February 26, 2008 Newsletter
This is the third installment of the Colony Title Newsletter.
To date, the response has been extremely positive. We will continue to deliver the good news in the marketplace. As of the original writing of this newsletter (February 21), and today (February 25) 30 year fixed rates went from between 6.125 and 5.875 to 6.625 as of Monday. For the first time there is a spread where 3/1 and 5/1 ARMs can be obtained in the low 5’s or even high 4’s (with a .75 point). ARMs may work if you anticipate only being there 3 to 5 years. With the structure of today’s refinances, if you are saving more than .5% on your rate, and you anticipate staying in that home for more than one year, you should consider refinancing. Our last newsletter touched on investment properties.
There are lots of opportunities for purchase of quality investment properties. Keep in mind, if you are selling an investment property and do not want to pay capital gains, one of the few remaining tax “loopholes” is the 1031 tax deferred exchange, also known as the Starker exchange, whereby if you identify a replacement property within 45 days and purchase same within 180 days (subject to certain criteria), you can defer ALL capital gains on the property.
The other opportunity for investment is buying with a family member. Many young people today don’t have the savings for the down payment, yet have sufficient income to qualify for a mortgage. Lenders have been very wary lately of minimum down payment deals. But, if your child or family member can qualify but needs the down payment, several options are open to you. One is to loan them the downpayment. Two, is gift it to the individuals. As of the end of 2007 you were allowed to gift $12,000.00 without tax consequences to either party ( 2008 limit has not yet been established). Third you can enter into a shared equity agreement wherein you jointly purchase the property and you the investor rent them the portion that you own, giving you some tax benefits and the ability to realize the profit .
If you have specific real estate related questions, just email to my address and we will get you the answers you need. If you are putting your house on the market call us for realtor referrals and advice with regards to FSBO’s.