Speculating that the mortgage interest tax deduction might go away is currently quite popular. News sites all across the internet have taken various angles on what it might mean to individual homeowners and the real estate markets in general. Most articles argue that eliminating this tax break will cause home values to decrease. The National Association of Realtors is frequently quoted as estimating that home prices would fall by 15% nationally and more in areas
We’ve been thinking a lot about mortgages lately. Something that jumps out at us is just how much of an opportunity the combination of declining mortgage rates and falling home prices has created for buyers. Interest rates for 30-year fixed mortgages were around 6% during the early and mid-2000s when we bought our house. Those same loans are now available for interest rates of 4% or less, and 15-year fixed mortgages are available for just
A while back we talked about how appraisals can impact a deal. A new twist is that buyers have recently been making their offers more attractive by voluntarily removing the appraisal clause. They take the risk that the appraiser finds that the “value” of the home to be less than the contract price, and they have to bring more cash to the closing. Today we’re going to quantify that risk. Banks require appraisals to help
Real estate appraisals have been a hot button issue over the past few years. First, appraisers were implicated as a contributing factor to the real estate bubble in the mid 2000s. The line of thinking was that they were focused less on the accuracy of their results than on their next deal. Next, the government responded by clamping down on the appraisal process to prevent lenders and real estate agents (who were both also implicated
Interest rates and down payment amounts are both trending upwards, according to recent articles on the current state of home mortgages, potentially reducing the purchasing power of buyers. After bottoming out around 4.25% last fall, mortgage rates for 30-year fixed-rate loans have recently moved above 5% for the first time in about a year. Commentators observe that rising rates will cause some buyers to rethink the advantages of home ownership, but generally conclude that they