Looking for the Largest Deduction

IRS 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.

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.

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.

Yummy Black Bean Chili!

Some people wanted me to share this. I originally got this from a friend of mine, but I altered it a little bit. It was supposed to be a meat free recipe, but I added venison burger or beef burger instead of rice. However, you can still take out the burger and use rice instead. 





YUMMY BLACK BEAN CHILI

2 tablespoon cooking oil
3+ garlic cloves, minced
3 medium red, orange or yellow sweet peppers, Coarsely chopped
1-1.5 large onions, chopped
2-3 medium zucchini, Coarsely chopped (2 1/2 cups)
3-4 cups fresh or frozen whole corn
2 to 4 teaspoons chili powder (to taste)
2 15 oz can tomatoes, cut up
2 15 to 16 oz can black beans, rinsed and drained
2 15 oz cans tomato sauce
1-2 fresh, pickled or canned jalapeno pepper, seeded and chopped
1 teaspoon salt
1 teaspoon pepper
1.5 to 2 lbs Ground Beef of venison (or use rice as a substitute)

Pour cooking oil into a wok or 12-inch skillet. (Add more oil as necessary during cooking). Preheat over medium-high heat. Stir fry garlic in hot oil for 15 seconds. Add sweet peppers and onions; stir fry for 4-5 minutes. Remove pepper mixture from the wok or pan.

Add zucchini and corn to the hot wok; stir fry for 4-5 minutes. Add chili powder; stir fry for 4-5 minutes more or till vegetables are crisp tender.

Return pepper mixture to the wok/pan. Add untrained tomatoes, black beans (drained and rinsed), tomato sauce, jalapeño peppers, salt and pepper. Cook and stir till bubbly. Cover and cook about 5 minutes more. Serve immediately.

How's Your IQ on the QM?

The 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.

Seein' is Belizen!

About a week and a half ago, by husband and I visited Belize. What a beautiful place! We were hooked the moment we set foot on the resort. We were even more hooked when we toured what they are doing down there!

Discover the Secret of Sanctuary Belize!

Visit Our Site to find out more about our adventure. 

Photos of our trip.

Find out about Sanctuary Belize HERE.

Eco-friendly Development with 5 Eco Systems!

Every Homeowner Needs One

A 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.

Reasonable Expectations

Coffee 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.

Making Room in Your Rooms

The 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.

Rate/Payment Relationship

A 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.

Rent or Buy - the cost is going up

Whether 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.

National Flood Insurance Program Regulatory Update

NOTE:           This update was sent to State and Local Association GADs earlier this morning

Provision Eliminating Future Grandfathering in the NFIP Delayed At Least Until 2015

On February 5, 2014, the Federal Emergency Management Agency (FEMA) released guidance released guidance related to flood insurance and grandfathering.  Section 207 of the Biggert-Waters Reform Act (BW12), which passed in 2012,  eliminated the grandfathering provision in the National Flood Insurance Program.   This guidance applies to FEMA’s future plans for grandfathering and not to the skyrocketing rate increases being triggered by a property’s sale which we’re seeing around the county

Grandfathering provides property owners the ability to pay a lower flood insurance rate based on an older map, even if the map and the flood risk changes in the future.  BW12 eliminated grandfathering and required FEMA to increase flood insurance premiums when the maps change, at a rate of 20 percent per year until the property pays the full actuarial rate.  FEMA had recently estimated that rules implementing this provision would be finalized in late 2014.       

This guidance is the result of provisions of the recently passed Consolidated Appropriations Act of 2014 (The Omnibus) which requires FEMA to cease any current planning and development activities to implement this provision through Sept. 30, 2014.   According to FEMA’s statement, they have halted all work related to this provision.  Once Congress restores funding to implement Section 207 of BW12, FEMA estimates it will take an additional 12-18 months to finalize the rulemaking.  NAR will continue to keep you apprised of the latest regulatory and legislative developments related to implementation or reform of BW12.

John DiBiase

Communications Director

Government Affairs

National Association of REALTORS^®

Find a Better Return

A 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 me for more information- iviebaker@kehoerealty.com; you may be amazed about what is available in the market.

10 acres N M-30, Gladwin MI - SOLD

Great Hunting or Building Parcel on a Paved Road

SOLD!

Build your home or come prepared to hunt because this beautiful piece of property has plenty of wildlife! Deer, bear, turkeys, and more! Great location on a paved road, not too far from town. Nicely wooded and a great wildlife area.

Lot 263 Kings Way, Gladwin MI - Nice Lake Lancelot Waterfront Lot

Great building or camping spot on Lake Lancelot.

$89,987

Click Here for More Info and Photos!

Are you looking for a fantastic building or camping site on a beautiful Up-North lake, with sandy beach front and amazing sunrises? You just found it! This beautiful waterfront lot, located on Lake Lancelot in Sugar Springs offers an amazing view and landscaped waterfront with a lovely sandy beach. Enjoy stunning sunrises and glassy lake views. Sugar Springs also offers several other amenities, including an 18 hole championship golf course, restaurant, 2 lakes, campground, private airstrip and so much more! Enjoy watching fireworks over the lake during the 4th of July weekend, as well as many other events that Sugar Springs had to offer throughout the year.

4647 Keswick Court, Gladwin MI - SOLD

Nice 4 Bedroom, 2 Bath Home on a Clean Lagoon on Lake Lancer

Nice Swimming Beach and Large Yard

SOLD!

Nice tri-level waterfront home on a clean an quiet cove, just off of the main lake. This home offers plenty of space with a main floor living room, kitchen, dining room and sunroom area. The lower level has a family room, additional bedroom and there are 3 bedrooms and bath on the upper level. There is a nice swimming beach on a clean lagoon and two patios (one in the middle of the back yard, near the beach). This home is located in a lovely area of sugar springs on a dead end court. New roof & total remodel 2006. Home does need some repairs done, but has tons of potential.

Personal Finance Review

You’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.

Interviewing a Mover

“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.

Fees

• 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?

Insurance

• 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?

Dates 

• 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?

Terms 

• 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?

What Can You Expect?

The two most frequently quoted constants in life are death and taxes.  Two more things would-be homeowners can expect in the near future are increases in mortgage rates and housing prices.

Interest rates have been kept artificially low for several years by the Federal Reserve in an effort to strengthen the economy. Policy is shifting to allow them to seek their own natural level and that will surely result in higher mortgage rates.  Rates on 30 year fixed mortgages are up over 1% from January, 2013.

Foreclosure activity is down, new home starts are up and prices have been increasing in most markets for two years.  Most experts agree that the cost of housing is going up.

If the price were to go up by 2% and the mortgage rate by 1% while a buyer is “sitting on the fence” making a decision, the payment would go up by almost $175.00 each and every month for the term of the mortgage.  Even if a person can afford to make the higher payments, what could they have done with that extra $175.00 a month?  Buy furniture?  Car payment?  Principal reduction?  Retirement contribution?  Save for a rainy day?

Click here to determine what the cost of waiting to buy will be using your price home.

 

What Kind of Showing Was It?

One of the most frequent calls from homeowners to their agents is about the listing’s inactivity due to the lack of showings.  The homeowner commonly believes that the home is shown only when a buyer walks through the house with an agent.

Today’s buyers are more sophisticated than in the past due to the abundance of information available to the public on the Internet.  There are seemingly inexhaustible sites with homes for sale, valuation estimates and virtual tours.  There are extensive mapping sites with satellite images, traffic conditions, entertainment, shopping and other points of interest.

There are actually three legitimate types of property showings.  A knowledgeable buyer can view a home for sale online and make a reasonable determination of whether the home will fit their needs.  Occasionally, buyers will drive by a home to get a feel for the home and also the neighborhood which might cause them to eliminate any further examination or consideration.

The third type, the physical showing, certainly gives the buyer the opportunity for the closest scrutiny but is generally reserved for properties that have passed the inspections of at least one other type of showing.

Sellers should be aware of the different types of showings and that a sales agent’s job is to help the buyer find the right home.  The listing agent’s job is to market the home so that the right buyer finds it either through their own efforts or that of the buyer’s agent.

Can You See the Savings?

If you’ve considered changing your light bulbs to energy-saving LED bulbs but decided not to make the investment because the prices were too high, you might want to investigate again.  The prices have come down considerably.

An initial investment now will generate immediate returns through energy costs and because they last longer, you won’t need to replace them for years.

The life of LED bulbs is projected to be from 35,000 to 50,000 hours compared to an incandescent bulb at 750 to 2,000 hours.  For normal home use, a LED bulb could last more than 20 years.

80-90% of the energy used by fluorescent and incandescent bulbs is wasted by the heat generated.  In contrast, cool LED bulbs converts 80% of the electrical energy to light energy.

• The color of LED lights is bright white, more like daylight, instead of the warm yellow of incandescent or the greenish tint of fluorescent bulbs.

• LEDs light up instantly instead of building to their intensity like some of the fluorescent bulbs.

• LEDs are more durable because they don’t have filaments or thin-glass bulbs like incandescent and fluorescent bulbs.

Shop around to find the best price on LEDs. If the LED only lasted 20,000 hours, you might have to purchase 20 incandescent bulbs during that same period of time.  Using the chart below, you can see that the LED uses about 10% of the wattage without compromising on the brightness.

The Perfect Last Minute Gift

It’s part of holiday tradition to celebrate with family and friends and to share gifts with our loved ones.  There’s no measuring how much is spent on the combined effort and money to find the perfect gift. 

The challenge is to identify the right gift in the right color and size; something they really want and need; and something that won’t break the budget. 

“Eight Gifts That Do Not Cost a Cent” are suggestions that have been offered on numerous Internet sites attributed to an anonymous writer.  They may be just what you need to find the perfect gift. 

• THE GIFT OF LISTENING...but you must really listen. No interrupting; no daydreaming; no planning your response; just listening.

• THE GIFT OF AFFECTION...be generous with appropriate hugs, kisses, pats on the back and handholds.  Let these small actions demonstrate the love you have for family and friends.

• THE GIFT OF LAUGHTER...clip cartoons and share articles and funny stories.  Your gift will say “I love to laugh with you."

• THE GIFT OF A WRITTEN NOTE...it can be a simple "thanks for the help" note or a full letter.  A brief, handwritten note may be remembered for a lifetime and may even change a life.

• THE GIFT OF A COMPLIMENT...a simple and sincere, "you look great in red" or "you did a super job" or "that was a wonderful meal" can make someone's day.

• THE GIFT OF A FAVOR... go out of your way every day to do something kind.

• THE GIFT OF SOLITUDE...there are times when a person wants nothing more than to be left alone.  Be sensitive to those times and give the gift of solitude to others.

• THE GIFT OF A CHEERFUL DISPOSITION...the easiest way to feel good is to extend a kind word to someone.  It’s really not that hard to say, Hello or Thank You. 

Up to $500 for Doing Home "Work"

The energy-efficient home upgrades tax credit is scheduled to expire on December 31st this year.  If you need to make improvements to your home, this could be an incentive to do it before the end of the year.  If you have already made qualifying improvements without realizing the tax credit is available, it may seem like a holiday gift you weren't expecting.

The equipment must be installed to qualify for the credit which can put you under a time crunch.  Heating and cooling systems, insulation, windows, doors, skylights, water heaters and home weatherization may qualify.

The Residential Energy Efficiency Tax Credit has been available for purchases since January 1, 2011.  The tax credit is 10% of up to $5,000 of qualifying improvements which would make a maximum of $500 tax credit.

The cumulative maximum amount of tax credit that can be claimed by a taxpayer in the different years this law has been in effect is $500.  If it has been claimed in previous years, the taxpayer is not eligible for this credit for additional new purchases.

For more information, see energy.gov or talk to your tax professional.

Winter Maintenance

With a 2,000+ mile long winter storm affecting much of the country, there are plenty of home owners who wish they were better prepared.  Even when you live in warm climates, some of these things are important to check periodically.

Preparing for the change of seasons can make your home more comfortable and protect your investment.  Regular maintenance extends the various components of a home and can generate savings in operating costs while avoiding expensive replacements.

• Weather strips around doors and windows should be checked for possible air leaks.
• Caulking around windows and doors should seal out moisture and air leaks.
• HVAC should be inspected and serviced by a professional annually.
• Smoke and carbon monoxide detectors should be tested regularly.
• Ductwork and supply lines from water heaters should be insulated.
• Fireplace chimneys should be cleaned regularly and fireplaces should be inspected for cracks in mortar and to see if the damper closes properly.
• Gutters should be free of leaves and debris to prevent rainwater build-up.
• Tree branches touching or hanging over your roof should be trimmed.

Please contact us if you need a service provider recommendation.

Motivated Sellers, Better Prices and Less Competition

The Winter Home Buyer Report conducted in the second week of November by REALTOR.com^® revealed the sentiments of current home buyers expecting to buy a house during the winter months.  It appears that there is pent-up demand with buyers who were unable to purchase a home recently.

Most cited as an impediment to purchase was the challenge of low inventory.  Strong demand coupled with short supply explains why home prices have been increasing.

"This summer and spring home buying season was particularly challenging for buyers, especially first-time home buyers trying to compete with all-cash offers and bidding wars because of reduced inventory.  In fact, a quarter of the winter home buyers revealed they are in the market now because they were unable to find a home during this last home buying season," said Alison Schwartz, vice president of corporate communications at REALTOR.com^®.  "While buyers are still experiencing challenges with inventory and approximately one in five buyers plan to put down all cash, there are advantages to looking for a home in the winter. Motivated sellers, better prices and less competition between buyers are some of the top reasons winter home buyers are interested in purchasing a home during the colder months of the year."

Some interesting statistics taken from the report are:

Biggest challenges when searching for a home during winter:

• 34 percent shared that there is not enough inventory on the market
• 29 percent believe that winter weather makes house hunting unpleasant 

Traditionally, the industry has found that the fourth quarter of the year has a lower sales volume and is generally attributed to distractions from the holidays and not wanting to make a move during consistently inclement weather.  Even in areas that are not affected by extreme winter weather, there seems to be a mindset about moving in the winter.

Indications are that it may be advantageous for sellers to put their home on the market now rather than wait until after the first of the year.

5341 M-30, Beaverton MI - SOLD!

Well Maintained Waterfront Home on 2 Large Waterfront Lots!

2 Bedrooms, 2 Baths, 2 Car Garage

Plus a 30x 40 Pole Barn with Workshop

SOLD!

Are you looking for a well maintained waterfront home on a large on on Wixom Lake? You may have just found it! This nice home offers an open floor plan with a great view of a extra wide channel of Wixom Lake. This home features a walkout basement with a fireplace, 1.5 Baths, 2 car attached garage and a 30x40 pole barn with heated workshop. All of this sits on two large lots with over 128 ft of waterfrontage on the lake! Great year round home or get away!

4421 Wagarville Road, Gladwin MI - SOLD!

Stunning and Immaculate Vintage Log Home on Pratt Lake!

2 bedrooms (one being a loft), 1 Bath, 1 Car Garage

Plus a Car Port and Shed

SOLD!

You will FALL IN LOVE with this "Rare Beauty" on beautiful Pratt Lake. This immaculate vintage log home sits on over an acre of land, nestled under tall pine trees, overlooking Pratt Lake. You will enjoy amazing panoramic views and a lovely sandy beach. Enjoy hours of fun and play out on the lake or relax on the beach and take in the view. Experience amazing sunrises and sunsets from this southern exposure view. T

his lovely solid log home has been recently updated with granite counter tops, Amish built hickory cabinets, modern fixtures, newer composite decking, updated plumbing & electrical and a newer roof with 50 year shingles sitting on 8 inch thick SIP panels to keep the house warm or cool, through the seasons. There are also dual pane Marvin windows and top end appliances. This home is a "Must See" for the serious log home buyer. Make your appointment today!

Refinance to Remove a Person

Most people are familiar with the various reasons a homeowner refinances their home which generally result in two major benefits: saving interest and building equity. 

There is however another reason to refinance which may not be as common which is to remove a person from the loan. In the case of a divorce, when one party wants to keep the home and the other party wants their equity out of the home, it is possible for the remaining party to refinance the home. If the equity is sufficient to justify it and the remaining owner can qualify for the new loan, the refinance can provide the proceeds to buy out the other spouse.

Refinancing to remove a person from the loan could also involve a situation where two or more heirs jointly own a property and have differing opinions on when to sell. The same situation could apply to a rental property with multiple owners and the refinance would provide a way to buy out a partner.

Sometimes, it’s not about taking cash out of the home to buy out the other party. If a person’s name is on the mortgage, they’re responsible if it goes to default. One party may be willing to deed the home to the other party but it doesn’t necessarily relieve them of the liability of the mortgage they originated.

Many times, once a person has made their mind to move on, they’ll take the fastest and easiest way out. Removing a person from the deed or a mortgage is a reason to consider obtaining legal advice to protect your interests. Refinance Analysis calculator.

Reasons to Refinance

1. Lower the rate
2. Shorten the term
3. Take cash out of the equity
4. Combine loans
5. Remove a person from a loan

Who's Paying Your Mortgage?

As a homeowner, you obviously pay for your mortgage but as an investor, your tenant does.  Equity build-up is a significant benefit of mortgaged rental property.  As the investor collects rent and pays expenses, the principal amount of the loan is reduced which increases the equity in the property.  Over time, the tenant pays for the property to the benefit of the investor.

Equity build-up occurs with normal amortization as the loan is paid down.  It can be accelerated by making additional contributions to the principal each month along with the normal payment.  Some investors consider this a good use of the cash flows because interest rates on savings accounts and certificates of deposits are much lower than their mortgage rate.

In the example below, is a hypothetical rental with a purchase price of $125,000 with 80% loan-to-value mortgage at 4.5% for 30 years compared to a 3.5% for 15 years.  The acquisition costs were estimated at $3,000, the monthly rent is estimated at $1,250 and $4,800 for operating expenses. 

Notice that both properties have a positive cash flow before tax.  The cash on cash return is the revenue less expenses including debt service divided by the initial investment to acquire the property.  The 15 year mortgage will obviously have a smaller cash flow and lower cash on cash but the equity build-up is significantly higher.

If the goal of the investor is to pay off the property to provide the highest possible cash flow at a later date, a shorter term mortgage with a lower interest rate will help them achieve that.  A simple definition of an investment is to put away today so you’ll have more tomorrow.  Sacrificing cash flow now, during an investor’s earning years, is a reasonable expectation to provide more cash flow in the future when it might be needed more.

Contact me if you’d like to explore rental property opportunities.