Freedom Family Homes: Home Builders North Carolina

There’s no denying the fact that the economy is tough right now. People are cutting back their budgets to the bare essentials and postponing plans. But if you’re one of the lucky few that have managed to tuck a bit of cash away, right now is the perfect time to buy a home. I know it sounds unreasonable, but with home prices down, interest rates down and the range of homes from which you can choose going up, right now is the time to act on your dream of becoming a homeowner.

Of course, this isn’t something you should just jump into without considering the finer details. Buying a home is one of the biggest commitments you can ever make. In such an uncertain economy, you’ll want to make sure that your investment is protected, no matter what happens. That means making sure your income can support your new mortgage and that you are generally prepared to handle the responsibility of being a homeowner. But even the most prepared people can sometimes fall into troubled times. That’s why there are certain protections you can ensure are attached to your mortgage in case life doesn’t go as planned.

One thing in particular you should look for when considering a home loan is to pick a lender that offers job loss protection. Job loss protection is basically a feature that is written into your loan that affords you insurance for a given period of time if you lose your job. That means your home is insured and protected. You won’t be foreclosed on and you won’t lose the roof over your head during this period.

No two job loss protection programs are the same, but they are usually targeted toward new homeowners and act as a bit of reassurance for those that are hesitant about buying a home in today’s rocky economy. Even if your job is stable now, it is possible that you could lose it later, making such insurance all the more valuable.

Freedom Family is proud to offer this protection to new homeowners through their select lender, Bank of America. This special job loss protection program insures all closed and funded loans for 12 months. This will be a big sigh of relief for many struggling families that are in a good financial situation now but are concerned about where they will be in the future.

Everyone wants to hope for the best, but sometimes life doesn’t go as planned. And that’s okay, so long as you’ve accounted for the unexpected when applying for a mortgage. By making sure job loss protection insurance is included in your mortgage, you safeguard your family, your home and your life against the troubling fact that this economy is uncertain.

The market for new homeowners is too good to pass up right now. Just be smart about your investment… and you can’t help but be smart with Freedom Family. You’ll obtain job loss protection and numerous other assurances that will keep your new investment safe. After all, safety in your investments is something we all can appreciate.

There has never been a better time to buy a home. Even though that sounds counterintuitive with the economy in such a downturn, it’s an honest fact. Home prices are dropping and better yet, interest rates are lower than ever. Take that in combination with the amazing tax benefits laid out in the American Recovery and Reinvestment Act that provide new home buyers with a tax credit of up to $8,000, now is the perfect time to take the plunge into home ownership.

So why on earth are interest rates lower now than ever before? In response to the foreclosure crisis and the generally poor health of the economy, the Federal Reserve started up a renewed effort to help the housing market. According to a recent article in The Washington Post, Freddie Mac, the mortgage financing company, reported an interest rate drop from 4.98 percent to 4.85 percent on 30-year fixed rate mortgages. This is actually a rate drop of a whole percentage point from just a year ago.

Even though most people seeking mortgages at this time are merely looking to refinance, you can take this moment to delve into your first real estate investment. And really, there’s no reason not to.

So, there’s probably an alarm going off in your head right now that’s saying, “But the economy is weak! I don’t want to take the risk of getting a mortgage! What if I lose my job? It’s just too risky!” This is a valid concern, certainly. Especially since a lot of people are getting laid off. But, if you feel relatively secure in your job, there hasn’t ever been a better time to take out a mortgage.

Think about it: interest rates are super low, home prices are going down and there are plenty of properties to choose from. Add on the fact that you could get a serious tax credit and there’s really no reason not to buy a home.

Home ownership has never been more affordable than it is right now in 2009. Of course, this might not be the most practical choice for you if your job is unsteady and you don’t have enough money saved up for a down payment. But if you do, it is strongly advised you at least consider the great deals in the mortgage industry today.

If you already have a mortgage, now might also be the time to consider refinancing. After all, if you purchased your home a few years ago, you most likely did so at a much higher interest rate. By refinancing, you can have your mortgage adjusted to a new lower rate. And don’t forget, you can use the equity you’ve built up in your home to remodel and further increase your home’s value.

These are just some reasons you should consider getting a mortgage now, in this market and all. Once the economy is on the rebound, interest rates will likely climb once again, so it’s in your best interest to jump on this opportunity while it lasts. It might seem a bit macabre to take advantage of such a poor economic situation, but really, it is people that take smart financial leaps that will help catapult us out of this mess.

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Tax Benefits for Home Owners

It’s tax season and everyone is interested in making sure that they get every possible deduction- charity contributions, ad valorem, medical expenses. All of these deductions are important because every penny counts, but with homeownership comes the real benefits. Thanks to the 2009 American Recovery and Reinvestment Act, you can buy a home now and get major benefits on your 2008 income tax return!

These benefits start when you very first buy your home. If you are a first time homebuyer you may qualify for a tax credit of up to $8,000! This is a new tax credit recently passed as part of the economic stimulus efforts. This tax break is unique because it allows you to receive the tax credit on your 2008 income tax return, as long as you close on your home before April 15, 2009! This means that you could buy a home now and get a credit on last year’s tax return. For example, if you qualify for the $8,000 tax credit and you owe $1,000 in taxes, instead of having to pay, you’ll get $7,000 back!

Not only will buying a home benefit you on last year’s return, most of the expenses associated with the purchase of a home are tax deductible in the year that you make the purchase. When you take out a loan to purchase a home, there are often loan origination fees, sometimes called “closing costs.” These are deductible on your income taxes, even if the seller pays them when you close! Additionally, many people, in order to lower the interest rate on their loan, pay points at the beginning of the loan. These points are also tax deductible. This means that the year that you buy your home, you will be eligible for thousands of deductible dollars when you complete your income taxes for that year.

Even after the first year of homeownership, the tax breaks continue. The interest that you pay on your loan, which is the majority of your monthly payment for the first several years depending on the terms of your loan, is also tax deductible. This is true not only for the interest that you pay on your first mortgage, but also for any interest paid on a home equity loan, even if you don’t use the money on your house. This means that once you earn equity in your home, you can take out a loan using that equity as collateral, and spend the money on whatever you like. Any interest you pay on that loan is then deductible from your income taxes. This is an especially good deal when you use the money to improve your home, because not only to you get the tax benefits, but you also increase the value of your home.

In addition to mortgage interest, the property taxes that you pay on your home are also tax deductible. Many people escrow their property taxes, meaning that the pay a little extra on their monthly mortgage payment and then the lender pays the property taxes from that account. Whether you escrow your property taxes or not, you can deduct the full amount from your income taxes.

All these tax deductions are great while you are living in your home, but the real tax break comes when you decide to sell. If the home that you are selling has been your primary residence for at least two of the past five years, any profits that you make on the sale of your home is yours to keep, tax free. For example, if you buy a home now for $150,000 and live in it for two years and then sell it for $200,000, the $50,000 is yours to keep in its entirety. You still have to report the income to the IRS, but you do not have to pay taxes on it. Previously, in order to receive this benefit, you had to reinvest the money in a new property, but the laws have changed and now you are allowed to do whatever you like with the proceeds.

Properly utilizing these tax benefits help make home ownership more affordable and a great investment in your future. If you already own a home, make sure that you itemize these deductions, and if you don’t yet own a home, now is the time to buy so that you can receive the tax credit on last year’s return and to maximize the tax breaks on this year’s return.

Note: Tax laws are complex and constantly changing. Always consult a tax professional regarding the impact of a home purchase on your taxes.

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• The tax credit is for first-time home buyers only.
• The tax credit does not have to be repaid
• The tax credit is equal to 10% of the home’s purchase price up to a maximum of $8,000
• The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit

Despite media reports of a shrinking economy, a light at the end of the tunnel was revealed in mid-February when President Obama revealed his “Homeowner Affordability and Stability Plan.” The plan promises to ensure affordability and stability in the housing market, increasing opportunities for homeownership and making home buying a safe financial investment.

With interest rates at a near historic low mortgages are more affordable than ever. Refinancing an existing mortgage at a lower interest rate would reduce monthly payments, except most financial institutions previously would not refinance a loan for more than 80 percent of the home’s value. Due to decreasing home values, many homeowners are finding themselves owing more than 80 percent making it difficult to refinance. The first part of the Obama plan, The Homeowner Affordability Initiative, includes making refinancing options available to these existing homeowners.

The second part of the plan, The Homeowner Stability Initiative, is more complex and involves several elements. Although people with traditional mortgages will also benefit from this aspect of the plan, it is aimed towards those with existing sub-prime mortgages. The purpose of this part of the plan is to allow homeowners to stay in their homes, thereby sustaining property values in their neighborhoods, by modifying the terms of their existing mortgage rather than refinancing. In order to accomplish this, five tactics for mortgage modification are included in the plan.

- Lenders and Government Share the Cost of Monthly Payment Reductions: Lenders would be required to reduce mortgage rates so that the monthly payment is less than 38 percent of the borrower’s total monthly income. After that has been achieved, the plan would allocate money to match the dollars saved by further reductions by the lender until the monthly payment is less than 31 percent of the borrower’s income. This lower rate would be in place for five years, after which the lender can begin to gradually increase the interest rate up to the original terms of the loan. In addition to reducing interest rates, the lender may also bring down the monthly payments to the required percentages by reducing the principal owed, with the government sharing the costs.

- Incentives for Lenders: In addition to a payment of $1000 up front for each mortgage modification a servicer establishes, they will also receive monthly ”pay for success” fees as long as the borrower is able to make the monthly payments. These fees can total $1000 per year for up to three years.

- Incentives for Borrowers: If a participant in the program stays current on his or her loan, he or she can get up to $1000 per year for five years to be paid directly towards the principal balance of the loan.

- Early Intervention: If a loan is modified before the borrower falls behind, an incentive of $1500 will be paid to the mortgage holder and $500 to the servicer.

- Reserve Payments: In order to avoid lenders foreclosing on homes based on fears that home prices will continue to decline, an insurance fund will be created by the Treasury Department that will compensate lenders based on future decline in the home price index.

In addition to mortgage modification, the Stability Initiative also includes other measures to protect communities and reduce foreclosures. Performance will be closely monitored with quarterly reporting by the Treasury, FDIC, Federal Reserve and HUD. Judges will be able to modify mortgages during bankruptcy proceedings. Relocation aid and other assistance will be provided to renters displaced by foreclosure and the terms of existing federal programs to help homeowners will become more flexible.

Unlike the first two parts of the plan, the final part does not address current homeowners, but instead seeks to strengthen confidence in Fannie Mae and Freddie Mac. This portion of the plan utilizes funds already allocated towards strengthening these programs, as well as allocating more funding to ensure mortgage affordability. In this part of the plan, the Treasury will increase its investment in Fannie Mae and Freddie Mac mortgage-backed securities.

Although President Obama’s plan directly addresses the immediate needs of current homeowners, the overall goal is not only to benefit those receiving aid, but also to benefit all homeowners and the economy in general by providing stability in the housing market that protects property values for existing homeowners and makes home-ownership accessible for future homeowners.

- Freedom Family Homes