Rent or Buy?

SHOULD YOU BUY OR RENT?

Homes-for-rent-in-Spring-TexasThe first step is to understand the arguments in favor of buying and renting. To calculate whether buying or renting makes more sense financially, you need to have a sense of your monthly costs in each case, including rent, mortgage payments, taxes, insurance and other related expenses that may apply to each option—as well as whether you would be more likely to spend or invest any savings from renting.

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NAHREP: Immigration Reform Could Generate $500 Billion

If current legislation that creates a path to legalization for 11 million undocumented immigrants is passed, the nation’s Hispanic real estate leaders estimate that it would create a new pool of 3 million homeowners and pump more than $500 billion in sales, income and spending into the U.S. housing economy. According to the National Association of Hispanic Real Estate Professionals (NAHREP), the chain reaction triggered by home purchases would drive demand for more than $500 billion in real estate transactions and an additional $233 billion in origination fees, real estate commissions and consumer spending associated with home-ownership.

Based on previous estimates from analysts, NAHREP officials calculate that as many as 6 million undocumented immigrants are likely to pursue legalization and possibly citizenship under the bill and up to 3 million would pursue homeownership based on the patterns of naturalized Latinos.

“Foreign-born householders have a high value and strong desire for homeownership,” says Juan Martinez, NAHREP president. “They have been here in our midst for years, working and participating in our economy. Legitimizing them through immigration reforms would finally give them the access and the confidence to buy homes.”

• Assuming past purchase trends among foreign-born householders remain consistent, half or up to 
3 million of the 6 million undocumented immigrants that are expected to pursue legalization, will also buy a home once they have legal status;

• Many of the undocumented foreign-born householders have age and income characteristics associated with potential homeownership with household incomes of about $40,000;

• Up to 3 million undocumented foreign-born householders could potentially afford a home worth $173,600, the national median sales price of a home. This would generate more than $500 billion in new mortgages, and about $25 billion in mortgage origination and refinance income;

• Assuming an average of 5.5 percent in sales commissions for these home sales, these purchases would create $28 billion in income within the real estate community;

• Home purchases by 3 million legitimized immigrants would create $180 billion in additional consumer spending within local communities based on the average $60,000 in associated purchases estimated by the National Association of REALTORS® in 2012.

Other housing and corporate leaders that work closely with the underserved market agree that legalization will spark swift interest in homeownership among these Latinos because they are already established in communities here in the U.S.

“Homeownership is an integral part of the American Dream in the undocumented immigrant community.
“Immigration reform would unleash pent-up demand for homeownership by millions of undocumented immigrants. It would help re-establish homeownership as a driving force in building wealth and accelerate the recovery of the nation’s economy,” says Alejandro Becerra, a former senior housing fellow, researcher, author and recipient of the 2011 HOPE Award.Our estimates in 2004 were very conservative and we received many calls from consumers who wanted to know what lenders were offering these loans,” says Gary Acosta, NAHREP co-founder and a veteran housing leader who was chairman of NAHREP when the study was conducted. “With the possibility of a legitimate path to residency and citizenship, we expect this group to be eager to buy homes.”

In its annual policy statement issued last March, NAHREP leaders advocated for immigration reform at the federal level that would create a path to citizenship for undocumented immigrants and their children and bring them out of the shadows.

Posted By Susanne On May 20, 2013

Tax break for underwater homeowners set to expire

The clock is ticking on a tax break that saves struggling homeowners from paying thousands of dollars to the IRS.

If the Mortgage Forgiveness Debt Relief Act of 2007 does not get extended by Congress by the end of the year, homeowners will have to start paying income taxes on the portion of their mortgage that is forgiven in a foreclosure, short sale or principal reduction.

Should the tax break expire, a large number of mortgage borrowers could be affected. More than 50,000 homeowners go through foreclosure each month.  

So if you owe $150,000 on your home and it sells for $100,000 in a foreclosure auction, the IRS could tax you on the remaining $50,000. For someone in the 25% tax bracket, that would mean paying $12,500 in taxes on the foreclosure. Similar taxes would apply for forgiven amounts in short sales and principal reductions.

“If there ever was a no-brainer in housing policy, this would be it,” said Jaret Seiberg, a policy analyst for Guggenheim Securities. Yet, Seiberg is skeptical the exemption will get extended. Now that the election is over, he thinks Congress will be heading into a “lame duck” session, with very little legislation moving forward through the end of the year.

Even if Congress allowed the exemption to expire, not all borrowers with forgiven mortgage debt will take a tax hit. If the debt is discharged in a bankruptcy, no tax is due. And anyone who is insolvent — meaning they have more debt than assets — at the time the debt was forgiven — would not have to pay the tax.

Also, in California certain borrowers are protected against paying the tax because of the way the state treats foreclosures.

In addition, the cost of the exemption could make it a point of contention. The office of Sen. Max Baucus, who heads the finance committee, estimated the cost of a one-year extension at $1.3 billion.

Source:  Les Christie @CNNMoney