Refinancing your home may accomplish a number of financial goals:
Lowering your interest rate may save money on your monthly payment.
Reducing the term of your mortgage may save tens of thousands of dollars over the life of the loan while increasing slightly higher on monthly payments.
Refinancing an ARM or a balloon to a fixed rate may eliminate the uncertainty of shifts in interest rates.
At Cascade Financial & Co., we offer a variety of refinancing packages to suit the needs of our customers, and we welcome the opportunity to work with you to find the right mortgage. The right option for you will depend on a variety of factors pertaining to your specific situation - one of our mortgage professionals will help you choose the best loan package.
Considering the following factors can give you a head start in deciding which type of refinance option to choose:
1. How long you plan to remain in the house?
2. How long you have been paying on your current mortgage?
3. The current rate and term of your mortgage?
4. Whether you have a second mortgage or home equity line of credit?
5. How much equity you have in your home?
6. Whether it will be beneficial to consolidate other debts into your mortgage? (this can depend on the amount of equity that you currently have in your home)
Monday, October 6, 2008
Wednesday, September 17, 2008
USDA Rural Housing Loans
Todays lending environment has left only 2 options for true 100% financing, the VA loan and the USDA loan. USDA's sole purpose is to provide loan options for borrowers to buy homes in the rural parts of the country in order to further populate areas to support the infrastructure of the United States. Qualifying for this loan option is easy and provides low rates and the guarantee of Uncle Sam that you are getting a great loan option. Call me at (615) 585-5824 if you would like more information on this great overlooked loan program.
Monday, February 25, 2008
Finally — IRS Guidance on Exchanging Vacation Homes Revenue Procedure 2008-16 Provides Safe Harbor
Until now, the issue of whether a vacation home qualifies for tax deferral treatment under IRC §1031 was the subject of much scrutiny and uncertainty. To the delight of many tax practitioners, on February 15, 2008, the IRS eliminated that uncertainty by issuing Revenue Procedure ("Rev. Proc.") 2008-16, effective March 10, 2008, which provides a safe harbor for exchanges of vacation homes (defined as "dwelling unit" in the Rev. Proc.). Now taxpayers can have a clear understanding of the circumstances under which the IRS will not challenge whether a vacation home will qualify as property "held for investment" under §1031.
Vacation Home as Relinquished Property
For a vacation home to qualify as relinquished property, it must meet the following criteria:
• It is owned by the taxpayer for at least 24 months immediately before the exchange ("qualifying use period"); and
• Within the qualifying use period, in each of the two 12 month periods, (1) the taxpayer rents the dwelling unit at fair rental to another person for 14 days or more and (2) the taxpayer’s personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12 month period that the dwelling unit was rented at fair rental value.
The first 12 month period immediately preceding the exchange ends on the day before the exchange takes place (and begins 12 months prior to that day). The second 12 month period ends on the day before the first 12 month period begins (and begins 12 months prior to that day).
Vacation Home as Replacement Property
For a vacation home to qualify as replacement property, it must meet the following criteria:
• It is owned by the taxpayer for at least 24 months immediately following the exchange ("qualifying use period"); and
• Within the qualifying use period, in each of the two 12 month periods, (1) the taxpayer rents the dwelling unit to another person at fair rental for 14 days or more and (2) the taxpayer’s personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12 month period that the dwelling unit was rented at fair rental.
The 12 month period immediately after the exchange begins on the day after the exchange takes place and the second 12 month period begins on the day after the first 12 month period ends.
Personal use is defined broadly. Use by the taxpayer or other person having an interest in the dwelling unit and any family member1 will be considered "personal use" by the taxpayer. Also, any arrangement whereby fair market rent is not paid will be considered "personal use" by the taxpayer. Notwithstanding the foregoing, use by family members will not be considered "personal use" by the taxpayer only if the dwelling unit is rented at fair market rent and the family member uses it as his principal residence.
Fair rental is based upon all of the facts and circumstances that exist when the rental agreement is entered into. All rights and obligations of the rental agreement are taken into account.
Note special rule for replacement property. If the taxpayer files a return reporting a transaction under §1031 based on the expectation that the dwelling unit will meet the qualifying use standards and subsequently determines that the dwelling unit does not meet the qualifying use standards, the taxpayer, if necessary, should file an amended return.
Exchanges of vacation homes outside the Rev. Proc. 2008-16 safe harbor. An exchange of a vacation home may still qualify under §1031 even though it falls outside the parameters of Rev. Proc. 2008-16. Any such circumstance will be subject to greater scrutiny and therefore should be carefully planned and reviewed by the taxpayer’s tax advisor.
Vacation Home as Relinquished Property
For a vacation home to qualify as relinquished property, it must meet the following criteria:
• It is owned by the taxpayer for at least 24 months immediately before the exchange ("qualifying use period"); and
• Within the qualifying use period, in each of the two 12 month periods, (1) the taxpayer rents the dwelling unit at fair rental to another person for 14 days or more and (2) the taxpayer’s personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12 month period that the dwelling unit was rented at fair rental value.
The first 12 month period immediately preceding the exchange ends on the day before the exchange takes place (and begins 12 months prior to that day). The second 12 month period ends on the day before the first 12 month period begins (and begins 12 months prior to that day).
Vacation Home as Replacement Property
For a vacation home to qualify as replacement property, it must meet the following criteria:
• It is owned by the taxpayer for at least 24 months immediately following the exchange ("qualifying use period"); and
• Within the qualifying use period, in each of the two 12 month periods, (1) the taxpayer rents the dwelling unit to another person at fair rental for 14 days or more and (2) the taxpayer’s personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12 month period that the dwelling unit was rented at fair rental.
The 12 month period immediately after the exchange begins on the day after the exchange takes place and the second 12 month period begins on the day after the first 12 month period ends.
Personal use is defined broadly. Use by the taxpayer or other person having an interest in the dwelling unit and any family member1 will be considered "personal use" by the taxpayer. Also, any arrangement whereby fair market rent is not paid will be considered "personal use" by the taxpayer. Notwithstanding the foregoing, use by family members will not be considered "personal use" by the taxpayer only if the dwelling unit is rented at fair market rent and the family member uses it as his principal residence.
Fair rental is based upon all of the facts and circumstances that exist when the rental agreement is entered into. All rights and obligations of the rental agreement are taken into account.
Note special rule for replacement property. If the taxpayer files a return reporting a transaction under §1031 based on the expectation that the dwelling unit will meet the qualifying use standards and subsequently determines that the dwelling unit does not meet the qualifying use standards, the taxpayer, if necessary, should file an amended return.
Exchanges of vacation homes outside the Rev. Proc. 2008-16 safe harbor. An exchange of a vacation home may still qualify under §1031 even though it falls outside the parameters of Rev. Proc. 2008-16. Any such circumstance will be subject to greater scrutiny and therefore should be carefully planned and reviewed by the taxpayer’s tax advisor.
Wednesday, February 20, 2008
FHA Increases Loan Limits
Yesterday, President Bush signed into law the Economic Stimulus Act of 2008, which Congress passed on February 7, 2008. The Act temporarily increases the mortgage loan limits for the U.S. Department of Housing and Urban Development’s (“HUD”) Federal Housing Administration (“FHA”) program, in addition to providing certain tax rebates and temporary increases in the conforming loan limits for Fannie Mae and Freddie Mac. As you know, the National Housing Act limits the maximum dollar amount that FHA can insure, and these maximum amounts vary based on the geographic location of the property securing the FHA loan. With regard to FHA-insured loans secured by single-family residences, the Act would increase the loan limit from 87 percent of the conforming loan limit to 125 percent of the median single-family home price in the geographic area. In certain geographic regions where the cost of housing is very high, the Act increases the FHA loan limit to as much as 175 percent of the conforming loan limit. The Act makes clear that, in calculating FHA loan limits, HUD will use the conforming loan limit in place prior to the Act’s passage, which was $417,000. This change effectively increases the FHA maximum loan amount from $362,790 to as much as $729,750 in certain parts of the country. In less expensive markets, Congress increased the FHA loan limit from 48 percent of the conforming loan limit to 65 percent of the conforming loan limit, which would increase maximum loan amounts in these areas from $200,160 to $271,050. The Act also gives HUD the authority to raise these loan limits by an additional $100,000 if market conditions warrant further increase. The Act’s temporary loan limit increases would apply to FHA-insured loans for which a mortgage lender has issued credit approval on or before December 31, 2008. HUD will likely make an announcement regarding the timeframe for loan eligibility at these higher loan limits. Therefore, lenders should wait for guidance from HUD before originating FHA loans with these increased loan limits.This increase in FHA loan limits should spur interest in FHA-insured loans and make this loan product an attractive option for many Americans in both refinance and new home purchase transactions. According to Congressional Budget Office estimates, implementing these increased loan limits could result in approximately $10 billion in additional FHA loan guarantees through December 31, 2008. As FHA-insured mortgages may become the loan of choice for many homebuyers and refinancing borrowers in the coming months, we have attached a recent Client Alert in which we summarize the FHA single-family program. As FHA loans gain popularity, lenders should be careful to ensure compliance with HUD’s lender and loan eligibility criteria and to keep apprised of new FHA requirements. If you are interested in learning more about the essentials of FHA lending, please let us know
Tuesday, January 15, 2008
Mortgage Rates are Low and Sellers are Motivated
Get ready for the influx of mortgage commercials bringing back the slogan “Mortgage Rates are at or near the lowest in history” or some variation there of. Truth is Mortgage Rates are very low right now. If you have been looking to purchase or find yourself in a mortgage that is still in the mid to high 6 percent range, now is a great time to purchase or refinance. 30 year fixed mortgages are between 5% and 5.25% as of today 1/15/07. That is very close to historical lows. Sellers are highly motivated right now so buyers have a rare time where they can get great incentives from sellers and still benefit from fantastic rates. The mortgage scene has changed with regards to qualifying. 100% loans are still available but only with good credit, income, and assets. First Time Home Buyers get in while the getting is good. Low competition, Low rates, Low Prices and Motivated Sellers. If you need help with prequalification or just have questions to ask do not hesitate to email me so. trent@callcascade.com
Friday, December 14, 2007
Your credit score is the single most important factor with lenders in determining if a homeowner will pay their mortgage. For this reason the biggest lenders in the mortgage industry, Fannie Mae and Freddie Mac, have decided to add credit score based fees to their loans. This is in addition to the ¼% delivery fee on all loans effective March 2008. The home owners credit score will determine how much this fee will be.
The following is a breakdown of the percentage in fees, a homeowner may incur based on their credit score.
- Credit scores between 660-679: 0.750% of loan
- Credit scores between 640-659: 1.250% of loan
- Credit scores between 620-639: 1.750% of loan
- Credit scores below 620: 2.000% of loan
For example, a person looking to purchase or refinance with a $250,000 loan amount and a 675 credit score could be subject to a credit based fee of $1,875. As you can see from the breakdown the fee can dramatically increase as a homeowner’s credit score lowers.
There will be three different options a borrower can choose to pay this fee:
- Cover the fee with cash at the closing
- Add the fee to the loan amount (this may also effect the loan-to-value of the loan)
- Accept a higher interest rate that will cover “far and above” the cost of the fee over the life of the loan but, no initial out of pocket money from the borrower.
These adjustments do not take effect until March 1, 2008. That means if you are planning to purchase or refinance a home mortgage after that time, please take the time to get your credit in order now. Contacting a mortgage planner at Cascade Financial is a good start to knowing your credit standing. Then, if you find that your scores are below 680 or very close to the next tier, take a proactive stance and work to improve your score.
Thursday, December 13, 2007
FLORIDA PROPERTY TAX REFORM:How Does It Affect You
On October 30, 2007 the Florida Legislature meeting in special session, approved a package of property tax reform proposals meant to provide relief to homestead-exempted homeowners, owners of second-homes, rental property owners and businesses.
Four major reforms are proposed:
1. EXPANDED HOMESTEAD EXEMPTION: Increase the cur-rent $25,000 Homestead Exemption by an additional$25,000 except on school board taxes.
2. PORTABILITY: Allow homeowners to transfer up to$500,000 of their Save Our Homes Assessment Limitation benefit to the new homestead.
3. CAP ON NON-HOMESTEAD PROPERTY: The assessed value for all other properties without a homestead exemption will be limited to a maximum 10% increase in a year.
4. TANGIBLE PERSONAL PROPERTY EXEMPTION: Businesses will be eligible for a $25,000 exemption on equipment such as computers, office furniture and fixtures. On January 29, 2008, Florida voters will have the opportunity to approve or reject this property tax reform package. The measure will pass if at least 60% of voters approve it.
Will voters have the ability to approve some provisions and reject others? No. Voters will have to decide if they want to pass the entire bill or not.
Will I have to apply for the increased homestead exemption? No. If voters approve the amendment and you already have a homestead exemption, you will not need to file a new application. The Property Appraisal Department will automatically increase your 2008 homestead exemption to $50,000. New homeowners must file a first time Homestead Exemption application in order to receive the $50,000 homestead exemption.
Will the qualifications for homestead exemption change under this bill? No. Minimum qualifications include ownership of the home and residence there as of January 1. You must file an application by March 1. For information on qualifications and how to apply for the Homestead Exemption, as well as for other property tax exemptions, please contact your local county property tax appraiser.
What is “portability”? Currently, property owners with a homestead exemption receive a benefit known as Amendment 10 or Save Our Homes cap. This Save Our Homes benefit works by limiting the increase of the assessed value of a home to a maximum of 3%regardless of any increase in market value. However, undercurrent law, if the homeowner moves or sells the property, this limitation is removed. If the proposed reform package is passed by voters, home owners will be allowed to transfer this benefit to the next homestead property. This is called portability or a portable cap.
If the proposal passes, when is the first year that I can transfer my Save Our Homes benefit? Qualified applicants will be able to transfer (or port) the Save Our Homes benefit beginning in 2008.
I plan to sell my existing home and buy a new one. How can I calculate the Save Our Homes benefit that I'll be able to transfer? There are two ways to calculate the amount of Save Our Homes benefit, depending on whether you buy a home that is less expensive or more expensive than your current homestead exempted property.
IF YOU'RE BUYING A MORE EXPENSIVE HOME: Calculate the difference between the market and assessed values of your existing home. You'll be able to port (or transfer) that amount, up to $500,000, to the next property.
IF YOU'RE BUYING A LESS EXPENSIVE HOME: In this situation you'll be able to transfer only a portion of this benefit. How much you can transfer will be proportional to the extent to which you're buying down.
My brother and I own an equal share in a home we bought a few years ago and we both have the homestead exemption. If he moves and purchases another home, does that affect my Save Our Homes limitation benefit? No. The Save Our Homes benefit remains with the original property. In order to transfer this benefit, the original Homestead Exemption would have to be abandoned by all parties.
Can I take my Save Our Homes benefit outside of the county I currently live in? Yes. The reforms have been packaged as an amendment to the Florida constitution and will therefore be applicable any where within the state.
What benefits are there for first time homebuyers? The reform package contains no specific proposals to benefit first time home buyers. However, first time home buyers who qualify will benefit from the increased $50,000 Homestead Exemption.
Four major reforms are proposed:
1. EXPANDED HOMESTEAD EXEMPTION: Increase the cur-rent $25,000 Homestead Exemption by an additional$25,000 except on school board taxes.
2. PORTABILITY: Allow homeowners to transfer up to$500,000 of their Save Our Homes Assessment Limitation benefit to the new homestead.
3. CAP ON NON-HOMESTEAD PROPERTY: The assessed value for all other properties without a homestead exemption will be limited to a maximum 10% increase in a year.
4. TANGIBLE PERSONAL PROPERTY EXEMPTION: Businesses will be eligible for a $25,000 exemption on equipment such as computers, office furniture and fixtures. On January 29, 2008, Florida voters will have the opportunity to approve or reject this property tax reform package. The measure will pass if at least 60% of voters approve it.
Will voters have the ability to approve some provisions and reject others? No. Voters will have to decide if they want to pass the entire bill or not.
Will I have to apply for the increased homestead exemption? No. If voters approve the amendment and you already have a homestead exemption, you will not need to file a new application. The Property Appraisal Department will automatically increase your 2008 homestead exemption to $50,000. New homeowners must file a first time Homestead Exemption application in order to receive the $50,000 homestead exemption.
Will the qualifications for homestead exemption change under this bill? No. Minimum qualifications include ownership of the home and residence there as of January 1. You must file an application by March 1. For information on qualifications and how to apply for the Homestead Exemption, as well as for other property tax exemptions, please contact your local county property tax appraiser.
What is “portability”? Currently, property owners with a homestead exemption receive a benefit known as Amendment 10 or Save Our Homes cap. This Save Our Homes benefit works by limiting the increase of the assessed value of a home to a maximum of 3%regardless of any increase in market value. However, undercurrent law, if the homeowner moves or sells the property, this limitation is removed. If the proposed reform package is passed by voters, home owners will be allowed to transfer this benefit to the next homestead property. This is called portability or a portable cap.
If the proposal passes, when is the first year that I can transfer my Save Our Homes benefit? Qualified applicants will be able to transfer (or port) the Save Our Homes benefit beginning in 2008.
I plan to sell my existing home and buy a new one. How can I calculate the Save Our Homes benefit that I'll be able to transfer? There are two ways to calculate the amount of Save Our Homes benefit, depending on whether you buy a home that is less expensive or more expensive than your current homestead exempted property.
IF YOU'RE BUYING A MORE EXPENSIVE HOME: Calculate the difference between the market and assessed values of your existing home. You'll be able to port (or transfer) that amount, up to $500,000, to the next property.
IF YOU'RE BUYING A LESS EXPENSIVE HOME: In this situation you'll be able to transfer only a portion of this benefit. How much you can transfer will be proportional to the extent to which you're buying down.
My brother and I own an equal share in a home we bought a few years ago and we both have the homestead exemption. If he moves and purchases another home, does that affect my Save Our Homes limitation benefit? No. The Save Our Homes benefit remains with the original property. In order to transfer this benefit, the original Homestead Exemption would have to be abandoned by all parties.
Can I take my Save Our Homes benefit outside of the county I currently live in? Yes. The reforms have been packaged as an amendment to the Florida constitution and will therefore be applicable any where within the state.
What benefits are there for first time homebuyers? The reform package contains no specific proposals to benefit first time home buyers. However, first time home buyers who qualify will benefit from the increased $50,000 Homestead Exemption.
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