Definitions: K-1 Statement
Schedule K-1
Sub-forms to tax form 1041 (estates and trusts), 1065 (partnerships) and 1120S (S-corps).
1041 (estates and trusts), 1065 (partnerships) and 1120S (S-corps) can pass both income and tax liabilities through to you as a taxpayer. The 2-page K-1 is where this income is documented.
Page 1 covers the dollar amount of income – for most real estate investment purposes page one, line 2.
Page 2 contains the instructions on how to complete the K-1.
The K-1 may be downloaded directly from the Internal Revenue Service here.
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Glimmer of hope in new home sales report March 2011
New home sales report March 2011
Is there hope for a recovery cycle to begin in 2011?
Industry insiders and prognosticators alike have been making guesses at exactly when we would hit bottom and when recovery would begin since we entered the market downtrend. While many were well educated guesses and other hunches based on theories created on the barstools of America they have all been simply guesses. Whether or not they are accurate will only be born out in the coming days, weeks, months, and years.
According to the Census Bureau report (see graphic) there were over 300,000 new homes sold in March of this year (2011). The more encouraging number for this southeastern based mortgage marketer is that 162,000 – well over half – were sold in the south. Click the graphic for a larger representation.
March 2011 housing numbers may hold promise
Although modest and somewhat an island of positive in a vast ocean of negative the March 2011 new home sales numbers as tabulated by the US Census Bureau proved an increase.
On the other hand there are variables in the equation
“We’ve gotten spoiled by the idea that
Mortgage Calculator
interest rates will stay in the low single-digits forever,” said Jim Caron, an interest rate strategist with Morgan Stanley. “We’ve also had a generation of consumers and investors get used to low rates.” (NYT)
$ % yrs % $
We are not certain when mortgage interest rates will begin to rise, nor are we sure how high they will trend. The cyclical nature of the economy indicates a strong likelihood rates will rise, possibly sharply, and could easily see double digits in a short time. This, however, is an unknown although it is predicted by some professional economists who have a track record of prediction such changes.
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Possible negative impact of “Qualified Residential Mortgage”
Chris Dodd - Co-Author
The Wall Street Reform and Consumer Protection Act of 2010 – aka The Dodd-Frank Act included a bit of somewhat obscure language about lenders leaving “skin in game” when they sell mortgages to investors. To sum it up it is a good idea but risky business.
The definition is being written and adjusted by the FDIC and we should know very soon what that definition is. On the “bad” side for first time home buyers, sellers who had to take cash to closing to pay the difference between their payoff and sales price, and buyers who make enough to live but not enough to say is that this could result in private loans all requiring 20% down. (This is not a set fact, just a possibility.)
The intent is to get the government out of the mortgage business by dwindling the holdings of Fannie Mae and Freddie Mac. With the goal of allowing private investor back into the game through the well practiced method of mortgage backed securities, a result of the securitization of pools of mortgages sold on Wall Street, the steps are precarious and the definition must be clear. The government is not always the best at being clear with definitions which causes a knee-jerk panic in the mortgage banking industry like the current brouhaha over how to compensate loan officers.
This short post is designed simply to give awareness to the reader there are, possibly, some major changes coming to the way lenders and banks make loans and to whom. Watch the video, Google “Qualified Residential Mortgage”.
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FHA Monthly Premiums will rise on April 18, 2011
FHA MMIP increases - click for larger view
FHA Mortgage Insurance Premiums Increase
We have enjoyed several months of the lowest FHA UFMIP (Upfront Mortgage Insurance Premiums) and MMIP (Monthly Mortgage Insurance Premiums) in recent history. With monthly rates being at .9% payments have been lower resulting in higher debt-to-income ratio for home buyers and owners who have refinanced. With our dollars being stretched because of a damaged and weakened economy this has helped sales and refinances to remain higher than they would have been with higher rates.
Effective with all FHA loans at 95% LTV (Loan To Value) and higher starting with new casefile ID numbers being issued on and after April 18, 2011, the monthly rate is increasing to 1.1% per month. Here is how that stacks up on a $180,000 loan;
| Loan | UFMIP | New | MIP .9 | MIP 1.1 | Monthly + | Annual + |
|---|---|---|---|---|---|---|
| 180,000 | 1,800 | 181,800 | 134.10 | 163.89 | 34.79 | 417.48 |
On a $180,000 home mortgage loan the increase in the FHA monthly mortgage insurance premium from .9% (of the principal balance) to 1.1% will mean nearly $35 more per month cost added to the mortgage. This multiplies to nearly $420 for the year.
While these numbers may not be astronomical you can see how this may make the difference to a family or single homeowner already working on a stretched budget. If income taxes are increased, deductions decreased, property taxes or home owner’s insurance increases, any of these need to be considered when purchasing a new home or refinancing.
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I am a multi-year veteran of the industry who has served in the highest offices in the industry. I can help you get the best deals and avoid getting ripped off!
Contact form on this web site
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Daily Rates for Qualified Buyers
Today |
Last Week |
|
| 30 Year Fixed | 3.59% | 3.65% |
| 15 Year Fixed | 2.91% | 2.89% |
| 5/1 ARM | 2.81% | 2.57% |
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