East Tennessee Real Estate & Neighborhood Source
No doubt the majority of buyers searching Knoxville homes for sale will need to secure a mortgage. While lending standards have been strict it hasn’t slowed the Knoxville real estate market. The following infographic from mortgage lending services provider, Ellie Mae, shows us what it took to get a mortgage in 2012.
UPDATE: SOLD! Two story basement home in private cul-de-sac located in West Knoxville’s Walnut Grove neighborhood at 13107 Naylor Ridge Lane, Knoxville, TN 37922. Featuring 4 bedrooms and 3.5 baths. Eat-in Kitchen with loads of granite counter space opens directly to the family room with a fireplace. Office with french doors on the main level bookends the foyer with the formal dining room. The 2nd level includes a huge master bedroom suite with dual sinks, whirlpool tub, and shower, 2 additional bedrooms, laundry room and a bonus room. Venture down to the basement which features a rec room, 4th bedroom, full bath, and large custom woodworking shop! The deck off the family room and kitchen overlooks a large, flat, fenced backyard. Neighborhood features a swimming pool and is zoned for the brand new Southwest Elementary School, Farragut Middle, and Farragut High School.
Troy Stavros, Broker and Partner with the 865 Real Estate team stated, “With the latest announcement regarding the new Qualified Mortgage rules, we felt it was a good time to re-address one of the questions asked of us most often by our Knoxville real estate clients. That being, “what are points” in a mortgage?”
There are two types of “mortgage points”. Discount Points and Origination Points. In both of these, each point is equal to 1% of the total amount mortgaged. For example, on a $200,000 home, one point is equal to $2,000. The least helpful from a buyer’s point of view are the “origination points’, as they are simply used to compensate loan officers. Not all lenders require the payment of origination points, and if asked, many are often willing to negotiate the fee. Origination points are NOT tax deductible. Discount points, which can be helpful, are basically prepaid interest. The purchase of each point typically lowers the mortgage interest rate by 0.25%. For example, if your original rate is 3.5%, purchasing a point could lower it to 3.25%. Most lenders give you the opportunity to buy anywhere from 0 to 3 discount points. If you itemize your taxes, discount points are tax-deductible.
Stavros says that next question clients have is, should I buy the points. Stavros offered, “The two deciding factors when looking at buying points on your mortgage are one, how long do you intend on living in the home, and two, do you have the extra money to pay for them.” The longer you plan on staying, the larger your savings will be if you purchase discount points. A number of calculators are available on the internet to help you figure the appropriate amount of discount points to buy, based on how long you plan on owning the home.
Consider the following example from Investopedia:
On a $100,000 mortgage with an interest rate of 6%, your monthly payment for principal and interest is $599.55 per month.
With the purchase of three discount points, your interest rate would be 5.25%, and your monthly payment would be $552.20 per month.
Purchasing the three discount points would cost you $3,000 in exchange for a savings of $47.35 per month. You will need to keep the house for 63 months to break even on the point purchase. Since a 30-year loan lasts 360 months, purchasing points is a wise move if you plan to live in your new home for a long time. If, on the other hand, you plan to stay only for a few years, you may wish to purchase fewer points, or none at all.
The second and most important question with the purchase of discount points involves whether or not you have enough money to pay for them. Stavros says, “Buying a home in Knoxville can be expensive. With down payments and closing costs. Many buyers simply don’t have enough money left over to purchase points.”
Purchasing discount points can be a good way to lower your monthly mortgage payments if you plan on staying in your home for an extended period of time. However with today’s incredibly low rates, you really need to crunch the numbers to see if it’s worth it.
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Are you looking for ways to update your home prior to selling that might grab a buyer’s attention? The following tips can guide you with some ideas that can add the right bang for the buck.
When deciding what will increase resale value, we need first to look at what buyers want. Why wait and start these projects a month before putting your home on the Knoxville real estate market? We suggest you start small and start early, so you can enjoy the fruit of your labors now.
If you are thinking about throwing your home into the Knoxville real estate market sooner than later, a good first step would be to consider calling a few professionals. Three in particular would be a home inspector, who can tell you what items will need to be addressed and may cause red flags to buyers. Second and third, a real estate agent and local interior designer or stager, all of which typically have the pulse of buyers and know what they are looking when visiting homes for sale in Knoxville.
Landscaping can add plenty of curb appeal to a home as well as make a backyard feel comfortable. Buying big trees and shrubs can get expensive, so we recommend you invest in your landscaping early, giving it time to mature so it is ready when the time comes to sell. That being said, nothing can take away from nice landscaping like a sad lawn. So, maintaining a healthy, green lawn can really set the tone before the buyer even gets out of the car.
Along with your landscaping nothing makes a first impression like a crisp clean exterior, so a good pressure washing of the home’s exterior and walkways can make an impact.
The last step to curb appeal, deals with the last steps before walking into the home, and that is at the front door. Upgrading exterior doors that are visible from the street can change the look of your home completely. A nice, classy, front door, can get a buyer excited about seeing the interior of the home. Think about it, where are buyers standing, and what are they looking at, as they wait for their Knoxville real estate agent to let them in the home!
The 70’s called and they want their lighting back! Unless you are planning on selling your home to Austin Powers it’s time to get rid of some of the historical artifacts. That includes outdated lighting fixtures, wallpaper, old carpeting, gold hardware, and possibly even the popcorn ceiling. Just updating to something simple, but current, can turn a big negative into an non-issue.
Kitchen remodels can come with a big price tag, so if yours is fairly current, small updates like new knobs on the cabinets or a new paint color may be all you need.
Speaking of paint color, this is the least expensive way to make a huge impact on your home. Painting outdated or extravagant colors to a fresh coat of a modern neutral color, can not only make your home look newer, but cleaner as well.
Last on the list, is another addition that is worth completing sooner rather than later so you can utilize it. That being built-in storage. Adding shelving or cabinets in a hall, bedroom, closet, garage, family room, or just about anywhere for that matter can add quite a bit of appeal. Who doesn’t like extra storage? We know buyers do!
What the latest steps to avert the fiscal cliff mean to the Knoxville real estate market.
In order to avoid the fiscal cliff, a budget package was passed by the U.S. Congress on New Years Day. Implications for homeowners and the Knoxville real estate market include: tax rates remaining the same for most households and the extension of mortgage cancellation relief.
The “American Taxpayer Relief Act of 2012’’ that was passed by Congress extends current tax rates for all households earning less than $450,000, and $400,000 for individual filers. Households earning above these limits will see tax rates revert to where they were in 2003, meaning taxpayers in the highest bracket would pay taxes on ordinary income at a rate of 39.6%, up from 35%. The tax rate on capital gains would also remain the same, at 15%, for most households, but for those earning above the $400,000-$450,000 threshold, the rate would rise to 20%.
Troy Stavros, Broker and Partner with the 865 Real Estate team stated, “From a real estate standpoint, this could have gone in a bad direction and gladly did not. With the Congress keeping the provisions for the exclusion from taxes on the sale of a principal residence and important tax exemptions for homeowners, I feel housing can continue on it’s course of positive momentum.”
Good news from a homeowner’s perspective, the exclusion from taxes for gains on the sale of a principal residence of up to $500,000 ($250,000 for individuals) remains intact, so only home sellers whose income is $450,000 or above, AND the gain on the sale of their house is above $500,000 would pay taxes on the excess capital gains at the higher rate. Therefore there is no change for the majority of home sellers.
Extenders, which keep in place expiring tax provisions, are also included. Of most interest to the Knoxville real estate market, the “American Taxpayer Relief Act of 2012’’ would extend mortgage cancellation relief for home owners or sellers who have a portion of their mortgage debt forgiven by their lender. This is typically seen in a short sale or foreclosure sale for sellers or a modification for owners. Without this extension, the debt forgiven would be taxable, adding additional financial burden to already underwater homeowners. Also extended are deductions for state and local property taxes and mortgage insurance premiums, which, along with the mortgage interest deduction, are important tax considerations for home owners and buyers.