Mortgage News Roundup - 5 Questions for Real Estate Agents From Potential Clients

Mortgage News Roundup

Costs of homes are slowly inching up, and the interest rates for mortgages are slowly inching down. Today we’ll look at questions for a potential real estate agent, and what you should know about homeowner associations when buying a home.

5 Questions for Real Estate Agents From Potential Clients

When you’re ready to buy a home, you generally will want the services of a licensed real estate professional. Often you’ll get numerous recommendations. Before you choose one, ask them all a series of questions to gauge how well they compare and who is going to be best for your situation.

1. How long have you been in this business?
2. What geographic areas and types of homes do you handle?
3. How will you communicate with me?
4. Can you share references?
5. What will it cost me to sell this property?

So if you’re a buyer, you’re wondering why you would ask question number 5, right? Well, often, buyers don’t pay costs associated with the sale of a home. It will help you to understand how much it may cost you when you decide to sell the home. Also look into detailed closing cost estimates.

What to Review in HOA Documents When Buying

HOA stands for Homeowners Association. There are rules and regulations with a governing body when you buy into a common interest development. You’re not just buying your house; you’re buying into a larger entity that typically owns the building structure, the roof, the parking garage, the clubhouse, the pools, security guards at the gates, etc.

You need to read carefully what you’re signing into when you buy into a development like this. Work with the real estate agents and HOA to get a copy of the documents sooner rather than later. Often, buyers don’t receive them until late in the escrow process, and don’t have enough time to really review the implications.

You need to ask for:

• HOA bylaws, board meeting minutes, newsletters
  These will alert you to special unit or building issues, such as restrictions on short-term rentals or pets, ability to park in your driveway, insurance issues, building construction quality and all the rules you’ll need to live by.
• Demand statement
  This will tell you whether there are any unpaid HOA fees, unit violations that may need to be resolved associated with your property.
• Reserve study
  This will tell you how much money is saved for paying for long-term repairs such as roofs, streets, fences, painting, etc. The reserve study tells you how much the community should have saved for those capital repairs and replacements and how much is actually saved.
• Financial statements and budgets
  This will show you whether the HOA is collecting enough money to pay its bills and whether it is putting away money for reserves.
• Insurance master policy binder
  This will tell you what the HOA insurance covers. Take this to your insurance agent to see what is not covered, so you can get the proper coverage for yourself.

Engage a lawyer if you have questions. And use the internet to see if there are any complaints.

Market Commentary for the Week of Memorial Day

This holiday-shortened week brings us the release of five relevant economic reports for the markets to digest in addition to Treasury auctions that have the potential to influence bond trading and mortgage rates. None of the reports are considered to be key data, but all of them do carry enough significance to affect mortgage rates if their results show sizable surprises.
The financial and mortgage markets will be closed Monday in observance of the Memorial Day holiday and will reopen for regular trading Tuesday morning.

April’s Durable Goods Orders released this morning, rose by 0.8%, which was higher than the expected -1.3%. The Durable Goods Orders Report gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket products. These are items made with an expected life span of three or more years such as airplanes, appliances and electronics. The 0.8% gain was due in large part by a spike in military hardware, while bookings for civilian order were mostly lower. This has been relatively good news for the bond market and mortgage rates as the bond market is trading higher.

The Conference Board is next with their Consumer Confidence Index (CCI) at 10:00 AM today. This data measures consumer willingness to spend. If the index rises, it indicates that consumers felt better about their personal financial and employment situations and therefore are more apt to make large purchases in the near future. If confidence is sliding, analysts think consumer spending may slow in the near future. The latter is good news for the bond market because consumer spending makes up over two-thirds of the U.S. economy. A decline in the index should boost bond prices and push mortgage rates lower Tuesday morning while a larger than expected increase would likely cause rates to move higher. It is expected to show a reading of 82.7, up from April’s 82.3 reading.

Wednesday has nothing scheduled that is expected to affect mortgage rates except the first of this week’s two Treasury auctions that are worth watching. The Fed will auction 5-year Notes Wednesday and 7-year Notes on Thursday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. On the other hand, strong sales usually make bonds more attractive to investors, bringing more funds into bonds. The buying of bonds that follows usually translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET each auction day, so look for any reaction to come during afternoon hours Wednesday and Thursday.

The next report will be Thursday’s revision to the 1st quarter Gross Domestic Product (GDP) at 8:30 AM ET. This is the first of two revisions that we get. The second revision to this index comes next month but isn’t expected to carry much importance. The GDP is the sum of all goods and services produced in the U.S. and is considered to be the best measurement of economic growth. Last month’s preliminary reading revealed a 0.1% increase in the annual rate of growth. Analysts expect a downward revision of 0.6% in this update. If the revision comes in much stronger than expected, we may see the bond market react negatively and mortgage rates move higher because it would mean the economy was stronger than thought last quarter. It will be interesting to see how the markets react if we did have economic contraction during the first three months of the year since bonds tend to thrive during weaker economic conditions.

Friday has the remaining two pieces of data. April’s Personal Income and Outlays data is the first at 8:30 AM ET. It gives us an indication of consumer ability to spend and current spending habits. An increase in income means that consumers have more money available to spend. As we pointed out above, since consumer spending makes up over two-thirds of our economy, this data can cause movement in the financial markets and mortgage rates. Current forecasts are showing a 0.3% increase in income and a 0.2% rise in spending. Weaker readings would be considered good news for bonds and mortgage rates.

The last relevant data of the week will come from the University of Michigan, who will update their Index of Consumer Sentiment for May late Friday morning. This type of data is watched fairly closely because when consumers are feeling more confident about their own financial situations, they are more likely to make a large purchase in the near future. Rising confidence and the higher levels of spending that usually follow are considered negative news for bonds and mortgage rates. Friday’s report is expected to show a decline of 0.4 from this month’s preliminary reading of 81.8. A higher reading would be considered bad news for bonds and mortgage pricing while a larger decline should help boost bond prices and lead to a slight improvement in rates.

Overall, I think today is the best candidate for most active day for mortgage rates this week although Thursday’s GDP reading will draw plenty of attention also if it does show a negative reading. With two relatively important reports scheduled for Friday, it may also be an active day. The least active day will probably be Wednesday unless the stock markets rally or show sizable losses. Please keep in mind though, as we saw several days the past couple weeks, we don’t necessarily have to have important data for the markets and mortgage pricing to move considerably. Therefore, please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

Mortgage News Roundup - Feds Evaluating Raising Interest Rates

Feds Evaluating Raising Interest Rates

With the economy and job market picking up, the Federal Reserve is beginning to study how it will raise interest rates even while the financial system is flush with Fed money, according to Fed meeting minutes released Wednesday.

The minutes of the April meeting showed that the central bank was shifting its attention from a bond-buying stimulus program (which is expected to be phased out this year) towards the challenge of raising interest rates as the economy and inflation increase.

The Fed is weighing several tools to raise interest rates in the broader economy, including increasing the interest the central bank pays banks to park money with the Feds. Fed officials are also considering reverse repurchase agreements, or “reverse repos”, in which the Fed effectively borrows money from banks overnight at a fixed interest rate to sop cash from the financial system.

4 Things Homebuyers Should Never Say

You don’t need to be a world-class negotiator to nab a great deal on your dream home. It’s more a matter of knowing what not to say. One errant comment or paperwork misstep can compromise your negotiating position.

1. “I’m not pre-approved” – you look like a weak candidate. And get pre-approved quickly.
2. “I’m Pre-Approved for This Exact Amount” – you may get the place for less if you don’t tip your hand.
3. “I Can’t Live Without This Home” – you’re right where they want you….desperate and willing to pay any price.
4. “This Is My Forever Home” – you should be thinking ultimately of resale value even if it’s 20 years down the road.

How to Avoid Closing-Cost Confusion

One of the most common mistakes for first-time homebuyers is to forget to factor in closing costs. So what are they? Closing costs are paid at the close of escrow in a real estate transaction or when the title is transferred to another party. They can end up being more expensive then planned on, so it’s essential to talk with a reputable loan officer to know up front how much you should plan on putting aside.

Typically closing costs cover appraisal fees, loan origination fees, title insurance, title search fees, credit report fees, recording fees, underwriting fees, and other costs associated with the close of a home.

Some of these fees are negotiable, and some are not. Some may be paid for by the seller. Talk with your real estate agent and loan officer to ensure everyone’s on the same page going in.

Market Commentary for the Week of May 19th

This week brings us the release of only three pieces of relevant economic news in addition to the minutes from the most recent FOMC meeting. None of the economic data is considered to be highly important to the markets and mortgage rates, but they do carry enough significance to influence mortgage rates if they show a wide variance from forecasts. Monday and Tuesday have nothing of importance scheduled, so look for stock movement to heavily influence bond trading and mortgage rates. Stock gains will probably pressure bonds and cause mortgage rates to move higher. If the major stock indexes show losses during the first couple days, we may see bonds thrive and mortgage rates move lower.

The first event of the week comes late Wednesday when the minutes of the last FOMC meeting will be released. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation or geopolitical concerns in the economy and their impact on economic growth. The goal is to form opinions about the Fed’s next move regarding interest rates and their current bond-buying program (QE3). Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during afternoon trading Wednesday.

The National Association of Realtors will give us the first piece of economic data with the release of their Existing Home Sales report at 10:00 AM ET Thursday. This data tracks resales of existing homes in the U.S. during April, giving us a measurement of housing sector strength and mortgage credit demand. This type of data is relevant because a weakening housing sector makes broader economic growth less likely. Current forecasts are calling for an increase in home sales between March and April. Ideally, the bond market would prefer to see a decline, indicating housing sector weakness. A large increase in sales could lead to bond weakness and a small increase in mortgage rates Thursday morning since a strengthening housing sector raises optimism about general economic growth.

April’s Leading Economic Indicators (LEI) will also be released at 10:00 AM ET Thursday. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show a 0.5% increase from March’s reading, meaning that economic activity is likely to strengthen over the next few months. A decline would be good news for the bond market and mortgage rates, while a larger increase could cause mortgage rates to inch higher Thursday.

The final release is April’s New Home Sales report late Friday morning. It is the sister report of the Existing Home Sales report. This data gives us a similar measurement of housing sector strength and future mortgage credit demand, but tracks a much smaller portion of housing sales than Thursday’s report does. Actually, it probably will not have much of an impact on mortgage pricing unless it shows a sizable variance from forecasts. Analysts are expecting to see gains in sales from March’s level, meaning the new home portion of the housing sector also strengthened last month.

Overall, I believe Thursday will be the most important day for rates, although Friday should be active also as it will be shortened due to the early close ahead of the Memorial Day. I suspect that Tuesday will be the calmest day of the week. Even though there is nothing to be concerned with Monday, selling in bonds late Friday means there is a small increase in mortgage rates waiting if your lender did not make an upward revision during afternoon trading. I don’t think we will see as much movement in rates was what we saw last week, however, it is still recommended to maintain contact with your mortgage professional if you have not locked an interest rate yet.

Mortgage News Roundup - Student Debt and Qualifying for a New Home Purchase

And we’re coming to the end of another week, creeping closer towards summer. It’s time to start cleaning the grill for Memorial Day barbecues, and pulling patio furniture out of storage if you haven’t already.

First, we need to mention that mortgage rates have hit a 2014 low in part because the Spring home buying season is in full swing. Global unrest and a weak U.S. economic recovery also have kept rates low on U.S. Treasury bonds. And as we mentioned last week, nearly half of all home sales were all cash. So, now is the time to talk with a professional loan officer about your situation so you can lock in a low rate.

Home Ownership Rates Slip In 2013

Home ownership in Sacramento County has plunged to its lowest level in 40 years after last decade’s catastrophic housing crash and the mass purchase of foreclosed homes by real estate investors.

“It’s a combination of people losing their homes to foreclosure, first-time buyers not being able to get loans, and investors swooping in and taking over neighborhoods,” said Kevin Stein, associate director of the California Reinvestment Coalition, a statewide group that advocates for low-income communities on housing and banking matters.

San Francisco and Los Angeles metro areas tend to have a much lower rate because the cost of housing is so much higher. The Los Angeles metro area home ownership rate slipped to a 19 year low in 2013.

In comparison, the overall nationwide home ownership rate is 64.8% down from 69% ten years ago. Home ownership is lowest in the West, at 59.4%.

Student Debt Keeps Young People From Buying Houses

The Federal Reserve Bank of New York reported Tuesday that in 2013 student debtors between the ages of 27 and 30 were less likely to have a mortgage than their peers who were student-debt free. It makes sense as it’s more difficult to save up a down payment, and with the new regulations, it would be more difficult to prove ability to pay. What’s interesting is that the number of mortgage holders dropped from about 34% in 2008 to about 22% in 2013.

But what’s also interesting is that the Federal Reserve released an additional report at the end of 2012 that showed that borrowers who were current on their student loan payments were actually more likely to take out a mortgage than other young adults.

Making the Most of an Open House Visit

Zillow posted a great blog entry on how to get the most out of an open house visit when you’re looking for your dream home.

• Use the open house to learn the market without committing
• You don’t have to sign in (but don’t be rude)
• Watch the other buyers
• Ask the agent questions
• Be open to meeting your future agent

Are you looking for a new home this weekend?

Market Commentary for the Week of May 12th

This week brings us the release of six economic reports that may have the potential to influence mortgage rates. There is data scheduled to be posted four of the five days with Monday being the empty one. Several of the reports are considered to be of elevated importance to the bond market and therefore mortgage rates. This raises the possibility of seeing noticeable movement in rates multiple days this week.

The first piece of data this week is April’s Retail Sales at 8:30 AM ET Tuesday morning. This is an extremely important report for the financial markets since it measures consumer spending. Consumer spending makes up over two-thirds of the U.S. economy, so this data can have a pretty significant impact on the markets. Current forecasts are calling for a 0.3% increase in sales from March to April. A weaker than expected level of sales should push bond prices higher and mortgage rates lower Tuesday morning as it would signal that economic activity may not be as strong as thought. However, an unexpected increase could renew theories of economic growth that would lead to more stock buying and bond selling, pushing mortgage rates higher.

Wednesday has April’s Producer Price Index (PPI) at 8:30 AM ET. It helps us track inflationary pressures at the producer level of the economy. If this report reveals weaker than expected readings, indicating inflation is not a concern at the manufacturing level, we should see the bond market improve. The overall index is expected to rise 0.2%, while the core data that excludes more volatile food and energy prices has been forecasted to also rise 0.2%. A decline in the core data would be ideal for mortgage shoppers because inflation is the number one nemesis for long-term securities such as mortgage-related bonds. As inflation rises, longer-term securities become less appealing to investors since inflation erodes the value of those securities’ future fixed interest payments. That is why the bond market tends to thrive in weaker economic conditions with low levels of inflation.

Thursday has two reports scheduled with the first being April’s Consumer Price Index (CPI) at 8:30 AM ET. This is the sister report of Tuesday’s PPI report, but measures inflationary pressures at the more important consumer level of the economy. These results will be watched closely and could lead to significant volatility in the bond market and mortgage pricing if they show any surprises. Current forecasts are calling for a 0.3% increase in the overall index and a 0.2% rise in the core data reading. As with the PPI, the core data is the more important of the two readings and will help dictate mortgage rate direction.

April’s Industrial Production is the second of the day but will come at 9:15 AM ET. It measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.1% increase in production, indicating that manufacturing activity was fairly flat. A decline in output would be good news for the bond market and mortgage rates because it would indicate that the manufacturing sector is not as strong as thought. This report is considered to be moderately important, so it will likely need to show unexpected strength or weakness to cause movement in mortgage rates.

The last two pieces of data will be posted Friday morning. April’s Housing Starts gives us an indication of housing sector strength and mortgage credit demand by tracking newly issued permits and actual starts of new home construction. It is expected to show an increase in new construction starts from March’s reading, hinting at housing sector growth. However, since this report is not considered to be of high importance to the bond market, it likely will have little impact on mortgage rates unless it varies greatly from forecasts.

May’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment will close out the week’s calendar just before 10:00 AM ET Friday. This index measures consumer willingness to spend, which relates to consumer spending. If consumers are more confident in their own financial situations, they are more apt to make large purchases in the near future. This report usually has a moderate impact on the financial markets though, because it is not exactly factual data. It is expected to show a reading of 84.5, which would be an increase from April’s final reading of 84.1, indicating consumers are a little more confident and more likely to spend than they were last month. If it shows a large decline in consumer confidence, bond prices could rise and mortgage rates would move slightly lower because waning confidence means consumers are less apt to make a large purchase in the near future.

Overall, the calmest day for mortgage rates will likely be Monday while the best candidates for most active day are Tuesday and Thursday. Both have key economic data being posted that will attract plenty of attention in the bond market. We also need to watch stocks for mortgage rate movement. Generally speaking, stock weakness makes bonds more attractive while stock gains tend to draw funds from bonds, leading to higher mortgage rates.

Mortgage News Roundup - Alternatives to Putting 20% Down

In today’s roundup, we’ll talk about how to protect your credit, alternatives to 20% down, and an interesting trend that we’re seeing on all cash sales.

Be proactive about your credit after breaches

Maybe you’re reviewing your monthly charges and found something you know you didn’t buy. Or perhaps your credit card company sent you a letter stating that they’re sending you a new card because they believed your card number was compromised.

Fraud might be on the rise in part lately because there have been so many significant security breaches, said Adam Levin, chairman and co-founder of Identity Theft 911. We’ve heard of Target, Neiman Marcus, and Michaels Stores and its subsidiary Aaron Brothers. But what of the ones we haven’t heard of yet?

Industry experts say there are many ways someone’s card information can be compromised :

• a rogue employee using a skimming device
• a consumer responding to phishing e-mails
• malware installed at a point-of-sale system at a store
• cyber-attacks can be very sophisticated and criminals often are out of the country.
• “micropayment fraud schemes” that charge your card repeatedly for small amounts for rogue Internet pharmacies, fake anti-virus software, jewelry or handbag buying clubs, and online gambling

So, yes, you’ve got to stay vigilant and regularly monitor your credit card balance and charges. Once you find something, contact your credit card company right away and request a new card. It’s a pain to update all of your recurring payments, but it’s better than the hassle of having to dispute a lot of fraudulent charges.

Alternatives to putting 20 percent down on a home

We all grew up hearing that you had to save up enough cash to put a 20% down payment when you purchase a house, and additional cash to cover the closing costs and additional fees. But that’s not always easy to do considering the Census released the average cost of a house in the United States costs $311,400.

There are alternatives to the standard 20% down payment. If you put less down, you will need to purchase primary mortgage insurance (PMI) and will increase your monthly expenses.

So if you really want a house and you’re looking for alternatives to putting 20 percent down, here’s what you need to know.

Figure out financing before looking for a house. There are numerous programs that will help you buy a home without 20 percent down. Talk with a professional loan officer to find out your options for your financial situation. They spend time each week reviewing new federal and state regulations as well as new loan offerings from the major lenders.

Nearly half of all home sales all-cash deals

All-cash deals hit a record 43% of home sales during the first three months of 2014, according to RealtyTrac. That’s up from 19% compared to the first three months of 2013. It’s also the highest level reported since RealtyTrac began tracking the deals in early 2011.

The jump is due to two main factors: strict lending standards that make it difficult to get a mortgage and intense buyer competition. Cash deals tend to close on time. Buyers dependent on financing may run into snags due to strict mortgage underwriting standards.

Miami, New York, Boston and coastal California cities are attracting a lot of foreign buyers who are paying in all cash, according to Jeff Meyers, founder of Meyers Research.

Market Commentary for the Week of Cinco de Mayo

This week has little scheduled in terms of economic data that is expected to drive bond trading and mortgage rates. There are only two relevant monthly or quarterly economic reports on the calendar and both are considered to be fairly insignificant. We do, however, have two Treasury auctions that can potentially affect rates in addition to a couple of congressional appearances by Fed Chairman Yellen the middle part of the week.

Friday’s Employment report gave us some unfavorable results that initially led to weakness in bonds, but that was short-lived as bonds moved into positive ground during late morning trading. That was quite surprising because the data indicated a much stronger than thought employment sector that should have fueled bond selling and stock buying. There is no clear reason why the data was shrugged off. It will be interesting to see if we get a correction in Monday’s session or if indeed the data was not a concern to bond traders. The strength we saw Friday and pressure building again in Ukraine could help keep bond yields lower, preventing a sizable upward move in mortgage rates in the immediate future.

This week’s two pieces of monthly or quarterly economic data will come Tuesday and Wednesday, but neither is considered to be highly important. March’s Goods and Services Trade Balance report will be released early Tuesday morning. This report gives us the size of the U.S. trade deficit but likely will not have much of an impact on the bond market or mortgage pricing. It is expected to show a $42.5 billion trade deficit, but likely will have little influence on Tuesday’s mortgage rates unless it shows a significant variance from forecasts.

The second will be from the Labor Department, who will release its 1st Quarter Productivity and Costs data early Wednesday morning. This information helps us measure employee productivity in the workplace. High levels of productivity help allow low-inflationary economic growth. If employee productivity is rapidly rising, the bond market should react favorably. However, a sizable decline could cause bond prices to drop and mortgage rates to rise slightly Wednesday morning. It is expected to show a 1.2% drop in worker productivity during the first three months of the year.

The Treasury will hold a 10-year Note sale Wednesday and a 30-year Bond sale Thursday. Results of the auctions will be posted at 1:00 PM ET each day. If they are met with a strong demand from investors, we could see bond prices rise enough during afternoon trading to cause downward revisions to mortgage rates. However, lackluster bidding in the sales, meaning longer-term securities are losing their appeal, could lead to higher mortgage pricing those afternoons.

The middle of the week also has two speaking engagements by Fed Chairman Janet Yellen. She will appear before the Joint Economic Committee Wednesday morning and the Senate Budget Committee Thursday morning. As with anytime the Fed Chairman is speaking, the media and market participants will be watching. Any surprises could lead to volatility in the markets and movement in mortgage rates.

Overall, I think we will see the most movement in mortgage rates the middle part of the week, but Monday’s open could be interesting also due to Friday’s confusing reaction to the key economic data. Wednesday’s 10-year Treasury Note auction could cause movement in rates during afternoon hours. However, any of this week’s moves will most likely be much smaller than some of last week’s changes were, comparatively speaking. Still, I recommend maintaining contact with your mortgage professional if you have not locked an interest rate yet because the overall tone and momentum of the bond market can change quickly at any time.

Mortgage News Roundup - 30-Year Fixed Mortgage Rates Drop Again

Zillow is reporting that interest rates for 30-year fixed mortgages fell again this week.

“Last week, rates dipped to the lowest level in seven weeks as weaker-than-expected home sales and continued concerns over geo-political stability in Ukraine kept downward pressure on rates,” said Erin Lantz, vice president of mortgages at Zillow. “This week, we expect more volatility as both the mid-week Federal Open Market Committee announcement and Friday’s jobs report have the potential to move markets.”

Here’s Why You Need to Be Pre-Approved for a Mortgage

Once upon a time, you could find a home, and then apply for a mortgage. Nowadays, the markets are so tight with so few listings, and stiff competition as well, that you need to be pre-approved for your home loan before you can start looking. Additionally, due to new regulations, it takes longer to process all of the documentation.

With online listings and so many real estate resources available to buyers and sellers, it’s easy to quickly get a property in front of the motivated. Buyers aren’t waiting on a call or fax from their real estate agent like they did in the 1980s. Instead, buyers can get push notifications from Zillow or texts from their agents and see homes as soon as they’re listed.

Transactions happen at the same speed. If you’re not approved for a mortgage when you make an offer, the seller risks waiting weeks to see if your loan will go through.

Being pre-approved also helps you be crystal clear on what you can afford.

Dangers of Giving Your Home to Your Children

It may seem like a great idea to transfer ownership of your home to your kids, but it actually isn’t.

For starters, parents often don’t realize the security they’re giving up, especially if they plan to continue living in the home. If one child were to get divorced, the ex-spouse could have a legitimate claim on the home. Creditors can come after the home if your child defaults on a loan or loses a legal dispute. There could be issues if you have multiple children with one wanting to take money out of the equity, and the others don’t. Your child could even sell the property without your permission. Nothing could be more awkward than getting evicted from your home by your own kid. And don’t think it couldn’t happen.

And transferring the home could negatively impact your applying for Medicaid coverage.

A home transfer is not advisable as a wealth-preservation or tax-avoidance strategy if the value of the parents’ estate is within the limit allowed for exclusion by the IRS or state tax authorities. In a case where federal gift tax applies, the rate can be as high as 40%. There can also be state gift taxes.

The tax bite is likely to be far less if the home changes hands as part of a normal inheritance. Talk with a professional to learn all of the impacts to your taxes and lifestyle before you make such a decision.