Monday, April 29, 2013

Cut Refinancing Expenses

iStock_000016148905XSmall(er).jpgEvery single day, homeowners who are excited about lowering their rate have a tendency to ignore the refinancing costs because they’re being rolled back into the new mortgage. If the payment is lower than what they’re currently paying and there’s no money out of pocket, it seems like a good deal.

Refinancing your home because a lower rate is available is one thing but the closing costs associated with that new loan could add several thousand dollars to your mortgage balance. By following some of the suggestions listed below, you may be able to reduce the expense to refinance.

•  Tell the lender up-front that you want to have the loan quoted with minimal closing costs.
•  Check with your existing lender to see if the rate and closing costs might be cheaper.
•  If you’re refinancing a FHA or VA loan, consider the streamline refinance.
•  Shop around with other lenders and compare rate and closing costs.
•  Credit unions may have lower closing costs because they are generally loaning deposits and their cost of funds is less.
•  Reducing the loan-to-value so that mortgage insurance is not required will reduce expenses.
•  Ask if the lender can use an AVM, automated valuation model, instead of an appraisal.
•  You may not need a new survey if no changes have been made.
•  There may be a discount on the mortgagee’s title policy available on a refinance.
•  Points on refinancing, unlike purchase, are ratably deductible over the life of the loan.
•  Consider a 15 year loan. If you can afford the higher payments, you can expect a lower interest rate than a 30 year loan and obviously, it will build equity faster and pay off in half the time.

A lender must provide you a list of the fees involved with making the loan within 3 days of making a loan application in the form of a Good Faith Estimate. Every dollar counts and they belong to you.


Thursday, April 25, 2013

A Tiny Trend

Houses are reportedly being built smaller than they have been in recent years, probably because they are more affordable to manage.  This downsizing trend has generated an interesting extreme; and while it doesn't seem to have hit the Midland area just yet, it’s picking up speed in other states and around the world.  What is this extreme trend, you ask?

John Hindman, Red River Restorations: Bungalito
Tiny houses.

We mean really, really tiny houses.

How you would feel about living in a house that is only 300 square feet?  125 square feet?  Even 60?
Cozy, or just cramped?

For some perspective: in cities like New York and L.A. the average apartment is likely to be about 600 square feet.  In the Midland community, most 1-bedroom apartments are roughly 700 square feet.

This concept of tiny living may seem a bit far fetched, but there are a growing number of people that say it isn't too tough at all. Many site the economical and environmental benefits- a 400 square foot house doesn't cost a whole lot to heat. 
Tiny House UK

For the brave of heart, these tiny dwellings can certainly function as full-time homes.  Manufacturers offer them with full (albeit limited) kitchens, bathrooms complete with showers, and sleeping areas that accommodate up to a queen sized bed.

For those that prefer their castles a bit larger,  you can use a tiny house as an addition to your current home.  One can easily be placed in your back yard for guests, studio or office space, your recent college graduate who is moving back home, or just for as a mini vacation spot when you need a little “me time”.

Tennessee Tiny Homes- Mendy's House

Tiny houses are often cheaper to build than a mother-in-law suite above the garage or an addition to an existing home; and they are easily moved if you decide to sell.

But even with all of these interesting facts and wonderful benefits of tiny living, we want to know: What do you think? 
Could you live in a tiny house?  
Would you?  
Leave a comment and let us know!

For more information about Tiny Houses visit these sites:

Sunday, April 21, 2013

Shifting Debt to Tax Deductible

shift debt.pngThe Mortgage Interest Deduction is available to homeowners for up to $1,000,000 of acquisition debt on the combination of their first and second home.  They can also deduct interest on up to an additional $100,000 of Home Equity debt.
While Acquisition Debt is used to buy, build or improve a principal residence, the Home Equity Debt can be used for any purpose.  It can be used for educational or medical expenses, to purchase a personal car or boat, consolidate debts or pay off credit cards.
A homeowner with $15,000 of credit card debt at 19% and sufficient equity in their home could replace it with a home equity loan at much lower interest rate. Not only would the interest rate on the home equity loan be about 1/3 of the rate paid on the credit card, it’s would now be tax deductible.
If the taxpayer was in the 28% bracket, the net interest on a 6.5% loan would be 4.68% after tax benefits are considered.
Shifting personal debt to Home Equity debt can result in an interest deduction and probably, a lower interest rate. For more information see IRS Publication 936 page 10 and consult your tax professional.

Thursday, April 18, 2013

Your Custom Dream Home Awaits at 4575 Tony Court.

4575 Tony Ct. in Williams Township is one of the most stunning new builds you'll find in the Tri-City area.  Cook Custom Homes finished the house mid-March of this year, and they didn't miss a single detail. 3 bedrooms, 2.5 baths, spacious 3 car garage, full basement, large back patio, open floor plan, and only minutes from both Auburn and Midland- this house was off to a great start before the foundation was even laid.  But, the real magic is in the exquisite craftsmanship, top of the line materials, and the builder's eye for detail. 

Allow us to walk you through it... As you wander up the freshly paved drive you'll notice the home's beautiful stone work and peaceful surroundings. 

Entering the home, the vaulted ceilings and large open living space will certainly take your breath away.  The entrance is open to the living room, dining area, kitchen, and the grand staircase leading to the upstairs bedrooms and loft.  The fireplace is finished with beautiful stone; and a half-wall divides the dining and living space without closing off the rooms.  Light from the large windows and sliding door (which leads to the patio and back yard) make the space inviting and peaceful. 

Walking past the living area, you enter the kitchen which is, well...perfect!  Granite counter tops and beautiful dark-wood cabinets provide stunning contrast to the cream ceramic floors and mosaic tile back splash.  The walk-in pantry gives you abundant storage space- which will come in handy, because you will inevitably be inspired by this fabulous kitchen.

Down a short hallway, just past the entrance to the basement, is a half bath, storage closets, the laundry room, and garage entrance.

Also off the kitchen is the main-floor master bedroom and private bath.  This large suite has views of the wonderful backyard- but you may be too distracted by the incredible bathroom and closet to notice.  A separate stool room, double vanity, large double shower, and walk-in closet create a spa-like retreat, just for you.

If you can pull yourself away from the master suite, wander back through the main living space and head up the beautiful staircase. The two spare bedrooms both have their own walk-in closets and share a bathroom perfect for siblings or guests.  The stool and shower are separated from the vanity area, making the morning routine for any family just a little bit easier.

Off the upstairs bedrooms is an open loft perfect for a play-space, office, or small seating area-perhaps a reading nook.

Before you finish your walk through, you must head to the basement. With 9ft ceilings, even this space seems airy and open.  It is plumbed for future finishing and would be perfect for an additional bedroom, theater area, game room, personal gym, or anything you can dream up.

The team at Cook's Custom Homes was voted 2012 People's Choice for Midland's Best Builder, and after seeing this house you will have no question as to why. For more information about 4575 Tony Court, or to set up your own private showing of this magnificent new-build, call Shelley Park at 989-698-1100 and make your dream house your home. 

Monday, April 15, 2013

When to Sell the Temporary Rental

Temporary Rental2.pngSome homeowners, who were not able to sell during the recession, chose to rent their homes instead.  In some cases, they didn't need to sell their home at the depressed prices and opted to rent it until the market recovered.
It's a valid strategy but there are time restrictions that could have serious tax implications for some homeowners.
The section 121 exclusion for gain in a principal residence requires that the home is owned and used as a main home for at least two years during the five year period ending on the date of the sale.  This allows a homeowner to rent their home for up to three years and still have some part of the exclusion available.
The sale of a home with a $200,000 gain that qualifies as a principal residence would result in no tax being paid by the owner.  Comparably, a rental property with the same gain could have a $30,000 or higher tax liability depending on the length of ownership and tax brackets of the investor.
The housing market has dramatically improved in the last year.  If you have a gain in a home that has been your principal residence and it has been rented less than three years, you might want to consider selling it while you qualify for the exclusion.
If you are considering a sale on your principal residence that has been rented, consult with your tax professional for advice on your specific situation.  For additional information, see IRS Publication 523.

Thursday, April 11, 2013

Top 10 Exterior Maintenance Tips to Keep Your House in Selling Condition

Last week we discussed some of those forgotten areas inside your home that may be in need of spring cleaning and upkeep.  This week we have a quick list of ten outdoor spring cleaning and upkeep tasks:
      1. Whether brick, stucco, or siding inspect your home’s exterior for cracks, loose pieces, leaks, or water damage.  Replace rotted siding or trim, properly fill cracks and leaks, and keep your home looking beautiful.

      2. Check the ground around your foundation for areas that have been washed out by poorly directed downspouts or piled snow and ice.  Any place in your yard where water can pool could quickly become a breeding ground for mosquitoes or lead to unwanted water in your basement, so fill it in.
      3. Prep your garden for spring flowers and rake your lawn to remove dead material and debris- this can help restore it to its green glory more quickly (just make sure you don’t rake too early in the season).

      4. Test your outdoor water spigot for leaky pipes by turning on the water and covering the faucet with your thumb.  If you can stop the flow, there is a chance you may have a leak somewhere up the line.

      5. Wash your windows inside and out!  Don’t be afraid to have them professionally done, especially if your house is or will soon be on the market.  If you’re going to put screens up for the summer make sure you wash those as well.

      6. If you used salt to keep your driveway, deck, and paths from becoming icy this winter, a good power wash may be needed to keep those surfaces from deteriorating.

      7. Set your patio furniture back up.  This makes the area look more inviting, even if it’s too cold to actually use it.  Are your cushions faded and worn? It might be time to replace them!

      8. The weight of snow and ice may have damaged your gutters.  Make sure that they are not sagging or drooping and that the downspouts are directing water away from the house.  Also clean out any debris that may have collected in them.

      9. From the ground, survey your roof for missing, cracked, or loose shingles.  Make sure that your chimney is free of vegetation and white calcium-like deposits- these can be signs of water infiltration.

      10. Rid your front door, mail box, and exterior lighting of winter residue.  A clean front door and mailbox can add to your curb appeal- you may even want to consider giving them a fresh coat of paint.  Clean the bugs and leaves out of outdoor lighting fixtures and wash the glass.

      Brad Vander Vliet, Park Place REALTOR and Property Manager (and our resident Mr. Fix-It) recommends doing home-maintenance on a regular basis because “it costs you far more dollars to bring it back to where it should be.”  Save yourself a headache and unnecessary cost and take preventative action today.  The more you do now the less you’ll have to do when it comes time to sell!

    Monday, April 8, 2013

    Boomerang Buyers

    It's estimated that 10% of the homes sold in 2013 will be to buyers who lost a home in the past five years.  Approximately 500,000 buyers who may have thought they wouldn't own a home anytime in the near future will be homeowners again.
    Waiting periods.png
    It's estimated that several million of these previous homeowners will purchase again in the next eight years.  This kind of activity will contribute significantly to the housing recovery.
    Some people thought that the housing crisis would cause a shift in values placed on owning a home but the boomerang buyers definitely don't support that theory.  Having a home of your own, where you can raise your family, share with your friends and feel safe and secure is still part of the American Dream.
    The rising rents, increasing prices and low, low mortgage rates are also influencing buyers into the market.  In many cases, it is cheaper to own than to rent.
    All new buyers, including those who have experienced foreclosures or bankruptcies, must have good credit history and the ability to repay the loan.  It just may not take as long to reestablish the credit as some would-be buyers might have thought.
    Read more about Bidding Wars This Spring, Spring's Wild Card and Boomerang Buyers.

    Friday, April 5, 2013

    Who Else Wants to Spring Clean?! ...Maybe...

    ...No?  Not so excited?  Yeah...We get it.
    Truth be told, we're probably more likely to stop at cleaning out our closets and leave those dark and unseen places untouched.  But, if you're ever planning on selling your home then keeping it in tip-top condition is extremely important.  Put in the effort now and reap the benefits later.  To help motivate your inner… janitor… we've compiled a short list of areas and appliances that may require maintenance and a little elbow grease.

    1)  Change your furnace filer.  If you use an inexpensive disposable filter, which usually costs less than $5, you should swap it out every 1-2 months.  A slightly higher-end disposable filter should be changed after about 4 months.  If you use a reusable, or non disposable, filter you should clean it monthly.  Also note that if you have a large home, pets, or suffer from allergies you may need to change the filter more frequently.
    And a special safety tip: make sure you turn off the furnace before changing the filter!

    2)  Check the attic.  Muster your courage, take a peak up there, and survey the space.  Look for signs that an animal has made itself at home.  If you suspect you may have an unwanted house-guest call a professional to have it removed.  While you’re up there, be sure to check for moisture, mildew, and water stains.  All air vents need to be clear of nests and debris. Any air leaks around chimney stacks, duct work, and light fixtures should be plugged, and (fun fact) the attic temp should stay within 10 degrees of your home’s temperature at all times.

    3)  Prepare your Sump Pump: We’re entering the rainy season, so take the time to make sure your sump pump is ready.  First and foremost, check the outlet to make sure the pump is plugged-in.  Having a back-up system is a wise choice in case of power outage or pump failure, but you’ll need to check it monthly to be sure it is always fully functional.  Experts also recommend cleaning dirt and debris from the pit, checking your float, and making sure the pump hasn't tipped.  Properly maintaining your sump pump will ensure it is functioning efficiently and help it last longer, so don’t be afraid to do a little research on more extensive maintenance that can be done.

    Now we’ll move on to some of those forgotten areas that should be cleaned.  Without getting into the dirty details how and why, here is a list of places and things in your home that you should consider scouring.

    This would be a good time to grab your rubber gloves and put a new bag in the vacuum...

    1) Ceiling fans
    2) Draperies and blinds
    3) Oven & stove
    4) Closet floors
    5) Dishwasher
    6) Behind appliances
    7) Computer keyboards
    8) Door knobs & light switches
    9) Inside of drawers & cabinets
    10) Mattresses

    Remember: If you’re unsure how to do something, think you may be in over your head, or simply need an expert opinion- Ask! Local experts are always willing to help, so don’t be shy.  

    Wednesday, April 3, 2013

    Bunch Your Taxes and Save

    iStock_000016195030XSmall(er).jpgOne of the drawbacks to low mortgage rates is that the total interest and property taxes paid for the year may be lower than the standard deduction.  A little planning might be able to help you at least every other year.
    Most homeowners know they can deduct their qualified mortgage interest and property taxes on their Schedule A of their 1040 tax return or to take the standard deduction if it is greater.  See Your Deduction...Your Choice, our post from March 12.
    Deductions are taken in the year that they're actually paid.  If a homeowner paid their 2012 property taxes in 2013, they would not be deductible on their 2012 tax return.  Then, if the 2013 property taxes were paid in 2013, both the 2012 and 2013 taxes could be deducted on the 2013 Schedule A.
    By delaying the payment of the 2012 taxes until 2013, the combination of the 2012 and 2013 taxes might exceed the 2013 standard deduction and provide a higher deduction. 
    Other Schedule A expenses such as charitable contributions and medical expenses may be bunched also.  From a practical standpoint, since most mortgage payments are due monthly, the mortgage interest would not be bunched.
    This information should be discussed with your tax advisor to see how it might apply to your individual situation.  The key is you must be aware of the strategy early to be able to use it.