Blog – Page 31 of 787 – First Rate Financial Group

27

Dec

Home Mortgage Tips

A Deep Dive into Mortgage and Tax Facts

Owning a home is a significant milestone that comes with a multitude of financial considerations. Beyond the pride of homeownership, there are substantial tax benefits and deductions available to those who embark on this journey. We will explore key facts about mortgages and taxes, focusing on the deductions, credits, and benefits that can make homeownership a financially savvy decision.

Mortgage Interest Deduction: A Prime Advantage for Homeowners

One of the most notable tax benefits for homeowners is the mortgage interest deduction. This deduction allows homeowners to deduct the interest paid on their mortgage from their taxable income. The rationale behind this is to encourage homeownership by making it more financially attractive. Homeowners can typically deduct the interest paid on mortgages up to $750,000 (or $1 million if the mortgage originated before December 15, 2017).

Property Tax Deductions: Easing the Burden of Ownership

Property taxes can be a significant expense for homeowners, but the silver lining is the ability to deduct these taxes from federal income taxes. Homeowners can include state and local property taxes when calculating their itemized deductions. This deduction is particularly valuable for those living in areas with higher property tax rates.

Points Deduction: Unveiling the Cost of Financing

When securing a mortgage, homeowners often pay points to lower their interest rates. The good news is that these points can be deducted from your tax return. Each point is typically equal to 1% of the loan amount, and the deduction can be claimed in the year the mortgage was taken.

Home Office Deduction: A Workspace Within Your Sanctuary

For those who work from home, there may be an opportunity to claim a home office deduction. While there are strict criteria for eligibility, if a portion of your home is used exclusively for business purposes, you may be able to deduct related expenses, including a portion of your mortgage interest.

First-Time Homebuyer Credits: Encouraging New Entrants

Governments often provide incentives for first-time homebuyers. These can come in the form of tax credits, helping offset the upfront costs associated with purchasing a home. Be sure to explore local and federal programs that may provide financial assistance or credits for those taking their first steps into homeownership.

Energy-Efficient Upgrades: Environmentally Friendly Tax Breaks

Making eco-friendly upgrades to your home not only benefits the environment but can also lead to tax credits. Installing energy-efficient systems, such as solar panels or energy-efficient windows, may qualify you for federal and state tax credits, putting money back into your pocket.

Owning a home comes with a range of financial advantages, especially when it comes to taxes. The mortgage interest deduction, property tax deductions, and various other credits can significantly reduce the financial burden of homeownership. As you embark on this journey, it’s crucial to stay informed about the ever-changing landscape of tax laws and seek professional advice to ensure you make the most of the available benefits. In the end, the dream of homeownership can be not only emotionally rewarding but also a smart financial move.

26

Dec

By First Rate Financial Group

Financial Reports

What’s Ahead For Mortgage Rates This Week – December 26, 2023

The final release of the GDP figures are the last large releases of the year before moving into Q1 of 2024, with the GDP report showing the economy had shown growth — particularly in Q3 with it tapering off by the end of the year. While the growth had been strong, it still was less than expected by analysts, however the final numbers do indicate we are on a track for a soft-landing and with the potential to all-together avoid a potential recession. The only other reports of note were the Personal Spending and PCE Index Prices.

GDP 2023 (Final)
The U.S. economy expanded at a revised 4.9% annual pace in the third quarter, a surprising burst of growth that appears to have tapered off at year’s end.

Growth of gross domestic product, the official scorecard for the economy, was reduced from a previously reported 5.2% in the government’s third estimate. It was still the biggest increase in GDP in a decade, however, excluding the pandemic years of 2020-21.

Personal Income and Spending
In November, consumer spending experienced a slight increase of 0.2%, indicating a somewhat tempered growth in the U.S. economy. The trend of subdued spending was also observed in October. On a positive note, incomes saw a rise of 0.4% during the same period. This increase in income is noteworthy as it now outpaces inflation.
PCE Index

In November, the U.S. inflation rate, as measured by the Federal Reserve’s preferred PCE index, registered a decline for the first time since 2020, signaling a continued easing of price pressures. The year-over-year inflation growth also decelerated, dropping to 2.6% from the previous month’s 2.9%, marking the lowest level since February 2021.

Primary Mortgage Market Survey Index

15-Yr FRM rates saw a decrease by -0.43% with the current rate at 5.95%.
30-Yr FRM rates saw a decrease by -0.28% with the current rate at 6.67%

MND Rate Index

30-Yr FHA rates saw a -0.02% decrease for this week. Current rates at 6.12%
30-Yr VA rates saw a -0.02% decrease for this week. Current rates at 6.13%

Jobless Claims
Initial Claims have decreased to 206,000 in comparison to the expected claims of 218,000. The prior week number was 203,000.

What’s Ahead
With New Year’s on the horizon, the only notable release will be the regularly scheduled Jobless Claims release.

22

Dec

By First Rate Financial Group

Mortgage

The Benefits of Construction-to-Permanent Loans

Embarking on a home construction project is an exciting journey that can lead to your dream home becoming a reality. However, the financial aspects of building a home can be challenging to navigate. This is where construction-to-permanent loans come into play. These unique financing options offer a range of benefits that can make the construction process more manageable and affordable. We will discuss the advantages of construction-to-permanent loans and how they can benefit homeowners.

What Is A Construction-to-Permanent Loan?

Construction-to-permanent loans, also known as CTP loans, are a type of financing that combines two separate loans into one convenient package. The first part of the loan is used to cover the costs of building the home, while the second part converts into a traditional mortgage once the construction is completed. This seamless transition from construction financing to a permanent mortgage is what sets CTP loans apart and makes them a valuable tool for homebuilders.

Benefits of Construction-to-Permanent Loans

Simplified Financing: One of the primary benefits of CTP loans is the simplicity they bring to the construction financing process. Instead of dealing with two separate loans, borrowers can streamline their financing into a single package. This reduces paperwork, simplifies budgeting, and makes it easier to manage the financial aspects of building a home.

One-Time Closing: In a traditional construction loan, borrowers must close on the construction loan and then go through a second closing for the permanent mortgage. This often means additional fees and paperwork. With CTP loans, there’s only one closing. You save on closing costs, and the process is more convenient and efficient.

Fixed Interest Rates: Construction loans typically have variable interest rates that can fluctuate with the market. This can lead to uncertainty in your budget. In contrast, CTP loans often offer fixed interest rates for the entire loan term. This provides stability and predictability in your monthly mortgage payments.

Flexible Loan Terms: Construction-to-permanent loans typically offer a range of loan term options, allowing you to choose the term that best suits your financial situation. This flexibility enables you to tailor your mortgage to your specific needs and preferences.

Lock-in Rates: With a CTP loan, you can lock in your mortgage interest rate at the beginning of the construction process. This protects you from any potential future interest rate increases, which can save you money over the life of the loan.

No Requalification: Once your home is completed, and your construction loan converts into a permanent mortgage, you don’t need to requalify for the loan. This can be especially beneficial if your financial circumstances change during the construction process, as long as you meet the initial qualifying criteria.

Lower Down Payment: Many construction-to-permanent loans offer competitive down payment requirements, often lower than what you might find with traditional mortgages. This can be a significant advantage, especially for first-time homebuilders who may not have substantial savings.

Construction-to-permanent loans offer a streamlined and cost-effective solution for financing the construction of your dream home. The convenience of a single closing, fixed interest rates, and flexible terms make these loans an attractive option for prospective homeowners. Whether you’re building your first home or your forever home, CTP loans can help make your dream home a reality while providing financial stability and peace of mind. If you’re considering a construction project, it’s worth exploring the benefits of construction-to-permanent loans as a viable financing option.