Do you Know???
Today's Article is about the mortgage / real estate meltdown.
There are a lot of clients being affected by the changes happening in the mortgage industry;
- The increase in rates on those Adjustable Rate Mortgages (don't we wish they could have stayed at 1% interest forever!)
- Short and Forclosure Sales
- No Cash flow on rental properties and more so Negative Cash Flow
It is an unfortunate time if you've overextended yourself or got caught up in the hype of the idea of "Make Millions in Real Estate," but, for those that are still floating there are some good things coming about from this mess:
1. The government has been promoting a new FHASecure program.
The purpose of this program is to assist borrowers with ARM mortgages that have become delinquent due to the reset of the interest rate. FHA Secure loans have the following features:
ü No prepayment penalties
ü No low initial teaser rates
ü Full documentation of ability to repay the mortgage
ü Require mortgage insurance paid by the borrower
ü Require taxes and insurance to be paid via an impound account
The website (set up by the HUD) has all the information you'll ever need on the FHA Secure program: http://www.fha.gov/about/fhascusqa.cfm
2.
Due to the high forclosure rates and short sales rate, if you are in
the mode to BUY property right now is a great time! There are a lot of
open properties on the market and a lot of people trying to get out and
hold on to their shirt tales.
3. For those that are staying in the market, depreciation is a
wonderous write off that can be taken on any property. A brief example of it's benefits:
- It's a non-cash expense - meaning you are not shelling out more than you have to
-
For every 100k in purchase price on a rental property you can get
approximately $7,200 in depreciation! That is a fabulous deal if you
have other income to write that off against!
PLEASE BE ON AWARE!!! This market is NOT for the weak of stomach or the uneducated.
SWC HIGHLY recommends
that you find a real estate agent and a mortgage broker that are
familiar with this market and it's perks and windfalls BEFORE you make
any decision to get into it!
If you have any questions about the
above information, need a referral to a great mortgage or real estate
person, or need some advice, please contact your CPA and ask some questions!
