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December 28, 2020December 27, 2020

The “House Hacking” Trend: When a House Is a Rental Property Too

House hacking is the art of making a primary residence out of an investment property, having rental income cover the homeowner’s costs. Millennial Money calls it a way to “use other people’s money (tenant rent) to pay down the mortgage and live for free.”

Of course, this is not a new idea in real estate investing, but millennial buyers may have rebranded it as a solution to a problem afflicting their generation. Younger home shoppers can quickly hit road blocks buying a home. Reasonably priced homes are in low supply and high demand. This imbalance has continually pressed home prices up, making it hard for first-time buyers to enter the market.

Hopeful buyers may read websites that tout house hacking as the best pathway to financial success. The housing market is on a roll; why not tap into the market for income?

Some hold investment properties only as long as they need to. Other home hackers repeatedly buy, building equity as they go and saving rental income for future down payments. As experienced investors can qualify for larger loans, their buying becomes more lucrative over time.

December 25, 2020December 23, 2020

How Does a Grant Deed Work?

Image of a smartly dressed person reviewing a legal document, specifically a Grant Deed legal document.

The title to a house can be conveyed from one owner to the next by through a transfer of a deed. Different kinds of deeds provide different levels of risk for the person acquiring the title. Among the various types of deeds, one with a moderate level of risk is the grant deed.

December 23, 2020December 21, 2020

Is a Quitclaim Deed Subject to Tax?

Black and white image of a calculator, a paperclip, and a pen sitting on a paper ledger used for accounting. Captioned: Is a Quitclaim Deed Subject to Tax?

Quitclaims are sometimes used to transfer property interests from one family member to another, or between divorcing spouses. Parents might wonder if they should use quitclaims to pass property to children to avoid the probate process. It’s easy enough to do. The homeowner signs the document with a notary, takes it to the county recorder of deeds, and has it recorded. Simple. No wonder adding someone to a deed or relinquishing rights through a quitclaim is often (mistakenly) called a “quick claim” deed. But what does the Internal Revenue Service think?

December 21, 2020December 20, 2020

Real Estate Tax Changes Could Be Coming: Spotlight on Capital Gains and the Stepped-Up Cost Basis

Image of a well appointed bedroom in what is likely a fancy house. Captioned: Real Estate Tax Changes Could Be Coming: Spotlight on Capital Gains and the Stepped-Up Cost Basis

A new administration might bring real estate tax changes. No matter what happens in this area, it’s worthwhile to know what’s going on that might affect your plans to bequeath your real estate. So here we take a look at taxes on capital gains, and then at one form of tax relief that’s now a complete question mark: the stepped-up cost basis of real property for your heirs.

December 18, 2020December 14, 2020

A Guide to Private Mortgage Insurance

Private mortgage insurance, commonly known as PMI, is a specific type of insurance you might have to pay when you take out a mortgage. As a rule, a mortgage lender tacks on the policy, which comes from a private insurance firm, if a buyer doesn’t put at least 20% down on the purchase price. PMI also comes into play in refinancing. A homeowner whose equity is less than 20% of the home’s market value will likely be asked to pay for private mortgage insurance.

The rationale? When a home buyer has less than 20% of a home’s appraisal price to submit as a down payment, the loan-to-value (LTV) ratio is above 80%. Borrowers in this category are considered more likely than others to default on their mortgages.

So, like other kinds of mortgage insurance, PMI protects the bank, not the borrower. It’s meant to reimburse a lending institution if the borrower stops repaying the mortgage.

To Pay or Not to Pay?

December 16, 2020December 13, 2020

Can Hackers Take the Title to Your Home?

Know the Signs. Prevent Identity Fraud.

The title to your home is a precious document. It proves that you own your home and that you may borrow money against your home equity. Can internet hackers take it from you?

Cybercriminals are highly sophisticated. In 2020, they were able to hack into top cybersecurity firms that do business with the U.S. government. Three years earlier, hackers got into a credit reporting company’s database. The Equifax breach exposed personal details of about 143 million people.

Assume that your social security number, birth date and other key identification numbers may have been exposed at some time. And if you’ve had the deed to your home recorded, your signature is in a database, too. But while we all could be vulnerable, knowledge is power. Here’s what to know about how title snatchers work, and how to safeguard your identity and your homeownership.

December 14, 2020December 11, 2020

Social Media Influence and Real Estate

About three quarters of the U.S. population — some 225 million adults — make regular use of social media. Real estate companies and agents, as well as sellers and buyers, are contributing to this energy, and exploring the opportunities it brings. Here, we take a look at some major ways in which the real estate world is interacting through Facebook, Instagram, and other popular social channels.

December 11, 2020December 8, 2020

Home Buyers, Cover Your Assets: Choosing Between Standard and Extended Title Insurance

Image of a nice newer house with a fantastic stone chimney . Captioned: Choosing Between Standard and Extended Title Insurance

People have a chance to buy title insurance when they buy homes. Homeowners might give these policies little thought until they need them. And yet, lenders focus pointedly on the matter. Get a mortgage, and you get a lender’s title insurance policy. Some people assume the lender’s coverage is enough. As we’ll explain here, it’s probably not.

But there’s a further question. If an owner’s title policy is so important to add, what level of coverage should the buyer consider? Is extended coverage better than the standard policy?

We’ll go through these questions in order.

December 9, 2020December 8, 2020

Guide to Buying an Estate Sale Home

Heirlooms and yard tools aren’t the only things you can get at estate sales. Sometimes, the houses themselves are for sale. And sometimes they’re great choices.

The local probate court oversees estate sales when homeowners die intestate (without leaving a will). And where there is a will, the executor may sell the late homeowner’s property to pay off the mortgage.

You might come across an estate sale in the listings. Or you could contact the county, and go through the open probate cases. But perhaps the easiest way to find good estate sales is to hire a local real estate pro. Some specialize in estate sale houses. Your agent will assist with the negotiation of a sales contract, the offer, and the closing — subject to court approval.

December 7, 2020December 6, 2020

Guide to Selling an Inherited Home

The roof is old. The house costs a fortune to heat. Over the years, tree roots have insinuated themselves into the sewer line. The property taxes and insurance costs are high.

You’re handy at certain do-it-yourself home renovation tasks. But this home needs an owner who’s dedicated to home improvement. The time has come to sell your inherited house.

Yes, in hindsight, it would have been better had you refused the deed in the first place. But you’d just lost a loved one, and your emotions were in control.