Real Estate Information Archive

Debt Relief May Trigger Tax

Monday, October 23, 2017

by Don DeHanas, Broker

The Mortgage Debt Forgiveness Act, originally passed in 2007, was extended three times to protect homeowners from paying income tax on debt that was relieved due to Foreclosure, short sales or deed in lieu of foreclosure.

The law expired on December 31, 2016 and unless it is extended again, homeowners with debt relief in 2017 may be subject to tax.

A homeowner might feel a sense of relief without the obligation of a delinquent mortgage but just because the payments are no longer due doesn’t mean that there isn’t another obligation that replaces it. If a lender cancels or forgives debt, a taxpayer must include the cancelled amount in their income for tax purposes depending on the circumstances. The tax significance could be serious.

This previously allowed relief only applied to a taxpayers’ acquisition indebtedness of their principal residence which did not include second homes and investment property. The maximum amount was limited to $2 million of mortgage debt forgiveness or $1 million if filing separately.

Due to the serious consequences involved in short sales and foreclosures, it is advised that homeowners faced with this possibility should seek expert advice from their legal and tax professionals.

If you or someone you know is looking to buy, sell or rent a home, please call DeHanas Real Estate Services at 301-870-1717.

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Be Careful when using Realtor.com & others

Thursday, October 19, 2017

by Don DeHanas, Broker

Be very leary of who you give your personal information. It might not be going to the party you think it is going to.

As a home buyer you are looking through Realtor.com or another home search site, and you come across a listing you would like more information on. There is a button in the ad that says "Contact Agent". When you click on it, you are required to leave your name and contact info. Are you expecting the listing agent to respond? Most consumers would say "yes". However, that is not the case. Realtor.com gives your information to multiple agents who have paid for your lead, and now you are talking to someone who has never even stepped foot into the property.

This week, I had a buyer tell me about their experience, and said "I thought I was contacting you. I don't understand why I have to work this other agent".

I called Realtor.com to see what I could do about this deceptive practice, and I was told I could either "buy a zip code or become a Pro member", and buy all my listings back for $1200 a month.

In doing more research, I spoke with someone who paid the money to buy their own listings back, and learned that when the system was tested, the "consumer" still received multiple calls from other agents. As a Broker and business owner, ensuring that my clients and customers have a great experience when they contact us is my highest priority. In the case of Realtor.com. the consumer thinks they are getting one thing and they end up with a completely different and disappointing experience.

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Making The Decision to Buy A Home

Monday, October 16, 2017

by Don DeHanas, Broker

There could be some legitimate reasons for not buying a home but indecision is not one of them. Indecision is rooted in not having enough information to move forward to own a home or continue renting.

If you keep renting, at the end of the year, you have had a place to live and a pile of receipts that helped the landlord pay for his house. Deciding to buy a home will give you a place to live that is yours and all the things that come with that.

When you consider principal reduction, appreciation and tax savings, your monthly cost of housing could be much less than the rent you’re paying. The principal reduction included in each payment is like a forced savings account that increases as your mortgage balance decreases.

Your equity in the property will also grow due to appreciation as the home goes up in value. The equity is part of your net worth and an investment in your family’s future. The income tax savings can be an additional financial consideration if the combined interest and property taxes are greater than the allowable standard deduction. Trends are showing that both tenants and homeowners are staying in their homes longer. It’s been said that whether you rent or own, you’re paying for the home.

Do you really want to buy the home for your landlord? Check out your numbers on a Rent vs. Own and then, call us at 301-870-1717 to help make it happen.

DeHanas Real Estate Services specializes in residential resales, Bank-owned home sales, Property Management, short sales, and new constrcution. DeHanas Real Estate Services is family owned and operated with an office convenitnly located in Waldorf, MD.

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What is Your Mortgage Risk Factor?

Monday, October 9, 2017

by Don DeHanas, Broker

Regardless of what a lender quotes on mortgage rates, the actual rate a borrower pays is based on a number of variables. Lenders determine whether to loan money and at what rate based on the risk involved with the transaction.

Factors that increase the risk that the loan will be repaid will proportionately increase the interest rate charged to the borrower. If the risk becomes too high, the loan will not be approved. • Loan amounts – conventional mortgages above conforming limits as set by Fannie Mae and Freddie Mac are considered jumbo loans and generally have a higher interest rate.

• FICO score – the lowest interest rate is reserved for the highest score; the lower the score, the higher the rate the borrower will pay.

• Occupancy – borrowers occupying a home as their principal residence are considered a better loan risk than second homes and investment properties.

• Loan purpose – purchase transactions generally have the lowest interest rate with refinancing for better rates and terms being priced slightly higher. An even higher rate might be charged for refinancing and taking cash out of the property.

• Debt-to-Income Ratio – a borrower’s monthly liabilities divided by their gross monthly income develops a ratio that helps lenders to assess the borrower’s ability to repay the mortgage.

• Property Type – some types of property are considered higher risk than others which could adversely affect the rate.

• Loan-to-value – the lower the percentage of the loan to the appraised value of the property will generally lower the interest rate.

Any combination of these factors could limit a borrower’s ability to secure a mortgage at the rate initially quoted. Pre-approval by a trusted mortgage professional can be the best way to know what rate you can expect to pay. Please call for a recommendation of a trusted mortgage professional.

For a more detailed analysis of your current financial situation, please call DeHanas Real Estate Services at 301-870-1717 or visit one of our lender partners.

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Getting Pre-Approved For A Mortgage

Monday, October 2, 2017

by Don DeHanas, Broker

Buyer’s mortgage pre-approval is good for everyone in the transaction. It saves time, money and removes the uncertainty of knowing whether the buyer will be qualified after negotiating a contract.

The direct benefits include:

• Looking at “Right” homes - price, size, amenities, location

• Find the best loan - rate, term, type

• Uncover credit issues early - time to cure possible problems

• Negotiating power - price, terms, & timing

• Close quicker - verifications have been made

There is a significant difference in having a trusted mortgage professional take a loan application and run all the necessary verifications compared to going through calculators on a lender’s website. Beside the peace of mind, the cost of being pre-approved is a bargain and generally, limited to the cost of the credit report. Even if a person has been pre-approved, a second opinion from a different lender may be a good option. It can verify there is a good deal or you’ll discover that you can improve it. Either way, it works to your advantage. Contact me if you’d like a recommendation of a trusted mortgage officer.

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