WeSpeakRealEstate Blog

Under Proposition 90, California property owners who are 55 years and older may be able to qualify to transfer the assessed value of their principal residence sold in county “A” to their new residence in county “B.”  Qualifications for Proposition 90 are as follows: (1) The purchaser or spouse must be 55 years of age, AND(2) The replacement residence must be equal to or less than the value of the residencesold, AND(3) The replacement residence must be located in the same county as the propertybeing sold OR must be located in one of the counties which have voted toPASS Proposition 90 in order for the real property tax base to be transferredfrom the former residence to the replacement residence.Before making plans to move, call the County Assessor’s Office in the county youare moving to and request the most recent information concerning Proposition 90. 

The following information is current as of February, 2002 but may be subject to change at any time. 

Please call applicable assessors office for participation.

 COUNTIES PASSED                                

People are living longer and longer, funding retirement can become a stressful affair.  Reverse mortgages can facilitate home owners avoid worries about cash flow. Reverse mortgages are only available to older applicants. Every individual who is listed on the deed of the home must be 62 years of age or older. The home must be your primary residence. The choice to apply for a reverse mortgage can be a tricky one. The biggest issue is an emotional one. We are all mentally trained to buy a home and try to build equity over the years. With a reverse mortgage, we are making the mental leap to actually reduce the equity in our homes. While this may sound like a sensible method for using the nest egg equity, it makes you, me and everyone very nervous. For some seniors, the reverse mortgage decision makes sense while it doesn’t for others. To limit the potential for problems and scams, banks are required to have senior applicants meet with unbiased third parties to determine the benefits and downside of using reverse mortgages.  Please post your comments or questions, we are here to help you.  

1. Homeowner calls counseling center and obtains counseling certification
2. Meet with loan officer for reverse mortgage application
3. Escrow & Title are opened
4. Loan application is submitted and FHA case number is assigned
5. Underwriting process begins and additional documentation may be required from homeowner
6. If insurance and payoff information were not received at time of application, this information is requested
7. Lender contacts loan officer to schedule closing
8. Escrow makes arrangements with borrower and notary for signing loan documents
9. Loan documents will be signed on the date stated on the documents
10. Lender provides fees and the borrower’s estimated closing statement is prepared for Borrower’s signature
11. Escrow prepares funding package for lender
12. Lender funds after 3 day right of recession gap
13. Escrow receives funds and releases documents for recording
14. Escrow disburses and records documents
15. Title policy is issued

A reverse mortgage is a special type of loan used by older Americans to convert the equity in their homes into cash. The money obtained through a reverse mortgage canprovide seniors with the financial security they need to fully enjoy their retirement years 

The reverse mortgage is aptly named because the payment stream is “reversed.” Instead of the borrower making monthly payments to a lender, as with a regular first mortgage or home equity loan, a lender makes payments to the borrower. While a reverse mortgage loan is outstanding, the borrower owns the home and holds title to it and does not make any monthly mortgage payments. The money from a reverse mortgage can be used for ANYTHING: daily living expenses; home repairs and home improvements; medical bills and prescription drugs; pay-off of existing debts; education; travel; long-term health care; prevention of foreclosure; and other needs. If your home needs physical repairs (mandatory repairs) in order to qualify for a reverse mortgage, a portion of the proceeds will be set aside for this purpose. To qualify for a reverse mortgage you must be at least 62 and own your own home or condominium. There are no income or medical requirements to qualify. You may be eligible for a reverse mortgage even if you still owe money on a first or second mortgage. In fact, many senior Americans get a reverse mortgage to pay off their first mortgage. You can choose how to receive the money from a reverse mortgage. The options are: all at once (lump sum); fixed monthly payments (for up to life); a line of credit; or a combination of a line of credit and monthly payments. The most popular option – chosen by more than 60 percent of borrowers – is the line of credit, which allows you to draw on the loan proceeds at any time. The size of the reverse mortgage that you can get will depend on your age at the time you apply for the loan, the type of reverse mortgage you choose, the value of your home, current interest rates, and – sometimes – where you live. In general, the older you are and the more valuable your home (and the less you owe on your home), the larger the reverse mortgage can be. The costs associated with getting a reverse mortgage include the origination fee (which can usually be financed as part of the mortgage), an appraisal fee, and other charges similar to those for regular mortgages.  The money provided to you from a reverse mortgage is tax-free; it is not income that you must pay taxes on. However, the funds received from a reverse mortgage may affect your eligibility for certain kinds of government assistance, so you should check into this before getting a reverse mortgage.  Before applying for a reverse mortgage, you must first meet with a reverse mortgage counselor. You may, however, first approach a reverse mortgage lender, who can provide you with the names of approved counseling agencies in your area. A list of approved counseling agencies nationwide is posted on the Web by the U.S. Department of Housing and Urban Development. The counselor’s job is to educate you about reverse mortgages, to inform you about other alternative options available to you given your situation, and to assist you in determining which particular reverse mortgage product would best fit your needs if you elect to get a reverse mortgage. In general, counseling sessions must be done face-to-face. However, if you are seeking a Fannie Mae reverse mortgage you can do it by telephone. In some areas, telephone counseling may be available for consumers seeking an FHA reverse mortgage (Home Equity Conversion Mortgage). No payments are due on a reverse mortgage while it is outstanding. The loan becomes due and payable when the borrower ceases to occupy their home as their principal residence. This can occur if the senior (the last remaining spouse, in cases of couples) passes away, sells the home, or permanently moves out of the home. The home does not have to be sold to pay off the loan. The borrower (or their borrower’s heirs) can instead pay off the reverse mortgage and keep the home. In any event, the amount owed on the reverse mortgage cannot exceed the value of the home at the time that the loan must be repaid. Moreover, if the home is sold and the sale proceeds exceed the amount owed on the reverse mortgage, the excess proceeds go to the borrower or the borrower’s estate.  Reverse mortgages are offered by banks, thrifts, and other financial institutions. Four reverse mortgage products are available to consumers in the U.S. at the present time. In the U.S., the most popular reverse mortgage is the federally-insured reverse mortgage, called the FHA Home Equity Conversion Mortgage Program (HECM). The other major product is the Home Keeper reverse mortgage, which was developed in the mid-1990s by Fannie Mae, a private national mortgage company. A companion product is the Home Keeper for Home Purchase mortgage, which is intended for home purchases. One “jumbo” private reverse mortgage product is offered by Financial Freedom Senior Funding Corp., of Irvine, CA. This is the Cash Account Plan. The HECM and Home Keeper products are available in every state, while Financial Freedom’s product is offered in 21 states and the District of Columbia.

 Article courtesy of- Fidelity National Title Insurance.

  By:  www.wespeakrealestate.com 

Who is Who?

Trustor = Borrower

Beneficiary = The Lender/Bank

Trustee = Title Company

WeSpeakRealEstate.com 

 President Bush signed into law Thursday, December 20^th, 2006, a new measure giving tax breaks to homeowners who have mortgage debt forgiven. Under preexisting law, the debt forgiven by a lender, such as for short sales and refinances, was generally taxable to the borrower as debt discharge income. With the passage of the Mortgage Forgiveness Debt Relief Act of 2007, a taxpayer does not have to pay federal income tax on debt forgiven for a loan secured by a qualified principal residence. This tax break applies to debts discharged from January 1, 2007 to December 31, 2009. Qualified principal residence indebtedness is debt incurred in acquiring, constructing, or substantially improving the residence (up to $2 million for refinances).For purposes of calculating capital gains, any debts discharged excluded from income under the new law must be subtracted from the basis of the taxpayer’s principal residence (but not below zero). However, taxpayers may generally exclude from capital gains income up to $250,000 (or $500,000 for married couples filing jointly) for properties owned and used as their principal residence for at least two of the last five years.

Here are 14 steps toward purchasing a home in Los Angeles if you are currently living out of state.

1. Call or email your contact information. Email - linda@bbhrealestate.com
2. I will respond with a series of questions that will help the search.
3. Become qualified for a loan to purchase in California.
4. I will send you information on properties which meet your specific needs.
5. Then we set a schedule to view these properties.
6. If one or more homes are of interest, we can start negotiations. If not we return to step 3.
7. When you are happy with the terms of purchase (price, closing date, etc…) we enter into contract with the seller.
8. An escrow company holds the buyer’s deposit and will order a title search. View the website www.ProActiveEscrow.com\ click on Escrow Process.
9. The seller is bound by state laws to disclose known facts about the property within 7 days of the executed contract.
10. I will send all documents by email, overnight delivery, or fax.
11. At your request we can schedule a home inspection report, appraisals or any other pertinent inspections within 17 days of the executed contract date.
12. I will be in contact with you, the seller, your lender, the inspection companies and any other entity tied with your purchase, to keep pace with your schedule.
13. You can call, email or fax me any time you have a concern.
14. When the closing date approaches there will be no surprises, just a home you are happy with!

I have over 15 years of experience selling homes in California. I will guide you through the entire process. Helping you avoid pitfalls. Working with me will save you time and money.  For more information please visit www.WeSpeakRealEstate.com!

 A first time home buyer will need financing, they should be qualified by a professional Loan officer. Lenders have many loan options.  Make sure to obtain a good faith estimate stating the fees toward the loan product of your choice.  Have your realtor review the estimate for advice of the fees being competitive.

 Once this is done, then we can work this formula of location, price and terms of the purchase. A Realtor can guide you through all the paperwork involved and be the backbone of the process. The Realtor has access to up- to-date multiple listing data. This data can be helpful and time saving with the help of a professional burrowing through the data and narrowing the search to specific homes that meet the buyer’s needs. When the right home is found then comes in the terms of purchase. Terms can take various forms from purchase price to negotiating repairs, close of escrow vacancy, appliances or any other situation that may cross the process. In short, professional advice can save a buyer time and money.

 The current market is great for first time buyers and bad for sellers who have recently purchased a home. Buyers can take advantage of the available low interest rates and larger inventory of aggressively priced homes. It is very difficult to try to time the market ( How low will prices go? ). Falling home prices are usually in parallel with increased interest rates. It may be the only time for some buyers to break into the market.

For more information please visit www.WeSpeakRealEstate.com

Here is some general information my clients have found to be very useful when considering investing in Real Estate and whether or not to use a property management firm. Enjoy! 

If I am interested in Real Estate as an investment what guidance can you provide?

A real estate investor can take many shapes, from your primary home as a hedge against inflation to others more complex; multi-unit rentals, strip-malls, new construction, land or buying a fixer home for resale. I have negotiated many of these types of transactions and can pinpoint the pitfalls before a contract is even written, saving both buyer or seller time and frustration by avoiding any misunderstandings.

What are the pros & cons of investing with the current market conditions? 

Investing in Real Estate as with any business is about numbers. Even in a soft market there is opportunity. The number of defaulting properties have grown giving investors a good position for purchasing below market value properties. The major points to avoid is doing the “numbers” on the investment before entering into contract to be sure what the worst and best case scenarios may be.

Should I work with a property management firm? Is this something a Realtor can provide?

Working with property management companies can indeed relieve an owner of having the first contact with the tenant. Also Realtors are knowledgeable of new laws for tenants and use up to date contracts and forms. The downside is that this service will cost an owner monthly.

For more information or questions please visit www.WeSpeakRealEstate.com