.   Six months inventory is considered a balanced market. Things that work in a buyer's market will not work in a seller's market.   The shortage of available homes for sale has led to not only shorter market times but multiple offers that have sales prices above the listing price.   B...

Many homeowners with mortgages pay for both types of insurance but only one of them protects the owner. Homeowner's insurance covers damage to your property and losses from fire, burglary, vandalism, and other named natural disasters.   When an insured has a loss, they file a claim with the insurance carrier which would be subject to the deductible mentioned in the policy. If the homeowner has a mortgage on the property, the lender will require that the borrower carry adequate insurance on the property and name the lender as an additional insured.   This protects the lender that the home will continue to be sufficient collateral for the loan in case of a loss. Mortgage insurance is not like homeowner's insurance in that it is solely for the protection of the lender if the borrower defaults on the loan.   Usually, lenders require mortgage insurance on any loan greater than 80% loan-to-value.   Occasionally, they may require it on some loans less than 80% based o...