Student Loans

The Obama Administration introduced the income based repayment program (IBR) for student loans.  This allows borrowers of federal student loans to set their monthly repayment amount based on their income rather than making an amortizing payment.

An amortizing payment would be one that is set to be paid off in the allotted term of the loan, and covers the necessary interest as well.  Therefore the monthly payment for this loan is of course based on your loan balance, loan term, and interest rate.

 

Furthermore, there is the public service loan forgiveness program.  This allows borrowers of federal student loans to have…

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Bridge Loans

It can be difficult to time the sale and the purchase of your next home perfectly.   While it’s ideal to sell and buy on the same day, sometimes you won’t be able to sell your property before closing on your new home.  If you have significantly equity in your home and need that equity in order to come up with the down payment on your next purchase, a bridge loan may be the solution.

A bridge loan is meant to be a temporary solution and you will pay off this loan immediately upon the sale of your current residence.

The…

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Tax Advantages

I am not a tax advisor – but I often get questions about the tax advantages of home ownership.  The below deductions assume you choose to itemize your deductions instead of taking the standard deduction.  Here are the benefits:

  1. Deduct interest:

When filing your income taxes, you may deduct the interest you pay on your primary residence.  You’ll receive a form 1098 which will declare the total interest paid in a calendar year.  To get an idea of the interest you will pay annually, take a look at your amortization schedule.

2. Deduct property taxes

You may also deduct your property taxes on…

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Homestead Deductions in DC and MD

If you buy your home in DC or in Maryland, and will live in the property, you will want to apply for the homestead deduction.

The homestead deduction will limit how much your property taxes can increase annually and potentially reduce your tax bill.

In DC, with the homestead deduction your assessed value will be reduced by $71,700.  This drops your monthly property taxes by $50.78.  More information: https://otr.cfo.dc.gov/page/homesteadsenior-citizen-deduction  The application for the program is here. The homestead deduction will also limit your annual property tax increases by 10%.

 

In Maryland, the Homestead Tax Credit will also…

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How do rate changes affect your payment?

When interest rates rise, you may be concerned about how that affects your affordability of your monthly payment.

Let’s break down how a rate shift affects your monthly payment on a 30 year fixed loan.

For every $100,000 you borrow, a 1% change in the interest rate will shift the monthly mortgage by about $60/mo.

That means on a $500,000 loan, a 1% change in the interest rate moves the monthly payment by about $300.

 

For example:

A $500,000 loan at 4% is $2,387.08/mo

A $500,000 loan at 5% is $2684.11/mo — the two payments are $297.04 apart.

If the rate rises by one percent, to…

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Alex Jaffe Alex Jaffe