Category Archives: Announcements

How Much Would a Small Interest Rate Hike Affect Your Total Mortgage Costs?

Scissors_Cutting_MoneyThe world is watching and waiting to see whether the U.S. Federal Reserve will raise interest rates this month, or at least by the end of 2015.

A rise in the “federal funds rate” will translate pretty quickly into higher mortgage interest rates, affecting any prospective homebuyer who can’t simply pony up a few hundred thousand dollars in cash. (The fed isn’t the only driver of mortgage interest rates, but it’s a factor in the mix.)

Given that nearly a decade has passed since the fed raised this rate, most experts don’t believe it will do anything more than inch it up. This isn’t a time for shock strategies.

The prospect of a rise in the rate nevertheless raises a question for prospective homebuyers. How much would a small rise in mortgage interest rates affect the amount you ultimately pay for your mortgage (assuming you choose a fixed-rate loan)?

The answer can be found by having some fun with Nolo’s “How much will my fixed rate mortgage payment be?” calculator.

Let’s assume you’re buying a $500,000 home, putting 20% down ($100,000, ouch) and will therefore be taking out a $400,000 mortgage. The reported 30-year rate on today is 3.96%.

According to Nolo’s calculator, your monthly payment on this loan would be $1,900, and the total interest you’d pay over the life of the loan would be $284,161.

Now let’s assume interest rates go up a notch, to 4%. That would take your monthly payments to $1,910 and your total interest paid by the end of the loan term to $287,478 — $3,317 more than you would have owed in our first example. Not awful, over 30 years.

Let’s keep going, and take those interest rates up to 4.5%. (Could happen!) That would boost your monthly payments to $2,027 and your total interest paid by the end of the loan term to $329,627. Things are starting to look more serious.

What about 5% mortgage rates? They’re still within the realm of where experts predict rates might go in the coming months or year. A mortgage at 5% on your $400,000 loan would come with monthly payments of $2,147 and bring your total interest paid to $373,021.

Them’s real dollars. With a seemingly small rise interest rate on the day you close on your home, from just below 4% to 5%, you’d be looking at owing $88,860 more in total interest by the time you’d paid that loan off.

Of course, if housing prices were to go down as a result of the rate hike, that would offset part of the problem – but no one seems to think they will.

Now might be a good time to get serious about buying a home. A trusted mortgage broker can also help you think strategically about how to finance your purchase.


IRS recently issued proposed regs which implement a new Federal law authorizing states to offer tax efficient “ABLE” accounts to folks with disabilities who became disabled before age 26.

The Achieving a Better Life Experience (ABLE) account provision was designed to enable people with disabilities and their families to save for and pay for disability-related expenses.

Contributions in a total amount up the annual gift tax exclusion can be deposited to an ABLE account annually, and distributions are tax free if used to pay qualified disability expenses.

Check out IRC Section 529A for the details.


Taxpayer situations change from year to year for a variety of reasons – new job, house purchase, additional dependent(s), windfall income and/or changed deductions. Depending on your situation, this might mean you should consider a change in your withholding so you hit the necessary target of required annual pay-as-you-go payments, without allowing your employer to overwithhold, which will result in your achieving nothing more than making an interest free loan to Uncle Sam until you later file and collect your refund.

Thus, if this is you, check out Form W-4 and give an updated version of the form to your employer. Check out Publication 505 and also consider going to where you will find a handy withholding calculator which may be of help.

Employer May Not Refuse to Hire Applicant Based on Suspicion of Need For Religious Accommodation

Epic2arly last week, the U.S. Supreme Court handed down its decision in EEOC v. Abercrombie & Fitch Stores, Inc. In that case, a young Muslim woman who wore a hijab (a religious headscarf) to her interview was denied employment because the headscarf violated Abercrombie’s “look policy,” which did not allow head wear of any kind. Without discussing the policy with the applicant, Abercrombie simply denied her employment.  (For more about the facts of this case, see our previous post, How Explicit Must a Request for Religious Accommodation Be?)

The Supreme Court ultimately held that Abercrombie engaged in religious discrimination by refusing to hire the applicant, Samantha Elauf. In doing so, the court rejected Abercrombie’s argument that it didn’t actually know that Elauf wore the headscarf for religious reasons. The Court held that actual knowledge is not a requirement for religious discrimination under Title VII. It was enough that Abercrombie suspected that Elauf would need an accommodation and that this was the motivation behind its refusal to hire her.

The Court’s holding suggests that Abercrombie should have notified Elauf about the “look policy” during the application process and explored possible accommodations with her. The result makes practical sense. How would Elauf have known that she needed an accommodation if she wasn’t aware of the company’s “look policy”?

The takeaway from this decision is that employers need to consider offering religious accommodation to employees, even if the employees don’t specifically request it. When an employer has reason to suspect that an employee may need an accommodation, it should broach the topic with the employee. However, employers acting on such suspicions must be careful not to engage in stereotyping that could lead to discrimination claims.

The best approach is to stick to objective facts and company policy. For example, it could lead to trouble to ask an applicant, “Do you wear a headscarf because you are Muslim?” Instead, simply inform the applicant of the company’s established policy that head wear of any kind is not allowed, and then ask if that would present any issues for the applicant. This puts the ball in the employee’s court and gives her the opportunity to request a religious accommodation if she needs one. (For more information on religious accommodation, see our Religious Discrimination page.)


The Internal Revenue Code says that amounts withdrawn from an IRA are not taxable as long as the entire amount is “rolled” back into the same or another IRA no later than 60 days after the distribution. Sometimes taxpayers don’t quite comply with the 60 day timeline for one reason or another, and the same Internal Revenue Code does enable IRS to allow more time in cases where failure to do so would be against equity or good conscience, including casualty, disaster, or other events beyond the reasonable control of the individual subject to such requirement.

In PLR 201523023, IRS did just that in a case where the taxpayer’s failure to accomplish a timely rollover was due to an IRA custodian’s administrative procedure of not accepting “starter checks.”