When should you refinance your mortgage? Here's an article to help you determine whether you will benefit from refinancing.
Mortage Interest Rate Deduction
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A July article in the Wall Street Journal suggests that the power of low inventory to drive and define the real estate market may be coming to an end. In a recent report from the National Association of Realtors, the national housing inventory rose 1.9% in June. But, the June 2013 housing inventory was still 7.6% below the June 2012 inventory. There is a growing concern though that higher interest rates and congressional action to change the mortgage interest deduction could cause a greater impact to the real estate market than low inventory.
Higher interest rates are threatening to slow sales and limit prices. In April there was a slight rise in mortgage rates which has continued through these summer months. According to the Mortgage Bankers' Association the average 30-year fixed-rate loan is now 4.68% which is the highest it's been in two years. Higher rates generally make buying a home less affordable. Luckily, current rates are still considered low enough to motivate potential buyers to purchase a home before the rates climb higher.
In Washington, several bipartisan panels are looking into changing the mortgage interest deduction, in place since 1913, to a tax credit. Many analysts believe that the deduction is costing the U.S. government more than it is helping a majority of the country's population. The belief is that a tax credit would positively impact a greater section of home owners while bringing in more tax revenue. Robert Dietz, a tax economist at the NAHB believes "Home prices would likely come down if there is no deduction, as there would be fewer buyers."
For sellers, this national news and local housing demand means that bids can come in rapidly and bidding wars may even occur. With this benefit comes the reality that some offers are put together too hastily and can fall through. For buyers, the active market means that it is essential to be prepared. Regardless of whether you are buying or selling a home, the tight inventory of today's market and looming financial changes make it essential to have the professional guidance of an experienced and knowledgeable real estate agent.
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