Your real estate agent may have mentioned the tax benefits of home ownership over renting. They are real, but you have to keep records if you want to take advantage of them.

That means, upon closing you should make a copy of your closing statement and put it with your other tax information before storing those loan documents.

This document will show the following expenses, which are deductible in the year of purchase:

• Points, which could include origination fees
• Pre-paid interest
• Pre-paid property taxes

After year’s end you’ll get a mortgage interest statement from the bank. Both of these documents need to go to your tax accountant.

If taxes and insurance are being paid through an escrow account managed by the bank, you may also need to supply a separate print-out showing how much the bank paid in property taxes from your escrow account.

Your tax accountant will use these documents to determine your homeowner-related deductions for the year.

Depending upon your income level and the amount of mortgage interest you’re paying, these deductions can bring you over the standard deduction and reduce your tax liability. (For this year, the standard deduction is $12,400 for married couples filing jointly and $6,200 for single filers.)

Since this expense is combined with other expenses such as medical care and work-related expense, you could save a significant amount.

If you have a home-based business…

If you operate a business from home or have a home office, it pays to keep records and deduct the expense from your business income.  This not only reduces the amount you’ll pay in Federal Income Tax – it also reduces the amount you’ll pay in Social Security and Medicare.

What’s deductible? That portion of your home utilities you use for business, improvements made to your work space, and a percentage of your mortgage interest, taxes, and insurance.

To determine the business portion, you must measure the square footage of the area used exclusively for business and divide it by the total square footage of your home. That will give you a percentage.

Note: You won’t be able to take this deduction if you only have a desk in a room that is primarily used for family living, so it does pay to set up an otherwise unused room as an office.

For full details, read IRS Publication 587 (http://www.irs.gov/publications/p587/index.html) – Business use of your home.

For maximum savings this year, discuss the issue with your tax accountant ahead of time and then be diligent in keeping records per his or her instructions.

You’d rather not spend it than get to deduct it…

So when you’re ready to save money on taxes by becoming a homeowner, call on the Mike Clover Group. Remember, we offer the lowest interest rates combined with the lowest fees – and we’ll close your loan within 30 days.

The first step is to become pre-approved for your mortgage loan, and we’ll be happy to do that for you. Reach us by phone at 1-800-232-7409 or apply on line at http://www.mikeclover.com.

And remember, we’re now serving clients in both Texas and Washington State.

Mike Clover

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

The Texas Association of Realtors recently released a quarterly report showing that year over year, 13% more single family homes were sold last quarter – and the median price was 7% higher. As of last quarter, the state-wide median home price stood at $161,400.

While we did have some excess of housing inventory last year (I know I was even struggling to personally sell my Cape Coral home), that inventory has now shrunk to an estimated 5.9 months’ worth of unsold homes. A balanced market is considered one consisting of a 6-month supply of homes, so a further reduction in housing inventory would put Texas in a seller’s market.

Homes are selling in all price points. Luxury home sales are on the rise in several metropolitan markets as increasing incomes drive the trend toward “moving up.”

Why is Texas doing so well?

We have jobs. In addition to smaller employers hiring more workers, 28 companies expanded or relocated to Texas in 2014, adding nearly 5,000 new jobs just in San Antonio, and more jobs are on the horizon.

The Toyota corporate campus, which is expected to bring 4,000 new jobs to North Texas, just broke ground. The Bureau of Labor Statistics expects Texas to lead the country in job growth. Predictions are that the next 5 years will see a 2.7% increase in Texas employment.

While the falling unemployment rate nation-wide is driven by people giving up the job hunt, the falling unemployment rate in Texas is driven by increasing employment.  This is good news for the housing industry – and good news for the economy as a whole.

Texas also has lower taxes and lower housing costs.

Analysts predict an even greater influx of new residents from California, where the median home price is $440,000, taxes are high, and job growth is considerably slower than that of Texas.

Texas not only gains more new out-of-state residents than any other state, we also lead the pack in home sales to international buyers.

Mortgage rates remain attractive. In fact, they’re now at their lowest point in two years. So if you’re thinking of relocating to Texas, thinking of making the leap from tenant to homeowner, or thinking of moving up to a more luxurious home, call the Mike Clover Group today at 1-800-2232-7409 or apply on line at http://www.mikeclover.com.

We’d be glad to get you pre-approved and ready to begin the search for your Texas dream home.

Mike Clover

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

This week Core Logic released its statistics on the Home Price Index through February 2015. It showed that nation-wide, home prices rose 5.6% from February 2014 to February 2015 and are expected to rise another 5% by February 2016.

Although 5% per year is the kind of appreciation we thought of as normal in prior years, this is the most dramatic year-over-year appreciation we’ve now seen in 9 years.

Not surprisingly, low end homes have led the way in appreciation, gaining 9.3% over the past year while high-end homes gained only 4.8%. There’s also some difference in appreciation rates between normal sales and short sales/foreclosures.

In spite of the increase, home prices nationwide are still 12.2% below the April 2006 peak. Across the U.S. thousands of homes are still underwater and thousands of homeowners are still being forced to either short sale or let their homes go into foreclosure. In five states – Nevada, Arizona, Rhode Island, Florida, and Connecticut – prices are still 24 -35% below their peaks.

Naturally, different regions in the country have been affected differently.

In fact, some states are doing quite well. The five states that registered the largest year over year price appreciation were Texas, Colorado, South Carolina, Michigan and Wyoming, with increases ranging upward from 8.4%.

Interestingly, when distressed sales were removed from the calculations, Florida joined the list, with price appreciation at 7.8%. (New York and Florida replaced Michigan and Wyoming in the top 5 when distressed sales were removed.)

So what about Texas?

Most other states show peak pricing at some time during 2005, 2006, or 2007. But Texas didn’t experience the wild swings in pricing that so many others areas did. Our prices didn’t escalate into the sky and they didn’t drop dramatically when the bubble burst.

Therefore, as of February 2015, our peak pricing was February 2015 – and we expect the increase to continue.

Core Logic also rated the top metropolitan areas in terms of price appreciation, and the Houston and Dallas areas came in at the top of the list, with 10.4% and 9.3% respectively. Next came the Los Angeles area at 7.9%. It’s no secret – people want to live in Texas!

Are you dreaming of purchasing a Texas home?

It might be a good idea to act now – while interest rates are still at rock bottom and before prices creep higher.

The first step is pre-approval for your home mortgage loan, so call the Mike Clover Group today at 1-800-2232-7409 or apply on line at http://www.mikeclover.com. We’ll be happy to get you pre-approved and ready to find your new home.

Mike Clover

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

Apply at: www.mikeclover.com

Repairing your credit before attempting to buy a home is a wise idea. Not only do you need a minimum score in order to qualify, a higher score will enable you to obtain a lower mortgage interest rate.

In their eagerness to get this done, many consumers have been lured by the quick fix offered by credit repair companies. Unfortunately, their method temporarily raises your score while at the same time making you ineligible for a mortgage loan.

Here’s why: In order to raise your scores, credit repair companies routinely place a dispute on every one of your credit accounts.  This action places an “XB” notation on that account and removes it from consideration in scoring your credit.

If your revolving debt was too high, or if late payments or default was dragging down your scores, suddenly they’re gone and your FICO score goes up.

The Fair Credit Reporting Act gives you the right to challenge information on your credit report, and that’s good. You should challenge an account that is in error, and errors do happen. You could have an account showing up on your credit that isn’t even yours, or you could be being billed for recurring charges for a service you no longer receive.

You should NOT use the challenge as a false method of raising your credit scores, for the simple reason that it will backfire.

When mortgage lenders see a credit report with XB notations, they see a red flag, telling them that the score is inaccurate because the report is ignoring potential liabilities. Thus, Fannie Mae and Freddie Mac both consider a credit report with XB notations to be invalid.  “XB” is a sign that the account is under investigation, so the bank will not even consider processing your home mortgage loan application until the dispute has been resolved or removed.

If you’re preparing to purchase a home and need to raise your credit scores, take a safer path.

• Begin paying down your high credit balances.
• Pay every account ahead of the due date.
• Refrain from taking on any new credit.
• If you’ve had late payments, get caught up.

For more tips on improving your credit scores safely, visit the CreditScoreQuick.com blog. http://www.creditscorequick.com/blog/

As with many things in life, a “quick fix” in credit scoring is not a solution.

Mike Clover

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

Apply at: www.mikeclover.com

More people are moving to Texas than any other state.
But is it a good idea?

For many, yes, it’s a wonderful idea. But is it a good idea for YOU? Here’s what you need to consider before you decide.

1. If you love taking off for a week-end of snowmobiling or snow skiing, you might not like it. We do occasionally get snow, but not that much. If you want snow sports, you CAN take a short drive into New Mexico.

2. Instead of snow, we have sunshine – lots and lots of sunshine.
In fact, some areas get as many as 300 days of sunshine every year. And since we don’t have a lot of smog to block it, you might need to stock up on sun screen.

3. If you don’t like to drive over 35 MPH, you won’t appreciate Texas.
This is a big state, with plenty of miles between places. In addition, many of our roads are privately funded by Texas Toll Road companies. Some of them carry speed limits of 80 MPH. So if you prefer poking along in traffic, able to text and make phone calls while you wait to begin crawling along, you’ll be downright uncomfortable driving here.

4. Open spaces mean clean air.
If you thrive on exhaust fumes and smog, stay in California! In Texas, more than 95 percent of land is privately owned, and 83% of Texas land is part of a farm, ranch, or forest.

5. If you believe businesses should be regulated and taxed to the hilt… you don’t belong here.
Texas is business-friendly. In fact, the Small Business & Entrepreneurship Council ranked us #1 in terms of the lowest costs of taxation on entrepreneurship and small business.

We pretty much believe that people have a right to pursue their dreams, build businesses without jumping through dozens of hoops, and keep what they earn.

6. If you enjoy grousing about how bad the economy is, you’ll be out of luck here.
According to the World Bank and the U.S. Department of Commerce, Texas’s gross domestic product is $1.14 trillion – which makes our state the world’s 14th largest economy.

If you compare our success to the rest of the U.S., it’s clear that without Texas, there would be no recovery.

7. If you want an excuse for being unemployed, you won’t find it in Texas.
In the period from January 2008 through December 2014, we added 1,444,290 jobs. If you subtract our employment from that of the entire U.S. economy, the rest of the states, taken together, show a loss of 275,290 jobs. Even though our population is growing by leaps and bounds, our unemployment rate is far below the national average. As I said – without Texas, there would be no recovery.

And… contrary to what you may believe, the jobs in Texas cross every sector – even technology.

8. Texans get to keep more of their own money.
With no state income tax, we Texans have more to show for the hours we work. We get to decide how to spend it instead of letting the government do it for us. Of course that means we support fewer government employees, so if you’re looking for work in civil service, Texas probably isn’t your best choice.

9. We have energy …
Yes, oil is a very big deal here. We believe America should become independent of foreign energy sources and “grow our own,” so we’re doing it.

But that’s not all – we’re also big on wind and solar power. In fact, estimates are that Texas produces enough wind energy to power all the homes in West Virgina and Utah.

If you believe we should remain dependent on oil coming in from countries that hate us, you don’t belong in Texas.

10. If you hate guns and can’t figure out that an armed populace is safer than an unarmed populace, Texas is not the place for you.
We Texans believe in protecting our families and our property, and our laws give us the right to do so. Nearly half of all Texans own guns. So if you’re a criminal intent on easy prey – note that you won’t be safe here.

– Reference: Find a Tampa defender at Mike G Law.

11. If you think livestock stinks, you just might not like it here.
We have cows, horses, and even real working cowboys. We also have other things that smell good to Texans – like hay.

12. If you enjoy spending most of your money on housing, food, and medical care, then you might not like Texas.
Our state is bigger, but our cost of living is smaller – in fact, you can buy a house in Texas for about half of what a similar house in a similar location would cost in California. Combine that with our absence of a state income tax, and you’ll see that there’s just no excuse not to prosper in Texas.

Mike Clover

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

Apply at: www.mikeclover.com

Are citizens stronger, happier, and generally better off when they have more control over their own lives and money? We Texans not only think so, we believe the facts support our claim.

In fact, we think Texas policies should be a model for the nation.

In order to compare apples to apples, let’s compare Texas to California. After all, we’re the two most populous states, we both have diverse populations, long coastlines, a border with Mexico, large numbers of immigrants, abundant energy and natural resources, and enviable climates.

Our public policies, however, are polar opposites.

California’s state income tax is the 4^th highest in the nation. Rates are bracketed by income, starting at 1% for those earning $15,174 or less – up to 13.3% plus $109,884.00 for those earning a million or more.

While the “1 percenters” at the top of the California food chain have average earnings of about $1.6 million, the rest of the population has an average income of $45,775.* If single, their California State Income Tax is 8.00% plus $1,360.28.**

Texas has NO state income tax – meaning that we Texas residents keep more of the money we earned.

California’s energy policies discourage oil extraction, even though California actually has more shale oil reserves than Texas.

Texas’s policies encourage oil production. We also have wind farms, creating even more energy.

California’s Industrial electrical rates are 88% higher than rates in Texas – making it much less expensive to manufacture goods in Texas.

Texas is growing faster…

Between 2000 and 2012, California’s population grew 11.9%. Texas grew by 24.4%. (The U.S. population as a whole increased by 11.3%.) A good number of those new Texas residents came from – where else – California. That debunks the idea that people only migrate to Texas for the weather!

Where are the greatest number of new jobs? Texas!

In the period between January 2000 to April 2013, nonfarm payroll in Texas grew by 19.7%, while California grew 2.6% and the U.S. overall grew by only 3.6%.

A common belief is that Texas “only” has jobs in oil production. Not so. Oil and gas extraction only amounted to 9.8% of Texas’ GDP in 2012, while manufacturing’s share was 14.5%. Then there are all those jobs in support industries, tourism, education, medical care, and yes – even technology. The Texas economy is diversified.

Why is this happening? Texas is business friendly. Businesses have far fewer regulations and hoops to jump than in California.

We’ll admit, California’s wages are higher than similar wages in Texas. However – First, Texans keep more of their earned dollars because of the difference in taxation. Then, the cost of housing, food, transportation, and health care is far higher in California.

If you compare two individuals working at the same kind of job – one in California and the other in Texas – the Texan can buy far more goods and services for 40 hours’ worth of work than his California counterpart.

So yes, we do believe Texans are better off than Californians.

Mike Clover

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

Apply at: www.mikeclover.com

You might just assume that a very wealthy person would have no trouble at all getting a home loan. Unfortunately, that’s not always true. The wealthy don’t always qualify.
Here’s why:
1. They do like to avoid paying income tax on all that wealth.

As a result, they may leave most of their money in their corporation, or “expense out” so much that someone looking at their income might wonder how they manage to eat and put fuel in their cars. This is perfectly legal, but can come back to bite when they want a home loan.

Lenders qualify borrowers based on their verifiable income – in other words, the personal income they report to the IRS.

2. They might not have enough credit to qualify.

Paying cash as you go – even for a new car – seems pretty honorable. But mortgage underwriters don’t see it that way. They want to see at least 3 credit accounts on which the prospective borrower makes regular monthly payments. In their eyes, having no credit can be just as bad as having poor credit, because they’re looking for a pattern of behavior.

3. They might actually have bad credit.

This seemed strange to me, so might seem strange to you as well. Why would someone who has plenty of money ever get behind on their bills? Perhaps because they aren’t worried about their credit. Perhaps because they don’t mind paying late fees? Perhaps because they hire someone to take care of their books and that person doesn’t pay attention to due dates?

Whatever the reason, it’s not all that unusual for extremely wealthy people to have poor credit scores.

4. High income earners aren’t afraid to take on debt. They can also be tapped by family members to co-sign loans. All of that can add up to debt to income ratio that exceeds lending guidelines, even though they still have more than enough to live on after all obligations are paid. After all, 20% of a million is a lot different than 20% of $60,000.

Their available funds are a help here. Some banks are willing to look past high debt when the borrower makes a down payment of 30 or 40%.

The bottom line: No matter what your income, it pays to pay attention to your credit scores.
• Pay all your bills on time
• Maintain at least 3 credit accounts
• Refrain from taking on excessive debt, or co-signing loans that will harm your credit rating.

Don’t forget I offer a Stated Income Jumbo loans. Go here for the details.

Mike Clover

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

Apply at: www.mikeclover.com

RealtyTrac recently compiled responses from six leading economists who were willing to make predictions for 2015. Each had a slightly different take, but were generally in agreement about the reasons why 2014 didn’t live up to expectations, and why 2015 should be better.

Wells Fargo Senior Economist Mark Vitner made his predictions in the January issue of HousingNewsReport, while staff members interviewed Lawrence Yun, Chief Economist for NAR, Mark Zandi, Chief economist for Moody’s Analytics, Bacon Economics partner Christopher Thornberg, and chief economists for Trulia and realtor.com, Jed Kolko and Jonathan Smoke.

All had predicted that 2014 would bring both growth in the housing market and higher interest rates. All expressed some surprise that falling interest rates didn’t do much to spur growth. However, they pointed out that tighter lending standards weighed heavily on single family housing sales. Lawrence Yun also blamed tight credit for the lack of new construction starts.

Vitner pointed out that 2014 may have paved the way for better things in 2015 because it was a year of “cleaning up the results of previous excesses.” He noted that foreclosures, negative equity positions, and vacancy rates are now nearly back to historical norms. As most are aware, an abundance of foreclosures and short sales on the market tend to depress home prices.

Real estate is always local, so some areas still have an excess of housing inventory while areas with strong job growth have very tight inventories. Supply and demand naturally affects home pricing.

Christopher Thornberg is cautiously optimistic, noting that job growth and improvements in the U.S. economy look promising for our housing market, but ongoing issues in Europe and the collapse in commodity prices at year end could slow growth in the U.S.

Vitner, Yung, and Smoke are enthusiastic over the prediction that 2015 will bring an increase in housing formation as Millenials reach prime home buying ages and job growth continues. Kolko, however, thinks this will primarily benefit the rental market, as many who are forming new households will opt to rent rather than buy. He also expects single family construction starts to lag, as the vacancy rate for single family homes is still high.

Yun and Smoke both expect to see an increase in first time buyers, and Yun expects to see an increase in migration due to increasing employment opportunities. Vitner believes state-to-state migration will also be fueled by baby boomers moving into retirement and an increase in corporate relocations.

While all six agree that home prices will rise, their predictions range from 5% to 10%. They also have differing opinions about the increase in both existing home and new home sales. Predictions range from 7% to 20% for existing homes and 25% to 40% for new homes.

The consensus among the economists who were interviewed is that interest rates will rise in 2015. However, Kolko pointed out that they made the same prediction a year ago and were wrong.  They also have hope for easing of credit and point to recent government actions as a good sign, but feel that it’s too early to say whether policy efforts and new programs will have the desired impact.

Mike Clover

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

Apply at: www.mikeclover.com

Buying a Home Makes Financial Good Sense

You know the emotional reasons for owning your own home. Things like security and independence top that list.

These five financial reasons might be even more powerful:

1. Unless you’re living rent free with a friend or relative, you’re paying for a house whether you own or rent. When you rent you’re not just providing the funds to make payments on the house, you’re also paying for upkeep, repairs, insurance, property taxes, and probably a bit of cash flow for the person who does own the house. So one way or another, you’re “buying” a house or at least a portion of a multi-family structure. Plus, you’re helping support the landlord.

2. Housing is a leveraged investment – the only such investment you’ll find.

Home ownership allows people to make a partial investment and own control of 100% of the house. So even if you only put 10% down on your house, when it appreciates in value, you’ll own 100% of the appreciation on the 90% you financed.

What does that look like?

Say the price of the house was $100,000 and you made an initial investment of $10,000. The house appreciates at a modest rate of 5% per year, so at the end of the year, in addition to any principal payments you made, you have equity of $10,000 plus the 5% appreciation ($5,000) for an equity of $15,000 plus your principal payments.

3. Home ownership is a form of “forced savings.”

With each payment you make, you reduce the amount you owe and increase your equity in the house. That money remains in “savings” until you either sell the house or refinance to take out part of your equity.

4. Owning a home comes with tax benefits.

Homeowners can deduct mortgage interest and property taxes from their taxable income. In many cases they also pay a lower property tax rate than do landlords. Those who work at home can deduct a portion of their household expenses as a “home office” expense.

When it’s time to sell, homeowners get a break on capital gains taxes. Single payers get a break of $250,000 while married couples get $500,000. Landlords pay tax on the entire gain.

5. Owning your home is a hedge against inflation. While the not-too-distant housing crisis did bring home prices down, historically houses rise in value by about 5% per year. So the house you could have bought last year for $100,000 would cost $105,000 this year, and $110,250 the following year. Rents also increase in keeping with the cost of building or buying rental properties. Most tenants find that when their initial rental agreement expires, they’ll have to agree to pay a bit more in order to renew.

When you have a fixed rate mortgage, your payment can only increase if property tax and insurance rates increase. Inflation doesn’t touch your payment on the principal balance.

The fact is that unless you’re planning a move in the near future or your employment is unreliable, it makes financial sense to buy a home now – while rates (and payments) are still low.

We have no crystal ball, but look at what will happen by next year if housing appreciates 5% and interest rates go up 1%.

2015: price: $100,000 Down: $10,000 Finance 90%: $90,000 @4% Payment: $429.67

2016: price: $105,000 Down: $10,500 Finance 90%: $94,500 @5% Payment: $507.30

Mike Clover

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

Apply at: www.mikeclover.com

Purchase & Refinance Mortgage Rates …….

All Loans close on-time and within 30 Days or less.

Refinance Rates & Purchase Rates could be lower… have your clients call me to discuss.

30 yr Conventional 3.75% – 0 Discount Points – 0 Origination

15 yr Conventional 3.0% – 0 Discount Points – 0 Origination

20 yr Conventional 3.625% – 0 Discount Points – 0 Origination

10 yr Conventional 3.125% – 0 Discount Points – 0 Origination

30 yr FHA 3.5% – 0 Discount Points – 0 Origination

15 yr FHA 2.875% – 0 Discount Points – 0 Origination

30 yr USDA 3.375% – 0 Discount Points – 0 Origination

30 yr VA 3.375% – 0 Discount Points – 0 Origination

15 yr VA 2.75% – 0 Discount Points – 0 Origination

Jumbo 30 yr Fixed 4.0% – 0 Discount Points – 0 Origination

Stated Jumbo 7/1 ARM 5.375% – 0 Discount Points – 1% Origination

Stated Jumbo 5/1 ARM 4.875% – 0 Discount Points – 1% Origination

* These rates are based on a estimated loan amount of $250,000 or above and roughly 4.321% to 5.89% APR depending on loan program. Rates are also subject to change without notice. FHA requires 3.5% down. Conventional requires 5% down. Jumbo requires 20% down up to $1Million. Jumbo APR is estimated 4.42% – 5.422% Some rates are based on a 740 credit score or higher. Some loans require lower LTV, call for details.*