Tuesday, June 3, 2014

Another Source for a Down Payment

IRA 250.jpgMost taxpayers know that they will pay a 10% penalty if they withdraw funds from their IRA before they turn 59.5 years old.  There is an exception for first-time home buyers that allows a penalty-free withdrawal of up to $10,000 per person if they haven’t owned a home in the previous two years.

This would allow a married couple who each have an IRA to withdraw a lifetime maximum of $10,000 each, penalty-free for a home purchase.

In many cases, the money would be used for a down payment or closing costs.   However, some buyers might consider this source to increase their down payment so they could qualify for a loan without mortgage insurance.

If the taxpayer qualifies for the penalty-free withdrawal, there may still be taxes due.  Contributions to traditional IRAs are made with before-tax dollars and the tax is paid when the funds are withdrawn.  Since Roth IRAs are made with after-tax dollars, there is no tax due when the funds are withdrawn.

Another interesting fact about this provision is that the taxpayer making the withdrawal can help a qualified relative which includes children, grandchildren, parents and grandparents.

Homebuyers who are considering using IRA funds for a home purchase should get expert advice from their tax professional concerning their individual situation.

Tuesday, May 27, 2014

Record Improvements Now

Register-250.jpgThere is a significant difference in how the money you spend on your home is treated for income tax purposes.  Repairs to maintain your home’s condition are not deductible unlike rental property owners who can deduct repairs as an operating expense.

On the other hand, capital improvements to a home will increase the basis and affect the gain when you sell which may save taxes.

Additions to a home or other improvements that have a useful life of more than one year may be considered an increase to basis or cost of the home.  Other increases to basis may include special assessments for local improvements like sidewalks or streets and amounts spent after a casualty loss to restore damage that was not covered by insurance.

Unlike repairs, improvements add to the value of a home, prolong its useful life or adapt it to new uses.

You can read more about improvements and see examples beginning on the bottom of page 8 of IRS Publication 523.  For a form to keep track of money you spend, print this Improvement Register.

Tuesday, May 20, 2014

Cut Your Housing Costs in Half

50% off (small).pngSerious shoppers wait for a 50% off sale to make the decision because of the bargain factor.  Renters who are serious about lowering their monthly cost of housing should consider buying with today’s low mortgage rates.  For an example, let’s assume a person buys a $200,000 home with 3.5% down payment on a 4.5% FHA mortgage for 30 years.

The total house payment would be approximately $1,508 per month.  However, once you consider the equity build-up due to normal amortization, a monthly appreciation estimated at 2% annually for this example, the tax savings and paying maintenance that a tenant wouldn’t be required to do, the net cost of housing is $772 a month.  This is almost half of the full mortgage payment.

If this person was paying $1,750 a month for rent, it would cost him almost $978 more to rent than to own. In the first year alone, it would accumulate to over $11,000 which is more than the down payment required of $7,000.

Owning a home is the largest investment that most people make and the down payment of $7,000 to purchase this home would grow to $58,837 in equity by estimating a 2% appreciation and normal amortization.

To check out what your real housing costs might look like, go to Rent vs. Own or contact your real estate professional.

Rent vs Own - InTouch.png

Friday, May 16, 2014

Tuesday, May 13, 2014

Who Saves the Commission?

Save Commission-250.jpgOne of the most common reasons buyers want to deal directly with the seller is because they feel they can save the commission.  It’s a valid consideration but interestingly, it’s the same reason the seller isn’t employing an agent; they feel they can save the commission.

Both parties cannot save the commission.  The buyer feels they have earned it because they’ve had to find the home, determine its value and negotiate with the seller.  They had to arrange their own financing, title and inspections.

The seller equally feels that they have earned the commission because they have incurred all of the marketing expenses and have invested hours upon hours to be available to show the property, hold open houses and answer inquiries.  They have had to research value, financing, title work and make decisions. 

There is certainly value in all of the things that buyers and sellers are willing to do to save the commission but only one person can save the commission only if the buyer and seller can reach a written agreement.

There is value to having a third party advocate helping each party to the transaction.

The Profile of Home Buyers and Sellers (Exhibit 8-1) reports that 14% of sales were For-Sale-by-Owners in 2004 compared to just 9% in 2013.  The trend shows that agent-assisted sales rose to 88% in 2013 from 82% in 2004.

The three most difficult tasks identified by for-sale-by-owners is attracting potential buyers, getting the price right and understanding and performing the paperwork. When surveyed, sellers most value the home selling in an anticipated time frame and for an expected amount.

The reality is that both parties cannot save the commission.  It is earned by providing specific services that are essential to the transaction.  The capital asset of a home represents the largest investment that most people make.   An investment that important certainly deserves the consideration of a professional trained and experienced to handle the complexities involved.

Tuesday, May 6, 2014

Consideration could be the key to your new home

Keys in Hand Small.jpgConsideration associated with a contract is generally thought to be the price and terms but being sympathetic and courteous towards the seller could make a difference in getting the home you want.

Business people, like store owners, expect to deal with customers and even come to expect behavior that might not be accepted in a purely social atmosphere. Homeowners, on the other hand, may not be aware of what to expect.  They are opening the sanctity of their home to the public for review and criticism.  Buyers may be detached from emotional feelings while the sellers might react unfavorably to comments that are taken personally. 

  1. Be on time for appointments; cancel if necessary.  The sellers may be rearranging their schedules and making an additional effort to make it convenient for you to see the property.
  2. Be a good guest and respect the seller’s privacy.  Look at the home and avoid looking at the seller’s personal items; there is no reason to look in refrigerators or furniture drawers.
  3. Don’t sweat the small stuff.  Try to focus on critical items of a home like location, floor plan, layout, size and not dwell on cosmetic items that are easily and inexpensively changed.
  4. It’s not a good negotiating technique to list the defects.  Most people become defensive when presented with a list which could have the opposite effect of helping you get a better deal.
  5. Limit your visits until you actually own the home.  It’s natural to be excited and making plans to move into your new home but it is still the seller’s until closing and they’re making plans to move too.
  6. Negotiations are generally finished when a contract is completed.  It can be frustrating to continually be asked for “one more thing.” Make a deal with the seller and live with it.  If there’s something you’re not sure about, specify it in writing in the contract.

Some things are obvious: the seller wants the most for their home and the buyer wants to pay the least possible.  Showing consideration to the seller about things that don’t have anything directly to do with price can actually benefit the buyer.

Friday, May 2, 2014

Midland, Michigan Real Estate Spotlight: A Move Toward Luxury

No matter your season of life, a move toward luxury is always a good choice.  If you're interested in Midland Michigan real estate, we have the perfect option for you: 5608 Powder Horn Trail, $650,000

Whether you’re hosting cocktails for four or a catered event for forty, your entertainment needs are easily accommodated in this executive home. The butler’s pantry with full prep kitchen allows any mess to remain out of sight. Relax and enjoy time together in the open kitchen and family room; or move into the dining room and formal living room to enjoy the floor to ceiling windows.

Beautiful cherry cabinets and stainless steel appliances will delight the cook in your family. The expansive island provides storage for all your kitchen supplies and is a great place for a quick morning breakfast or a few hours of homework. The stunning Brazilian Cherry floors flow throughout the entire main level.

The private master suite is located on the south side of the home and offers a beautiful view of the wooded backyard. With enough space for a comfortable seating area, this could be the peaceful retreat you need after a long week. The attached master bath features a tile rain-shower with seat and privacy windows and a separate water closet. His and hers vanities and walk-in closets finish off the suite.

The second story is devoted to three large bedrooms, each with their own walk-in closet. The front bedroom has an attached full bath and the other two bedrooms share a Jack & Jill bathroom.  At the top of the stairs is a desk space which could easily be used for storage or study sessions. Separated from the main living areas, this upper level has privacy and plenty of personal space for guests or any member of the family.

The lower level offers an additional 1400 square feet of living space to meet your unique needs. With a fifth bedroom and full bath, it could function as a private living area. It would also be a perfect place for your in-home movie theater or gym. Currently, the space houses both a family room and workout area. Also located in the lower level is a quiet place to get a bit of work done, or the perfect space for your home business. The large den is tucked away in the lower level of the house and features a full wall of above-grade windows. This space would also function beautifully as a library or hobby room.

Your new car will reside in style in the heated garage. With 3 full-size stalls there is room for your sports car or the young driver in your home. Sports equipment, winter boots, backpacks, or gym bags– you need a place to drop your “stuff”. The mud room allows you to keep all these items out of sight while still in a convenient location.

For a private showing of 5608 Power Horn Trail, or any other Midland, Michigan houses for sale, contact agent Shelley Park Cluff at 989-698-1100 or email sold@shelleypark.com.

Wednesday, April 30, 2014

Midland, Michigan Receives Honors as a Great Place to Live

Summary: Midland, Michigan is a great place to live. Studies conducted by Forbes Magazine, CNN Money and SafeWise are helping to solidify that reputation.

The city has been named the fourth best city in Michigan to raise a family; one of the top eight cities in America with a thriving middle class; and has twice been named one of the 100 best communities for America’s young people. The Movoto Real Estate Blog even named Midland the number one city in Michigan.

Real Estate expert Shelley Park Cluff, Broker and owner of Park Place Homes explains, “The Midland area continues to receive these honors because of its outstanding educational opportunities, cultural and art programs, affordable living, and diverse recreational possibilities. All of these things come together to create a great place to raise a family.”
Forbes Magazine agrees. Their recent study concludes that Midland’s low crime rates, high median household income and high school graduation rate ranks Midland as the fourth best small city to raise a family.

A CNN Money study also names Midland County, Michigan, and Midland specifically, as one of eight areas in America where the middle class thrive. Midland’s 6.6% unemployment rate, median household income of $50,861 and good quality of life contribute to the city’s high ranking. They also name Midland’s robust fire, police and road services as contributing factors.

“The Midland real estate market is a testament to these statistics,” said Cluff. “Of the homes sold in Midland this year, the average price has been roughly $140,000, which makes our area very affordable and attractive for middle class families.”

 Safety statistics are also important to Midland’s reputation as a desirable place to live.  A recent SafeWise report names the locale as one of the 50 safest cities in Michigan based on FBI reports of both violent and property crimes.
“When choosing a place to live and raise a family, safety is of primary importance,” adds Cluff. “Studies like this increase everyone’s confidence that they have chosen to live in a safe community.  Also, as a real estate broker and long-time resident, I can confidently speak of Midland’s safety.”

Cluff says another reason Midland ends up on these best lists is Midland’s wide variety of year-round activities. The city offers arts and cultural experiences which rival those found in larger cities.  Unique shops and restaurant venues grace the downtown district. Sports opportunities are endless and even include ice skating on the hottest of summer days. Midland’s Chippewa Nature Center is one of the largest non-profit nature centers in the country with peaceful nature trails, bird watching opportunities and more. The city is also peppered with neighborhood parks boasting playgrounds, a place for dogs to run, fishing and even canoeing. The list of available activities is extensive and diverse. Visit the City of Midland website to learn more.  

For more detailed information about the Midland real estate market, home values, and homes for sale in the Midland area, contact Shelley Park Cluff at 989-698-1100, or visit her website: www.shelleypark.com.

About Park Place Homes

Shelley Park Cluff launched Park Place Homes with the goal of creating unique, custom real estate experiences for her clients. She has firm roots in Midland with knowledge and expertise to share about the local real estate market and community. Whether buying or selling a home, she’ll work tirelessly to create the experience you deserve.    

Contact Information

Shelley Park Cluff

(989) 698-1100

Tuesday, April 29, 2014

The Question Every Cash Buyer Should Answer

Warning Cash.pngPaying cash for a home seems like a huge advantage to qualifying for a mortgage and an appraisal.  However, for the fortunate few who don’t need a mortgage, there is a question they should answer before they make that decision: Do you think at any point in the future, you might put a mortgage on this property?

It’s important because paying cash for a home could affect the ability to deduct the interest if the homeowner should place a mortgage on the home at a later date.

Most homeowner’s know they can deduct the interest on up to $1,000,000 of acquisition debt on their principal residence but they may not understand the limitations of such debt.

Acquisition debt is the amount used to buy, build or improve a person’s principal residence.  The amount is not static but changes over time.  An amortized loan reduces the principal owed with each payment made and the acquisition debt is reduced accordingly.  If a person stays in a home long enough to retire the loan, the acquisition debt is reduced to zero.

Our current federal law allows a homeowner to deduct the interest on the acquisition debt plus the interest on up to an additional $100,000 home equity debt.  If a person pays cash for a home, the acquisition debt would be zero and the only interest deduction allowed would be for home equity debt.

If you answered yes or even maybe to the question, before you pay cash to buy your home, you should discuss your situation with your tax advisor.

Monday, April 28, 2014

Waterfront Living Can Be a Dream, With Preparation and Knowledge

Waterfront living!  A dream for many homeowners.  However, as demonstrated by recent flooding in the Midland and Sanford areas, waterfront living does come with potential challenges and risks.  One of those risks is the potential for property or home flooding.  “Homeowners should be aware of the possibility that even if their home is not in sight of the river or lake, the elevation it sits at could lend itself to being in a flood zone,” said Shelley Park Cluff, owner and Broker of Park Place Homes Real Estate in Midland. 

A home that is listed in the 100 year flood plain (or less), is required by mortgage lenders to carry flood insurance.  In the past, this was based on the value of the home and would approximately double the annual cost of home owner’s insurance. 

In order to protect new homeowners, this year President Obama signed into law the Flood Insurance Relief Law, which repealed the Federal Emergency Management Agency’s (FEMA) authority to dramatically increase rates when a property is sold, a proposition made by FEMA in 2013 in order to recoup rising expenses.  The new legislation caps the increase at 18% annually on new homes, and 25% annually on older homes.  “Even with the potential of 18% - 25% annual increases upon home sale, this is still a savings as compared to what FEMA had proposed,” said Park.

In order to assess flood insurance potential, the website www.FloodSmart.gov has a quick and easy tool to search properties and assess your risk.  “This is helpful if you are shopping for a new home and need to estimate annual insurance expenses,” said Park. “No one wants to be surprised by learning about expensive flood insurance requirements after their purchase offer has been accepted.”

Another valuable tool is GIS mapping, which shows where the flood maps are in the city of Midland, and some local townships.  On the map, users can follow the flood zones to see how close they come to their current or prospective homes. 

“Also check out where your home stands with a LOMA letter, formally known as a Letter of Map Amendment,” said Park.  “If your property is listed in the flood plain, but the structure is not, it is possible to hire a site engineer to conduct an elevation survey to exempt your home from requiring flood insurance.  This cost is approximately $600-$800, but worth the savings.”

An elevation survey can also potentially reduce required flood insurance premiums.  “Essentially, every inch matters,” said Park.  “A difference of just a few inches can mean the difference of hundreds of dollars a year in your flood insurance premium.”  It is worth making sure the data supplied by FEMA, which is estimated, is proper so you are not over charged.

If your property or home was recently flooded, visit the Midland County Department of Health website at www.co.midland.mi.us for instructions regarding treatment of wells, septics and homes. For more information about flood insurance assessments on your current or prospective home, contact Shelley Park Cluff at 989-698-1100 or www.parkplacehomesonline.com.

Thursday, April 24, 2014

Tis the Season for Orange Barrels

It's spring in Michigan and that means the reappearance of everyone's favorite street decor: the orange barrel.

Midland is a beautiful place to live; and we figure we can handle a bit of road construction if it means keeping the city in good shape. Plus, well maintained roads mean potential buyers are less likely to get lost in a pothole while driving by your house for sale.
You can always find up to date information regarding current construction projects at the City of Midland's website, but we've included the list of 2014 projects for you, below.  Happy Spring, and happy travels!

Tuesday, April 22, 2014

A Lower Payment is Your Choice

Mortgage acquired 250.png94% of purchasers last year opted for a fixed-rate mortgage at some of the lowest rates in home buying history.  Yet, some of them will pay more in interest than necessary based on the time they’ll own the home.

If a person only plans to be in the home a few years, the adjustable-rate can offer significant savings.

Not only is the interest rate on the adjustable-rate lower than the fixed in the initial period, amortization on a lower interest rate amortizes faster than a higher interest rate.

In the example shown below, a $200,000 mortgage for 30 years is compared using a 4.25% fixed-rate to a 3.25% 5/1 FHA adjustable rate.  The first five years of the ARM generates a $113.47 a month savings which accumulates to $6,808.20.  In addition, due to faster amortization on lower interest rate loans, the unpaid balance at the end of five years will be $3,001 lower on the ARM for a total savings of $9,801.

Assuming the adjustable-rate mortgage was to escalate the maximum allowed at each period, the breakeven would occur in 8 years and 6 months. If a person were to sell the home prior to this point, the ARM would provide a lower cost of housing for the homeowner.

For some people, the uncertainty of how the interest rate may change is not acceptable.  On the other hand, for the risk tolerant individual who may be more confident in financial matters or who may know when they’ll be moving next, the ARM can be a smart choice.

To make projections using your individual numbers, see the Adjustable Rate Comparison.

InTouch ARM.png

Friday, April 18, 2014

The Home of Tomorrow

The Michigan Association of REALTORS® recently published an article in "Michigan REALTOR®" explaining four rising trends believed to be shaping the home of tomorrow. Author Deirdre Sullivan of Houselogic.com wrote, "the home of tomorrow isn't about Jetson-esque wonders and smartphone apps. It's about home value, the environment, and our lifestyles".
Active Greywater Toilet: Caroma

Here's a breakdown of the trends Sullivan noted and how you may see them take shape:

1) Extreme Energy Efficiency
    What to look for:
      -Smarter use of water in the loo through waterless toilets, which are a step further than their low-flow brothers, and grey water systems which reuse household water.
      -Garages wired for electric vehicles. This trend is already taking up permanent residency in Palo Alto, California where building code now requires new homes to be wired for electric car chargers.

2) The Rise of Super Storms
    What to look for:
      -Generators capable of running the whole house. A home generator can not only keep your household functioning for days during a storm, but approximately 52% of the cost of a generator can also be recouped.

3) The Locally Grown Movement
    What to look for:
      -Indoor gardens are likely the next step in the push for healthier food and responsible purchasing. These handy little green spaces combat rising food prices (attributed to transportation costs) and can actually improve air quality within the home and offer a boost to a gloomy disposition.

4) Sophisticated Appliances and Fixtures
    What to look for:
      -"Multi-purpose uber appliances", says Sullivan. Just as the smartphone has eliminated the need for an alarm clock or CD player, General Electric predicts that by 2025 our sinks will also act as dishwashers, our washing machines will also fold our clothes, and kitchen faucets will dispense water, ice, miscellaneous beverages and even vitamins.

So far we haven't seen many of these trends take shape in the Midland real estate market, but you can bet we'll be the first to tell you when they do! In the mean time, if you're looking for your home of tomorrow give us a call or browse our website for more info on the homes available today!

Tuesday, April 15, 2014

An Exchange Means More to Reinvest

Section 1031 exchange for rental and investment real estate is a tool that allows investors to move the gain from one property to another without immediate income tax consequences. 
An instant benefit is to postpone the tax due which gives the investor a larger amount of proceeds to invest.  In the example shown, the investor has 21% more proceeds to invest and grow over time than if he had paid the taxes due instead of exchanging.
A legitimate long-term goal might be to make qualified exchanges from one property to another until the investor dies.  The heirs would then receive a stepped-up basis on the property based on the market value at the time of the decedent’s death and possibly avoiding taxes altogether.
There are specific requirements to be met in order for the exchange to qualify. For more information on exchanges, see IRS publication 544.  In addition to enlisting the services of a real estate professional familiar with investment property, seek the help of Qualified Intermediary to facilitate the intricacies of the exchange.  Your real estate agent can help you locate one.
Exchange example.png

Thursday, April 10, 2014

7 Rules for a Livable Layout

Whether you're staging to sell, moving into a new home, or looking for a fresh makeover for your existing place, carefully planning where you'll put your furniture is worth the time and effort.  How you arrange your furniture dictates how you use a room.

Of course, we're often restricted by the size and shape of the furniture we own and the rooms need to fill.  Given what you have to work with, HGTV has laid out seven simple rules for arranging furniture that will help you maximize the livability and visual impact of your rooms. Click the link below to browse through their slideshow and pick up a few tricks to try in your home!

Design by Jennifer Jones; Photo from HGTV.com

Tuesday, April 8, 2014

Is the Window Closing?

iStock_000011016597Small 250.jpgWith interest rates lower than they’ve been in over 40 years, it may be difficult to think of a “window of opportunity” closing.  However, it isn’t difficult to understand that it may very probably cost more to live in a home in the near future due to rising interest rates and prices.

Zillow recently reported results from a nationwide study that home values are expected to appreciate by 4.5% through the end of the year.  Coupled with Freddie Mac’s projection that rates are going up, the cost of housing for buyers by the end of the year will be higher than it is now.

While uncertainty of the future can stagnate some people, the fear of loss can be much more devastating when a person realizes that the amount they pay to live and enjoy a home could have been considerably lower had they acted when prices and mortgage rates were lower.

The following example considers a $250,000 purchase today with a FHA mortgage compared to what it might be at the end of the year with a higher price and interest rate as discussed earlier.  The net effect is that it will cost $191.87 more each month to live in the very same home based on the cost of waiting to buy.

To see what the cost might be for your price range, use this Cost of Waiting to Buy spreadsheet.

cost of waiting.png

Thursday, April 3, 2014

Spotlight Listing: 3310 Lakeside

Before you know it, we'll be enjoying another beautiful Michigan summer. Take a look at 3310 Lakeside, listed for $349,900, and the lake house you've been dreaming of could be yours before season hits! This beautiful, traditional 2-story home offers 3470 square feet of living space and 85 feet of main Sanford Lake frontage. The expansive view up and down the lake, a sandy bottom perfect for wading out to swim, and a dock and steel sea wall make for the ideal waterfront retreat.

Inside the home, you can appreciate the professional updates (completed in 2000) that have been made which have expanded the view of the lake and opened up the home.  Whether your more interested in continuous daytime light or a beautiful sunrise view, the two story foyer and numerous lake-side windows will certainly meet your needs.

And what good is a gorgeous house on the lake without an equally beautiful kitchen in which to make your favorite summertime meals? This kitchen is open to the living room and dining room- assuring that the cook will never be lonely- and has windows facing the deck and water. Modern kitchen appliances, granite counter tops, and hardwood floors finish the space in style.

Upstairs, each of the spacious bedrooms have waterfront views.  The master suite has a generous walk in closet and a large private bath complete with heated ceramic floors and private deck. Additional living space is offered on the second story as well as in the walk-out lower level.

When you add features like 2 fireplace, vaulted ceilings, space for a home-office, custom bookcases, attached 2.5 car garage, and a security system it is clear that 3310 Lakeside is the lake house you've been dreaming of. Park Place Homes' REALTOR® Carol Park would love to take you on a private showing. You can reach her by email, sold@carolpark.com, or by phone, 989-698-1100.

Tuesday, April 1, 2014

Looking for the Largest Deduction

Standard Itemized.pngIRS allows taxpayers the option to take the standard deduction or the itemized deduction.  The astute taxpayer will compare to see which one will result in the greatest deduction and the election can be made each year.
The 2013 standard deduction for a married couple filing jointly is $12,200 and $6,100 for a single taxpayer.  It doesn’t require any proof of actual expense and has no requirement for home ownership.
Items that can be included on Schedule A for itemized deductions include:
  • Certain taxes paid for state and local income tax, general sales tax, real estate property taxes, personal property taxes or other taxes paid
  • Qualified home mortgage interest, investment interest or possibly, mortgage insurance premiums
  • Charitable contributions
  • Casualty or theft losses
  • Medical and dental expenses that exceed 7.5% of adjusted gross income if born before 1/2/49 or 10% if born after 1/2/49
  • Job expenses and other miscellaneous deductions that exceed 2% of adjusted gross income
A non-homeowner taxpayer who has been taking the standard deduction needs to consider that it isn’t just the ability to deduct the mortgage interest and property taxes.
While the standard deduction might be the obvious choice for a non-homeowner, the combination of the mortgage interest and the property taxes plus other allowable deductions not recognized previously such as charitable contributions, now makes taking the itemized deductions significantly more advantageous.

Tuesday, March 25, 2014

What's the Point?

Prepaid interest, sometimes called “points”, is generally tax deductible when a person pays them in connection with buying, building or improving their principal residence.  When points are paid on a refinance, they are not a current deduction but have to be taken prorata over the life of the mortgage.DEDUCTIBILITY.png

For instance, if $3,000 in points were paid on refinancing a 30 year mortgage, a deduction of $100 per year is allowed.  When the loan is paid off or replaced by refinancing again or the home is sold and the mortgage paid off from the proceeds, the balance of any un-deducted points may be taken in that tax year.

Your tax professional needs to be made aware of any of these situations so that he or she can accurately reflect the deductions in your return.  Currently, the most common situation is homeowners may be refinancing their home for the second, third or even, fourth time. If there are points that have not been completely deducted, they need to be treated in the year of refinancing.

For more information, see points in IRS Publication 936; there is a section on Refinancing in this publication. For advice considering your specific situation, contact your tax professional.

Friday, March 21, 2014

Break Out of Winter: Weekend Events in the Tri-Cities

The snow is FINALLY starting to melt and the action is picking up around town. If you're tired of being cooped up inside then check out this short list of fun things happening around the tri-cities this weekend!

Les Misérables is opening at the Midland Center for the Arts! The show tonight begins at 7:30pm- as will Saturday night's performance. Sunday's show is a matinee beginning at 3pm. The production will conclude next weekend with two final performances on Friday the 28th at 7:30pm and Saturday the 29th at 7:30pm. While tickets are becoming scarce, there are still some available for all three shows this weekend.

If the theater isn't your style, then maybe you're up for a little shopping. Downtown Midland is hosting a Meet Your Merchant day on Saturday from 11am-4pm.  Pop in to the unique array of local stores for a chance to win prizes, pick up some great items- many at special discounts- and meet the owners of these fabulous stores! If you're up for more, you can also visit downtown Bay City where the Welcome Spring Open House is happening Friday and Saturday. Restaurants and stores alike are offering discounts, prizes, and new spring items.

If you're searching for a bit of inspiration head over to the Ryder Center at SVSU for the 53rd annual Home & Garden Show.  Vendors include everyone from builders & remodelers to lanscapers and gardening specialist. Tickets are just $5 for adults- kids under 17 are free- and $1 off coupons are available online. Seminars will be going on all weekend long. Topics like Water Features in Your Landscape, How To Hire Contractors, and Fruit Tree Pruning and Care are just a few of those being featured this weekend.

Head on out and enjoy the weekend!

Tuesday, March 18, 2014

How's Your IQ on the QM?

Qualifying Guidelines.pngThe Qualified Mortgage Rule came into effect on January 14, 2014 as one of the results to the Dodd Frank Reform Act to protect consumers from predatory lending practices.  This will affect the underwriting standards that the majority of lenders will use to qualify borrowers.

The ability to repay rule states that financial information must be supplied by the borrower and verified by the lender.  The borrower must have sufficient assets or income to pay back the loan which limits the maximum debt-to-income ratio of 43%.  In an effort to present a more accurate picture of the costs to the borrower, teaser rates can no longer hide a mortgage’s true cost.

A maximum of 3% in upfront points and fees can be paid on behalf of the borrower.  There can be no negative amortization, interest-only or balloon payments and the loan term limit cannot exceed 30 years.

While there are more requirements, most deal with good underwriting practices that are followed by reputable lenders such as considering and verifying things that affect the ability to repay the mortgage like income, assets, employment status, simultaneous loans, debt, alimony, child support and credit history.

Friday, March 14, 2014

Understand Before You Sign: The Seller's Disclosure

There are a lot of documents involved in the buy-sell process, all of which are very important to understand.  As always, we are here to make your experience as smooth as possible; so we'd like to walk you through one of the forms you'll see when you buy or sell a home- the seller's disclosure.

This document is a statement disclosing the condition of, and information concerning a home and its property. It is not a substitute for a home inspection because it is based solely on the seller's knowledge. If a seller is unaware of a problem, he or she is not responsible for disclosing it. This is an opportunity for a seller to be upfront about the condition of the home; and an opportunity for a buyer to obtain important information before entering into a purchase agreement.

The seller's disclosure is available to anyone interested in the property, not just buyers who have signed a contract to purchase the house. It is extremely important to note that the disclosure is a legal document. This means that if a seller knowingly omits information or provides misinformation they may be held accountable in a court of law. It is always best to be completely honest and deal with any issues right away.

Seller's disclosures vary from state to state. The form used by the Midland Board of REALTORS® includes questions regarding the functionality of appliances such as a range/oven, alarm system, ceiling fans, sprinkler systems, central air conditioning, the sump pump, etc. It also covers topics like the type of insulation in the home, the kind of plumbing system and historical presence of water in the basement and pest infestations. Sellers are also asked to disclose information regarding "common areas" on the property- meaning facilities or spaces over which a homeowner's association or other entity may have authority.

If you've gone through a house with your REALTOR® and you'd like more information about the structure, ask for the disclosure. Your agent can walk you through it and answer any questions you may have.

Tuesday, March 11, 2014

Every Homeowner Needs One

water meter key.jpgA water meter key is like insurance; buy it before you need it.
Imagine a pipe has burst and there is water flowing like a river through your home.  There may a cut-off valve to each sink if it works and if that’s where the leak is coming from. Your home may have a master cut-off valve but if you haven't used it before, you might not know where it is. The last resort is to cut off all the water to your house at the meter.
In most cases, you'll need a key to get into the meter.  With water starting to rise in your home, concern over the damage being done may add to your anxieties.  You don’t have time to call a plumber or even go the store to buy a water meter key.
Emergencies are handled much better when you plan for them in advance and practice, even though you hope you’ll never need it.
1. Determine what kind of key you need to open your water meter.
2. Purchase it at the home improvement or hardware store.
3. Practice opening the meter to be able to do it quickly and easily.
4. If your meter key doesn’t have a wrench on one end, you need a wrench to turn the water valve.
5. Practice turning the water off just to see how it works and feels.
6. Put the key in an obvious and conspicuous place.
7. Have the phone number of an emergency plumber, just in case you need it.
While you’re planning for the unexpected, it might be a good idea to show some of the other family members how it works and where you keep the key.

Friday, March 7, 2014

Spotlight Listing: 315 Ireland


This absolutely beautiful, and well maintained, one owner home features over 2,200 square feet of flowing space, three bedrooms and an unofficial fourth bedroom in the finished basement. Two gorgeous fireplaces, a new roof in 2011, stunning 40x20 heated in ground pool, located on a quiet corner lot in Auburn- and yours for $235,000. 

The open concept chef's kitchen (20x20) has amazing Corian counter tops with an integrated sink offering a lovely view of the backyard and pool. With ample cabinets, a large pantry, breakfast bar, and new stainless steel appliances (2013), this kitchen is perfectly suited for a family on the move. Easy to clean, high performance and high style Mannington Adura Luxury vinyl flooring and updated lighting take the space beyond functional to wonderful.

The breakfast nook is full of natural light and offers access to the backyard. This space connects the kitchen to the cozy living room (18x15) which features a beautiful gas fireplace with marble surround and custom mantle. Past the staircase and the custom designed coat closets is the formal dining room. This elegant (13x11) space has oak hardwood floors and several recessed windows making it a wonderful setting for holiday gatherings.

Rounding out the main level is the main floor laundry (10x8), updated half bathroom with granite counter top and storage closet, and custom designed office space (10x10) with high end soft-close oak cabinets, custom coat rack with cubbies, more storage and lots of counter space.

Upstairs, the freshly painted landing area connects the bedrooms and upstairs bathroom. The stunning master bedroom (16x15) features vaulted ceilings and a view of the pool through the large window with window seat. Oversized his and her walk-in closets feature custom built shelving. The attached master bath has a double vanity, double sink, sweeping granite counter top and dual linen closets connected by a seating area perfect for getting ready. There is a jet tub and private standing shower as well. The second (13x11) and third (12x11) bedrooms located upstairs (one with feature window and vaulted ceiling) share a full bath complete with tub/shower combo, more granite counter tops and updated lighting.

The unofficial fourth bedroom (12x10) is located in the basement along with approximately 800 square feet of finished space. Here you’ll also find a half bath, another gas log fireplace and mantle. The sump pump even has an upgraded city-water backup system to protect the house in the event of a temporarily power outage.

The 100x135 corner lot sits on a quiet street with very little traffic, is within walking distance of schools, and near the newly opened TriCity Sports Complex. The owners took great care during the design process to include an extra parking pad for a third vehicle and an extra cement sidewalk and porch space that wraps around the side of the home into the back yard pool area. This house has so much to offer and truly cannot be limited to words.  You must see this home for yourself.  Call Logan Richetti or our office today to schedule your own private showing!

Tuesday, March 4, 2014

Reasonable Expectations

fortune cookie2.pngCoffee should be hot. Beer should be cold. Mexican food should be spicy.  However, if these things are less than the standard that you expect, there are not any lasting consequences.
As the value of the object in question rises, either in price or gravity, the expectations usually increase and decisions become progressively more important.  Marriage, children, health and careers are certainly a few of the more important items that bear careful consideration.
The sale of the largest asset that most people own, their home, also merits having reasonable expectations.  A homeowner should expect to get the market value for their home in a reasonable period of time with as few inconveniences as possible.
According to the latest Home Buyers and Sellers Survey, more homeowners are entrusting the sale of their home to real estate professionals.  Owners can increase the likelihood of a favorable outcome by sharing their expectations with agents prior to listing their home for sale.
Challenge your agent to explain what they intend to do to:
  • Price the home correctly
  • Prepare the home to make a good impression
  • Position the home in the marketplace
It is reasonable for a seller to expect the agent will work hard to sell the home; will tell the truth and represent the client’s interests to the best of their ability.  Agents exemplify remarkable service when they exceed the seller’s expectations.

Friday, February 28, 2014

Midland Michigan Real Estate YTD

The Midland, Michigan Real Estate market usually heats up in the early spring. Last year, our local REALTORS® noticed things picked up a bit early- possibly due to the weather. So how are we doing this year? We've compiled some data for you and analyzed the sales year to date.

Demand for single family homes fluctuates based on price, location, and size. Since January first of 2014, REALTORS® in the Midland Board have sold 115 residences. Broken down by number of bedrooms, nearly 60% of those sales were homes with three bedrooms. The graph above shows the full break down of the homes sold this year. This year's sales are broken down by price range in the graph below.

You'll notice that 27 homes sold under $75,000 dollars. A number of those sales represent foreclosures or short sales. Midland has a healthy "fix and flip" market (one reason why you rarely abandoned homes in our area) and investors often snatch up these properties. Of the 115 homes sold so far this year, the average sale price is $138,345 which falls right around the middle of our 75k-150k range.

While there have not been as many new listings added to the Midland area market this year as last year at this time, sales have remained steady. This leaves us with about 4% fewer homes available for sale. Lower inventory and strong demand means that buyers may experience competition for a home they decide to purchase. For the same reason, prices are likely to remain strong which is good news for home sellers.

For more detailed information about the Midland real estate market, home values, and homes for sale in the Midland area give us a call at 989-698-1100, or visit our website: www.parkplacehomesonline.com! We'd love to help in any way we can.

Tuesday, February 25, 2014

Making Room in Your Rooms

retain remove.jpgThe more things you have, the more you have to take care of.  And in this case, the more that you have to store that gets in the way of finding the things that you actually use.  Periodically, you need to go through every closet, drawer, cabinet and storage area to get rid of the things that are just taking up space in your home and your life.
Every item requires the decision to retain or remove.  Consider these questions as you examine each item:
• When was the last time you used it?
• Do you believe you’ll use it again?
• Is there a sentimental reason to keep it?
You have four options for the things that you’re not going to keep.  If you know someone who needs it or will appreciate it, you can give it to them.  You can sell it in a garage sale or on Craig’s List.  You can donate it to a charity and receive a tax deduction or you can discard it to the trash.
Start with your closet. If you haven’t worn something in five years, get rid of it.  Then, go through the things again and if you haven’t worn it in two years, ask yourself the real probability that you’ll wear it again.
Another way to do it is to move it from your active closet to another closet.  If a year goes by in the other closet, the next time you go through this exercise, those clothes are on their way out.
If the items taking up space are financial records and receipts, the solution may be to scan them and store them in the cloud.  There are plenty of sites that will offer you several gigabytes of free space and it may cost as little as $10 a month for 100 GB at Dropbox to get the additional space you need.  It will certainly be cheaper than the mini-storage building.

Thursday, February 20, 2014

Share The Memories

Visit Share the Memories' Website

In 2008, Becca Tointon wanted to donate four bridesmaid dresses to a good cause and found that no local agency collected them.  Soon after that, under the umbrella of North Midland Family Center and in cooperation with the Midland Newcomers Club, Becca started "Share the Memories".

The organization's seeks to provide underprivileged high school girls the opportunity to attend prom by removing the financial barriers created by the expense of a dress.  Thanks to a large team of volunteers and the generous support of the community, Share the Memories has provided 750 girls with prom dresses.  

Park Place Homes is a long time supporter of Share the Memories and is thrilled to once again be able to offer our office as a collection location.  Anytime between now and March 7th you may drop off any new or gently used dresses and we will deliver them for the event.  Share the Memories is also accepting other prom related items such as gift certificates for a salon appointment, accessories, or prom tickets which will be raffled off during the event.

With a large selection of dresses available and continued increase in awareness of Share the Memories, we expected 2013 to be the best year yet!

You can find more information at www.sharethememoriesmi.org/, through their facebook page, or our facebook page

Tuesday, February 18, 2014

Rate/Payment Relationship

Rate Payment Relationship 2 small.pngA ½% increase in interest rate may not sound like much but it is roughly equivalent to a 5% increase in price.  It becomes obvious when you compare the payments.

If you financed 100% of the cost of a $250,000 home at 4.5% interest for 30 years, the payment would be $1,266.71 per month.  If the mortgage rate went up to 5%, the payment would be $1,342.05.  If the home increased 5% in value, the $262,250 loan at the lower 4.5% rate would have payments of $1,330.05.

The two payments are close enough to justify the statement that a ½% change in interest is approximately equal to 5% change in price.

Each time interest rates go up, fewer people can qualify to buy a seller’s home.  The mortgage rules that went into effect this year require buyers to meet specific payment to income ratios.  As demand picks up for the seasonal market, most experts expect rates to increase.

Buyers will be doubly challenged in the current market because prices are rising (NAR reports 11% last year) along with the anticipated mortgage rates.  Buyers who wait will inevitably be paying more to live in the same home had they acted sooner.

Check out on how Interest Affects Price for a home in your price range.

Friday, February 14, 2014

Sometimes Love Just Isn't Enough

Have you lost that loving feeling?
Are you starting to think "it might be you, not me"?
Do you love it, but you're just not in love with it anymore?

We understand.

You have some great memories. You've had a good run.
But sometimes love just isn't enough.
You're ready to see *dramatic pause*...other houses.

Don't feel guilty. We understand, and we have good news for you! There are more fish in the sea...or, houses on the market, to be more accurate.

The new year is here and the market is heating up. 528 house have been listed with the Midland Board of REALTORS® just since January 1st! Our agents have been busy showing houses to buyers eager to start this spring in a new home; and that is great news for sellers.

Bottom line: if you're not in love with your house anymore, Park Place Homes can help. Whether you're ready to jump ship tomorrow or may need a little time making a break from your current dwelling, we're here for you. You can browse all available homes for sale in Midland and the surrounding areas on our website: www.parkplacehomesonline.com or if you'd rather, give us a call and we can help narrow your search.

Park Place Homes- your successful housing matchmaker since 2008

Tuesday, February 11, 2014

Rent or Buy - the cost is going up

Buy or rent small.jpgWhether you continue to rent or decide to buy a home, according to recent Zillow 2014 housing projections, the cost is going up.  Zillow projects home prices to increase nationally by 3%, mortgages to rise to 5% interest rate by the end of the year and rents to go up by 2.5% on average.

If it will cost a person more whether they rent or buy, the conclusion can be made that one way or the other, they will pay for the house they occupy.  The question will be whether they buy it for themselves or their landlord? Will they benefit from the equity build-up and the appreciation?

The following analysis looks at a $200,000 home that can be purchased with a 30 year FHA mortgage at 4.3%.  The assumption uses 3% appreciation and tenant currently paying $1,750 a month in rent.

The house payment, principal, interest, taxes and insurance would be about $1,609 a month.  However, once you consider the benefits of the principal reduction each month, the appreciation and the tax savings and the increased cost of maintenance, the net cost of housing is closer to $630 per month.

Even if you ignored the tax savings, the net cost of housing would only be $919.06 per month.  The tenant would pay considerably more to rent than to own the home.  Over time, the decision to buy a home could result in a considerable financial asset that the tenant will not benefit from.

To estimate your cost of housing, use the Rent vs. Own.

Thursday, February 6, 2014

Spotlight Listing: 4619 Ottawa Ct.

This fairy tale home could be the house you've been dreaming of! Conveniently located within Midland, but on the and of a cul-de-sac, you have your own little gem right in town. With three bedrooms, two baths, a fenced yard, and a full finished basement, you're sure to find your happily ever after here!

Wood floors and plenty of natural light make the entrance to this home and the living room a lovely place to relax.  The large front window looks out over the spacious front porch- yet another perfect spot to spend some time.  If the weather gets too warm, come on back inside and enjoy the Central Air.  Just past the living room is a galley kitchen with plenty of space for a table.  The sliding glass door fills the space with light and offers convenient access to the back deck and fenced yard beyond.

 Down the hall you'll find all three bedrooms. Each has large windows and updated lighting fixtures! Currently one bedroom is being used as a den/office. In such a lovely space, you can certainly dream up any number of uses for your rooms!  And space is not limited to those bedrooms.  A full finished basement offers an additional living space complete with egress window. The basement is also where the second bathroom is located.

If you're ready to make your housing dreams a reality, contact Tim Sodini, REALTOR® to schedule your own private tour of this lovely home.  Park Place Homes can help you write your happy ending.   Tim Sodini: 989-698-1100x140 or timothy.sodini@charter.net

Tuesday, February 4, 2014

Find a Better Return

Return on Investment.pngA certificate of deposit will generate a cash flow based on the interest rate that it pays which is the only way it generates a return for the investor.
An investment in a stock that doesn’t pay dividends, would need to be worth more than you paid for it to earn a profit.  On the other hand, a stock that paid dividends could make the investor a profit even if it sold for the same price that he paid for it.
Investors can profit four different ways with an investment in rental real estate.
1. Cash flows that result from having a surplus after collecting the rent and paying the expenses.
2. Equity build-up results from a portion of each monthly payment reducing the unpaid balance.
3. Tax benefits can result from the depreciation allowed on the property and the preferential long-term capital gains tax rate.
4. Appreciation benefits the investor when the value of the property increases.
The most conservative investors in real estate make decisions to purchase a rental property based on its ability to generate a cash flow and reduce the mortgage through normal amortization.  If the property can offer an acceptable rate of return compared to other available investments, the tax benefits and possible appreciation become an added bonus.
With increased rents and low mortgage rates for investors, rental property can offer significantly higher returns than many of the available alternatives.  Contact us for more information- info@ParkPlaceHomesOnline.com; you may be amazed about what is available in the market.

Tuesday, January 28, 2014

Personal Finance Review

Reveiw checklist.pngYou’ll need to earn $2.00 for every $1.00 you want to spend assuming you pay 50% of your earnings on income tax, social security and Medicare.  On the other hand, you get to keep 100% of every dollar you save on your personal expenses because the taxes have already been paid.

Periodically, review your expenditures with the diligence of an exuberant IRS agent on commission.  It’s an exercise that most people don’t feel they have time to do but the rewards make it entirely worthwhile.

  • Get comparative quotes on insurance – car, home, other 
  • Review and compare utility providers 
  • Review plans on cell phones 
  • Review plans on cable TV, satellite for unused channels and packages or receivers 
  • Review available discounts on property taxes 
  • Consider refinancing home – lower rate, shorter term or cash out to payoff higher rate loans 
  • Consider refinancing cars 
  • Call credit card companies to ask for a lower rate 
  • Review all of the automatic charges on your credit cards – consider no-fee cards 
  • Search for late fees that are regularly being paid and eliminate them. 
  • Review all bank charges for accounts and debit cards; determine if they can be reduced or eliminated.

If you don’t want to review your credit card accounts, consider reporting the cards stolen so that new numbers will be issued.  You can notify the companies that need your number.  Companies who might have your number won’t be able to automatically renew services that you may no longer be using.  You can be assured that they’ll contact you when the old number doesn’t go through and you can re-evaluate the decision at that time.

Friday, January 24, 2014

Zehnder's Snowfest 2014

We're keeping it short and sweet this week. Why?  Because it's getting busy over here! The new year has begun and that means there is a lot to do over here at Park Place Homes.
And by the way, we are absolutely loving it!

So here it is:
Looking for something fun to do this weekend?  You're in luck!
Zehnder's is hosting their annual Snowfest and the festivities run through this Sunday:

Photo Credit: Jeff Schrier | Mlive.com

- Snow Sculpting Competitions
- Professional exhibition ice sculptors
- Warming tents
- Live Music
- Photo Booths
- Face Painting
- Ice Putt Putt Golf
- Inflatables for kids
- Magic & Juggling
- Warm-food competitions
- Fireworks
- Chicken Bowling (we have no idea what that is, but would love to see it)
- Did we mention the warming tents and live music?

Click HERE for a full schedule of events.
Note that all events are subject to date and time changes due to weather.
If you do make it out to Snowfest, take a picture and post it on our Facebook wall! Have a great weekend!

Tuesday, January 21, 2014

Interviewing a Mover

Mover 250.jpg“I’d wish I’d know that before I made a decision.”  If you’ve ever regrettably said this to yourself, having a checklist might have prevented the issue in the first place.  This list of questions can provide you with things to discuss when interviewing a moving company.


  • What is the charge for packing?
  • Does it include boxes? If not, what do they cost and will you deliver them?
  • Is there an additional charge to deliver some items to a storage unit?


  • How is a damage claim handled? 
  • What insurance do you provide and is there a cost? 
  • Does the insurance cover items packed by the owner? 
  • Can additional insurance be purchased? 
  • If items are covered by my Homeowner’s insurance, whose insurance pays first?

Unusual Items 

  • Can you ship my car(s)? Will they be in the moving van or towed? 
  • What are the charges for shipping cars, lawn tractors, etc? 
  • What items cannot be shipped? 
  • If a shuttle truck is needed because of the location of my house or size of the drive way, is there an additional charge? 
  • If packing and loading are on different days, can you leave the beds and other basics out for us to use?


  • What dates are available for our move?
  • What date will you pack and how long will this take? 
  • What date will you load the van? 
  • What date will the van arrive at my new location? 
  • If my new home is not ready for delivery, how many days can it be delayed before there is a charge? 
  • What is the charge for additional days or weeks?


  • Are there any additional fees that I’m responsible for that have not been discussed? 
  • What are the terms of payment? 
  • Is a down payment required? 
  • When will the balance be due and who is authorized to accept it?

Thursday, January 16, 2014

4 Things You Should Know About Park Place Homes

The 2013 statistics are in and based on those numbers we have 4 important facts about Park Place Homes that you should know:

1) Park Place Homes has the highest percentage of listings sold (of listings taken) in the Midland Board. 

This means that by listing your house with us you've increased the likelihood that your home will sell by about 16%.  

2) Park Place Homes has the lowest average days on market for listings sold. 

For our sellers, this means they had 1 month fewer taxes to pay, 1-2 fewer house payments to make, and 4 fewer weeks of keeping their house ready for showings.

3) Park Place Homes has one of the lowest discounts from listing to sold price. 

This means that there is a smaller gap between the price at which you and your REALTOR decide to list the house and the price you actually receive. This translates into more money in your pocket.

4) Park Place Homes sells more listings per agent than any other office in the Board of REALTORS. 

We attribute this to our agents' depth of knowledge, their years of experience, and our office's ability to work as a team. When you list with Park Place Homes you have the whole office working to sell your home.