The Mortgage Process and Your Income Tax Return

By now you know that your mortgage lender is going to want to see your latest tax return. In fact, in addition to the copy you’ll be asked to provide, you’ll sign a form allowing your lender to get a “true” copy from Uncle Sam.

So… don’t try to fudge and give your lender a bogus return. It won’t work.

Since tax day has just passed and you may still be feeling the strain, we thought we’d bring you a bit of humor with some do’s and don’ts. Unfortunately, these “don’ts” come from real-life situations that tax preparers and lenders have encountered.

If you’re self-employed, remember that you’ll have to work a little harder to prove your income. When you’re anticipating a purchase or a refinance it isn’t the time to pad your expenses. If you’re a building contractor, don’t remodel your son’s basement for free, then lump the expenses into your legitimate materials expense.

Remember that lenders are leery of self-employment, so don’t quit your salaried position to go into business for yourself until after your loan is finalized.

If you take a write-off for a home office, do make sure your lender notices, and don’t add that kitchen remodel into “maintenance” expense for your office.

Do’s and Don’ts for everyone…

Do write off legitimate deductions, such as charitable contributions and mileage, mortgage interest, medical expenses, and dependents.

Don’t deduct your dog’s veterinary bills. And… just because your dogs are named George and Susan, don’t try to add them as dependents.

Do write off unreimbursed business meals and mileage as per the guidelines. Keep in mind this deduction will be deducted from your income. 2106 deductions reduce your gross income with mortgage lenders.

Don’t confide to your lender that those business meals were actually just you and your family.

The same goes for business trips – if you legitimately travel to another city on business, deduct it. If you and your family rent a house at the beach for a week and business is the last thing on your mind – don’t ask your lender to overlook that deduction.

Do file your taxes on time.

Don’t explain that you haven’t had time to file taxes for the past few years, but you’ll get caught up soon.

Do include all your income on your tax return.

Don’t tell your lender to disregard the tax returns because most of your income is “under the table.” And don’t hand the lender several W-2’s or 1099’s and say “I forgot to add these to my tax return.”

The thing to remember is that your lender has to use the information on your tax return.

No matter how much you confide that you really cheated “just a little,” he or she can’t consider your income to be anything but what you reported to Uncle Sam.

However…

Do take legitimate deductions for court ordered maintenance.

But Don’t confide to your lender that you didn’t actually pay for that maintenance – or for anything else you deducted from your income.

Your lender’s job is to help you get the best loan possible – while also protecting the bank. His or her job is to help you borrow money that you actually can repay.

When you’re ready to purchase or refinance a home in Texas, get in touch. Today’s interest rates are low, and so are the fees at Homewood Mortgage. Call the Mike Clover  Group today at 1-800-223-7409 or apply on line at http://www.mikeclover.com.

We’ll find the best loan for you and your unique situation.

Mike Clover

Mortgage Banker

Homewood Mortgage, LLC

Toll FREE: 1-800-223-7409

O: 469-438-5587

F: 972-767-4370

NMLS# 234770

Web: www.mikeclover.com

E-mail: mike@mikeclover.com

Call for Super Service!!

Texas Purchase & Refinance Mortgage Rates …….

 New Loan: No Income Verification Jumbo Loans!

 We are from Texas, We are operated in Texas, and We are Texas Strong!

 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.

 Loan amounts $350k or above 4.25% with 740 FICO score

30 yr Conventional 4.375% – 0 Discount Points – 0 Origination

15 yr Conventional 3.5% – 0 Discount Points – 0 Origination

20 yr Conventional 4.125% – 0 Discount Points – 0 Origination

10 yr Conventional 3.25% – 0 Discount Points – 0 Origination

30 yr FHA 3.875% – 0 Discount Points – 0 Origination

15 yr FHA 3.25% – 0 Discount Points – 0 Origination

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

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

15 yr VA 3.25% – 0 Discount Points – 0 Origination

Jumbo 30 yr Fixed 4.625% – 0 Discount Points – 0 Origination

No Income Verification Jumbo 7/1 ARM 5.375% – 0 Discount Points – 0 Origination

No Income Verification Jumbo 5/1 ARM 4.875% – 0 Discount Points – 0 Origination

Your Locally Owned and Operated Texas Mortgage Banker……

 * These rates are based on a estimated loan amount of $250,000 or above and roughly 4.377% 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 4.776% Some rates are based on a 740 credit score or higher. Some loans require lower LTV, call for details.

Mike Clover

Mortgage Banker

Homewood Mortgage, LLC

Toll FREE: 1-800-223-7409

O: 469-438-5587

F: 972-767-4370

NMLS# 234770

Web: www.mikeclover.com

E-mail: mike@mikeclover.com

Call for Super Service!!

For years now we’ve been hearing about “shadow inventory” and how it might suddenly come out of the shadows and cause the housing market to tumble once again.

What is shadow inventory? CoreLogic defines it as consisting of the properties that are seriously delinquent, going through foreclosure, or held as REO’s but not currently offered for sale in any Multiple Listing Service.

When shadow inventory shrinks, it’s a better sign of a housing recovery than rising prices and an increase in sales. It means there will be fewer and fewer distressed properties on the market in months to come. The fewer foreclosed houses for sale, the sooner prices will return to normal, and the sooner the markets will come back into balance – with about 6 months’ worth of inventory available at any given time.

According to a report released by CoreLogic, shadow inventory in all states has been declining for the past 16 months. This is a good sign that fewer homeowners are in trouble.

In 2010 the volume peaked at about 3 million homes that were in foreclosure or seriously delinquent and approaching foreclosure. One year ago, shadow inventory was estimated at 2.2 million. Today, the figure has fallen to just over half of the peak, to 1.7 million. This is a year-over-year decline of 22%.

Prior to the financial crisis, 600,000 – 700,000 was a normal number, so we aren’t completely over the crisis, but things are definitely looking up.

In terms of dollars, this is a $70 billion decline in the value of shadow inventory. It fell from $324 billion in January 2013 to $254 billion in January 2014.

In February 2014, 43,000 foreclosures were completed. That’s 16% less than in February 2013, when 51,000 foreclosures were completed. In February 2012, the number was 65,000.

Texas was listed #3 among the top 5 states with completed foreclosures in the 12 months ending February 2014, with 39,000. Florida topped the list at 118,000, followed by Michigan at 50,000. California reported 37,000 completed foreclosures while Georgia listed 34,000.

The good news here for Texas is that our state is not listed in the top five with respect to shadow inventory nor with respect to currently listed foreclosure inventory. This would indicate that we’ve passed the crisis and bank owned properties will have a smaller and smaller impact on our market in months to come.

This could, of course, be due to the fact that prices have been rising in most areas of Texas, so homeowners who might be in distress have regained equity and are able to sell by traditional means.

If you’re ready to become a Texas homeowner, get in touch. Today’s interest rates are still low, and as always – so are the fees at Homewood Mortgage. Call the Mike Clover Group today at 1-800-2232-7409 or apply on line at http://www.mikeclover.com.

Mike Clover

Mortgage Banker

Homewood Mortgage, LLC

Toll FREE: 1-800-223-7409

O: 469-438-5587

F: 972-767-4370

NMLS# 234770

Web: www.mikeclover.com

E-mail: mike@mikeclover.com

Call for Super Service!!

Whether the Fannie Mae / Freddie Mac overhaul will or will not damage the housing industry is a matter of opinion, and a matter of which of the legislative proposals makes it through Congress.

Should Congress adopt the Johnson-Crapo proposal, the changes could raise mortgage interest rates by as little as 0.2% for borrowers with excellent credit. Should they adopt the Corker-Warner proposal, higher risk borrowers might pay an additional 1.5%.

Analysts Kent Colton and Michael Cartliner or the Harvard Joint Center for Housing Studies predict that the most stringent of the proposals would knock out between 6% and 9% of qualified buyers and reduce housing starts by as much as 155,000 units per year.

Laurie Goodman, director of the Housing Finance Policy Center at the Urban Institute, disagrees. She says that riskier borrowers already pay higher rates and that borrowers with weak credit are already being shut out of the housing market because of tighter underwriting standards. Thus she feels that the potential impact on home sales will be minimal.

Fannie and Freddie don’t actually make loans. They purchase loans, package them into securities, and sell them to investors. The reason they got into trouble during the mortgage melt-down is that they guarantee those loans.

This policy translated into lower loan costs for consumers, because the investors had essentially no risk. Fannie and Freddie held all the risk, and didn’t have enough capital to back their guarantees when millions of loans went into default.

Most of the overhaul proposals call for Fannie, Freddie, and any successors to hold significantly more capital. The amount of capital required is one of the factors that will determine just how much more consumers will pay for loans.

How would this affect you?

On a $200,000 loan, the principal and interest payment on a 30 year note at 4.5% is $1,013.37. Raising the rate to 4.7% would raise the payment about $24, to $1,037.28. Should that rate go to 6%, the difference is more significant. Then the payment would increase by $185.73 – to $1,199.10.

Would $185 more per month knock you out of the running for home ownership?

Right now it’s all speculative.

Economists are doing studies and making predictions. But until we see which of several proposals is finally adopted and how the new regulations actually affect interest rates, no one really knows how the overhaul will affect the housing market.

Our best advice for anyone who is thinking about purchasing a home in the near future is to move forward before any changes take place. Today’s interest rates are still low, and as always – so are the fees at Homewood Mortgage.

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

Toll FREE: 1-800-223-7409

O: 469-438-5587

F: 972-767-4370

NMLS# 234770

Web: www.mikeclover.com

E-mail: mike@mikeclover.com

Call for Super Service!!

Texas Purchase & Refinance Mortgage Rates …….

Make your clients happy with these Low Rates & Low Fee Loans, also let your your clients, friends and family know……..that we will beat any deal on rates, fee’s and service.

We are from Texas, We are operated in Texas, and We are Texas Strong…..!

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 4.5% – 0 Discount Points – 0 Origination

15 yr Conventional 3.5% – 0 Discount Points – 0 Origination

20 yr Conventional 4.25% – 0 Discount Points – 0 Origination

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

30 yr FHA 3.875% – 0 Discount Points – 0 Origination

15 yr FHA 3.25% – 0 Discount Points – 0 Origination

30 yr USDA 3.875% – 0 Discount Points – 0 Origination

30 yr VA 3.875% – 0 Discount Points – 0 Origination

15 yr VA 3.25% – 0 Discount Points – 0 Origination

Jumbo 30 yr Fixed 4.625% – 0 Discount Points – 0 Origination

Your Locally Owned and Operated Texas Mortgage Banker……

* These rates are based on a estimated loan amount of $250,000 or above and roughly 4.551% 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 $1 Million. Jumbo APR is estimated 4.667% Some rates are based on a 740 credit score or higher. Some loans require lower LTV, call for details.

Mike Clover

Mortgage Banker

Homewood Mortgage, LLC

Toll FREE: 1-800-223-7409

O: 469-438-5587

F: 972-767-4370

NMLS# 234770

Web: www.mikeclover.com

E-mail: mike@mikeclover.com

Call for Super Service!!

Zillow recently released the results of their research to give us the answer.

Two Texas cities made the list of “Top Ten Best Seller’s Markets,” while none made the list of buyer’s markets.  San Antonio came in at #3 while Dallas/Fort Worth is #10. Our own research shows that several other Texas cities are experiencing seller’s markets. Austin and Houston are two examples.

So what constitutes a seller’s market?

In Zillow’s analysis, a seller’s market was not necessarily defined as one where prices are rising (although they are), but as one where homes are selling faster, and at prices near, at, or even higher than their listing price.

In a buyer’s market, homes are for sale longer, price reductions are frequent, and buyers are more likely to be successful with an offer at less than full price.

What causes homes to sell faster and at full price? The Law of Supply and Demand, working in an area with a shortage of homes for sale.

In a balanced market, an area will have about 6 months’ worth of inventory. This is determined by dividing the number of homes currently for sale by the average number of homes sold per month over the preceding 12 months.

As of February, San Antonio had about 4.2 months’ worth of available homes. In January Austin had only 2 months’ supply, while Houston has remained constant with 2.6 months’ inventory since December. The number of homes for sale in the Dallas area is at an almost 20 year low, with less than a 3-month supply.

If no more homes were listed, these cities would be “out of houses” before July.

Texas may be on its way back to a balanced market…

As prices and demand rise in any city, the balance begins to shift. More homeowners are willing to offer their homes for sale and builders once again have the confidence to develop new neighborhoods.  As a result, inventory levels increase and begin inching toward the 6-month benchmark that indicates a balanced market.

This would happen faster if not for the Catch 22. While homeowners may be more willing to sell as prices rise, many who want to remain in the area still hold off simply because they’re afraid they won’t find a new home to buy.

That fear should dissipate as Texas home builders get back into full swing with new construction and take the pressure off existing home sales.

Days on the market statistics can mislead buyers…

All of these cities are recording reduced numbers of days on the market.  East Dallas, for instance, is showing 45 days on the market, while North Texas as a whole is showing 64 days on market.

Buyers shouldn’t be misled by those numbers.  They don’t mean that buyers have 45 or 64 days in which to look and choose. Properly priced, well-presented homes in these low-inventory markets typically receive multiple offers within 4 or 5 days of appearing in the local Multiple Listing Service.

The good (make that great) news: In spite of rising prices, Texas is still one of the most affordable places in the U.S. to live.

According to Zillow, the median price of homes that sold in Dallas–Fort Worth in January was $162,129, the median home value in Houston was $135,200, and the median price of homes currently listed in San Antonio is $165,000.

Meanwhile, the median home price in Miami was $305,500, in Los Angeles County $443,000, and in San Jose, $593,750.

If you’re ready to become a Texas homeowner, call the Clover Mortgage 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 make a solid offer the minute you find your new home.

Texas Purchase & Refinance Mortgage Rates

 Why use us?

• 20 plus years combined experience
• Low Rates & Fees
• 2014 Five Star Mortgage Professional featured in Texas Monthly magazine for customer service.
• BBB A+
• On-time closings
• Full service mortgage banker

 Rates jumped back up.. Get em locked!

30 yr Conventional 4.5% – 0 Discount Points – 0 Origination

15 yr Conventional 3.5% – 0 Discount Points – 0 Origination

20 yr Conventional 4.25% – 0 Discount Points – 0 Origination

10 yr Conventional 3.25% – 0 Discount Points – 0 Origination

30 yr FHA 3.875% – 0 Discount Points – 0 Origination

15 yr FHA 3.25% – 0 Discount Points – 0 Origination

30 yr USDA 4.25% – 0 Discount Points – 0 Origination

30 yr VA 3.875% – 0 Discount Points – 0 Origination

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

Jumbo 30 yr Fixed 4.625% – 0 Discount Points – 0 Origination

 Your Locally Owned and Operated Texas Mortgage Banker……

* These rates are based on a estimated loan amount of $250,000 or above and roughly 4.551% 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 4.677% Some rates are based on a 740 credit score or higher. Some loans require lower LTV, call for details.

Why are so many people looking for homes in Texas?

Would-be Texas homeowners are feeling frustrated lately because there’s so much competition for every well-maintained, properly priced home. They’re also frustrated because homes are selling for higher prices than they anticipated. Prices are, of course, rising due to the law of supply and demand.

Why so much demand? Because the population of Texas is growing daily. According to a December 2013 release by the U.S. Census Bureau, Texas added more than 387,000 residents between July 1, 2012, and July 1, 2013, and more than 1.3 million since April 1, 2010. This increase is significantly more than any other state.

The sharp growth patterns have been in the Midland-Odessa region due to the oil and gas boom, and in the largest metropolitan areas. Dallas-Forth Worth, Houston, Austin, San Antonio, El Paso, and the Rio Grande Valley are all booming. Some rural counties, however, have lost population.

Why is the population growing?

Because Texas leads the nation in job growth, and responsible people go where they can find work. On top of that, Texas has no personal income tax, so residents can keep more of what they’ve earned.

According to the U.S. Bureau of Labor Statistics, in January 2014 Texas added more jobs than any other State with a gain of 33,900 jobs. In contrast, 27 states plus Washington, D.C. lost jobs in January. California was the leader in that category, with a loss of 31,500 jobs.

Texas also ranked #1 in job growth for the 12 months ending in January – with the addition of 322,400 jobs.

And why does Texas lead in job growth?

Because Texas is “business friendly.”

According to the Small Business & Entrepreneurship Council’s “Business Tax Index 2013,” Texas ranks #1 in terms of the lowest costs of taxation on entrepreneurship and small business. To compile these rankings, the Council pulls together 21 different tax issues and combines them into one tax score. California, by the way, ranked highest in tax on business. Is it any wonder that their population is falling as the population of Texas grows? Click here to see the 21 tax issues used in this determination, and to see where other states rank.

What does this mean for hopeful home buyers?

It means they need to become pre-approved before they shop, and be ready to make an offer when they see the house they want. Thinking about it for a day or two will likely mean losing out.

Even though prices are rising, home buyers can be thankful to be in Texas. According to Zillow, the median price of homes that sold in Dallas–Fort Worth in January was $162,129, and the median home value in Houston was $135,200 – while the median home price in Miami was $305,500 and in Los Angeles County $443,000.

If you’re ready to become a Texas homeowner, call the Clover Mortgage 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

Toll FREE: 1-800-223-7409

O: 469-438-5587

F: 972-767-4370

NMLS# 234770

Web: www.mikeclover.com

E-mail: mike@mikeclover.com

Call for Super Service!!