Video Summary

How does buying a house affect my income taxes?  Well, once you buy a house you can deduct off your income tax the interest that you pay on any mortgage.  That deduction will go away as your income rises, and at a certain level you won’t get that benefit. 

You are also in a position to deduct your real estate taxes.  If you obtain a loan and you have to pay any closing costs or points on your mortgage, that’s considered an interest deduction and can be taken for the year in which you obtain your loan. It’s a prepaid interest charge, and it can be computed if you tell your accountant about it on your income tax for the year in which you buy your home. 

So as a result to purchasing a home you have certain income tax deductions that you can take for your real estate taxes and any interest that you pay on any mortgage that you have (although that is limited or starts diminishing as you make more and more money).  So if you have any questions about that, give us a call at (727) 847-2288.

Video Summary

  What is PMI?  PMI is Principal Mortgage Insurance.  It is insurance that a lender obtains from an insurance company (which I believe AGI, at the government bailout, was one of the largest providers of mortgage insurance) and they ensured that the lender would not lose any money as a result of lending more than 80 percent loan to value in the event that the mortgage went into default.

  Well, you can imagine the mortgage insurance is busy paying off these days with all the loans that have decreased in value.  And so the lenders who have mortgage insurance for loans that exceeded 80 percent loan to value make a claim on their mortgage insurance once they conclude the mortgage foreclosure action, and they are entitled to be paid by whoever gave them the insurance.

  Some borrowers believe that mortgage insurance is for their benefit, since they paid for it.  Mortgage insurance is not for the benefit of the borrower- it’s for the benefit of the lender, and you pay for it because you’re getting a loan that’s in excess of 80 percent loan to value.

  Some folks think that mortgage insurance is like credit life insurance, so that if you die then the loan would be paid off, but that is not the case.  It’s something that lenders obtain if you obtain a loan that’s greater than 80 percent loan to value.

  So if you have any questions about it, give me a call at (727) 847-2288.  Thank you.

Video Summary

“Should I get mortgage insurance?”  Well, in order to answer the question, I believe that you’re really asking, “Should I get insurance to pay off my mortgage in the event that I pass away?”  And that is really what I call ‘credit life insurance’ or simply an insurance policy that insures your life and names a beneficiary so that the loan would be paid off at your death.  Many credit card companies offer this for a small fee that your loan would be paid off or your balance would be paid off if you pass away.

Sometimes, the mortgage companies will also offer this feature.  My suggestion is simply to go online or contact your insurance agent and ask him about a mortgage-term insurance that is guaranteed renewable, say, for a ten-year period.  That way, the amount of insurance that would be paid to your beneficiary would be for a level amount.  The premiums for term insurance are very small, particularly if you’re under the age of 60,   and I would suggest that you check with your insurance agent.

Mortgage insurance is usually what I consider as the mortgage insurance that a lender obtains to insure any amount above 80 percent of the loan devalue.  Whenever you obtain a loan and you’re borrowing more than 80 percent of the appraised value, the lender usually requires that you obtain mortgage insurance, which they provide for you, and you have to pay a premium until such time as your loan decreases to 80 percent, at which time the mortgage insurance will drop off.  So, that’s about mortgage insurance.  I believe that most people, when they think of mortgage insurance, mean that that’s whenever your loan’s going to be paid off in the event someone passes away.

The mortgage insurance the lender obtains does not pay your loan off.  It’s only for your lender’s benefit in the event that there is a default under the provisions of your loan.  So, if you have any questions, give me a call at (727) 847-2288.  I’d be glad to talk to you about it.  Thank you.

Video Summary

“What is a non-qualifying assumable mortgage?”  Well, let’s first talk about what we usually have from institutional lenders and a mortgage.  They are not non-qualifying assumable mortgages.  They have a clause in the mortgage that says, “In the event that you transfer the property, the loan becomes due and payable.”  That’s called a due-on-sale clause.  So, you will violate the terms of the mortgage if you convey the property to a third party and have them take over your mortgage.

Now, some Veterans’ mortgages are qualified assumable mortgages, meaning that if another veteran is assuming it, he can apply to the Veterans’ Administration and see if they will allow him to assume it.  With regular institutional lenders it’s very difficult and they’ll probably refinance you rather than try to have you assume a mortgage.  So, when do you have an assumable mortgage?  It’s usually with a private investor.  Whenever an individual holds the mortgage and it does not have the language in there that, “This mortgage becomes due and payable at such time as you transfer the property,” or words to that effect.

So, if it doesn’t have language that it is not assumable, then the mortgage can be assumable.  A non-qualifying assumable mortgage would be one that did not contain a due-on-sale clause or a prohibition against someone assuming the mortgage.  You don’t find those very often, and I guess probably 20 or 30 years ago the old FHA mortgages used to be a non-qualifying assumable.  (But I’m afraid that my age is telling on me and at this point there’s not too many of those around to assume or they’re so small that it wouldn’t make any sense to do it.)

99.9 percent of your mortgages out there do have a clause that makes them non-assumable and must be paid in the amount they’re transferred.  However, if you choose to go ahead and just take over the payments for someone, I must say that most institutional lenders have not been exercising their right to call the loan due and payable, and they’re just happy to get their payments regularly.  There are some problems with taking over a mortgage that is not assumable, so if you have any questions or would like to work out some creative financing, give me a call at (727) 847-2288.

Video Summary

“What is a ‘piggy back’ mortgage?” A piggyback mortgage is one where you get a first mortgage, which is an 80-percent loan devalue on the property. The reason we use 80 percent is because you don’t have to pay mortgage insurance if you have an 80-percent loan devalue. Well, you say, “ I don’t have enough money. I want to borrow 90 percent or try to borrow 100 percent.” Depending on the length of the lending climate (Which is not too good right now; five or six years ago it was terrific.), you turn around and get a home-equity loan or a second mortgage for the additional ten to 20 percent of the loan, and that’s the piggy back portion. In this way, you avoid having to pay mortgage insurance on it.

It’s particularly helpful if you can do this if you’re in transition; what they used to call “bridge loans” (but you can’t find bridge loans anymore) where you’re going to acquire property and then later sell your other property and pay off your home-equity loan, or even pay down your first mortgage. So, the piggy back portion comes into play whenever you obtain a second mortgage at the same time as you get your first mortgage, and the purpose of it is to avoid having to pay mortgage insurance on a high loan devalue if you borrow more than 80 percent.

Back when the economy was red-hot we were doing any number of closings. We’d get an 80-percent loan and turn around and get a second mortgage or a piggy back loan for another 20 percent and provide 100 percent financing, or very close to 100 percent financing. So, if you have any questions about piggy back mortgages or a real-estate transaction, give me a call at 847-2288. Thank you.