Blog – The Korwels Team

Understanding Mortgage Rates: A Look Back and What It…

For anyone looking to buy a home, understanding mortgage rates is absolutely crucial. These rates can significantly impact your monthly payments and the total cost of your home over the life of your loan. As your trusted real estate partner, I want to shed some light on the history of mortgage rates, what influences them, and what this means for you in today’s market.

A Historical Perspective: Riding the Rate Rollercoaster

Mortgage rates haven’t always been as they are today. Over the decades, they’ve experienced significant swings, influenced by economic events, government policies, and global factors.

Looking back, the late 1970s and early 1980s saw historically high mortgage rates, sometimes reaching double digits as the Federal Reserve battled high inflation. Imagine borrowing money for a home at 15% or even 18%! And yet people did it.

As inflation was brought under control, rates gradually declined throughout the 1990s and into the early 2000s, making homeownership more accessible. The period following the 2008 financial crisis saw rates plummet to historic lows as the government tried to stimulate the economy.

In more recent years, we’ve seen rates fluctuate again, influenced by factors like economic growth, inflation concerns, and the Federal Reserve’s monetary policy.

For the most recent graph, just click here: https://fred.stlouisfed.org/series/MORTGAGE30US#

The Simple Truth: What Makes Rates Go Up and Down?

While the intricacies of the financial markets can be complex, the basic factors influencing mortgage rates are quite straightforward:

The Economy: A strong, growing economy can sometimes lead to higher interest rates as demand for borrowing increases. Conversely, during economic slowdowns, rates may decrease to encourage borrowing and spending.
Inflation: When the cost of goods and services rises (inflation), interest rates, including mortgage rates, tend to follow suit to compensate lenders for the decreasing purchasing power of future payments.
Federal Reserve Policy: The Federal Reserve (often called the “Fed”) plays a significant role in influencing interest rates through various tools, including adjusting the federal funds rate. While the Fed doesn’t directly set mortgage rates, its actions have a ripple effect throughout the economy.
The Bond Market: Mortgage rates are closely tied to the bond market, particularly the yield on U.S. Treasury bonds. When bond yields rise, mortgage rates often follow, and vice versa.
Investor Demand: The appetite of investors for mortgage-backed securities also plays a role. Higher demand can sometimes lead to lower rates, while lower demand can push rates up.

Think of it like a seesaw: when the economy is strong or inflation is high, the seesaw tips towards higher rates. When the economy slows down or inflation is low, it often tips towards lower rates.

Today’s Market and Your Future Home

Understanding the history and the basic drivers of mortgage rates helps us contextualize the current market. Rates today are influenced by a unique combination of these factors, and staying informed is key for any prospective homebuyer.

This brings me to you, the future homeowner. Considering the current economic landscape and the historical context we’ve discussed:

What mortgage rate would you consider a comfortable and motivating point to make your move and purchase your dream home?

I’d love to hear your thoughts! Let’s discuss your individual circumstances and navigate the current market together to find the perfect property and the right financing options for you.

Ready to take the next step? Contact me today for a personalized consultation! Let’s turn your homeownership dreams into a reality.

Home owner

Unlock Your Home’s Hidden Potential

A Comprehensive Guide to Leveraging Your Equity

Your home is more than just a place to live; it’s a valuable asset that can provide significant financial flexibility. Over time, as you pay down your mortgage and your home’s value appreciates, you build equity – a powerful resource you can tap into for various financial needs. This blog post will explore how you can leverage your home equity through Home Equity Lines of Credit (HELOCs) and refinancing, providing you with the knowledge to make informed decisions about your financial future.

Understanding Home Equity

Home equity is essentially the difference between your home’s current market value and the outstanding balance on your mortgage. For example, if your home is worth $500,000 and you owe $200,000 on your mortgage, you have $300,000 in equity. This equity represents a significant portion of your net worth and can be a powerful tool for achieving your financial goals.

Why Leverage Your Home Equity?

Leveraging your home equity can provide access to funds for various purposes, including:

Home Improvements: Renovating your home can increase its value and improve your quality of life.
Debt Consolidation: Consolidating high-interest debt, such as credit card debt, into a lower-interest loan can save you money.
Major Expenses: Covering unexpected expenses, such as medical bills or education costs.
Investment Opportunities: Investing in real estate or other ventures.

Two Primary Methods: HELOCs and Refinancing

There are two primary methods for accessing your home equity: Home Equity Lines of Credit (HELOCs) and refinancing.

1. Home Equity Line of Credit (HELOC)

A HELOC is a revolving line of credit secured by your home equity. It functions similarly to a credit card, allowing you to borrow funds as needed up to a pre-approved limit.

How it Works:
- You apply for a HELOC with a lender, who will assess your creditworthiness and home equity.
- If approved, you’ll receive a line of credit with a specific limit.
- During the draw period (typically 5-10 years), you can borrow funds as needed.
- After the draw period, you enter the repayment period, where you repay the outstanding balance plus interest over a set term.
Advantages:
- Flexibility: You can borrow funds as needed, making it ideal for ongoing projects or unexpected expenses.
- Lower Interest Rates: HELOCs typically have lower interest rates than credit cards or personal loans.
- Interest-Only Payments: During the draw period, you may only need to make interest-only payments, reducing your monthly expenses.
Disadvantages:
- Variable Interest Rates: HELOCs often have variable interest rates, which can fluctuate with market conditions.
- Risk of Foreclosure: Your home serves as collateral, so failure to repay the loan can result in foreclosure.
- Discipline needed: It is very easy to overspend.

2. Refinancing

Refinancing involves replacing your existing mortgage with a new loan, often with better terms or to access your home equity.

Types of Refinancing:
- Rate-and-Term Refinance:
  - This is the most common type of refinance.
  - It allows you to change your interest rate, loan term, or both.
  - Benefits: Lower monthly payments, reduced interest costs, or a shorter loan term.
- Cash-Out Refinance:
  - This type of refinance allows you to access your home equity by taking out a larger loan than your existing mortgage.
  - You receive the difference in cash, which you can use for various purposes.
  - Benefits: Access to funds for major expenses, debt consolidation, or home improvements.
- Cash-In Refinance:
  - This is when a borrower makes a lump-sum payment to reduce their loan balance.
  - Ideally lowering their loan-to-value ratio and securing better loan terms.
- No-Closing-Cost Refinance:
  - This option allows you to avoid upfront closing costs by rolling them into your new loan balance or accepting a slightly higher interest rate.
  - Benefits: Lower upfront costs.
- Streamline Refinance:
  - This refinance option applies to FHA, VA, and USDA loans.
  - It offers a faster process with less paperwork and no appraisal required.
  - Benefits: Streamlined process, reduced paperwork.
- Consolidation Refinance:
  - Borrowers can combine multiple debts into a single loan, securing an interest rate that’s often lower.
- Reverse Mortgage:
  - This option is only available to homeowners over the age of 62.
  - They can borrow against their home equity and receive regular cash payments.

Benefits of Refinancing

Refinancing can offer several benefits, including:

Lower Interest Rate: A lower interest rate can significantly reduce your monthly payments and save you money over the life of the loan.
Reduced Monthly Mortgage Payment: Refinancing to a longer loan term or a lower interest rate can lower your monthly payments.
Shortened Loan Term: Refinancing to a shorter loan term can help you pay off your mortgage faster and save on interest.
Switching from an ARM to a Fixed-Rate Loan: Switching from an adjustable-rate mortgage (ARM) to a fixed-rate loan can provide stability and protect you from rising interest rates.
Tapping into Home Equity: A cash-out refinance allows you to access your home equity for various purposes.
Eliminating Private Mortgage Insurance (PMI): If you have built enough equity, you may be able to eliminate PMI, saving you money on your monthly payments.
Saving Money Over the Life of the Loan: By reducing your interest rate or shortening your loan term, you can save thousands of dollars over the life of the loan.

Choosing the Right Option: HELOC vs. Refinance

The best option for you depends on your individual financial situation and goals.

Consider a HELOC if:
- You need flexible access to funds for ongoing projects or unexpected expenses.
- You prefer a revolving line of credit.
- You are comfortable with variable interest rates.
Consider refinancing if:
- You want to lower your interest rate or monthly payments.
- You want to access a large sum of cash for a specific purpose.
- You prefer a fixed-rate loan.
- You want to consolidate debt.

No-Closing-Cost Refinance vs. Standard Refinance

A no-closing-cost refinance can be appealing because it eliminates upfront costs. However, it’s important to understand that these costs are typically rolled into your new loan balance or reflected in a slightly higher interest rate.

No-Closing-Cost Refinance:
- Lower upfront costs.
- Potentially higher interest rate or larger loan balance.
Standard Refinance:
- Upfront closing costs.
- Potentially lower interest rate and smaller loan balance.

Determining Your Home’s Worth

Before making any decisions about leveraging your home equity, it’s essential to understand your home’s current market value. This will help you determine how much equity you have available. Contact us today to get a free, no-obligation comparative market analysis (CMA) of your home.

Click here to start home valuation

Seller

Home Improvements That Pay Off

Selling your home? Congratulations! Now’s the time to not only enhance your enjoyment of the space but also strategically invest in improvements that will significantly increase its value when you’re ready to list.

Imagine a potential buyer walking into your kitchen. If they see gleaming granite countertops instead of dated laminate, their interest is piqued. In fact, any will do: granite, quartz, or marble. You’ve instantly elevated the space, adding a touch of luxury that buyers crave. This investment won’t just make your kitchen more enjoyable for you now; it will likely be fully recouped when you sell.

Similarly, replacing those tired cabinets with a fresh coat of paint and new hardware can work wonders. Not only does it give your kitchen a modern facelift, but it also signals to buyers that you’ve taken care of the home. New hardware is so budget friendly, it is worth doing every time.

And let’s not forget the appliances. Stainless steel is the gold standard. Upgrading to energy-efficient models not only enhances the kitchen’s aesthetics but also appeals to eco-conscious buyers. These upgrades not only improve your own daily life but also increase the home’s overall desirability, ensuring you’ll likely see a strong return on your investment.

The bathroom is no exception. Picture a potential buyer entering a bathroom with a sleek, new toilet. Add high-efficiency and it becomes eco-friendly and visually attractive. It’s a subtle yet impactful change. This small investment can make a big difference in how buyers perceive the space.

Likewise, replacing outdated faucets, shower heads, and light fixtures with stylish alternatives instantly elevates the bathroom’s ambiance. These upgrades not only enhance your own daily enjoyment but also signal to buyers that the home is well-maintained and updated, increasing its overall appeal.

Don’t underestimate the power of smaller upgrades. A simple tile backsplash in the kitchen or bathroom adds a touch of elegance and protects your walls. Upgrading outdated faucets with sleek, modern alternatives can make a big difference in the overall look and feel of your kitchen and bathrooms. These small investments can have a significant impact on the overall impression of your home.

Flooring plays a crucial role in a home’s overall appeal. Hardwood floors are timeless classics, and are appreciated by pet owners and parents alike. If you’re lucky enough to have hardwood under those carpets, refinishing them can bring back their original luster and significantly increase your home’s value. If hardwood isn’t in the budget, luxury vinyl plank (LVP) offers a fantastic alternative. It provides the look and feel of real wood with added durability and water resistance, making it perfect for high-traffic areas. This investment offers a return on two levels: it enhances your own enjoyment of the space while also increasing its desirability to potential buyers.

Don’t forget the exterior! Curb appeal is crucial. A well-maintained lawn and vibrant flower beds create a welcoming first impression that can significantly impact a buyer’s initial perception of your home.

A new front door can add a touch of personality and significantly improve your home’s overall appearance. This investment not only enhances your own enjoyment of your home but also signals to buyers that you’ve taken pride in its upkeep. Or you can just put a fresh coat of paint!

Bigger projects include some energy-efficient upgrades. Replacing old, drafty windows with energy-efficient models not only saves you money on utility bills but also appeals to eco-conscious buyers. And proper attic insulation improves energy efficiency and makes your home more comfortable. These upgrades not only enhance your own living experience but also demonstrate to buyers that the home is well-maintained and energy-conscious, increasing its overall value.

Finally, address any major maintenance issues. A well-maintained roof is crucial. Addressing any leaks or damage reassures buyers. Check and repair leaking faucets, fix damage to the walls and replace burned out light bulbs. It improves overall first impression of the house.

By investing in any of these projects, you’re not just improving your home – you’re increasing its value and ensuring a successful sale. They make your home more appealing to a wider range of buyers, ultimately resulting in a quicker sale and a higher return on your investment.

Buyer

Homeowners Associations: A Double-Edged Sword

Homeowners Associations (HOAs) are increasing in the United States, shaping the landscapes of many neighborhoods. They are the most popular in Florida, California and Colorado, where over 60% of properties are part of HOA. In Wisconsin, it’s just about 19%.

HOAs offer a unique blend of benefits and drawbacks, making it essential for potential homeowners to understand their implications.

A Brief History of HOAs

The concept of HOAs traces its roots back to the early 20th century, emerging as a response to urban sprawl and the need for community governance. Initially, HOAs primarily focused on maintaining property values and ensuring aesthetic uniformity within neighborhoods. However, over time, their role has expanded to encompass a wider range of responsibilities, including:

Community Maintenance: HOAs often oversee the upkeep of common areas like parks, pools, and landscaping. With this, they take over for the owners chores like lawn mowing and snow removal.
Enforcing Rules and Regulations: They establish guidelines regarding property maintenance, architectural styles (often regulating details like color of siding, type and height of a fence etc.), and even noise levels.
Providing Amenities: Some HOAs offer additional amenities such as clubhouses, fitness centers, or security services.

The Cost of Belonging

One of the most significant considerations for potential homeowners is the financial impact of HOA fees. These fees vary widely depending on the specific HOA, location, and the level of services provided. On average, HOA fees can range from a few hundred dollars to several thousand dollars per year. Not surprisingly, the highest HOA membership fees are paid by home owners in Alabama, on average almost 5,500/year, with Wisconsin average being “only” $4,000/year on average.

While HOA fees may seem burdensome, it’s important to weigh the costs against the benefits. By maintaining property values and providing amenities, HOAs can contribute to a more desirable living environment. However, it’s crucial to carefully review the HOA’s budget and financial history to ensure that fees are being used responsibly.

The Pros and Cons of HOA Living

Pros:

Enhanced Property Values: HOAs can help maintain property values by enforcing consistent standards and investing in community improvements.
Community Amenities: HOAs often provide access to shared amenities like pools, fitness centers, and clubhouses.
Security: Some HOAs offer security services, such as gated communities or 24/7 surveillance.
Sense of Community: HOAs can foster a strong sense of community through social events and volunteer opportunities.

Cons:

Strict Rules and Regulations: HOAs may impose restrictive rules on homeowners, limiting their freedom to modify their properties.
Increased Costs: HOA fees can add to monthly expenses and may increase over time.
Potential for Conflict: Disagreements between homeowners and the HOA board can arise, leading to tension and legal disputes.
Lack of Privacy: In some cases, HOAs may have the authority to monitor residents’ activities.

Making an Informed Decision

When considering a home within an HOA community, it’s essential to conduct thorough research and ask the right questions:

Review the HOA’s Governing Documents: Understand the rules, regulations, and financial obligations.
Inquire About Fee Structure: Learn about the current fees and any potential increases.
Assess the HOA’s Financial Health: Review the budget and reserve funds to ensure long-term sustainability.
Attend HOA Meetings: Participate in meetings to gain insights into the board’s decision-making process.
Talk to Current Residents: Get firsthand accounts of the HOA’s strengths and weaknesses.

By carefully evaluating the pros and cons, potential homeowners can make informed decisions about whether HOA living is the right choice for their lifestyle and financial situation.

Buyer

All about home inspection

The Importance of a Home Inspection

Buying a home is a significant investment, and a home inspection is a crucial step in the process. It provides valuable insights into the property’s condition and potential issues, helping you make informed decisions about your purchase.

Why a Home Inspection Matters

Identifying Structural and Safety Concerns: A home inspector will thoroughly examine the property’s foundation, framing, roof, electrical system, plumbing, and heating/cooling systems. They can identify potential structural weaknesses, safety hazards, and code violations that may not be visible to the untrained eye.
Assessing the Overall Condition: The inspector will evaluate the general condition of the property, including the interior and exterior finishes, appliances, and overall maintenance. This information helps you understand the property’s age, wear and tear, and any necessary repairs.
Budgeting for Repairs and Maintenance: Knowing the property’s condition allows you to budget for potential repairs and maintenance costs. This helps you avoid unexpected expenses after closing.
Negotiating Power: If the inspection reveals significant issues, you can use this information to negotiate a lower purchase price or ask the seller to make repairs before closing.
Peace of Mind: A thorough home inspection can provide you with peace of mind knowing that you’re making an informed decision about your investment.

What Does a Home Inspection Typically Cover?

A standard home inspection typically covers the following areas:

Foundation: Checks for cracks, water damage, and other structural issues.
Roof: Assesses the roof’s condition, including any leaks, missing shingles, or other damage.
Plumbing: Evaluates the plumbing system for leaks, water pressure issues, and the condition of pipes and fixtures.
Electrical System: Tests the electrical system, including outlets, switches, and wiring.
Heating and Cooling System: Checks the condition of the HVAC system, including the furnace, air conditioner, and duct work.
Attic and Crawl Space: Inspects the attic and crawl space for insulation, ventilation, and signs of pests or water damage.
Interior: Assesses the condition of walls, floors, ceilings, and cabinets.

How Much Does a Home Inspection Cost?

The cost of a home inspection varies depending on several factors, including:

Size of the Home: Larger homes typically require more time to inspect, which can increase the cost.
Age of the Home: Older homes may have more potential issues, which can also increase the cost.
Location: Home inspection costs can vary by region.
Inspector’s Experience: More experienced inspectors may charge higher rates.
Specific Services Included: Some inspectors offer additional services, such as radon testing or mold inspection, which can add to the cost.

Typically, you can expect to pay between $300 and $500 for a home inspection. However, some inspections may cost more, especially for larger or more complex properties.

Who Pays for the Home Inspection?

Traditionally, the buyer is responsible for paying for a professional home inspection. However, there are some exceptions and nuances to consider.

Buyer Pays: In most cases, the buyer assumes the cost of the home inspection to ensure the property’s condition before purchasing.
Seller Pays: Sometimes, sellers may offer to pay for a home inspection as an incentive to attract buyers, especially if the home has been on the market for a while or has known issues.
Negotiation: The cost of the home inspection can sometimes become a negotiation point during the offer process. Buyers may include the cost of the inspection as part of their offer, and sellers may agree to pay for it or negotiate a lower price.

How to Schedule a Home Inspection

Once you’ve found a home you’re interested in, you can schedule a home inspection with a certified inspector. Be sure to choose an inspector who is licensed and insured.

When scheduling the inspection, you’ll need to provide the inspector with the following information:

Property Address: The inspector will need to know the address of the property to be inspected.
Access to the Property: The inspector will need access to all areas of the property, including the attic, crawl space, and basement.
Any Known Issues: If you’re aware of any existing problems with the property, be sure to let the inspector know.

What to Do After the Inspection

After the inspection, you’ll receive a detailed report outlining the inspector’s findings. The report will include any potential issues and recommendations for repairs.

If the inspection reveals significant problems, you may want to negotiate a lower purchase price or ask the seller to make repairs before closing. You may also want to get quotes from contractors to determine the cost of repairs.

Conclusion

A home inspection is an essential part of the home buying process. By investing in a home inspection, you can protect yourself from costly repairs and ensure that you’re making a sound investment.

Additional Tips for Home Buyers

Do Your Research: Before you start looking at homes, do your research and learn about the different types of home inspections available.
Get Multiple Quotes: Get quotes from several different inspectors to compare prices and services.
Be Present During the Inspection: If possible, be present during the inspection (and ask your agent to accompany you) so you can ask questions and learn more about the condition of the home.
Don’t Be Afraid to Ask Questions: If you have any questions about the inspection process or the inspector’s findings, don’t be afraid to ask.

By following these tips, you can ensure that you’re making an informed decision about your home purchase.

Buyer

Navigating Wisconsin’s New Real Estate Landscape

Real estate market has recently undergone significant changes, impacting the home-buying process. Here’s a breakdown of the key updates as they relate to Wisconsin real estate transactions that you need to be aware of.

Mandatory Written Documents

Before viewing a property, buyers in Wisconsin are now required to sign one of three written documents:

Agency Agreement: This agreement establishes a formal relationship between the buyer and their real estate agent, outlining the agent’s fees as well as their duties and responsibilities.
Disclosure to Customers: This document provides information about the agent’s limited duties with no agency agreement. Agent does not represent buyer in the transaction, they only fill out contract per buyers instruction and cannot provide any advise.
Pre-Agency Showing Agreement: This agreement is used when a buyer is considering working with an agent but hasn’t yet made a final decision. Agent cannot provide advise or fill out contract until buyer decides if he wants to work with agent.

Buyer Responsibility for Agent Commission

It’s important to understand that buyers are responsible for paying their real estate agent’s commission. However, buyers can request sellers to provide a credit towards the cost of their agent commission. This is known as a seller concession and can be negotiated during the offer process, along with purchase price and other terms.

Conclusion

Navigating the Wisconsin real estate market can be exciting but also challenging. With the recent changes to the home-buying process, it’s more important than ever to have a knowledgeable and experienced real estate team by your side.

The Korwels Team is here to help you every step of the way. Our team of dedicated professionals can provide expert guidance, negotiate on your behalf, and ensure a smooth home-buying experience.

Ready to get started?

Contact The Korwels Team today to schedule a consultation and learn how we can help you find your dream home in Wisconsin.

Buyer

Pre-qualified or pre-approved?

Which one when?

When embarking on the journey of purchasing a home, understanding the distinctions between pre-qualification and pre-approval is crucial. These two terms often get used interchangeably, but they represent different stages in the homebuying process – and different levels of scrutiny. Let’s delve into the details to help you make informed decisions.

Pre-Qualification: The Initial Step

Pre-qualification is a preliminary assessment that provides a rough estimate of the loan amount you might be eligible for. It’s a relatively informal process that typically involves a brief conversation with a lender or completing an online questionnaire. Lenders will generally ask about your income, debt, and credit history to get a sense of your financial situation.

Key Points About Pre-Qualification:

Informal assessment: Doesn’t involve a thorough credit check.
Estimate: Provides a general idea of your borrowing capacity.
Early stage: Often a starting point in the homebuying process.
No commitment: Doesn’t guarantee loan approval.

Benefits of Pre-Qualification:

Helps set a budget: Gives you a better understanding of your price range.
Streamlines the process: Can expedite the homebuying journey.
Enhances your negotiating position: Shows sellers you’re a serious buyer.

Pre-Approval: A More Formal Commitment

Pre-approval is a more rigorous process that involves a comprehensive review of your financial information, including a credit check. It’s a stronger indication of your creditworthiness and ability to secure a loan. Lenders will typically require documentation such as tax returns, pay stubs, and bank statements.

Key Points About Pre-Approval:

Formal process: Involves a thorough credit check.
Conditional approval: Subject to the property appraisal and verification of income.
Stronger commitment: Shows sellers you’re a serious buyer with financing in place.
Rate lock option: May allow you to lock in an interest rate for a specific period.

Benefits of Pre-Approval:

Increases your chances of success: Demonstrates to sellers that you’re a qualified buyer.
Streamlines the closing process: Can expedite the transaction.
May offer better interest rates: Lenders may provide more favorable terms to pre-approved buyers.

When to Get Pre-Qualified and Pre-Approved

Pre-Qualification:

Early in the homebuying process: If you’re just starting to explore your options.
To get a sense of your budget: Before starting your home search.

Pre-Approval:

When you’re ready to make an offer: To demonstrate your financial capability to sellers.
To lock in an interest rate: If you’re concerned about rising interest rates.

Factors Affecting Pre-Qualification and Pre-Approval

Several factors can influence your pre-qualification and pre-approval status, including:

Credit score: A higher credit score generally leads to better terms.
Debt-to-income ratio: A lower debt-to-income ratio improves your chances of approval.
Income: Higher income can increase your borrowing capacity.
Employment stability: A steady job history is beneficial.
Down payment: A larger down payment can reduce your loan amount and improve your chances of approval.

Choosing the Right Lender

Selecting the right lender is crucial to the pre-qualification and pre-approval process. Consider the following factors when making your decision:

Reputation: Choose a reputable lender with a track record of customer satisfaction.
Rates and fees: Compare interest rates and closing costs from different lenders.
Terms and conditions: Understand the loan terms and any associated fees.
Customer service: Look for a lender that provides excellent customer support.

Additional Tips

Start early: Begin the pre-qualification or pre-approval process well before you start your home search.
Get organized: Gather all necessary documentation, such as tax returns, pay stubs, and bank statements.
Shop around: Compare offers from multiple lenders to find the best terms.
Be transparent: Provide accurate information to your lender to avoid delays.
Consider a pre-approval lock: If you’re concerned about rising interest rates, consider locking in your rate.

By understanding the differences between pre-qualification and pre-approval, you can make informed decisions and increase your chances of successfully purchasing a home. Remember, these are essential steps in the homebuying process, so take the time to research and choose the best options for your specific needs.

Contact us today if you have additional questions – we can also suggest some local lenders we work with and trust to guide you through the process.

Uncategorized

Home Sweet Tax Breaks

Advantages of home ownership explained

Homeownership offers a multitude of tax advantages that can significantly impact your bottom line.

One of the most well-known benefits is the mortgage interest deduction. If you itemize deductions, you can typically subtract the interest paid on your home loan from your taxable income. Similarly, property taxes, which are often substantial, can also be deducted.

Another key factor is capital gains, which is the profit realized from selling an asset—in this case, your home. While capital gains can be subject to taxation, homeowners can strategically reduce their tax liability by understanding capital improvements. Those permanent additions or alterations to your home increase its value or prolong its life. Examples include adding a new room, upgrading the kitchen, or replacing the roof. These expenditures increase your home’s tax basis—the original purchase price plus the cost of improvements. A higher tax basis means a lower capital gain when you sell. Just by carefully documenting capital improvements and maximizing your home’s tax basis, you can potentially shield a significant portion of your sale proceeds from capital gains taxes.

For homeowners who use a portion of their residence exclusively and regularly for business purposes, the home office deduction can provide valuable tax relief. This deduction covers a percentage of your home’s expenses, including utilities, insurance, and depreciation, based on the square footage allocated to your home office.

Furthermore, making your home more energy-efficient can not only save you money on utility bills but also potentially qualify you for energy tax credits. These credits are offered to encourage homeowners to adopt environmentally friendly practices and reduce their carbon footprint.

By understanding and maximizing all of these tax advantages, homeowners can transform their property into a valuable financial asset.

Disclaimer: Tax laws are subject to change, and the deductibility of these items can vary based on individual circumstances. It’s essential to consult with a tax professional for personalized advice.

Buyer

Tips for Unmarried Couples Buying a House

For unmarried couples, the excitement of buying a home can be tinged with a bit of uncertainty. Fear not! With some careful planning and knowledge , you can navigate the process smoothly and build a secure nest together.

Understanding Title Ownership: You Say Yours, I Say Ours

One of the key differences unmarried couples face compared to married couples is the lack of automatic legal protections. This is especially true when it comes to ownership of the property. Here, you’ll need to decide how you want to hold the title, essentially determining how you own the house:

Joint Tenancy with Right of Survivorship: This is the simplest option. Both partners own the property equally, and if one partner passes away, the other automatically inherits their share. This avoids probate, a lengthy and costly legal process that determines how assets are distributed after death. Sounds perfect, right? Well, it’s important to understand that both partners have equal rights to the property, meaning either can sell their share without the other’s consent.
Tenancy in Common: This option offers more flexibility. Each partner can own a different percentage of the property, based on their down payment contribution, for example. You can also designate who inherits your share upon death through a will. This might be useful if one partner contributes significantly more financially. However, tenancy in common does not include the right of survivorship. If one partner dies without a will, their share may go to their legal heirs, which could potentially be someone other than your partner.

Choosing the Right Title:

Deciding how to hold title depends on your specific circumstances and long-term goals. Here are some factors to consider:

Financial Contribution: Did one partner contribute a larger down payment? Tenancy in Common allows you to reflect that contribution in ownership percentages.
Future Plans: Do you plan to have children or get married in the future? Joint tenancy with right of survivorship might be simpler, but discuss how future life changes could impact your decision.

Remember, this is a crucial decision. Consulting with a local real estate attorney is highly recommended. They can explain the legal implications of each option within the context of your state’s laws and help you choose the title structure that best suits your needs.

The Mortgage Maze: Two Hearts, One (or Two) Mortgages?

Getting pre-approved for a mortgage is an essential first step in the home-buying journey. However, as an unmarried couple, there are some additional things to keep in mind:

Joint Mortgage Eligibility: Both your credit scores, income, and debt-to-income ratios will be considered to determine your borrowing power.
- Credit Scores: The lower of your two credit scores will often affect the loan terms you qualify for, including the interest rate. Discussing credit improvement strategies and working towards a healthier credit score together can be beneficial.
- Income Verification: Combined income determines the maximum loan amount you can qualify for.
- Debt-to-Income Ratio: This ratio shows the lender how much debt you carry compared to your income. A lower ratio (typically below 36%) indicates a better ability to manage mortgage payments.
Applying for a Mortgage as Unmarried Partners: Be transparent with the lender about your relationship status. This could affect the loan agreement. Have all necessary documents ready, such as proof of income, employment verification, and identification for both partners.

Beyond the Bricks and Mortar: Protecting Your Nest Egg

While love is the foundation of any relationship, legal agreements can provide much-needed peace of mind. Consider these two options:

Cohabitation Agreement: This outlines who owns what assets and how finances will be handled if the relationship ends. It can address things like furniture, appliances, and even shared bank accounts.
Property Agreement: Similar to a prenuptial agreement, this specifies each partner’s financial contribution to the property and how it should be divided upon separation or death. This can be particularly important if one partner contributes significantly more financially towards the down payment or renovations.

These agreements can prevent disagreements and potential legal battles down the road. Remember, a real estate attorney can help draft these documents properly to ensure they are legally binding.

This post has explored the key considerations for unmarried couples buying a house, from understanding title ownership and navigating the mortgage process to implementing legal protections like cohabitation agreements and property agreements. Remember, seeking guidance from a real estate attorney is invaluable throughout the journey.

So, are you ready to turn your dream of homeownership into a reality? Contact us today! We can help you navigate the process from start to finish, ensuring a smooth and stress-free experience. Let’s build your dream home together, on a foundation of love, planning, and legal security.

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Trunk & Treat 2023

Join us and some of our favorite clients and friends for this unique Halloween event, held on Sunday before 👻 Halloween 💀.

When: Sunday, October 29, 2023 from 1 to 3pm

Where: Parking at Keller Williams Madison West, 555 Zor Shrine Pl #100, Madison, WI 53719

What: Food 🌮 & ice cream 🍦 truck + lemonade stand 🍋

Bounce 🛝 houses & games 🎯

Children’s jewelry 💍 and clothing 🧢 vendors

And of course, plenty of Trick or Tricking candy 🍬!

No RSVP needed, just stop by!

Bring along family and friends!