A record low on average thirty year fixed mortgage: 3.25%
With fears of the coronavirus still looming and the stock market the most volatile it’s been since 2008, the Federal Reserve cut mortgage rates to an all time low-which makes for the perfect time to buy if you’ve been thinking about purchasing real estate.
According to an article by NPR, Laurie Goodman, co-director of the Housing Finance Policy Center at the Urban Institute says that buying a home is crucial for most Americans to build wealth and that these lower rates can mean hundreds or thousands of dollars a year in lower mortgage payments. [NPR].
“Homeownership is really the single best way to build wealth,” Goodman adds.
If you have good credit, rates on a 30-year fixed-rate mortgage have dropped from about 4.5% to around 3.5% over the past year which effectively makes the same-priced house from a year ago more than 10% cheaper today in monthly mortgage payments. [NPR]. (And a great way to recover what you may have lost in the market last week).
The rates have dropped even further from 3.5% to 3.25% for a thirty-year loan! The new rate marks the lowest level since Freddie Mac started tracking it in 1971, the company says.
10 Advantages of Real Estate Ownership and Using Your SAFE HARBOR®-Directed IRA™ (SHIRA™) Funds to Buy It:
1). Tax advantages: taxes are the least fun part about making money, but real estate ownership offers different tax advantages depending on the type of real estate you own. For instance, if you own a rental property, that income is not subject to self-employment tax! The government also offers tax breaks for rental property depreciation, insurance, maintenance repairs, travel expenses, legal fees and property taxes. An investment in apartments, vacant land, commercial buildings, industrial, etc all offer their own variation of tax incentives as well. To top it off, real estate investors are entitled to lower tax rates for their long term investments! The SHIRA™ utilizes the tax write offs associated with real estate ownership to totally or partially eliminate the tax liability of using your IRA funds to purchase real estate. (If you qualify*).
2). Income: creating passive income with real estate is a no-brainer and a huge incentive to invest in real estate. As always, location, location, location-matters, but if you research and invest wisely, you can secure a steady flow of passive income for a long time, covering your cost of the mortgage and putting money in your pocket to do with as you like. Because there are no prohibited transactions with the SHIRA™, the rental income from the real estate goes directly to your pocket to use for whatever you want.
3). Real Estate Appreciation: because land and buildings are appreciating assets, you can be very confident that your property will increase in value over time.
4). Leverage Funds: an investment in real estate offers leverage. For example, you can buy a property worth $600,000 with only $100,000 down. To learn more about the value of the protected leverage the SHIRA™ offers, read, “Leverage and Protection! What Happens When you Have the Best of Both Worlds?”
5). Equity: purchasing real estate with borrowed help means having to pay it back with interest, however, each of those payments go towards the principal of the real estate. By owning real estate, you are building equity and wealth in the same property.
6). You’re Your Own Boss: by investing in real estate, you have complete control over your own money, unlike the volatile stock market of which you hold relatively no control, any money gained or lost in real estate and your property is a direct result of what you do and the choices you make.
7). Step up in Basis: tax allowance whereby you can pass real estate at death to your heirs at the appreciated value, with no tax consequences to them on the appreciation.
8). Asset Protection: The SHIRA™ is invested in a principal protected vehicle, safe from any possible downturn in the stock market with upside interest earning potential when the stock market performs well!
9). Diversification: Purchasing real estate with an IRA lets you maximize the value of your money, providing increased asset diversification of your portfolio and protected leverage for the real estate.
10). Occupancy: Owning something tangible for you and your family to use and enjoy, creating memories for years to come and leaving your family a legacy they can be proud of. Like Oprah said, “You can’t live in a stock certificate!”
The Perfect Alternative Investment
With the protection and possible interest earnings of the SHIRA™, the potential appreciation of the real estate, rental income, and the intrinsic value of occupancy, together with the tax write-offs (if you qualify); the total value and benefits of the SHIRA™ and the real estate could be, and has been, in the double digits. In other words, the perfect alternative investment.
We specialize in helping clients structure customized, tax effective IRA real estate investments that enhance their portfolios, lifestyles, market positions, and legacies.
Please share this with friends and family that could benefit from our proprietary IRA real estate structure!
Visit www.lasaiibenefits.com to sign up to receive our “Understanding the SAFE HARBOR®-Directed IRA™” Guide to learn more.
Source: https://www.npr.org/2020/03/02/811223836/mortgage-rates-are-near-all-time-lows-as-coronavirus-worries-hit-markets