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What does the new tax reform mean for homeowners?

by Thomas Makinney

It might be hard to remember with all that’s been going on in the past month, but as of Jan. 1, a new tax policy goes into effect. Many of us will not see many changes until we file their taxes in 2019, but the tax laws could not only impact our paycheck (for better or worse) they also have the potential to significantly alter home ownership incentives.

We can’t speak for individual paychecks, but as far as how the tax policies relate to real estate, we can offer a few insights.

  1. Reduced cap on mortgage interest deduction.

What it is: The Tax Cuts and Jobs Act reduced the limit for mortgage interest rate deduction for new loans to $750,000, starting Dec. 15, 2017. Loans that were taken before this date are grandfathered into the previous tax policy, which featured a $1 million cap on the deduction.

What it means: Homeowners who want to refinance their existing mortgage can do so up to $1 million and still be able to deduct the interest, however, the new loan cannot exceed the amount of debt being refinanced. Nationwide, this should only affect 1.3% of all mortgages, however, high-priced housing areas will feel the impact.

  1. New limits for state and local tax deductions.

What it is: While homeowners previously had an unlimited itemized deduction amount, under the new bill, they can only itemize deductions up to $10,000 for the total state and local property taxes and income or sales taxes. The cap is the same for both individual and married filers.

What it means: Households that itemize deductions and pay more than $10,000 in combined state and local taxes will get a smaller tax break, and for others, having a cap on deductions may be the deciding factor for some as to whether or not to itemize.

  1. Capital gains time frame excluded.

What it is: The previous capital gains tax policy, which stated that homeowners must live in the home for two out of the past five years in order to qualify for the exclusion, remains unchanged.

What it means: Sellers who live in their homes between two and five years can list their homes on a more flexible schedule without fear of a potentially hefty tax hit. (An original Senate bill had proposed an increase in the residency requirement to five years out of the past eight, but it did not make the final version.)

  1. Home equity loan deductions qualified.

What it is: Taxpayers will no longer be able to deduct interest paid on home equity loans beginning in 2018. Previously, there was a cap of $100,000 of home equity debt.

What it means: By taking away a low-cost financing option, many worry that owners will end up paying more for their loans, which could impact the home ownership rate make it more difficult for struggling communities to reinvent themselves. This shouldn’t impact the rate of home ownership but may affect home renovations.

  1. Standard deduction doubled.

What it is: The standard deduction for both single taxpayers and married couples filing separately used to be $6,350; that is being doubled under the new law to $12,000. Married couples filing jointly will see their previous deduction of $12,700 increase to $24,000.

What it means: This increase will most likely impact how many homeowners take advantage of their mortgage interest deduction. With a larger standard deduction and a decreased itemized deduction, many filers will no longer find it financially advantageous to itemize deductions. Under the current tax code, itemizing and claiming the mortgage interest deduction is financially worthwhile for about 44% of homeowners. Under the new law, itemizing and claiming the mortgage interest deduction will only be worthwhile for about 14.4% of homes nationwide.

Of course, it’s much to soon to tell how these new tax codes will affect anyone. According to research in the Wall Street Journal, it appears that taxpayers in high-cost areas (such as New York, San Francisco, Honolulu, and even Chicago) will feel much of the impact, and high-tax burdened markets will most likely receive a higher tax bill with the new limit. Low-tax states, however, may benefit from the new code.

Many thanks to RISMedia, realtor.com, and Zillow Research for the insight and analysis that contributed to this post. And many thanks to our CPA who proofed the piece for accuracy. 

If you have questions about the new tax code, and particularly how it will affect the Elmhurst housing market, please reach out to us. We’re here to help! Call (630) 441-5570 or visit www.gmregroup.com

Elmhurst Open House List for July 15-16

by Thomas Makinney

 

We are hosting 206 Kenmore on Sunday from 1:00pm - 3:00pm.  Stop by to say hello!

 

206 Kenmore

 

 

Street # 

CP 

Str Name 

Sfx 

City 

Start Date/Time 

End Time

LP/RP 

444

N

Ridgeland

Ave

Elmhurst

07/16/2017 01:00 PM

3:00 PM

$329,900

337

W

Fremont

Ave

Elmhurst

07/16/2017 12:00 PM

3:00 PM

$334,900

583

N

Kenilworth

Ave

Elmhurst

07/16/2017 12:00 PM

2:00 PM

$344,000

412

E

Huntington

Ln

Elmhurst

07/15/2017 01:00 PM

3:00 PM

$375,000

422

E

Webster

Ave

Elmhurst

07/16/2017 02:00 PM

4:00 PM

$395,000

928

S

Fairfield

Ave

Elmhurst

07/15/2017 12:00 PM

3:00 PM

$416,000

947

S

Fern

Ave

Elmhurst

07/16/2017 01:00 PM

3:00 PM

$449,900

947

S

Fern

Ave

Elmhurst

07/15/2017 12:00 PM

2:00 PM

$449,900

474

W

Third

St

Elmhurst

07/16/2017 01:00 PM

3:00 PM

$518,500

410

E

Schiller

St

Elmhurst

07/16/2017 01:00 PM

3:00 PM

$549,900

475

N

Maple

Ave

Elmhurst

07/16/2017 01:00 PM

3:00 PM

$674,000

822

S

Hillside

Ave

Elmhurst

07/16/2017 01:00 PM

3:00 PM

$774,900

299

W

Claremont

St

Elmhurst

07/16/2017 01:00 PM

3:00 PM

$849,000

206

S

Kenmore

Ave

Elmhurst

07/16/2017 01:00 PM

3:00 PM

$875,000

208

E

Columbia

Ave

Elmhurst

07/16/2017 01:00 PM

3:00 PM

$875,000

444

N

Walnut

St

Elmhurst

07/16/2017 01:00 PM

3:00 PM

$899,000

601

S

Cedar

Ave

Elmhurst

07/16/2017 01:00 PM

3:00 PM

$915,000

106

E

Oneida

Ave

Elmhurst

07/16/2017 01:00 PM

3:00 PM

$950,000

280

S

Prospect

Ave

Elmhurst

07/16/2017 01:00 PM

3:00 PM

$975,000

260

E

Elmhurst

Ave

Elmhurst

07/16/2017 01:00 PM

3:00 PM

$999,000

117

 

Joanne

Way

Elmhurst

07/15/2017 11:00 AM

4:00 PM

$1,129,000

117

 

Joanne

Way

Elmhurst

07/16/2017 11:00 AM

4:00 PM

$1,129,000

148

 

Joanne

Way

Elmhurst

07/15/2017 11:00 AM

4:00 PM

$1,139,000

148

 

Joanne

Way

Elmhurst

07/16/2017 11:00 AM

4:00 PM

$1,139,000

144

 

Joanne

Way

Elmhurst

07/15/2017 11:00 AM

4:00 PM

$1,189,000

144

 

Joanne

Way

Elmhurst

07/16/2017 11:00 AM

4:00 PM

$1,189,000

325

S

Prospect

Ave

Elmhurst

07/16/2017 01:00 PM

4:00 PM

$1,199,000

236

E

South

St

Elmhurst

07/16/2017 01:00 PM

3:00 PM

$1,289,000

160

 

Joanne

Way

Elmhurst

07/16/2017 11:00 AM

4:00 PM

$1,389,000

160

 

Joanne

Way

Elmhurst

07/15/2017 11:00 AM

4:00 PM

$1,389,000

Millennials sticking with realtors when buying a home

by Thomas Makinney

Millennials are quickly heading into the real estate scene, with an impressive 56% planning to purchase a home in the next two years. (For more on this, see our previous post.)

But contrary to their heavy online presence, they remain decidedly traditional when it comes to buying a home. A recent survey found that 75% of millennials would rather work with a local real estate agent than use an online one, and 71% would choose a local mortgage lender rather than going through a website.

This shouldn’t be surprising, despite the proliferation of online services. As any homeowner knows, buying your first home can be overwhelming and daunting. And no website can provide the experience and expertise (and yes, peace of mind) that a real person can.

We like to joke that our job is half real estate agent and half therapist, but it’s true that buying and selling a home is an intensely personal and often emotional experience. And we don’t see that ever changing.

Of course, the internet plays an important part in anyone’s real estate transaction these days. It’s an invaluable resource for researching neighborhoods and a town’s amenities and schools.  However, when it comes to actually making a decision or working out financing, a personal touch is irreplaceable.

The best way to find a realtor is through referrals, and we have loads of happy clients. If you want to find out more about the full range of services we provide (including hand-holding), call us at (630) 441-5570 or visit our website, www.gmregroup.com

2015 Real Estate Tax Assessments: Were you surprised?

by Thomas Makinney

York Township recently completed its 2015 real estate tax assessment and homeowners should have already received the results through mail. Many residents will see a significant increase in their property taxes, which although bad news, means that the market is getting stronger.
 
Every year the assessor’s office estimates the market value of more than 46,000 parcels of property with York Township. Each property is then assessed at one-third of market value. Prices are based on sales that have occurred in the previous three years, meaning that the assessments will always lag behind the marketplace. When property values and sales are decreasing, it takes a few years for those changes to be reflected in assessments. Similarly, when values and sales are rising (as we’ve been seeing for the past few years,) the positive growth takes a few years to catch up to assessments, which is why the increase often takes homeowners by surprise.
 
The good news is that the economy appears to be stabilizing and real estate values are continuing to rise after the market downturn.
 
If you wish to appeal your assessments, you have until November 30, 2015 to do so. For more information, visitwww.yorkassessor.com/York and www.dupageco.org/SOA/1486
 
Thinking of contesting your assessed value? We can provide comparables to help you review the market. We’re here for all your real estate questions about buying and selling. Call us at (630) 441-5570 or visit us at www.gmregroup.com.

Real Estate in the Real World: Appraisals Matter

by Thomas Makinney

If you’re a first time home buyer or seller, you may have questions about some of the steps along the way.  We’re here to help, and this week in our Real Estate in the Real World series we’d like to shed light on the appraisal process.

signing.jpg

When a buyer’s offer is accepted and the application for their loan is pending, one of the approval factors is the appraisal of the home.  As brokers on the listing side, we are always present for the appraisal.  We will note the amenities and features that distinguish the home, and with the appraiser’s permission we will review and discuss the comparable properties in the area both sold and under contract.  
appraisal-gb.jpg

Without the justification of the purchase price, the loan will not be approved, and the transaction could end there.

 At the Gracik Makinney Group, we work actively and diligently to ensure that every part of the process is as smooth and successful as possible.

When buying or selling a home, it is of highest importance to enlist the help of a qualified professional who will do what it takes to complete the best possible transaction.  If you or someone you know are interested in buying or selling, The Gracik Makinney Group is happy to be a valuable resource in Elmhurst real estate.  Give us a call at 630-441-5570 or visit us on the web at www.gmregroup.com

The State of Elmhurst's Mortgage Interest Rates

by Thomas Makinney

Mortgage interest rates have been a hot topic for months now, and it’s no different here in Elmhurst. The long-standing trend of record low rates may be changing, however, and that’s important news for anyone considering purchasing a home this summer.

According to Jack Jones, Mortgage Loan Officer at Fairway Independent Mortgage Corporation (NMLS ID #543267), the days of getting a rock bottom interest rate are coming to a close. He notes their volatility over the past six months – more so than at any time in the past year – and their increasing tendency to become even more volatile as each day passes. Rates are now from 0.5 to 1.00% higher than they were just one month ago.

Jones admits that the forces behind these fluctuations are complicated, but he notes that a large part of it can be attributed to what Federal Reserve Chairman Ben Bernanke has to say. Last year Bernanke announced that the Fed would stop its Quantitative Easing program, the government’s $65 billion-per-month program to artificially suppress mortgage rates by purchasing mortgage-backed securities (MBSs), when either the rate of inflation exceeded 2.5% or the unemployment rate dropped below 6.5%. This past January, Mr. Bernanke announced that the Fed would stop purchasing MBSs by January 2014. Later, he expanded that idea to include a tapering off process so as not to cause an instant mortgage interest rate spike, but declined to state when that tapering off would begin. Then, in a June 19th statement, Mr. Bernanke mentioned that this tapering off process would be addressed in the next few Fed meetings, the first of which takes place within a month.

What this means for prospective buyers is that now is the time to make the move into the housing market before interest rates begin their inevitable upward climb. The inventory of homes for sale is increasing, and with The Gracik Makinney Group’s local knowledge and professional expertise, we can help you find the home, and the mortgage, that you’ve always wanted. Give us a call at 630-567-5902 or stop by the office at 190 North York Road in Elmhurst.

Elmhurst Real Estate and the Fiscal Cliff

by Thomas Makinney

We had a lot of news coverage in the weeks leading up to the New Year about the fiscal cliff and other tough financial issues that will need to be addressed in the coming months. Congress was able to draft last minute legislation to avoid the fiscal cliff, but what does that mean for homeowners here in Elmhurst?

Shortly after the bill’s passage, the National Association of Realtors released a brief on the issue detailing some of the ways homeowners and real estate investors may be affected. At a fundamental level, the Mortgage Interest Deduction remains, and the Mortgage Cancellation Relief will be extended for one more year until January 1, 2014. The Deduction for Mortgage Insurance Premiums for filers making less than $110,000 will be extended through 2013, and is also made retroactive to cover 2012.

The 10% Energy Efficiency Tax Credit (up to $500) for homeowners for improvements made to increase the energy efficiency of existing homes is extended through the remainder of 2013 and is also made retroactive to cover 2012, too. The exclusion from the sale of a principle residence, $250,000 for singles and $500,000 for couples, remains in place.

Of interest to commercial real estate investors, the 15-year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012. The capital gains rate remains at 15% for those at the top rate of $400,000 individual and $450,000 joint, and for those above that level, the rate rises to 20%. However, the $250K/$500K exclusion for a principle residence still applies.

The estate tax was also addressed in the bill. The first $5 million dollars in individual estates and $10 million for family estates are now exempt from the estate tax. Above that level, the rate will be 40%, which is a 5% increase. The Pease limitations on itemized deductions for high-income filers are eliminated for 99% of American taxpayers, but remain in place for individuals earning more than $250,000 and couples earning more than $300,000. For more specific information on this or any of the decisions affecting real estate, you can read the full NAR brief here.

Here at The Gracik Makinney Group, we’re dedicated to helping you understand the entire process of buying, selling, and investing in real estate, and helping you make the best decision for your individual needs. As part of our own plans for the New Year, the Gracik Makinney Real Estate Group is pleased to announce our new affiliation with Coldwell Banker. Contact us today at our new address - 190 N. York Road in Elmhurst, or at (630) 567-5902.

Elmhurst Illinois Open Houses for Sunday, November 11, 2012

by Thomas Makinney

Address:264 N Illinois St

City: Elmhurst

Price:$889,000

Scheduled for: 11/11/2012 from 02:00 PM to 04:00 PM

 

Address:402 W Fremont

City: Elmhurst

Price:$699,900

Scheduled for: 11/11/2012 from 02:00 PM to 04:00 PM

 

Address:634 S Hillcrest Ave

City: Elmhurst

Price:$499,000

Scheduled for: 11/11/2012 from 02:00 PM to 04:00 PM

 

Address:328 W Hillside Ave

City: Elmhurst

Price:$459,000

Scheduled for: 11/11/2012 from 02:00 PM to 04:00 PM

 

Address:15W629 Grand Ave

City: Elmhurst

Price:$149,900

Scheduled for: 11/11/2012 from 01:00 AM to 03:00 PM

 

Address:496 N Howard Ave

City: Elmhurst

Price:$259,900

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

Address:311 N Berteau Ave

City: Elmhurst

Price:$269,000

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

Address:322 N Oaklawn Ave

City: Elmhurst

Price:$350,000

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

Address:280 E St. Charles Rd

City: Elmhurst

Price:$352,500

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

 

Address:361 E South St

City: Elmhurst

Price:$419,000

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

Address:318 N Highview Ave

City: Elmhurst

Price:$469,900

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

Address:275 N Ridgeland Ave

City: Elmhurst

Price:$479,900

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

Address:355 W First Ave

City: Elmhurst

Price:$565,000

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

Address:251 N Highview Ave

City: Elmhurst

Price:$575,000

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

Address:353 W First Ave

City: Elmhurst

Price:$575,000

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

Address:479 S Cottage Hill Ave

City: Elmhurst

Price:$575,000

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

Address:359 W First Ave

City: Elmhurst

Price:$599,900

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

Address:357 W First Ave

City: Elmhurst

Price:$599,900

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

Address:429 S Argyle Ave

City: Elmhurst

Price:$629,000

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

Address:521 N Howard Ave

City: Elmhurst

Price:$650,000

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

Address:530 N Evergreen Ave

City: Elmhurst

Price:$659,900

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

 

Address:452 S Kenilworth Ave

City: Elmhurst

Price:$675,000

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

Address:749 S Saylor Ave

City: Elmhurst

Price:$699,000

Scheduled for: 11/11/2012 from 01:00 PM to 03:00 PM

 

 

Address:466 N Oak Ave

City: Elmhurst

Price:$879,900

Scheduled for: 11/11/2012 from 01:00 PM to 04:00 PM

 

Reduce the Mortgage on Your Elmhurst Home

by Thomas Makinney

Of all the regular expenses for your Elmhurst, IL home, your mortgage is probably the biggest.  But did you know there are ways to reduce your mortgage payment other than refinancing?  From the MSN Money website, here are some alternative options for paying less each month.

Make One Extra Payment Yearly – This is one of the easiest ways to save, as the extra payment is applied totally to principal, not interest.  You’ll lower your balance and reduce your total interest payments.

Bi-Weekly Payments – Every other week, put half of the mortgage payment on your Elmhurst property in an account and each month pay your mortgage from that account. At the end of the year, you’ll have made 26 half payments which equals 13 full payments.  That’s one extra payment to put on your principal.  You can actually hire a company to help you manage this, but watch out for fees.

Lose the PMI – This is Private Mortgage Insurance, and it’s required if the down payment was 20% or less on your Elmhurst real estate.  But once your mortgage balance falls below 80% of the appraised value of your home, you can petition your lender to drop this fee.  There will likely be a charge to reappraise your home, but that’s nothing compared to what you’ll save each month.

Check Your Home’s Assessed Value – If the value of your Elmhurst home has dropped but this was not reflected in your tax assessment, you can petition to change your current assessment.  The lower taxes could possibly save you hundreds of dollars annually.

Recast Your Mortgage – If you come into big money and can apply a large payment totally to your mortgage principal, some lenders will then recast, or reset, your monthly payment. This recalculates your monthly principal and interest so your payment will be smaller over the remaining life of the loan.

Loan Modification – If you’re going through a financial hardship, you might be able to modify your loan so it’s more affordable.  Various programs now help borrowers to stay in their homes with reduced monthly payments. Not everyone qualifies, so check with your lender or go to the Making Home Affordable site.

Refinance – Although his is the most common way to save, it’s also usually the most expensive due to the refinancing fees.  Be sure you’ll save enough on your monthly payments to cover the fees. 

The options for lowering mortgage payments are as individual as the people who use them.  Crunch the numbers and decide which alternative will save you the most money.

These tips are also great to think about when buying as well as refinancing, and we have the experience to help you make the right choice.  If you’re looking to buy or sell Elmhurst real estate, contact the Gracik Makinney Group, or call (630) 567-5902.

 

How Foreclosures and Bankruptcy Affect Future Mortgages

by Thomas Makinney

The state of today’s home market is being felt across the country as well as here in Elmhurst. Your real estate representative is forced to handle situations that have not been seen in many years. From short sales, to foreclosures, to bank-owned homes, The Gracik Makinney Real Estate Group is well equipped to handle any eventuality. Common questions we hear are

  • How will my credit be affected by a foreclosure?
  • What will my waiting period be for my next loan if I have foreclosed or declared bankruptcy?

In a recent email from Old Second Bank’s Sue Welsh, the considerations for financing were spelled out by lending scenario and lending group. The information is below:


Foreclosure  Short Sale
Deed-In-Lieu
 
Ch. 7 
Bankruptcy
 
Ch. 13
Bankruptcy

Fannie Mae 7 Yrs from
completion date
2 Yrs with max 80% LTV
4 Yrs with max 90% LTV
7 Yrs > 90% LTV
4 Yrs from discharge or
dismissal date
2 Yrs from discharge date
4 Yrs from dismissal date

Freddie Mac • 7 Yrs from
completion date
• 4-7 Yrs max
10% down
• 4 Yrs from completion
date for short sale
• 4 Yrs for deed-in-lieu
4 Yrs from discharge or
dismissal date
2 Yrs from
discharge date

FHA 3 Yrs from
completion date
3 Yrs from
completion date
2 Yrs from
discharge date
1 Yr of the payout must elapse
& payment performance must
be satisfactory; buyer must
receive permission from the
court to enter into a mortgage

VA 2 Yrs from
discharge date
No specific information
in this yet, assume
foreclosure rule of 2 Yrs
2 Yrs from
discharge date
1 Yr of the payout must elapse
& payment performance must
be satisfactory; buyer must
receive permission from the
court to enter into a mortgage

USDA Rural 3 Yrs from
completion date
3 Yrs from
completion date
3 Yrs from
discharge date
1 Yr of the payout must elapse
& payment performance must
be satisfactory; buyer must
receive permission from the
court to enter into a mortgage

Jumbo* Based on specific investor guidelines

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