Ann Arbor Area first time home buyers, are you waiting on your IRS Refund from the Tax Credit?

We have received a few calls lately from clients who have not yet received their up to $8000.00 tax credit from the IRS yet. When the 08 program first started people were getting their refunds in weeks, not months.

Here is an article I read today on Market Watch, a Wall Street Journal Division on what is taking so long.

No worries, it will be worth the wait. They are just doing their job and double checking.

Ann Arbor Home buyers how to  file for the $8000.00 Tax Credit

Legislative changes in November 2009 expanded and extended the credit and also added documentation requirements for claiming the credit. Due to increased compliance checks by the IRS, failure to submit documentation will slow down the issuance of any applicable refund.

Filing Requirements

2009 Tax Return

Because of the documentation requirements for claiming the credit, taxpayers who claim the credit on their 2009 tax return must file a paper — not electronic — return and attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit (see the instructions for help with the form), and a properly executed copy of a settlement statement used to complete the purchase.

• Purchasers of conventional homes should include a copy of Form HUD-1, Settlement Statement, or other settlement statement, showing all parties’ names, property address, sales price and date of purchase.
• Purchasers of mobile homes who are unable to get a settlement statement should include a copy of the executed retail sales contract showing all parties’ names, property address, purchase price and date of purchase.
• Purchasers of newly constructed homes where a settlement statement is not available should include a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

Note Regarding Signatures: While the Form 5405 instructions indicate that a properly executed settlement statement should show the signatures of all parties, the IRS recognizes that the elements of the settlement document, often a Form HUD-1, may vary from jurisdiction to jurisdiction and may not reflect the signatures of the buyer and seller. The settlement statement that must be attached to the return is considered to be properly executed if it is complete and valid according to local law. In locations where signatures are not required the IRS encourages the buyer to sign the settlement statement prior to attaching it to the tax return even in cases where the settlement form does not include a signature line.

Long-Time Residents: The November 2009 legislation extends the credit to long-time residents of the same main home if they purchase a new main home. To qualify, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. For long-time residents claiming the credit, the IRS recommends attaching, in addition to the documents described above, any of the following documentation of the five-consecutive-year period:

• Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
• Property tax records or
• Homeowner’s insurance records.

2008 Tax Return

It is still possible to claim the homebuyer credit for 2009 home purchases on 2008 tax returns. Homebuyers may use the December 2009 revision of the Form 5405 along with Form 1040X to amend their 2008 tax return.

The chart below shows the medium price of homes in Ann Arbor continues to drop. With a peak in October the prices continue to come down.

I am asked all the time when will we hit the bottom?  I wish I knew. In 2009 we sold the same amount of homes in the Ann Arbor Area, according to the Board of Realtors data. But….the prices were much lower.

Pricing your home to sell is the way to get it SOLD. Pricing above the market, or saying, “the buyers can always make an offer,” does not work. Buyer are looking for the best value.

Search homes and condo’s for Sale in Ann Arbor Area. There are some great opportunities for buyers right now.

Here is a chart of how a loan progresses in Ann Arbor with the new Good Faith Estimates and new HUD Guidelines.

Courtesy of Tom Richardson of Liberty Title.

Ann Arbor Area or foreclosures throughout Washtenaw County.

Many sellers ask me should we sell now or wait until the market comes back?  I answer by telling them two things.

• Why are they selling?
• How do any of us know when the market is coming back?

According to recent data from First American CoreLogic on foreclosures for the Ann Arbor area, the rate of foreclosures among outstanding mortgage loans is 1.29 percent for the month of October, an increase of 0.59 percentage points compared to October of 2008 when the rate was 0.70 percent.

* Foreclosure activity in Ann Arbor is lower than the national foreclosure rate which was 3.02 percent for October 2009, representing a 1.73 percentage point difference.

However in Ann Arbor, the mortgage delinquency rate has increased. According to First American CoreLogic data for October 2009, 4.85 percent of mortgage loans were 90 days or more delinquent compared to 3.25 percent for the same period last year, representing an increase of 1.60 percentage points.

This is a current search as of today, December 10, 2009 of the homes that are bank or government owned in the Ann Arbor Area Board of Realtors MLS. There is a total of 97 single family homes; but 22 are under contract so 75 are available to purchase.

***Thanks to First American CoreLogic, a member of The First American Corporation (NYSE:FAF) family of companies,  the largest provider of real estate, property and ownership data and advanced analytics for information on foreclosures, delinquencies, median home prices, home price indices, home valuations, sales activity and mortgage loan originations, for the use of their data in this post.***

Ann Arbor Area Home Search

What should you do if you live in Washtenaw County and are in a lease with a landlord who goes into foreclosure?

The Scenario

In good faith you have signed a lease. One day you come home from work or classes and see a notice of foreclosure on the door.

First, don’t panic. According to Michigan law the mortgage company must post this on your door at least 15 days before advertising in the papers a notice of foreclosure.

After the 6 weeks of being posted publicly, the home must go to a sheriffs sale.  Michigan is a redemption state, this means that the homeowner has 6 months from the date of the sheriffs sale to “redeem” the property. Basically this means the homeowner must pay all fees and back mortgage payments.

The lease you have is valid until the redemption period ends.

Should you pay your rent?

That is a tough call, as the landlord has not been paying the mortgage but using your money. Technically the landlord still owns the property. Your lease is with them. One suggestion on the Michigan Tenant Organization suggests is to keep the money as the landlord could still bring and eviction case for non-payment of rent.

Security Deposit

Yes you are still entitled to getting your security deposit back.

In Ann Arbor, I have seen this several times. In good faith you signed a lease, paid the rent and come home to find a “notice of foreclosure” on your door.

If you are working with a Licensed Realtor, it is a good idea to have them prove they are current on the mortgage obligations at the time you sign a lease.

Many homeowners in the Ann Arbor Area have not been able to sell their homes, therefore, they choose to rent. Many times the rent is not enough to cover their mortgage payment and they get behind.

If they miss 3 months payments the mortgage company or bank will begin the process of foreclosure.

Your lease is valid until the 6 month redemption period ends.

If you need help in Washtenaw County contact Michigan Tenant Counseling Program at 734-761-8599