Sunday, February 27, 2011

Chipping Away

The budget President Obama recently sent to Congress begins the process of ultimately doing away with the tax deduction for mortgage interest. In its place, he is recommending a tax credit. His 2012 budget would place limits on the amount of mortgage interest a family …wait for it…making more than $250,000.00 annually can deduct.

Currently, one may take a deduction for mortgage interest paid on their primary residence and second home, first mortgage and second mortgage/HELOC. The loan amount must be $1 million or less on the 1st mortgage and $100,000.00 or less on the second mortgage/HELOC.

President Obama wants to change the deduction to a maximum credit of up to $5,000.00. The loan limits would be lowered to $500,000.00 on first mortgage loans and be eliminated for second mortgage/HELOC loans.

The straight up explanation is - this will put more negative pressure on a real estate market which does not need any more negative pressure. With values dropping across the country and underwriting guidelines becoming stiffer, the American home buyer has lost a lot of incentive to purchase a house. This proposal, aimed at higher priced homes, does nothing to encourage somebody to buy in this price range, thereby inhibiting the market further.

Wednesday, February 9, 2011

Evaluating a Neighborhood

As you begin the search for your new home, not only do you need to find the right house, but you’ll also need to find the right neighborhood. The “perfect” house in the wrong neighborhood can spell disaster. Here are a few guidelines and search tools you can use to size up your next neighborhood.

Location, Location, Location – This famous mantra has always been, and will always be, the single best piece of advice one can receive when buying real estate. How close is the house to your work? What are the road conditions? What are the developer’s plans for improvement? What are the long-range plans for the area? Answers to these questions are very important factors when you decide to put an offer on a home.

Demographics - If your family has young children, you’re going to be looking for a “kid friendly” neighborhood. On the other hand, if you’re empty-nesters, are there other couples around your age? It’s vital to identify the demographics of your future neighborhood.

Night and Day Difference - The feel of a neighborhood and can change significantly after the sun goes down. Drive by at night to see what type of activity is going on. Check it out on different days of the week, especially Friday and Saturday nights. You may not want to move into a neighborhood that turns into a disco after dark.

Proximity to Services – How close and convenient are the businesses you patronize? How easy is it to get to these companies? Will you have to cross busy streets and intersections or make U-turns to get to them? Find out what the walk score is. This will give you a great amount of information on the area surrounding your next home.

Talk to Neighbors – Meeting your prospective new neighbors will allow you to evaluate and judge whether you’ll want to live next door to them. I once lived next door to a guy who turned out to be a weekend motorcycle warrior. Every Saturday morning, spring through fall, he’d start his Harley at 7:30 a.m. and let it “warm up” for about 10 minutes before blasting off. Talking to neighbors may help you avoid a situation like this.

Crime Statistics – It’s always a good idea to check with the Police to get an idea of the criminal activity in the neighborhood and surrounding area. Most municipalities and/or local newspapers have websites you can search for information on “undesirables” who reside in the neighborhood you’re considering. It’s prudent to get as much info as possible on this topic

You’ll be pleased you took the time to look at these important, but often overlooked aspects of buying a home. These tips may save you from getting into a disastrous housing situation, and keep you happy in your home for many years to come.

Greg Parrish is a Mortgage Loan Officer with WR Starkey Mortgage, LLP(CO LMB #100032297 NMLS #304686) located in the Denver Tech Center in Denver, Colorado. He specializes in FHA, VA, and Conventional home loans. For more information, call 303.808.3407

The views expressed here are those of the author and do not necessarily reflect the views of WRSM. WR Starkey Mortgage CO LMB #2146 6025 S Quebec Street Suite 110, Centennial CO 80111. To check the status of a Mortgage Loan Originators Colorado State License, please go to: