New home sales unexpectedly spike to 8-month high

Purchases of new U.S. homes unexpectedly increased in March to an eight-month high, indicating housing demand remained strong at the start of the spring buying season, Commerce Department data showed Tuesday.

Key Points
Single-family home sales increased 5.8 percent to a 621,000 annualized pace (median forecast called for a 584,000 rate)
The median sale price of a new house rose 1.2 percent from March 2016 to $315,100
Supply of homes shrank to 5.2 months from 5.4 months; there were 268,000 new houses on the market at the end of March
Big Picture

Steady job growth and improving wages are continuing to drive demand, building on last year’s new-home sales that were the strongest since 2007. While mortgage costs remain above pre-election levels, they’re becoming less of a curb on the market, with the average 30-year fixed rate falling last week to the lowest since November. Still, lean inventories and rising prices may restrain any gains.

Other Details
Rise in demand was led by a 16.7 percent gain in the West, which had the fastest sales pace since 2007; the South and Northeast also saw gains, while purchases slowed in Midwest
The February reading was revised to a 587,000 pace from a previously estimated 592,000
Commerce Department said there was 90 percent confidence that the change in sales last month ranged from a 9.7 percent drop to a 21.3 percent increase, underscoring the volatility of the data
New-home sales account for about 10 percent of the residential market and are tabulated when contracts are signed; existing-home sales, which rose 4.4 percent last month, are based on contract closings

Copyright Bloomberg 2017

Careful…Don’t Get Caught in the Rental Trap!

There are many benefits to homeownership. One of the top benefits is being able to protect yourself from rising rents by locking in your housing cost for the life of your mortgage

Don’t Become Trapped
Jonathan Smoke, Chief Economist at, reported on what he calls a “Rental Affordability Crisis.” He warns that,

“Low rental vacancies and a lack of new rental construction are pushing up rents, and we expect that they’ll outpace home price appreciation in the year ahead.”

In the Joint Center for Housing Studies at Harvard University’s 2016 State of the Nation’s Housing Report, they revealed that “The number of cost-burdened households rose to 21.3 million. Even more troubling, the number with severe burdens (paying more than 50% of income for housing) jumped to a record 11.4 million.” These households struggle to save for a rainy day and pay other bills, such as food and healthcare.

It’s Cheaper to Buy Than Rent
In Smoke’s article, he went on to say,

“Housing is central to the health and well-being of our country and our local communities. In addition, this (rental affordability) crisis threatens the future value of owned housing, as the burdensome level of rents will trap more aspiring owners into a vicious financial cycle in which they cannot save and build a solid credit record to eventually buy a home.”

“While more than 85% of markets have burdensome rents today, it’s perplexing that in more than 75% of the counties across the country, it is actually cheaper to buy than rent a home. So why aren’t those unhappy renters choosing to buy?”

Know Your Options
Perhaps you have already saved enough to buy your first home. HousingWire reported that analysts at Nomura believe:

“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment.

It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)

Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream home. As we have reported before, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!

Bottom Line

Don’t get caught in the trap so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Have a professional help you determine if you are eligible for a mortgage.

Source: Keeping Current Matters

Here’s how much Chicagoans pay in property taxes

Chicago-area homeowners pay some of the highest property taxes in the country.

Local taxing authorities raked in over $12.3 billion in property taxes last year, the second most of any housing market in the country behind New York City’s $30 billion, according to recent tax information released Thursday by ATTOM Data. With an effective tax rate of 2.15, the Chicago statistical area ranks 22nd out of 217 markets for its tax rates. In fact, five counties in Chicago’s metropolitan statistical area are in the top 26 in the highest tax rates by county, according to the study.

Here is a breakdown of Chicago-area tax data for 2016, including information on the housing market and by county:

Click to enlarge

Source: Chicago Agent Magazine

Foreign National Home Loan Program

• Loan Amounts Up To $2,000,000
• 2nd Home* & Non Owner Occupied
• 1 – 4 Unit Properties
• No Reserves
• Passport Only To Qualify
• International Credit Report or Letter of good standing from current Financial Institution. *2nd Home max $1mil. loan amount, may require income documentation

Call or Email us Today!
American Mortgage Corporation NMLS# 1203481

What are the tax benefits of homeownership?

Many Americans got some depressing news last week; either their tax return was not as large as they had hoped or, in some cases, they were told they owed additional money to either the Federal or State government or both. One way to save on taxes is to own your own home. According to the Tax Policy Center’s Briefing Book -“A citizen’s guide to the fascinating (though often complex) elements of the federal Tax System” – there are several tax advantages to homeownership. Here are four items, and a quote on each, from the Briefing Book:

1. Mortgage Interest Deduction

“Homeowners who itemize deductions may reduce their taxable income by deducting any interest paid on a home mortgage. The deduction is limited to interest paid on up to $1 million of debt incurred to purchase or substantially rehabilitate a home. Homeowners also may deduct interest paid on up to $100,000 of home equity debt, regardless of how they use the borrowed funds. Taxpayers who do not own their home have no comparable ability to deduct interest paid on debt incurred to purchase goods and services.”

2. Property Tax Deduction

“Homeowners who itemize deductions may also reduce their taxable income by deducting property taxes they pay on their homes.”

3. Imputed Rent

“Buying a home is an investment, part of the returns from which is the opportunity to live in the home rent-free. Unlike returns from other investments, the return on homeownership—what economists call “imputed rent”—is excluded from taxable income. In contrast, landlords must count as income the rent they receive, and renters may not deduct the rent they pay. A homeowner is effectively both landlord and renter, but the tax code treats homeowners the same as renters while ignoring their simultaneous role as their own landlords.”

4. Profits from Home Sales

“Taxpayers who sell assets must generally pay capital gains tax on any profits made on the sale. But homeowners may exclude from taxable income up to $250,000 ($500,000 for joint filers) of capital gains on the sale of their home if they satisfy certain criteria: they must have maintained the home as their principal residence in two out of the preceding five years, and they generally may not have claimed the capital gains exclusion for the sale of another home during the previous two years.”
Bottom Line
We are not suggesting that you purchase a house just to save on your taxes. However, if you have been on the fence as to whether 2017 is the year you should become a homeowner, this information might help with that decision.

Disclaimer: Always check with your accountant to find out what tax advantages apply to you in your area.

Source: Keeping Current Matters

How to Buy a Home With Bad Credit

Bad Credit? Don’t Give Up Hope of Owning a Home
Yes, it is possible to get a mortgage loan, even if your track record of paying off debts isn’t stellar.
Check Yourself

Call, Email or PM us Today!
American Mortgage Corporation NMLS# 1203481

How American Mortgage Corporation Gets You Approved When Other Lenders Said No

If Denied, Try, Try Again

Almost one-in-four home purchase applicants is denied, according to mortgage software company Ellie Mae. Even more homeowners are turned down when it comes to refinance applications — more than 30 percent.

Not all lenders are created equal, though. Some banks, credit unions, and mortgage brokers do things that others can’t.Many times, it’s all about finding a knowledgeable lender that thinks outside of the box.

Don’t lose hope just because you have been turned down in the past.Following are true stories of successful home buyers who got mortgage-approved with American Mortgage Corporation despite being told “no” the first time.

Turned Down Because Of Low Credit Scores

Until recently, Ted and his wife Brenda, along with their three children, had been life-long renters.They did not rent simply because they enjoyed renting. They rented because Brenda was a stay-at-home mom, and with just one income.

Their budget didn’t extend far enough to cover their monthly bills.As a result, there were times where they were forced to live off of their credit cards. A couple of late payments and a few maxed out credit cards took a toll on their credit scores.

Ted’s credit score was 577. His bank turned him down due to his less-than-perfect FICO. Fortunately, thanks to a lender’s credit analyzer program, Tim was able to get a detailed game plan on how to get his credit scores up.

Eager to become homeowners, Ted and Brenda followed American Mortgage Corporation’s instructions to the “T”. All they had to do was pay down a couple of credit cards, and transfer a balance from one card to another.

With the help of a American Mortgage Corporation, they saw immediate results. In less than one week, Tim saw his credit score jump almost 50 points!

With Ted’s credit score now at 625, Tim and Brenda went home shopping that very weekend. They found their dream home, made an offer, and moved into their new home just 30 days later.

Being denied by one lender doesn’t mean you’ll be denied by every lender. There may be a number of loan programs available that may fit your situation. You just don’t know about them yet.

Don’t give up just because you’ve been turned down. Try, try again.

How to Drop Private Mortgage Insurance (PMI)

Private mortgage insurance protects your lender in case you default on your home loan — and you have the privilege of paying for that protection. Your lender will typically require you to buy private mortgage insurance if you purchase a home with less than 20% down, or if you refinance a home and the equity in the house is less than 20% of the home’s value.

PMI is required because if you can’t pay and the lender is forced to foreclose on a home in which you have no equity, the foreclosure sale may not generate enough money to cover the outstanding loan balance plus the lender’s costs. The problem is that you pay a big cost to buy this protection for your lender. PMI typically costs between 0.5% and 1% of the entire loan amount per year. That means on a $200,000 loan, you could spend as much as $170 a month.

Ideally, you’ll avoid PMI by waiting until you’ve saved enough to put down at least 20% on a home you purchase. Unfortunately, this isn’t always practical. Paying PMI allows you to get into a home — and begin building equity — when you might otherwise need to wait months or years. Buying a house and paying PMI might make sense when real estate values are rising, or if you’re concerned that interest rates will climb and you want to get a mortgage at current lower rates.

In any case, if you have PMI on your home, you’ll definitely want to drop it as soon as you’re allowed. Here are the rules regarding when you can drop PMI, along with a guide on how to eliminate this expense from your budget.

When can you stop paying PMI?

You can stop paying PMI as soon as the balance on your mortgage loan falls to 80% or less of your home’s value, as long as you are up to date on your monthly mortgage payments. If your home is worth $200,000, your loan balance would need to be no more than $160,000 for you to drop PMI.

Your loan balance should eventually fall to 80% of the home’s value if you make your payments each month — but this process can take years, because you’re mostly paying interest on your loan during the early years of your mortgage. If you bought a $200,000 house with a 10% down payment, your original mortgage balance would be $180,000. You’d need to get that balance down to $160,000 to drop PMI. Assuming a 30-year fixed rate loan at 4.25%, your loan balance would drop below $160,000 after 71 payments. — so it would take you almost six years to reduce your loan balance enough to stop paying for PMI.

Making extra payments could help you get your mortgage balance down to 80% of your home’s value faster. If real estate values rise in your area, this could also help. If your home appraises for much more than you paid for it, this increases equity in your home. If your $200,000 house is worth $250,000 a year after you bought it, you’d no longer have to pay PMI, because your remaining mortgage balance — around $177,000 after a year of payments — would be around 71% of the $250,000 your home is currently worth.

How can you drop PMI?

As soon as you believe your mortgage balance has dropped to 80% of your home’s value, you can send a written request to your lender asking to drop PMI. This written request should include your loan information, your property address, information on the equity you believe you have in your home, and a request for your lender to provide you details on the steps to take to stop paying for private mortgage insurance.

Typically, to convince your lender to stop making you pay for PMI, you must provide proof you have at least 20% equity in your home. This usually means paying for a professional appraisal. Your lender will likely want to use their appraiser, so contact the lender to find out how to take this step.

n appraisal is obviously necessary if your request to drop PMI is based on a belief that your home has increased in value. Your lender won’t simply take your word for it that your house is worth more. However, many lenders also require you to submit an appraisal even if your request is based on the fact you’ve paid down your mortgage. Lenders demand an appraisal under these circumstances to ensure your home hasn’t declined in value since you purchased it.

If you don’t want to pay for an appraisal, you can wait, and PMI will eventually be terminated by your lender. If your loan closed after July 29, 1999, lenders are required to automatically drop PMI once your loan balance falls to 78% of the original value of the home at the time you took your loan. Even if your home is now worth less than it was when you bought it, lenders still can’t require PMI and must drop it as long as you’re current on your payments. You don’t have to pay for an appraisal or do anything else, but you could be paying PMI for a lot longer than necessary. With a $200,000 home, your loan balance would drop to just below 78% of its value — ($156,000) after 84 payments. That’s 13 extra payments — an additional $1,820 in expenses — if your PMI costs you $140 a month.

It’s usually worth paying for the cost of an appraisal and writing a simple letter to your lender requesting PMI removal as soon as possible. When you are close to getting your loan balance under 80% of your home’s worth, or if you have reason to suspect your home is now worth more than you paid, check out comparable home sales in your area to get an idea of what your home might appraise for. If those sales support your belief that your home is now worth more than 80% of what you owe, write to your lender and ask them to stop making you pay for PMI to protect their investment.


How Do I Use A Home Equity Line As Your Down Payment

HELOC: Most Homeowners Don’t Use Them For This

A home equity line of credit (HELOC) works great for home improvement projects or to consolidate debt.

But most homeowners never use them for this: to make a down payment on another home purchase.

Whether you are buying a second home or investment property, or just want to move without selling your current home (yet), a HELOC is a fantastic tool.

Here’s a real-life story of a couple that bought a new house, putting 20% down using a HELOC, and avoided private mortgage insurance (PMI) on the new home

A Creative Down Payment

As the Johnsons enter their golden years, their goal is to make their next home purchase their final one.

They would like to sell their current home prior to purchasing a new one.

This is a good idea for a couple of reasons.

Even though they qualify, they don’t particularly want to carry two mortgage payments at once.
They would like to use their $100,000 in equity position towards their new home.
Using the proceeds of the sale for a down payment would get them out of paying private mortgage insurance (PMI), as well as get their monthly mortgage payment down to a comfortable amount.

The Challenge

It’s a seller’s market, which is great for sellers, but not so great for buyers. Home shoppers face fierce competition.

There are fewer houses on the market than there are buyers looking for them. This results in many multiple-offer situations.

It’s tough to get a home with a contingent offer when you’re going up against non-contingent one. For instance, if you say you need to sell your home before closing on the new home, the seller will likely go with a first-time home buyer with no contingency.

But, thanks to a good equity position in their current home, the Johnsons could get creative.

The Solution

They didn’t have to sell their existing home prior to purchasing their dream home at all. Their lender helped them come up with an option to tap into their current home’s equity position.

Mr. Johnson applied for a HELOC. This allowed him to use the equity in his current home as the down payment for his new home.

The Johnson’s were approved for a $100,000 line of credit. This was enough to cover the 20 percent down payment necessary to avoid paying PMI.

Later, when Mr. and Mrs. Johnson sell their current home, they will pay off this home equity loan, along with the other mortgage on their existing home.

Thanks to that seller’s market we are currently in, the Johnson’s aren’t concerned about carrying multiple mortgages as once. Priced correctly, their existing home should sell rather quickly.

Source: The Mortgage Reports

The Top 3 Hottest Real Estate Markets for 2017 Are in Florida

Trulia recently published its list of the 10 hottest real estate markets to watch in 2017, and-no surprise-several coastal markets made the list. Trulia based its ranking of the 100 largest metro areas across the country on five criteria: a high search interest, a decreasing rate of vacancy, high affordability, a high rate of job growth, and a high population of people happy with the outcome of the presidential election.

The “hottest” markets vary depending on who you talk to-Zillow’s ranking of the hottest markets of the year looked very different. But if you’re looking for coastal real estate in an affordable city that has few people moving out of it, this list of the hottest coastal markets of 2017 might offer some suggestions. If you’re looking to capitalize on the recovering housing market and purchase your dream coastal escape, consider these hot markets:

Continue Reading