The Could Have, Would Have, Should Have Club

Who’s In the Club?


The Could Have, Would Have, Should Have Club is one of the largest clubs in the world. Its enormous membership spans generations, all the way back to the beginning of time. If you are active in business, investing, or anything similar, you’re undoubtedly familiar with this club.

What is The Could Have, Would Have, Should Have Club, exactly? It’s not a real “club,” of course, but a simple reference to a group of people. These people could have taken action on a specific scenario, would have taken action in hindsight if they hadn’t been distracted by other issues, and in retrospect, should have taken the necessary precautions, knowing what they know now.


The Club and the Changing Economic Landscape


We have all been faced with the above scenario at some point in our life. I don’t know of a single soul who hasn’t fallen victim to the The Could Have, Would Have, Should Have Club at one time or another. So, what does this mean for us today? It’s very simple. All of us, whether business people or not, will be looking at a dramatically changing financial topography over the next few years as a result of the recently enacted tax reform in this country.


The changes to come are not about right or wrong, good or bad, one side versus the other. Instead, the real question is how to adapt to all of the changing elements of the enacted tax plan and what impact they will have on the economy at large. More specifically, the impact they will have on the real estate and mortgage industry


What You Should Do Now


Everyone needs to do one of two things immediately. The first option is to read the new tax law in its entirely (it clocks in at over 300 pages!) The other option is to immediately seek counsel from a tax professional as to how you should respond to the changing tax laws. The farther in advance you can plan, the more likely you are to maximize the positive impact and limit the negative impact of the changes for both your business and personal situation. Since Americans in general have proven they don’t really want to read such legislation, it’s probably best to seek the advice of a tax professional rather than to try to interpret the changes on your own. The time to do so is now, not at the end of the year. Waiting too late puts you at risk of becoming a member of The Could Have, Would Have, Should Have Club.


The impact on the real estate and mortgage industry will be significant with respect to how much mortgage loan interest is still deductible, the handling of rental properties, capital gains taxes, and even the methodology of taxing a second home. I worked on The Hill lobbying for the mortgage industry for over ten years and I remember one of our “sacred white cows” being the deductibility of mortgage interest. Another bite has been taken out of that apple and I fear it will continue until someday there is no longer any mortgage interest deduction at all. It will be interesting to see how all of this plays out in years ahead.


What’s in Store for Mortgages?


The forecast for fixed interest rates is pretty stable with only a slight increase. That said, the FED keeps moving the rate up which means all adjustable rate products and short-term loans  (like credit card and auto loans) will be impacted. Mortgage Adjustable Rate Loans will become far less popular as the FED keeps increasing the interest rate. The current forecast is that the FED will raise the rates three times next year but at this point that is, of course, speculation.


The manner in which you handle your taxes will impact your ability to qualify for a home. As rates go up, fewer borrowers will qualify for some of the most popular mortgage products on the market. Inventory remains tight, driving appreciation and increasing prices homes. As fewer people can qualify for a mortgage, the temptation to commit mortgage fraud will rise. Remember, a prison cell is a terrible alternative to not being to legitimately qualify for a home mortgage.


It would be wise to factor in all of these events and issues in your decision making process in many areas as we move into 2018. I urge everyone to always see the advice of licensed professional and plan, plan, plan!