My 50th Birthday!

This past weekend, I celebrated my 50th birthday with family and friends. I have two (not much) younger sisters who love to ask “don’t you feel older” and my answer is typically “not really”. I’m actually pretty excited to be the big 5-0…beyond being able to join AARP!

The first thing I did on Monday, following my birthday celebration, was to contact my H.R. department to let them know that I want to increase my contribution to my 401(k) pronto. As a 50 year old, I can contribute an additional $6,000 to my 401(k) this year. Yee-haw! It’s my opinion that you cannot save enough… I also stash as much into my health savings account as possible.

In my profession, I am in the unique position to see a someone’s financial profile, including their retirement savings. I am always thrilled when I see that someone has been socking away for their golden years and I also see when people have not planned for retirement. I cannot stress enough how important it is to save and plan for our later years. I am not a financial planner…however, my personal opinion is that it’s more important to fund your retirement and pay off revolving debt than it is to pay off your mortgage or have a shorter term mortgage. This is why for a majority of the clients I see, a 30 year fixed rate mortgage seems to be the best option. ¬†A 30 year fixed mortgage will allow for a fixed, reduced payment during pre-retirement years so that you can stock funds that you would be paying towards a shorter term mortgage towards savings or debt reduction.

Another thing about being 50, is that retirement is within sight… it might be 5, 10 or 15 years away but it’s a reality. I actually hope to work as long as I can. If you are planning on retiring one day ūüėČ and possibly downsizing your home and/or mortgage, you need to plan for this.

There are a couple things to consider…lenders are looking for income to continue at least 3 years¬†(we are literally talking 36 months at closing of the mortgage) when using it for qualifying for a mortgage. If you are planning on leaving your job or cutting back on hours, there may be issues with using your income. If you are leaving your job to retire, your past income will probably not be averaged or factored for qualifying. Retirement income may be used, with proper documentation, once you are receiving it.

Something else to think about, is that with getting older, we have higher odds of injury or illness. Either of these awful unexpected events may impact income and/or credit and therefore, impact what you may qualify for with a mortgage for buying the home you plan on retiring in. A reverse mortgage may be an option for retirees who have a challenge qualifying for a mortgage however you need to wait until all borrowers on the mortgage are 62 or older and there are other factors for qualifying.

Bottom line, being 50 is a reality check for me. I think it’s never too late to start planning for retirement and to work on getting finances in (better) order. ¬†Refinancing a mortgage may help achieve eliminating higher interest rate debt(s) which would help fund retirement.

I am happy to help you with your mortgage needs for home buying or refinancing your home located in Washington state! Please contact me.

Mortgage Insurance Tax Deductible for 2015 and 2016

Money in pocketI’m receiving gleeful emails from various private mortgage insurance companies announcing that mortgage insurance will once again be tax deductible. This is thanks to the PATH Act extending certain tax benefits to eligible home owners.

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Mortgage Insurance Deductible through 2014

You may have heard that last week, Congress passed and President Obama signed the 2014 Tax Increase Prevention Act. It has some good news for home owners who currently pay various forms of mortgage insurance. If you pay mortgage insurance, including private mortgage insurance (pmi), or VA, FHA or USDA forms of mortgage insurance during 2014,  you may be able to deduct that on your 2014 income taxes.

Before you get too excited, this act does not extend the mortgage insurance deduction past 2014.

So if you are paying any form of mortgage insurance, especially if it’s private mortgage insurance or FHA mortgage insurance, it still makes sense to see if you can eliminate or reduce your payment with a refinance as you will not be able to deduct your mortgage insurance during 2015 (as things currently stand).

If I can help you with your refi or home purchase on property located anywhere in Washington state, please contact me!


Tips on how to save up for a down payment

iStock_000009450603SmallGet Rich Slowly recently posted How to Save Up for a Down Payment Fast. ¬†I’d like to respond to some of the ideas offered in GRS’s post from a Mortgage Professional’s viewpoint and¬†offer my advice.

Here are some of the suggestions on How to Save Up for Down Payment Fast along with my 2 cents (in italics).

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Mortgage Insurance loses tax deduction benefit in 2014

mortgageporterraiseOver the past few years, home owners have enjoyed deducting private mortgage insurance (pmi) premiums from their income tax. This is also true for government forms of mortgage insurance (aka funding fee or guarantee fee) with FHA, VA and USDA mortgage loans. This benefit is coming to an end effective on 2014 tax returns.

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Mortgage Insurance is Tax Deductible for 2013

Home owners who acquired their home after 2006 and who have mortgage insurance may be able to treat the mortgage insurance premiums as they would their mortgage interest deduction when they file their 2013 income taxes. This is per IRS Publication 936.

Here are some basic requirements:

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Happy Birthday, Son!

scanToday is my son’s birthday. Although to me, it seems like just ¬†yesterday he was toddling around in his Barney slippers, he is now entering his third year of college. I simply could not be more proud of him.

The one piece of advice that I would offer anyone with children is to start saving for your child’s education NOW if having your son or daughter attend college is important to you. I’m thankful that I’m able to help my son out with his tuition. He does have student loans…however I’m at least able to help contribute. I set up an auto-payment into a 529 account years ago and before that, bought savings bonds. ¬†I didn’t miss what was taken from my checking account. Of course it did take a hit in recent years – but I’m still so glad I’ve been able to save some money for him.

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Which mortgage is best for you? Consider your retirement and savings accounts.

On my recent post, Comparing 15 and 20 Year Fixed Rates, a reader asks how do I decide which program is best for my clients? ¬†The short answer is: I don’t. The decision of what type of mortgage to select is up to my client (assuming they qualify for the shorter term mortgage with the higher payment, of course). I feel it is my duty to help my clients understand the mortgage programs, so they can make an educated decision and to provide them with various scenarios to consider. [Read more…]