Obama, Tax Loopholes and Bay Area Mortgage Interest Deduction Attack

A recent New York Times article called Tax Loopholes May Be Next, Obama Says recaps some of the tax points addressed in a recent CBS interview with Scott Poley.

“Can we close some loopholes and deductions that folks who are well connected and have a lot of accountants and lawyers can take advantage of so they end up paying lower rates than a bus driver or a cop?” President Obama said in his recent interview in the White House.

What does this mean to Bay area home owners (mortgage tax deduction wise?)

I think we need to watch out for a full frontal attack over the next 60 days on the mortgage interest deduction. My guess is that the administration will try to significantly lower the amount of allowable mortgage interest that can be deducted from your income taxes.

The current limit is $1,100,000 and I have heard rumors that it may be slashed as low as $500,000. Now that the “Bush era tax cuts” have been resolved, this seems like the next priority to attempt to lower the deficit.

If you are concerned about this issue, this would be a great time to make your voice heard. I expect it will have a sizeable income on higher costs areas especially in the Bay Area.

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Buying a Home; Pitch Letters or a Clean Offer?

home_searchJoann S. Lubin’s article in the Wall Street Journal, Can I Buy Your House, Pretty Please? (January 11, 2013 ), recently caught my eye. The article discuss the latest phenomena of home buyers in competitive markets, such as Silicon Valley, writing heartfelt letters to sellers as an upper hand in the offer battle for buying homes.

The article mentions buyers writing “pitch letters” in volumes, often sending pictures, in an attempt to create a sort of emotional bond with the sellers. I agree that buyers should take the time to connect with sellers if it works in their favor. However, in addition to “I love you letters”, borrowers should come in with the best offer especially as it relates to financing.

Ask yourself: Do you need a financing contingency or not? How about an appraisal contingency?

I have worked with many buyers to “sharpen” their pencil to make sure the loan issue does not get in the way of a great offer. Take the time to plan a strategy with your mortgage banker to consider whether you need a financing contingency and whether you need an appraisal contingency as well.

The cleaner the offer the more likely it will be accepted.

A love letter is one thing, but that may be form over substance. A great clean offer and working with a professional mortgage lender to structure that offer as it relates to contingencies is always the first step.

You can read Lubin’s entire article Wall Street Journal Can I Buy Your House, Pretty Please? online.

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A Hub for Mortgage Banking Information

buying-a-home In the ever increasing confusion of mortgage banking, refinancing, loan restructuring and home buying all we need is simplicity.

That is why I created the The Mortgage Banking Expert blog. Think of this blog as the professional resource you can draw upon whenever a question about the loan process comes to you.

There are many reasons why you may need a mortgage. Whatever the reason, there are literally thousands of options available and I am here to help, educate and guide you through the process.

Thank You,
Joel Spolin – Mortgage Banking Expert

Posted in Ask Joel, Financing & Refinancing, Home Buying in Palo Alto, Home Loans | Leave a comment