RATES IMPROVE / IRS TO BEGIN TAXING ON SHORT SALES / FORECLOSURES.

MORTGAGE RATES FALL:  The bond market dropped 66 bps last week – marking a good week for lowering interest rates.  A lot of this is spurred by bad news in the economy / Japan.  It’s unfortunate, but when these things happen – the stock market typically goes down and mortgage rates get better.  The par rate on a 30 year fixed loan dropped to 4.875%.  5/1 ARMs back down to 3.25%.  15 year fixed loans down to 4.25%.

MORTGAGE RATE ADVERTISEMENTS:  I get asked this all the time – why are the rates you quote higher than other advertisements I see.  First, I quote par rates – the lowest rate you can get without paying discount fees to get the rate.  A lot of companies/individuals quote low on the rate so you will call them – they forget to mention that the rate they quote will involve a ton of closing costs.

Keep in mind when getting a quote – I can get you any rate that you want.  Lower rates are more expensive.  I try to quote rates with reasonable closing costs as that is what most customers want. 

IRS ENDING TAX BREAKS FOR SHORT SALES / FORECLOSURES IN 2012:  Congress enacted the Mortgage Forgiveness Debt Relief Act in 2007 that says the IRS will not tax foreclosure/short sale losses on primary residence homes until 2012.  For example if you owed $300,000 on your home and you short sold it for $200,000 – you would be sent a 1099 for the $100,000 that you would have to pay income taxes on.  This was temporarily suspended until 2012. 

The end is coming soon and you will be paying taxes on these losses.  I would never recommend foreclosure/short sale unless it is absolutely necessary, but if you are planning on doing one of these – I would do it now. 

Here is a good CNN article on when the IRS can tax you: http://money.cnn.com/2011/04/15/real_estate/taxes_mortgage_debt/index.htm

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