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November 9, 2016

Homeownership Tax Benefits

One of the biggest benefits of homeownership is that you get tax benefits! At Avrus Financial and Mortgage, we want to help you make the most out of your new home. Here are some ways that you can do it:

Mortgage Interest

When you purchase a home and take out a mortgage, you will get a tax break on the interest on that mortgage. Your biggest tax break is reflected in the house payment you make each month (for most homeowners, most of that check goes toward interest). And all that interest is deductible, unless your loan is more than one million dollars, in which case the IRS will limit your deductible interest. And it’s not just your first mortgage that will help you out here: equity debts of $100,000 or less are generally fully deductible as well.

Points

Points can offer a tax break too. The IRS lets you deduct points in the year you paid them, as long as the following apply: if the loan is to purchase your home, if the payment of points is the normative practice in your area, and if the points were within the usual range. The same rule applies to home equity loans or lines of credit. When the loan money is used for work on the house that’s securing the loan, the points are deductible in the year the loan is taken out.

Capital Gains

When you sell your home, you also get a tax break. If you buy your home for $250,000 and sell it for $500,000, for example, you are making money; but this income isn’t taxed the same way that it would be if you made it via a job, for example.

Moving Tax Credits

If you buy a home in one state and sell a home in another state, you can likely receive tax credits for moving expenses if the move is mandated by a job necessity.

It’s important that you understand all the ways that home ownership impacts your financial bottom line. At Avrus Financial and Mortgage, we want to save you as much money as possible, and we’re ready to help you save in a myriad of different ways.

Why not ask us how… today?

September 15, 2016

Mortgage Terms Don’t Have to be Mysterious

We’re not talking about the terms of your loan: we’re talking about the language used in mortgages! And if you’ve never taken out a mortgage before, it can all seem quite mysterious. But it doesn’t have to be! At Avrus Financial and Mortgage, we want the process to be as transparent as possible, so here are a few terms with which you might not be familiar:

1) The good faith estimate, also known by its initials, the GFE. What it does is give you an idea of what you’ll be paying in closing costs for your mortgage. These costs can include loan fees, fees to be paid in advance, reserves, title charges, government charges and miscellaneous additional charges. It can be difficult early on to be clear about exactly what the costs at closing will be, so that’s why it’s called “good faith”—it’s the best that can be done with the information at hand. If your disclosures are all correct, then the estimate will be more accurate than it will if there are bumps in the road ahead that you could have foreseen. Additional changes can happen when documents are reviewed and it’s necessary, for example, to change mortgage programs.

There are two sections to the GFE:
• Lender fees: This is a critical section and can vary from lender to lender. Some affect the APR (annual percentage rate), which is the part that varies the most and should have special attention paid to.
• Prepaids: As the name suggests, these are the things that you will need to pay in advance or bring with you to closing. They include interest, homeowner’s insurance, and mortgage insurance.

2) Verifications, forms that go directly from the mortgage broker to the entity (bank, employers, etc.) issuing the verification. They include verification of deposit, verification of rent or mortgage, verification of loan, and verification of employment.

3) Loan-to-Value, which assesses whether the property you want to purchase is a good risk for the lender. The loan amount is divided by either the appraised value or the sales price. The result is what is known as the equity on the property; it includes the down payment.

At Avrus Financial and Mortgage, we are committed to helping you understand every step of the mortgage or refinance process. We’ve helping thousands of people in California, Florida, and Georgia understand their loan needs and get the best possible financing, and we can help you.

Why not ask us how… today?

August 12, 2016

I’m Retired: Does That Mean I Can’t Get a Mortgage?

A lot of people hesitate to even consider buying a new home or refinancing the one they have because they’re retired. Without that regular paycheck and the promise of many paychecks to come, there’s an assumption that it’s not worth it to even dream.

And then there are retirees who assume that if they can pay cash for a new home, or pay off their mortgage, then that’s what they should do. But there are a lot of financial considerations to take into account when making that kind of decision, and there may be good reasons to opt for a mortgage: there are tax reasons, there are asset preservation reasons, there are even just plain arithmetic reasons!

They’re wrong. Applying for a mortgage when you’re retired is different from the mortgage application you filled out when you were 30; but it’s still well within the bounds of possibility!

Your home is your biggest asset, and many people believe that they need to have it paid off before they retire or early on in their retirement, much less refinancing or taking out a new mortgage. But a mortgage is still the lowest-interest loan you can get; and what if you had a major medical emergency or you or your spouse had to go into assisted living? That cash that you don’t have tied up in your home. Keeping your mortgage going and putting the extra money somewhere safe is often a better decision.

And then there’s the question of what you mean by retired. According to the U.S. Bureau of Labor Statistics, nearly 20 percent of Americans who are over 65 are still employed in some capacity, either full-time or part-time. When added to retirement income, this can help you qualify for a mortgage. If you have adult children, some lenders will allow them to qualify for a loan on your behalf, even if they do not plan to live with you. If you’re over 62, you can also qualify for a reverse mortgage. While you most frequently hear about people using this option to refinance the house that they already own and live in, there are also some programs that allow homebuyers to qualify for a reverse mortgage.

In other words, there are a number of different loan programs and strategies to help you, whether you want to buy a home or refinance one you already have, once you’re retired. At Avrus Financial and Mortgage, we are familiar with the various loan programs offered by lenders in your area, and we can help you with the planning and application process. We’ve helped other retirees with mortgages, and we can help you, too.

Why not ask us how… today?