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Stay informed throughout the loan process

ALLISON SIMSON

Question: We are quite upset with our lender. During the initial interview we were told that the interest rate would be lower than what we actually got when we bought. Where did we miss out?

Answer: Financing a home purchase can be a complicated process, and consumer confusion over the way mortgages are submitted and processed can lead to additional stress or even complaints.

The Florida Comptroller’s office, which deals with numerous aggravated homebuyers, offers some advice to consumers in the market for a house. A key step, the agency says, is to confirm that the broker or lender is licensed. Then, investigate whether it has ever been the target of any grievances. Additionally, consumers must realize and accept that interest rates can and likely will fluctuate between the time that they submit their application and the time that the transaction is closed.

Homebuyers must understand that any changes in interest rates can affect what they owe each month in mortgage payments and that the broker/dealer is not in control of either. To avoid misunderstandings, homebuyers should obtain documents 24 hours before closely and review them intently ” especially for the interest rates, final payments, and any prepayment fees ” before signing.

Question: We don’t have enough money to put 20% down on a new home and understand that we will probably need to pay private mortgage insurance. Are there any other options? Also, what do we need to know about mortgage insurance?

Answer: Homebuyers who have trouble coming up with the funds for a downpayment used to have only two options: taking out private mortgage insurance or finding a less expensive home. But an increasingly popular option among buyers today is a piggyback loan.

This loan acts as an 80 percent first mortgage, with the remaining 20 percent divided equally between a downpayment and a 10 percent fixed- or variable-rate second mortgage. The overall savings from piggyback loans may not be great, especially if the interest rate for the second mortgage rises. But some of the money being paid goes into the home rather than to an insurer.

Private Mortgage Insurance (PMI) only benefits the insurer, and there are now ways to have the mortgage insurance dropped after your equity builds sufficiently.

Question: We made an offer on a house in Dillon Valley and decided ahead of time that we would walk away if the seller made a counter-proposal, which is of course exactly what has happened. Now we’re not sure what to do because we really love the house. We promised ourselves not to get emotionally involved. What do you recommend?

Answer: It is not unusual to have some hesitation in making a decision to buy a home. For most people, their home purchase is one of the largest investments they will ever make in their lives. Apprehension regarding borrowing a large amount of money is quite common and I frequently work with buyers who want to buy a particular property but are reluctant to spend what it takes to become a homeowner.

Take some time to analyze your feelings. You may feel like throwing in the towel and walking away from the whole thing, but if you can’t get that property out of your mind, it may well be that this is the perfect property for you.

Ask yourselves, “What is it about this property that made us decide to go ahead and make an offer?” If you come up with all the wonderful things which will make this house the place which you want to call home, continue to pursue the negotiations.

The process of negotiating the purchase of real estate is not an easy one. It most frequently requires give and take on the part of both buyer and seller.

If this feels like the perfect property for you, don’t give up. Rely on your Realtor for some good advice on how real estate negotiation typically takes place. Often the differential between what you want to pay and what the seller wants to receive amounts to only a few dollars more in your monthly payments. Take a close look before you move on to another property.

Question: We are interested in buying a vacation home here but are not well informed about what kind of tax breaks we might obtain along with this purchase. What can you tell us?

Answer: Mortgage interest and property taxes on a second home may be tax deductible (depending upon the use you make of your second home), just as are the interest payments on the mortgage for your primary home.

You may be able to deduct rental expenses including depreciation if the government considers your second home to be a “vacation home”. The key is what is determined to be a second home and what is a vacation home. Each category has separate tax rules depending on the proportion of owner’s personal use days versus rental days. A residence is considered a second home if it is used personally more than 14 days or at least 10 percent of the days it is rented. It is a vacation home if personal use is 14 days or less, or less than 10 percent of the days rented.

For a second home, all mortgage interest and property taxes are deductible as additional itemized deductions. If there is rental income, other property expenses may be deductible, but only up the amount of the rent income (losses are not allowed).

Owners of a vacation home may claim rent expense deduction other than interest and taxes, including depreciation of the property, even if it results in a loss. When personal use of a vacation home is involved, deductions are determined by allocating expenses, including interest and taxes, proportionally between the rental and personal use periods.

Tax laws are complicated and constantly change. Be sure to consult with your personal tax advisor.

For answers to your real estate questions, call Allison at (970) 468-6800. E-mail Info@SummitRealEstate.com. Allison is a long time local in Summit County. Summit Real Estate ” The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s longtime residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours. Want to know the value of your Summit County property? Visit http://www.SummitHomeValue.com


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