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July 3rd, 2012

Have you ‘asked our expert’?

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Expert resized-HSH SpecialEach week, we select one email question (out of many) from HSH.com visitors and answer it. The questions we decide to answer are common issues many homebuyers and homeowners can relate to.

Here is a sampling of a few recent “Ask the Expert” questions and their answers:

Q: Will biweekly mortgage payments save me money?

A: Making biweekly payments on your mortgage will absolutely cut your interest cost and shorten the term of your loan, to boot. Usually done though an auto-debit arrangement from an account you specify, the mortgage lender will sweep though that account every two weeks and collect exactly half of your required monthly payment.

While there are only 12 months per year, there are actually 26 two-week periods. This means you are essentially making 13 monthly payments per year. In today’s market, and if started from the first monthly payment, this reduces the term of a 30-year loan to about 25 years, saving you a bundle in interest costs.

Read more.

Q: We just sold our house, when do we have to pay the IRS?

A: Capital gains taxes as they apply to your principal residence can be found in IRS Publication 523.

If you have lived in your home for two of the five years leading up to the date of sale, you are exempt from taxes on capital gains realized by the sale of the home. There are limits, though, of $250,000 in gains for a single filer and $500,000 for a joint return.

You can only exclude gains from the sale of a home every two years — that is, if you sold a home last year and excluded the gains from tax, you cannot exclude the gains made on this house. You would have to wait at least another year before this home becomes eligible to be excluded.

Publication 523 has worksheets and tips to help you figure out your basis cost and what your gains actually will amount to once you’ve subtracted selling costs, certain improvements and more.

Q: I’m eligible for HARP, but my servicer doesn’t participate. What can I do?

A: Not all lenders/servicers participate in the HARP program, which is voluntary. If your loan is owned or backed by Fannie Mae or Freddie Mac and your servicer doesn’t participate, you are free to go to another lender who is active in the program.

Among the items which make your loan eligible for a HARP refinance are:

  • Your mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009
  • Your mortgage hasn’t already been refinanced through HARP, “unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009”
  • Your loan-to-value ratio must be greater than 80 percent
  • You have to be current on your mortgage

Read more.

Be sure to check out our Ask the Expert page where you can read all the questions we’ve answered or submit one yourself.

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One Response to “Have you ‘asked our expert’?”

  1. Tara Says: August 7th, 2012 at 4:06 pm

    I had a chapter 7 discharge in 2009. My home was included and not reaffirmed. In mid 2011, our house was underwater $100,000 so we walked away. We are now renting a home with the intention of buying in about 2 1/12 years. Will the foreclosure be reported in a way that will not allow us to buy then. The foreclosure is currently not completed and the deed is still in our name. Myl lawyer assured me that we would be fine as far as qualifying, but I have heard differing opinions. I live in Michigan.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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