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What type of documentation will I need for my mortgage
loan application?
Having these documents on hand when you visit the mortgage
company will help make the application process easier:
- A purchase contract for the house.
- Your bank account numbers, the address of your bank branch
and statements for the previous 2-3 months.
- Pay stubs, W2 withholding forms, tax returns for two years,
or other proof of employment and income.
- Recent credit card bills or canceled checks for rent or
utility bill payments.
- Information on other consumer debt such as car loans,
furniture loans, student loans and retail credit cards.
- Balance sheets and tax returns, if you are self-employed.
- If you are using a gift from someone to help pay the down
payment and/or closing costs, bring a letter stating that
the money is a gift and will not have to be repaid.
2. What is a FICO score?
A FICO score is a popular method lenders use to determine
a loan applicant's credit risk. Scores range from 350 (high
risk) to 950 (low risk). Credit scores only consider the information
contained in your credit profile. They do not consider your
income, savings, down payment amount, or demographic factors.
Past delinquencies, slow payments, current debt level, length
of credit history, types of credit and number of inquiries
are all considered in credit scores. There are some things
you can do to improve your FICO score before applying for
a mortgage loan. Contact us
for more information on ways to improve your FICO score.
The following information has been summarized from the website
of the San Diego County Assessor/Recorder/Clerk, Gregory J.
Smith. For additional information, visit www.sdarcc.com.
3. When is real estate reappraised?
Real property is reappraised when a change-in-ownership
occurs, or upon completion of new construction. Except for
these two instances, property assessments cannot be increased
by more than 2% annually, based on the California Consumer
Price Index. The property tax rate is 1% plus any bonds, fees,
or special charges.
4. What is a Change-in-Ownership Statement?
This confidential statement is used for appraisal purposes
and is required by State law to be filed with all property
sales and transfers at the time of recording. If it is not
filed, a $20 fee is charged and the Assessor's Office will
send out another statement to obtain the required information.
5. How do I get a Homeowners' Exemption?
If a property is your principal place of residence on January
1, you may apply for an exemption of $7,000 off your assessed
value. New property owners automatically receive an exemption
application as well as an annual verification of continued
eligibility.
6. Is there an assessment exclusion for Seniors and Disabled?
Yes. Propositions 60 and 90 allow qualified disabled people
and those 55 years of age or older to buy a residence of equal
or lesser value than their existing home and transfer their
current taxable value to their new property. See questions
6-9 below to learn more.
7. What are propositions 60 and 90?
Both prop 60 and 90 offer tax relief to people aged 55 or
older by exempting them from reassessment when an existing
residence is sold and a replacement residence is purchased
at an equal or lesser price than the original.
8. What are the qualifications for Prop 60/90?
To qualify for the reassessment exemption, the seller of the
original residence or the spouse who resides with the seller
must be at least 55 years old at the time of sale. The exemption
is a one-time-only benefit. The original property must have
been eligible for a Homeowner's Exemption or entitled to a
Disabled Veteran's Exemption and the replacement property
must be the owner's principal residence. The replacement property
must be of equal or lesser "current market value"
than the original and it must be purchased or constructed
within two years (before or after) of the sale of the original
property. The county you sell or purchase property in may
affect your eligibility. There are other eligibility requirements
that must be met, as well. Contact
us for more information about Prop 60/90.
9. May I give my original property to a family member
and still receive Prop 60/90 benefits on my replacement property?
No. The original property must be sold for consideration and
be subject to reappraisal at full market value.
10. If I get Prop 60/90 benefits must I still file for
a Homeowner's Exemption on the replacement property?
Yes.
11. What is the Parent/Child Exclusion?
The transfer of real property between parents and children
can be excluded from reappraisal for property tax purposes.
An application must be filed with the Assessor's Office to
determine eligibility for this exclusion. See questions 12
and 13 below to learn more.
12. What are Propositions 58 and 193?
These propositions offer tax relief by preventing reassessment
when real property transfers between a parent and child (Prop
58) or from grandparents to grandchildren (Prop 193), making
it easier for Californians to keep property in the family.
13. Who qualifies for Prop 58/193 benefits?
For Prop 58: Any child born of the parent(s). Any stepchild
of the parent(s) and the spouse of the stepchild while the
relationship of stepparent and stepchild exists. Any son-
or daughter-in-law of the parent(s). Any stutorily adopted
child who was adopted before the age of 18.
The relationship exists until marriage is terminated by divorce,
or, if the relationship is terminated by death, untile the
remarriage of the surviving son-in-law or daughter-in-law.
For Prop 193: The same relationship requirements for children
apply to grandchildren, step-grandchildren and grandchildren-in-law.
The parents of the grandchild(ren) who would qualify for a
Propostion exclusion from the grandparents must be deceased.
There are other eligibility requirements that must be met,
as well. Contact us for more
information about qualifying for Prop 58/193.
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14. What are supplemental property taxes?
The Supplemental Real Property Tax Law of 1983 was implemented
to aid California's schools. This supplement is in addition
to the regular tax bill, and it is expected to produce over
$300 million per year in public education revenue. It requires
the Assessor to reappraise property when ownership changes
or new construction is completed. The Assessor issues a supplemental
assessment that gets prorated based on the number of months
remaining in the fiscal year ending June 30.
15. When are supplemental property taxes due?
The supplemental property tax becomes a lien on your property
as of the date of ownership change or the date of completion
of new construction. Depending on the county's current workload,
you could be billed in as few as three weeks or as many as
six months or more.
16. How does the supplemental tax assessment work?
The assessor will appraise your property using a formula that
is prorated based on the number of months remaining until
June 30, the end of the tax year. You will be advised of the
assessment amount and will have the opportunity to discuss
your valuation, apply for a homeowner's exemption (see
question 5 above) and be informed of your right to file
an assessment appeal. The county will then calculate your
supplemental tax and mail you a bill.
17. Can I pay supplemental property taxes in installments?
All supplemental taxes are payable in two equal installments,
due on the date the bill is mailed and delinquent on the date
specified.
18. If I have an impound account, will the supplemental
tax bill be sent to my mortgage company?
No. The supplemental tax bill is sent directly to you by the
Tax Collector.
19. If I resell my property again within a few months,
will the supplemental tax bill be prorated among the owners?
Yes. If another sale or transfer of the property occurs before
the mailing of the supplemental tax bill, the supplemental
taxes will be prorated between the owners by the Assessor's
Office.
20. Can I appeal my supplemental tax assessment?
To appeal a supplemental assessment, an application must be
filed with the Clerk of the Board within 60 days from the
mailing of the tax bill.
For more information, call (858) 505-6262.
21. What if I have more questions about supplemental property
taxes?
You can always contact Sandra
with questions.
Or for additional information, please call the San Diego
County Assessor's Office at (858) 505-6262 or visit www.sdarcc.com.
22. What is a title insurance premium?
The title insurance premium is a one-time fee paid at the
close of escrow in California. The issue of who pays closing
costs is a matter of agreement between the parties, unless
guidelines are specified by a lender or governmental agency,
as may be the case with VA or FHA transactions.
23. Why do I need title insurance?
Title insurance provides peace of mind at every stage of the
buying process. It offers protection against many risks, including
forgery, fraudulent releases, disputed powers of attorney,
lack of capacity of a person who has signed a document, ambiguous
or erroneous legal descriptions, ambiguous judgment liens,
incorrectly indexed public records and federal estate tax
liens.
An extended coverage policy can go even further, offering
protection against third-party claims regarding adverse possession
or past use of land, rights to access adjoining lands or encroachment
by neighbors. There is even coverage available against building
permit violations and post-policy forgeries and encroachments.
By providing experienced professionals to eliminate risks
before closing; insuring against risks that can't easily be
detected; insuring a good closing and even by providing important
legal defense, if a problem should arise after the fact.
24. What is escrow?
According Heritage Escrow, "an escrow is the deposit
of funds and/or documents with an impartial neutral third
party for delivery upon the specific terms and conditions."
25. Who needs escrow?
You do! Buyers, sellers, lenders and borrowers all have a
vested interest in making sure that funds and documents will
only change hands once every condition of your transaction
has been met. It is the escrow holders obligation to safeguard
funds and documents, disbursing funds and conveying title
only when provisions of the escrow have been completely fulfilled.
26. Who chooses the escrow holder?
The escrow holder is usually chosen by agreement between the
principals. A real estate broker may make a recommendation,
but the principals are ultimately responsible for the decision.
It is illegal for referral fees to be paid between real estate
brokers and escrow companies.
27. What do I have to do during escrow?
Your most important job is to make sure you understand your
escrow instructions. As questions about anything you're unsure
about in terms of the instructions, but keep in mind that
your escrow officer cannot offer advice about legal or financial
issues regarding your transaction.
The second most important thing to do is to follow your instructions
quickly and completely. If needed, make sure to provide "good"
funds into the escrow account. Personal checks will add additional
time to the process.
Finally, be sure to let your escrow officer know as soon
as possible about any special needs you might have. Communication
is the key to a successful escrow!
28. Should I sign loan documents during escrow?
Some lenders forward their loan docs to escrow for you to
sign. If you choose to do so, make sure you are familiar with
the process, terms and conditions of the loan since your escrow
officer cannot explain or interpret the lender's documents
for you. You may also request a representative from your lender
to be present to answer questions at signing, or you can choose
to sign loan docs at the lender's office.
29. What is a closing statement?
A closing statement is a written account of the charges and
credits to your account at the time of escrow. Be sure to
review your closing papers carefully and ask your escrow officer
if you have any questions about the information in them. Save
your closing statement for your accountant and for taxes.
30. Can an escrow be cancelled?
Yes, an escrow can be cancelled if a contingency cannot be
met or if the parties should disagree during the process.
In cases of cancellation, funds on deposit can usually not
be released until the escrow holder is in receipt of cancellation
instructions that have been mutually agreed upon by both parties.
You may be charged a cancellation fee, as well. Ask your escrow
company about their policies.
Escrow officers cannot mediate cancellation disputes. If
necessary, the escrow holder may allow a court to decide which
party is entitled to disputed funds. This is called an interpleader
action.
31. What are Mello-Roos?
In a Mello-Roos District, funds for financing public improvements
and services are collected through a tax imposed on real property
owners. These services may include streets, water, sewage,
electricity, infrastructure, schools, museums, parks and police
services for newly developing areas. Mello-Roos taxes are
equally applied to all properties in the area, regardless
of their value. The tax stays in effect as long as it is needed
to pay for bonds, interest and administration costs, not to
exceed 40 years.
32. How much will my Mello-Roos payment be?
The amount of the Mello-Roos tax may vary yearly, but it may
not exceed the maximum amount determined with the district
was created. If you purchase a new house with a subdivision,
the maximum amount will be outlined in the public report.
33. When will my Mello-Roos payment be due?
Mello-Roos payments are usually collected with your general
property tax bill.
34. What is a 1031 tax deferred exchange?
A 1031 tax deferred exchange lets a seller of an investment
property to exchange the existing property for a "like"
replacement and defer capital gains and depreciation recapture.
Such an exchange opens up the possibility of generating income
off of money that would have otherwise been paid to the IRS.
Contact us for more details
on a 1031 tax deferred exchange.
35. Why is it important to test for mold?
Mold exposure can cause adverse allergic reactions and can
aggravate some existing health conditions. Factors include
the type of mold in the home, the degree to which the mold
has spread, and the sensitivity of the individual to a particular
type of mold.
36. What can be done if mold is suspected in a home?
Mold inspection and testing will help determine the presence
of mold, the type of mold that may be present, and the quantity
of mold spores that are airborne in the home. There are three
major methods of testing for mold:
- Swab testing checks for visible mold, mildew or fungus.
This test works well for bathrooms and other interior areas
where humidity and moisture levels are high.
Air testing determines concentration levels and types of
airborne molds in the home. This test works well in the
absence of visible molds.
- Carpet testing can help determine the presence of mold
in carpeting.
- Once the presence and type of mold has been determined,
there are companies that specialize in the safe removal
of existing mold. Ask us for
a recommendation.
37. What is the California Mold Disclosure Law?
Need more current info here: The new California mold disclosure
law took effect in California on January 1, 2002, but real
estate sellers and prospective landlords won't have to disclose
the presence of mold in California homes and buildings to
prospective buyers and prospective tenants under the first
state law to address growing public fears about mold problems
until some future date [probably January 1, 2004] when the
State of California publishes both mold contamination and
mold remediation standards. The California state government
has until July 1, 2003, to establish such standards.
Sellers, real estate brokers and agents, and home inspectors
will have to be diligent in following the law. In conforming
with the law, the property seller's transfer disclosure statement---a
requirement in real estate transactions since 1985---will
now include mold.
In addition, the California State Department of Toxic Substance
Control will soon include a chapter on toxic mold in its Environmental
Hazards Handbook, which is provided to all buyers and sellers.
Enforcement of mold standards and mold disclosure statements
will be done by local governmental agencies under the new
mold law.
38. What if I want to buy a home that I suspect may have
mold problems?
The seller and realtor are legally obliged to disclose any
known information about material defects in the home, so send
them both a certified letter asking about any water damage
and mold damage history for the house. In that letter, request
a short extension in the closing date of the sale so you can
hire a company to test the home for mold.
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