Mortgage rates, tax deductions help homeowners
We continue to watch mortgage rates as their status remains tentative. The Federal Reserve is scheduled to stop buying Treasury Bonds at the end of May. Most agree that this will surely cause an increase in mortgage rates. As of Friday, interestingly enough, the Idaho Housing and Finance Association website (ihfa.org) showed a thirty year fixed rate of 4.6 percent! New reports across the nation indicated that rates actually increased last week, yet the IHFA rate remains the same.
According to an article this past week in Inman News, "Rates on 30-year fixed-rate mortgages averaged 4.81 percent with an average 0.7 point up for the week ending March 24, up from 4.76 percent last week but down from 4.99 percent a year ago. The 30-year fixed-rate mortgage hit an all-time low, in Freddie Mac records dating to 1971, of 4.17 percent during the week ending Nov. 11.
For 15-year fixed-rate mortgages, rates averaged 4.04 percent with an average 0.7 point, up from 3.97 percent last week but down from 4.34 percent a year ago. Rates on 15-year fixed-rate loans hit a low, in records dating back to 1991, of 3.57 percent in November."
This newspaper, in a story quoting Senator Mike Crapo, indicated a return to double digit mortgage rates in the not too distant future. Once a rate is granted for a conventional, fixed rate loan, the rate never changes. Rates as low as today's will soon be a point of envy for those who missed the opportunity. Many of us painfully remember the 18 percent interest charged on mortgages in the early 1980s.
This time of year, with federal income taxes soon due, homeowners will still benefit from their ability to deduct the interest from their home's mortgage and some other deductions and credits available; these include deductions - with specific limits - for mortgage interest and capital gains on home sales, and credits for certain energy-efficient home improvements. Even with these benefits, home owners pay 80-90 percent of all U.S. federal income taxes.
By way of example, a family who bought a home in 2010 with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file this year. However, as the administration looks for ways to bolster the economy, this deduction is in jeopardy.
National Association of Realtors President Ron Phipps said recently, "Recent proposals to reduce or eliminate the mortgage interest deduction and remove government support of the housing finance market could have disastrous consequences for the economy, not to mention making it harder or nearly impossible for millions of families to own their own homes. We believe America must continue to invest in home ownership, for the future of our families and our nation."
As Realtors, our 1.1 million members will rally to oppose the loss of this deduction, but we can do little to prevent the ultimate rise of home loan interest rates.
Trust an expert....call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.
Kim Cooper is a real estate broker, Realtor and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664 with your questions or commentary.