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Gift of Equity

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There is a little-known mortgage program that could provide the vehicle for the right person to get into a home.  If a person sells their home to another for less than the fair market value, the difference in the appraised value and the sales price is considered a gift of equity for the buyer. FHA requires that borrowers receive gifts of equity only from family members transferring title to the borrower.  An appraisal is required to determine the value of the home.  The sales price is subtracted from the appraised value to determine the equity to be gifted.  If a home appraises for $300,000 when the owner will sell it for $250,000, the gift is $50,000. The gift is applied to the down payment.  In this example, the borrower would have to qualify for a $250,000 mortgage which would require private mortgage insurance because a 20% down payment on a $300,000 home would be $60,000.  If the buyer had an additional $10,000 in cash to put down, the PMI would not be requ
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Do You Know the Way?

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It may be natural for first-time buyers to be unsure of the process of buying a home because they haven't been through it before but even repeat buyers need to know changes that have taken place since the financial housing crisis. The steps in the home buying process are predictable and generally follow the same pattern.   It certainly makes the move stay on schedule when you know all the different things that must be done to get to the closing. In the initial interview with your real estate professional, you share the things you want and need in a home, discuss available financing and learn how your agent can represent you in the transaction. The pre-approval step is essential for anyone using a mortgage to purchase a home to assure that they're looking at the right price of homes and so they'll know what they can qualify for and what the interest will be. Even with lower than
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Do You Know the Way?

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It may be natural for first-time buyers to be unsure of the process of buying a home because they haven't been through it before but even repeat buyers need to know changes that have taken place since the financial housing crisis. The steps in the home buying process are predictable and generally follow the same pattern.  It certainly makes the move stay on schedule when you know all the different things that must be done to get to the closing. In the initial interview with your real estate professional, you share the things you want and need in a home, discuss available financing and learn how your agent can represent you in the transaction. The pre-approval step is essential for anyone using a mortgage to purchase a home to assure that they're looking at the right price of homes and so they'll know what they can qualify for and what the interest will be. Even with lower than normal inventory, it is difficult to stay up-to-date with the homes currently f
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Start Early and Live Happily Ever-after

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As storybooks go, the character is introduced, they meet their love interest, a villain thwarts their intentions, true love overcomes, they marry and live happily ever-after.  It's a very familiar formula. Similarly, there is a formula that couples follow in real life.  They go to college, get a good job, rent a home, fall in love, get married and buy a starter home.  They start a family, move into a larger home, save for their children's education, start planning for their retirement and if they live within their means, they invest their surplus funds. An alternative to this might be to start investing in rental homes early in their adult life before their standard of living becomes so expensive that they don't feel like they have the money to purchase rentals.  There are infinite possibilities but let's say a single person, after getting a good job, buys a small three or four-bedroom home with an owner-occupied, minimum down payment.  They move int
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It's Not Just the Tax Benefits

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When the standard deduction for married couples filing jointly was increased from $12,700 to $24,000 for 2018, there was some speculation that the bloom was off the rose of homeownership.   The thought was that if the tax benefits from being able to deduct the property taxes and interest was less than the standard deduction, that maybe, the buyer would be better off continuing to rent. With mortgage rates as low as they have been for the past eight years, payments have been lower and so has the amount interest that was paid.   This and the fact that sales and local taxes, which include property taxes, are limited to $10,000 a year on the Itemized Deduction form have made it harder to reach the increased standard deduction. The reality of the situation is tax benefits are only one of the components that make a home an excellent investment and it probably contributes the least of the top three benefits.   Principal reduction and appreciation build an owner's equity in
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Fast Track Rental Property

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FHA allows owner-occupants to purchase up to a four-unit property with a minimum 3.5% down payment.   The rent collected on three units could be used to make the payment and the owners' pro-rata share would be less than ¼ of the payment itself. The owner-occupied unit would be considered their principal residence.   The other three units are treated as rental property and eligible for cost recovery, a non-cash deduction plus all the normal business expenses.   The rental income of the three remaining units is calculated as income and assists the buyer in qualifying. A homeowner could buy a four-unit, live in one for two years, buy another four-unit with a minimum down payment, move into one unit, rent the other three as well as the previous unit in the first property.   Then, after another two years, repeat the same process over aga
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Autumn Sales! Year End Tax Breaks

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For Quicker Transaction! CALL DON BURNS (281) 734-8715 www.har.com/donburns DON BURNS TEAM- REAL ESTATE CDPE, CRS, ePRO® www.donburns.com http://www.har.com/donburns don@donburns.com (281) 491-6274 Houston, Texas Sugarland, Texas Richmond, Texas Missouri City, Texas Katy,Texas
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