Looking back on 2013, especially the last quarter of the year, we all felt the dysfunction in Washington with the government shut down and last minute budget deals. I think we kept the makers of Advil and Excedrin busy as we tried to ease the major headaches that came from all the drama. Now that the President has signed the bipartisan budget deal we avert another shutdown and turn our attention to the next cliffhanger- the debt ceiling. You just cannot make this stuff up!
Ben Bernanke’s term as Chairman of the Federal Reserve will expire on January 31st and his replacement, Janet Yellen, will take the reins. The Federal Reserve has been keeping interest rates low with bond purchases, a program known as Quantitative Easing. This monthly asset purchasing program of $85 billion will begin to taper in January. With signs of an improved economy and lower unemployment, Bernanke felt that a slow and gradual pull back was in order. Tapering has been rumored for months and now becomes a reality.
There is another potential impact for rates as the Fed begins to taper. The FHFA, or Federal Housing Finance Agency, will initiate a planned fee increase on mortgages. These fees will cause rates to increase for some with less than perfect credit. The new director, Mel Watts, will assess the risk and impact they will have when he takes office and may look at these increases as unnecessary. Some investors are holding off for a few days before they implement the changes just in case they are put on hold. We will keep you posted on this issue and the impact it will have on borrowers.
2013 was a banner year as interest rates remained low. Anyone who purchased or refinanced hit the jackpot in low rates. At the end of the year we provided our clients with a copy of their settlement statement and some helpful tips to use as they prepare their taxes. Here are three that I found interesting:
Provide dependent taxpayer ID’s on your return. Did you know that you need to show the social security numbers for your children and other dependents on your tax return? The IRS may deny the personal exemption of $3,900 if the ID is not provided – so congratulations to all the new parents out there in 2013, and remember to get your child registered for their ID number.
There is still time to contribute to a retirement account. If you have a traditional IRA or a Roth IRA, you have until April 15, 2014 to contribute for 2013. If you have a Keogh or SEP (for self-employed borrowers) and you file an extension for your taxes, you are given until October 15, 2014 to contribute for 2013.
Tax free gifts. The limit for tax free transfers was $14,000 per person in 2013. A married couple could transfer $28,000 per person. If one of your relatives felt generous this year and stayed within the guidelines you did not have a taxable event. Great news for someone that needs help with a down payment!
For any other tips and advice pertaining to mortgage financing you may contact Michael of The Michael Mann Team at Fairway Independent Mortgage at 484-224-2985 or by email at email@example.com or as always you can visit us on the web at www.TheMichaelMannTeam.com
To get an instant mortgage approval you may contact Scott Hillegass of The Michael Mann Team at 610-737-1189