You’re here because you have important questions about your home and mortgage. And you want answers about buying or selling, taxes, the impact of divorce, and other critical issues that influence your life and finances.
We field a lot of questions every day. And we’ve found that most people are asking the same exact things.
That’s why we’ve curated this extensive list of home and mortgage questions (with answers), so you can feel more confident with your decisions.
The links below will take you exactly where you need to go. Or, you can scroll freely to learn more about it all.
If we’ve missed anything that you want an answer to - just let us know.
Let's dive in!
- Buying A Home
- Selling A Home
- Mortgage Basics
- Mortgage Products and Programs
- Divorce Specific: Divorce Mortgage Questions
- Divorce Specific: Process and Timeline
- Dividing Property
- Tax Considerations
Buying A Home
1. What do I need to do before buying a home?
Step 1: Set a housing expense budget (include estimated payments for mortgage, property tax, insurance, HOA, and maintenance)
Step 2: Save for the down payment (and closing costs)
Step 3: Get pre-approved for a mortgage
Step 4: Work with a real estate agent
Step 5: Find the home of your dreams, and write an offer
2. What’s the difference between getting prequalified vs. preapproved?
Mortgage 'pre-qualification' means that you have verbally provided data to the mortgage company for a general assessment of your loan qualifications. That does not include a review of your tax returns, credit report, etc.
A much more formal approach is a mortgage 'pre-approval.' A preapproval letter requires a full review of documentation to substantiate your information. That usually includes tax returns, pay stubs, bank statements, and a credit report, to name a few.
3. How much money do I need for a down payment?
The most commonly targeted down payment for home buyers is 20% of the purchase price. This threshold will allow you to avoid having to pay Private Mortgage Insurance (PMI), which is an additional expense for lower down payments.
However, most conventional loans will allow for 5% down. FHA loans can allow for as little as 3.5% down. And VA loans can allow for as little as 0% down.
4. How do I calculate my housing expenses?
Fixed housing expenses include items such as your monthly mortgage payment (including principal and interest), property taxes, homeowners insurance, and HOA dues. Other variable costs include repairs and maintenance, and utilities.
A mortgage advisor can give you an estimated payment based on your loan amount using current market interest rates. Property taxes can vary by county but can be from 1% - 1.5% of the purchase price annually. Homeowners insurance is a policy that you can shop to find the best terms.
5. Which closing costs are negotiable on my home purchase?
You usually negotiate closing cost concessions on a home purchase as a lump-sum seller credit. Any seller credit that you negotiate can not exceed the sum of your non-recurring closing costs and prepaid interest.
Non-recurring closing costs include all lender fees, escrow and title fees, as well as your homeowners' insurance policy. A seller credit cannot cover recurring expenses, such as property taxes.
6. How long does it take to close on a new home purchase?
Most purchase contracts include a 30-day close of escrow. The timer starts when both the buyer and seller have executed the agreement. A longer period can be negotiated on a case by case basis. You can also aim for an expedited closing inside of 30 days (such as 21 days). Be sure to check with your mortgage lender to ensure that they can honor the expedited closing timeline.
7. What if I'm paying more than the house appraises for?
That only becomes an issue when you are financing some of the purchase price.
While you can pay as much for a house as you want, lenders have strict parameters in place for loan-to-value ratios. To calculate your loan-to-value ratio, they will use the appraised value (not the purchase price).
If your appraised value comes in lower than the purchase price, it might limit the size of the loan you can obtain, or it can increase the cost of your loan via higher interest rates.
8. Is it better to rent or buy?
The decision to rent or buy is truly a personal decision. There is no clear cut way to assess whether buying or renting is a better financial decision.
The decision rests on several factors, such as interest rates, property values, down payment requirements, and alternative investment opportunities.
9. What is a loan contingency? Do I need one?
A loan contingency is a clause in your purchase contract that protects you if you are unable to get approved for a new mortgage. With loan contingency in place, you are entitled to recoup your initial deposit if your loan falls through during the process.
Once the loan contingency has been removed, you are no longer protected if issues arise while trying to obtain financing. In other words, the mortgage can no longer be a reason for canceling the contract.
It is always advisable to include a loan contingency if you need a loan to complete the purchase.
10. What is an appraisal contingency? Do I need one?
An appraisal contingency is a clause in your purchase contract that is used to ensure the home appraises for a specific minimum amount. If the appraised value of the property comes in less than expected, you can terminate the contract and still be refunded your earnest money deposit. Once the appraisal contingency is removed, or if there is no contingency, then the appraised value of the property can not be used as a valid reason to cancel the contract.
11. What is an inspection contingency? Do I need one?
An inspection contingency (aka due diligence) gives you a chance to have the property inspected early-on in the purchase process.
The inspector will look to ensure the house is in working order, including an inspection of the plumbing, electrical, and structural elements. Most inspection contingencies allow for 5 to 7 days to have the home inspected. As a buyer, you have the right to cancel the contract based on the findings of the certified inspector, or negotiate to have certain repairs made.
12. What items are excluded from the home that I am buying?
As a buyer, anything that you specifically want to be included in your home purchase needs to be included in your purchase contract.
In general, only fixtures are included in a home purchase. A fixture includes items such as decorations, equipment, or appliances attached to the house. These go with the buyer.
Other items that are not fixed to the house will need to be negotiated separately. That includes things such as refrigerators, curtains, and above ground pools or hot tubs, to name a few.
13. What if I’m buying a house that someone is currently renting?
The sale of the property does not change the terms of the lease agreement in place. The original lease remains in effect and cannot be altered. In other words, you are inheriting the lease and the tenant.
You have two options if you want the tenants to move out. For one, you can make your purchase offer contingent on the home being vacant. Another option is to try and either renegotiate the lease or buy out the tenants from their existing lease. It's important to know that the tenant is not obligated to accept your new lease terms.
14. What is an owner's title insurance policy, and when do I need one?
An owner's title insurance policy is a form of insurance that you purchase to protect you if a person attempts to question or challenge your ownership interest in the home at a later date (usually a previous owner). The policy ensures that you have taken over the clear title to the house.
That is not to be confused with the lender's title insurance, which only protects the money the bank lent you. A lender's title policy does not protect your equity in the home and does not protect you personally as a homeowner.
15. How do I select the right real estate agent?
Selecting the right agent can make all the difference in your home buying experience. Our top three tips for choosing the right agent are:
1. Interview a couple of agents to get a feel for various personalities and find the best fit for you.
2. Ensure the agent is local and understands your local market
3. Evaluate their abilities, including their knowledge of the marketplace, their listening skills, and their willingness or capacity to help guide you.
16. How much do I need to pay my real estate agent?
Real estate agent commissions on the buyer side and listing side are both paid for by the seller.
There are some instances in which a buyer will pay their real estate broker directly, specifically in a sale-by-owner scenario where there is no listing agent involved. However, in most cases, the seller is responsible for all real estate broker fees or commissions.
17. What is the best time of year to buy a new home?
According to a report by Realtor.com, the first week of fall is the best time to buy a new home in the United States.
This time of year is usually around the end of September. While this may vary by location, buyers can usually find more inventory available during this time of year. The market is also less competitive this time of year, which presents opportunities for you to find price reductions.
18. What is homeowner's insurance? Do I need it?
A homeowner's insurance policy covers losses and damages on personal assets within the home, as well as the house itself. The policy includes damage to the interior, exterior, and protects against injury that might occur on the property.
Your policy includes a liability limit, which is equal to the maximum amount of coverage. Lenders require homeowners to have an insurance policy in place. Even without a lender requirement, it is always advisable to have a valid and sufficient insurance policy in place.
Selling A Home
19. What is the first thing to do before selling my home?
There is a list of practical steps you will need to take before putting your home on the market. But one of the biggest and first things you'll need to do is decide inside your brain and heart that selling your home is going to happen, either because you need to or you want the sale to occur.
For many people, a home is a place of a lot of great memories, and letting go can be tough. Don't underestimate the flood of emotions that will come out as you ponder your decision. Make peace for your given set of circumstances, and then you can put the actual process into action.
20. How do I determine the value of my home?
What you're concerned with is how much you can net after the sale of your home. To do this, you need to determine what your house will sell for (a realtor will help you with this) and then subtract closing costs, commissions, and any mortgage debt you still have on the home.
That will give you the dollar amount you have to walk away with or use to put into buying another home.
21. How can I increase the value of my home before selling it?
There's a long list of things you can do. Start by clearing out clutter, inside and out. Fix creaky interior, entry and garage doors, cabinets, and windows. Consider a new coat of paint in rooms worn by years of use. Shine windows and mirrors. Patch holes. Pull weeds. Freshen up flower beds. Trim trees and bushes. Hire a service to do a deep cleaning.
All those small "deferred maintenance" things on your home to-do list should be deferred no longer.
22. What is the best time of year to sell my house?
There is no single best time of year. It all boils down to your situation and your location. If you're in a bind, then the best time of year to sell your home is now.
If you have flexibility, then the best time will be driven by market conditions. Summer is generally a more active season due to better weather and families moving between school years. But winter buyers are more no-nonsense and are probably up against deadlines. That is part of what you need to discuss with your realtor before listing your home.
23. How much does it cost to sell my house?
There are several costs to consider. The good news is that many are negotiable, but some are not.
Real estate commissions are a great example. Six percent of the selling price is the norm, but depending on who you work with, you may be able to bargain that amount down. There will also be prep costs to get your house ready for sale and closing costs that you will need to pay as well. A realtor will provide you with an itemized listing of what these costs are.
24. Do I need to use a real estate agent to sell my house?
Technically, no. But if you want to be smart, protect your interests, get top dollar, and remove a good part of the stress of selling a home, then yes.
You rely on professionals all the time in your life to do things you can't (doctors, dentists, tax professionals, etc.). Since selling your home is probably going to be the most significant transaction of your life, the better question to ask is, "why wouldn't you hire a real estate agent to sell your house?"
25. What if I need to sell my house before buying another?
Contingency sales are the norm. That means you are both a seller and a buyer at the same time. Timing has a lot to do with it, but timing also works out in a majority of cases.
When you sell your home, you free up assets to use toward the purchase of another. If the contingency process doesn't work out on one deal, it will work out on the next one. You can also bridge to buying a home by renting somewhere for a short period, until the right house and the right terms come to you.
26. How do I determine the best listing price for my home?
If you're working with a realtor (and in the vast majority of cases, you should), they will have several methods to help you determine the value of your home.
A realtor will look at recent comparable sales in your immediate area, determine how hot the market is, and consider how quickly you want your home sold. There is no single magic way to come up with a number, but there are tried and true ways to make sure the amount you come up with is reasonable.
27. How long will it take to sell my home?
Not to be smart about this, but how long do you want it to take?
If you list a million-dollar home for $600,000, it will probably sell in a day. If you price a million-dollar home at a million dollars, expect it to take a bit longer. With an aggressive realtor on your side, selling a home is a numbers game. The more people that see it, the higher the chance is that it will be a perfect fit for someone well qualified to buy it.
28. Is it important to stage my home?
It can be. Studies show that staged homes bring higher prices and quicker sales.
But you need to weigh that against the cost of hiring a stager to do the work. If your home is tired and dumpy, then do what you can to freshen it with some self-staging. Ask your realtor's opinion too. However, if you keep an immaculate home, you may not need any additional help.
29. Should I be present when buyers are viewing my house?
Nope! Let your realtor do the work for you. If any questions come up, you could say the wrong thing and hurt your chances of getting top dollar or closing the sale.
Instead, head to Starbucks and wait for a call or text from your realtor.
30. How much am I supposed to pay my real estate agent?
In most cases, the real estate commission is between 5%-6% of the home's sale price. This amount is generally split between the buyer's agent and the seller's agent. If you're buying the house, you don't pay a real estate commission, but you will pay closing costs.
Like every other deal, commissions are negotiable, especially if an agent is representing both the buyer and the seller. Discuss terms upfront as you interview agents to represent you.
31. How long do I have to respond to buyers' offers?
In formal written offers, there is a deadline in the offer. But if there is mutual interest, give and take is normal in the interests of getting the deal done.
32. Should I have a pre-inspection on the house before listing it?
Yes. When you pre-identify any problems with your home, you avoid surprises that can be used against you to drive the price of the house down. Any issues will come out in a home inspection anyway. It's better to lay all your cards on the table at the beginning of the process.
33. Who picks the title company, the buyer, or the seller?
It's negotiable. As part of the process, the buyer and seller reach an agreement about who selects and pays for title insurance.
In some cases, the buyer chooses the title company and pays for a lender's insurance policy. Sometimes the seller chooses the title company and pays for an owner's title insurance policy.
34. Is an all-cash offer always better than an offer with financing?
Not always. An all-cash offer many times is a lower offer because there are fewer roadblocks to closing. An all-cash offer removes contingencies, including the need for a buyer to qualify for a loan, which has tripped up many sales.
35. Can I rent my home back from the buyer for a certain period?
Absolutely! As part of the negotiation process, if you need to stay in your home due to a contingency of buying another home, and there’s a time gap, you may be able to cut a deal for a short-term rental after the sale of your home is complete.
Mortgage Basics
36. How can I lower my mortgage payments?
There are several ways to reduce your mortgage payments.
- Refinance your mortgage into a lower interest rate (take advantage of market declines, or convert to an adjustable-rate loan)
- Refinance your mortgage into a longer-term (i.e., 30 years vs. 15 years)
- Refinance into an interest-only loan (payments are interest-only rather than principal & interest)
- Pay down your mortgage balance (the smaller the mortgage, the lower the amount)
37. How do I lock my interest rate?
Interest rates and associated closing costs fluctuate daily. It's important to know that your rate can change until you've decided to lock it in.
Once your mortgage advisor has quoted you a rate and price that you are happy with, you should request that they immediately lock it in. That will protect you from any rate increases. However, you will not be able to 'unlock' the rate if rates decline during the loan process.
38. How do interest rates affect my monthly payment?
Monthly mortgage payments heavily depend on the interest rate associated with your loan. Higher interest rates typically result in higher monthly payments. Lower interest rates usually yield lower monthly mortgage payments.
However, this may not always be the case. For example, a loan for $500k at 3% for 15 years will have a higher payment than a $500k loan @ 4% for 30 years. The length of the term also matters.
39. What are mortgage discount points? Are they worth it?
Mortgage discount points are an up-front fee paid by the borrower to the lender in exchange for a lower interest rate. One discount point is equal to 1% of the loan amount.
For example, paying one point to buy down your rate on a $500k loan will cost $5,000 (or 1% of the loan amount). The way to determine whether it is worth it is to calculate how long it will take you to recoup that extra cost in the form of monthly savings.
If you intend to hold onto that loan beyond that break-even period, then it may make sense to pay points for a lower rate. Discount points are also tax-deductible similar to mortgage interest.
40. What is mortgage insurance? When do I need it?
Mortgage insurance, or (PMI) Private Mortgage Insurance, is an insurance expense added on to a regular mortgage payment for borrowers that have less than 20% equity. The insurance is in place to mitigate the lender's risk when they are extending a loan that exceeds 80% of your home's value (for conventional loans).
This mortgage insurance can either be paid separately on your own (funded by the borrower) or included in the rate the bank offers you (lender paid). PMI can be expensive, and the annual premium can run between .5% - 2.5% of your loan amount yearly.
41. What are the benefits of refinancing my mortgage?
Refinancing your mortgage can result in several financial benefits:
- Lower your monthly payments
- Lower interest paid over the life of the loan
- Consolidate debt
- Eliminate mortgage insurance
- Borrower cash for personal expenses
- Reduce the term of your loan
42. What factors impact my interest rate?
The state of the economy impacts interest rates. In general, interest rates for long-term fixed-rate loans (i.e., 30 year fixed) mimic movement in the 10-Yr Treasury Yield. However, there are borrower related factors that also impact your interest rate, including:
- Your FICO score
- Your Loan to Value Ratio
- The type of property (single-family house, condo, townhouse, multi-unit)
- Property occupancy (primary residence, investment, or 2nd home)
- Type of transaction (purchase, rate/term refinance, cash-out refinance)
43. Which is better, a cash-out mortgage or a HELOC?
Cash-out mortgages and HELOCs are both excellent options for tapping into your home's equity. Which one is right for you will depend on a few factors, such as how quickly you need the funds, and whether you'll need access to additional equity in the future.
Cash-out refinances are suitable for lump-sum transactions and debt-consolidation. HELOCs are often used for home improvement or renovation when the total cost has yet to be determined, and you can use the line of credit on an as-needed basis.
It's important to note that HELOCs (2nd mortgages) usually have higher interest rates than cash-out mortgages (1st mortgages) because they remain in 2nd position on your property title report.
44. When are my mortgage payments due?
Mortgage payments are due on the 1st of the month. However, most lenders allow for payments anytime between the 1st of the month and the 15th of the month. Payments made after the 15th will be considered late payments and will usually result in a late payment penalty.
Late payments are reported to the credit bureaus, which will impact your credit, once the loan has become 30 days past due. The credit impact worsens as the loan moves to 60 or 90 days past due.
45. What credit score do I need to secure a mortgage?
Credit scores are a vital piece of the loan qualifying process. The credit score requirement will depend on the type of transaction and the size of your loan. In general, a borrower must have a minimum 620 FICO score to secure any conventional financing.
Some conventional lenders have restrictions that require a minimum 660 credit score. Low credit scores may impact the size of the loan you can get in proportion to the property's value (loan-to-value ratio).
Also, lower credit scores will result in a higher interest rate. The higher interest rate will result in a higher monthly mortgage payment, which can hinder your ability to secure a mortgage.
46. How big of a mortgage can I truly afford?
Your lender did mortgage affordability analysis and mortgage qualification analysis, which do not assess the same financial details.
A mortgage lender qualifies you based off of your gross income and weighs that against any debt that appears on your credit report (credit cards, auto loan/lease, student loans, etc.). They also factor in housing expenses such as property taxes, homeowners insurance, HOA dues, and other special assessments.
To determine whether the mortgage is affordable, you must take into consideration ALL of your monthly obligations, including but not limited to after-tax income, childcare expenses, gas, food, utilities, etc.
First, figure out what is possible in terms of qualifying for a new mortgage. Then, figure out what is prudent as it relates to affordability and your overall financial picture.
47. What documents will I need for a new mortgage?
Since the Great Recession in 2008, lenders and investors have become more strict on loan documentation requirements.
In general, you will likely need to provide two years of financials (i.e., tax returns), W2's, paystubs, bank statements, mortgage statements, insurance policies, lease agreements, and the list goes on. Anything the lender has a question about will usually be addressed via a Letter of Explanation, for which there may be several.
48. What is the difference between a mortgage broker and a mortgage banker?
A mortgage banker is an employee of the bank or lender that provides the financing for your new mortgage. The products that they offer are the products of that particular lending institution. They must also follow the guidelines and parameters established by that company.
A mortgage broker is an independent third party that connects you with a particular bank, product, or program. A mortgage broker is not limited to one lender's criteria and can scour the market to find the best fit for you based on your circumstances. A mortgage broker will also shop rates on your behalf to find you the best terms available.
49. How much will my credit score affect my interest rate?
Your credit score, or FICO score, is a significant factor in determining your interest rate.
Your credit scores are issued by three credit bureaus - Experian, TransUnion, and Equifax.
The FICO score used to determine your rate is the MIDDLE of the three scores. For example, if you have scores of 745, 730, and 710, then the FICO score used in determining your rate will be the middle score of 730. A higher FICO score will result in a lower interest rate, and a low FICO score translates to a higher interest rate.
50. How much can I borrow against my house?
One part in determining how much you can borrow against your home depends on the size of the mortgage that you can qualify for.
The second part in establishing a maximum loan amount will rest on the appraised value of your home. You will be required to obtain an appraisal as part of your new mortgage application. The appraisal will dictate the value of the house for lending purposes.
Lenders have loan-to-value limits, which set the parameters for loan size in proportion to the appraised value.
51. What is the difference between my interest rate and the APR?
Your interest rate, known as the nominal rate, is the rate of interest you will pay on the principal balance of your loan. You might find that the APR (Annual Percentage Rate) is slightly higher than the nominal rate quoted by your mortgage advisor.
That is because the APR is a broader assessment of the overall cost of your loan. For example, the APR will include things such as fees, closing costs, and discount points paid to buy your rate down.
A large spread between your interest rate and the APR is an indicator that there are substantial costs involved. It's essential to look at both your nominal rate AND the APR when considering which loan option is best.
52. What is the Loan Estimate? Can it change?
Your Loan Estimate is an initial estimate of total loan costs, anticipated monthly payments, and other loan terms (including the interest rate) that you receive within three days of applying for a new mortgage.
The Loan Estimate is called an 'estimate' because it should give you a general idea of the total loan cost. The Loan Estimate can change during the loan process, and when it does, you'll receive a revised copy.
There are some fees that the bank cannot increase after disclosing them to you, so you might find some fees to be over disclosed and then reduced before closing. The Loan Estimate is not to be confused with a Closing Disclosure.
53. What is a Closing Disclosure? Can it change?
The Closing Disclosure is a document you’ll receive at the very end of your loan process. This disclosure looks almost identical to the Loan Estimate that you received up-front.
The similarity in these documents allows you to be able to compare the initial estimate you received with the actual, final loan terms.
Receipt of the Closing Disclosure signals that you are fully approved and preparing for a loan closing. Once the Closing Disclosure is signed, there is a mandatory three-day wait period before you are allowed to sign final loan documents with the notary public.
Be sure to advise your mortgage advisor ASAP before signing the document if any revisions are required.
54. How much does it cost to get a new mortgage?
The cost of obtaining a new mortgage will depend on the interest rate you selected, in addition to the lender, escrow company, and title company that you work with.
Generally, mortgage costs are higher for purchase transactions than they are for refinance transactions. There is no hard and fast rule for the overall cost of obtaining a new mortgage.
The standard fees you can expect to see will include a lender origination fee, lender underwriting/processing fee, appraisal fee, credit report, recording fees, escrow service, title insurance, and notary fees. You have the option of taking a higher interest rate in exchange for a lender credit toward closing costs. Alternatively, you can pay additional closing costs in the form of discount points to secure a lower interest rate.
55. How much income do I need to show for a new mortgage?
Conventional loans sold to Fannie Mae and Freddie Mac have a standard max debt-to-income (DTI) ratio of 45%. This number is calculated by taking your gross monthly income and dividing it by the sum of your housing expenses (mortgage, tax, insurance, HOA) and other debts that appear on a credit report.
With mitigating factors, they will often allow a ratio of up to 50%. Jumbo loans (aka portfolio loans) are not sold to Fannie Mae or Freddie Mac, and the lender sets the DTI. Most jumbo lenders have a 43% max DTI limit.
56. What are some ways for me to eliminate debt using the mortgage?
The most common way is to consolidate all or some of your debt by wrapping it into a new mortgage. To accomplish this, you must have enough equity in your home to allow for an increase in your loan amount.
For example, if you have $25k in credit card debt at a high rate of ~20%, it may be best to refinance your mortgage, add $25k to the loan balance, and use this to pay off or pay down any outstanding obligations. That will eliminate the outstanding debt, save you money on annual interest, while also helping to simplify your repayments by keeping them under one roof (the mortgage).
Another alternative to paying off debt using your home is by adding a HELOC, or home equity line of credit, rather than refinancing your 1st mortgage. That is an especially good option when you have an interest rate on your 1st mortgage that you don't want to forfeit.
57. What debts will the bank consider when looking at my mortgage application?
A lender assessing your mortgage qualifications will take into consideration all of your housing expenses, including your mortgage payment (principal and interest), property tax installments, special tax assessments, homeowners insurance, and HOA dues.
The other non-housing related debts that they consider are any items that appear on a credit report such as credit cards, auto loan/lease, student loans, and other secured or unsecured forms of financing.
Note: while alimony and child support may not appear on a credit report, these recurring payment obligations are also included in the bank's assessment of your application.
58. How do I find out my credit score?
Credit reporting is done by three primary credit bureaus - Experian, TransUnion, and Equifax. You can obtain a copy of your credit score and credit report by contacting these three credit bureaus.
Another option is to utilize your one free annual credit report using www.annualcreditreport.com. Since most lenders will require their credit report to process your new mortgage application, you can request a copy of it from them directly.
This report will show your FICO score, which is the middle of the three scores lenders use in determining your creditworthiness. You want to avoid pulling your credit report more than once in a short timeframe because your score could be negatively impacted as a result of too many inquiries.
59. What is the process for getting a new mortgage?
These are ten steps to getting a new mortgage:
- Assess what your loan qualifications are
- Submit your loan application to the lender
- Lock in your interest rate
- Sign your initial disclosure package (i.e., Loan Estimate)
- Obtain formal underwriting conditional approval
- Allow an appraiser access to inspect your property
- Work with your lender to provide all loan approval conditions
- Sign your Closing Disclosure (then wait for 3-days)
- Sign your final loan closing documents in the presence of a notary
- The lender will fund your loan, and escrow will record it (you’re all done!)
Mortgage Products & Programs
60. Which type of mortgage product is right for me?
Consider these critical factors when deciding which loan product is right for you:
- How long you intend to live in the house? If you move, will you keep it or sell it?
- Are you willing to take a higher rate and payment, for the peace of mind that comes with a long term fixed-rate mortgage, such as a 30 year fixed?
- Are you willing to take a lower rate and payment in the form of an adjustable-rate loan and forfeit the security of a fully fixed rate product?
- Do you want to pay down your mortgage with each payment, or do you want to keep your payments at a minimum by making interest-only payments?
Answering these questions can guide you toward the correct loan product. When in doubt, ask your mortgage advisor for their expert opinion.
61. What is an impound or escrow account, and how does it work?
Lenders establish an impound or escrow account where you pay your property taxes and homeowners insurance every month. The property taxes and insurance are included in your regular mortgage payment.
The lender is then responsible for paying your property tax installments and homeowners insurance premiums on your behalf when they become due. The benefit is that you do not need to worry about making payments, and you will not have to worry about having sufficient funds.
On the flip side, these accounts do require on up-front deposit to set up the account. The money in the bank's possession does not earn interest. An impound account can be added to your existing mortgage at any time.
62. Does my mortgage have a prepayment penalty?
Most conventional loans in today's environment do not include prepayment penalties. A prepayment penalty is the bank's way of protecting the interest they are set to earn on your loan in the event you pay it back too early, or too fast.
A prepayment penalty is usually disclosed as a percentage of your loan amount. You can find out whether your loan has a prepayment penalty by reviewing the original Promissory Note you signed at inception.
63. What is the difference between a fixed-rate loan and adjustable-rate loan?
A fixed-rate loan is a loan product with an interest rate that stays the same for the entire term of the loan. Common fixed-rate loan terms can range from 10, 15, 20, or 30 years.
An adjustable-rate loan (ARM) is a loan that has an interest rate that can fluctuate periodically, usually annually. These loans often have fixed rates for a short period (5, 7, or 10 years) and then can adjust based on current market rates for the remainder of the term.
These loans are tied to a benchmark rate (which can change) and include an additional fixed spread (margin). These are attractive as they usually offer low initial rates. Caps are put in place for how much the rate can rise once the fixed period expires.
64. What is the difference between an interest-only loan and a fully amortized loan?
A fully amortized loan payment includes repayment of both principal and interest. Interest is the financing charge the bank collects for extending your credit. Your principal balance is the total outstanding balance on your loan.
With a fully amortized loan, your principal balance is reduced every month as you continue to make payments. Fully amortized loans are a good way of building equity in your home.
An interest-only loan payment includes repaying interest expenses only. The principal balance of your loan remains the same with every payment you make. To pay down the principal balance, you must do so voluntarily. A voluntary paydown in principal will result in a lower monthly mortgage payment since you will now be paying interest on a smaller sized loan.
These are attractive options for keeping your payments as low as possible. However, you will not be building equity along the way.
65. What type of loan will get me the lowest possible mortgage payment?
There are three rules of thumb in deciding how low you want your mortgage payment to be:
- #1 - The longer the term of your loan, the lower your mortgage payment will be. An example of a long-term loan is a 30 or 40-year loan. These payments are low because they are spread out over such a long period.
- #2 - Interest-only mortgages will yield a lower payment that fully amortized mortgages. An interest-only mortgage does not contribute to the principal balance of your loan.
- #3 - A lower interest rate will result in a lower payment. You can always choose to pay discount points (an additional closing cost) to secure a lower interest rate.
66. What are the loan limits for conforming and jumbo loans?
Fannie Mae and Freddie Mac set conventional loan limits in the United States. Fannie and Freddie purchase these loans from banks. These loan limits vary from County to County.
Loan limits are also subject to change on an annual basis. As of 2019, conventional conforming loan limits are $484,350. Some Counties have High Balance loan limits up to $726,525.
Jumbo loans are loan amounts that exceed conforming loan limits in your county. Jumbo loans are not sold to Fannie or Freddie. Instead, they are either held on the lender's books as a portfolio investment or sold to private investors in the secondary market.
67. What is a home equity line of credit, or HELOC?
HELOC stands for home equity line of credit. That is a revolving credit line that you can repeatedly use by tapping into the equity in your home.
A HELOC is a form of lien and works similar to a credit card. You can use it when you want, up to a specific limit, and make payments based on the outstanding balance.
HELOCs typically come with variable interest rates. A typical HELOC will have a 30-year term, of which you can draw on the account for the first ten years. After ten years, the account becomes frozen, and you have the remaining 20 years to pay back the outstanding balance.
68. What are the uses of a home equity line of credit?
A home equity line of credit is used for anything and everything. That includes home renovations, home remodeling, home purchase, child's tuition, or to consolidate any outstanding debt.
HELOCs are also added as a safety net in case you need access to liquid funds quickly and easily. You can put one in place without the intention of using it. A HELOC may or may not come with an annual servicing fee, and potential prepayment penalty if closed within a specific period.
69. What is a loan assumption?
A loan assumption is a process in which one party to a joint mortgage inherits the existing mortgage without any change to loan terms. You can find out whether your loan is assumable or not by reviewing the Promissory Note for your current loan.
The process for assuming a mortgage is similar to a refinance. That is because the client 'assuming' the new loan on their own will need to qualify. Qualification of the new sole owner is essential to ensure their ability to repay the mortgage.
70. Why would I want to assume my mortgage?
An assumable mortgage is an alternative to a refinance in which the client retaining the existing loan does not want to alter the terms of that loan. Whereas with a refinance, a new loan is being taken out to pay off and close the existing mortgage, a loan assumption keeps the existing loan in-tact.
The most common reason to assume a loan rather than refinance it is when interest rates are higher than when the existing loan was originated. In this case, a loan assumption can help to protect your current rate and monthly mortgage payment.
71. Am I eligible for a VA loan?
To be eligible for VA financing, you must first obtain a Certificate of Eligibility for the Department of Veterans Affairs. You can get this by calling the VA department, or by logging in or registering at the ebenefits portal.
VA loans usually include a VA funding fee, which is expressed as a percentage of the loan amount and is paid up-front at closing. Some Veterans may be eligible for a VA funding fee waiver. Those that are not can also choose to finance this fee by including it in their new loan amount.
72. What is an FHA loan, and what are the pros/cons?
The Federal Housing Administration issues FHA loans. Borrowers that stand to benefit the most from FHA financing are borrowers that are first-time homebuyers, or borrowers with low income, low down payments, or low FICO scores.
FHA loans also carry up-front premiums that can be paid in lump-sum at closing or financed and included as a monthly premium. Discuss with your mortgage advisor whether an FHA loan is right for you.
73. Does my mortgage have a prepayment penalty?
You can find out whether your mortgage has a prepayment penalty by contacting your existing lender and asking. Otherwise, you can review the original Promissory Note that you signed when you financed the loan initially.
Prepayment penalties are becoming less and less frequent, and most conventional loans do not carry prepayment penalties.
Divorce Specific: Divorce Mortgage Qualifying
74. Can child support and spousal support be used for income?
Yes, provided it meets certain criteria. Lenders want to see a period of seasoning in which you’ve been receiving consistent support payments. The support must also continue for a minimum of 3 years from the time of your loan closing.
75. How do I know if I qualify to buy out my spouse?
Qualifying depends on three primary factors – your credit, your income, and your home's equity. Check with a divorce mortgage expert to determine to your maximum qualifications, and see whether it's enough to complete the buyout.
Then, you can request a Buyout Preapproval Letter to bring to your next settlement discussion.
76. Will a joint debt with my ex-spouse count against me when I apply for a mortgage?
Joint debts are still debt to be considered in your new mortgage application unless your divorce settlement agreement legally assigns the liability to your spouse. In that case, it can be excluded. Any joint debts not legally assigned to another party are likely to count against you.
77. Can I rent a room in my house to show extra income for qualifying?
Lenders will not consider rental income on a home that you are financing as your primary residence unless it is generated from a permitted, detached accessory dwelling unit (ADU). Otherwise, the home needs to be financed as a rental property to include the rental income.
Note: Interest rates are higher for rental properties.
78. My spouse ruined my credit. How does that affect my ability to get a loan?
Credit (FICO) scores are a critical part of the loan qualification process. Most lenders have a minimum FICO score requirement, and anything below that threshold will prohibit you from qualifying. Also, low credit scores result in higher interest rates, which translates to higher monthly payments. High credit scores will yield a lower interest rate.
79. What if my ex-spouse misses a mortgage payment, and I'm on the loan?
A missed payment on a joint obligation will harm your credit score once the payment becomes 30 days past due. For this reason, it is always best to retire joint debts following a divorce.
You can protect yourself by keeping track of all your debts and ensuring no late payments extend beyond 30 days.
80. My spouse is responsible for paying the mortgage, how does that affect me?
If your name is not on the loan, then don't worry about anything. If your name is on the loan, hopefully, your spouse is diligent about making timely payments.
The risk here is that if your spouse misses a payment, your credit could be impacted. Depending on the extent of the credit damage, it could affect your ability to secure a new loan in the future.
81. Can the bank come after me if the decree states he/she is responsible for the mortgage?
The banks and the credit bureaus are not interested in who is supposed to pay the mortgage. The bank's sole interest is to ensure they are paid back in full, under the terms of the Promissory Note that you signed.
The credit bureaus are responsible for reporting your payment history and verifying the timeliness of those payments. However, the bank will only come after you if the mortgage payments become severely delinquent.
Divorce Specific: Process and Timing
82. Do I have to wait until my divorce is over to refinance or buy a new house?
It depends on your situation. A divorce does not automatically prohibit you from refinancing or buying a house. However, there are many considerations to take into account before deciding when to move forward.
Your spouse will need to sign a new deed on the marital house - or the new home - if you look to obtain financing pre-divorce.
83. How do I buy out my spouse when I'm keeping the house after divorce?
There are two ways to buy out your spouse. The first is to use existing cash balances (or a gift) to pay them their share of the equity. Alternatively, you can refinance your home to complete the buyout through a cash-out refinance or a home equity line of credit (HELOC).
84. How can I get my name removed from the mortgage?
There are only three ways to remove yourself from a mortgage: your spouse can refinance the loan, your spouse can assume the existing mortgage, or the mortgage can be paid off in full using cash.
Many people mistakenly believe that coming off of title also removes them from the mortgage. That is not the case.
85. How can I get my ex’s name removed from the mortgage?
There are only three ways to have your ex removed from the mortgage – loan refinance, loan assumption, or loan payoff. The most challenging option is the loan assumption, which has the lowest success rate. The easiest option is to pay off the loan, provided you have the means to do so.
86. Does removing myself from the house title also remove me from the loan?
No. Removing yourself from the title is entirely different than removing yourself from the mortgage.
Title transfers require recording a new deed. Mortgage transfers get done by 'assuming' the existing loan or refinancing the property.
87. How quickly can I get a mortgage after a divorce?
Once both parties execute your divorce settlement agreement, you can apply for a new mortgage right away. The timeline for closing will depend on whether you are buying a house or refinancing an existing loan. Lender turn-times also dictate how long the process can take.
88. Can I lock my rate while I go through the divorce process?
More extended rate lock periods result in higher closing costs. If you lock your rate and do not close within that specified window (anywhere from 30-90 days), it will cost you more money to extend the rate lock period. Since divorce can be a long process, we don't advise locking a rate until you are ready to proceed.
89. Why do I need to refinance my mortgage after/in divorce?
A divorce refinance may be necessary to access the cash or equity needed to buy out your spouse.
In some cases, the departing spouse will require the in-spouse to refinance their loan to be removed from the joint debt. Credit can be severely impacted if a payment is missed while they are still on the loan.
90. Will my property be reassessed as a result of the property buyout?
Refinance transactions for buyouts, or any other reason, should not trigger a property tax reassessment by the County. However, that is not to say that your property will never be reassessed. If the property is reassessed, it is not a result of the buyout or transfer. Note: Transfer taxes may apply.
91. What is a deferred sale in divorce?
A deferred sale is an agreement or a court order to sell the home on a predetermined date in the future. Deferred sales are common in divorces involving minor children.
A deferred sale will enable the kids and the occupying spouse to enjoy exclusive use of the home after the settlement. That is often a better alternative than a forced sale of the family residence.
92. Are there mortgage professionals that specialize in divorce?
Yes. A mortgage professional that specializes in divorce is known as a divorce mortgage advisor. Divorce mortgage advisors have a unique designation titled (CDLP) Certified Divorce Lending Professional.
These specialists will be able to advise on how your divorce settlement agreement, or the proposed terms of your agreement, may impact your ability to qualify for a mortgage after the divorce. They will also identify opportunities in which you can finance the home pre-divorce, depending on your specific situation.
93. Should I keep the mortgage in my name if I don’t keep the house?
As a general rule of thumb, you should not remain tied to a joint debt on a property that you are no longer legally own. Once you are off of the mortgage, then you can come off of the title.
If you remain joint on the mortgage, you should remain joint on the title to the extent you are allowed to do so. If you are the sole owner of the mortgage, then you will not be able to transfer the title to your spouse until the loan is in their name.
94. How do I give up rights to the home if my name is on the loan?
Removing yourself from the title is different than removing yourself from the loan. To transfer your legal interest in a property, you will want to sign an Interspousal Deed or Grant Deed.
However, it is usually in your best interest to have your spouse remove you from the mortgage (via refinance) if you are signing over your ownership stake in the property.
95. When should I refinance my house during a divorce?
There are many things to consider before deciding whether it’s the right time to refinance. It’s important to note that refinancing is possible in both pre-divorce and post-divorce circumstances.
There are pros and cons to both strategies, and a divorce mortgage advisor can walk you through the considerations that apply to your divorce settlement.
96. Do I need to tell the buyer that I am getting divorced?
No. Divorce is not a material fact, and it has no impact on the material value of your home.
You are not required to disclose your divorce to any potential buyers.
Does it matter? Yes, in some cases, a buyer may use your circumstances to try and negotiate a better deal if they feel that you are being forced to sell the home as a result of your situation.
97. Is my spouse entitled to 50% of our home's equity?
Your spouse's share of the equity will depend on the state where you live.
Some states are 'community property' states. Community property is generally divided equally amongst both parties 50/50, and each party is entitled to keep their own 'separate property.
Other states are 'equitable distribution' states. Equitable distribution requires that assets and earnings be split equitably (aka fairly) but not necessarily equally.
Dividing Property
98. What does property title mean?
In essence, the title is your rights to a specific property. It's your legal way of staking your claim of ownership. Holding title to your home means that you are the owner or owners of record.
A title can be split among several people or entities. Evidence of this title ownership is in the form of a deed. The deed is a legal document that transfers legal ownership from one party to the next. There are several different ways to hold title to a property.
99. What is the best way for a married couple to hold title?
There are three options for holding the title as a married couple in California:
Joint Tenants - This is the most common way for married couples to hold title in CA. That implies a 'right of survivorship,' which allows the property to pass from the deceased spouse to the surviving spouse automatically without the need for probate.
Community Property - Each spouse can assign their ½ equity to another person after death. The tax benefit for the surviving spouse is that they receive a full step-up in basis. The disadvantage is that to transfer title to the surviving spouse upon death, the property will need to go through probate.
Community Property w/ Right of Survivorship - This is a hybrid form of vesting. The couple receives the tax benefit associated with Community Property vesting, while also avoiding probate if one party passes away. The deceased interest will automatically transfer to the surviving spouse, similar to Joint Tenancy. Married couples frequently choose this form of vesting, in addition to Joint Tenancy.
Note: Married couples are also known to hold title in their Family Trust, provided the Trust is active and Revocable.
100. What are the different ways to hold title?
These are the most common ways of holding title to a property:
- Joint Tenants
- Community Property
- Community Property w/ Right of Survivorship
- Tenants in Common
- Tenants in Entirety
- Sole ownership (i.e., unmarried)
- Sole ownership (i.e., married as sole and separate property)
- Trust
101. How long does it take to buy out my spouse and retain sole ownership?
The time required to complete a buyout depends on whether or not you are obtaining financing to do so. Buyouts are often completed via a refinance of the family home, with one client pulling equity from the house to give to the other. In these instances, joint ownership is transferred to sole ownership after the refinance process when the departing spouse receives their buyout funds. That can take anywhere from 30-45 days.
In other instances, a spouse already has access to the cash needed to complete the buyout, and no new financing is required. Transferring ownership is easy with an Interspousal Deed in a matter of days. The title is updated once both parties have signed the deed, notarized it, and recorded it with the County Clerk.
102. How do I know how much equity I have in my home?
Equity in your home is equal to the appraised value minus the balance of your mortgage, or mortgages. That includes any liens or encumbrances. You can calculate your home's equity by following these two steps:
Check your title report to see which loans are on title. Then, check your credit report or current loan statement to confirm the outstanding balance. That includes 1st mortgages, 2nd mortgages, and HELOCs.
Get an appraisal from a certified appraiser. An appraiser's job is to inspect the property and compare it with recent comparable sales in the area. They use this information in determining the fair market value of the home at that given time.
Equity = Appraised Value - Outstanding Liens
103. What is an Interspousal Transfer Deed?
An interspousal transfer deed is a legal document that is used to transfer the title of a property between two spouses (married couple). An interspousal transfer deed is only required if both spouses are on title to the property.
104. What is a Quitclaim Deed?
A quitclaim deed is a legal document that is often used to transfer property between family members. There are risks associated with a quitclaim deed, especially when there is an exchange of money between two parties.
For this reason, they are often used for transfers between family members. A married person in a community property state, such as California, needs a quitclaim deed to hold the title as their sole and separate property.
105. How long does it take to remove someone from the title to a home?
Title to a property can easily be updated using a deed, such as a quitclaim deed or interspousal transfer deed. Once these deeds are signed, notarized, and recorded at the County Clerk's office, the title to the home is updated immediately.
Do not confuse removing someone from the title with removing someone from the loan. These are two separate processes with entirely different timing considerations.
106. Does a quitclaim deed take my name off the mortgage?
No, a quitclaim deed has nothing to do with your mortgage. A quitclaim deed is only used to make changes to the property title, which is different than the mortgage. To remove someone from a mortgage, you must either refinance the existing loan in your name or attempt to assume the existing loan, which eliminates one party from the mortgage debt. Another option is to pay off the loan in full, at which point no one is responsible for any outstanding mortgage debt.
107. What are title defects? How do I find them?
A title defect is a red flag that could threaten one's right of ownership to a property. In other words, the title is not marketable if you wish to sell or transfer your interest. You can locate a title defect by requesting a copy of your preliminary title report and reviewing it for accuracy.
Some common mistakes of the title include:
- Unknown or undiscovered liens
- Illegal deeds
- Forgery
- Errors in the public record
- Easements, or boundary disputes
108. Who is responsible for recording a deed?
Anyone can record a deed once it has been signed and notarized by all parties. Deeds are recorded at the County Clerk's office in the County where the property is located.
109. How do I protect myself against unknown liens?
You can protect yourself from taking over a defective title, which includes unknown liens, by purchasing title insurance. Title insurance will protect you from any financial loss associated with a defective title.
Do not confuse your owner’s title insurance policy with that of the lender’s title insurance policy. A lender’s title insurance policy only protects the lender and the principal amount of the mortgage. You will need to obtain an owner’s title insurance policy to protect yourself.
110. What is title insurance? Do I need it?
There are two types of title insurance policies available to you when you purchase or refinance a home.
The first is a lender's insurance policy, which a borrower is required to buy and which only protects the lender's interest in the house, specifically the principal amount of the new mortgage.
There is also an owner's title insurance policy that will protect you against any loss or defects of title. An owner's cost comes at an additional cost to the lender policy. Although a lender policy is mandatory and an owner's policy is optional, it is always advisable and best practice to purchase an owner's policy to protect yourself.
111. What is a title report?
A title report provides a complete summary of property ownership changes and a chronological list of any liens that have been recorded. A title report also contains a full legal description of the property as well as other information on the assessment value, current zoning, and current tax information.
You can obtain a copy of your title report by requesting one from an escrow or title company. When in doubt, visit the county assessor's office and ask to review any deeds that have been filed manually. Title reports can contain errors, so it's essential to verify anything that appears inaccurate.
Tax Considerations
112. What is the current mortgage interest deduction limit?
In 2018, the mortgage interest deduction limit was reduced from $1M to $750,000 on qualified residence loans. These types of loans must be used to buy, build, or substantially improve a primary residence or second home. However, if you finalized your loan before December 17, 2017, you will be grandfathered in at the old $1M limit.
113. Can I write off the interest on a home equity line of credit?
Interest accrued on home equity loans and lines of credit can be deducted, provided the funds were used to buy, build, or substantially improve the property. However, the interest deduction is capped at $100,000 for home equity lines.
The old rule allowed interest to be deducted up to $100,000 on any 2nd mortgage lien. The new rule specifies that the funds must be used for one of the qualifying purposes we just mentioned (buy, build, improve).
114. Are there tax consequences for transferring the title to my home in a divorce?
A transfer tax, which is like a transaction fee, is a tax that can result from the transfer of property from one party to another, especially pursuant to a divorce. These transfer taxes can apply at both a city level and County level, depending on where the property is located.
Transfer tax payments are typically non-deductible. The buyer, or the spouse retaining ownership of the home, is usually the one responsible for paying transfer taxes.
115. Will my property be reassessed by removing a spouse from the title?
The two things that are most likely to trigger a property tax reassessment are the completion of a construction project or a change of ownership. However, in most cases, a transfer of title between two spouses does not result in a property tax reassessment.
Homeowners aim to avoid these reassessments because they are going to set a new Base Year Value based on the current fair market value, which is likely to cause your property taxes to increase.
116. What are some ways for me to transfer my property tax basis to my new home?
Proposition 60 allows a homebuyer in CA over the age of 55 to be able to sell their current residence and transfer those property taxes to the new home. The new home must be of equal or lesser value, but the benefit to this strategy cannot be overstated.
Taking advantage of this one-time transfer can save you thousands of dollars per year on your property tax bill.
117. How much interest can I deduct on an investment property?
You can deduct all expenses associated with owning a rental property on your tax returns, Schedule E. This includes all interest paid in the year, regardless of how large of a loan you have or how high your interest rate is.
118. I paid discount points for a lower interest rate. Is it deductible interest?
Yes, discount points are considered an interest-expense. Therefore, if you pay discount points to secure a lower interest rate on your mortgage, you have essentially 'prepaid' your interest to the lender. This lump sum interest expense is tax-deductible.
119. Do I need to pay capital gains on the sale of my home?
Yes, if you're selling your home for a profit, then you can expect to incur capital gains taxes on the sale. Capital gains up to $250,000 are tax-exempt for single individuals. If you are married when you sell the home, the limit for tax-exempt gains is extended to the first $500,000.
120. What is a 1031 exchange? Should I do one?
In essence, a 1031 exchange is the trade of two properties that are considered to be like-kind properties. This strategy allows you to buy and sell real estate while deferring the capital gains tax you would otherwise pay on the proceeds because the proceeds are held by an intermediary (the 1031 exchange company) and are directed straight to the purchase of your new property. However, there can be severe tax implications if not done correctly.
121. Are mortgage closing costs tax-deductible?
No, standard closing costs on a new mortgage (purchase or refi) are not tax-deductible. The only items that appear on a loan closing settlement statement that would qualify for a tax deduction are things like prepaid interest and property taxes.
122. Is mortgage insurance (PMI) tax-deductible?
Private Mortgage Insurance is currently treated like interest for tax purposes and is therefore deductible. The deductibility of PMI has set to expire every year for the past few years. However, the deadline for this change has continuously been extended.
Until further notice from the IRS, you can deduct Private Mortgage Insurance.
123. Can I deduct property taxes in 2019?
Property tax deductions were reduced in 2019 from prior years. Homeowners may now deduct only up to $10,000 in combined property taxes, and state and local income taxes.
The limit is reduced to $5,000 for any married couples that file separate tax returns. To do this successfully, you’ll want to itemize your deductions on Schedule A of your Federal tax returns.
124. Which home expenses are tax-deductible?
Whether or not a home expense is tax-deductible depends on what the property is used for. Generally, in 2019, the only home-related expenses that qualify for tax deductions are interest and property taxes. However, investment properties can deduct other items such as depreciation, repairs, management fees, and homeowners' insurance, to name a few.
125. What are supplemental property tax bills?
When the County reassesses your property value for tax purposes, you may end up with a supplemental tax bill. These supplemental bills collect taxes for the difference between your old property assessment and your new property assessment.
A property tax basis can be reassessed for a myriad of reasons, and when it does, you can expect to pay more.
126. Can I deduct losses on real estate investments?
Yes, rental losses on investment properties are 'passive losses,' and these can be deducted to the extent you have 'passive income' to offset them.
Rental income on real estate is regarded as passive income. For example, you cannot deduct passive real estate losses against non-passive income, such as your employment earnings.
As with other real estate-related deductions, there are caps on the amount you can deduct. Homeowners with $100,000 or less in income may deduct up to $25,000 in real estate investment loss.
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