Sunrise Homes & Renovations, Inc.

What’s Ahead For Mortgage Rates This Week -February 18th, 2020

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What’s Ahead For Mortgage Rates This Week -February 18th, 2020Last week’s economic reporting included releases on inflation, retail sales, and consumer sentiment. Weekly readings on mortgage rates and first-time jobless claims were also released.

Inflation Hits Highest Growth Pace Since 2018

Consumer staples including rent, prepared food and medical expenses caused inflation to rise 0.10 percent from December to January, which was the smallest month-to-month growth in four months. Rents drove month-to-month inflation with a growth rate of  0.40 percent.

Year-over-year inflation grew from 2.30 percent to 2.50 percent, which was the highest year-over-year growth rate since Fall 2018. Analysts said that inflation remained low according to historical data and that no sharp inflationary growth was expected.

The rapid acceleration of rents and home prices continued to create obstacles for renters and homebuyers, who faced prices rising faster than the overall inflation rate and wage growth,

Retail Sales Dip in January

The Commerce Department reported an 0.30 percent drop in retail sales for January, which matched expectations, but was half the growth rate of 0.60 percent posted in December. January’s lower reading was largely attributed to clothing stores, which experienced a 3.10 percent decline in sales after the holiday season.

Analysts expected retail sales to grow at a pace fast enough to support economic growth throughout 2020.

Mortgage Rates and New Jobless Claims Rise

Freddie Mac reported higher rates for fixed-rate mortgage loans last week; rates averaged 3.47 percent for 30-year fixed-rate mortgages and were two basis points higher. Rates for 15-year fixed-rate mortgages averaged one basis point higher at 2.97percent.

Rates for 5/1 adjustable-rate mortgages rose an average of four basis points to 3.28 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.80 percent for 15-year fixed-rate mortgages and 0.30 percent for 5/1 adjustable-rate mortgages.

First-time jobless claims rose to 205,000 new claims filed but fell short of an expected reading of 211,000 new claims filed. The prior week’s reading for new unemployment claims was 203,000 claims filed.

The University of Michigan reported higher consumer confidence for February; the Consumer Sentiment Index rose to 100.8 from January’s index reading of  99.8. Analysts predicted no change for February’s reading.

What’s Ahead

This week’s scheduled economic news includes readings on NAHB Housing Markets, Housing starts, building permits and sales of previously-owned homes. Weekly readings on mortgage rates and new jobless claims will also be released.

Investment Property Down Payments: How Much Will You Need?

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Investment Property Down Payments: How Much Will You NeedInvesting in real estate is a great way for someone to diversify his or her assets; however, there is a common hurdle that almost all real estate investors face. This comes in the form of a down payment. 

It can be a challenge for someone to come up with enough cash to fund the down payment on a home or piece of land, let alone multiple properties. At the same time, how big of a down payment does someone really need? There are a few factors that someone is going to need to consider.

The Conventional Mortgage

There are plenty of investors who like to stick with a conventional mortgage for their investment properties. This makes sense because this is a format they are familiar with. For a conventional mortgage, the down payment is going to fall between 10 and 25 percent.

When taking out a conventional mortgage for an investment property, the lender is typically going to want a larger down payment. For a single-family property, most lenders are going to expect at least 15 percent of the purchase price. This number can be as high as 25 percent of those who are investing in an apartment building, condo structure, or any multifamily unit.

Those who are looking to put down a smaller down payment will need to finance the investment property as a second home. While this might be an interesting thought, anyone looking to purchase an investment property as a second home will need to spend at least some of their time at this location. For a second home, someone might be able to get away with a 10 percent down payment.

A Smaller Down Payment For Multifamily Buildings

There is another way that someone might be able to successfully apply for a smaller down payment. FHA mortgages tend to have higher fees; however, they require smaller down payments. For example, even a multifamily property may only require a 3.5 percent down payment with an FHA loan.

In this example, someone could purchase a multifamily building for $600,000 and only have to put $21,000 down. Those who are willing to stomach higher fees might want to check out the possibility of an FHA loan.

If you are interested in purchasing an investment property, be sure to consult with your trusted real estate professional.

Green Energy Tax Credits For Home Improvement & Energy Efficiency

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Green Energy Tax Credits For Home Improvement & Energy EfficiencyMany individuals and families are looking for ways to reduce their energy consumption. Running the heater during the winter and the air conditioner during the summer can have significant impacts on someone’s energy consumption and costs. It should come as no surprise that many people are trying to reduce their HVAC usage to save money; however, there is a better way.

Individuals and families can permanently reduce their fossil fuel usage and carbon footprint by investing in home improvements. Better yet, local, state, and even the federal government wants everyone’s home to be more environmentally conscious, or “green.” Many utility companies want people to act in the same way. That is why there is a slew of incentives for homeowners who are willing to make their homes more Earth-friendly.

Government Tax Credits For Green Initiatives

Many of the tax credits the government is offering for “going green” are going to run through the end of 2021. They are available to any homeowner in the United States who files a federal tax return. Applying for tax credits is done by filling out Form 5695 from the IRS.

Some of the biggest tax credits come from solar energy generation. The first example of a solar energy system comes in the form of a solar water heater. All Energy Star-rated solar water heaters will qualify for this tax credit. Typically, solar water heaters cost somewhere between $2,000 and $5,000. 

The other biggest source of solar energy comes in the form of solar panels. Solar panels need to generate electricity directly for the residency and must meet all safety codes. Typically, solar panels cost between $25,000 and $35,000. Even though these sound expensive, the costs are dropping quickly and the tax credit makes the system worth it in the eyes of many homeowners.

Wind Energy

Homeowners can also qualify for green energy tax credits through the use of wind energy. The cost of a wind turbine strong enough to power a home will vary widely. Some may cost $15,000 while others may cost $75,000. 

Keep in mind that, in addition to the tax credit, these systems may drastically cut someone’s utility costs. Eventually, these systems should pay for themselves. For this reason, green energy has become an attractive option for many homeowners. 

If you are in the market for a new home or interested in listing your current property, be sure to consult with your trusted real estate professional.

4 Things To Do Before Co-Signing A Mortgage For Your Child

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4 Things To Do Before Co-Signing A Mortgage For Your ChildIt can be hard to convince a lender that a young person is ready to buy a house. There may not be a long credit history, a lack of assets might make it hard to fund a down payment, and the buyer’s age can cause banks to hesitate. One of the ways for parents to help with this process is to co-sign on the mortgage. Before doing this, there are a few important steps to keep in mind.

Look At Your Own Qualifications

Remember that co-signers are going to go through the same vetting process as the primary borrower. This includes someone’s income, credit history, assets, debts, and credit score are all going to be scrutinized. It might be a while since the co-signer has had to go through this process. Be sure to take a look at one’s own qualifications. Remember that any mortgage, including acting as a co-signer, will act as an outstanding debt. This might make it hard to refinance in the future.

Think About Paying The Loan

While nobody wants to think about their child being unable to pay back the loan, there is always the chance that this may happen. Therefore, think about what would happen if you need to step in and make these payments. If you cannot handle the burden of having that additional co-payment, you may want to think twice about co-signing. Failing to make these payments will not only hurt your child’s credit score but yours as well.

Protect Yourself

As a co-signer, it will be important to protect yourself before signing on the dotted line. First, be sure to do some estate planning with your child. You should encourage your child to take out a life insurance policy. While no parent wants to think about burying their child, if something happens to him or her, the co-signers are going to be on the hook for the rest of the loan. Furthermore, be sure to monitor the loan payments as well. Sign up for email or text alerts to make sure payments are being made on time.

Plan Ahead

Many parents are going to reflexively act as a co-signer for their child; however, it is important to plan ahead. Be sure to think about all possibilities and make sure that both you and your child are ready to handle an added loan payment.  

If you are interested in buying a new home or listing your current property, be sure to consult with your trusted real estate professional.

How To Keep Records For Your Real Estate Business

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How To Keep Records For Your Real Estate BusinessAnyone who is looking to build a successful real estate business needs to keep meticulous records. When buying and selling property, there are a lot of tax and legal responsibilities. While some people may not want to think about this issue, the IRS may audit a real estate business. In this case, it is critical to have documentation that demonstrates proof of income as well as any credits or deductions that might have been claimed.

Some of the most common deductions that are claimed in the real estate business include depreciation, mortgage interest, repairs, insurance premiums, administrative costs, and property taxes. In order to keep records for a real estate business, there are a few categories to consider.

Improvements That Have Been Made To Properties

There are two ways that someone can deduct the costs of improvements or repairs made to properties. First, someone can deduct the entire cost of the expense during the year that it was incurred. This means the cost of materials, labor, storage, and more. 

The other way that someone can claim this deduction is to depreciate its cost over a predetermined period of time. This time period is going to depend on the nature of the repair. In this case, the depreciation period would begin on the date the repair or improvement is made.

The Cost Of Cars, Mileage, And Parking

Another key category is mileage and parking. There are plenty of people who use a car to get from place to place. If this car is used for work purposes, it can be claimed as a deduction. In order to keep proper records of mileage and parking, it is important to keep either a digital or paper log for the purposes of each trip. 

Then, with the number of miles driven in hand, this can be multiplied by the suggested mileage rate provided by the IRS. The grand total can be deducted from someone’s gross taxable income that year. The alternative way to calculate this is to forgo the standard rate issued by the IRS and deduct the cost of gas, maintenance, and depreciation of the vehicle. Some people like to calculate the deduction both ways and use the larger total. Just be sure to have records to support this claim.

What’s Ahead For Mortgage Rates This Week -February 10th, 2020

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What’s Ahead For Mortgage Rates This Week - February 10th, 2020Last week’s economic news included readings on construction spending and public and private-sector job growth. Weekly readings on mortgage rates and first-time jobless claims were also released.

Construction Spending Dips in December

Overall spending on public and private-sector construction spending dropped by  -0.20 percent in December to an annual rate of $1.33 trillion. Analysts expected spending to increase by 0.10 percent based on November’s revised reading of 0.70 percent growth in construction spending.

Spending on residential construction rose 1.04 percent in December, which is good news for housing shortages in many areas of the U.S. Lower mortgage and interest rates have fueled builder confidence as fears about the impact of tariffs on building materials were diminished.

Chronic short supplies of homes, especially affordable homes, have impacted housing markets in recent years. Builders seeking higher profits have focused on high-end construction as demand increased for entry-level and mid-range homes. Slim supplies of available homes continued to sideline buyers who couldn’t find affordable homes or homes they wanted to buy.

Bidding wars and cash buyers in high-demand markets also add additional pressure to home buyers who depend on mortgage financing. Real estate pros and industry analysts have long said the only way to ease high demand and rapidly rising home prices is for builders to produce more homes at a variety of price points.

Mortgage Rates, New Unemployment Claims Fall

Freddie Mac reported lower fixed mortgage rates for the third consecutive week as the average rate for a 30-year fixed-rate mortgage fell six basis points to 3.45 percent. Rates for 15-year fixed-rate mortgages averaged three basis points lower at 2.97 percent.

Rates for 5/1 adjustable rate mortgages averaged eight basis points higher at 3.32 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.20 percent for 5/1 adjustable-rate mortgages.

New unemployment claims fell to 202,000 claims filed as compared to 215,000 new claims expected and the prior week’s reading of 217,000 first-time claims filed. The month-to-month reading for first time jobless claims is considered more stable and showed 211,750 new claims filed. The lowest post-recession month-to-month reading of 193,000 new claims filed was posted in April 2019.

Public and Private-Sector Jobs Increase in January

The government’s Non-farm Payrolls report posted 225,000 new public and private-sector jobs in January as compared to December’s reading of 147,000 jobs posted. An average of 211,000 public and private-sector jobs were added in the last three months. ADP reported  291,000 private-sector jobs added in January as compared to 199,000 jobs added in December.

The Commerce Department reported a national unemployment rate of 3.60 percent in January; analysts expected the unemployment rate to hold steady at December’s reading of 3.50 percent.

What’s Ahead

This week’s scheduled economic reporting includes readings on inflation, retail sales and consumer sentiment. Weekly reports on mortgage rates ad first-time jobless claims will also be released.