Redding, CA Real Estate Mortgage

Your pumped because you just bought your first house and now you are ready to collect your first time home buyer credit but

Without the proper documentation your IRS First-time Buyer Tax Credit will be delayed. Below are tips on what you need to gather before you make your claim. It is important that you provide them appropriately for your transaction. Since I am not a tax advisor though, I will not be held liable to the accuracy of the below information, and I strongly encourage you to seek council from a tax professional.

Buying a home is the biggest financial decision most of us will ever make.

So it is easy to see why having clear and concise information is crucial to ensuring a successful outcome and a low stress experience.

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Typically, the first step in the home purchasing process is to secure one of two things: a pre-qualification or a pre-approval from a lender. These are distinct processes, so it is important to understand the difference.

A pre-qualification, acts as a dry run of the loan application process. A lender’s loan consultant can typically pre-qualify you for a home loan in less than an hour. To establish a pre-qualification you will need to complete a mortgage application and authorize a credit report. You should also provide the loan consultant with as much income documentation as possible. A review of the mortgage application, your credit, and your income documentation will determine if you are pre-qualified for a loan. Your loan consultant will then be able to tell you:

• The loan amount you qualify for
• The types of loans you qualify for (i.e. fixed, variable, FHA, VA)
• The sales price on a home you can qualify for
• The current rate and fees for the selected loans

A pre-approval takes pre-qualification one step further. Your loan consultant will compile the information gathered from your credit report and asset/income statements to secure a valid pre-approval. When you become pre-approved you will receive a letter stating that your mortgage is pre-approved. A valid pre-approval is the best tool you can have when shopping for a new home. The key is to ensure that your pre-approval is valid. A pre-approval that is valid has been underwritten by an authorized underwriter or an automated approval system. With a valid pre-approval in hand, all you have to do is find the home you want, have it appraised, and then close your loan.

Buyers and Realtors®, say goodbye to Southern California Title and Escrow companies and their frustratingly slow and poor service when handling foreclosures. Assembly Bill 957 known as the ‘Buyers Choice Act’ is now law. It prohibits a seller (lender) of foreclosed homes from requiring a buyer to purchase title insurance and escrow from their preferred service provider. REO sellers can no longer make it a condition of receiving offers or selling their homes!

How much cash can I receive from the equity in my home?

The amount depends on three factors:

1. The age of the youngest borrower
2. The current value of your home, the sales price if you are purchasing a home, or the FHA maximum lending limit, whichever is lower
3. The current ‘expected’ interest rate

These three factors determine your cash equity benefit (the gross amount of money available). The actual net cash available is then determined by deducting any existing mortgages and deducting the closing costs of the reverse mortgage.

Are there any restrictions on how I use my money?

No! You can use the money any way you desire—it’s your money!

What are the most common reasons seniors get a reverse mortgage?

There are an infinite number of ways seniors utilize the proceeds from a reverse mortgage, ranging from practical to fun. Here are just some of them:

• Eliminate monthly mortgage payments
• Home repairs or home remodel
• Pay for in-home health care
• Pay for medical bills or pay for prescription medications
• Payoff credit cards or other debts
• Cover daily living expenses
• Travel
• Help their children buy a home or assist other family members
• Assist grandchildren with their college education
• Purchase items you have always wanted or needed

If no monthly payments are required, how is the reverse mortgage paid back?

The loan is due and payable when the borrower sells the home, permanently leaves the home (12 months or more), or all parties on the title have passed away. The passing of the last party on the title triggers the repayment. The heirs have a maximum of one year (with exceptions) to pay off the loan.

What if I want to leave the home to my children?

It is your home, so you can leave it to your children or to anyone you choose. However, the loan is not assumable (it can’t be taken over by someone else). Your heirs can pay off the loan any number of ways including selling the home. If they wish to keep the home, they would need to refinance it and pay off the reverse mortgage loan in full.

What if I owe more than my home is worth?

Reverse mortgages are “non-recourse,” which means the lender cannot collect more money than the home is worth, regardless of how much is owed and they cannot seek other assets to pay for the debt. This is an excellent protection for you. If the heirs wish to keep the home then the lender is entitled to all that is owed including interest and closing costs.

Can I hold title in a Living Trust?

Yes, the trust must meet HUD guidelines and be approved by the lender. If you would like to confirm your trust is acceptable for a reverse mortgage, you can click here to contact us and we can review it for you FREE of charge.

What do the experts say about this program?

Many financial advisors and senior advocates, including the National Council on Aging, suggest that a reverse mortgage can be a smart way to secure your financial future during retirement. Visit our senior resources page to see what other senior advocacy organizations are saying.

Are there costs associated with a reverse mortgage?

As with any loan, there are closing costs associated with obtaining a reverse mortgage. Standard costs include: the lender loan origination fee, HUD required counseling, FHA mortgage insurance, and 3rd party fees such as title, escrow, and appraisal. All of the above costs are limited and regulated by HUD (Department of Housing and Urban Development).

Will I have to pay taxes on the money I receive?

The IRS does not consider proceeds from a reverse mortgage to be taxable income. They are considered loan advances on your equity and are not taxed. (We recommend consulting a tax professional.)

Is the interest charged on the loan tax deductible?

The interest is deductible at the time the loan is paid in full. (We recommend consulting a tax professional.)

Will a reverse mortgage affect my Social Security or Medicare benefits?

Payments you receive do not affect your Social Security or Medicare benefits. However, in the Federal Supplemental Security Income Program there are specific requirements for certain programs such as Medicaid. Therefore, we suggest that you consult a benefits specialist in your area to determine if you would be affected.

If you would like to see if a Reverse Mortgage is right for you call Sheila Karlowsky at 223-1032

What is a reverse mortgage and how does it work?

A reverse mortgage is a loan that enables homeowners 62 years of age and older to tap into some of the equity they have accumulated in their home and convert it into tax-free cash. A Home Equity Conversion Mortgage (HECM) is safe and secure because it is insured by the federal government through the U.S. Department of Housing and Urban Development (HUD/FHA). A reverse mortgage allows you to:

• Eliminate monthly mortgage payments
• Continue to own and maintain full control of your home
• Protect against owing more than the value of your home
• Keep all remaining equity
• Qualify with no income or credit restrictions

What are the benefits of a reverse mortgage?

• Eliminate your mortgage payments while paying off your existing mortgage
• Receive tax-free money by converting the equity in your home into cash
• Continue to live in your own home while maintaining ownership
• No restrictions on how you use your money
• You or your heirs keep all remaining equity after the loan is paid off
• You or your heirs will never owe more than the home is worth
• Never lose your home as long as you maintain the property and pay the property taxes and homeowner’s insurance
• No income or credit restrictions
• Does not affect Social Security or Medicare benefits
• Government insured
• No pre-payment penalty means you may repay the loan at anytime
• Flexible payment options allow you to receive your money in various ways

How do I qualify?

• All borrowers must be 62 years of age or older
• The home must be your primary residence
• There must be sufficient equity in your home
• Your home must be one of the following:
  • Single-family residence
  • One to four family unit dwelling
  • Planned unit development
  • HUD-approved condominium
  • Manufactured home (some mobile homes are eligible)
• Your home must meet HUD’s minimum property condition standards (you can use the reverse mortgage to pay for necessary repairs that may be required).
• Receive counseling from a HUD-approved counseling agency. Click here to contact us for a list of approved agencies.

How do I receive my money?

You can receive your money in any of the ways listed below, or a combination of these:

• Line of Credit – to be drawn from when you want
• Lump Sum – all at once
• Tenure – guaranteed lifetime monthly payments
• Term – for a specific time period pre-determined by you
• Combination – select a combination of the above options

This blog will have additional questions and answers tomorrow. If you have questions not answered in this post call Sheila Karlowsky 223-1032.

According to a search I did on sellingredding.com there are currently 255 bank owned properties, also known as “REOs” for sale in Shasta County.  Whether your a first time home buyer or buying up this means there are 255 bargains out there to choose from and that number is growing as more REOs are released from the banks.  Some of these REOs are great deals, however keep in mind some of these homes have not been lived in or maintained in months. Not to mention there could be broken windows, spray painted walls, damaged or missing fixtures, water damage, funny smells, and if you can think of it I am sure it is out there kind of damage from previous disgruntled home owners, vandals, or squatters. 

One of the issues of buying an REO is that usually the Bank selling the home sells it “as-is” and is not really gung ho about losing  more money on a home they have already lost thousands on!  So what that means is that you have to buy the home as it is…broken windows and funny smell included! The problem here is that if you are not paying cash and you need to obtain a loan, a lender is going to require that the home meets minimum safety and health standards and most likely you will have to get these items fixed prior to your loan closing. ZZZZINNNNNGGGGGGGG do you hear that???? Yep that’s your fishing reel going nuts because you just caught yourself a lunker of a ” catch 22″.  Why on earth would you put up cash to fix a home you dont even own???? BUT you need particular items fixed, that the bank (current owner )  will not fix, to get a loan.  So you might be thinking REOs are really just for cash buyers….wrong!

Let me tell you about a dandy little program called the FHA 203(k) re-hab loan. This loan will allow you to ” have your cake, and eat it too…… while enjoying your new floors, counter tops, and stainless steel appliances!”

The FHA 203(k) is through the Federal Housing Administration (FHA) 203 (k) mortgage insurance program, borrowers can purchase a new home and borrow additional funds to make repairs in the same loan. This loan is a stable financing solution that combines the purchase of the home and the costs of the improvements into one single loan.  Some of the highlights of the programs are:

• 3.5% Down Payment on the Purchase price plus improvements
• 30yr fixed at a competitive interest rate
• Up to 35,000 in repairs or upgrades can be financed
• Repairs can be made after the close of escrow
• Roof, gutters and downspouts
• Plumbing and electrical systems
• Minor remodeling, such as kitchens, which does not included structural repairs
• repair/replace/add exterior decks, patios, porches
• Weatherization
• Purchase and Installation of appliances; ranges, refriderators, washers/dryers, dishwashers and microwaves.
• Floors
• Windors and doors
• Existing HVAC system
• Septic Systems and or well repair or replacement

Repairs can be done by a licensed or bonded contractor and the contractor has up to 6 months to complete the work.  If you would like more information in regards to this product call Sheila Karlowsky at 530-223-1032.

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USDA Rural Loan

If you live in or near a rural area, there is an excellent government program that can help you obtain a home loan.

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The United States Department of Agriculture (USDA) Guaranteed Rural Housing (GRH) loan program offers a conventional 100% loan; meaning zero down payment! In addition, there is no requirement for mortgage insurance or cash reserves.

However, there are certain specific requirements for this loan, both for the borrower and for the location of the property. The borrower must not have the means for the down payment on a regular conventional loan, and the borrower must plan to occupy the property. You do not need to be a first-time homebuyer. Your income cannot be above 115% of the U.S. median income, adjusted by family size.

While there is no monthly mortgage insurance (insurance collected to protect the lender), there is a one-time, upfront ‘guarantee’ fee that can also be financed into the loan, thus bringing the loan amount to 102% of the home cost. Below are some of the benefits of a USDA Guaranteed Rural Housing loan program:

• No first-time homebuyer requirements
• Eligible in rural areas with a population of 20,000 or less
• 102% loan to value financing
• No mortgage insurance needed
• 30-year fixed rate
• No financial reserve requirements
• Income limitations vary per applicable city or area
• Seller can contribute up to 6% of the sales price towards your closing costs

Your loan consultant can help you determine whether your income and location qualify you for this program. Or Sheila Karlowsky, 530-223-1032 today for more information.

Veteran Home Loans

Did you know that eligible veterans can buy a home with as little as zero money down?

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If you are actively serving in the armed forces, or are a veteran who received a discharge classified as Honorable or Under Honorable Conditions and served a minimum of 90 days active duty, you may qualify! The “VA Guaranteed Home Loan” is a government backed program designed to make the dream of homeownership possible for eligible veterans.

VA Purchase Loans

Here are some important benefits:

• 100% financing available
• The seller can contribute the full amount of the borrower’s closing cost, plus up to an additional 4% of the sales price
• The veteran can be stationed overseas and his or her spouse can still purchase a home locally
• In-service veterans can use quarters/housing allowance income to qualify and make the mortgage payments
• There are no prepayment penalties

Eligible veterans who have available home loan entitlement may use a VA Guaranteed Home Loan to purchase a single family residence, condominium, townhouse, co-op, or build a new home. The loan can also be used for energy efficient repairs, alterations, renovations and improvements. VA loans can only be used on a primary residence. Since VITEK is a direct lender for VA loans, we can process your loan in-house which will get you into your new home faster.

It’s no surprise lending and real estate regulations have changed as a result of the credit crisis. We have already seen tightened lending practices that resulted from rising mortgage delinquencies, and now our legislators in Washington have enacted new laws changing the way lenders do business today.

If you have been thinking about buying your first home, or making a move from your existing home, the time has never been better! Already, the combination of historic low interest rates and affordable homes are enough to make home buying a good financial decision. With the government just recently extending and enhancing the homebuyer tax credit, now is the time to jump in!