A Simple Way to Plan Your 2018 Budget

No matter what goal you set for yourself, meeting them requires planning and purpose.  From the Movement Blog, comes great advice on how to make the most of your financial goals by planning for 2018!

What to Include in your 2018 budget

By: Megen Robbins | Movement Mortgage | December 15, 2017

Many families create weekly or monthly budgets, but still find themselves in a bind when forgotten expenses or “surprises” crop up. That’s why an annual budget is the smart way to plan your finances. Planning this far ahead will help you think big picture and itemize all the expenses you anticipate for the year (and leave some wiggle room for the ones you don’t).

Just as you would for a business, this is a great time to set up a meeting with your family to plan the 2018 budget – but unlike a business, this one is all about your own financial future! Here are some expenses to consider when creating your yearly budget.

Keep your eye on the goal

Hashing out your family’s goals is the best place to start. This will shape your entire budget, trickling down into how you prioritize spending in every category.

Some goals may be more short-term, such as saving for a vacation, a down payment or a new car. Or, they could be lifelong goals like investing in retirement or growing your savings account. Decide on the most important things you want to accomplish next year financially, and your budget will be the roadmap to make it happen.

Expected expenses

Take a look at your spending patterns from this year to help you project what you’ll spend next year. Then, add up your average monthly costs on ordinary expenses, like insurance, mortgage payment, utilities and charitable giving. Weekly expenses such as groceries, gas and incidentals should also be considered, and examining your past expenditures in these categories will give you a frame of reference for the year ahead.

You may even find some areas to trim your spending.

On, and don’t forget about these expenses that may not occur every month:

• Auto Insurance
• School tuition
• HOA fees
• Car registration renewals
• Oil changes
• Termite protection
• Holiday spending

When things go wrong

When creating a budget, many people take the “nah, I’m good” approach and skip over the unglamorous expenses like car or home repair. Unfortunately, this attitude isn’t always an option when a rainy day actually hits.

You can be proactive by adding a line item in your budget for emergency reserves each month. Think of it as a coin jar you can use when things go wrong, and when you reach for the money, it’ll be there.

Freedom to be fun

Not all financial surprises are bad. Leave a little room for spontaneity in your budget; this might be entertainment-related if you love concerts, festivals or date nights, or it might take care of things like babysitting or pet care for a quick getaway.

This fund could also contribute to buying gifts for birthdays, holiday shopping or treating yourself. Accrue savings each month just as you would for an emergency fund, and scale the amount set aside so it doesn’t eclipse your other expenses.

Budgeting for an entire year may seem intimidating, but doing so helps you ensure you have the funds for what you want most, like pizza night, summer camps, dates and a vacation.

Prep now for buying a home in 2018!

Don't wait to make New Year's Resolutions, start planning now to buy a home in 2018! Here are some tips from Movement Mortgage on how to get started.

Prep now for buying a home in 2018

By Danielle Flynn | Movement Mortgage Blog

The home-buying process is extensive and can be overwhelming – especially for new homeowners, and even more so if you don’t do your homework.

If you’re in the market to buy in 2018, now’s the time to start preparing; and we’re here to help.

We interviewed two industry experts to help homebuyers prepare for a 2018 purchase. Movement Mortgage Loan Officer Leslie O'Neal and Mirambell Realty Real Estate Agent Christopher Cazenave share their expertise:

Get Pre-Approved

The moment you decide to buy a house, work with a lender to get pre-approved for a mortgage loan. Knowing how much you qualify for will narrow down your options and help direct your search.

 A word of caution, though: don’t overextend. Just because you qualify for a $250k loan, doesn’t mean your home should cost $250k. There are other expenses to consider, like interest payments, homeowners insurance and taxes.

Prioritize your Priorities

After you have an idea of how much you’d like to spend, decide on the lifestyle that suits you and your family. Consider factors like proximity to good schools, convenience to shopping and entertainment, how much land you’d like, and so forth. Deciding what’s most important to you will help further focus your search.

Start Saving

Most lenders require a down payment towards your mortgage loan, which could be up to 20%. If you don’t have enough money at your disposal, save for a bit longer or perhaps borrow against your IRA or retirement account (be sure to read the terms first, though!)

Despite how you come up with the deposit, be sure you can prove the source of the funds. Lenders won’t accept the cash payments, and if your down payment was a gift from a generous giver, be prepared to provide a gift letter.

Count the Cost

You should also be prepared for other out-of-pocket expenses during the home buying process. You’ll need money for things like closing costs and home inspections before your close, and furniture, appliances and utilities afterward. Do your homework to understand how much money you’ll be paying upfront and save accordingly.

Credit Matters

Be extra careful with your credit during this process. Review your credit report and make sure there are no inaccuracies. Avoid opening new credit accounts and making major purchases. Several inquiries can negatively impact your credit score, which can impact your loan decision and your interest rate.

Enlist a Pro

When it comes to finding your dream home, don’t go at it alone. A qualified real estate agent is familiar with the ever-changing real estate market, can guide you through the process (including contract negotiations), and help you make a wise choice, considering your budget and lifestyle needs. They also share tips and tricks with you along the way to save you time and money.

Clean House

Once you find the perfect home, you’ll be moving in a matter of weeks. Take time early in the process to get rid of items you don’t want to bring with you. For inspiration, read our list of creative ways to purge. Starting early will make it easier to pack when the time comes.

Take Some Time

The home-buying process doesn’t happen overnight. Carve out time in your schedule for conversations with your lender and realtor, home inspections, closing meetings, and so forth. As you get closer to your move date, consider taking time off work to pack, move, and get settled in your new place.

Get an early start and you’ll soon be enjoying a new home in the New Year.

Tax reform still not settled, one expert argues: Are deductions the motivation for buying?

While still in it's early stages, the bills proposed by the House and Senate still need to be reconciled. Greg Richardson, an industry veteran and EVP of Capital Markets for Movement Mortgage argues that tax breaks aren't necessarily what draws people to become homeowners.

Tax reform may not doom housing after all

From: Movement Mortgage Blog 11/10/17 | By: Greg Richardson - EVP of Capital Markets

Both House and Senate Republicans have now unveiled their versions of President Donald Trump’s comprehensive tax reform plan. The Senate’s plan keeps the popular mortgage interest deduction untouched; the House plan calls for a $500,000 cap on how much interest homeowners can deduct on their income taxes.

For weeks, pundits and reporters have blasted proposed changes to the mortgage interest deduction, suggesting it will make homeownership unaffordable for millions of Americans and sway renters to stay put in their apartments.

I’m skeptical that will happen.

First, let’s remember that the plan is still in the early stages. The GOP in both chambers will have to reconcile differences between their two versions of the plan. Then, they have to each pass a cohesive bill before Trump signs it into law.

Goldman Sachs estimates there’s a 65-percent chance tax reform will be implemented by 2018. Analysts expect details of the bill will change as pressure from special interest groups and trade associations upset by some of the provisions continues to mount.

Differences between the House and Senate’s tax plans. Courtesy of The Wall Street Journal.

I want to encourage anyone unnerved by the House’s version of the plan as we know it now. Even if the cap becomes law, it will not have a harmful effect on housing. Let me explain.

No need for deduction woes

• Small businesses may benefit: The plan calls for a cut in the percentage of tax paid by small businesses, which often take the brunt of high taxation and suffer most during a downturn. Granted, slashing taxes will not automatically create an upsurge in hiring. But, it can ease the burden for entrepreneurs and mom and pop shop owners who are the backbone of the American economy. Like I’ve said before, when businesses are healthy and stable, the economy flourishes. When the economy thrives, more people buy homes.

• Motives don’t change: As far as the mortgage interest deduction is concerned, let’s keep in mind that it’s never been a significant motive for buying a house. Think about it. When you’re talking to potential buyers, how many cite taking advantage of the mortgage interest deduction as something influencing their purchasing decision? I’m willing to guess very little. Laurie Goodman, co-director of the Urban Institute’s Housing Finance Policy Center, agreed with statements that people don’t buy homes because of the deduction. “I think people buy homes because it represents security and a way to build wealth and a sense of stability,” she told CNBC. “I don’t think the mortgage interest deduction plays a large role in that decision.”

• It won’t affect everyone: In 2012, only about a quarter of taxpayers claimed the deduction, according to a USA Today analysis of data from the Internal Revenue Service. For many homeowners, the deduction has never been a big factor at tax time. Remember, it’s only available to taxpayers who itemize, and most Americans don’t (a 2016 study from the Tax Foundation shows that just 30 percent of U.S. households itemize). Plus, homeowners only reap the full benefit of the deduction if their total deductions for mortgage interest, charitable giving and other expenses are worth more than the standard deduction.

The bottom line

 Will aspiring homeowners change their minds about buying if the deduction loses its luster? I don’t think so.

Richard Green, director of the University of Southern California’s Lusk Center for Real Estate, told CNBC that the deduction does encourage people to buy bigger houses than they would normally but it doesn’t “flip the switch” between buying and renting. HousingWire suggests reducing the deduction will yield positive results because lower taxes for middle-class renters will help them save for a down payment.

The deduction is most useful in states like California and New York, where home prices and tax rates are significantly higher than the rest of the country. That’s probably why the National Association of Realtors has come out against any change to the deduction, saying it feels weakening the deduction will hurt middle-class homeowners.

I agree that tax breaks sweeten the perks of homeownership. But, overall, the deduction benefits Americans in the highest tax bracket with larger loans. Therefore, it’s unlikely the deduction will ever be a main driver of homeownership. Thanks to a variety of assistance programs and special loan products, buying a house is accessible to individuals in any social class.

Our New Branch in Willow Lawn!

Our soft opening was a great success! We are so excited for our new space and excited to offer our expertise and services in our new location. Focused on first-time homeowners, community lending, and renovation loans, we are dedicated to getting you the loan you need!

Personal Branding Mastery Event!

Learn from the best on how to promote yourself and your business from Movement Mortgage Sales Coach, Nick Thomas.  At The Westin Richmond on October 19th from 2:00 pm - 5:00 pm, see you there!

We're Opening a New Branch!

We're so excited to announce that we will be opening a brand new Movement Mortgage branch to better serve homebuyers! We will be moved in by the end of the month to our new location:

4912 West Broad Street

Across the street from Willow Lawn Shopping Center and next to Krispy Kreme doughtnuts - we think it's pretty convenient. Once we're settled in, keep an eye out for our open house invitation to stop by and see our new digs. We're thrilled to be pioneering the new Movement Mortgage - Willow Lawn Branch to better serve our Richmond customers!

Happy National Homeownership Month!

Happy National Homeownership Month!  There are so many ways to get started on making the goal of homeownership a reality - FHA programs, Tax Credits, and Rehab Incentives to name a few! HUD, The Department of Housing and Urban Development, is celebrating this month by talking about the benefits of their Housing Counseling services that have helped lots of families across the country OWN a piece of their American Dream. 

OPEN HOUSE Saturday!

We know that in this competitive market, house hunters don't rest! Don't let the holiday stop you from finding a great home, like this beautiful property in Henrico. Check out the Open House this Saturday and don't waste a minute!

WCR & BHC Bus Tour

It was a lovely day for a bus tour with the Women's Council of Realtors and Better Housing Coalition!  We grabbed breakfast and headed out to view different RVA communities where the BHC is making a difference!  They are making an impact in Scott's Addition, Jeff Davis and are continuing their influence in the Randolph and Byrd Park areas. It was great to learn about all the good work they are doing for Richmonders!

Open Houses This Weekend!

Do You Know How Many Credit Scores You Have?

Your credit rating is the biggest factor when it comes to applying for a mortgage.  Many people get taken by surprise by their credit rating if they haven't done a little research first.  There are ways to manage your credit before you apply for a home loan and knowing how your credit is rated is half the battle.

1 Thing You Probably Didn't Know About FICO Credit Scores
Do you know how many FICO scores you have? If you said three or fewer, you need to read this.

By Matthew Frankel

How many different FICO credit scores do you have? Many people think they have just one, since there's only one FICO score included in many sources, such as the free score offered by several credit cards. Others think there are three -- one from each credit bureau. While this is true, each bureau actually has several different versions lenders can see. It may surprise you to learn that, in all, you have more than two dozen FICO scores.

Why use FICO and not anything else?
There are several different types of credit scores, but the FICO score, produced by the Fair Isaac Corporation, is the most widely used by far. In fact, the FICO scoring model is used in more than 90% of lending decisions.

To be clear, I'm not saying that non-FICO credit scores can't be useful. The second most popular scoring model, Vantage Score, and others are based on the information in your credit report and can give you a good general idea of where you stand -- great credit, so-so credit, etc. However, it's important to remember that these scores are most likely not what a lender is going to see when you apply for a new credit account.

Within the FICO scoring model, however, you might be surprised at how many different credit scores you have.

The three credit bureaus
There are three different credit bureaus that use the FICO scoring method to generate credit scores from the information in your credit report -- Equifax, Experian, and TransUnion.

Over the past few years, more and more credit card issuers are offering "free FICO scores" as a perk of card membership. While these scores are the real thing, they only represent one of the three credit bureaus (TransUnion seems to be common).

While the only way to see your scores from all three bureaus side by side is usually to pay for it, you can view your full credit reports from all three bureaus once per year, absolutely free, at www.annualcreditreport.com. This is truly a free service -- not a sales gimmick for a credit monitoring service, so take advantage to make sure that all three of your credit reports are error-free.

But that's not all
In addition to having FICO scores from all three credit bureaus, there are several versions of your FICO score generated by each one.

For starters, these include updated versions of the FICO scoring model, as the formula has been fine-tuned over the years. The most popular version currently in use is known as FICO Score 8, but FICO recently released FICO Score 9, which incorporates certain changes. To name the major differences, FICO Score 9 doesn't count paid collection accounts against you, places less emphasis on unpaid medical bills than the previous version, and counts payment histories on rental housing if it's reported. Some lenders have started using FICO Score 9, but it's not widespread just yet.

There are also industry-specific FICO scores for auto lending, credit card decisions, and mortgage lending. For example, an auto-specific FICO score might emphasize a borrower's previous history with auto loans and leases over other credit information.

• Auto lenders use the FICO Auto Score, and the version depends on the credit bureau. FICO Auto Score 8 is used with all three bureaus, but each has another, previous version available as well.
• Credit card issuers can use the FICO Bankcard Score 8 with all three bureaus, and versions 2, 4, and 5 can be used as well, depending on which bureau they're using to check your credit. In addition, Experian also uses FICO Score 3 for credit card purposes.
• Finally, mortgage lenders use one of three versions of the FICO score -- FICO Score 2 (Experian), FICO Score 5 (Equifax), or FICO Score 4 (TransUnion).

Wait, I have how many different FICO scores?
Between all three credit bureaus, and including the different versions of the FICO score that are used by various types of lenders, there are 28 different FICO scores. And this just includes versions that are commonly used by lenders today -- there could be lenders using outdated versions of these scores as well.

The bottom line is that even if you know what your FICO score is, there's no way of knowing specifically which version a lender is going to be looking at. You can see all your FICO scores on websites such as myFICO.com (for a fee), and there may be some variation between the scores, so it may be worth checking out the full picture of your FICO situation if you're planning to make a large purchase anytime soon.

To view the original article, visit The Motley Fool.

Building Equity

Equity is one of the best bargaining chips you can have when making important financial decisions for your future.  There are many ways to build it.  Making your regular monthly payments, maintaining your property and waiting for the market to increase your property value in time is one way.  But if you're not the type of person who likes to sit around waiting, there are active ways you can increase it as well!

Banks Photos/Getty Images

How Homeowners Build Equity
By Justin Pritchard

Building equity is one of the main benefits of home ownership. You don’t notice it while it’s happening, but at some point you’ve got a valuable asset that can be used for almost anything.

What is Equity?
Equity is the amount of your home that you actually own. If you borrowed money to buy your home, you can calculate your equity by subtracting your loan balance from the value of your home. If you end up with a negative number, you’ve got negative equity – the home is worth less than you owe on it.

Example: your home is worth $250,000 and you owe $100,000 on your mortgage. $250,000 minus $100,000 equals $150,000 of equity in your home. This is the value you can do something with if you sold the home.

How to Build Equity
The more equity you have, the better. There are two ways to build equity:

1. The property value increases
2. The amount of debt decreases

You can take an active or passive approach to building equity, depending on your goals, your resources, and your luck.

Increase the Property Value
Your home’s market value is an important element in your equity calculation. If that goes up, you instantly have more equity. So how does your home rise in value?

Rising prices in your market: if you’re lucky, home values in your market might simply rise over time, without any effort on your part. This is most likely to happen in attractive neighborhoods and growing towns.

Home improvement: you can also invest in your home to increase its value.

Updating kitchens and bathrooms, improving landscaping, and making the home more energy-efficient can all pay off (but there’s an up-front cost, and you need to make sure you can more than recoup those costs). If you’re doing improvements mainly to build equity, pick projects with the highest return on investment (ROI).

Upkeep: routine maintenance is boring, but a home that’s falling apart is not worth much to anybody. You can actually see your home equity decrease if you fail to address issues like leaks and deteriorating roofing.

Decreasing the Debt
Monthly payments: with most home loans, you pay down your loan balance a little bit each month. A basic amortization table can show you the process in action. The longer you have your loan, the more principal you pay (more of each payment goes towards equity, and less of each payment is lost to interest charges). It’s actually pretty easy if you just keep making payments – and you build momentum (with larger and larger principal payments) without even trying.

But you might want to accelerate the process and build equity more quickly. There are several ways to do that.

Shorter term: shorter term loans cause you to pay down debt and build up equity more quickly than long term loans. For example, a 15-year mortgage would be better than a 30-year mortgage. As a bonus, those shorter term loans often come with lower interest rates – that, combined with the fact that you’re paying interest for fewer years, means you’ll actually spend less on interest over the life of your loan.


Extra payments: even if you have a 30 year mortgage, you can speed things up by paying extra. Each extra dollar you pay (above and beyond your required payment) reduces your debt and goes towards your equity – just make sure your lender applies those payments to the principal. There’s nothing stopping you from setting up a 15 year repayment schedule (see the link to the amortization table above) and making those payments on your 30 year loan. If things change at some point and you can’t afford to do that any more, you’ve got the flexibility to go back to the smaller 30-year payment. If that’s too complicated, just send an extra payment from time to time.

Leave it alone: second mortgages and refinancing can interfere with debt reduction. Obviously, if you can save a bundle by refinancing, go ahead and do it. But remember that with most loans, you pay mostly interest in the early years of your loan – so every time you start over, you delay (or at least slow down) your equity building. Borrowing against your home with a second mortgage (or home equity line of credit) clearly increases your debt and reduces your equity.

Forced Savings
Sometimes people refer to a mortgage payment as "forced savings." You might not think you're saving any money by making payments each month, but you are building up the value of an asset (like you would build up the value of a savings account by making regular deposits). With a home, the asset isn't cash in a savings account - it's equity in your home.

What can you do with Equity?
You might wonder what you get out of all that equity. The short answer is that it's an asset that you can trade for other assets.

• If you sell your house, you'll get cash for your equity
• If you're buying another house, you can use that money (or the equity) to help fund the purchase of your new house (and therefore you'll borrow less)
• If you ever need cash, you can borrow against the equity in your home with a second mortgage (also known as a "home equity loan")

To view the original article, visit thebalance.com

How Much of a Mortgage is Right for You?

It's really easy to get excited when looking for a new home, we know!  The thrill of imagining your life in a new, fresh space and all of its possibilities can be energizing and motivating.  But when it comes to your dream home, with a little extra square footage you don't really need that's on the brink of your budget - should you go for it?  While is easy to romanticize the extra hard work you'll do to keep up with your monthly mortgage, when it gets down to the everyday reality, the struggle can get real.  Make sure you jump into your new home - and mortgage - with a full knowledge of what you can really afford, then you can truly live happily ever after!

How Big Should Your Mortgage Payment Be?
Just because a lender is willing to approve you for a mortgage doesn't mean you'll be able to comfortably make the payments. You're better off settling for a little less house and a monthly payment you can manage.

By Wendy Connick 
Mar 12, 2017 at 6:43AM

Image Source: Getty Images

It's normal for rent or mortgage payments to be the biggest single monthly expenditure for a household. But if housing starts to take up too big a percentage of your available income, you'll find yourself strapped for cash.

Zillow's most recent housing affordability survey shows that housing expenditures are clearly on the rise, with typical monthly mortgage costs hitting 15.8% of median household income -- up from 14.7% a year before. While that's still low in historical terms, the upward trend, in combination with rising interest rates and home values, means that payments may soon be heading into the danger zone. Renters are paying even more percentage-wise, hitting 29.2% of median household income. And in certain metropolitan areas the housing expenditure numbers verge on gruesome: Los Angeles and San Francisco both sport mortgage expense percentages of more than 40% of median household income.

Most experts agree it's best to keep housing costs to less than 30% of income. Lenders will typically limit mortgage loans so that the monthly payment (including taxes and insurance) is no more than 28% of monthly household income. Of course, the highest monthly payment you can really afford may be a little higher or lower than that, depending on factors like your lifestyle and your other expenses.

So how can you figure out how big of a mortgage payment you can afford?

Start by taking a good look at your income and expenses

Rather than depending on an arbitrary number like 28% or 30%, it's best to evaluate your household budget and see what percentage works for you. What you're looking for is a housing payment that you can pay every month without feeling stressed every time the due date rolls around. If you have a mortgage, you ideally want to be able to pay a little extra toward the principal every month, allowing you to get rid of the mortgage early and save on interest. If your gut reaction to that sentence was, "My mortgage payment is a pain already -- no way I can pay extra," then that's a sign you're paying more than you can afford.

Now take your monthly housing payment and divide it by your monthly household income. For example, if you pay $1,000 a month in rent, and your paychecks add up to $4,000 per month, then you divide $1,000 by $4,000 to get 0.25, or 25%. That number is your current housing payment percentage; remember it, because you'll use it to determine what the right percentage is for you.

Next, make a list of all your regular expenses. Don't forget the biggies that come around only once or twice a year, like insurance renewals. You can factor those large but sporadic expenses into your monthly budget by dividing the normal payment out over the number of months in the term. For example, if your car insurance renewal comes around once every six months, take the renewal amount and divide it by six to see how much it's costing you "per month." Once you have your expenses in front of you, ask yourself how comfortable you feel with your current situation. Do you have enough money every month to cover your expenses, plus a little to tuck away in savings? Do you live paycheck to paycheck, with creditors breathing down your neck until you can get a hold of the next chunk of income? Or worse, are you stuck with ever-growing credit card bills because you fall a little further behind every month? The answer will tell you whether your current housing costs are low, marginal, or too high compared to your current income and other expenses.

If you've already pared your non-housing expenses down as low as you can, yet you still have trouble paying all your expenses every month, then your housing payment is too high for your current situation. You might consider downsizing your home or possibly refinancing to get a smaller payment if you own your home.


If you're paying all the bills every month and can still stash a bit of money into savings and/or your retirement account every month, then your current housing payment is OK for your situation. Now is when you can go back to the percentage you calculated earlier and use that as a baseline.

If your current housing payment takes up 25% of your income and you're struggling to pay it, then you might aim for 20% or even 15% instead. On the other hand, if you're doing fine and have extra income every month, you could likely push the percentage up a little to 30% and still be all right.

Don't let the other costs of homeownership surprise you

If you're currently renting and are planning to buy a house using your rent payment as an affordability guideline, remember that as a homeowner you'll need to budget extra for maintenance and emergencies. If you buy a house and the furnace breaks down, or a pipe springs a leak and floods your kitchen, you can't just call the landlord and have him deal with it. You'll have to cover all these expenses yourself. Homeowners insurance will cover the cost of some crises, but you probably don't want to leave a foot of water on the kitchen floor until the insurance check arrives, so you'll need to have enough extra money kicking around to pay for repairs until you get reimbursed by the insurance company.

Whipping out a credit card for emergency housing expenditures is an option, but it's not a good one. Assuming you can't pay off the full amount of the card charge immediately, which is likely, you'll end up paying through the nose on interest and possibly fees. For that reason, you should prioritize setting up and funding an emergency savings account before you consider buying a house. Having enough money to cover at least a few months' worth of expenses is even more important for homeowners than it is for renters. And remember, making a down payment will inevitably take a huge chunk out of your savings, so take that into account when deciding if you have enough saved up to start house-hunting.

First-Time Homebuyer Class

Do you want to buy a home but aren't really sure where to start the process?  Reading about it online can only answer so many questions.  Get real answers from professionals in the industry who help individuals like you every day get into homes they love!  We are happy to be participating in this free class that only requires a pre-registration! Join us this Saturday, March 4 at Virginia Capital Realty on North Thompson Street!

Deducting the Mortgage Interest on Your Home

Deducting mortgage interest can add up to a pretty penny in savings for the average homeowner. Knowing the basics can help you determine which deduction you qualify for.  For instance, taking a deduction on a construction loan is great, unless you don't plan on moving into the property you're working on.  In which case, it can end up biting you back in the long run.  Hopefully, this article from thebalance.com can help clear things up!

The Home Mortgage Interest Tax Deduction
Paying Mortgage Interest Can Reduces Your Taxable Income
By William Perez
Updated February 21, 2017

You've probably heard that owning your own home comes with a few nice tax perks. One of them is that the interest you pay on your mortgage loan is tax deductible.

Claiming Home Mortgage Interest
You have to itemize your deductions on Form 1040, Schedule A to claim mortgage interest. Schedule A also covers many other deductible expenses, including real estate property taxes, medical expenses, and charitable contributions.


Sometimes these all add up to more than the standard deduction for your filing status, making it worthwhile to itemize. Otherwise, you'll save more tax dollars by foregoing the home mortgage interest deduction and claiming the standard deduction instead. Complete Schedule A and compare the total of your itemized deductions to your standard deduction to find out which method is most advantageous for you.

Here are a few other things about this deduction that you'll want to keep in mind.

Qualifying for the Mortgage Interest Deduction
Mortgage interest includes that which you pay on loans to buy a home, on home equity lines of credit and on construction loans. The deduction is limited to interest paid on your main home and/or a second home. Interest paid on a third or fourth home isn't deductible.

You must also be on the hook for the loan – the debt can't be in someone else's name unless it's your spouse and you're filing a joint return.

It must be a bona fide loan in that you have a contractual obligation to pay it back. Finally, your home must act as security for the loan and your mortgage documents must clearly state this.

Your home can be a single family dwelling, a condo, a mobile home, a cooperative or even a boat – pretty much any property that has "sleeping, cooking and toilet facilities," according to the Internal Revenue Service.


Determining How Much Interest You Paid
You should receive Form 1098, a Mortgage Interest Statement, from your mortgage lender at the beginning of the new tax year. The form reports the total interest you paid during the previous year. You don't have to attach the form to your tax return because the financial institution must also send a copy of Form 1098 directly to the IRS.

Make sure the mortgage interest deduction you claim on Schedule A matches the amount reported on Form 1098. The amount you can deduct may be less than the total amount that appears on the form based on certain limitations. Keep Form 1098 with a copy of your filed tax return for at least four years.

Dollar Limitations on Home Acquisition Debt
Home loans and the interest you pay on them are subject to some overall limitations. One limit applies to loans used to buy or build a residence.

This is "home acquisition debt." The term refers to any loan you take for the purpose of acquiring, constructing or substantially improving a qualified home.

You can't deduct interest on more than $1 million of home acquisition debt for your main home and/or your secondary residence. The limit is reduced to $500,000 if you're married and file separately.

For example, let's say you borrowed $800,000 against your primary residence and $400,000 against your secondary residence. Both loans were used solely to acquire the properties. Together, the loans add up to $1.2 million, exceeding the $1 million limit for home acquisition debt.

Now let's say that both loans have a fixed interest rate of 5 percent. The total interest you paid for the year was $60,000. You would only be able to claim a mortgage interest deduction for $50,000 of that, the interest on the first $1 million of home acquisition debt. The remaining $10,000 is the result of loan value that exceeds the $1 million limit so you can't claim it.

Limitations on Home Equity Debt
A home equity debt is a loan you take out for a reason other than to acquire, construct or substantially to improve a qualified home. It may also be a loan you take to improve a qualified residence, but it exceeds the home acquisition debt limit.

You can't deduct interest on more than $100,000 of home equity debt for your main home and/or your secondary residence. This limit is reduced to $50,000 if you're married but filing separately. Your deduction for home equity interest may be reduced even below this $100,000 limit if your indebtedness exceeds the fair market value of your home.

Interest paid on home equity debt is an adjustment for the alternative minimum tax, not so affectionately known as the AMT.

For this example, let's say you borrowed $300,000 in a home equity line of credit. The amount you borrowed did not exceed the fair market value of your home so you're OK there. You used $150,000 of the money to add a new family room to your residence, and you spent the remaining $150,000 on your son's college tuition. Half the loan is treated as home acquisition debt because it was used to substantially improve your home. This portion would be subject to the home acquisition debt limitation. The other half is treated as home equity debt because it was not used to improve your home. You would be able to deduct interest only up to the $100,000 limit on this portion. So assuming you paid a total of $21,000 in interest, it would break down like this:

• $10,500: Fully deductible home acquisition debt on the first half the loan
• $7,000: Deductible home equity debt on two-thirds of the home equity portion of the loan or $100,000 of that $150,000 portion
• $3,500: Non-deductible home equity debt representing the interest paid on the portion of the home equity debt that exceeded $100,000

You'd also have to report the $7,000 to the IRS as an AMT adjustment on Form 6251.

Joint Mortgages
If you jointly hold the mortgage with someone else who's not your spouse, you're entitled to deduct only the interest that you personally pay regardless of which of you receives Form 1098 from the lender. But there's a loophole here. Co-borrowers who make payments to prevent foreclosure can deduct the interest paid even if the interest was supposed to be paid by someone else. The editors of JK Lasser's "Your Income Tax" pass along this tip:

"The Tax Court has allowed a joint obligor to deduct his or her payment of another obligor's share of the mortgage interest if the payment is made to avoid the loss of property, and the payment is made with his or her separate funds." (page 328)

Home Construction Loans
You can deduct interest on mortgages used to pay for construction expenses. The proceeds must be used to acquire the land and for construction of the home. Expenses incurred in the 24 months before construction is completed count toward the $1 million limit on home acquisition debt.

But there's a catch. If you deduct interest on a construction loan for two years, then you decide to sell the property rather than move in and use it as your residence, you may have to restate your returns for the years you deducted the interest to characterize it as investment interest instead. This can limit its deductibility. In other words, the IRS may want some money back.

Points Paid
Points paid on acquisition debt for primary and secondary homes are fully deductible in the year they're paid, but points paid on refinancing must be amortized over the life of the loan. Points aren't always reported on Form 1098, but you might find them on your HUD-1 closing statement.

When to Seek the Help of a Tax Professional
Figuring out the home mortgage interest deduction is straightforward for many taxpayers. Add up the interest reported on your Forms 1098 and enter the total on Schedule A. You can use the worksheet in Publication 936 to calculate your allowable deduction, and you can figure the AMT adjustment for home equity debt using the Home Mortgage Interest Adjustment Worksheet found in the Instructions for Form 6251.

You might want to check with a tax professional, however, if you bought or sold property during the tax year. In fact, it would make sense to seek the advice of a tax pro even before you buy or sell real estate if only to get a handle on the tax consequences of your decision.

The Docs You MUST Have To Get A Mortgage

If you're thinking about buying a home this year, the right time to get these documents in order is now, since you'll need the majority of these documents when you are preparing your taxes. Having your finances in order is something that you should probably do all year round but we all know most people leave it for last minute.

Obviously you'll also need to see what your credit score is like and if it's not good, now is the time to improve it. Having too much debt on your hands will also affect the loan amount you'll qualify for. This is why getting all your debt information is important, figure out how much you're actually paying every month in bills, some of these bills may even be tax deductible.

Just remember, most of the documents you need to prepare your taxes are the same ones we'll need to see as your mortgage lender, so keep a copy for us!

• W-2 forms from the previous two years, if you collect a paycheck.
• Profit and loss statements or 1099 forms, if you own a business.
• Recent paycheck stubs.
• Most recent federal tax return, and possibly the last two tax returns.
• A complete list of your debts, such as credit cards, student loans, car loans and child support payments, along with minimum monthly payments and balances.
• List of assets, including bank statements, mutual fund statements, real estate and automobile titles, brokerage statements and records of other investments or assets.
• Canceled checks for your rent or mortgage payments.

Read more at Bank Rate

We've moved to HomeBridge!

We have a really exciting announcement here at the Peyton Roinnel Team, we've moved to HomeBridge Financial! Our new office is located on 1100 Boulders Parkway, Suite 100. Richmond, VA 23225. Our phone number is (804) 322-3078.

We've decided to make this move because when it comes to mortgages, more specifically renovations and restorations, not a lot of companies in Richmond have expertise with those types of loans and we wanted the ability to do more with them. This is why we have picked HomeBridge Financial. With HomeBridge we have even more control over our loans and we can do so many amazing things for our clients.

We've also built an incredible network of professionals that include: Realtors, Financial Advisors and Contractors; to ensure that we provide support to our clients that go beyond just their home mortgage.

Peyton Roinnel Deckelman is now the branch manager of the Richmond office of HomeBridge Financial, which means we not only have the ability to continue our commitment of great service to our clients, but we have more control and flexibility when it comes to the products we offer.

We are so excited about the opportunities we've been given through this move to HomeBridge Financial and we want to pass along that excitement to our clients!  So if you have any mortgage needs, or just a good recommendation don't hesitate to call, our door is always open!