Values of Distressed Manhattan Retail Properties Plummet

Values of Distressed Manhattan Retail Properties Plummet

Real estate borrowers who are already struggling to pay the mortgages on their Manhattan retail properties have also been hit with a sharp cut to those properties’ assessed values. So reports MarketWatch.

The values for Manhattan retail properties for which lenders ordered new appraisals since July—often done when borrowers seek debt relief or fall behind on their payments—were down 53% from their value at the time of securitization, according to data from real-estate data platforms Trepp and CompStak.

Trepp and CompStak, which looked at $5 billion of Manhattan retail property debt, said that the lion’s share of those properties were in “the Chelsea/Clinton and Greenwich Village/SoHo neighborhoods.”

Read the full article from MarketWatch.

Source: themortgageleader.com

Why 2 Finance Experts Still Struggled To Buy This House

Why 2 Finance Experts Still Struggled To Buy This House

Think two seasoned certified financial planners would have an easy time buying a house? Tony and Barbara Matheson would beg to differ.

In fall 2019, these empty nesters found themselves itching to downsize from their large rental in the ultraexpensive San Francisco Bay Area. Hoping to buy a reasonably priced house within walking distance of restaurants and other amenities, they set their sights on Sacramento, CA. Armed with a healthy income, solid credit history, and a deep knowledge of personal finances—plus they’d owned property before—they figured they would sail through the home-buying process.

Six months and three lost bidding wars later, they realized that Sacramento’s real estate market was far more cutthroat than they’d imagined.

In March, the Mathesons finally purchased a three-bedroom, one-bathroom 1926 Tudor on a tree-lined street. With the closing papers signed, they figured they were home-free—but COVID-19 was about to throw another curveball into the picture.

Here Tony shares their story, and his hard-won lessons for aspiring first-time home buyers and others who want to learn what buying real estate is really like today.

Tony and Barbara Matheson's new home in Sacramento, CA
Tony and Barbara Matheson’s new home in Sacramento, CA

Tony Matheson

Location: Sacramento, CA
House specs: 1,225 square feet, 3 bedrooms, 3 bathrooms
List price: $550,000
Price paid: $580,000

Why did you decide to move?

We’d been living in the Bay Area and were looking to downsize since both of our kids had moved out. We wanted to be near downtown Sacramento, close to restaurants, bars, museums, and coffee shops.

I’d think home buying would be a breeze for two finance pros. How did it go?

I was really surprised by how tough the market was. After five months touring homes, we made an offer on our first house. This house went into a bidding war; we had to raise our bid five times before tapping out.

Next, we fell in love with a second home. This time, we offered the sellers $30,000 over the asking price. The sellers had so many other bids, they never even bothered to counter our offer.

We found a third home, and once again bid over the asking price. But after five tries, we lost out again. It was heartbreaking.

How awful! Why do you think these homes sold to other buyers?

We came prepared with what most consider strong financials for making an offer on a single-family home: great credit scores, a significant down payment, pre-approval for a mortgage. We offered good earnest money and 15-day escrow, didn’t include an appraisal contingency, and probably had a few other bonuses to the seller that I’ve forgotten. So we were doing everything “right.”

What we were finding is that we were up against some other buyers who were making all-cash offers, sometimes $50,000 above the asking price. How does anyone compete with that?

So how did you finally get an offer accepted?

We were extremely fortunate that we had a great real estate agent who was able to find a home that hadn’t been listed yet. We could negotiate one on one with the seller without having to compete against multiple offers.

The sellers had planned to invest $30,000 to $40,000 on home improvements before putting it on the market. We offered to buy the house as is, without the improvements. After going back and forth a few times, the sellers took our offer.  

What did you like about this house?

We knew within 5 seconds of walking into the house that this was the one. It was the perfect neighborhood. We were close to everything, within walking distance to plenty of bars and restaurants. The outdoor area is gorgeous. Beautiful trees surround our house, and the house is the perfect size for us.

The living room of Tony and Barbara's Sacramento home
The living room of Tony and Barbara’s Sacramento home

Tony Matheson

So once your offer was accepted, what happened next?

The sellers weren’t prepared to move immediately. They needed time to prepare. So we rented the house back to the sellers for a month after closing. We closed on Valentine’s Day, but we didn’t move in until mid-March.

Little did we know what was about to happen.

Tony and Barbara love this window in their Sacramento home.
Tony and Barbara love this window in their Sacramento home.

Tony Matheson

March is when the coronavirus really hit. What was it like moving during that time?

It was difficult and terrifying in the beginning. We moved in ourselves without hiring movers. Then, after we moved in, it was quite an adjustment. Simple things like calling an electrician or completing other minor home projects were enormously difficult.

Did you make any renovations to your home?

We put $10,000 to $12,000 into the house so far. The major issue after moving in was electricity—it needed to be completely reconfigured. For example, the second bedroom, which became my office, only had two plugs. Between my monitors for work, computers, Peloton, cellphones, and other devices, I needed 12 plugs. We also wanted to put in a tankless water heater for more space, and install a security system.  

During the COVID-19 shutdown, Tony and Barbara painted their new home.
During the COVID-19 shutdown, Tony and Barbara painted their new home.

Tony Matheson

How did quarantine affect these repairs?

It was horrible. We couldn’t get anyone to come out to do any work for at least three months. For the first month, no one was booking. Then, when we could finally get through, the businesses were overwhelmed with requests.

Tony and Barbara celebrate finally closing on their dream home in Sacramento.
Tony and Barbara celebrate finally closing on their dream home in Sacramento.

Tony Matheson

What was it like when you finally settled in?

It was exhilarating, exciting, and weird. Exhilarating because we got the house we wanted. Exciting because we were beginning a new phase in our lives. And weird because we moved in at the beginning of the pandemic. We wanted to have a housewarming party, but of course, we couldn’t.

What is your advice for aspiring home buyers?

Even if your finances are completely buttoned up, be prepared that buying a house may be a difficult and even painful process.

Tony and his daughter on game night in their new home
Tony and his daughter on game night in their new home

Tony Matheson

Emotionally it does get hard. As much as you try not to get attached to a house during the negotiation process, you can’t help it. And there is a competitive drive that kicks in when you are in a bidding war with others. It’s draining.

Still, in the end, knowing that you’ve overcome challenges along the way just makes you more appreciative of the reward at the end. We have a place to call home amidst all this craziness. It’s all worth it.

Their parrot Kiwi also enjoys the new home's view.
Their parrot Kiwi also enjoys the new home’s view.

Tony Matheson

Source: realtor.com

The Average Salary of a Surgeon

The Average Salary of a Surgeon

The Average Salary of a Surgeon – SmartAsset

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Surgery is a prestigious field that requires a high degree of skill, dedication and hard work of its members. Not surprisingly, surgeons’ compensation reflects this fact, as the average salary of a surgeon was $255,110 in 2018. This figure can vary slightly depending on where you live and the type of institution at which you work. Moreover, the path to becoming a surgeon is long and involves a substantial amount of schooling, which might result in student loan debt.

Average Salary of a Surgeon: The Basics

According to the Bureau of Labor Statistics (BLS), the average salary of a surgeon was $255,110 per year in 2018. That comes out to an hourly wage of $122.65 per hour assuming a 40-hour work week – though the typical surgeon works longer hours than that. Even the lowest-paid 10% of surgeons earn $94,960 per year, so the chances are high that becoming a surgeon will result in a six-figure salary. The average salary of a surgeon is higher than the average salary of other doctors, with the exception of anesthesiologists, who earn roughly as much as surgeons.

The top-paying state for surgeons is Nebraska, with a mean annual salary of $287,890. Following Nebraska is Maine, New Jersey, Maryland and Kansas. Top-paying metro area for surgeons include Cincinnati, OH-KY-IN; Winchester, WV-VA; Albany-Schenectady-Troy, NY; New Orleans-Metairie, LA; and Bowling Green, KY.

Where Surgeons Work

According to BLS data, most of the surgeons in the U.S. work in physicians’ offices, where the mean annual wage for surgeons is $265,920. Second to physicians’ offices for the highest concentration of surgeons are General Medical and Surgical Hospitals, where the mean annual wage for surgeons is $225,700. Colleges, universities and professional schools are next up. There, surgeons earn an annual mean wage of $175,410. A smaller number of surgeons are employed in outpatient Care Centers, where the mean annual wage for surgeons is $277,670. Last up are special hospitals. There, the mean annual wage for surgeons is $235,770.

Becoming a Surgeon

You may have heard that the cost of becoming a doctor, including the cost of medical school and other expenses, has soared. Aspiring surgeons must first get a bachelor’s degree from an accredited college, preferably in a scientific field like biology.

Then comes the Medical College Acceptance Test (MCAT) and applications to medical schools. The application process can get expensive quickly, as many schools require in-person interviews without reimbursing applicants for travel expenses.

If accepted, you’ll then spend four years in medical school earning your M.D. Once you’ve accomplished that, you’ll almost certainly enter a residency program at a hospital. According to a 2018 survey by Medscape, the average medical resident earns a salary of $59,300, up $2,100 from the previous year. General surgery residents earned slightly less ($58,800), but more specialized residents like those practicing neurological surgery earned more ($61,800).

According to the American College of Surgeons, surgical residency programs last five years for general surgery. But some residency programs are longer than five years. For example, thoracic surgery and pediatric surgery both require residents to complete the five-year general surgery residency, plus two additional years of field-specific surgical residency.

Surgeons must also be licensed and certified. The fees for the licensing exam are the same regardless as specialty, but the application and exam fees for board certification vary by specialty. Maintenance of certification is also required. It’s not a set-it-and-forget-it qualification. The American Board of Surgery requires continuing education, as well as an exam at 10-year intervals.

Bottom Line

Surgeons earn some of the highest salaries in the country. However, the costs associated with becoming a surgeon are high, and student debt may eat into surgeons’ high salaries for years. The costs of maintaining certification and professional insurance are significant ongoing costs associated with being a surgeon.

Tips for Forging a Career Path

  • Your salary dictates a lot of your financial life, such as how much you can afford to pay in rent and the slice of your paycheck that goes to taxes. However, there are some principles that apply no matter your income bracket, like the importance of an emergency fund and a well-funded retirement account.
  • Whether you’re earning a six-figure surgeon’s salary or living on a more modest income, it’s smart to work with a financial advisor to manage your money. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.

Photo credit: ©iStock.com/megaflopp, ©iStock.com/XiXinXing, ©iStock.com/shapecharge

Amelia Josephson Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia’s work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.
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Source: smartasset.com

20-Year vs. 30-Year Mortgages: Get a Lower Rate?

20-Year vs. 30-Year Mortgages: Get a Lower Rate?

It’s time for a new mortgage match-up.

Since paying down the mortgage early seems to be so en vogue these days, it makes sense to compare “20-year mortgages vs. 30-year mortgages.”

The most common type of mortgage is the 30-year fixed. It amortizes over 30-years and the mortgage rate never changes during that time.

Each mortgage payment is the same every month, so there isn’t any fear of interest rates resetting higher and pushing a homeowner toward foreclosure.

It’s also very affordable relative to other loan programs because of the ultra-long amortization period. Pretty straightforward, right?

For this reason, it holds a near-90% share of the home purchase market, and accounts for over three-quarters of all home loans, including refinances. It is the gold standard.

This simplicity and safety explains its popularity, but that doesn’t mean it’s the perfect home loan.

After all, they take a full three decades to pay off, and with first-time home buyers sometimes entering the market between the ages of 30 and 40, one could easily carry their mortgage into retirement.

Fortunately, there are other options with different loan terms to consider.

How a 20-Year Fixed Mortgage Works

20-year fixed mortgage

  • Just like the more common and popular 30-year fixed mortgage
  • The interest rate never changes during the entire loan term
  • But the 20-year mortgage term is a full decade shorter
  • This results in less interest paid in exchange for a higher monthly payment

The 20-year fixed mortgage is a pretty simple loan program, just like it’s much more popular cousin the 30-year fixed.

They’re actually no different other than the fact that the mortgage term is 10 years less.

Both come with an interest rate that never changes during the loan term, making it a safe choice for someone fearful of a rate adjustment on an ARM.

The borrower who opts for a 20-year fixed also gets to pay off their home loan a decade earlier.

Aside from owning your home much faster, you’ll also save on interest over the shorter repayment period.

Another benefit is that the interest rate is sometimes a bit cheaper as well, which results in a one-two punch.

20-Year Mortgage Loans Can Save You a Lot of Money

20-year fixed

  • It’s not very economical to pay back your mortgage over 30 years
  • Some will even argue that 20 years is too long as well
  • You pay a ton of interest over such an extended period of time
  • But not everyone can afford the higher monthly payment tied to shorter-term mortgages

When it comes down it, 30-year mortgages have some serious drawbacks, with the most obvious one being the long amortization period.

They also come with the highest interest rates relative to other loan programs. Yes, you pay a premium for the convenience of a fixed interest rate over three decades.

And since the mortgage takes so very long to be paid off, a lot more interest is paid and it takes forever to build home equity.

Think of it this way. If you borrowed money from a friend and asked to pay it back over 30 years, they would probably say no. Only mortgage lenders seem willing to do this.

If by chance they agreed, they’d want to charge you a higher rate of interest. And because you’d be paying it back so slowly, you’d pay a lot more interest over that time.

Assuming your loan amount is large, perhaps a jumbo mortgage, it could be the difference of many thousands of dollars versus a mortgage with a shorter term.

Consider a Shorter-Term Mortgage Like the 20-Year Fixed

  • A 20-year fixed greatly reduces the amount of interest due
  • And results in a home that is free and clear 10 years earlier
  • The monthly payment may not even be much more expensive
  • Perhaps just 1.2 to 1.3X that of a 30-year fixed depending on rate

So what are homeowners to do? Well, the most common solution to this ”problem” is to look at a shorter-term home mortgage instead, such as a 20-year loan.

While the 15-year fixed is the most common alternative, it comes with its own drawback, namely a much higher monthly mortgage payment that most home buyers can’t afford, especially first-timers.

In other words, not every homeowner can just say, “I want to pay my mortgage off faster” and switch to a 15-year fixed or 10-year fixed mortgage.

It gets very expensive. Nor can most first-time home buyers qualify at the higher payment.

Fortunately, there are mortgage product options in between, with the most common being the 20-year fixed mortgage.

A 20-year mortgage sheds 10 years off the typical loan term, and results in much less interest paid throughout its duration. The mortgage payments are also relatively manageable.

Tip: There are 20-year FHA mortgages and VA loans available if you don’t have a lot of down payment money but still want to pay your mortgage down fast.

Let’s look at an example of the 20-year fixed to illustrate the savings:

$200,000 Loan Amount 30-Year Fixed 20-Year Fixed
Mortgage Rate 4% 3.75%
Monthly P&I Payment $954.83 $1,185.78
Payment Difference $230.95
Total Interest Due $143,738.80 $84,587.20
Interest Difference $59,151.60

20-Year Mortgage Rates Are Cheaper

  • You should receive a lower mortgage rate if you opt for a 20-year fixed mortgage
  • How much lower will vary by bank/lender and how much you shop around
  • Expect a discount somewhere around .125 to .25% vs. the 30-year fixed
  • But be sure to put in the time comparison shopping

As you can see from the example above, 20-year fixed mortgage rates aren’t much different than 30-year fixed mortgage rates, though the 20-year mortgage does tend to price a little bit lower than the 30-year fixed.

That lower interest rate can save you even more over the shorter term of the 20-year loan.

Overall, I’d say that 20-year mortgage rates price about a .25% below a comparable 30-year fixed. So 3.75% instead of 4%, or 3.5% instead of 3.75%. You get the idea.

It does depend on the bank or credit union in question. Some may price the loan products fairly similarly, with the only difference reduced closing costs (or fewer discount points).

They’re definitely going to be higher than rates on a 15-year fixed, but you should save some money versus the 30-year fixed.

Of course, you have to consider your property type, credit score, down payment/home equity, other various borrower attributes, and whether we’re talking about conforming mortgages or jumbo mortgages.

Anyway, in our example above the homeowner with the 30-year mortgage pays about $230 less each month, despite the higher mortgage rate. Yes, their monthly mortgage payment would be significantly lower.

But the 20-year fixed results in interest savings of nearly $60,000 over the life of the loan! This borrower would also own their home free and clear an entire decade earlier.

Doesn’t 20 years sound a lot more reasonable than 30? You can actually see the light at the end of the tunnel and pay off the mortgage before your hair turns gray.

This shorter term can be pretty beneficial, especially if you plan to retire soon and anticipate being on a fixed income.

Or if you want to build equity and buy a move-up property in the near future, using the proceeds for the down payment.

The 20-year fixed is also a good alternative because you won’t break the bank making your mortgage payment each month.

It’s a nice middle ground between 30 years and 15 years, and highlights the importance of comparing mortgages across the whole spectrum.

But again, the monthly payment will be higher than the 30-year payment, which could stretch you thin or limit what you can afford if you’re buying an expensive home.

Tip: When obtaining a mortgage pre-qualification, ask your loan officer if you make enough to support 20-year fixed payments. Or simply do the math yourself with the help of a mortgage calculator.

Go With a 20-Year Fixed Mortgage to Stay on Course

  • If you have a 30-year mortgage and want to refinance to a lower rate
  • Consider switching to the 20-year fixed instead of getting another 30-year term
  • This way you won’t restart the (amortization) clock on your mortgage
  • You can save even more interest and pay off your home loan a lot faster

If you’re currently in a 30-year fixed, and don’t want to reset the mortgage clock during a mortgage refinance, consider a move to a 20-year fixed to stay on course without even paying more each month.

For example, if you’ve already been paying down your mortgage for five years, you won’t necessarily want to take on a fresh 30-year mortgage if your goal is to pay off your loan.

Because mortgage rates are so low at the moment, you may be able to refinance from a 30-year to a 20-year fixed mortgage and still lower your monthly payment.

Also keep in mind that there are other loan types outside the 15, 20, and 30-year options.

Some banks even allow you to choose your own mortgage term, whether it’s a 17-year fixed or a 24-year fixed.

So be sure to look at all available home loan options to determine which makes the most sense financially for your unique situation.

Also ask yourself why you want to pay the mortgage off sooner rather than later. There may be a better place for your money.

Read more: 30-year fixed vs. 15-year fixed.

Don't let today's rates get away.

Source: thetruthaboutmortgage.com

Beware the New Mortgage Fee Fearmongering

Beware the New Mortgage Fee Fearmongering

You may have heard there’s a “new mortgage fee.” And you might have been told to hurry up and refinance NOW to avoid said fee.

While there is some truth to that, it is by no means a reason to panic, nor is it even applicable to all homeowners.

Additionally, it’s possible it may not save you money to refinance now versus a couple months from today, depending on what direction mortgage rates go.

So before we all get in a tizzy and give in to what some are clearly utilizing as a scare tactic, let’s set the record straight.

What the New Mortgage Fee Is and Is Not

  • A 50-basis point cost known as the Adverse Market Refinance Fee intended to offset COVID-19 related losses
  • It’s not a .50% higher mortgage rate
  • It’s an additional .50% of the loan amount via closing costs
  • Only applies to mortgage refinance loans backed by Fannie Mae or Freddie Mac
  • Home purchase loans are NOT affected by the new fee
  • Nor does it apply to FHA loans, USDA loans, or VA loans

Over the past week, I’ve been bombarded by articles warning of the new mortgage fee – most feature something to the effect of “refinance now” and “act fast!”

But in reality, you might not need to do anything different, nor hurry.

Sure, it’s an amazing time to refinance a mortgage, what with mortgage rates hovering at or record all-time lows. No one can argue that.

Still, it all seemed to come to a screeching halt two weeks ago when Fannie Mae and Freddie Mac surprised us with their Adverse Market Refinance Fee, which is designed to offset $6 billion in COVID-19 related losses.

Why would they do such a thing at a time when the economy (and homeowners) are already suffering due to COVID-19? Well, that’s a different story and not really worth getting into here.

The important thing to know is this new mortgage fee only applies to home loans backed by Fannie Mae and Freddie Mac, and only if you’re refinancing an existing mortgage.

It has nothing to do with FHA loans, USDA loans, VA loans, or home purchase loans. Or jumbo loans while we’re at it.

Additionally, they have since exempted Affordable refinance products, including HomeReady and Home Possible, and refinance loans with an original principal amount of less than $125,000.

Some single-close construction-to-permanent loans are also exempt.

In terms of cost, it’s .50% of the loan amount, not a .50% increase in mortgage rate. That could mean another $1,500 in closing costs on a $300,000 loan, which is nothing to sneeze at.

But mortgage rates don’t live in a vacuum, and can change daily, so how much more (or less) you’ll actually pay depends on what transpires between now and the implementation date.

When Does the New Mortgage Fee Go into Effect?

  • Applies to loans purchased or delivered to Fannie and Freddie on or after December 1st, 2020
  • This means you’d want to apply for a refinance 60 or so days before that cutoff
  • Since mortgages are sold and securitized once the loan actually funds
  • But remember there’s more to mortgage pricing than just this new fee

The fee was originally supposed to go into effect for loans purchased or delivered to Fannie and Freddie on or after September 1st, 2020, but after much uproar, they just delayed it to December 1st, 2020.

This doesn’t mean you have until December 1st to apply for a refinance in order to avoid the fee.

Since we’re talking purchase of your loan or delivery of your loan so it can be bundled into a mortgage-backed security, there needs to be a buffer.

We have to account for how long it takes to get a mortgage, plus the post-closing stuff that takes place before delivery or sale.

You’d really want to get your refinance in maybe 60+ days prior to December 1st to be safe, though it’s unclear if mortgage lenders will already start baking in the fee even earlier.

If not, you might be stuck paying an additional .50% of your loan amount, either via out-of-pocket closing costs or a slightly higher mortgage rate.

Assuming you don’t want to pay anything at the closing table, your interest rate might be .125% higher, all else being equal.

So if you qualified for a 30-year fixed mortgage rate of 2.5%, it might be 2.625% instead. On a $300,000 loan, it’s about $20 higher per month.

Sure, nobody wants to pay more, but it shouldn’t be a refinance deal breaker for most folks.

And here’s the other thing – mortgage rates might move lower over the next few months due to, I don’t know, COVID-19, the most contentious presidential election in recent history, a stock market that could collapse at any moment, and so on.

In other words, if mortgage rates drop another .25% or .375% by later this year, it’s possible to come out ahead, even with the new fee.

The counterpoint is not to look a gift horse in the mouth. Either way, don’t panic.

Don't let today's rates get away.

Source: thetruthaboutmortgage.com

Don’t Panic! 3 Money-Saving, Last-Minute Tax Tips for Homeowners

Don’t Panic! 3 Money-Saving, Last-Minute Tax Tips for Homeowners

It’s heeeere: tax time.

Granted, this year, the coronavirus pandemic prompted the Internal Revenue Service to extend the usual April 15 deadline to July 15. That might have seemed like plenty of time—and yet here we are, with a mere two weeks to go and a filing window that’s closing fast.

We get it. Maybe you’re a procrastinator. Or maybe you’re a homeowner who, rather than taking the easy-peasy standard deduction, generally tries to save a bundle by itemizing your deductions instead.

Whatever your reason, if you’ve put off filing your taxes until now, don’t panic! You still have options.

Here are three last-minute tax tips for homeowners that could save you plenty of money, headaches, and more.

Tip No. 1: Grab Form 1098

Form 1098, or the Mortgage Interest Statement, is sort of like your home’s W-2: a one-stop shop for your possibly two biggest tax breaks.

  • Mortgage interest: “The biggest real estate tax deduction for most people will be the interest on their home loan,” according to Patrick O’Connor of O’Connor and Associates. Single people can deduct the full interest up to $500,000; for married couples filing jointly, the limit is $1 million if you purchased a house before Dec. 15, 2017. If you bought a home after that date, you will be allowed to deduct the interest on no more than $750,000 of acquisition debt—that’s a loan used to buy, build, or improve a main or secondary home. (Here’s more on how your mortgage interest deduction can help you save on taxes.)
  • Property taxes: This is the second-biggest deduction for most homeowners. Just remember the total amount you can deduct is $10,000, even if you pay way more—and that includes state and local income tax, property tax, and sales tax. (Here’s how to calculate your property taxes.)

You might be eligible for other real estate–related deductions and tax credits, but these are the biggies for most people. If you’re down to the wire on filing, you might just deduct these two and call it a day.

Just remember to make it worth your while. These numbers need to add up to more than the current standard deduction, which jumped to $12,200 for individuals, $18,350 for heads of household, and $24,400 for married couples filing jointly.

Tip No. 2: File an extension

If you still need more time to get your taxes together, it’s totally simple and penalty-free to file for an extension until Oct. 15. But don’t get too excited; the IRS still requires you to pay your estimated tax bill by July 15, or else you’ll pay interest on what you owe down the road.

The IRS makes it easy to file for an extension, either online or by mail. On the form, just estimate how much tax you owe. If you’re filing an extension because you need more time to figure out your itemized deductions, one easy shortcut is to just take the standard deduction now—or the same amount you claimed last year. All in all, it’s better to overestimate what you owe, because then you won’t pay any interest. Once you file for real, anything you’ve overpaid will come back to you.

But what if you need an extension because you can’t pay your tax bill? It’s still better to file for an extension with fuzzy numbers than to not file at all.

The IRS has payment plans that can help if you are short on cash. Just file something—blowing the deadline entirely will open you up to penalties as well as interest on your bill. And maybe an audit, too.

Tip No. 3: Hire some help

If you make less than $69,000 a year, you qualify to use free tax prep software from the IRS. Even if you make more than that, there are lots of free or low-cost online tax prep options that should work for anyone with relatively straightforward taxes.

Of course, another option is to find yourself a good accountant.

If paying for a tax preparer sounds extravagant, keep in mind that, according to the U.S. Tax Center, the average cost of getting your taxes done is only $225. This, generally speaking, is money well-spent.

A good accountant can actually save you money by spotting deductions you might not have found on your own, and helping you plan to minimize the next year’s taxes. All in all, that may add up to the best few hundred bucks you’ve ever spent!

Another timesaver: Rather than snail-mailing your accountant your tax forms, snap pictures of them on your smartphone; some apps like CamScanner can do so with scanner-style quality. Accountants don’t need the originals to file.

For next year, remember to prepare

OK, so this year you waited too long and stressed yourself out. If you don’t want a repeat ordeal next year, now is also the time to mend your ways and start tax prep early. Nobody wants to be thinking about taxes all year, of course. But as a homeowner, you can do some things to be better prepared.

So before you do any home maintenance, upgrades, or renovations, research whether there are any tax deductions you could be eligible for.

Start now, and you’ll be sitting pretty to collect on all the various tax perks that come with owning a home rather than pulling out your hair at the last minute.

For more smart financial news and advice, head over to MarketWatch.

Source: realtor.com

The Pros and Cons of Building vs. Buying as a First-time Homeowner

As the seller’s market continues, many first-time homebuyers are deciding which route is best for them: buying an existing home or building a new one. While the right answer varies from person-to-person, there are several pros and cons for each option. As the housing inventory shortage continues, new construction has grown in popularity but the demand still outpaces the supply, so many buyers look to existing construction. Understanding what each option entails will help homebuyers make a better, more informed decision in their home buying journey.

building a homebuilding a home

Read: How New Constructions are Helping Ease the Housing Shortage

Buying an Existing Home

Existing homes are often referred to as resale homes. “Resales are properties that are previously owned and re-selling not new.”

How To Know If an Existing Home Is The Right Choice For You

Sonia Graham, Realtor with JPAR Maryland Living advises that “Existing homes are a great choice too  – you can tell if the bones are good; neighborhoods are established. Maybe you want something with good bones and a vintage feel that you can also update.”

Things To Consider With Existing Homes

Graham states in the Annapolis-Baltimore area that approximately 65% of recent sales are existing construction and that, “we are in a seller’s market here in Maryland. Homes are being priced really well, however, because of the lack of inventory, homes get sold at higher than listing.” This is true across the U.S. In September 2020, existing home sales increased by 9.4% from the previous month and 20.9% increase from last year for a total of 6.5 million homes.

existing home buying vs buildingexisting home buying vs building
  • Total housing inventory declined from the prior month and one year ago to 47 million, enough to last 2.7 months at the current sales pace. What this means for buyers: There are less homes to choose from.
  • Existing homes prices were up 14.8% from September 2019 and according to the National Association of Realtors “September’s national price increase marks 103 straight months of year-over-year gains.” What this means for buyers: You may pay more for less home depending on your budget.
  • In September 2020 properties remained on the market for 3 weeks – an all time low according to NAR. What this means for buyers: The market is fast paced and requires buyers to decide and act quickly to secure a home.
  • Eighteen-percent of September 2020 sales were purchased by cash buyers according to NAR’s data. What this means for buyers: Buyers must make strong, clean offers to compete against the large portion of cash buyers.
  • For homes that sold in August 2020, homeowners had just over 3 offers on their home according to NAR. What this means for buyers: Expect that you will have to compete and present your highest and best offer every time.

Buying A New Construction Home

Housing starts, or new construction, rose 8.1% from this time last year, according to National Association of Realtors’ Chief Economist, Lawrence Yun. Sonia Graham says that 37% the Annapolis-Baltimore home sales have been new construction. And there’s a reason the new construction has grown in popularity: it’s helping to ease the housing shortage.

construction buying vs buildingconstruction buying vs building

How To Know If New Construction Is The Right Choice For You

Sonia Graham states that with new construction “the biggest incentive is the closing help; using the builder’s lender generally keeps the cost lower for the builder and so they have more room to offer incentives.”

Read: Questions to Ask Before Buying Land to Build Your Dream Home

Read: When Should We Start Building Our Home? Pros and Cons of Building in the Spring

Things To Consider With New Construction

As Graham says, “everyone loves the idea of being the first to live in a home – nothing used by anyone before, everything sparkly and brand new…” However, it’s important to understand no home is perfect; existing or new. This is why Graham strongly suggests “using the home inspector your Realtor works with… red flags will be found in the home inspection.”

  • “Housing starts had hit 1.617 million in January and fell to 934,000 in May. The recovery hit a snag due to the shortage and rising cost of lumber, with the price of softwood lumber up 81% year-over-year as of September”, according to NAR’s latest data. What this means for buyers: As lumber prices increase, so will new home cost. The increase cost in lumber is ultimately transferred to the buyer.
  • Thirty-nine percent of buyers choose new construction to “avoid renovations or problems with plumbing or electricity.” What this means for buyers: There should be no looming large expenses like a roof or plumbing with new construction.
  • Closing costs are negotiable. Unlike with existing homes, builders tend to be more open to paying for some or all a buyer’s closing costs. This should be negotiated early-on and put into writing between the buyer and builder. What this means for the buyer: If the burden of closing costs AND a down payment are an issue, new construction could possibly ease that burden by helping with closing costs.
  • Builders provide warranties, but read the fine print! Builders will typically provide a one year builder’s warranty; however, they don’t cover everything. It’s advised that buyers request to see a copy of the warranty prior to purchasing the home. Buyers may also purchase additional home warranty options which cover more.

To decide which option is best, it’s important that as a buyer you work with an experienced and knowledgeable Realtor that is proficient in both areas. As Sonia Graham reminds, “Its truly a family by family choice and neither is “right or wrong” as a whole – just “right or wrong ” for the client and their family.” By working with a Realtor, buyers can feel comfortable and informed on which choice is best for them. To start your new or existing home search, download the Homes.com app on your smartphone or search via the web.


Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.

Source: homes.com

Why Joe Biden and Kamala Harris Haven’t Paid Off Their Mortgages

Why Joe Biden and Kamala Harris Haven’t Paid Off Their Mortgages

Posted on November 11th, 2020

You’d think presumably wealthy politicians like Joe Biden and Kamala Harris would own their homes free and clear. But that’s not the case, per their 2019 tax returns.

Both individuals disclosed their returns on the JoeBiden.com website, and each paid tens of thousands of dollars in mortgage interest last year.

But why would they pay interest if they had the means to simply pay off the loans, a luxury most other Americans can’t afford to do? The reason is simple.

Mortgage Debt Is the Cheapest Debt Out There

  • Joe and Jill Biden paid $15,796 in home mortgage interest in 2019
  • Kamala Harris and Douglas Emhoff paid $32,041 in home mortgage interest in 2019
  • There’s a good chance both parties could have paid off their mortgages in full
  • But why bother if you can earn a higher rate of return for your money elsewhere?

Why Biden and Harris and so many other rich homeowners choose to carry mortgages as opposed to paying them off has to do with how cheap they are relative to virtually everything else.

Ultimately, it doesn’t get much better than home loan debt, especially with mortgage rates in the 1-2% range at the moment. What other type of loan offers such cheap financing?

This is why I refer to mortgages as good debt, especially since you have the opportunity to write off the interest in many cases.

On top of that, the low rate of interest makes it easy for savvy homeowners to beat the rate of return on their mortgage by investing elsewhere.

Simply put, your mortgage rate is your rate of return if you choose to prepay your home loan ahead of schedule.

Any extra dollars put toward your loan essentially earn whatever your mortgage rate is, so if it’s 2.75%, you’re earning 2.75% if you choose to pay any extra each month or year.

Unfortunately, the lower mortgage rates go, the less it makes sense to prepay the mortgage because you’re earning a lower and lower rate of return.

Interestingly, we often hear feel-good stories in the news about everyday Joes paying off their mortgages in just 5-10 years. Or even less time. But why? What’s the rush exactly?

Getting Rid of the Mortgage Is a Psychological Victory

  • The obsession with paying off the mortgage is a psychological one
  • Often times there are better uses for your money than prepaying your home loan
  • An alternative might be to pay off other high-interest rate debt like credit cards
  • Or to invest any extra funds in the stock market, mutual funds, or a general retirement account

Sure, it’s great not to have to make a monthly mortgage payment, but that doesn’t mean it’s the best move financially to prepay your home loan.

Often, the desire to pay off the mortgage has more to do with human psychology than it does math.

It probably feels good to pay off any debt, especially a large sum of money such as a mortgage.

But as noted, it’s cheap debt and you might be better served putting extra dollars elsewhere.

Apparently, this is what Joe Biden and Kamala Harris do, and Obama did the same based on his old tax returns.

In the past, I reported that Joe Biden had been a refinancing machine, constantly taking advantage of cheaper financing by way of rate and term refinance to save money on his home loans.

One of the richest men in the world, Warren Buffett, has also been a proponent of carrying a mortgage for the same reasons.

You get to lock in an ultra-low mortgage rate for three decades and watch the payment become effectively cheaper over time as inflation erodes the value of the dollar.

It doesn’t get much better than that, especially when you might be able to write off the interest too.

This explains why Joe Biden, Kamala Harris, Warren Buffett, and even Facebook founder Mark Zuckerberg choose to hold mortgages when they can easily pay them off.

Read more: Should I pay off my mortgage early?

(photo: Elvert Barnes)

Don't let today's rates get away.
About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.

Source: thetruthaboutmortgage.com

How to Prepare For Closing Day [Free Downloadable PDF]

How to Prepare For Closing Day [Free Downloadable PDF]

After you’ve successfully put in an offer for your dream home and set a date for closing, you’ve come to the final steps of your home buying journey. However aside from getting the keys, you’ll want to be prepared for the additional costs, and steps that will be required for a successful home purchase.

The Preparing For Closing Day guide contains information, tips, and more about what to expect on the big day. The guide will also include a checklist of what to prepare and an example of how to calculate the funds needed for closing.

To learn more about how you can best prepare for closing day, get our free buyer’s guide here.

Pre-Closing Day Checklist

To ensure a smooth process for your home transaction, you’ll still have a few steps to go through before you get your keys. Here are 6 steps to check off your list before closing day:

  1. Review your contract
  2. Complete a final walkthrough
  3. Meet with your lawyer
  4. Purchase home insurance
  5. Know how much cash is required at closing
  6. Secure cash required for closing

Cash Required At Closing

Understanding the costs that will be required at closing day is important to know even before you start your home search. Not only will you be prepared for what to expect, but this can help you with budgeting your costs.

Some examples of costs to include in your calculation:

  • Down payment
  • Title insurance
  • Legal fees
  • Land transfer tax

Statement of Adjustments

Another important document is your statement of adjustments, which will display any credits to both the buyer or seller as well as the final amount payable by the buyer on closing day. You can expect the following to be listed in the statement:

  • Purchase price
  • Your deposit
  • Prepaid property taxes, utilities or fuel
  • Prepaid rents 
  • Appraisal fee
  • Land survey fee

For a sample calculation of cash required at closing, download our Preparing For Closing Day guide here.

Source: zoocasa.com