Match Day FAQs: Why Buy During Residency?

Match Day is quickly sneaking up on us and with the anticipation of being “matched” also comes the endless decisions in order to prepare for residency. One such decision is where to live, and in turn whether you should rent or buy during your residency. In the current market buying is a viable option due to dependability of demand in the downtown area among many other reasons. Ann Arbor is often rated as one of the best places to live in the country and as a result, owning property here, especially in the heart of the city, is a fantastic investment. Check out our reasoning below in order to properly consider your option to buy after Match Day on March 21st.

Nielson Condos | Ann Arbor

Build Equity Early

If you have the funds for a healthy down payment, then buying should definitely be on your radar. Over the four to five years you spend in residency you can begin to build equity with your investment. Instead of paying monthly rent, your money could be going towards a profitable condo in downtown Ann Arbor. A good tool to use in order to get a basic understanding of the money you would save can be found here.

Rental Income

If you do intend to buy, consider a two bedroom. This way if you want to sublet during potential time away or rent to a roommate this is an excellent way to contribute to a monthly mortgage payment. In most cases your monthly costs are drastically lowered through living with a roommate and this only puts you ahead in terms of building equity towards your property.

Current Market

With interest rates still low and prices only beginning to rise, buying now, whether in med school or not, is a wise decision. Since this is an in-demand area due to the college and popular downtown area, a well-maintained condo or home is a viable option for investment. There is also a tax benefit for mortgage deductions which is another plus to this option. Whether the market is up or down at the end of your time in Ann Arbor, properties appealing to medical students will remain this way since there is a constant demand for housing near the school and hospital.

Constant Demand

The years you spend in residency paying money towards the mortgage will pay off when you can continue to either rent or sell your property at the end of your time in Ann Arbor. When your residency comes to an end or you decide to leave Ann Arbor the demand for property close to the college and hospital will still be in demand. Properties such as one to two bedroom condos in close proximity to the medical facilities in particular are popular.

Since you will be spending the majority of your time in class or at the hospital, making the most of your money is extremely important. Why put a large chunk of money towards a rental every month with no return when you can invest your money? Through buying a property during residency you get a return on the money spent throughout your time in school through re-sale or rental income after the fact. For more information or tips to buying in a short amount of time, contact us for more information.

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Closing Cost Basics | Ann Arbor Real Estate

Closing costs can sneak up on an unsuspecting home buyer in a hurry. In order to avoid any unexpected obstacles, prepare for the total purchase cost from the beginning through understanding what closing costs are and what they include.

Ann Arbor Real Estate
Photo by Chris Potter

About Closing Costs

Closing costs are typically associated with fees due on, or before, the date a buyer closes on a new home. Real estate agents and brokers, the mortgage lender, insurance companies, and state and local governmental agencies are the most likely sources of these fees. Some items that tend to get lumped in with closing costs are actually paid prior to closing or separate from the closing itself. Examples include title search fees, title insurance, taxes, property insurance and association fees.

Upfront costs can vary widely from market to market. There can be as many as a couple dozen items that need to be handled by a home buyer before signing on the dotted line at closing. They range from the loan origination fee, typically 1 percent of the purchase price, to costs for required inspections, an appraisal, and for recording fees. The title search and title insurance fees protect the lender from secondary and silent liens on the property. In some cases, an escrow deposit to cover the cost of private mortgage insurance and the first few months of property taxes will be required.

Estimated Price of Closing Costs

As a rule, home buyers will pay anywhere from two percent to five percent of the total purchase price in upfront costs. A recent nationwide survey of closing costs showed that Michigan’s were among the lowest in the U. S. The survey used a $200,000 home value as the benchmark. In Michigan, these costs amounted to an average of $2,203, of which $1591 went to the lender, and $611 went to third parties. A buyer seeking to “buy down” the interest rate upfront will add one percentage point of the total purchase price for each discount point purchased. Prepaid fees were also excluded from the survey.

Minimizing Their Impact

It’s not possible to avoid upfront costs entirely, but there are ways to minimize them. If the lender allows for it, a no-closing-cost mortgage is one possibility. The lender will typically charge a higher interest rate or include these costs in the mortgage, but for a cash squeezed buyer already struggling to come up with the down payment, it can be a good option. Finally, closing costs in a traditional transaction are born by the home buyer. But, as always, many aspects of a real estate purchase can be negotiated. Closing costs are no exception. A seller who agrees to pay for closing costs, however, may be less willing to negotiate in other areas.

Do your homework early to avoid last minute surprises. Then, sit down with your Ann Arbor area real estate agent with the confidence you are ready to write the purchase offer that best suits your needs.

Real Estate Predictions for 2014 (in Ann Arbor, MI)

Ann Arbor Michigan is a beautiful city full of greenery, cityscapes and gentle rolling hills. Also home to the University of Michigan, Ann Arbor enjoys the intellectual and progressive flare appreciated by college communities. Home values in Ann Arbor have not suffered the severe financial loss from foreclosures and underwater mortgages like similar Michigan communities, but Ann Arbor has experienced the uncertainty that is shared by many communities in the U.S. over the past few years.


Real Estate Predictions for 2014

Experts predict a steady and modest home price increase for 2014. This is good news for buyers who are reflecting and trying to visualize but need time to research and compare. Some foreclosures and short sales are available, but they are quickly being absorbed and require quick action. For sellers looking to upgrade, 2014 will have some great opportunities.

Rising Confidence

After years of dismal news, these predictions of slow and steady recovery are great news. This moderate activity is expected to last one to two years and at the end of the steady gain, values will return to levels enjoyed in 2005, the last year before the bubble burst. The real estate market actually turned the corner in 2012 and is just now beginning to feel a little like a recovery for individual home sellers.

Red Flags

To continue the recovery, individual homeowners should be mindful of red flags or bumps in the road.

  • Restrictions on mortgage credit could dampen buyer enthusiasm and ability.
  • The recovery could cause inflation which is good for home values, but also creates fear and volatility which would have a negative impact. Awareness is important.
  • The job market is currently improving and unemployment is decreasing. An increase in unemployment could shake a fragile recovery.

For homeowners who need to sell, homes can be sold with professional pricing and marketing strategies. 2014 will be a great year to make big decisions because while the marketing is moving steadily in a positive direction. But there will be time to sleep on major decisions.