To Prepay Or Not to Prepay, that is the Question

 Tax Benefits of Homeownership, The Affordable Home  Comments Off on To Prepay Or Not to Prepay, that is the Question
May 232015
 

calculator photo2I was included in a FaceBook thread where a homeowner considered whether to refinance his 30year Fixed rate mortgage into a 15 year fixed rate mortgage, or to find an online calculator that would assist him in creating a prepayment plan.

Here’s his query:
Can anyone recommend a decent mortgage calculator site/app/spreadsheet?
We’re currently on a 30 year/4% fixed. Trying to compare two options:
1) Switch to a 15 year/3.65%.
2) Start paying an additional quarterly payment against principal with the existing mortgage.
I know this isn’t exactly advanced math, but I also feel like someone must have put something together that shows the impact of added payments against principal. Mortgage calculators are great at helping figure out the cost of new mortgages (i.e., option #1 above), but not so good at helping jigger existing mortgages (option #2).
Any help?

Here’s my response:Light-Bulb-Clip-Art
First check with your tax professional before you consider a day in the near future when you “burn the mortgage!” While it may feel great to someday own your home free of any debt, you might lose out on a valuable (in real dollars) tax deduction. Second, rather than refinance and incur closing costs again, prepaying a 30 year mortgage is easy-peasy! Simply add 4% of your current Principal and Interest monthly for year one of your prepayment plan. In subsequent years, add ANOTHER 4% of each years’ NEW monthly payment. Treat your mortgage like an employee with “4% cost of living raises” each year. If you follow this course you can prepay a 30 year loan in 13 years. Hope that helps!

 

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

Apr 132015
 

tax refundIt’s tax time and many homeowners receive large tax refund checks. Here’s some advice I’ve put together for you on different ways to use that money.

This article is part of my series “The Affordable Home.”  In the series I seek to focus on the intangible benefits of homeownership by making them, well, tangible.  I believe the affordable home is the sensible and proper approach to homeownership; so many new homebuyers today specifically focus on the affordability of the mortgage loan instead of the “HGTV” aspects of a house. I find this attitude refreshing for two reasons.

First, it’s an “old” attitude: in decades past the idea of buying a home revolved around diligent budgeting to save up the down payment and the concept the monthly payment should be affordable.

1950-oct-28-crop

The features of the house—granite countertops, high end appliances, paved driveways—were minor considerations and certainly did not make for sound decision-making when buying a home.  Those features could be added later, if one so desired, and those “old-timers” (I was once one of them) knew that.

Second, during the past decade, during the “Boom” the focus was on something I considered completely nuts: buy a home, an amazing home packed with big rooms, big features, and big monthly payments, at any cost.  Affordability be damned.  I struggled as a mortgage professional during those years to try to talk sense into people.

Since it’s tax-time, the advertising from folks who want your refund checks are everywhere.  There was the TV advertisement: “Just in time for your tax refund we’ve received a new stock of bamboo flooring!”

bamboo

It occurred to me that this is the time of year when many people, especially homeowners, get large tax refunds and the sharks start circling looking to take a bite out of that refund check.  To this I say, “STOP!  Take a minute to reflect on what you should do with your money!  You worked hard for it, and you bought an affordable home so you could get that refund, don’t throw it away without giving it due consideration.”

Here are my suggestions to spend your tax refund wisely:

1. Consider investing the money for your future.  My pal Nick, the owner of the Westside Steakhouse  was at one time a stock broker.  Here’s his take on wisely using your money:: “Never spend more than you make and save some money every week.”  Awesome advice and I believe that fits very handily into my concept of the affordable home.   Especially in this day and age of doubt over pensions, we consumers must be smarter and more responsible with our planning for retirement.  Follow Nick’s advice and invest your tax refund to begin or supplement your savings plan.

The New York Times “Your Money” section featured a wonderful piece recently about a new vehicle that makes it easier for us to create a sound investment strategy without all the costly bells and whistles.  Here’s the link to that article:  Financial Advice for People Who Aren’t Rich

I have long advised my clients to consider retaining a Financial Advisor to provide counsel on all things finance-related: investing, budgeting and insurance.  You can find a local Financial Advisor in the your area here:  National Association of Personal Financial Advisors

And here is sound advice from a CPA about investing not just your refund, but investing throughout the year and the tax benefits/ramifications: Fund Your Retirement Or Your Child’s College?

2. Create an Emergency Reserve.  Take some or all of that refund check and put together your emergency reserves.  Park the money somewhere it’s inaccessible by debit card!  You’ll need ease of access, but putting it within reach of a debit card is a surefire path to disaster.  pile of cash

3. Pay down debt.  This tends to be the long held standard amongst many homeowners I’ve known over the years.  I believe this is an admirable activity, but I believe taking your tax refund to pay down debt should be part of a comprehensive plan for debt management.   To take a page out of my friend Nick’s finance playbook: don’t spend more than you earn.  I advocate tending to your credit use respectfully and as part of your total family budget every month.  This way you won’t necessarily have to take your hard won refund check and pay down a credit card balance.  Of course, if, during the year you experienced an emergency and needed to access your credit to assist with that emergency, then paying off that debt at tax time is a sound strategy since it’s a one time event.

I’ve found that Consumer Action is the best site on the ‘net for sound advice on all things credit related, including how to obtain lower credit card rates and fees and great counselling on preparing and maintaining a family budget.  Find them here: Consumer Action

 Another Smart Strategy for The Affordable Home: Take home more money in your paycheck; get a smaller refund at tax time.

I hope my suggestions are useful to you at this exciting time of year.  Of course, I also advocate that you really shouldn’t get such a large refund at tax time if you’re a homeowner.  I’ve long believed that you should incorporate into your homeowners’ “network of advisors” a great tax professional or CPA.  By doing so, you can lean on your tax professional/CPA to advise you on the correct withholding throughout the year to increase your take-home pay, reduce your end of the year tax refund (and prevent having to pay!), and enjoy the benefits of homeownership every month instead of once a year. Here’s the IRS page on how to calculate correct withholding, but I recommend you do this only under the guidance of your tax professional/CPA:  IRS Withholding Calculator

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Ask Trevor A Question
Sep 072014
 

tax refundIt’s tax time and many homeowners receive large tax refund checks. Here’s some advice I’ve put together for you on different ways to use that money.

This article was the first in my series “The Affordable Home.”  In the series I seek to focus on the intangible benefits of homeownership by making them, well, tangible.  I believe the affordable home is the sensible and proper approach to homeownership; so many new homebuyers today specifically focus on the affordability of the mortgage loan instead of the “HGTV” aspects of a house. I find this attitude refreshing for two reasons.

First, it’s an “old” attitude: in decades past the idea of buying a home revolved around diligent budgeting to save up the down payment and the concept the monthly payment should be affordable.

1950-oct-28-crop

The features of the house—granite countertops, high end appliances, paved driveways—were minor considerations and certainly did not make for sound decision-making when buying a home.  Those features could be added later, if one so desired, and those “old-timers” (I was once one of them) knew that.

 

Second, during the past decade, during the “Boom” the focus was on something I considered completely nuts: buy a home, an amazing home packed with big rooms, big features, and big monthly payments, at any cost.  Affordability be damned.  I struggled as a mortgage professional during those years to try to talk sense into people.

Since it’s tax-time, the advertising from folks who want your refund checks are everywhere.  There was the TV advertisement: “Just in time for your tax refund we’ve received a new stock of bamboo flooring!”

bamboo

It occurred to me that this is the time of year when many people, especially homeowners, get large tax refunds and the sharks start circling looking to take a bite out of that refund check.  To this I say, “STOP!  Take a minute to reflect on what you should do with your money!  You worked hard for it, and you bought an affordable home so you could get that refund, don’t throw it away without giving it due consideration.”

Here are my suggestions to spend your tax refund wisely:

1. Consider investing the money for your future.  My pal Nick, the owner of the Westside Steakhouse  was at one time a stock broker.  Here’s his take on wisely using your money:: “Never spend more than you make and save some money every week.”  Awesome advice and I believe that fits very handily into my concept of the affordable home.   Especially in this day and age of doubt over pensions, we consumers must be smarter and more responsible with our planning for retirement.  Follow Nick’s advice and invest your tax refund to begin or supplement your savings plan.

The New York Times “Your Money” section featured a wonderful piece recently about a new vehicle that makes it easier for us to create a sound investment strategy without all the costly bells and whistles.  Here’s the link to that article:  Financial Advice for People Who Aren’t Rich

I have long advised my clients to consider retaining a Financial Advisor to provide counsel on all things finance-related: investing, budgeting and insurance.  You can find a local Financial Advisor in the your area here:  National Association of Personal Financial Advisors

And here is sound advice from a CPA about investing not just your refund, but investing throughout the year and the tax benefits/ramifications: Fund Your Retirement Or Your Child’s College?

2. Create an Emergency Reserve.  Take some or all of that refund check and put together your emergency reserves.  Park the money somewhere it’s inaccessible by debit card!  You’ll need ease of access, but putting it within reach of a debit card is a surefire path to disaster.  pile of cash

3. Pay down debt.  This tends to be the long held standard amongst many homeowners I’ve known over the years.  I believe this is an admirable activity, but I believe taking your tax refund to pay down debt should be part of a comprehensive plan for debt management.   To take a page out of my friend Nick’s finance playbook: don’t spend more than you earn.  I advocate tending to your credit use respectfully and as part of your total family budget every month.  This way you won’t necessarily have to take your hard won refund check and pay down a credit card balance.  Of course, if, during the year you experienced an emergency and needed to access your credit to assist with that emergency, then paying off that debt at tax time is a sound strategy since it’s a one time event.

I’ve found that Consumer Action is the best site on the ‘net for sound advice on all things credit related, including how to obtain lower credit card rates and fees and great counselling on preparing and maintaining a family budget.  Find them here: Consumer Action

 Another Smart Strategy for The Affordable Home: Take home more money in your paycheck; get a smaller refund at tax time.

I hope my suggestions are useful to you at this exciting time of year.  Of course, I also advocate that you really shouldn’t get such a large refund at tax time if you’re a homeowner.  I’ve long believed that you should incorporate into your homeowners’ “network of advisors” a great tax professional or CPA.  By doing so, you can lean on your tax professional/CPA to advise you on the correct withholding throughout the year to increase your take-home pay, reduce your end of the year tax refund (and prevent having to pay!), and enjoy the benefits of homeownership every month instead of once a year. Here’s the IRS page on how to calculate correct withholding, but I recommend you do this only under the guidance of your tax professional/CPA:  IRS Withholding Calculator

 

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Ask Trevor A Question
Aug 282013
 

Often First Time Buyers rely on family to provide extra money for the purchase of a home in the form of a Gift.

In general, before using Gift money from family, I recommend you have a discussion with the Mortgage Loan Originator (MLO) who prequalified you. Depending on the Loan Program she used to qualify you, there may be restrictions on using Gift funds or there may be other requirements.

Gift funds, like all monies used in the purchase of a home, must be “sourced.” That is, your Lender will need to see the source of the Gift money from your family member. In most instances the Lender will also need to track the transfer of those funds from your family member into your bank account.

Again I caution: Speak with your MLO before using Gift monies for the purchase of a home.

A question that often comes up when Gift monies are involved is:

“What are the tax consequences of using

Gift money when buying a home?”

I’m happy to refer you to the website for my good friends at Burns & Rodriguez for professional guidance in this area from tax professionals:

http://www.brodtax.com/newsletter.php#6

 
Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Ask Trevor A Question

Speak to your Tax Professional NOW

 First Time Homebuyers, Tax Benefits of Homeownership  Comments Off on Speak to your Tax Professional NOW
Sep 202011
 

I always recommend to my clients that they undertake two important tasks when it comes to income taxes and homeownership.

 

First:

Find an experienced and competent

tax professional and create a long-term relationship.

 

You’ll thank me for this advice years from now.  There’s nothing better than knowing you can rely on the advice of someone who “has your back” with all things tax-related.  You can find local tax providers through the IRS website, www.irs.gov  using this link: HERE

 

Second:

Once you’ve created this superb new professional relationship

you should then set out to speak to your

tax professional THREE times annually.

 

One conversation obviously takes place during tax time.  Sitting down with your tax professional shouldn’t only be about getting your income tax returns done.  You should also be discussing your financial plans for your future and your current financial standing.  A great tax pro can use that conversation to guide you both during the tax filing process and also throughout the year when you speak to your tax pro TWICE MORE.

 

 

The next TWO times you speak with your tax professional should be in June (around mid-way through the year) and again in September-October.  These chats don’t need to be lengthy—fifteen to twenty minutes probably covers your current financial status.  You’ll want to review your Year-To-Date income and income tax withholdings on your paystubs, especially if you have modified your withholding numbers to maximize your take home pay.  More about that HERE and HERE.

 

Speaking to your tax professional twice more after filing your income taxes helps you manage your money more efficiently, IMHO.  You’ll avoid any nasty surprises with the IRS (you never want to find yourself owing money at tax time!)  and you’ll find yourself with more cash in hand throughout the year.

 

That all having been said: Speak to your Tax Professional NOW.

 

I welcome Comments for all my blog entries. I will be happy to review and approve all legitimate comments provided by readers of tcurranmortgage.com. I do not permit unfettered access to comments for obvious reasons: mortgage spammers and their ilk. If you wish to Comment on any entry, please do so and I will quickly review and approve.

Thanks for reading tcurranmortgage.com. Hope that helps!

 Posted by at 10:06 am

Tax Time: A Journey to getting your MONEY.

 Tax Benefits of Homeownership  Comments Off on Tax Time: A Journey to getting your MONEY.
Jan 082009
 

I sat with a family last night preparing to buy a home. I sifted through the documents needed for the loan approval process, paystubs, bank statements, 401k account statements, credit report. Finally I came to the clients’ tax returns.

Mom and Dad have their annual returns prepared by the same tax professional they have used for more than twenty years. I reviewed the documents and thought the returns were adequately prepared.

Then I reached for the Son’s tax returns. HoooBoy. There as I reached across their dining room table was that infamous “green and white” folder. I won’t mention the name of the national service (well-advertised on television and elsewhere), only will I state that when I see that infamous folder, a shiver runs down my spine (the kind you get when you read a really scary Stephen King story late at night).

What followed was some stern talking to by me to the Son. “First thing you’re going to do when you buy your home is meet with your Mom and Dad’s accountant. You will no longer visit the folks who gave you that green and white folder.”

I went on to advise him to bring his previous three years’ returns to Mom and Dad’s accountant when he goes there in a few weeks to have his 2008 returns prepared. The IRS allows us taxpayers to revise our returns up to three years back if we feel we missed some deductions and may be entitled to a larger refund than was originally issued.

Having seen many returns stapled into those green and white folders over the years, I knew there was a REALLY good chance my client could amend one or several of his previous three years’ returns and get some more money back from Uncle Sam.

I also told him, since they are soon to buy a home, that he needs to consult with the accountant in the area of getting a lower refund after he buys a home. Instead of waiting for a refund, he should lower the tax deductions from his weekly paycheck thus enabling him to bring home more money. Uncle Sam still gets his fair share (the IRS allows us to change our withholding as many times throughout the year as we feel is necessary as long as we are meeting our tax liability), and my clients—soon to be Homeowners—get more liquid cash every month to help make the experience of buying their first home a happier one.

More money in your pocket every month when you own a home seems to be a pretty good path to happiness to me, no?

The advice I gave these clients is important as you learn to watch out for your money. Use tax time to get in touch with your money; you can get more of it in your pocket by working with a competent tax professional and by knowing the fundamentals of IRS regulations.

Jan 072009
 

In the next few weeks, employers all across the country will begin sending out 2007 W-2 forms so that we taxpayers can get our papers together and submit our annual tax returns.

As you await the arrival of your W-2, might I suggest spending a Saturday afternoon preparing for your meeting with your tax professional?

If you are a homeowner, you’ll need also to receive from your mortgage Lender your annual 1098 form indicating how much interest and taxes you paid throughout the year. For most of us, the mortgage interest and property taxes on our primary residences are seriously important tax deductible items. Often, these deductions can bring about a large refund for a homeowning family.

Homeowners should also bring to their tax pro any and all documentation to support any other potential tax deductions they may have the right to claim: charitable contributions, Union dues, unreimbursed employee expenses, proof of medical bills in excess of 2% of your adjusted gross income, and more. Bring as many items as you may feel are deductible; let your tax pro be the judge of what is feasible as a deduction, and what’s not. As a homeowner, you’re most likely filing a Schedule A for itemized deductions and that’s where the mortgage interest, property taxes and all those other deductions will be collected to provide a substantial reduction in your adjusted gross income—usually much larger than the standard deductions provided for by Uncle Sam.

I’d like to suggest this year that you Homeowners also consult with your tax professional about important tax-saving strategies for 2009. In the current state of the economy, we could all use a boost in our take-home pay or at least solid advice on how to save on your 2009 income taxes.

For instance, you can change your withholding at work and reduce the tax dollars deducted from your weekly paycheck, thus taking home more of your hard-earned dollars. Next year, you’ll get a lower refund, but, so what? That’s your money the government is returning to you—a loan you made, interest-free to Uncle Sam—not a windfall from the Treasury.

Your tax pro might also suggest refinancing your mortgage at what are right now the lowest interest rates since a man named Eisenhower was in the White House. Your tax professional will likely tell you to pay points not only to obtain the lowest possible rate, but also to obtain a further tax deduction over the next two years on your annual returns.

Homeowners, when you meet with your tax professional this year, go for the maximum deductions and discuss money-saving, tax-reducing strategies. It’s your money, it’s your home and you worked danged hard for both of them!

For those of you who are renting, I’d recommend similarly probing for the sage wisdom buried in your tax professional’s mind as to ways you can save money on your 2009 taxes. There are certainly things you can do now and throughout the year—contributions to an IRA and the like—that will invest your money for the future and lower your tax liability when you file your 2009 return next year.

I’d bet that for many renters your tax professional may look at your income, look at your lack of deductions and your inability to file a Schedule A for itemized deductions and make a radical suggestion: Buy a Home!

If ever there was a reason to ignore all the bad news about falling home prices, instability in the economy and the payroll of the New York Yankees, buying a home for the purpose of paying less income tax is as good a reason as you can find.

So, renters, get ready for a serious conversation with your tax professional this year. Then, ring me up to get prequalified for a mortgage. I’d be happy to oblige in your quest to pay less income tax next year. And, it would be my pleasure to help you make a dream come true: that of owning your own home!

Feb 282007
 

Gina and those wonderful geeks at LifeHacker featured an article about an online payckeck calculator in one of today’s LH blog entries.

I have long recommended that my clients change their withholding once they purchase a home. The fact is, most homeowners get quite a large tax refund. This check you’re receiving from the U.S. Treasury, no matter the amount, reflects an interest-free loan you made to Uncle Sam! Heck, they don’t even say, “Thanks!” when you get your refund check.

Remember, if you’re getting a refund every year, you need to adjust the withholding. You’re overpaying your taxes with every paycheck.

Especially if you’re a homeowner or file a Schedule C with enough expenses to dramatically reduce your taxable income, you must pay attention to this money you’re tossing out the window.

Not that you shouldn’t get a refund: by all means, a refund is good because you certainly don’t want to OWE the IRS anything. You just don’t want a tremendous amount of money back; I think a $1,000 refund is adequate.

IRS.gov provides more information about withholding issues.

Basically, if you’re getting a refund every year, the IRS says you can reduce your withholding. And I quote, “You should try to have your withholding match your actual tax liability. If too much tax is withheld, you will lose the use of that money until you get your refund.” Also, “You can adjust your withholding by filing a new Form W-4 with your employer at any time.” (See page 2 of the PDF I’ve linked to above: IRS Publication 919)

My favorite quote, “You should check your withholding if there are personal or financial changes in your life…that may affect your tax liability.”

Let’s see, what would be a personal and financial change that would affect your tax liability? Hmm…umm…hmm…Oh RIGHT! Buying a HOME! Mortgage interest and property taxes are tax deductible for most homeowners. I think that constitutes a financial change, no?

I strongly recommend my clients consult with a tax professional before making a withholding change. In the meantime, for the curious at heart, the website referred to in the LifeHacker article is a good way to get a sense for how much money you could keep in your wallet instead of sending it away to the government for a year or more.

 Posted by at 12:03 pm
Feb 192007
 

The benefits of homeownership extend far beyond the feeling of satisfaction you get when you return on a cold February evening to your own hearth and home.

The experience of owning a home changes you in so many ways, not the least of which is financially. Your awareness of all things financial increases dramatically when you own a home. You become more alert with regards to budgetary considerations.

One important financial benefit of homeownership is often overlooked. Only at tax time, it seems, do folks think about these benefits.

Depending on your income level (consult your tax professional), you can likely deduct the interest on your mortgage and property taxes. Your “Adjusted Gross Income,” is lower. You pay less income tax because you own your own home! WOW!

My reminder to you is this: don’t forget about tax time once your return is filed.

Prepare for the rest of the year. Your tax professional can suggest other deductions. You may only need to keep some receipts, track mileage, or increase retirement contributions.

Ask your tax professional how to decrease your tax withholding at work, you’ll take home more money weekly.

I believe homeownership is one of the greatest experiences we can strive for. I have dedicated my 18 year career as a mortgage professional to that end both for my family and for my clients.

I am happy to recommend these excellent accountants to my clients:

Jessica Vaiana CPA
Vaiana & Co.
516-502-6760
39 Maple St
Garden City NY 11530
Se Habla Espanol

Gilbert McLean CPA
718-252-6213

1193 E 39 St
Brooklyn NY 11210

Janie Bradley CPA
718-221-2909

1785 Fulton St
Brooklyn NY 11233

Wilson Charles
Intellifacts Services
646-423-7208
2667 Pitkin Ave
Brooklyn NY 11208

Roseline Borno CPA
RM Borno Management LLC
212-867-5096
60 E 42 St, Suite 1259
New York NY 10165

Elvin Olivera
Castle Hill Business Services Inc
718-829-3655
1208 Castle Hill Ave
Bronx NY 10462
Se Habla Espanol