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3 Kevin Martini Things That Could Impact Raleigh Real Estate 

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The question that is top of mind for many, that either one whom owns real estate in the Raleigh area or one whom want own real estate in Raleigh, North Carolina area, is if the perceived real estate pivot is an opportunity or a challenge.  According to Raleigh mortgage broker and Certified Mortgage Advisor Kevin Martini; “Right now there are 3 pivots in today’s housing market that could impact current homeowners and homebuyers.  They are inventory, price growth and interest rates”. 

INCREASE IN HOUSING INVENTORY

The number of houses available for sale in most markets across the U.S. and in Raleigh area has increased from the ultra-low levels of the past few years however there is still an undersupply of home for sale on the aggregate. The perception that we have shifted to a full blown buyer’s market is not correct.  The slight increase in inventory and days-on-market has provided some homebuyers with negotiating power. 

MORE TRADITIONAL HOUSE PRICE GROWTH

House values have risen by 20%+ per year in many markets throughout the pandemic. It is unrealistic to expect that this hose price growth will  continue moving forward. The growth of house prices is slowing to more of a traditional pace versus the pandemic pace, house price growth is forecasted to normalize.  Sure normalization means a deceleration form pandemic levels but declaration does not means depreciation.

FLUCTUATING HOME LOAN INTEREST RATES

Raleigh mortgage rates have risen by over 2% this year in response to high inflation and the removal of the Federal Reserve’s pandemic-era stimulus programs. This means that mortgage payments have increased for potential buyers however since there are higher weekly wages, the playing flied has remained level for keeping home affordable.

On the topic of affordability, check out episode 153 of the Martini Mortgage Podcast which highlights how higher home prices and fluctuating mortgage rates are not really impacting home affordability.

RALEIGH MORTGAGE BROKER AND CERTIFIED MORTGAGE ADVISOR KEVIN MARTINI

Even with the recent perceived pivot in the real estate arena, if you are still considering to make a move, it may be time to pick up your home search back up today.  Rember, it should always be home loan first and then go find your home. If you have questions about the increase in housing inventory, traditional house price growth or about the fluctuating home loan interest rates contact Kevin Martini by dialing (919) 238-4934. 

What is depreciation? 

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If you are thinking of buying an investment property in Raleigh, North Carolina or anywhere in the U.S for that matter, a powerful word that you need to know is depreciation. In fact, in the real estate investment space, there are 3 thing you need to know about deprecation. 

What is depreciation?

A tax deduction that real estate investors can take for the value of improvements on real estate investment property is called depreciation. According to the IRS Publication 946 (2021),  depreciation “… is an allowance for the wear and tear, deterioration, or obsolescence of the property.” One may not depreciate the value of the land since depreciation is only applicable to the value of the improvements on the land. To deprecate a property, you must own it, it must be used in your business or as an income-producing activity, it must have a useable life and that useable life must be greater than 1-year.

How is depreciation calculated?

For illustration only, if an investment property is worth $500,000, and the land is worth $200,000, you can get a tax deduction for $300,000 when you buy the property. Now you cannot take the $300,000 tax deduction all at once in 1-year however you can spread it out over 27.5-years for residential properties.

How can you benefit from depreciation? 

In the simplest form, deprecation allows you to take a ‘paper-loss’ when you purchase and/or own real estate rental property.  This ‘paper-loss’ shelters part of your rental income from taxes. IMPORTANT: depreciation will eventually need to be paid back when you sell the real estate rental property through ‘depreciation recapture’ (NOTE: there is a way to defer ‘deprecation recapture’ by using a 1031 exchange.  

This article has been written by Certified Mortgage Advisor and Raleigh mortgage broker Kevin Martini for informational purposes only and does not constitute legal, tax or financial advice.  Please consult with a qualified tax advisor for specific advice pertaining to your situation.  For more information on any of these items, please reference IRS Publication 946 and IRS Publication 527.

Contact Kevin Martini

Kevin Martini | NMLS 143962 | Certified Mortgage Advisor and Producing Branch Manager | Martini Mortgage Group at PCL Financial Group (powered by Celebrity Home Loans, LLC NMLS 227765) | 507 N Blount St Raleigh, NC 27604 | (919) 238-4934 | www.MartiniMortgageGroup.com | Kevin@MartiniMortgageGroup.com | nmlsconsumeraccess.org |Equal Housing Lender

This article has been written by Certified Mortgage Advisor and Raleigh mortgage broker Kevin Martini for informational purposes only and does not constitute legal, tax or financial advice.  Please consult with a qualified tax advisor for specific advice pertaining to your situation.  For more information on any of these items, please reference IRS Publication 946 and IRS Publication 527.

5 Things That Impact Your Credit Score For Mortgage

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Your credit scores usually determine the price you pay for your money (mortgages, auto loans, auto leases, credit cards, business loans, personal loans, etc.). Perhaps the most significant part of your credit report is your credit score. For the purpose of mortgage, credit scores range from 350 to 850, with 850 being the best possible credit score, and 350 being the worst possible credit score. 

Who Pulls Your Credit Will Determine Your Credit Score 

The credit score you see may vary from what a lender sees and your credit score may vary between different debt being requested. This is because everyone has a unique credit score that represents their risk when applying for a new account based on what type of credit is being extended. Every industry has their own credit score model. 

Different models are used to help a lender determine the credit risk for different type of debt. When securing an auto loan, the creditor is likely to use FICO (Fair Isaac Corporation) Auto Credit Score.  When applying for a credit card, the creditor is likely using FICO 8 or VantageScore.  When securing a mortgage, FICO Score 2, 4 and then 5 are used.

Credit Model & Scores Used When Applying For A Mortgage

There are three credit bureaus in the U.S. that collect information about you from your creditors. These bureaus then calculate a credit score based on that information. This means that you have three credit scores, one issued by each of the three credit bureaus:

  • Equifax (model: FICO Score 5 or Equifax Beacon 5)
  • Experian (model: FICO Score 2 or Experian/Fair Isaac Risk Model v2)
  • TransUnion (model: FICO Score 4 or TranUnion FICO Risk Score 04)

Mortgage lenders typically order a tri-merged credit report when you apply for a home loan. The tri-merged credit report gives the lender information from all three credit bureaus. The lender typically uses your middle credit score when they evaluate your loan application. 

(NOTE: YES, the score models used are older versions and newer credit score models are available however Fannie Mae and Freddie Mac guidelines require these older versions be used.)

5 Factors That Determine Your Credit Score For Mortgage

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Payment History has a 35% Impact on Credit Score for Mortgage

The biggest predictor of future payment behavior is past payment performance.  Payment history makes up more than 1/3rd of the credit score for the purpose of mortgage.  

Amount Owed has a 30% Impact on Credit Score for Mortgage

It is not just about the amount of the balance, it is about the balance as it relate to available credit. ‘Amount Owed’ is really the proportion of debt balances compared to the total available credit for that account.

Length of Credit History has a 15% Impact on Credit Score for Mortgage

Established credit accounts with a good track record. Time between older accounts and newer accounts.

Credit Mix has a 10% Impact on Credit Score for Mortgage

A well-balanced mix of credit accounts such as revolving credit, installment loans and mortgage.

New Credit has a 10% Impact on Credit Score for Mortgage

Newly established credit accounts put pressure on credit score until account performance can be established.

65% of your credit score is your payment history and balance-to-limit ratio.

Logan Martini
martini mortgage group at pcl financial group