Mortgage Matters: What is an Assumable Mortgage?

NORFOLK, VA, Jan 14, 2014—If you're shopping for a mortgage for the first time, you're probably hearing tons of terms you're unfamiliar with. One of these terms, although not as popular as traditional mortgages, is an assumable mortgage. In the following article, Louis Eisenberg, Associate Broker REALTOR ABR SFR of Prudential Towne Realty lets us in on what makes this mortgage different, and if it may be a good fit for you.

“An assumable mortgage is held by the seller and can be taken over by the buyer when a home is sold,” explains Eisenberg. “Such loans are hard to find because most lenders stopped voluntarily writing them many years ago.”

Most new assumable loans today are adjustable rate mortgages. They may be attractive if the interest rate on the existing loan is lower than the rate the buyer could otherwise get on a new mortgage, either because of current market conditions or the buyer’s poor credit history.

“To determine whether to assume an old loan or apply for a new one, pay close attention to the possible assumption fee, usually one point, and other terms of assumption set forth in the existing loan,” says Eisenberg.

One plus: there are generally few closing costs with an assumable loan.

“While an assumable mortgage can speed up the property sale, sellers should be careful about letting a buyer assume their mortgage,” warns Eisenberg. Depending on the state and terms of the mortgage, a seller may remain liable for the loan until it is paid off in full, meaning the lender may go after both the seller and the buyer if the loan is not paid.

For more information on loans and mortgages, please contact Louis Eisenberg, Associate Broker, Realtor, Prudential Towne Realty, 109 E. Main Street, Norfolk, VA 23505, leisenberg@prudentialtownerealty.com, 757-572-7244, or www.LouisEisenberg.com

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Take Necessary Precautions When Buying a Flipped House

NORFOLK, VA, Jan 07, 2014—As home prices are rising, home flippers are returning to the fold, snapping up properties or listing already flipped masterpieces they've been sitting on while prices were low. Home flipping is the process of buying a property, renovating it and selling it for a higher price. Many investors, known as “serial flippers,” buy multiple homes and flip them in quick succession. If you're looking at a home that has recently been flipped, Louis Eisenberg, Associate Broker REALTOR ABR SFR of Prudential Towne Realty offers you a few things to keep in mind.

The history
“Check the tax records to see how long the previous owner owned the property,”
suggests Eisenberg. “If it was a very short time, do your due diligence to determine whether the home was an investment opportunity, or whether the owner may be leaving because something is awry.”

The flipper
If the current owner of your home's information is available, and they seem to be a serial flipper, check out any homes they have flipped in the past. How does their previous work look? Were the buyers of those homes satisfied?

The permits
“If any structural changes were made, be sure they were properly permitted and that all the necessary inspections were done,” notes Eisenberg.

The quality of renovation
Make sure to get a proper inspection on the property, and have a builder pay special attention to the home's structure or any recent changes. “While many home flippers are extremely talented renovators, some cut corners and take shortcuts to flip the home faster,” cautions Eisenberg. Make sure everything is sound so you don't stumble upon a problem post-sale. “If you can't have an inspection until you've made an offer, make sure to include a contingency clause enabling you to walk away if the inspection shows a critical issue,” says Eisenberg.

Plumbing, heating and AC
Since many flippers do not live in the homes while working on them, their systems may not have been used, and issues may go unnoticed or unnamed. Does the AC work? How about the plumbing? Any leaks? Be sure to check thoroughly.

For more information on flipped homes, please contact Louis Eisenberg REALTOR, Prudential Towne Realty, 109 E. Main Street, Norfolk, VA 23510, leisenberg@prudentialtownerealty.com, 757-572-7244, or  www.LouisEisenberg.com

Home Selling 101: Capital Gains on the Sale of Your Home

NORFOLK, VA, Jan 02, 2014—For those who sold their home this year, it's important to understand how selling your home may impact your tax returns, now that tax season is upon us. Below, Louis Eisenberg, Associate Broker REALTOR ABR SFR of Prudential Towne Realty explains how capital gains work for those who have recently sold a home. “If you sell your primary residence, you may be able to exclude up to $250,000 of gain – $500,000 for married couples – from your federal tax return,” says Eisenberg. To claim the exclusion, the IRS says your home must have been owned by you and used as your main home for a period of at least two out of the five years prior to its sale. There are a few catches, Eisenberg explains. “You also must not have excluded gain on another home sold during the two years before the current sale.” However, special rules apply for members of the armed, uniformed and foreign services and their families in calculating the 5-year period. If you do not meet the ownership and use tests, you may use a reduced maximum exclusion amount. But only if you sold your home due to health, a change in place of employment, or unforeseen circumstances. An extra perk? According to Eisenberg, if you can exclude all the gain from the sale of your home, you do not report it on your federal tax return. If you cannot exclude all the gain, or you choose not to, you must use Schedule D of Form 1040, Capital Gains or Losses, to report the total gain and claim the exclusion you qualify for. How about for those with more than one home? “You can exclude the gain only from the sale of your main residence,” says Eisenberg. “You must pay tax on the gain from selling any other home.” If you have two homes and live in both of them, your main home is usually the one you live in most often. For more real estate information, please contact Louis Eisenberg, REALTOR, Associate Broker, Prudential Towne Realty, 109 E. Main Street, Norfolk, VA 23510, leisenberg@prudentialtownerealty.com, 757-572-7244, or www.LouisEisenberg.com