Hispanics to Shape Future Housing Demand

A booming Hispanic population will be the key to the nation’s future residential real estate market, Julian Castro, the newly confirmed secretary of the Housing and Urban Development, told The Associated Press.

Nearly half of first-time homebuyers nationwide will be Hispanic in six years, according to a 2013 study from the National Association of Hispanic Real Estate Professionals. What’s more, Hispanics are forecasted to account for 40 percent of the estimated 12 million net new households nationwide within the next decade.

Castro says that an overhaul of federal immigration laws could further aid the U.S. housing market. Federal immigration law changes could add about 3 million home owners and generate more than $500 billion in sales, income, and spending into the housing economy, estimates the National Association of Hispanic Real Estate Professionals study.

"It's a significant contribution if we can get immigration reform done," Castro says.

Source: “Castro: Hispanics Key to U.S. Housing Sector Future,” Associated Press (Sept. 20, 2014)

Get a Discount on Your Mortgage

Get a Discount on Your Mortgage

Mortgage Applications Plunges?

Just a slight trend higher in interest rates was enough to stall both potential home buyers and borrowers looking to refinance their loans.

Total mortgage application volume fell 7.2 percent last week from the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association (MBA). The weekly index is now at its lowest level since December of 2000.

"Although the weekly increase in rates was small, they were trending up in the week following Labor Day, with many data reports showing a pickup in the pace of economic growth," said Michael Fratantoni, chief economist for the MBA.


written by Diana Olick,CNBC

Why Loans Are Still Hard to Get

In the early days, if you wanted a mortgage loan, you had to have a job, some down payment money and good credit. While that's still true today, loans are more difficult to get.

Lenders look for more information about you,  making the process take longer than it used to. If you're wondering why, the reason is buy backs. A buy back is a loan that the lender originally issued and then sold to another lender, mortgage servicing company or to Fannie Mae or Freddie Mac. 

If the borrower defaults on their loan, lenders want to know why.  Fannie and Freddie look to see if there was a problem in underwriting or something fraudulent about the loan that contributed to the borrower's default. If so, the lender could be forced to buy the loan back.

Explains David Reed, author of Mortgages 101, "When a mortgage company makes a home loan, it doesn't pull money out of its savings accounts, but instead utilizes a credit line from which it draws. The lender approves a loan, draws down its credit line by $300,000 to issue the mortgage. If a lender does this several times a day pretty soon that credit line would start to look a little thin. When a lender needs to replenish its mortgage coffers, it sells the loans it has already made to other lenders."

There are specific purchase agreements between lenders who buy and sell loans. These are called conforming loans, because the loan must meet certain criteria to be eligible for purchase by a secondary party. It can't exceed a certain amount, may require a minimum down payment and the credit scores of the borrowers may not be below 620, for example. That way lenders who buy loans don't have to re-underwrite a loan that's been certified by the original lender as a "sellable" mortgage, says Reed.

To avoid any potential buy back, lenders today are asking for more documentation than previously required, or asking that borrowers meet stricter credit terms than those required for conforming loans. The result is that lenders are taking more time to close loans.

Reed points out that if one were self-employed, the underwriter would ask for maybe one year's tax return. "Now, two years returns are required, and even three years, if the underwriter feels uncomfortable with a loan," he says.

The bottom line for borrowers is be prepared to offer more documentation and for the purchase transaction to take longer. That doesn't mean the lender is going to decline the loan.

In fact, one way to look at the situation is that it's an advantage for borrowers. It may be tougher to get a loan, but it's also going to be tougher to default.

Written by Blanche Evans, Realty Times

Mayo, ASU collaborate on biomedical campus in north Phoenix

KUD International Inc. is working with the Arizona State Land Department to develop a 150-acre biomedical campus that eventually could create as many as 30,000 jobs.

The New York developer plans to invest $1 billion to develop what could be one of the nation's largest research parks.

Dr. Wyatt Decker, president and CEO of Mayo Clinic in Arizona, said he is excited about the potential of the biomedical corridor.

“Not only will this mean growth in the state’s bioscience and medical research sector, there will also be a very positive impact for patients and visitors," he said. "We look forward to our continued collaboration with the state, ASU and the city of Phoenix to bring the vision for the Arizona Biomedical Corridor to life."

Phoenix Mayor Greg Stanton said this new campus will strengthen the 30-acre Phoenix Biomedical Campus in downtown Phoenix.

"The more we can become a science hub, a medical education hub, a bioscience hub, the better it is for everyone," he said. "Having a great bioscience infrastructure, a great medical education infrastructure, a great research infrastructure helps everyone that's in that industry."

written by: Angela Gonzales, Phoenix Business Journal

Tax Benefit of Homeownership

The tax deductions you’re eligible to take for mortgage interest and property taxes greatly increase the financial benefits of homeownership. Here’s how it works.

 

Assume:

$9,877 = Mortgage interest paid (a loan of $150,000 for 30 years, at 7 percent, using year-five interest)
$2,700 = Property taxes (at 1.5 percent on $180,000 assessed value)
______

$12,577 = Total deduction

Then, multiply your total deduction by your tax rate.

For example, at a 28 percent tax rate: 12,577 x 0.28 = $3,521.56

$3,521.56 = Amount you have lowered your federal income tax (at 28 percent tax rate)

 
Note: Mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased when total income reaches a certain level.

Source: Realtor Magazine Online

Can I Work and Still Receive Social Security Benefits

This is a question that a many baby boomers wants to know the answer.  Jeff Young has an answer to this question,  Jeff Young is the Senior Vice President of First Financial Equity Corporation in Scottsdale, AZ and teaches Social Security Claiming Strategies at the Arizona School of Real Estate and Business. See below for his answer. to the question.

As Jeff Young said the question is not "Can I work and still collect social security?" but "Is there a penalty on social security earnings if my income exceeds certain threshold?". 

All social security income taken prior to full retirement age (FRA) is subject to an earnings test.  FRA is age 66 for those born between 1943 and 1954 and gradually goes up to age 67 for those born between 1955 and 1960. Earnings received prior to FRA are subject to the earnings test. Once a taxpayer reaches FRA, additional earnings can be of any amount of money and will not be affected by an earnings cap. However, those earnings may be subject to taxation of course, but that is altogether a different matter.

In the years prior to turning full retirement age, a $1 is surrendered in social security for every $2 earned over $15,480. In the actual year that one turns FRA, a $1 is surrendered for every $3 over $41,400. These limits increase each year due to the adjustment for inflation. It is important to remember that earnings are calculated for the purposes of determining whether or not the limit has been exceeded on an individual income only. For example, a couple’s annual Adjusted Gross Income may be $75,000, but if a spouse’s individual income is under the earnings threshold, his or her social security income would not be subject to reduction even if the other spouse was earning $60,000.

For a person taking social security prior to FRA and earning $42,000, their social security earnings would be reduced by $13,260 in 2014. Our calculation:  $42,000 – $15,480 = $26,520 divided by $2 = $13,260.  It really isn’t accurate to call this a penalty; however, a person’s social security income would reflect the calculation in higher payments later on. For instance, if social security was collected at age 62 and the taxpayer had enough income to delay payments for 12 months, it would be as if the person applied for social security at age 63, which of course would result in higher payments. Not to mention the added year of income and payments into the system.

For the year in which the taxpayer turns FRA, the rules change as described above. The threshold not only increases, but only those months prior to FRA.  For the Boomer born in November of 1948, that person would be subject to the pro-rata limit of $41,400 for the first 11 months only, with the last month of the year not being subject to the earnings test.

Generally speaking, taking social security early is not a good idea for several reasons; one exception is the inability to maximize income.  Some people will apply for social security at the earliest age of 62 with plans to earn up to the limit, thinking that it’s a smart strategy.  The actual result is they are locking in the lowest of both social security payments and earnings capability. If they’re married, the results can be catastrophic, especially if they live long lives.

If you are considering collecting social security benefits before your full retirement age, be prepared to limit what income you receive or be prepared to surrender some or all of your social security payments if you make above the threshold.   Fully understand what the long term ramifications are as well because once you decide to take social security early, it may be difficult, if not impossible, to change your mind later.

Buying a Home - Think Long Term Investment

Buying a home can be a wise financial investment, if you buy right and hold your home for long-term gain. Because of closing and moving costs, it's nearly impossible to buy a home and sell it immediately for a large gain, but it is possible to sell after a couple of years with no capital gains tax should you make a profit.

According to the National Association of REALTORS^®, home equity growth beats inflation by about one to two percent annually, not to mention government subsidies for home ownership in the form of tax relief and other incentives.

However, if you look at owning a home strictly as an investment, you'll miss many pleasures. Look at your home as a home, rather than part of your portfolio. Buying a home allows you to live in the neighborhood you want for as long as you want, without having to worry that the landlord is going to sell out from under you. Your stake in a home makes you part of the community, committed to making it a better place to live.

Written by Blanch Evans, Realty TImes

Labor Day

Observed on the first Monday in September, Labor Day pays tribute to the contributions and achievements of American workers. It was created by the labor movement in the late 19th century and became a federal holiday in 1894. Labor Day also symbolizes the end of summer for many Americans, and is celebrated with parties, parades and athletic events.

In 1894, Grover Cleveland made Labor Day a federal holiday after a failed attempt to break up a railorad strike.

http://www.history.com/topics/holidays/labor-day