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The Art of Mortgage Pre-Approval

Buying a home can feel like a cutthroat process.

But getting mortgage preapproval can help you, especially in a hot house market.

What Is Mortgage Preapproval?

Mortgage preapproval comes in the form of a letter from a lender that states that you qualify for a loan of a certain amount and at a certain interest rate based on an evaluation of your credit and financial history.

The letter is an offer, but not a commitment, to lend you a specific amount. It’s good for up to 90 days, depending on the lender.

You’ll want to shop for homes within the price range of your preapproved mortgage.

Armed with a letter of preapproval, you can show sellers that you are a serious homebuyer with the means to purchase a home. In the eyes of the seller, preapproval can often push you ahead of other potential buyers who have not yet been approved for a mortgage.

Once you find a house that you want to buy, you can make an offer. And if the seller accepts, it’s time to finalize your mortgage application.

A loan underwriter will review your application and conduct other due diligence measures, such as having the house appraised to make sure it is valued at the price it’s selling for.

If all goes well, the lender will issue a commitment letter, which officially seals the deal on your loan, and you can schedule a closing date.

Preapproval vs. Prequalification

As you begin to look into getting a mortgage, you may encounter another term: prequalification.

Getting prequalified for a mortgage is not the same as being preapproved. It’s actually a relatively simple process in which a lender looks at a few financial details, usually self-reported, such as income, assets, and debt, and estimates how much of a mortgage the lender thinks you can afford.

Prequalification gives you an idea of what your monthly payment might be and provides a chance to shop around with various lenders to see what types of terms and interest rates they offer. (Prequalification is not a guarantee that you will actually qualify for a mortgage.)

Taking out a mortgage is a huge step, of course. Prequalification can be useful, because it gives you an idea of how much house you can afford.

This home affordability calculator can also help in estimating how much you can afford.

Getting preapproved is a more complicated process. You’ll have to fill out an application with your chosen lender, agree to a credit check, and provide information about your income and assets.

Recommended: Preapproval vs. Prequalification: Key Differences to Know

Upping Your Odds of Preapproval

There are a number of steps you can take to increase your chances of preapproval or to increase the amount your lender may approve.

Build Your Credit

When you apply for any type of loan, lenders want to see that you have a history of properly managing your debt before offering you credit themselves.

You can build your credit history by opening and using a credit card and paying your bills on time. Or you could consider having regular payments, such as your rent, tracked and added to your credit score.

Recommended: What Credit Score is Needed to Buy a House?

Check Your Credit

If you’ve established a credit history, a first step before applying for a mortgage is to check your credit reports, which are a history of your credit compiled from sources like banks, credit card companies, collection agencies, and the government.

The information is collected by the three main credit reporting bureaus, Transunion, Equifax, and Experian. You’ll want to make sure that the information on your credit reports is correct. Ordering the reports is free .

If you find any mistakes, contact the credit reporting agencies immediately to let them know. You don’t want any incorrect information weighing down your credit score, putting your chances for preapproval at risk.

The free credit reports provided by the nationwide credit reporting agencies do not include your credit score, a number typically between 300 and 850. You can purchase your score directly from the credit reporting agencies, or from FICO®. Your credit card company may provide your credit score for free.

Or you could try an app that updates your credit score weekly and tracks your spending at no cost.

Stay on Top of Debt

Your ability to pay your bills on time has a big impact on your credit score. And if your budget allows, you can make payments in full.

If you have any debts that are dragging down your credit score—for example, debts that are in collection—it’s smart to work on paying them off first, as this can give your score a more immediate boost.

Recommended: How Much Debt is Too Much to Buy a Home?

Watch Your Debt-to-Income Ratio

Your debt-to-income ratio is your monthly debt payments divided by your monthly gross income. If you have $1,000 a month in debt payments and make $5,000 a month, your debt-to-income (DTI) ratio is $1,000 divided by $5,000, or 20%.

Mortgage lenders typically like to see a DTI ratio of 36% or less.

Lenders may assume that borrowers with a high DTI ratio will have a harder time making their mortgage payments. If you’re seeking preapproval for a mortgage, it may be beneficial to keep the ratio in check by avoiding large purchases. For example, you may want to hold off on buying a new car until you’ve been preapproved.

Prove Consistent Income

Your lender will want to know that you have enough money coming in each month to cover a potential mortgage payment, so the lender will likely want proof of consistent income for at least two years (that means pay stubs, W-2s, etc.).

For some potential borrowers, such as freelancers, this may be a tricky process since they may have income from various sources. Keep all pay stubs, tax returns, and other proof of income and be prepared to show them to your lender.

What Happens If You’re Rejected?

Rejection hurts. But if you aren’t preapproved, or you aren’t approved for a large enough mortgage to buy the house you want, you also aren’t powerless. You can ask the lender why it said “no.” This will give you an idea about what you might need to work on in order to secure the mortgage you want.

Then you may want to work on the factors that your lender saw as a sticking point to preapproval. You can continue to work to boost your credit score, lower your DTI ratio, or save for a higher down payment.

If you’re able to pay more upfront, you will typically lower your monthly mortgage payments. Once you’ve worked to make yourself a better candidate for a mortgage, you can apply for preapproval again.

The Takeaway

In a competitive market, having a mortgage preapproval letter in hand may give a house hunter an edge. After all, the letter states that the would-be buyer qualifies for a home loan of a certain amount.

If you’re shopping for a mortgage, give SoFi a look. SoFi mortgage loans come with competitive rates and as little as 5% down.

It takes just two minutes to check your rate.



SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

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Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s
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External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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What to Know about FHA 203K Loans

Buying a fixer-upper is sometimes romanticized by pop culture. While it’s fun to dream, the reality of home renovation is that it can be laborious and draining, especially if the home needs serious help.

Repair work requires energy and resources, and it can be difficult to secure a loan to cover both the value of the home and the cost of repairs—especially if the home is currently uninhabitable. Most lenders won’t take that sort of chance.

But if you have your heart set on buying a fixer upper, an FHA 203(k) loan can help.

The Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD), insures loans for the purchase and substantial rehab of homes. It is also possible to take out an FHA 203(k) loan for home repairs only, though it might not be your best option if that’s all you need.

If you have the vision to revive a dreary house, here’s info about FHA 203(k) loans and other home improvement loan options.

What Is an FHA 203(k) Home Loan?

Section 203(k) insurance lets buyers finance both the purchase of a house and its rehabilitation costs through a single long-term, fixed- or adjustable-rate loan.

Before the availability of FHA 203(k) loans, borrowers often had to secure multiple loans to obtain a mortgage and a home improvement loan.

The loans are provided through HUD-approved mortgage lenders and insured by the FHA. The government is interested in rejuvenating neighborhoods and expanding homeownership opportunities.

Because the loans are backed by the federal government, you may be able to secure one even if you don’t have stellar credit. Rates are generally competitive but may not be the best, because a home with major flaws is a risk to the lender.

The FHA 203(k) process also requires more coordination, paperwork, and work on behalf of the lender, which can drive the interest rate up slightly. Lenders also may charge a supplemental origination fee, fees to cover review of the rehabilitation plan, and a higher appraisal fee.

The loan will require an upfront mortgage insurance payment of 1.75% of the total loan amount (it can be wrapped into the financing) and then a monthly mortgage insurance premium.

Applications must be submitted through an approved lender .

What Can FHA 203(k) Loans Be Used For?

Purchase and Repairs

Other than the cost of acquiring a property, rehabilitation may range from minor repairs (though exceeding $5,000 worth) to virtual reconstruction.

If a home needs a new bathroom or new siding, for example, the loan will include the projected cost of those renovations in addition to the value of the existing home. An FHA 203(k) loan, however, will not cover “luxury” upgrades like a pool, tennis court, or gazebo (so close!).

If you’re buying a condo, 203(k) loans are generally only issued for interior improvements. However, you can use a 203(k) loan to convert a property into a two- to four-unit dwelling.

Your loan amount is determined by project estimates done by the lender or the FHA. The loan process is paperwork-heavy. Working with contractors who are familiar with the way the program works and will not underbid will be important.

Contractors will also need to be efficient: The work must begin within 30 days of closing and be finished within six months.

Mortgage LoanMortgage Loan

Temporary Housing

If the home is indeed unlivable, the 203(k) loan can include a provision to provide you with up to six months of temporary housing costs or existing mortgage payments.

Who Is Eligible for an FHA 203(k) Loan?

Individuals and nonprofit organizations can use an FHA 203(k) loan, but investors cannot.

Most of the eligibility guidelines for regular FHA loans apply to 203(k) loans. They include a minimum credit score of 580 and at least a 3.5% down payment.

Applicants with a score as low as 500 will typically need to put 10% down.

Your debt-to-income ratio typically can’t exceed 43%. And you must be able to qualify for the costs of the renovations and the purchase price.

Again, to apply for any FHA loan, you have to use an approved lender. (It’s a good idea to get multiple quotes.)

Common Home Improvement Loan Options

The FHA 203(k) provides the most comprehensive solution for buyers who need a loan for both a home and substantial repairs. However, if you need a loan only for home improvements, there are other options to consider.

Depending on the improvements you have planned, your timeline, and your personal financial situation, one of the following could be a better fit.

Recommended: Looking to upgrade your home this year? Check out our Home Improvement Cost Calculator to estimate your budget and ROI.

Other Government-Backed Loans

In addition to the standard FHA 203(k) program, there is a limited FHA 203(k) loan of up to $35,000. Homebuyers and homeowners can use the funding to repair or upgrade a home.

Then there are FHA Title 1 loans for improvements that “substantially protect or improve the basic livability or utility of the property.” The fixed-rate loans may be used in tandem with a 203(k) rehabilitation mortgage.

The owner of a single-family home can apply to borrow up to $25,000 with a secured Title 1 loan.

With Fannie Mae’s HomeStyle® Renovation Mortgage, homebuyers and homeowners can combine their home purchase or refinance with renovation funding in a single mortgage. There’s also a Freddie Mac renovation mortgage, but standard credit score guidelines apply.

Cash-Out Refinance

If you have an existing mortgage and equity in the home, and want to take out a loan for home improvements, a cash-out refinance from a private lender may be worth looking into.

You usually must have at least 20% equity in your home to be eligible, meaning a maximum 80% loan-to-value (LTV) ratio of the home’s current value. (To calculate LTV, divide your mortgage balance by the home’s appraised value. Let’s say your mortgage balance is $225,000 and the home’s appraised value is $350,000. Your LTV is 64%, which indicates 36% equity in the home.)

A cash-out refi could also be an opportunity to improve your mortgage interest rate and change the length of the loan.

Recommended: How Does Cash-Out Refinancing Work?

PACE Loan

For green improvements to your home, such as solar panels or an energy-efficient heating system, you might be eligible for a PACE loan .

The nonprofit organization PACENation promotes property-assessed clean energy (or PACE) financing for homeowners and commercial property owners, to be repaid over a period of up to 30 years.

Home Improvement Loan

A home improvement loan is an unsecured personal loan—meaning the house isn’t used as collateral to secure the loan. Approval is based on personal financial factors that will vary from lender to lender.

Lenders offer a wide range of loan sizes, so you can invest in minor updates to major renovations.

Home Equity Line of Credit

If you need a loan only for repairs but don’t have great credit, a HELOC may provide a lower rate. Be aware that if you can’t make payments on the borrowed funding, which is secured by your home, the lender can seize your home.

The Takeaway

If you have your eye on a fixer-upper that you just know can be polished into a jewel, an FHA 203(k) loan could be the ticket, but options may make more sense to other homebuyers and homeowners.

SoFi offers cash-out refinancing, turning your home equity into renovation money.

Or maybe a home improvement loan of $5,000 to $100,000 seems like a better way to turn your home into a haven.

Check your rate today.



SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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The Ultimate Babyproofing Checklist

The Ultimate Babyproofing Checklist

When babies start crawling, they can get into all sorts of trouble. Aside from creating messes, they can hurt themselves. That’s why it’s important to babyproof a home before a child begins to explore.

Coming up with a babyproofing checklist can help parents relax, knowing that their little ones will be able to crawl—and eventually walk—around the home without getting hurt.

A pre-baby financial checklist usually includes budgeting. A babyproofing checklist includes ways to ensure that a home is safe for a child.

Put Up Gates

If parents don’t have doors throughout their home, they can install baby gates.

The best types of baby gates can be screwed into a banister, wall, or door frame because they are the most secure, according to Babylist. Pressure-mounted gates are an option, especially if parents live in a rental and don’t want to put holes in the structure.

Some gates allow parents to step through, while others swing open. When looking for baby gates, parents may want to seek out the ones that are the top-rated for safety and the most convenient for their homes. For instance, they may get frustrated that they have to constantly step over a gate, so a swinging gate could be a better fit.

Buy a Hexagon Playpen

When parents can’t constantly watch their baby, they can put the baby in a hexagon “play yard” with toys and a bottle.

The panels can also be used to block off certain rooms or areas of a room.

However, parents should keep in mind that a toddler may be able to climb out of the panels or push them out of the room.

Cover the Outlets

Another part of a babyproofing checklist is covering all the outlets in the home.

The easiest option is to push heavy furniture in front of outlets so the baby can’t get to them. But if that’s not possible, parents can buy plug-in plastic covers, outlet shields, or sliding plate covers.

Remember to also get power strip covers and cord covers so the baby can’t play with those either.

Babyproof the Doors

Babyproofing doors is important so that babies can’t get into certain rooms or get their fingers jammed in doors.

To babyproof doors, parents can install doorknob covers, which are rounded, plastic covers that are too hard for babies to squeeze in order to turn the knobs.

Parents can also use a door strap, which will keep babies out of a room but allow small pets in.

Put Away Heavy Objects

If young children pick up a heavy object, they could drop it and break it or, worse, hurt themselves.

A major part of a babyproof checklist is putting away heavy objects that could injure a child. These objects could go in a closet or another room. It doesn’t matter where they go, as long as they are out of baby’s reach.

Install Latches on Drawers

One key part of babyproofing a home is to make sure that children can’t get into drawers and cabinets where dangerous objects like knives are stored.

Parents have a few options for babyproofing cabinets and drawers.

According to Babylist, they can use slide locks for double door cabinets, which tie adjacent knobs together, or magnetic locks, which go in drawers and cabinets and require a key to unlock them.

Parents could also purchase adhesive strap locks, which use heavy-duty, removable adhesive, or spring-action locks, which unlock when parents open a drawer and hold down on the lock at the same time.

Remove Choking Hazards

If parents have more than one child, there could be little toys around the house or other objects that are choking hazards for the baby.

Parents could store these objects in a safe spot and instruct their older kids to do the same. For instance, an older child could have a special trunk where they put all their toys when the baby is around.

Keep Chemicals Locked Up

Before having a baby, parents may have kept household cleaners and bug spray underneath the sink.

Now, when babyproofing, they need to put a lock on the cabinet where these chemicals are stored and/or install a gate to keep the baby far away from them.

A number of household substances must, by law, have child-resistant packaging. Still, one look around the average home shows potential dangers, including perhaps colorful single-load laundry detergent units and dishwashing liquid.

Use Corner Guards

Installing corner guards is an essential babyproofing step. Corner guards, which may prevent a bad bruise or eye injury, can be used on sharp corners of wooden desks, glass tables, and metal fireplace hearths.

Some corner guards are made of high-density foam; others from silicone rubber. They come in different colors and may include double-stick tape for easy installation.

Babyproof Window Blinds

Corded blinds are a strangling hazard for babies.

Parents can wrap a blind’s operating cords around cord cleats. Cord cleats should be installed at least 5 feet above a floor, where a baby can’t reach.

Other options are shortening cords and tying on plastic washers (the washer ties to the lift cord, preventing the lift cord from being pulled through the slats on the blind).

Secure Furniture to the Wall

Babies start to become very curious when they roam around the house. They may push furniture and try to move it. This is why all furniture they have access to should be secured to walls.

It’s important to secure furniture not only in the living and dining room but also in the nursery. Pay special attention to the baby’s bookshelf and dresser.

Every year children are injured in tip-overs of TVs, tables, dressers, and bookcases, some fatally.

Secure Rugs

Once babies start to crawl and even walk, they could slip and fall on rugs. Carpet Mill notes that parents can make rugs immovable by placing nonskid rug pads under rugs.

Double-sided carpet tape can also be used to keep down any slight upturns on the edges and corners of the rugs.

Block or Babyproof Stairs

Babies love stairs, but of course stairs can be dangerous. Parents can block stairs off with a baby gate or add carpeting, nonskid step pads, or a carpet runner to make stairs less slippery.

Paying for Babyproofing

First-time parents are prone to making common financial mistakes, but any way you slice it, child rearing is expensive, and that can start with babyproofing a home.

A metal baby play yard alone can cost more than $100, and gates can add up if there are a lot of open entryways to block off from the baby. Parents may also need to buy storage bins, carpeting, or furniture to keep the baby safe.

If they aren’t able to pay for babyproofing out of pocket, they could put the expense on a low- or no-interest credit card, look out for sales on their favorite items, or take out a home improvement loan.

The Takeaway

A babyproof checklist is a must before babies start crawling and then toddling. Adding baby gates, playpens, and gadgets, and modifying furniture and flooring, can add up, but safety is the watchword.

A new child brings joy but, let’s face it, a lot of expenses. If a loan could help, SoFi offers fixed-rate personal loans without fees.

Look into the benefits of a personal loan and find your rate.



SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.

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Mortgage Interest Deduction Explained

Homeownership has long been a part of the American dream, and it opens the door to benefits like the mortgage interest deduction for those who itemize deductions on their taxes.

Itemizing typically makes sense only if itemized deductions on a primary and second home total more than the standard deduction, which nearly doubled in 2018.

Here’s what you need to know about the mortgage interest deduction.

What Is the Mortgage Interest Deduction?

The deduction allows itemizers to count interest they pay on a loan related to building, purchasing, or improving a primary home against taxable income, lowering the amount of taxes owed.

The tax deduction also applies if you pay interest on a condominium, cooperative, mobile home, boat, or recreational vehicle used as a residence. The deduction can also be taken on loans for second homes, as long as it stays within the limits.

States with an income tax may also allow homeowners to claim the mortgage interest deduction on their state tax returns, whether or not they itemize on their federal returns.

What Are the Rules and Limits?

The passage of the Tax Cuts and Jobs Act of 2017 was a game-changer for the mortgage interest deduction. Starting in 2018 and set to last through 2025, the law greatly increased the standard deduction and eliminated or restricted many itemized deductions.

For the 2020 tax year, the standard deduction is $24,800 for married couples filing jointly and $12,400 for single people and married people filing separately.

If you itemize deductions, you’re good to go and can deduct the interest. There’s further good news, as you may also be able to deduct interest on a home equity loan or line of credit, as long as it was used to buy, build, or substantially improve your home.

The loan must be secured by the taxpayer’s main home or second home and meet other requirements. For tax purposes, a second home not used for income is treated much like one’s primary home. It’s a home you live in some of the time.

The IRS considers a second home that’s rented some of the time one that you use for more than 14 days, or more than 10% of the number of days you rent it out (whichever number of days is larger). If you use the home you rent out for fewer than the required number of days, it is considered a rental property—one that you never live in, and not eligible for the mortgage interest deduction.

Generally, your interest-only mortgage is 100% deductible, as long as the total debt meets the limits.

According to the Internal Revenue Service, you can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of debt. Higher limitations ($1 million, or $500,000 if married filing separately) apply if you are deducting mortgage interest from debt incurred before Dec. 16, 2017.

You can’t deduct home mortgage interest unless the following conditions are met.

•   You must file Form 1040 or 1040-SR and itemize deductions on Schedule A (Form 1040).
•   The mortgage must be a secured debt on a qualified home in which you have an ownership interest.

Simply put, your mortgage is a secured debt if you put your home up as collateral to protect the interests of the lender. If you can’t pay the debt, your home can then serve as payment to the lender to satisfy the debt.

A qualified home is your main home or second home. The home could be a house, condo, co-op, mobile home, house trailer, or a houseboat. It must have sleeping, cooking, and toilet facilities.

Know that the interest you pay on a mortgage on a home other than your main or second home may be deductible if the loan proceeds were used for business, investment, or other deductible purposes. Otherwise, it is considered personal interest and is not deductible.

How Much Can I Deduct?

No doubt you want the answer to that question. In most cases, you can deduct all of your home mortgage interest. How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds.

The IRS says that if all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages. (If any one mortgage fits into more than one category, add the debt that fits in each category to your other debt in the same category.)

1. Mortgages you took out on or before Oct. 13, 1987 (called grandfathered debt).

2. Mortgages you (or your spouse if married filing jointly) took out after Oct. 13, 1987, and prior to Dec. 16, 2017, to buy, build, or substantially improve your home, but only if throughout 2020 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately).

(There is an exception. If you entered into a written contract before Dec. 15, 2017, to close on the purchase of a principal residence before Jan. 1, 2018, and you purchased the residence before April 1, 2018, you are considered to have incurred the home acquisition debt prior to Dec. 16, 2017.)

3. Mortgages you (or your spouse if married filing jointly) took out after Dec. 15, 2017, to buy, build, or substantially improve your home, but only if throughout 2020 these mortgages plus any grandfathered debt totaled $750,000 or less ($375,000 or less if married filing separately).

The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home.

What Are Special Circumstances?

Life sometimes isn’t black or white, but gray. Just like you need to understand your home loan options, you need to know the special situations where the IRS says you might or might not qualify for the mortgage interest deduction.

You can deduct these items as home mortgage interest:
•   A late payment charge if it wasn’t for a specific service performed in connection with your mortgage loan.
•   A mortgage prepayment penalty, provided the penalty wasn’t for a specific service performed or cost incurred in connection with your mortgage loan.
You cannot deduct the interest paid for you if you qualified for mortgage assistance payments for lower-income families under Section 235 of the National Housing Act.

Is Everything Deductible?

The government is only so generous. There are a lot of costs associated with homeownership. Many of them are not tax deductible under the mortgage interest deduction, like homeowners insurance premiums.

One caveat: You might be able to write off a portion of insurance, as well as utilities, repairs, and maintenance, if you have a home office and deduct those expenses on Schedule C.

Also not on the list for inclusion in the mortgage interest deduction are title searches, moving expenses, and reverse mortgage interest. Because interest on a reverse mortgage is due when the property sells, it isn’t tax deductible.

How to Claim the Mortgage Interest Deduction

An itemizer will file Schedule A, which is part of the standard IRS 1040 tax form. Your mortgage lender should send you an IRS 1098 tax form, which reports the amount of interest you paid during the tax year. Your loan servicer should also provide this tax form online.

Using your 1098 tax form, find the amount of interest paid and enter this on Line 8 of Schedule A on your tax return. It’s not a heavy lift but gets a tad more complicated if you earn income from your property. If you own a vacation home that you rent out much of the time, you’ll need to use Schedule E.

Furthermore, if you’re self-employed and write off business expenses, you’ll need to enter interest payments on Schedule C.

The Takeaway

You can take the mortgage interest deduction if you itemize deductions on your taxes. Keep in mind that it’s typically only worth taking if the write-offs exceed the standard deduction.

The mortgage interest deduction, though, can be a bonus of sorts, especially if you’re a homeowner with a second home.

As with all matters that affect your taxes, you’ll want to consult with your financial advisor about claiming the deduction.

Looking for a loan to finance a primary home or second home? SoFi’s mortgage loans can help, with competitive rates and low down payment options.

Quickly find your rate today.



SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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How to Stage a House: 8 Steps

If you’re ready to sell your house, it’s probably a safe assumption that you want to get an offer quickly and at or above asking price. Staging is one way to maximize your chances of doing just that.

In a nutshell, staging uses design to cater to a larger share of buyers and highlight a home’s assets. When done well, staging makes it easier for buyers to visualize the space as their own.

According to a National Association of Realtors® survey, 82% percent of buyers’ agents said staging a home made it easier for a buyer to visualize the property as a future home .Nearly half of sellers’ agents used a staging service.

Ready to get started? This guide will take the guesswork out of how to stage a house with eight easy steps.

8 Steps to Stage a House for Sellers

1. Take Stock of Needed Fixes

If a house requires considerable repairs, a seller may face a lengthy negotiation process that results in concessions and contingencies. Any issues flagged by an inspection will also need to be addressed with prospective buyers.

Deciding whether to make these fixes beforehand will affect how a home is staged and perceived by buyers. Even relatively small issues like cracks in a ceiling and a dripping faucet can raise concerns and influence a buyer’s impression.

Taking care of these common home repairs before house staging can show buyers that you’ve maintained the property and keep their focus on its strengths.

2. Enhance Curb Appeal

Before buyers walk through the door, they’ll have already formed an impression from the home’s curb appeal, the attractiveness of a property from the sidewalk or street.

Buyers may even do a drive-by before setting up a showing to narrow down their search. Thus, sprucing up a home’s exterior, lawn, and landscaping are essential to any plan for how to stage a house.

Any eyesores, such as chipped paint, cracked windows, or clogged gutters could discourage buyers from taking a closer look. Power-washing any siding and applying a fresh coat of paint where needed are some possible quick improvements.

Thinning out lawn decor, replacing burned-out lights, and tidying up gardens and landscaping are also low-cost ways to increase curb appeal.

For many prospective buyers, their first look into your home will be digital. High-quality photos can be helpful in attracting buyers.

Staying on top of things like lawn care while the home is listed could make a difference in getting more showings and securing a higher offer. In fact, homes with strong curb appeal sell for 7% more on average than their less inviting counterparts, one study showed.

3. Remove Clutter

While working on house staging, you may also be encumbered with the homebuying process or figuring out what to do with all your stuff after it’s sold. In either case, staging is an opportunity to jumpstart the moving process and declutter the house.

Removing clutter is a popular staging tactic to make the interior of a home appear more spacious. A home’s square footage can’t be fabricated, but curating a more open layout can give the impression of a larger space.

Begin by packing away items that you don’t use daily like seasonal clothes, knickknacks, sports equipment, and other odds and ends. This is also a chance to identify anything you want to sell, donate, or dispose of.

Storage space of a home can also be a major selling point. Instead of loading up the basement, garage, and closets, sellers may want to consider asking family members or friends to store their belongings, or renting a storage unit.

Depending on location, a 10-by-20-foot storage unit costs between $120 to $280 a month and can accommodate the contents of a two- to three-bedroom house, HomeAdvisor notes.

4. Depersonalize the Space

Cutting back on personal items is an important step in staging a house. While decluttering the home, stowing away family photos and clothing is a good place to start. Removing subtler items like personal toiletries can further neutralize the space.

That lavender paint in one room, turtle-themed wallpaper in another? It might be best to create a more ordinary canvas.

The point is to show that the home is move-in ready and an open book for buyers to add their personal touches. With just the integral furniture and furnishings remaining, it’s easier for buyers to imagine themselves moving in and living there.

5. Do a Deep Cleaning

Once the decor and furnishings have been minimized, it’s time to get the house squeaky clean. While this is one of the more cost-effective ways to stage a house, it can take significant time and energy.

To streamline the process, consider starting with the highest surfaces and working your way down. Overhead fixtures like lighting and ceiling fans are often overlooked in regular cleaning routines, and thus accumulate lots of dust and grime. It’s likely that cleaning these hard-to-reach places will bring debris down on countertops and floors.

Bathrooms and kitchens are key rooms to focus on. Water stains and mildew in sinks, tubs, and showers are obviously a no-no. Making sure appliances sparkle and that countertops are spotless can give the kitchen a fresh new look.

6. Define Every Space

While the kitchen, bathroom, master bedroom, and garage are straightforward in their purpose, some spaces in a home may not have an obvious use to prospective buyers.

Thinking about how to stage spare rooms and unconventional spaces is important. For example, using an extra room for storage may fit your needs, but that use may not translate as valuable to many buyers. Instead, staging such a space as a home office or workout room could appeal to a larger segment of buyers.

7. Stage Where It Matters Most

Not every room holds equal weight from the homebuyer’s perspective. According to the NAR report, these are the most important rooms in staged houses for sale, according to buyers’ agents:

1. Living room: 46% cited as very important
2. Master bedroom: 43% very important
3. Kitchen: 35% very important
4. Dining room: 27% very important
5. Yard: 23% very important

8. Don’t Forget Outdoor Space

Whereas the front of a house determines curb appeal, the yard, porch, or patio space can sell buyers on the lifestyle that living there provides.

The backyard is a popular place for entertaining and socializing, especially for families with kids. Tidying up the yard and addressing any safety issues like a wobbly porch railing or broken fence could be easy fixes.

Setting up a focal point, such as an outdoor seating area, fire pit, or grill, can make the space more inviting. Even if it’s a limited yard or patio space, brightening it up with flowers and comfy outdoor furniture can change the perception from confined to cozy.

The Takeaway

How to stage a house? It can take time and energy, but emphasizing a home’s strengths and creating an inviting atmosphere can be done with some thorough cleaning, decluttering, and rearranging.

If you’re shopping for a new home while selling, financing can be challenging. Getting prequalified for a mortgage with SoFi is quick and easy, and no commitment is required.

SoFi offers home loans with competitive rates and as little as 5% down.

What’s more, SoFi’s home loan help center provides resources to help navigate the homebuying process.

Check your rate on a home loan in a few clicks.



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