There is no better gift to give yourself this holiday season and in the New Year, than your own home - preferably owned outright.

So with the hope of getting consumers free and clear of their mortgage debt sooner, we tapped Durham, N.C. REALTOR® Bernice McNutt who blogged recently with these tips on how to pay down that homeowner's debt:

1. Accelerate bi-weekly payments - Instead of paying your mortgage on a monthly basis 12 times per year, McNutt says pay your mortgage every two weeks for a total of 26 payments each year. A $300,000 mortgage with a monthly payment and three percent debt service over 25 years will cost $125,920 in interest. Increase to accelerated bi-weekly payments and shave nearly three years off of your schedule, and save $16,059 in interest.

2. Round up your mortgage payments - McNutt says the quicker you can pay off your loan, the more you will save in interest. So round up your mortgage payments. If your accelerated bi-weekly mortgage payments are $543, consider rounding up to $600 instead.

3. Put ‘found’ money toward mortgage payments - McNutt believes unexpected sources of money such as a birthday gift or bonus at work are considered sources of ‘found’ money. ‘Found’ money can be easily applied to a mortgage without any impact to one's budget because it wasn’t money you were counting on. A one-time payment of $5,000 on a $250,000 mortgage at 3.75 per cent over 30 years will decrease the mortgage amortization by over 12 months.

4. Make a lump sum anniversary payment - McNutt says most banks will allow you to make an extra mortgage payment each year, which is applied directly to the principal. Taking advantage of this by making a lump sum payment — even if it’s as small as $50 a year — is a great way to chip away at your mortgage.

The New Year is almost here, and with it comes a bevy of legal and regulatory changes, especially for the mortgage industry. To help potential homebuyers understand how the changes will affect their mortgage processes, Don Frommeyer, CRMS, President of NAMB (The Association of Mortgage Professionals), outlines some of the regulations set to start in January 2014.

“Since 2009, the housing market has been working to create standards and regulations that minimize the risk of another mortgage industry fiasco,” says Frommeyer. “The ability-to-repay mandate is a perfect example of this and it exemplifies how mortgage professionals are taking extra caution with every customer.”

Upcoming mortgage industry changes include:

- Ability-to-Repay Mandate: The CFPB designed this regulation to set a gold-standard for lending to ensure each and every borrower is a qualified borrower. Lenders will follow a set of guidelines to establish a consumer’s income, assets and obligations before deeming them eligible. The CFPB rules establish a standard for what the government considers a “qualified mortgage.”

- Decrease in FHA Loan Limit: The Federal Housing Administration (FHA) announced that beginning January 1, 2014, mortgages will be limited to $625,000, down from $729,750. Homebuyers looking to obtain a larger loan will have to apply for a jumbo loan, which will most likely come with a higher down payment. “For many areas of the country this change won’t be a huge issue as average home prices fall below the established limit. However, borrowers in metropolitan areas with higher average housing prices may face challenges when applying for mortgages as the 20 percent down payment associated with jumbo loans will be an enormous increase from a traditional loan’s 3.5 percent down payment,” notes Frommeyer.

- Caps on Loan Origination Fees: January 10, 2014 brings a rule for the Qualified Mortgage that points and fees on mortgages cannot exceed 3%.

- Tighter Regulations for Self-Employed: As the rules to create a QM (qualified-mortgage) take effect, people without a W-2 will face difficulty when they apply for loans. It’s more of a task for individuals to prove their debt-to-income ratio without the proper documentation, even if they have a high net-worth and perfect credit. The income is calculated bringing into play the customer write offs to reduce taxable income.

For more information, visit www.namb.org.

Mortgage applications decreased 5.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 13, 2013.

The Market Composite Index, a measure of mortgage loan application volume, decreased 5.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 6 percent compared with the previous week. The Refinance Index decreased 4 percent from the previous week. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier to the lowest level since December 2012. The unadjusted Purchase Index decreased 9 percent compared with the previous week and was 12 percent lower than the same week one year ago.

"Mortgage applications fell further last week, with the market index falling to its lowest level in more than a dozen years,” says Mike Fratantoni, MBA’s Vice President of Research and Economics. “Both purchase and refinance applications fell as interest rates increased going into today's Federal Open Market Committee meeting."

The refinance share of mortgage activity increased to 66 percent of total applications from 65 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8 percent of total applications.

The close of every year seems to bring its own uncertainty from a tax-planning perspective. Last year featured the expiration of certain temporary tax provisions and the commencement of automatic federal government spending cuts. In October the President and Congress temporarily agreed on funding the government and increasing the national debt limit. But these issues may reappear in 2014 and could result in tax law changes that affect income-tax and financial planning.

For now, the best approach is to focus on how to limit your exposure to the many new or increased taxes in 2013 and beyond.

1. Manage higher taxes

Many taxpayers will be faced with higher tax bills in 2013 as a result of:

* The temporary reduction in the Social Security tax from 6.2 percent to 4.2 percent that expired at the end of 2012. This means an increase of $2,000 in taxes for $100,000 of wages.

* The tax rate on wage income that increased from 35 percent in 2012 to 40.5 percent in 2013. The tax rate on interest income that increased from 35 percent to 43.4 percent and the tax rate on capital gains and dividends that rose from 15 percent to 23.8 percent for high-income taxpayers.

* The Affordable Care Act, which was passed in 2010, that increased the Medicare tax from 1.45 percent to 2.35 percent for high-income taxpayers starting in 2013.

Strategies that can help minimize these taxes:

* Avoid a transaction, such as selling stock, which would push you into a higher tax bracket.

* Accelerate any deductions that you control, for example, pay your January mortgage in December to get the interest deduction in 2013.

Note that tax considerations are only one factor when determining whether to buy, hold or sell an investment.

2. Understand the new investment income tax.

The new 3.8 percent tax on investment income was created under the Affordable Care Act and became effective in 2013. The income threshold for this tax is $200,000 for individuals and $250,000 for joint filers.

For those affected, there are short-term and long-term strategies that can help minimize this tax burden.

A short-term strategy involves trying to manage your tax position to keep below the threshold for the 3.8 percent tax or to minimize investment income in any year where you will exceed the threshold.

A long-term strategy is to consider investment options that avoid the tax or change the types of investments you hold to include more that are not subject to the tax.

People who think they cannot be affected by high-income thresholds need to understand that the income amounts are not indexed for inflation. Over time, more and more taxpayers will be subject to the tax - even if their real or inflation-adjusted earnings are the same.

3. Consider converting retirement assets.

Recent increasing tax rates created a unique opportunity to accelerate gain and pay taxes at lower rates. Individuals who converted assets from a traditional before-tax IRA to an after-tax Roth likely benefitted.

After-tax Roth IRAs generate tax-free income, subject to you holding the account for five tax years and reaching age 59.5. If you have a traditional 401(k) or IRA, you can convert that asset to a Roth IRA by paying the tax on the gain or before-tax value of the asset. While any conversion tax liability in 2013 will need to be paid with your 2013 income tax return, it may make sense to convert some funds to a Roth IRA and diversify your retirement assets from a tax perspective. In addition to possibly paying tax on the gain at lower rates, a Roth IRA offers other benefits, such as not being subject to age 70.5- required minimum distributions, and limiting the impact of Medicare surcharges and the 3.8 percent investment tax.

4. Contribute to an IRA.

Many individuals do not realize they can contribute to an IRA each year regardless of their income or whether they have a retirement plan at work. The only requirements for making a contribution to an IRA are that you have earned income of at least the amount contributed and you have not reached age 70.5.

While you have until the due date of your income tax return in April of 2014 to make your 2013 IRA contribution, delaying the contribution until then results in you losing some of the opportunity for tax-favored growth. So consider making your 2013 contribution now and your 2014 contribution in January 2014. Depending on your income, you may be able to contribute directly to a Roth IRA and enjoy tax-free growth. Even if you earn too much to contribute directly to a Roth IRA, you can fund a traditional IRA and then convert some or all of the funds to a Roth IRA.

Prudential Financial, its affiliates and their financial professionals do not render tax or legal advice. Please consult with your tax and legal advisors regarding your personal circumstances.

The nationwide financial and economic challenges in recent years have upended millions of consumers' retirement plans, and dreams of transitioning into a new or smaller dwellings to age in place.

So the recent news from the National Association of Home Builders was well received. Builder confidence in the 55+ housing market continued to show improvement in the third quarter of 2013, representing the highest third-quarter number since the inception of the NAHB's 55+ Housing Market Index (HMI).

The report indicated that all segments, from single-family homes, to condominiums and multi-family rentals, registered strong increases. While this news is targeted at builders, the confidence factor bodes well for a jump start to 55+ housing developments and planned communities across the country.

Robert Karen, chairman of NAHB’s 50+ Housing Council and managing member of the Symphony Development Group said NAHB members are seeing steady improvement in the 55+ housing sector as buyers and renters are attracted to new homes and communities that offer the lifestyle they desire.

NAHB Chief Economist David Crowe added that like in other segments of the industry, the 55+ market is improving in part because consumers are more likely to be able to sell their current homes, which allows them to buy a new home or move into an apartment that suits their specific needs.

Which snapshot would you like?

• Market Area overview for Hilton Head/Bluffton/etc combined

• On Island Detached Homes Only

• On Island Attached Condos/Villas Only

• Off Island Combined Homes, Condos & Villas

Hilton Head Island Area Market Stats (MLS)*

• Closed Sales YTD: 3,337(+9.1%)
• Pending Sales YTD: 3,589 (+12.0%)
• Median Price - Area wide YTD: $255,000 (+13.0%)
• Average Price - Area wide YTD: $340,775 (+7.7%)
• Median Price - Hilton Head Island Villas/Condos YTD: $225,000 (+20.3%)
• Median Price - Hilton Head Island Detached Homes YTD: $480,000 (+6.2%)
• Median Price - Mainland Detached & Villas/Condos YTD: $213,000 (+12.2%)
• Housing Inventory: 2,390 Homes for Sale - 7.5 Months Supply (-21.9%)

      *Current as of November 2013. Next update for December to be released mid- to late-January

To see both reports in full, complete with graphs, click on

• Monthly Indicators
• Housing Supply Overview

Building a custom home today involves much more than specialized floor plans. Homeowners have endless options for special features and unique touches that can turn a home into a personal oasis.

“Most people who build a custom home prefer to be able to influence the design, appliances, fixtures and décor selections rather than buying a replicated product,” Kevin M. Stuckey, managing partner at Stuckey Builders LLC, explained.

Stuckey and other members of the Custom Builders Council of the Greater Houston Builders Association cite several hot trends in today’s market.

Functionality over Formality
James D. McVaugh, founder and president of McVaugh Custom Homes Inc., said homebuyers tend to prefer functionality over formal living spaces.

“This is particularly true with ‘great rooms’ -- where dining, kitchen and living rooms all blend in an L-shape configuration with a high ceiling,” he explained. “We are also seeing kitchen islands getting bigger and designed in new shapes like the letter ‘T’ which seats more people and allows for easier conversations.”

Amanda Pallotta, associate designer and of sister companies Contour Interior Design LLC and Capital Builders & Designers LLC, explained that clients tailor their homes to fit their lifestyle.

After much debate and worry in the industry, the Federal Housing Finance Agency decided that the 2014 maximum conforming loan limits for mortgages acquired by the government-sponsored enterprises Fannie Mae and Freddie Mac, will remain at $417,000 for one-unit properties in most areas of the country.

In its simplest explanation, the Housing and Economic Recovery Act (HERA) of 2008 establishes the maximum conforming loan limit that Fannie Mae and Freddie Mac are permitted to set for mortgage acquisitions and requires annual adjustments to these limits to reflect changes in the national average home price.

Policymakers were contemplating a reduction in the maximum size of home loans that Fannie Mae and Freddie Mac were allowed to acquire, trying to lessen the government’s footprint in the mortgage market. Many are glad that didn’t occur.

Steve Brown, president of the National Association of REALTORS®, was among those championing the decision, stating that NAR opposed lowering the ceiling on loans due to it increasing costs for consumers and reducing access to conventional mortgages.

“In September, when reports surfaced that FHFA acting director Edward DeMarco was considering using conservator authority to lower loan limits, NAR cautioned that such an experiment would jeopardize homeownership for many creditworthy buyers, especially first-time homebuyers who are often less likely to meet the 20 percent minimum down payment requirement,” Brown says. “There is already enough turbulence in the regulatory environment for mortgage lending. Lowering loan limits at this time would create even more confusion and uncertainty, and we would run the risk of reversing the progress that’s been made in the economic recovery.”

HERA provisions require that FHFA set loan limits as a function of local-area median home values. Where 115 percent of the local median home value exceeds the baseline loan limit ($417,000 in most of the U.S.), the local loan limit is set at 115 percent of the median home value. In Washington, D.C.—and all U.S. states except Alaska and Hawaii—the highest possible local area loan limit for a one-unit property is $625,500.

In determining the 2014 HERA loan limits in high-cost areas, the FHFA did not permit declines relative to prior HERA limits. Therefore, while it did not explicitly prohibit declines in high-cost area loan limits, that approach is consistent with the statutory procedure for responding to changes in prices on a national basis.

For more information about GSE loan limits, contact our office today.

The recently released National Association of REALTORS Profile of Home Buyers and Sellers 2013 yielded a variety of interesting facts.

When polling consumers about their homeselling experience, the NAR learned that:

• Almost half of home sellers traded up to a larger size and higher priced home and 59 percent purchased a newer home.
• The typical seller lived in their home for nine years. The median tenure has increased in recent years. In 2007,the typical tenure in home was only six years.
• Eighty-eight percent of sellers were assisted by a real estate agent when selling their home.
• Recent sellers typically sold their homes for 97 percent of the listing price, and 47 percent reported they reduced the asking price at least once.
• Thirteen percent of recent sellers had to delay or stall selling their home because the value of their home was worth less than their mortgage.
• Thirty-six percent of sellers offered incentives to attract buyers, most often assistance with home warranty policies and closing costs

A: Such loans are offered by government agencies and private lenders, including nonprofit groups and employers. In fact, there are government programs at both the federal and state level to help cash-strapped buyers. Under many state housing agency guidelines, borrowers must usually be first-time homebuyers or have a limited family income to qualify for low down payment loans.

The Department of Housing and Urban Development (HUD) offers several programs through the Federal Housing Administration (FHA) that require down payments of 3 to 5 percent.

Several times over the past few years, President Bush has proposed a “zero down mortgage” insurance program for first-time homebuyers with good credit. First proposed for his 2005 budget, it was promoted as a tool that would qualify about 150,000 FHA-insured borrowers in the first year alone. The 2006 budget indicated 200,000 potential borrowers would be helped. The plans, which required congressional approval, never got off the ground.

Fannie Mae, the nation’s largest supplier of home mortgage funds, has a popular program for low- and moderate-income homebuyers called Community Home Buyers. Under the program, borrowers may buy with just 3 percent down—with a 2 percent gift from family members, a government program, or nonprofit group—and obtain private mortgage insurance to protect the lender against default. The program is available through participating mortgage lenders and requires that borrowers take a home-buyer education course.