Posts Tagged ‘house payments’

Michigan Tax Legislation Now in the House of Representatives- Good News for Home Buyers

A brief explanation of how Michigan property taxes work. We have what is called the homestead exemption for a person’s primary residence in The Great Lakes State, which basically means if the house is your primary residence you get a break on the millage rate- up to 18 mills. On a house valued at $200K- or a taxable value of $100K- 18 mills equals $1800. Not chump change.

The way the law currently works is if you buy a house that isn’t a primary residence, such as a bank owned home, you must close and file your homestead exemption with the township prior to May 1. If you file after May 1, you will pay the higher rate for the remainder of the year. So if you close on your house in June, you will have both the summer and winter tax bill at the higher rate.

Today I received an E-News Special Alert in my in box from the Michigan Association of Realtors letting me (and everybody else in their e-blast) know that Senate Bill 77 passed the Michigan Senate today with a vote of 36-0 and now moves to the House of Representatives. The email states that “This legislation would provide for an additional principal residence filing date of October 1st.” It goes on to state an amendment was added to move that date to November 1 for 2010 only. It wasn’t specific as to whether you have to file ON Oct. 1 or BY Oct. 1. As I find out more details, I will update you.

In the meantime you may want to contact your state rep to let them know how you want them to vote. I have also found when I need more details on a piece of legislation, my rep has had no problems in the past emailing me the complete text of a bill. Remember- our representatives work FOR us.

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I’m not really calling you a dummy. This is my attempt at a very simplified explanation of what seller concessions are.

Example: You want to buy the house you just looked at and want to make an offer of $200,000. You need $5000 in seller concessions (seller paying all or part of your closing costs). Your offer will be $205,000 asking the seller to pay $5000 in concessions. If you offer $200K and ask for $5K in concessions, your offer is really $195,000.

The seller isn’t really paying your closing costs- you are mortgaging them.

Sellers- you really aren’t paying those closing costs. The buyer is mortgaging them.

Buyers- sellers have a bottom line. They don’t tend to come down to that bottom line AND pay concessions. The concessions are rolled into the purchase price.

Sellers– don’t question the amount of the concessions. If the buyer’s loan officer is over charging them that is their business. You only need to be concerned about your bottom line.

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It was the best of times (when your house was assessed). It was the worst of times (now)… it was the epoch of belief, it was the epoch of incredulity… it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us…

Two houses in Oakland County Michigan– both priced the same. Both in the same township with the same greedy bloodsucking tax revenuerstax base. The difference- The tax amount. To the tune of a tad over $2800/year or $235/month. This is not chump change and it is very important.

When you get pre-approved for a $300,000 sale price, the loan officer had to use some number for taxes. In reality, when you get pre-approved for a mortgage, you’re really getting pre-approved for a maximum house payment amount.

In the example above, the difference in taxes is because of the assessments and the fact that one of the houses is in the village and has a village tax. Both are on the same lake. So- how does the that $2800 additional annual tax affect your buying power?

To make the math easy, I’m going to assume an interest rate of 4 3/8%. At a 4 3/8 per cent interest rate $5=$1000 of sale price. Or annual tax. A difference of $235 in house payment equals about $47,000 in purchase price. OR– house A with higher taxes would need to sell for $47,000 less than house B in order to have the same monthly house payment. Or- you can pay $300,000 for house B and have the same house payment as you would if you paid $253,000 for house A.

When I show you houses, attached to the MLS sheet is the public record that gives recent tax information and an assessment history. This will also help you determine what your new taxes will be. So when we’re looking at things like size, location, price, we also need to pay attention to the property taxes.

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I heard from a lender I work with at National City- interest rates are down! Yeah! Right now you can get a conventional mortgage with no point for 5.5% (with good credit of course). FHA rates run about a quarter per cent higher. Great time to buy- prices are down. Rates are down. And a lot to choose from!

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