There has been a lot of fact checking going on these days, what with Election Day tomorrow and all. Sites like Politifact.com and FactCheck.org are a few (although some say the fact checking sites could use some fact checking of their own, but we digress).
Back to real estate.
There is a lot of real estate information out there – a lot. Much of it can seem contradictory, biased, or change on a daily basis – making it a real estate roller coaster ride of information.
A few items have come across our real estate radar that are important for potential home sellers and buyers to be aware of. We will highlight the top three, and do a little fact checking of our own:
1. 3.8% Tax: What's True, What's Not – via REALTOR Mag
Rumors have run amuck around this tidbit of information. When healthcare reform kicked off more than a year ago, there was 3.8% tax presumed to be a real estate tax. While there is a tax, it will only affect 2-3% of homeowners. The net-net is this:
- “If you are a household with annual income of $250,000 or more and you earn a gain (not sale price) of more than $500,000 on your house (after the $500,000 exclusion), any amount of gain above the exclusion would be plugged into a formula to see if it’s taxable.”
This is a classic case of ‘yes-but.’ YES there is a 3.8% tax relating to real estate, BUT it is actually a tax with many conditions that make it irrelevant to 97-98% of the population.
2. The 20% Down Myth – via Martha Harvey, Mortgage Network
Flashback five years ago and if you had a nice smile and a reliable handshake you could get a mortgage way above your means. We all know how that panned out, and in 2008 banks reacted to the housing crisis by tightening their lending requirements and requiring a 20% down payment in many instances.
However, there are actually many state and federal programs out there that allow people to get a loan and purchase a home without putting the full 20% down.
Mortgage companies such as Mortgage Network can help you with 5% down, with no PMI under the standard Fannie Mae program. There are many types of low-or- no down payment options. Here are a few, but contacting a mortgage professional can help you consider the option that’s best for you.
3. Election Year Jitters – Sean Harbour, Sovereign Bank
It is widely speculated in real estate circles that an election year can make buyers and sellers nervous – causing many to sit it out until post-election. There is also a theory based on the belief that the Federal Reserve Board is under political pressure to keep interest rates stable or lower prior to an election in order to make it more attractive for voters to vote for the incumbent.
According to yet another election year-based theory, mortgage rates tend to drop immediately following a presidential election. Are these theories true? History says no. Sean Harbour from Sovereign Bank breaks it down with this chart:
|3 Months Before Election||Election Day||3 Months After Election||6 Months After Election|
|1972 – RICHARD NIXON (Republican)||7.40%||7.43%||7.44%||7.65%|
|1976 – JIMMY CARTER (Democrat)||9.00%||8.81%||8.67%||8.82%|
|1980 – RONALD REAGAN (Republican)||12.56%||14.21%||15.31%||16.40%|
|1984 – RONALD REAGAN (Republican)||14.47%||13.64%||12.92%||12.91%|
|1988 – GEORGE H.W. BUSH (Republican)||10.60%||10.27%||10.56%||10.77%|
|1992 – BILL CLINTON (Democrat)||7.98%||8.31%||7.68%||7.47%|
|1996 – BILL CLINTON (Democrat)||8.00%||7.62%||7.65%||7.94%|
|2000 – GEORGE W. BUSH (Republican)||8.03%||7.75%||7.05%||7.15%|
|2004 – GEORGE W. BUSH (Republican)||5.87%||5.73%||5.63%||5.72%|
|2008 – BARACK OBAMA (Democrat)||6.48%||6.09%||5.13%||4.86%|
When digesting a lot of confusing information, just do as your mother always told you: Don’t believe everything you read, do your homework, and if you have questions: ask.