Labor Market Starting to Look Less Sleepy

“Whistle while you work.” (Snow White)

That’s something more people have been able to do lately, as the labor market continues to steadily improve. Here’s what December’s Jobs Report showed… and what it means for home loan rates.

The Labor Department reported that 103,000 jobs were created in December, and private job growth was 113,000. While these numbers were below the recently ramped up expectations, they do show that the trend in the labor market is improving. Also noteworthy are the upward revisions to the prior two months readings, showing 70,000 more jobs created than had been previously reported.

And yet, the real shocker in the report was a significant decline in the unemployment rate to 9.4%, which is the lowest unemployment rate since May of 2009.

So what did we learn from this Jobs Report?

1. While positive news, this Jobs number was still soft enough to support the Fed continuing on their plans for a full dosage of QE2 for the economy… and this won’t be good for Bonds and home loan rates, as it carries along some real inflation threat down the road.

2. The recent tax package and lower tax rate extensions have not yet had enough time to be seen or felt in the economy, so those factors should help provide further improvement in the labor market in future months… but also will create inflation – bad news for Bonds and home loan rates.

The bottom line for right now is that the familiar chant “Don’t Fight the Fed” continues to ring true. The Fed is intent on creating inflation, lowering the unemployment rate and raising Stock prices…and they have already been somewhat successful. QE2 will likely keep coming until the employment picture improves significantly, and this is all going to be unfriendly for Bonds and home loan rates ahead.

So what should you do if you have been thinking about purchasing or refinancing a home? The good news is that home loan rates are still extremely attractive right now, so call or email me now to get started. Or forward this newsletter on to someone you know how may benefit from today’s historically low rates.

Stuart Brown, Sr. Loan Officer Team Leader
The Valley Mortgage Group
Cell: 503-538-1072
Fax: 503-538-6682
stuart@wvbk.com
wvbk.com/stuartbrown

Housemaster Inspections Answers Your Homeownership Questions

Tips on tubular skylights, clues to dishwasher leakage, the downside to sealing attic vents, and water heater corrosion protection.

Q. My kitchen has only one window, leaving it pretty dark most of the time. We thought about a skylight but have been told there wouldn’t be much addition lighting from it because of the design of our roof and attic. Any suggestions?

Yes. There is a product on the market called a tubular skylight. This type skylight may be perfect for lighting your kitchen or just about any other dark area of your home. You can find a skylight like this on a website such as https://aiaindustries.com/ if you’re interested. It involves the installation of a flexible, aluminum tube that has a highly reflective inner surface to direct additional lighting to your living area. The sunlight is captured by a roof-mounted receptor and directed down through the tubing to a ceiling diffuser that casts the light throughout the room.

Q. When my dishwasher runs, I notice some water coming out from underneath it at times. I removed the base cover and there is no evidence of leakage from the pump or hose fittings. it is not coming from the seal around the doors. It seems to be coming out the sides of the dishwasher but there are no cracks on the inside liner. Any suggestions before I call in the serviceperson.

It’s possible that your problem is associated with a recirculation hose that runs up the side of the unit to the spray arm at the top of the dishwasher. This may have cracked or deteriorated. To check this it will be necessary to pull the unit out from under the cabinet. If that is the cause, if you are fairly handy you should be able to replace it yourself. A replacement hose can be purchased from the manufacturer or a parts supplier.

Q. My neighbor seals up all openings in his unfinished attic each year to keep the cold air out and to save on heating bills. I seem to recall reading that this is not a good idea. What is right?

What you read is correct. It is best to allow the cold air to circulate through an unfinished attic. Of course, you must adequately insulate the attic floor to keep the heat in the house from rising up and out of your attic. The attic hatch or door should also be insulated and weatherstripped.

Sealing off the attic from outside air, however, will effectively trap any rising warm air in the attic. This will create a greenhouse effect (high humidity) in the attic, which may ultimately cause damage to your roofing framing. Mold can also develop if conditions are right. So seal off the attic from the house, but let the attic breath. This also helps keep the underside of the roof cold, which helps reduce ice dam problems.

Whilst resolving these problems that concern your roof, it may also be the best time to give it a quick inspection so you know that it is still in good condition. If for any reason you notice any issues that need repairing or replacing, then you should think about having a look at the average repair and replacement cost in your area so you have a better idea about how much money you could be spending on these renovations. But something like this is important and it should be fixed as soon as possible.

Q. I was told that if I replace the anode in my water heater it would last longer. What is the anode and what does it do?

The anode is a rod that is generally installed inside the water heater tank, usually hanging from a fitting on the tank. It provides protection from corrosion that might otherwise occur due to the chemical make-up of the water. The anode is made of a material that is more reactive than the steel tank, and harmful elements in the water will be drawn to the anode, causing it to corrode rather than the tank. For this reason the anode is often referred to as the sacrificial anode.

Once the anode has deteriorated, however, the exposed steel of the tank is ripe for deterioration. If the tank is relatively old (8+ years ) the feasibility of adding a new anode may be questionable, and it may be worth having a look at buying a new water heater. Before you buy one, it’s definitely worth looking at a water heater reviews site first to ensure you find the best water heater for you. However, if you are in an area with hard water or water containing other elements that might contribute to the rapid deterioration of the anode, replacing it once or twice in ten years may enable the water heater to reach its full design life. Replacement is a relatively simple process, but often best left to a professional. Since each situation will be a little different, it would be wise to get a cost estimate first and then consider the unit’s expected future life and cost of a new heater before making a decision.

Remember, these tips are only general guidelines. Since each situation is different, contact a professional if you have questions about a specific issue. More home safety and maintenance information is available online at www.housemaster.com.

Equestrian Property Specialist Joins Bella Casa Real Estate Group

Introducing Lori Wilton, Realtor®

We’re thrilled to welcome Lori to Bella Casa, and we hope you get to meet her in person soon because she is a wonderful person and we know you’ll enjoy her as much as we do. Lori brings a great deal of equestrian property experience to the table as she owns and manages a local equine breeding operation called Foxdale Farm (she’s produced two national champions two years in a row!).

Lori says,

I am incredibly excited to work alongside the Bella Casa Real Estate Group. One of the most important philosophies that has driven me in my horse breeding business has been the value I place on helping people achieve their goals. I love matching people up with the opportunities and relationships that can help them find what they are looking for. Furthermore, doing business with integrity – honesty, forthrightness, and clarity in communication all provide the foundation that informs how I believe business should be done. For all of these reasons, I look forward to working with people in one of the most beautiful places in America to achieve their real estate goals, whether that means to sell and move on, find the home of their dreams, or just network for the future.

Learn more about Lori Wilton.

Do you have interest in buying or selling equestrian properties in or around Yamhill County? We can help! Call us today at 503-437-9005.

What Should We Think About 2011?

We have had a rough ride through the “valley of the shadow of death” for almost 4 years now. We have suffered the paralysis-of-analysis trying to gain an education into irresistible cause and effect, and understanding of the relationship of so many industries and entities all interconnected. It has been painful and exhausting, and at some level fascinating!

We have entered the New Year with attitudes which likely match the variety of opinions about the future. One school thinks it is REALLY bad and we have more and worse tribulations ahead. They are pessimistic, depressed, and fearful. Others think the worst is behind us; they are soberly optimistic and mildly energetic. The truth may lie between the poles but I know of no one who thinks there is a quick fix or sudden recovery just around the bend! Whose predictions should we rely upon?

Perhaps there is a better way…

Some months ago, a friend of mine went to a seminar with an audience of financial planners and investment consultants. A well-known national speaker (I am sorry to be light on details but am recounting this from memory at age 55!) engaged the audience something like this:

“You are all industry experts; how much time do you spend in research, analysis, and educational activities trying to stay up with the trends to be able forecast the future for your clients?”

The consensus was 25% of their time was dedicated to this pursuit.

“How many of you predicted the financial melt-down in the fall of 2008 with the attendant bankruptcies of almost all of the nation’s investment banks, and the steep plunge in the stock market?”

No one took credit for that.

“How many of you predicted the fastest and most dramatic recovery of the stock market ever in the spring of 2009?”

The room was quiet and still.

The speaker then peppered them with several other such events related to their industry in recent history and when they were sufficiently embarrassed he said this:

“Your work and your value are not in predicting the future for your clients! Your calling is to serve your clients by utilizing the proven fundamentals of sound management to protect your client’s wealth and grow it for their future needs. You who have been faithful to these over many years and had a commitment to long-term fruitfulness, even after the worst implosion since the Great Depression, have been successful in achieving excellent results for your clients. You need to continue to do what has made you successful and what will, in the long term, benefit your clients most- just practice the proven fundamentals consistently regardless of the daily news.”

What great wisdom!

How We Will Face the Year!

As we start the new year, we re-commitment ourselves to the fundamentals of our trade. We will do what is best for our clients in the long-view, and assist them in making the best decisions for their futures. We will be faithful to our promises to those who entrust their sales to us. We will be diligent to practice the fundamentals for successfully selling your properties and in helping buyers make wise choices in market conditions with which few have experience. Whether they then choose to go and figure out how to buy monero or invest into other more volatile markets in cryptocurrency, to name but one example, is up to them.

For four years we have been adapting to new conditions, adjusting to changing markets, learning different principles for this economy, and forging novel practices which fit the new realities better. We have relentlessly expanded and improved our services while most others have pulled back and laid low; we have never given up. We make our decisions on what is best for getting the job done, not on the state of our pocketbook. We believe that if we keep our clients as the highest priority we all profit in the long-term. We are upgrading our skills and education, to meet new challenges. We have been humbled by the losses and suffering that has been experienced by so many in our communities. Our focus is what can be done today; our hope is that if we all stick to proven principles of practice that the future will take care of itself and we can all make up for the losses endured. We ask each of our clients to continue to trust us and remain loyal in spite of the long and difficult road we have traveled together.

And Now My Predictions???

I am incorrigible. My goals flow from my convictions about the future so here are my opinions for 2011 laid gently on the chopping block of ideas! I find myself in the more optimistic sector. The stock market has returned 14-17% in profit (and more) in 2010. Businesses adjusted and are now very profitable. In fact, individuals can even Geld im Internet machen (make money on the internet) by investing in stocks online. Even those with limited knowledge about the process can take help from plenty of resources that would be able to allow them to make the right choices. For instance, with sites similar to Qwer that can provide AAPL stock information (for Apple), AMZN stock information (for Amazon), along with other companies’ market data, they would be able to make informed choices regarding their investments. Additionally, people with little knowledge of stock investment can also take the assistance of reputed and reliable brokers to make sure that their money goes into the most profitable stocks. It is very rare that a broker would turn out to be fraudulent as there tend to be laws and securities lawyers (those interested can click here to know what they do) to protect the right of people in case of fraud.

Even banks and businesses are flush with cash waiting to utilize the stock market when prudent. Unemployment has surely slowed and surveys give reason to expect the unemployment trend will soon begin to reverse itself. Buyers no longer deny that property values are exceptionally low, and interest rates and inventory are wildly attractive. There is pent-up demand to move, and we currently have a net loss of housing this year making the time ripe for new construction to jump start. We have opened a second office in Newberg and are eager and energetic. We are re-visioning strategies for 2011. We expect to have a much better year for us and much happier clients. As testimony to our faith, we have refused to change our tag line. We will insure that regardless of challenges and threats, our clients can expect to…

Buy. Sell. Be Happy.

Randy McCreith
Cell: 503-310-9147
Fax: 866-281-6653
Randy@TheBellaCasaGroup.com
www.TheBellaCasaGroup.com
Search for all properties in Regional MLS
Market Conditions & Updates

McMinnville (19th & Hwy 99)
207 NE 19th Street, Suite 100
McMinnville OR 97128 (503-437-9005)
Newberg (College & Hwy 99)
700 E 1st Street, Suite 100
Newberg OR 97132 (503-437-9005)

7 Steps to Take Before You Buy a Home

Article From BuyAndSell.HouseLogic.com

By: G. M. Filisko
Published: February 10, 2010

By doing your homework before you buy, you’ll feel more content about your new home.

Most potential homebuyers are a smidge daunted by the fact that they’re about to agree to a hefty mortgage that they’ll be paying for the next few decades. The best way to relieve that anxiety is to be confident you’re purchasing the best home at a price you can afford with the most favorable financing. These seven steps will help you make smart decisions about your biggest purchase, whether it be one of the new condo developments in Toronto and the Greater Toronto Area, or a classic townhouse, or anything in between.

1. Decide how much home you can afford

Generally, you can afford a home priced 2 to 3 times your gross income. Remember to consider costs every homeowner must cover: property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care if you plan to have children.

2. Develop your home wish list

Be honest about which features you must have and which you’d like to have. Handicap accessibility for an aging parent or special needs child is a must. Granite countertops and stainless steel appliances are in the bonus category. Come up with your top-five must-haves and top-five wants to help you focus your search and make a logical, rather than emotional, choice when home shopping.

3. Select where you want to live

Make a list of your top-five community priorities, such as commute time, schools, and recreational facilities. Ask your real estate broker; to help you identify three to four target neighborhoods based on your priorities.

4. Start saving

Have you saved enough money to qualify for a mortgage and cover your downpayment? Ideally, you should have 20% of the purchase price set aside for a downpayment, but some lenders allow as little as 5% down. A small downpayment preserves your savings for emergencies.

However, the lower your downpayment, the higher the loan amount you’ll need to qualify for – and if you still qualify, the higher your monthly payment. Your downpayment size can also influence your interest rate and the type of loan you can get.

Finally, if your downpayment is less than 20%, you’ll be required to purchase private mortgage insurance. Depending on the size of your loan, PMI can add hundreds to your monthly payment. Check with your state and local government for mortgage and downpayment assistance programs for first-time buyers.

5. Ask about all the costs before you sign

A downpayment is just one homebuying cost. Your REALTOR® can tell you what other costs buyers commonly pay in your area-including home inspections, attorneys’ fees, and transfer fees of 2% to 7% of the home price. Tally up the extras you’ll also want to buy after you move-in, such as window coverings and patio furniture for your new yard.

6. Get your credit in order

A credit report details your borrowing history, including any late payments and bad debts, and typically includes a credit score. Lenders lean heavily on your credit report and credit score in determining whether, how much, and at what interest rate to lend for a home. Most require a minimum credit score of 620 for a home mortgage.

You’re entitled to free copies of your credit reports (https://www.annualcreditreport.com/cra/index.jsp) annually from the major credit bureaus: Equifax (http://www.equifax.com), Experian (http://www.experian.com), and TransUnion (http://www.transunion.com). Order and then pore over them to ensure the information is accurate, and try to correct any errors before you buy. If your credit score isn’t up to snuff, the easiest ways to improve it are to pay every bill on time and pay down high credit card debt. If you need to pay off any debt you already have, it may be worth looking for a personal loan from the likes of personalloan.co. You will be able to pay off any debt you might have and start to manage this loan by paying in monthly payments, bigger chunks or in a certain way to suit you. Make sure you have a look around to find the best loan for you to help you improve your credit score.

7. Get prequalified

Meet with a lender to get a prequalification letter that says how much house you’re qualified to buy. Start gathering the paperwork your lender says it needs. Most want to see W-2 forms verifying your employment and income, copies of pay stubs, and two to four months of banking statements.

If you’re self-employed, you’ll need your current profit and loss statement, a current balance sheet, and personal and business income tax returns for the previous two years.

Consider your financing options. The longer the loan, the smaller your monthly payment. Fixed-rate mortgages offer payment certainty; an adjustable-rate mortgage offers a lower monthly payment. However, an adjustable-rate mortgage may adjust dramatically. Be sure to calculate your affordability at both the lowest and highest possible ARM rate.

More from HouseLogic

Learn how Fannie Mae and Freddie Mac mortgages can help you save on financing (http://www.houselogic.com/articles/how-fannie-mae-and-freddie-mac-save-you-money/)

Learn more about the costs of homeownership (http://www.houselogic.com/articles/a-financial-plan-for-your-home/)

Other web resources

Homebuyer counseling resources (http://www.hud.gov/offices/hsg/sfh/hcc/counslng.cfm)

Get a free credit report from each of the three credit reporting bureaus (https://www.annualcreditreport.com/cra/index.jsp)

G.M. Filisko is an attorney and award-winning writer who has thrice survived the homebuying process. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Mortgage Interest and Real Estate Tax Deduction Facts

Note: At the risk of boring you with another post about mortgage interest deductions, this is such an important issue that I wanted to post these specific facts to help state the case for how vital the deduction is to homeowners and those pursuing homeownership.

December 7, 2010
By Danielle Hale, Research Economist

In recent weeks, many proposals, suggesting a variety of changes to the tax system, have been discussed. The estimates below are for the complete elimination of these two tax benefits at current marginal tax rates, one of the most extreme possible changes.

Mortgage Interest Deduction Facts:

• 51 million—or 68 percent—of the approximately 75 million owner-occupied houses in the United States in 2009 had a mortgage.
• 38.5 million taxpayers claimed a deduction for mortgage interest, deducting a total of $470 billion, in 2008.
• The average taxpayer claiming the MID deducted $12,200 from taxable income in 2008.
• Therefore, the average taxpayer saved $3,050 in taxes by claiming the mortgage interest deduction1 .
• The total tax savings from the MID in the United States in 2008 was $117 billion.

Real Estate Tax Deductions Facts:

• 42 million taxpayers in the United States claimed a deduction for real estate taxes in 2008, deducting a total of $172 billion.
• The average taxpayer claiming the real estate tax deduction subtracted $4,090 from taxable income in 2008.
• Therefore the average taxpayer saved $1,020 in taxes as a result of the real estate tax deduction2 .
• The total savings from the real estate tax deduction in the United States in 2008 was $43 billion.

Eliminating Deductions: Losses for Home Owners and the Nation

If the mortgage interest and real estate tax deductions were eliminated, the loss would not be a one-year event; homeowners lose out on these potential savings each and every year. The present value3 of these lost savings could total $3.2 trillion. The value of all owner-occupied real estate in the United States in 2009 was $19.3 trillion4 . If the lost tax savings are fully capitalized into the price of houses, the average decline in value in the United States would be 17 percent. From the individual perspective, the median priced home in the United States in the third quarter 2010 was $177,800. A decline in value of 17 percent, as projected, would mean a loss in home value of $29,500 for the typical home owner.

These estimates, because they are based on a complete elimination of these deductions, can be viewed as a high-end estimate. Other changes will result in smaller losses to home owners. Additionally, national results are computed by looking at national averages. A very different picture can result when looking at the state level depending on the characteristics of the housing market, tax payers, and homeowners. For state information, contact data@realtors.org.

1Marginal rates range from 10 to 35 percent. A 25 percent rate was used to calculate the tax savings.
2Ibid.
3Present value calculation assumes 5 percent discount rate and 1000 year time horizon.
4As measured by the American Community Survey. The Federal Reserve Flow of Funds for 2009 estimated the market value of household real estate to be $17 trillion which would raise the estimate of the decline in value to 19 percent.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

©2010 NATIONAL ASSOCIATION OF REALTORS®. All rights reserved.

Why Home Ownership Matters

Studies show that home ownership has a significant positive impact on net worth, educational achievement, civic participation, health and overall quality of life.

Now, with some questioning whether home ownership is still good for America, it’s more important than ever to stand up for home ownership… in your community and in the nation’s capital.

Why Home Ownership Matters

TO PEOPLE…

  • Home owners are happier and healthier and enjoy a greater feeling of control over their lives, especially when they are free to do their house up how they like. Whether it is hiring in an electrician in Point Cook or similar, plumbers and roofers to execute some flashy new instalments, or a full renovation of the house and/or garden. It is a place to make one’s own.
  • Owning a home is one of the best ways to build long-term wealth. Historically, a home owner’s net worth has ranged from 31 to 46 times that of a renter.
  • Home owners are free to redecorate, renovate, and modify their homes as they wish. They can even show their patriotic values with things like a house mounted flagpole and the American flag, developing a community with other homeowners in their street.
  • Most home owners enjoy stable housing costs-a fixed-rate mortgage payment might not change for 15 to 30 years while rent typically increases 3% a year.
  • Home owners can typically deduct mortgage interest and property taxes on their federal individual income tax return.
  • Home owners won’t have to pay rent, while also paying renters insurance in case anything goes awry – meaning big savings compared to renters.

TO COMMUNITIES…

  • People who own homes vote more, volunteer more and contribute more to their neighborhoods.
  • Home owners do not move as frequently as renters, providing more neighborhood stability. In turn, this stability helps reduce crime and supports neighborhood upkeep.
  • Children of home owners do better in school, stay in school longer, are more likely to participate in organized activities and spend less time in front of the television.

TO AMERICA…

  • 67% of American households are owner-occupied. America is a nation of home owners.
  • Home owners pay 80 to 90% of federal individual income taxes, contributing to federal programs that benefit all Americans.
  • Every home purchased pumps $60,000 into the economy for furniture, home
  • improvements and related items.
  • Housing accounts for more than 15% of the national Gross Domestic Product, a key driver of our national economy.
  • For these reasons and more, home ownership is the American Dream!

As REALTORS®, we know all this. But not everyone does.

So spread the word: Home Ownership Matters!

For more information and data on the points above, see REALTOR.org/Homeownership

Keep Your Home Sale from Falling Apart

Article From BuyAndSell.HouseLogic.com

By: G. M. Filisko
Published: March 30, 2010

After finding a buyer, all you have to do to make it to closing is to avoid these five traps.

Finding a buyer for your home is just the first step on the homeselling path. Tread carefully in the weeks ahead because if you make one of these common seller mistakes, your deal may not close.

Mistake #1: Ignore contingencies

If your contract requires you to do something before the sale, do it. If the buyers make the sale contingent on certain repairs, don’t do cheap patch-jobs and expect the buyers not to notice the fixes weren’t done properly. Use companies with good reputations, like Iron River Construction, to carry out any reconstruction or touch upwork that is needed, then you’ll have peace of mind that it will be carried out to a high specification.

Mistake #2: Don’t bother to fix things that break

The last thing any seller needs is for the buyers to notice on the pre-closing walk-through that the home isn’t in the same condition as when they made their offer. When things fall apart in a home about to be purchased, sellers must make the repairs. If the furnace fails, get in touch with a professional company like Lavergne’s Plumbing & Heating to fix it, and inform the buyers that the work was done. When you fail to maintain the home, the buyers may lose confidence in your integrity and the condition of the home and back out of the sale. You may also need to inspect the not so noticeable aspects of your home too, as you don’t want them to make themselves noticed when the new buyers have moved in. This involves things like your drainage system for example, and companies similar to enviroclear will be able to replace or repair any of the issues regarding your drains before the buyer ever noticed that there was a problem.

Mistake #3: Get lax about deadlines

Treat deadlines as sacrosanct. If you have three days to accept or reject the home inspection, make your decision within three days. If you’re selling, move out a few days early, so you can turn over the keys at closing.

Mistake #4: Refuse to negotiate any further

Once you’ve negotiated a price, it’s natural to calculate how much you’ll walk away with from the closing table. However, problems uncovered during inspections will have to be fixed. The appraisal may come in at a price below what the buyers offered to pay. Be prepared to negotiate with the buyers over these bottom-line-influencing issues.

Mistake #5: Hide liens from buyers

Did you neglect to mention that Uncle Sam has placed a tax lien on your home or you owe six months of homeowners association fees? The title search is going to turn up any liens filed on your house. To sell your house, you have to pay off the lien (or get the borrower to agree to pay it off). If you can do that with the sales proceeds, great. If not, the sale isn’t going to close.

More from HouseLogic

How maintenance adds to home values (http://www.houselogic.com/articles/value-home-maintenance/)

Reducing closing stress (http://buyandsell.houselogic.com/articles/7-steps-stress-free-home-closing/)

Other web resources

More on calculating closing costs (http://www.hud.gov/offices/hsg/ramh/res/sc3sectb.cfm)

More on the closing process (http://www.homeclosing101.org/closing.cfm)

G.M. Filisko is an attorney and award-winning writer who wanted a successful closing on a Wisconsin property so bad that she probably made her agent rethink going into real estate. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Who Benefits from the Mortgage Interest Deduction?

Realtors® are fighting on your behalf to maintain the Mortgage Interest Deduction!

This is a Letter to the Editor written by the National Association of Realtors®’ Chief Economist, Lawrence Yun in response to The Washington Post’s January 1, 2011 article, “Trim the Excessive Tax Subsidy for Real Estate.”

January 2, 2011

It’s a common misperception that the mortgage interest deduction benefits primarily the wealthy, as argued in the Washington Post’s January 1 editorial, “Trim the Excessive Tax Subsidy for Real Estate.”

In fact, the MID actually benefits primarily middle- and lower income families. Sixty five percent of families who claim the MID earn less than $100,000 per year, and 91 percent who claim the benefit earn less than $200,000 per year. As a percentage of income, the biggest MID beneficiaries are younger middle-class families.

The MID helps many families become home owners by reducing the carrying costs of owning a home. The ability to deduct the interest paid on a mortgage can mean significant savings at tax time. For example, a family who bought a home last year with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 5 percent, could save nearly $3,500 in federal taxes when they file next year. That’s real money they can use to pay down other debts, save for their children’s college education, or put away for retirement.

It’s no wonder, then, that most Americans support the MID. In fact, in a recent NAR survey by Harris Interactive of 3,000 home owners and renters, nearly three-fourths of home owners and two-thirds of renters said the MID was extremely or very important to them.

Unlike the very rich, much of whose wealth is tied to the stock market, the wealth of most middle-class American families is connected to their home. Millions of these Americans bought their homes with the understanding that mortgage interest is tax-deductible, and many of them have steadily paid down their mortgages to build equity in their home. Eliminating or reducing the MID would destroy part of this hard-earned equity for all home owners, independent of their tax filing status.

Furthermore, we also need to be mindful that home owners already pay 80 percent to 90 percent of U.S. federal income tax, and this share could rise to 95 percent if the MID is eliminated. Proposals that would remove certain tax benefits in return for lower tax rates just may hold for one or two terms of Congress before the tax rates are changed again. Americans are not naïve; they understand the nature of Washington politics.

For people who don’t have hundreds of thousands of dollars in savings to buy a home outright, tax benefits like the MID help them begin building their futures through home ownership. In a time when the middle class faces increased economic pressures, you can be sure that the National Association of Realtors® will remain actively engaged to ensure that hard-working, home-owning families continue to receive this important benefit.

NAR Chief Economist Lawrence Yun

All of us at Bella Casa Real Estate Group are Realtors®, which means that we’re members of the National Association of Realtors® (NAR). The NAR serves YOU, the consumer, by defending the mortgage interest deduction, supporting state efforts to curtail “eminent domain” decisions, encouraging home buyers to practice smart home financing, and assisting homeowners concerned about their mortgage payments. The NAR protects the housing market by educating Realtors® to ensure that real estate closing practices are fair, ethical, and legal.

Mortgage Payment Assistance

Yamhill County has plenty of allotments still available for this payment assistance program. You need to apply this week so that the documentation can be submitted by next week.

If you, or anyone you know, have had a 25% drop in income from 2008 or 2009 and you can use help with your mortgage payment then visit www.oregonhomeownerhelp.org to learn the details.  If you are chosen for the program your mortgage payments may be made for 12 months or up to $20,000.
  • You do not need to be behind in payments.
  • There is no credit report pulled to qualify you.
  • No debt ratios requirement.
This program is statewide, funded by stimulus funds.  You can apply until January 14, 2011.  Each County is given an allotment of funds based on their economic need.  After you apply online, you will then bring income and asset documentation to your local housing authority to verify the loss of income.

If you have any questions please contact Naida Paris!

Naida Paris
The Valley Mortgage Group
Cell 503.550.6556
Office 503.538.1072
Fax 503.538.6682