Renters: 5 Must-Do Tasks to Handle Before You Move

With these key tasks on your to-do list, your move can be a light lift.

When Barry Blanton moved with his wife from Eugene, OR into a rented unit in a high-rise residential tower in downtown Seattle, he thought he had his bases covered.

He had measured the size of his new living room, and knew that his furniture would fit perfectly. Once the movers got his couch through the new entryway, however, they faced an insurmountable problem: The couch was too big to maneuver past two curves in the hallway.

“It sat in the hallway for a week before my wife rented a van to move it,” says Blanton. “We had to crawl over it to get into the bathroom.”

The fact that Blanton is the principal at Seattle-based property management and development consulting firm Blanton Turner — and has worked in the industry for most of his adult life — only underscores how easy it is for renters to make mistakes when moving.

Measure — then measure again

Despite best planning efforts, such logistical issues are surprisingly common when people are moving familiar belongings into an unfamiliar space, says Blanton.

Knowing the dimensions of a room and the things being moved into it isn’t enough. “Think about the bottlenecks,” Blanton advises. “Not just where something’s going to go, but how it’s going to get there.”

He recalls a situation in which a young man moving into an apartment was able to get his loaded moving truck into a building’s garage, but found that once all his furniture was unloaded, the now-lighter truck was too tall to get back out without hitting overhead ductwork and sprinkler heads (more on this later).

The man and his friends spent hours filling the truck with weights from the property’s exercise room just to lower it enough to safely exit.

Make reservations

When moving into any multi-story building — especially one in a crowded downtown neighborhood — it’s important to make arrangements ahead of time with the building’s management team. More than likely, you’ll need to reserve the elevator.

“This isn’t something you tell them that morning,” warns Blanton. “If you’re moving on a Saturday at the end of the month, there could be four or five other people moving that day.” (Don’t forget to schedule use of the elevator at the building you’re moving from, as well.)

And if you’re bringing a moving pod or parking a moving truck on the street, make sure you have the proper permits. Most multi-family properties will be able to help with this, as will moving companies. “Moving companies do earn their money, especially in an urban environment,” says Blanton.

Document your environment

In the age of ubiquitous technology, it’s easier than ever to take photos of any pre-existing damage in your rental.

Before you get settled, pull out your phone and snap pictures of any damage such as scuffed floors, chipped countertops or bent window blinds — then send the photos to yourself so they’re date-stamped.

It’s easier to refer to the photos at move-out than argue with the building manager about who cracked the Formica and when.

Prepare to clean

When it’s time to move, few renters look forward to the deep cleaning that’s required upon vacating a unit. If you plan to use a cleaning service, Blanton suggest hiring the same company that your building uses — that way there won’t be a gap in expectations.

“There’s nothing worse than spending the entire day cleaning your apartment, then having someone come in and point out all the things you missed,” notes Blanton.

If you want to save money and do it yourself, keep in mind some of the things renters often forget to clean: window tracks, underneath the stovetop burner pans, beneath the crisper drawers in the fridge, the rim around the dishwasher door, and behind the toilet.

Stay insured

Most renters know that protecting their property with renters insurance is important, but many forget to update their policy when they move to a new residence.

Renters insurance doesn’t just protect your belongings, it also covers damage you may inadvertently do to the building itself.

Remember that overhead sprinkler mentioned earlier? Accidentally breaking that off with a moving truck could cause flooding — and a great deal of damage. Depending on the building’s insurance policy — and temperament of the manager — you could be on the hook for the building’s insurance deductible, if not more.

Contact your insurance company before you move. It’s an easy call to make, and it could help you avoid costly penalties later.

Get more advice about renting in our Renters Guide.

Related:

Source: zillow.com

5 Ways Home Buyers Make Their Agent’s Job Harder

Not only do these behaviors ruin your agent’s day, but they can ultimately work against you, too.

Buying a home can be a long and challenging process. It’s a big, expensive and infrequent transaction that can cause lots of stress and anxiety.

Some buyers take years to complete a purchase, and they require a lot of hand-holding and make lots of requests. Others are more self-sufficient, and only bring in the agent from time to time.

Good real estate agents can accommodate any buyer at any time — as they should. We’re in the service business, and I always say the customer is always right.

But let’s face it: All buyers (and all agents) are not created equal, and since buyers don’t pay for the agent’s time, there can sometimes be a disconnect.

Here are five buyer behaviors that can make life tough for agents.

Planning a (secret) price swap

It’s one thing for a buyer to ask a seller for a credit if the final home inspection uncovers a problem. But after you have a deal, planning to negotiate the price down without telling your agent is a big no-no. It adds stress and ill will among all parties involved, during what could already be a difficult transaction.

It’s better to be upfront about your intentions. If the deal is not meant to be, it’s better to not go down the path at all.

Making unjustified lowball offers

The seller’s property is on the market for $400,000, and it’s worth close to that, based on recent comparable sales. And yet, a potential buyer offers $300,000 and won’t budge on the price.

It’s not because the home is grossly overpriced or there’s something seriously wrong with it, but simply because the buyer wants a bargain.

Unjustified lowball offers can be a waste of time for everyone involved. The seller isn’t going to swallow $100,000 for no reason, even if the property has been on the market a while.

In fact, a lowball offer will likely just help the listing agent get a small price reduction, thus opening the window of opportunity to another buyer.

It’s certainly okay to offer less than the asking price, but be realistic.

Requiring too much during the showing

It’s typical for a potential buyer to view a property during an open house, then ask for a private showing — even two or three times. That’s par for the course.

However, it’s frustrating when a buyer arrives to a showing with a designer, architect, contractor or just some friends, then spends an hour or two at the home checking out and measuring each room. This is counterproductive, particularly if you do it at one home after another and never make an offer.

Some buyers have even been known to bring their psychic, who, after making a big splash with tarot cards and numerology charts, declares that the property has “negative energy” and isn’t a good fit, mainly based on the numbers in the property address. Did the psychic really need to see the property in person to figure that out?

Buyers typically give themselves an opportunity to gauge their own reactions to a property before bringing in friends, family or hired consultants. To go over a home inch-by-inch on the first or second visit is often a waste of everyone’s time.

Demanding loads of attention early on

Some people are just beginning to think about buying a home. That’s fine; buyers have to start somewhere.

Unfortunately, sometimes buyers are a year or two away from being ready to pull the trigger, yet they make a lot of demands on the agent’s time.

Asking an agent to research city building permits on a house just because you’re curious — and even though the property doesn’t fit your requirements — is probably not a fair request.

Agents can’t be as effective with their active clients if they’re spending lots of time researching tax records or city permits for clients who are years away from being ready to purchase.

Changing your mind repeatedly

It’s fine to shift course based on what you learn during the home shopping process. This is a common part of the buyer evolution process.

Many buyers set out for X but end up with Y after learning the market and seeing where their dollar goes. By the time you’re ready to start making offers and moving in the direction of acquiring a home, you will be laser focused.

But if you find yourself moving around and you’re uncertain about the object of your search, it’s possible you just aren’t ready to buy. That’s fine. Take your time and learn the market.

The home-buying process is a journey, and a good local agent, brought in at the right time, can add so much value. Be mindful that agents work for free until a buyer or seller closes. Agents should be leveraged as a huge resource — when the right time comes.

Related:

Originally published May 23, 2014.

Source: zillow.com

Mortgage Lenders Now Providing Payment Relief Due to Coronavirus

Last updated on December 28th, 2020

I will update this post as new information is made available, but we’re starting to see mortgage relief packages rolled out by all the major housing agencies.

Whether the government launches some sort of HAMP-esque program that goes beyond the usual loss mitigation options remains to be seen.

That may be dictated by how bad the coronavirus outbreak gets, and its eventual effect on the housing market.

Coronavirus Relief for FHA Loans

The Department of Housing and Urban Development (HUD), which oversees the FHA home loan program, has halted foreclosures and evictions for the next 60 days as a result of COVID-19.

This applies to the initiation of a foreclosure and the completion of any foreclosures in process.

Additionally, lenders must cease all evictions of individuals living in an FHA-insured single-family property.

This guidance applies to both forward FHA loans and reverse mortgages, known as Home Equity Conversion Mortgages (HECM).

With regard to mortgage payment relief, the FHA has called on loan servicers to offer its suite of loss mitigation options, including short and long-term forbearance options, along with mortgage loan modifications.

Coronavirus Relief for VA Loans

The VA has released a circular titled, “Foreclosure Moratorium for Borrowers Affected by COVID19,” which strongly encourages a 60-day halt on foreclosures and evictions beginning March 18th, 2020.

They have also encouraged holders of VA guaranteed home loans to extend forbearance to borrowers affected by COVID-19.

Loan servicers have been to told to evaluate the VA Loss Mitigation options outlined in Chapter 5 of the VA Servicer Handbook M26-4.

This may include the reapplication of prepayments to cure or prevent a loan default, and allows the terms of any guaranteed loan to be modified without the prior approval of the VA, assuming conditions in the regulation are met.

USDA Rural Development Response

First off, USDA Rural Development will continue to provide USDA home loans and grants to those in rural communities nationwide.

Additionally, they have granted authority to lenders that participate in their Single-Family Housing Guaranteed program to work with borrowers having difficulty making payments.

Lastly, RD will issue guidance to its Single-Family Housing Direct borrowers to ensure those in need of payment assistance are adequately reached.

Fannie Mae and Freddie Mac Assistance Options

The pair, which back the vast majority of home loans, have both suspended foreclosure sales and evictions for the next 60 days.

Both Fannie Mae and Freddie Mac will provide payment forbearance for up to 12 months.

Fannie Mae says it will either reduce or suspend borrower’s mortgage payments during that time.

Neither will assess penalties or late fees against borrowers.

Freddie Mac says forbearance is an option regardless of occupancy, meaning primary residences, second homes, and investment properties are all eligible for relief.

Additionally, both are suspending the reporting of delinquencies related to any forbearance, repayment, or trial plans to the credit bureaus.

So homeowners won’t have to worry about getting dinged by the credit bureaus as they seek assistance.

Boston Mortgage Relief

The Mayor of Boston, Marty Walsh, has inked a deal with 12 banks and mortgage lenders that allows homeowners to defer mortgage payments for at least three months.

The institutions in question include Bank of America, Boston Private, Cambridge Trust Company, Century Bank, Citizens Bank, City of Boston Credit Union, Dedham Savings Bank, Eastern Bank, Mortgage Network, Inc., PrimeLending, Salem Five Bank, and Santander Bank.

The participating lenders will extend loan deferment if needed, and have also agreed to a collective goal of approving deferments within 21 days of application.

Only “essential paperwork” is needed from the borrower, and it will not be reported to the credit bureaus as being a late, nor will they will charge late fees.

Most importantly, once the deferment period comes to an end, the homeowner will not be required to pay the total deferment/forbearance amount in a lump sum.

Connecticut COVID-19 Mortgage Assistance

Connecticut Governor Ned Lamont has announced that his administration has reached an agreement with 50+ credit unions and banks to offer mortgage relief to homeowners affected by the COVID-19 pandemic.

Like other states, there will be a 90-day grace period on mortgage payments and no foreclosures/evictions for 60 days.

Additionally, homeowners will get relief from any fees and charges for 90 days, and won’t suffer any negative credit score impact.

Nevada Mortgage Relief Measures

  • Moratorium on evictions and foreclosures for duration of the State of Emergency
  • 90-day grace period on mortgage payments
  • Banks have agreed to work directly with customers to ensure no one pays a giant lump sum payment to get back on track

Governor Sisolak and State Treasurer Zach Conine have announced relief options for homeowners in the state of Nevada.

They say “a vast majority of lending institutions are offering homeowners facing financial hardships due to COVID-19.”

This includes a a 90-day grace period on mortgage payments, and more importantly, have agreed to “ensure that no one is hit with a giant lump sum payment if they need to stop making payments for a couple of months.”

“In many cases, these payments can instead be added onto the back end of a loan, so people can get back to work and get back on their feet.”

New Jersey Mortgage Grace Period

New Jersey Governor Phil Murphy announced mortgage payment forbearance of up to 90 days for borrowers economically impacted by COVID-19.

  • 90-day grace period for mortgage payments
  • No negative credit impact for receiving assistance
  • No mortgage-related fees or charges for at least 90 days
  • Moratorium on foreclosure sales and evictions for at least 60 days

New York State Mortgage Assistance

In New York State, Governor Cuomo signed an executive order that provides mortgage relief, including a 90-day payment holiday to homeowners impacted by the novel coronavirus.

Here are the details:

  • Postpones or suspends any foreclosures
  • Waives mortgage payments for 90-days based on financial hardship
  • No negative reporting (late payments) to credit bureaus
  • Grace period for loan modifications
  • No late payment fees or online payment fees

Apparently, any missed monthly mortgage payments are being tacked on to the back of the loan. It’s unclear if this will effectively freeze the mortgage or result in a balloon payment.

Worldwide Response

Last week, Italy’s deputy economy minister announced that mortgage payments would be suspended across the entire country in light of the coronavirus (COVID-19) outbreak.

While plenty of Italian homeowners might not actually contract the virus, the economic implications of a countrywide shutdown could affect their ability to make timely housing payments.

For example, with Italy effectively coming to a standstill, many homeowners may not be able to work until the lockdown is lifted.

It’s unclear who will be paid during this time. There are also longer-term layoffs to consider if businesses are permanently affected.

In the UK, similar measures are already being extended by individual banks, including TSB Bank, which is offering a “repayment holiday for up to two months.”

My understanding is this gives homeowners a two-month break before they must resume making timely monthly mortgage payments.

Similar moratoriums are being offered to mortgage borrowers by other British banks, and they’re also making it easier for customers to get access to their cash if need be.

U.S. Mortgage Lenders May Not Be Far Behind

  • Italian banks have already suspended mortgage payments nationwide
  • UK banks are now offering mortgage holidays to affected customers
  • Matter of time before U.S. banks and lenders extend similar assistance
  • If you need help paying your mortgage, contact your loan servicer and look out for news bulletins

While no major coronavirus restrictions have made it to the United States just yet, at least beyond some universities and other private institutions, there’s a chance we could experience a similar clampdown soon.

Really, it sounds more like a matter of when than if, despite no mandatory freedom of movement likely.

This is known as “social distancing,” designed to limit human-to-human contact and stop the spread of the fast-moving COVID-19.

Assuming that happens, there’s a good chance mortgage lenders will step in and offer temporarily relief for those affected.

Again, while the virus itself may not directly affect an individual homeowner’s health, disruptions in multiple industries could lead to layoffs or the inability to perform job duties.

Generally, when a natural disaster occurs, Fannie Mae, Freddie Mac, and HUD offer some level of assistance and/or guidance to loan servicers to ensure borrowers can get back on their feet, or avoid falling behind to begin with.

This may involve the suspension or reduction of mortgage payments for 90 days up to six months, depending on the circumstances.

They may also suspend eviction lock-outs on real estate owned (REO) inventory to avoid displacing tenants during what could be a sensitive time.

Tip: If you need assistance paying your mortgage at this time, be sure to keep an eye on the FHFA or HUD websites, along with Fannie Mae and Freddie Mac’s, for any pertinent announcements.

Homeowners Are Helping Themselves to Lower Mortgage Rates

  • Record low interest rates lead to 55.4% increase in weekly mortgage applications, per MBA
  • Refinance share surged to 76.5% of total loan volume from 66.2% a week earlier
  • 2020 mortgage origination forecast revised up to $2.61 trillion
  • Industry group now expects refis to account for $1.23 trillion in volume, up 36.7% from earlier estimates

In the meantime, homeowners seem to be helping themselves by taking advantage of the record low mortgage rates also on offer at the moment.

Instead of asking for a payment holiday, borrowers are lowering their mortgage rates in droves via a traditional mortgage refinance.

This morning, the MBA reported that home loan applications surged 55.4% from a week earlier as refis jumped 79% to their highest level since April 2009.

Home purchase applications also rose six percent from a week earlier, a good sign in an otherwise uncertain time.

That pushed the refinance share of mortgage activity to 76.5% of total applications from 66.2% a week earlier.

The record low interest rate environment prompted the MBA to revise its origination forecast, forecasting total mortgage volume of $2.61 trillion this year, a 20.3% increase from 2019’s volume ($2.17 trillion).

Additionally, they expect home refinance originations to double their earlier projections, surging 36.7% to around $1.23 trillion.

Despite the unknowns in this ever-evolving situation, home purchase originations are still slated to climb 8.3% this year to $1.38 trillion.

While this is generally good news for the mortgage industry, it’s probably wreaking havoc on loan servicers and mortgage investors who are seeing prepayment speeds go through the roof.

Additionally, it’s going to make it difficult for mortgage companies to get their staffing right if mortgage rates all of a sudden U-turn, and in any case, once the party comes to an end.

Read more: How soon can I refinance my mortgage?

Source: thetruthaboutmortgage.com

7 Steps to Prepare for Tax Season

By midnight on April 15, taxpayers must e-file or mail their federal and, if applicable, state tax returns for the previous calendar tax year without penalty. Well before the deadline, have you hunted and gathered all your documents, looked for a tax pro or software, and learned about any new tax credits or deductions you might be eligible for?

You should have received a Form W-2 by Jan. 31 or, with any mail delay, soon thereafter. The same deadline applies to certain 1099-MISC forms for independent contractors. Each financial institution that paid you at least $10 of interest during the year must send you a copy of the 1099-INT by Jan. 31 as well.

Waiting until the last minute to prepare for tax filing is never advisable. If taxpayers work for one employer, their taxes may not be complicated, but if they have side gigs or they’re self-employed, tax returns can take a while to fill out.

7 Tax Prep Tips for 2021

Before taxpayers file, here are some tasks they need to do.

1. Decide on Hiring a Pro or DIY

Taxpayers can either prepare and file their taxes on their own or hire a professional. If they choose the latter, they can go to a tax preparation service like H&R Block or contact a local accountant or other tax pro.

The costs for a professional vary, and the more complicated a return is, the higher the costs will be.

The IRS has a tool where taxpayers can find a tax preparer near them with credentials or select qualifications.

If you’re going it alone, IRS Free File lets you prepare and file your federal income tax online for free. There are two options, based on income.

•  You can file on an IRS partner site if your adjusted gross income was $72,000 or less. This is a guided preparation, and the online service does all the math.
•  Those with income above $72,000 who know how to prepare paper forms and can do basic calculations can fill out and file electronic federal tax forms. (There is no state tax filing with this option.)

2. Collect Tax Documents

By the end of January, you should have received tax documents from employers, brokerage firms, and others you did business with. They include a W-2 for a salaried worker and 1099s for contract workers or freelancers.

Employers will send the documents in the mail or electronically.

Investors might receive these forms:

•  1099-B, which reports capital gains and losses
•  1099-DIV, which reports dividend income and capital gains distributions
•  1099-INT, which reports interest income
•  1099-R, which reports retirement account distributions

Other 1099 forms include:

•  1099-MISC, which reports payments in lieu of dividends
•  1099-Q, which reports distributions from education savings accounts and 529 accounts

If taxpayers won anything while gambling, they’ll need to fill out Form W-2G. If they paid at least $600 in mortgage interest during the year, they’ll receive Form 1098, whose information can be used to claim a mortgage interest tax deduction.

A list of income-related forms can be found on the IRS website.

Last year’s federal return, and, if applicable, state return could be good reminders of what was filed last year and the documents used.

3. Look Into Deductions and Credits

Take the standard deduction or itemize deductions? The higher figure is the winner.

The vast majority of Americans claim the standard deduction, the number subtracted from your income before you calculate the amount of tax you owe.

For tax year 2020, the standard deductions are:

•  $12,400 for a single filer
•  $24,800 for a married couple filing jointly
•  $12,400 for a married couple filing separately
•  $18,650 for a head of household

Individuals interested in itemizing tax deductions can look into whether they’re eligible for a long list of deductions like a home office (and, if eligible, whether to use the simplified option for computing the deduction), education deductions, health care deductions, and investment-related deductions.

The IRS notes that you may benefit from itemizing deductions if any of these apply:

•  Don’t qualify for the standard deduction.
•  Had large uninsured medical or dental expenses during the year.
•  Paid interest and taxes on your home.
•  Had large uninsured casualty or theft losses.
•  Made large contributions to qualified charities.
•  Have total itemized deductions that are more than the standard deduction to which you otherwise are entitled.

Then there are tax credits, a dollar-for-dollar reduction of the income tax you owe. So if you owe, say, $1,500 in federal taxes but are eligible for $1,500 in tax credits, your tax liability is zero.

There are family and dependent credits, health care credits, education credits, homeowner credits, and income and savings credits.

Taxpayers can see the entire tax credits and deductions list on the IRS website.

4. Make a Final Estimated Tax Payment

Taxpayers who do not have taxes withheld from their paychecks can pay estimated taxes every quarter to avoid owing a big chunk of change.

In 2020, the first two quarters of taxes were due on July 15. The third was due on Sept. 15, and the fourth was due on Jan. 15, 2021.

5. Apply for a Payment Plan If Needed

Another way to prepare for taxes is to apply for a payment plan with the IRS, if that seems necessary.

Just know that penalties and interest will accrue until you pay off the balance.

For the 2020 tax year the IRS issued revised COVID-related collection procedures . They include:

•  Taxpayers who qualify for a short-term payment plan may now have up to 180 days to resolve their tax liabilities instead of 120 days.
•  Qualified individual taxpayers who owe less than $250,000 may set up installment agreements without providing substantiation or a financial statement if their monthly payment proposal is sufficient.
•  The IRS is offering flexibility to some taxpayers who are temporarily unable to meet the payment terms of an accepted offer in compromise (settlement of a tax bill for less than the amount owed).
With a long-term payment plan, taxpayers may pay taxes for a period of more than 120 days with monthly payments.

In general, the payment plans are available to individuals who owe $50,000 or less in combined income tax, penalties, and interest or businesses that owe $25,000 or less, combined, that have filed all tax returns.

A short-term payment plan has a $0 setup fee online, by phone or mail, or in person.

A long-term payment plan has a $31 setup fee online, or $107 by phone, mail, or in person. (The setup fee is waived for low-income payers.)

Taxpayers can pay for the plans on the IRS’s website.

6. Decide Whether to File for an Extension

If you need more time to prepare your federal tax return, you can electronically request an extension until Oct. 15 to file a return.

To get the extension, you must estimate your tax liability and pay any amount due by April 15 to avoid penalties.

7. Look Into CARES Act Provisions

The CARES Act was passed in March 2020 to help Americans during the COVID-19 crisis. The act included the Federal Pandemic Unemployment Compensation program, which gave people who were collecting unemployment compensation an extra $600 per week through July.

At the end of 2020, the president signed a $900 billion coronavirus relief bill, which gave people earning unemployment an extra $300 per week for up to 11 weeks.

Unemployment assistance does count as income, which means the base amount and the enhancements of $600 and $300 are taxable.

Most government agencies were to provide a paper copy of Form 1099-G, reporting unemployment compensation, by Jan. 31 of the year after the year of payment.

Other programs under the CARES Act aimed to assist struggling business owners. They include the Paycheck Protection Program, the Employee Retention Credit, Economic Injury Disaster Loans, and Payroll Tax Postponement.

The PPP program gave employers the chance to borrow up to 2.5 times their average monthly payroll, or up to $10 million, to cover workers’ paychecks. A forgiven PPP loan is not taxable under federal law, and business owners can deduct qualifying expenses paid with the money from the forgiven PPP loan, according to the U.S. Small Business Administration.

With Economic Injury Disaster Loans, business owners could borrow up to $2 million or they could receive a cash advance, which would not need to be repaid, up to $10,000. Emergency EIDL advances aren’t included in income, and taxpayers can deduct business expenses they paid using the advance, Bloomberg Tax notes.

The Employee Retention Credit , which gave employers a tax credit for keeping workers on the job, could reduce expenses that business owners would otherwise pay on their federal return and is not counted as income, according to the IRS.

Special Distribution Provisions

Another CARES Act provision provides for special distribution options and rollover rules for retirement plans and IRAs and expands permissible loans from certain retirement plans.

The IRS lays out the rules in a piece titled “Coronavirus-related relief for retirement plans and IRAs, questions and answers.”

In general, an individual could take a distribution of up to $100,000 from employer retirement plans, such as section 401(k) and 403(b) plans, and IRAs without the typical 10% additional tax on early distributions (before age 59½).

The provision also increases the limit on the amount that a qualified individual can borrow from a retirement plan. An IRA does not count. It permits a plan sponsor to offer qualified individuals up to one additional year to repay their plan loans, too.

The criteria for qualified individuals can be found on the IRS’s website, but it basically says that individuals who had the coronavirus or had a spouse or dependent with the virus, or who experienced financial hardship because of coronavirus would be eligible.

The Takeaway

“Tax prep” isn’t a phrase signaling that big fun is on the way, but putting off the inevitable isn’t the best choice. Prepare for tax season as early as possible by gathering documents and information, choosing a preparer or getting ready to DIY, and learning about new tax credits and deductions.

Still have questions about preparing for taxes? SoFi’s Tax Help Center can answer tax questions as they apply to investing, stock options, loans, college, and retirement accounts.

You can also find out more about coronavirus tax relief, check your tax refund status, and make a tax payment from the hub.


Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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Source: sofi.com

Factors Driving The Housing Market Moving into 2021

According to a study done by Eyul Tekin, “after adjusting for inflation over time the future of the American Dream seems rather gloomy. Median home prices increased 121% nationwide since 1960, but median household income only increased 29%.” This is rather disturbing.

Thankfully, we have companies like Fannie Mae and Freddie Mac who have mandates to keep housing affordable for Americans.

In response to this disparity between the rise in wages versus home prices, Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae said “the rise of women in the workforce has changed the dynamics of house prices to reflect an expectation of two incomes. If you look at median house price in a market relative to median income of a two- person household, it’s at long term normal levels. If you have only one income, that is where the affordability problem is.”

So, it’s not so gloomy, it is societal trends running their course.

The accelerated increase in house pricing is being driven by several factors:

  • The cost of the big three components – land, labor and lumber – have all increased. Lumber cost is at an all-time high. With lower levels of immigration, labor costs have increased and, with strict zoning regulations, especially in urban settings, land has been limited and the price driven up.
  • Low interest rates, which are expected to remain at existing levels though this year, have made borrowing more affordable. That same monthly payment can now buy more house, driving up buyers’ bids.
  • The supply/demand imbalance, which is perhaps the biggest factor. On January 22nd, the National Association of Realtors announced that unsold housing inventory sits at an all-time low of 1.9 months based on the current sales rate. That’s down from 3 months a year ago. Demand, driven by low interest rates and societal shifts due to Covid-19, has outpaced supply.

Why the shortage of houses for sale?

Many people, especially older people driven by COVID-19 concerns, who own homes don’t think now is a good time to sell. In December, the Fannie Mae  Home Purchase Sentiment Index® (HPSI) declined for the second consecutive month and fell to its lowest level since May 2020 as consumers adjusted to the worsening COVID-19 conditions of the first few weeks of December.

“Both the ‘Good Time to Sell’ and ‘Good Time to Buy’ components fell significantly, with respondents overwhelmingly noting the unfavourability of economic conditions,” Duncan said. “In particular, the sell-side component fell for the first time since April and by 18 points, reversing most of the increases of the past three months and implying to us that, at least temporarily, potential home sellers might wait to list their homes. If so, this could have the effect of perpetuating already-tight inventory levels and supporting additional (albeit lesser) home price growth, which could contribute to a further moderating of home sales.”  When supply falls more sharply than demand, prices increase.

Supply is Expected to Increase Going Forward

The U.S. Commerce Department announced that housing starts jumped 21.4% on a year-over-year basis and building permits soared 9.2%, the highest level in 13 years. “The good news about the house rise is that markets are performing the way you would expect. When prices go up and profits go up that is a signal for others to enter production and increase supply, and that’s certainly happening,” Duncan said. However, it might take a while for the supply to catch up with demand. Experts say that homebuilders and construction companies will have to continue these increased efforts though 2022 to meet demand levels.

It’s Not Just About Building More Houses

More people may be putting their houses on the market as well. As the HPSI indicates, there is pent up demand on the sell side.

Also, the MBA estimates that 5.54% of mortgage loans are in forbearance. When forbearance ends, some homeowners will be faced with a tough choice, either sell or get foreclosed upon. Unless they bought very recently, chances are they have built up enough equity to make selling the best option. This too will add to inventory levels.

The impact of the end of forbearance on the housing market is a matter of debate, but Fannie Mae sees the impact as one reason it is forecasting housing appreciation in 2021 to be 4.5% rather than the 10% of 2020. (Note: the historical norm for annual price increase is 3.75%)

Millennials were already starting to move from urban to suburban areas. During the financial crisis Millennials were looking for jobs and the places they were available was in the urban centers. This meant many lived in apartments. Now that they have children that are reaching school age they are moving out to areas with more land, more sports, good schools and other amenities.

They are moving from urban areas to the suburbs. When COVID-19 hit, the plans these people had for the next three years accelerated. The recent housing starts data support this, showing single family housing starts rose 12% while multi-family fell 13.6%.

How sustainable this movement is remains to be seen. If this is just an acceleration of buying that would have happened anyway, it implies that the supply/demand balance would move toward more supply, less demand a few years out.

There are a lot of factors at play when it comes accessing the cost of housing. It seems that the house prices will continue to rise in the short term and have the potential to grow at a slower pace, or even decline slightly, a few years out. With that said, if you have to borrow to buy a house, now is a good time to buy. You might just have to be more patient or more aggressive than you would have been otherwise given the competition.

Source: themortgageleader.com

Mike Huckabee hauls in $9.4 million for Florida beach house

Politician Mike Huckabee has sold his Florida beach house — a cause of headaches and controversy during the time he owned it — for $9.4 million. Late last year, he announced he was moving back to Arkansas, where he served as governor from 1996 to 2007.

It was a speedy sale for Huckabee. He listed the home in Santa Rosa Beach for $9.5 million in late December and had an offer in hand about a week later, according to the Multiple Listing Service. Records show he paid $800,000 for the vacant property in 2009 and erected the mansion two years later.

The construction wasn’t cut and dried, however. In 2014, Reuters reported that Huckabee needed political help to push the permits through since state regulations wouldn’t allow the mansion to be built so close to the eroding beach’s sand dunes.

During his time in the home, Huckabee was also engaged in a battle to block public use of the beach. In an email published by the Tampa Bay Times, he argued that his land extended to the water line of the Gulf of Mexico and should therefore be off-limits to public beachgoers.

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According to the listing, the house claims 75 feet of sand on Blue Mountain Beach. It spans three stories with five balconies and a rooftop deck overlooking the water.

A gated driveway approaches the brick-and-stucco exterior, and inside, six bedrooms and nine bathrooms are spread across 8,277 square feet. There’s a center-island kitchen, rounded breakfast nook, scenic living room and movie theater.

Out back, a patio features a fountain-fed swimming pool and spa. A thin stretch of lawn separates the house from the beach below.

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After serving as the 44th governor of Arkansas, Huckabee ran for the Republican presidential nomination in 2008 and 2016. The 65-year-old also hosts an eponymous political commentary show, “Huckabee,” which currently airs on the Trinity Broadcasting Network.

The Spears Group of Scenic Sotheby’s International Realty held the listing. Joe Burton of Joe Burton Realty represented the buyer.

Source: latimes.com

Pending Home Sales Post 5th Straight Loss

January marked the fifth straight
month that the National Association of Realtors® (NAR) has reported a decline
in its Pending Home Sales Index (PHSI). The index, based on newly signed
contracts for the purchase of existing homes, was down 2.8 percent from its
December level.

The index in January was at
122.8 compared to 125.5 in December and has lost 10 points since August. Still,
pending sales were up 13 percent compared to a year earlier. This January’s
PHSI was, in fact, the highest for any January on record.  

Analysts had expected the index to be
flat but individual estimates by those polled by Econoday all overshot the
actual results. They covered a range from a 1.5 percent downturn to 0.5 percent
growth. The consensus was for zero change.

“Pending home sales fell in January
because there are simply not enough homes to match the demand on the market,”
said Lawrence Yun, NAR’s chief economist. “That said, there has been an
increase in permits and requests to build new homes.” Yun said that increase in
single-family permits has been consistent for eight months and is a good sign
that the supply and demand imbalance in the residential real estate market
could be easing as soon as mid-2021.

“There will also be a natural
seasonal upswing in inventory in spring and summer
after few new listings
during the winter months,” he said. “These trends, along with an anticipated
ramp-up in home construction will provide for much-needed supply.”

Following a week where January’s
existing-home sales increased, Yun noted that pending contracts are a great
early indicator for upcoming closed sales but stressed that the timing of the
relationship between existing-home sales and pending home sales may not be in
lockstep.

“The two measurements aren’t always
perfectly correlated due to varying amounts of time required to close a
contract,” Yun said. “This is because a number of fallouts can occur due to a
variety of factors, including a buyer not obtaining mortgage financing, a
problem with a home inspection, or an appraisal issue.”

He noted that the economy is showing
promising signs of improvement, and many millions of Americans are now receiving
a COVID-19 vaccination. Still, he cautioned that the better economic outlook,
rising inflation prospects and higher budget deficits will soon drive increases
in interest rates. “I don’t foresee mortgage rates jumping to an alarming
level,” he said, “but we should prepare for a rise of at least a decimal point
or two.”

mortgagenewsdaily.com