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tom stachler selling property and homes in ann arbor michigan and saline michigan providing you with this market report for april 2014 thomas real estate for sale

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The city of Ann Arbor recently announced its decision to sell a parking lot downtown to a local property manager. As part of that agreement, Dennis Dahlmann has agreed to turn this parking lot into a mixed-use development no later than January 1, 2018, which means that more apartments are coming to downtown Ann Arbor very soon.

The deal is estimated to be worth around $5.25 million. The sale of the former YMCA property was approved unanimously by the city council in November. In making the decision, once council member was excited at the possibility of creating something “magnificent” on the site, and remarked that it would be an excellent development for the downtown area.

This parking lot is located near the Blake Transit Center, and is also situated along William Street and Fourth and Fifth Avenues. It consists of just under an acre of land that will house a structure that is at least five stories high when completed. The lower level will contain retail and restaurant space, office space on middle floors and apartments on the top floors.

Ann Arbor’s city council had previously set forth a number of stipulations for building on the site. One of the requirements was that the site plan had to be based upon available standards for energy efficiency. Proper parking facilities were also outlined, to include connecting with another underground parking garage that is nearby.

In addition, the city also made exact specifications as to the amount of open space that’s provided. The amount of open space must be at least 10% of the property. The city also mandated that the developer include a fountain that is approximately the same size as the one located in front of the Campus Inn.

City officials received five different offers, and considered all of them carefully before deciding to sell this lot to Dahlmann. In deciding which offer to take, council members looked at the benefits of each proposal separately in addition to considering the asking price.

Residents can expect ground breaking for this new construction to begin soon. Government officials are hopeful that the idea of more apartments coming to downtown Ann Arbor will help spur economic growth within the city.

To follow up from my previous post about FHA mortgage limit changes this year, there are some additional mortgage changes to know in 2014. Buyers who are looking to purchase a new Home need to be aware of current changes in mortgage rules in order to choose the loan that is best for them.

One of the biggest changes involves FHA loan limits. The maximum amount of an FHA loan decreased from $729,750 to $625,000 beginning January 1, 2014. A number of counties across the country saw significant decreases, as the loan limits are based upon median home prices in a given area. The expiration of credits given by the Housing and Economic Reform Act of 2008 has resulted in the agency now approving 115% of the median Home Price in a given area as opposed to 125% previously.

The Consumer Financial Protection Bureau (CFPB) now requires lenders to follow an “ability to repay” mandate when approving loans. This new regulation requires that lenders follow a precise set of guidelines when it comes to calculating income, debt and assets. In doing so, they are granting what the government deems to be a “qualified mortgage” in an effort to reduce the number of foreclosures that take place in the future.

Self-employed workers face even more difficulty when it comes to obtaining a “qualified mortgage” than others will. That’s because the new rules make it more difficult for people without a W-2 form to prove their debt-to-income ratio than it is for others. This is true even for those who have extremely high credit scores and a high net worth. It seems that the government is concerned that tax write-offs will reduce the amount of taxable income a person earns, thereby making income statements less accurate than W2 forms.

Some positive mortgage changes stem with new caps placed on loan origination fees. Those who obtain a qualified mortgage are limited to no more than three percent of the loan amount for points and fees charged by the lenders. Unfortunately, there is no cap on origination fees for consumers who do not obtain a qualified mortgage.

As always, buyers should check with their lender to find out about specific changes that are mandatory by a particular institution.

The fact that days are shorter and colder in winter often means that selling a Home during this time of year is especially challenging. That doesn’t mean it has to be impossible, as there are some tips for winter home selling people can do in order to increase their odds of securing an offer.

Keeping driveways and walkways clear ensures that real estate agents and potential buyers are able to get to a property. If they can’t get to a particular home, they will bypass it and head to another one instead. Those who cannot clear snow and ice themselves should consider hiring a professional service to help them with this.

Outdoor lighting should be bright enough to illuminate a home’s best features, while also making it safe to enter. Adding new lighting or replacing burned out bulbs can ensure the property’s best features are highlighted, and which guests feel comfortable coming and going.

The inside temperature of a home should feel nice and toasty. When people enter, they don’t want to feel cold, as this will make them wonder whether or not the heating system works efficiently. If a home is vacant, installing a programmable thermostat that is operable by smart phone will allow homeowners to turn the temperature up just before visitors arrive.

Just as in the summertime, everything inside the home needs to be clean, tidy and well-staged. Plastic mats near the doorway will contain snow and mud, thereby helping carpets to stay clean. The angle of the sun during winter also makes streaks and grime more noticeable, which is why washing windows inside and out is highly recommended.

Doing some little things to make a home seem warm and inviting will go a long way toward enticing buyers. Simple things, such as flameless candles burning on an end table or warm cider simmering on the stove, can make a house feel more welcoming. Homeowners may not want to burn a wood fire in their fireplaces if they are not home, but simply staging some fire logs in front of the fireplace could still lend a cozy feeling to the home.

Many market reports show that sellers have fewer homes to compete with during the winter. This means that those who follow these tips for winter home selling are likely to make a sale despite there being inclement weather.

The rules governing mortgages are continuously changing, and it is important for anyone who is considering a new Home purchase to be aware of them. This year, FHA mortgage limit changes in 2014 top the list of new rules, and an overview of the changes are listed below.

Overview

The Federal Housing Administration sets loan limits based upon county. Beginning January 1, 2014, the maximum amount of a loan decreased in 652 counties nationwide, while subsequently increasing in 89 others. There are no FHA mortgage limit changes in 2014 in the remaining 2,493 counties across the country, and loans insured by either Fannie Mae or Freddie Mac will also not be affected.

Nationwide, the maximum FHA loan amount is now $625,500, as compared with $729,750 that the agency allowed in 2013. The amount allowed will depend on the cost of living in a given area. Previously, the FHA allowed loans that were up to 125% of the local area median Home Price, but the decrease now means that lenders can grant only 115% of that amount instead.

Unequally Affected

The decrease is affecting some counties across the country harder than others. The National Association of Realtors® reports that 146 counties have experienced a 20% or greater reduction in loan amounts. U.S. Finance Post states that buyers in cities such as San Francisco, Los Angeles or New York City are more likely to see FHA rates remain higher than those who live in rural areas.

Many prospective Home buyers, at one time or another, fall victim to the "kid-in-a-candy-store" mentality when they find the home of their dreams is available but happens to be priced just a little outside their price range. If you find yourself in this situation, there are some things to contemplate.

Sometimes financial stretches for buyers make sense. This is especially true when you consider that each additional thousand dollars on the overall Home Price equates to a mere $100 - $200 extra on the monthly mortgage payment.  Not only that, but Buying a nicer, larger home will often save you time and money in upgrades in the following years. This means that you can spend your years living in your home instead of working on it.

For a vast majority of people, the purchase of a new home is a long-term financial investment. So if you plan to be in the home for many years to come, then stretching financially may be a great buying strategy for you. 

However, everyone's financial situation is different and sometimes financial stretches for buyers are not a good idea.  For instance, if you are not planning on being in the home for more than 5 years, then you could lose a lot of money in the up and down cycles of the housing market. Also, if you do not have much job security for one reason or another, then you may not want to stretch to a more expensive home.

Financial stretches for buyers can be a calculated risk that pays off well over time. But if you’re a buyer with financial uncertainty, then you’re probably better off not pushing yourself to your financial limit. Talking with an experienced real estate agent is your best step for working out a buying strategy that works well for you.

It doesn't take a Black Friday horde to tell you that the holidays are a busy time for merchandisers, retailers and shoppers. However, what you might not know about this festive time of year is that potential Home buyers who are looking now are serious about purchasing your home.

This is one of the reasons why you, as the seller, should be as flexible as you can during this time when it comes to showing your home. It stands to reason that the more flexible you are for showings, including short-notice appointments, the more chances you'll have of selling your home fast.

In addition, sellers show consider how many decorations are put up for this time of year. Decorations are nice and can make the home more inviting. However, too many decorations inside or outside the home can be distracting. Certainly be willing to garnish your home in holiday cheer, but it would be wise to keep it to a minimum.

On the other side of the coin, if you are a potential buyer searching for a home over the holidays, remember that sellers may not have the ability to be as flexible during these often hectic months due to travel plans, hosting commitments, or any number of other valid reasons. In a word, don’t be discouraged if a seller cannot accommodate a home showing on a moment’s notice.

Both buyers and sellers can capitalize on the increased sense of urgency that is typically ratcheted up over the holidays. This is especially true for homebuyers since the vast majority of each group would prefer to close on a home purchase or sale prior to the close of the year.

To best facilitate these transactions in a timely fashion, buyers and sellers alike would benefit from the knowledge and experience of a real estate agent.

The two most common types of mortgages are fixed rate and adjustable rate. There are several others, some of which are described below, but it's best to keep it simple as you enter the labyrinthine maze of Home finance.

Fixed rate

These loans offer one specific rate for its entire duration; however, if interest rates fall, your rate may increase.

Adjustable rate mortgage (ARM)

Adjustable rate mortgages main attraction is their relatively low initial interest rate; however, they are directly impacted by the market conditions at adjustment time. So, your monthly payment can fluctuate, up or down, dramatically over time.

Hybrid ARM

A hybrid ARM is a blending of these first two mortgages in which the interest rate starts out fixed, but after a specified length of time, becomes vulnerable to the whims of the market.

FHA (Federal Housing Administration)

This is a government-secured loan that allows people who may have trouble qualifying for other financing a home loan with one low down payment; however, the size of the loan could be limited.

VA (Veterans Administration)

Here we have another government-backed loan; this one offers eligible veterans, active duty personnel and surviving spouses competitive interest rates, with little to no down payments.

Balloon mortgage

Similar to the aforementioned hybrid ARM, a balloon mortgage starts with a fixed rate, usually at a comparatively low number. Once the fixed period ends, the lender must pay back the full balance of the loan.

Interest-only

Another hybrid of sorts, interest-only loans allow the borrower to pay just the interest for an agreed-upon term, after which the full balance of the loan is due.

Reverse mortgage

This one is aimed at senior citizens who want to convert their home equity into cash. The crucial distinction between reverse and conventional mortgages is that with a reverse mortgage, lenders are not required to pay principal or interest as long as they live in or own the home.

For decades, Home ownership in the United States has been partially subsidized by the tax savings associated with owning a home. Many homeowners qualify for certain tax deductions and tax credits that make home ownership more affordable.  In order to utilize certain deductions, a homeowner must itemize their tax deductions. But almost everyone is eligible to benefit from one or more of the tax benefits of home ownership. Here are a few to consider as of the date of this article:

1. Property Taxes Deduction: In many areas, property taxes can be one of the most significant costs of homeownership. Therefore, the ability to deduct residential property taxes from taxable income is an incredible savings. A property tax deduction is essentially a tax-deductible tax, so that the homeowner does not pay income tax on money that was used to pay property taxes. This particular deduction may only be used for the period of time the homeowner actually owns the home. Back taxes paid as part of the purchase arrangement may not be deducted. But anything going to the Seller on the settlement statement for property taxes the seller paid in advance can be deducted. Homeowners can only deduct the amount of property tax actually paid to their local municipality for the tax year. However, if the property taxes are held in escrow for paying taxes at a later time, the deduction cannot be taken until such time as the money is paid out of the escrow account to the taxing authority. Many local assessments for improvements or other city/county fees that one may find on their property tax bill are not deductible. Also, if any (typically partial) refund of the property tax occurs, the amount of the deduction is generally reduced by the amount of the refund.


2. Mortgage Interest Deduction: For many homeowners, the mortgage interest tax deduction is the most valuable tax deduction, and can be used to deduct interest paid on a mortgage of up to one million ($1,000,000.00). When a homeowner receives their first Form 1098 from their lender, they should know that its potential value is vast and to consult with a tax professional as to how best to take advantage of this benefit. This deduction is especially useful for most new homeowners, as the initial mortgage payments for new homeowners are primarily comprised of interest for the first several years, making for a larger deduction (until more of the payment is comprised of principal when there is less interest paid and less interest to deduct). Prepaid mortgage interest paid at closing may also add to the amount of this deduction.


3. Mortgage Insurance Premiums Deduction: Many home buyers whose initial down payment is less than 20% of the purchase price are required to pay private mortgage insurance or "PMI." This insurance can be a significant expense. Homeowners may generally deduct the premiums paid for such mortgage insurance for the current tax year on a primary residence and a non-rental second or vacation home. However, eligibility for this deduction is phased out based on income levels (check with your tax professional).


4. Points Deduction: If an owner paid discount points or "points" (or sometimes "loan discounts") to reduce the interest rate on borrowed funds as part of the purchase or refinance of a home, the cost of these points can be deductible in the year they were paid or over the life of the mortgage, depending on the type of loan and the unique qualities of the taxpayer.


5. Energy Credits: Some homeowners can receive a tax credit (either federal, state or local) for a portion of the cost of materials used for energy efficient upgrades to their residence (including doors, windows, furnaces and air conditioners, roofing materials, insulation, solar panels, water heaters, geo thermal heat pumps, fuel cells, wind turbines, and other energy efficient upgrades).


6. Home Office Deduction: Many home owners, who use a portion of their home for office purposes, may be able to claim a tax deduction for the pro-rata portion of costs related to the office space (e.g. repairs, mortgage, insurance, utilities, and depreciation). To utilize this deduction, the home office must be used exclusively and regularly as a place of business, a place to meet clients/patients for business purposes, a place of storage (e.g. for inventory or records used in the business), or a place where a majority of business work is done.


7. Gain on Sale Exclusion: Individuals can exclude up to $250,000 of gain from a primary residence from taxable income, and married couples can exclude up to $500,000 of gain. To qualify, the seller(s) must have lived in the home as a primary residence for two of the prior five years before the sale.


8. selling Costs Deduction: If the seller’s gain from the sale of a home does not qualify for the exclusion in #7 above, or the gain exceeds the maximum amount of the exclusion in #7, the costs associated with selling the home may also be available to reduce the tax burden of the seller. For example, the following costs may be deductible: title insurance, advertising and marketing expenses, broker fees, or repairs (if made within 90 days of the sale and with the intent to facilitate a sale).


9. Home Improvement Loan Interest Deduction: Interest on loans for home improvements may be deductible, provided the loan was used for a "capital improvement," such as building a deck, installing a new water heater system, or building a garage or otherwise expanding the size of the home. Many s1maller items, such as wallpaper, paint, carpet, etc. are not considered "capital improvements."


10. Construction Loan Interest Deduction: Interest on a loan used to construct a new principal residence or vacation home for personal use may be deductible for the first 24 months of the loan.


11. Loan Forgiveness Exclusion: As of the date of this article, the Mortgage Debt Forgiveness Relief Act of 2007 was extended to allow debt that is forgiven by lenders in short sale situations to be excluded from taxable income, rather than being taxed as debt forgiveness income.


12.  IRA Penalty Exemption: The ten (10) percent penalty for the early withdrawal of IRA funds can be avoided if the withdrawal of such funds is used toward the purchase of a home within 120 days of the withdrawal. This benefit is limited to a withdrawal of up to $10,000 in IRA funds for each spouse, and only if each spouse did not own a home within the two years prior to the new home purchase.

These tax benefits represent some of the biggest tax benefits of homeownership. Other tax benefits also exist. And the above analysis is an informational summary only and is not to be used, and is not intended to be used, as tax advice. When it comes to tax matters, a tax professional, Certified Public Accountant, or tax attorney should be consulted for the particular circumstances of each taxpayer, to ensure that no tax benefit opportunities are missed and to ensure compliance with law. 

HOMESTEAD TAX CREDITS - The state of Michigan has a homestead tax credit for owner occupied residences.  This amounts to approximately a 33% discount on your annual local and state property taxes.  There are deadlines for filing this paperwork however in order to get your tax savings.  There is also options to get more than one homestead credit though in most cases it is limited to just one per person/household.  CALL us to discuss your situation as they there are complex rules and regulations which vary by individual case.  

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