Lee Morof's Real Estate Blog

Purchasing a house can be expensive, but there are measures in place to make it easier, particularly for people buying a home for the first time. One option is a mortgage credit certificate. What is the certificate, and how does it work?

A Mortgage Certificate Is A Tax Credit

A mortgage credit certificate, usually shortened to MCC, is a credit issued to first-time homebuyers by the local or state government. This certificate allows first-time homeowners to claim a federal tax credit for mortgage interest paid on the loan, with a limit of up to $2,000. When someone takes out a mortgage, the majority of the payments go toward interest. This credit certificate allows homeowners to recover some of the interest paid in the form of a tax credit.

Who Qualifies For This Credit?

Not every homeowner will qualify for this certificate. Usually, this is a certificate reserved for low-income people purchasing a home for the first time. Or, these credits are limited to people who purchase a house in a certain area. Usually, these programs are run by the states. Every state has a slightly different income limit for people purchasing a home. Everyone needs to check the local rules and regulations set by their states.

Is The Certificate Different From A Tax Deduction?

Yes, the mortgage credit certificate is different from a tax deduction. A tax credit is directly applied to the amount of money someone owes in taxes. In contrast, a tax deduction is a deduction from someone’s gross taxable income. A tax credit is better for tax purposes than a tax deduction. It is possible for someone to be awarded a mortgage credit certificate and deduct the interest paid on the mortgage from their taxes. Anyone who has questions about how deductions and credits work should work with a tax professional. 

Do Not Leave Money On The Table

It is true that purchasing a house for the first time can be a challenge; however, there are financial measures in place to make this process easier. Anyone who is buying a home for the first time should take a look at the state qualifications for the mortgage credit certificate program. This could help people save money on their taxes.

There are many reasons why people need to move. Some people might be moving to be closer to a school. Other people might be moving to live closer to family members. Some people might have gotten a job in another state. Purchasing a home in another state can be a challenge, but technology has made it easier. Even though a lot of people still prefer to see a potential home in person, it is possible to take a virtual tour of a house. As a result, some people purchase homes they have never seen in person. On the other hand, there are many challenges that come with purchasing a house in another state. What can potential homeowners do to make the process easier?

Choose The Right Real Estate Agent

One of the first tips potential homeowners need to keep in mind is that they need to choose the right real estate agent. Even though it is always important to work with a real estate agent, it is even more important when purchasing a home in a new area. Potential homeowners are unfamiliar with the area, and they need to learn more about the community. A real estate agent can talk to homeowners about local schools, shopping and dining opportunities, potential development, and property values. The right real estate agent should take the time to understand the needs of his or her clients and generate a list of potential properties based on those preferences. 

Ask Questions About The Area

Next, homeowners should not be afraid to ask questions about the area. There is no such thing as a dumb question, and homeowners need to collect all the necessary information to make an educated decision. How much earnest money is required? What is it like to get an inspection? How long does it take to close? Don’t hesitate to ask a few questions about the region. 

Request A Remote Closing 

Speaking of closing, homeowners can request a remote closing. That way, they don’t have to worry about altering their schedules to be physically present at the closing table. The real estate agent can be the representative of the buyer at closing. This can make the process easier, saving money on travel expenses along the way. 

It is true that the summer months are a hot time for the real estate market. Many families with children prefer to move during the summer because they do not have to pull their kids out of school. On the other hand, it is possible to sell a home during the holidays. There are fewer homes on the market, so this could drive up prices. What are a few tips homeowners should follow for selling their houses around the holidays?

Remove The Clutter

When the temperature cools off, people spend more time inside. Therefore, it is easy for houses to get cluttered. When this is combined with the rest of the holidays, it is easy for messes to build up. People looking to sell their houses during the holidays need to avoid clutter at all costs. Potential buyers want to imagine what their life is like in the house. If there is a mess everywhere, it will be difficult for buyer imaginations to run wild. 

Maximize The Curb Appeal

There is never a second chance to make a first impression, and the first impression comes from curb appeal. Even though there might be a lot of leaves on the ground, homeowners need to act quickly to remove them. Furthermore, bare trees can expose damaged parts of the house. It might be a good idea to throw a fresh coat of paint on the outside. 

Price To Sell

There is a delicate balance between pricing a house too high and pricing a house too low. Nobody wants to leave money on the table, but it is important not to scare away buyers. Homeowners who can afford to wait may want to price the house higher; however, if someone is starting a new job at the beginning of the year, the house might need to be priced lower to sell quickly. 

Select The Right Agent

Selling a home during the holidays can be a challenge, but the right real estate agent can make all the difference. It is critical to work with an agent who has experience selling a home during the holidays. That way, they can find comparable homes in the area, set the price right, and get as many showings as possible to get offers on the table. 

The real estate market has gone through a number of changes during the past few months. When inventory is low, sellers win. They have the ability to pick a buyer, they can make more money, and they can sell a house faster. What are some of the biggest reasons why sellers win when inventory is low? 

The Asking Price Goes Up

One of the biggest reasons why sellers win when inventory is low is that the asking price goes up. When there are more buyers than there are sellers, a seller may have multiple offers on the table. Then, the seller can leverage those offers against each other, driving up the price of the house. This could allow sellers to get thousands of dollars over the asking price for their homes. 

Sellers Maximize The Return

When sellers drive up the asking price of a house, this also increases the equity they have in their homes. When sellers have a mortgage, the monthly payment does not change much over the life of that mortgage; however, when the value of the house rises, this means sellers have more equity in their homes. They can do a lot with this equity. They can sell the house, pocket the extra equity, and either put it toward a new house or deposit it into their retirement account. 

The Seller Can Dictate The Terms

Finally, when inventory is low, sellers have the ability to dictate the terms. For example, a seller might be selling a house that has a wide variety of repairs. When inventory is low, sellers do not necessarily have to do these repairs. They know there are so many people looking for houses that someone will be willing to purchase the house without asking for repairs to be made. Sellers might even ask for cash offers only. This allows the seller to avoid certain closing expenses and walk away with more cash. 

Sellers Win When Inventory Is Low

The real estate market fluctuates over time; however, when inventory is low, sellers win. Because there is less competition on the market, sellers can get multiple offers on the table. This allows them to drive the negotiation, getting as much money as possible for their house. 

There are numerous homeowners who are looking for a way to make more space. Even a small decluttering project can make a significant difference to the amount of space available in a home. This can also make it easier for homeowners to find what they are looking for. Furthermore, if a home is going on the market in the near future, it needs to be as clean as possible. That way, prospective buyers can see the potential of a home. What are a few examples of decluttering projects that can make a significant difference?

Clean Under The Kitchen Sink

The kitchen is one of the most used spaces in the home. Therefore, it is critical to keep it clean. Focus on cleaning under the kitchen sink. The easier the cleaning supplies are to locate, the easier it will be to keep the kitchen clean. Some homeowners are more likely to keep the kitchen clean if they have an easier time pulling out the cleaning supplies. Consider using labels, drawers, and boxes to keep the equipment organized. 

Check The Bathroom Closets

Bathroom cabinets are among the most overlooked areas in the home, but they also have a lot of potential. Many homeowners do not have enough linens and towels to fill up the bathroom cabinet, so think of other ways to use this space. For example, homeowners may want to place extra toothbrushes, toothpaste, and cleaning supplies in the bathroom cabinet. It might be smart to use dividers to keep the space in the bathroom closet organized. 

Tidy Up The Refrigerator

Finally, homeowners should also think about cleaning the refrigerator. Stains in the refrigerator can be notoriously difficult to remove, but using a bit of white vinegar can go a long way. Take a look at the expiration dates on the items in the refrigerator and throw away food and drinks that have already gone bad. Then, consider using labels to keep the refrigerator organized. This will make it easier for everyone to find what they are looking for the next time they open the door. 

These are just a few tips on how to declutter the areas that most homeowners often forget about. Just remember that a home can be decluttered in steps and is a process. 

There are many people who are thinking about refinancing their homes. For example, some people may be interested in reducing their monthly payments, while other people may be interested in tapping into the value of the home to fund a home improvement project. What is the relationship between property values and refinancing? There are several important points to keep in mind. 

Property Values Tend To Rise

First, it is important for homeowners to understand that property values tend to rise during the life of a mortgage. For example, someone may purchase a home valued at $250,000. Then, fifteen years later, the home might be valued at $350,000. This might mean that homeowners have access to an extra $100,000 in equity. They might use some of this money to put towards a new home when they sell their current home. Or, they might refinance their home and access that equity to complete a home improvement project. 

Monthly Payments Might Go Up

If homeowners decide to refinance their houses and take all of the equity out of the home, they might be starting their 30-year mortgage over again. Then, because the property is worth more money, they may end up with a higher monthly payment. That is why homeowners need to work with a professional who can help them figure out how the refinancing process may impact their finances in the future.

Why Property Values May Rise

There are several reasons why property values may go up. First, there might not be enough homes in the local area. Therefore, the ones that are available might be worth more money. The popularity of a specific location might increase as well. There might be a new company moving to the area with attractive job opportunities. Finally, home improvements might also increase the value of the property. 

Why Refinancing Might Make Sense

There are several reasons why it might be a good idea to refinance a home. First, homeowners might use some of the equity to pay off existing debt, such as medical bills. Some homeowners like to refinance their homes to reduce their monthly payments with a lower interest rate. Finally, there are homeowners who refinance to complete home renovation projects. 

Rent has gone up significantly during the past year. Even though it is not unusual for rent to go up over time, the average rent across the country has increased significantly during the past year. This means that the average rent will probably be even higher next year than it is this year. Even though this is one of the biggest deterrents against renting, there are other reasons to get out of the rental market as well. 

Renters Stand To Lose More Money This Year

One of the biggest reasons why renters are losing so much money is that the average value of a house has gone up significantly. During the past year, the average value of a home in the United States increased by more than $50,000. This means that the average homeowner gained this amount of money in equity. Renters do not get the same benefit. Because renters are not investing any money in property, they are not seeing any return on the money they throw away in rent. This means that renters lost tens of thousands of dollars by renting this past year instead of owning. 

Renting Can Be Very Expensive

A lot of people do not want to purchase a house because they are scared of maintenance expenses, property taxes, and the size of the down payment. On the other hand, renting is like throwing money down the drain. The money is going directly into the pocket of the property owner, and the renter is not seeing any sort of return on that investment. Furthermore, even though the price of renting can go up over time, many people who take out a mortgage lock in the rate for 30 years. This means the monthly payment will be the same at the end of the loan as it is at the beginning of the loan. If someone has a steady job, their income is likely to go up during the course of the mortgage, meaning that they have more financial flexibility in the future. Renters need to think carefully about what they can do to get out of the rental market and purchase property before rent increases in the future. 

The most popular time of year to sell a home is the summer. There are a lot of families with children who prefer to move during the summer because they do not want to move their children during the school year. In contrast, many people do not like to move during the winter. It can be difficult to request extra time off of work, particularly during the holiday season. At the same time, it is still possible to sell a home during the winter. What are a few tips homeowners need to follow to sell a home during the winter? 

Maximize Curb Appeal

There is never a second chance to make a first impression, and homeowners need to maximize curb appeal. Do everything possible to make the yard look nice. It is also critical to shovel the walkways. That way, potential buyers do not need to worry about slipping and falling when they walk up the front driveway. It may also be helpful to clean off the patio to make it look larger. 

Warm Up The Inside

People are going to be cold when they step inside during the winter. Therefore, homeowners should turn up the heat. It may also be helpful to have a specific location for winter coats and wet shoes. That way, potential buyers will be comfortable at that look at each individual room in the home. 

Add More Lights

During the winter, it is dark when people go to work. It is also dark when they come home. It might be pitch black when people arrive, so remember to turn on the lights in the home. Having lights can make the home feel more inviting. They can also increase the visibility inside and outside the home so the buyers can see what the house has to offer. 

Showcase The Season

Sellers should not hesitate to showcase the season. Consider putting out a plate of cookies. Arrange pillows and blankets on the sofa. Turn on the fireplace if there is one. Even seasonal accents can make the difference when trying to get an offer on the table. Be sure to stage the home for the season to showcase the potential of a house. 

Purchasing a home is a major decision, and it could be the most expensive financial transaction somebody ever makes. Therefore, it is important to get this right. One of the biggest hurdles for a new homeowner is coming up with enough money for the down payment. A lot of people believe they require 20 percent down to purchase a home. Saving this amount of money can be overwhelming, and some people are wondering, is this really necessary? There are several key points to keep in mind. 

Putting 20 Percent Down Is Not Really Necessary

When taking a look at the prices of homes, putting 20 percent down can seem like a pipe dream for most people. Fortunately, putting this amount of money down is not actually necessary. It is possible for people to qualify for a loan with significantly smaller amounts of money. For example, there are some lenders who might be willing to provide a loan to a first-time homebuyer for as low as 3.5 percent. Even though this is still a lot of money, it is not nearly as much as 20 percent down. Potential homeowners need to do their homework and work with down payment assistance programs to make this process easier. 

Why Do People Put 20 Percent Down?

So, where does the idea of putting 20 percent down actually come from? Many homeowners decide to put 20 percent down because they would like to avoid something called private mortgage insurance, or PMI. This is an insurance policy that potential homeowners may be required to purchase on behalf of the lender to protect the lender in the event of a default. When homeowners reach 20 percent equity in their homes, they can ask for PMI to be canceled. Because most homeowners do not want this additional expense, they may feel compelled to put 20 percent down. 

Find The Right Home Loan

Potential homeowners should not feel like their dreams are derailed simply because they need to put 20 percent down. It is possible to qualify for a home loan with significantly lower down payment percentages, but every homeowner has to assess his or her options. That way, they can make the best financial decision for their individual situation.

Closing on a new home is exciting and many people view their closing date as the finish line; however, even after closing a new home, there is still a lot that has to happen. What do new homeowners need to do after closing on a new home?

Mark The Date Of The First Payment

Every homeowner needs to know the first date of the new mortgage payment. They need to get their bank account set up for an automatic draft, or they need to send a physical check by that time. Keep in mind that the first payment might include a partial payment from the prior month as well.

Understand That The Loan Servicer Might Change

Anyone who is sending a physical check needs to be aware that the loan servicer might change. Many banks sell their loans to another entity, which means physical checks might need to go to a new address. 

Watch For Potential Scams In The Mail

Many new homeowners receive a lot of junk mail and deceptive advertisements from scam artists. Anyone who has questions about the information they receive in the mail might want to talk to their real estate agent or lawyer to see what is real or what is fake. Sometimes, people try to sell homeowners on policies they already have, such as home insurance or mortgage insurance.

Make Sure Property Taxes And Homeowners Insurance Are Set-Up

Homeowners also need to make sure their property tax payments and homeowners’ insurance are set up. Often, the lender will escrow these payments, saving homeowners a significant amount of stress. This also means that homeowners need to make sure the lender is taking enough money every month to cover home insurance and property tax bills at the end of the year.

Look Past The Closing Date

These are a few of the most important tasks all new homeowners need to complete after closing on a new home. That way, nothing important gets overlooked, and homeowners are not surprised by anything they receive in the mail. Talk to a real estate or mortgage professional to learn more.