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Your Tax Refund and Stimulus Savings May Help You Achieve Homeownership This Year

Your Tax Refund and Stimulus Savings May Help You Achieve Homeownership This Year | MyKCM

If you’re planning to buy a home this year, saving for a down payment is one of the most important steps in the process. One of the best ways to jumpstart your savings is by starting with the help of your tax refund.

Your Tax Refund and Stimulus Savings May Help You Achieve Homeownership This Year | MyKCM

Using data from the Internal Revenue Service (IRS), it’s estimated that Americans can expect an average refund of $2,925 when filing their taxes this year. The map below shows the average anticipated tax refund by state:Thanks to programs from the Federal Housing Authority, Freddie Mac, and Fannie Mae, many first-time buyers can purchase a home with as little as 3% down. In addition, Veterans Affairs Loans allow many veterans to put 0% down. You may have heard the common myth that you need to put 20% down when you buy a home, but thankfully for most homebuyers, a 20% down payment isn’t actually required. It’s important to work with your real estate professional and your lender to understand all of your options.

How can your tax refund help?

If you’re a first-time buyer, your tax refund may cover more of a down payment than you realize.

Your Tax Refund and Stimulus Savings May Help You Achieve Homeownership This Year | MyKCM

If you take into account the median home sale price by state, the map below shows the percentage of a 3% down payment that’s covered by the average anticipated tax refund:The darker the blue, the closer your tax refund gets you to homeownership when you qualify for one of the low down payment programs. Maybe this is the year to plan ahead and put your tax refund toward the down payment on a home.

Not enough money from your tax return? 

A recent paper from the National Bureau of Economic Research found that, of the households that received a stimulus check last year, “One third report that they primarily saved the stimulus money.” If you had the opportunity to save your Economic Impact Payments, you may consider putting that money toward your down payment or closing costs as well. Your trusted Giver’s Mindset real estate professional can also advise you on the down payment assistance programs available in your area.

Bottom Line

Saving for a down payment can seem like a daunting task, but it doesn’t have to be. This year, your tax refund and your stimulus savings could add up big when it comes to reaching your homeownership goals.

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Are Interest Rates Expected to Rise Over the Next Year?

Are Interest Rates Expected to Rise Over the Next Year? | MyKCM

So far this year, mortgage rates continue to hover around 3%, encouraging many hopeful homebuyers to enter the housing market. However, there’s a good chance rates will increase later this year and going into 2022, ultimately making it more expensive to borrow money for a home loan. Here’s a look at what several experts have to say.

Danielle Hale, Chief

Our long-term view for mortgage rates in 2021 is higher. As the economic outlook strengthens, thanks to progress against coronavirus and vaccines plus a dose of stimulus from the government, this pushes up expectations for economic growth . . . .”

Lawrence Yun, Chief EconomistNational Association of Realtors (NAR):

In 2021, I think rates will be similar or modestly higher . . . mortgage rates will continue to be historically favorable.”

Freddie Mac:

We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.”

Are Interest Rates Expected to Rise Over the Next Year? | MyKCM

Above are the most recent mortgage rate forecasts from four top authorities – Freddie MacFannie Mae, the Mortgage Bankers Association (MBA), and NAR:

Bottom Line

If you’re planning to buy a home, purchasing before mortgage interest rates rise may help you save significantly over the life of your home loan.

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Our goal is to educate on current market and help you make best decision on your unique situation.

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Reverse Mortgages & The Sandwich Generation

By Alain Valles, CRMP, CSA, MS, MBA

I’m not talking about older peoples’ eating habits but the harsh reality of balancing the financial, physical, and emotional support of three generations.

Two Types of Generational Sandwiches

Young-Middle-Old: The typical generational sandwich is the middle-aged person struggling to financially support their children (often grown adults) AND aging parents.  This is also often called the squeeze generation.  Out of devotion and duty, the 45-60 year old middle-aged person is caring for their parent(s) financially or in the role of an unpaid caregiver.  And, at the same time, stressed trying to give support to their children, often in their 20’s and even 30’s.  Studies show that the person in the middle is at a much higher risk of health, emotional, and financial stress.  And, deferring their own financial planning will continue the cycle on to the next generation.

Though counterintuitive, higher income and net worth families are at an even greater financial risk.  One opinion is because they have not had to say over the years “no, we can’t afford that.” And now that a parent has health issues and an adult child is not living within their means, the person in the middle faces the stark financial reality of what my father-in-law would say – “the waiter will eventually bring the bill.”  Something must proactively be done to keep the family in balance.

Young-Old-Middle:  A growing trend is where aging parents are caring both financially and physically for their grandchildren.  In this case, the older person is in the middle caring for the younger generation.  This may be due to a single parent situation, military duty, work demands or being unemployed, health situations, and sadly addiction or legal challenges.  The older person may still be working which only compounds the emotional and financial stress of keeping everything in equilibrium.  My experience is even though the stock market is roaring it is just plain hard for the typical family to keep it all together.  

Older People Don’t Want to be a Financial Burden

Every study shows that older people do not want to be a financial burden on their adult children.  Older people desire to remain financially independent and will sacrifice their quality of life to achieve this goal.  That might include not being able to pay for needed medical care and medicines, maintaining their homes, or incurring increasing credit card balances to cover bills.  Too many times we hear – “Don’t worry about me, I’ll be ok” and know in our hearts that is not true.

The older person is not alone in these thoughts.  Adult children don’t want to admit to their aging parents that finances are tight.  They will postpone funding their retirements plans to provide for their parents’ needs.  Adult children will incur more debt to fund their children’s education and other needs.   This all can become a viscous cycle. 

It’s Hard Out There – Reverse Mortgage Possible Solution

For fortunate homeowners 62 years old or older, a reverse mortgage may be the optimum solution to minimizing or eliminating the financial squeeze of the generational sandwiches.  When used properly, a reverse mortgage gives the options of receiving immediate tax-free cash, a monthly check for life, and/or a line of credit to be used if ever needed.  Each of these options provides that no monthly mortgage payment is required thereby increasing monthly cash flow.  Of course, real estate taxes and insurance must be paid and abide by other loan guidelines. 

The biggest challenge I find is not the mechanics or math of a reverse mortgage but rather facing the emotional challenge to acknowledge and address that the current financial situation is untenable and can very well destroy the caring and love that every family desire. 

And that is way we are here.  Helping Hands Community Partners is an approved 501(c)(3) self-funded nonprofit company with the mission to educate people about senior housing options and, when appropriate, we can arrange reverse mortgages for qualified individuals.

Get accurate information

A great place to get reverse mortgage information is the free “How to Use Your Home to Stay at Home” 36-page book. This is the official reverse mortgage consumer booklet approved by the U.S. Department of Housing & Urban Development and published by the National Council on Aging.  We’re happy to mail it to you. 

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Renovation Success Story

Helping Hands Community Partners renovated a two family house near Providence College, on River Ave. , Providence, RI. Before, the house was vacant for years and was unlivable. Working with local labor, we replaced the roof, added new heating, new electrical, new appliances, among many more essential components to make this house a home. 

The Helping Hands Community Partners real estate mission’s rule of thumb: sell properties 10% below the appraised value to underserved populations. 

A retired veteran, bought the property for $300,000. Today, the two-family home property is worth around $500,000 and the property values in the neighborhood are now rising. 

From our Giver’s Mindset perspective, our mission is accomplished when we have ecstatic homeowners, grateful neighbors who no longer worried about vacant houses, appreciative local contractors who have gained employment, and satisfied towns or cities. This activity helps actualize our vision of working with likeminded people and organizations to strengthen our communities one family at a time.

This is a true win-win for everyone.

To learn more about Helping Hands Community Partners real estate and mortgage services, call today at (888) 681-2299