Home Financing Tips from Local Experts

Our home financing tips cover some of the many avenues through which you can purchase and finance a home in today’s marketplace. I talked to some local experts in the accounting and mortgage industries, and they shared options to consider when choosing the best one for you. Factors such as how long you intend to own the property, the down payment funds you have available and the fees you will incur are just a few items for consideration. To begin your Deep Creek Lake real estate search, you can contact me, Betsy Holcomb, at 301-616-5022 or betsy@deepcreekvacations.com.

Home Financing – Mortgage Update Courtesy of Mike Archer, First Home Mortgage

According to Freddie Mac, the average 30 year fixed rate on 2/7/2019 was 4.41% with .4pts and 3.38% with .4pts on a 15 year term.  Interest rates have dropped rather significantly following steady climb throughout the 4th quarter of 2018.  The general consensus is that rates will likely level off and remain steady throughout 2019.

If you have contemplated a refinance, now is the time to investigate your options while rates remain historically low.  I am finding that more and more clients are moving from a 30 year to a 15 or 10 year options to reduce the interest rate and pay their house off more quickly as they are now contemplating retirement.  A quick phone conversation is all that is needed to evaluate your options.

If you looking to purchase a house and have less than 20% to put down?  If so, don’t worry, First Home Mortgage offers several options that allow you to put down less than 20% and avoid paying mortgage insurance.  We also have the option of using a 2nd mortgage to structure the loan so that both loans are under 80% of the property’s value and therefore do not require mortgage insurance.

Are you looking to renovate your house either to sell it or just upgrade the existing improvements?  If so, we have a conventional renovation loan program, Fannie Mae HomeStyle that allows you to finance the proposed renovations using a conventional loan and avoid paying mortgage insurance.  The maximum loan amount under this program varies by county throughout the State of Maryland.

Finally, if you are first time homebuyer strapped with student loans, the State of Maryland has released Smartbuy 2.0, which affords first time buyers with debt forgiveness of up to $40,000 if they stay in the house for at least 5 years.  On top of the, they are also offer the Maryland HomeCredit, which is a recurring annual tax credit equal to 25% of the mortgage interest paid, up to $2,000 each year.

Please feel free to email or call me with questions or concerns at marcher@gofirsthome.com or 443-226-2030.

Mike Archer, Sr. Mortgage Consultant
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Home Financing – 1031 Exchange

Do you own appreciated investment or business real estate?  The recently implemented Tax Cuts and Jobs Act “TCJA” has changed many aspects of the Internal Revenue Code.  Good news…1031 exchanges also known as “like kind exchanges” for real estate remain alive and well!  This still offers a great opportunity to defer capital gain from the sale of your investment or business real estate as long as you reinvest the original purchase price into a replacement investment real estate property.  If your like-kind exchange isn’t a simultaneous exchange (relinquished and replacement property close on the same day), you need to utilize the help of a Qualified Exchange Intermediary to assist in your transaction.  Early planning and consultation will insure you are completing the steps correctly because mistakes in the process can result in taxable income.  Here are a few basic rules to remember to help avoid reporting a taxable gain:

Consult a Qualified Exchange Intermediary before you sell your relinquished property.

1.You must exchange property of “like kind” and both properties (relinquished and replacement) must be investment or business property.

2.To avoid capital gain income and taxes associated with the gain, the purchase price of the replacement property must be the same or greater than the basis in the property sold.

3.You must not receive cash or “boot” in the transaction to defer all the gain. Boot received will cause a portion of the gain to be taxable.

4.You must identify the replacement property within 45 days of the sale of the relinquished property and complete the purchase of the replacement property within 180 days (or before your tax return is due including extensions).

This is a simplistic overview of a 1031 Exchange and there are many rules guiding these transactions, so always make sure to consult your tax professional with your specific situation.

Source: Kristi Newsome, CPA – The Rodeheaver Group P.C., 301.334.3127, www.rgroupcpa.com

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