Dec. 19, 2013

New Lender Guidelines

Hope you're having a wonderful holiday season.

As we move into next year, I wanted to take a moment to talk a little about the significant loan changes coming in 2014 that will impact the real estate market.

First; as of January 1st, FHA has lowered the insurable amount for all loan products in Riverside County.

The maximum allowable loan now using FHA will be $355,350. This is a significant drop from the $500,000 allowable until the end of 2013.

There are hundreds of homes in our area, including new construction available for sale in the 355-500K price range and an FHA loan with the low, 3.5% down payment will no longer be an option. To qualify in this price range now, most buyers will have to use a conventional mortgage. A conventional mortgage will require a higher down payment and a much lower debt to income ratio (43%) than FHA; however, will generally have a lower mortgage insurance premium.

The other significant change will involve the qualified mortgage rules (QM14) all lenders must begin using to qualify loan applicants in January 2014.

These new qualifications will have a maximum allowable debt to income ratio of 43% as well. It is currently set at 55% so this drop will also have a significant effect on potential buyers next year.

These are only a few of the many lending changes coming that will greatly effect buyers next year.

You can still get a conventional loan 
with a 5% down; however, the new DTI (debt to income ratio) will still come into play while getting qualified.

Having all this in mind if you would like to discuss these changes in detail please contact me so we can put you on the right path to purchase next year or even still get you qualified before this year runs out.

We look forward to hearing from you and assisting you with your home purchase.

Posted in Lending
Oct. 8, 2012

Mello-Roos Taxes

The standard tax rate in Murrieta is usually 1.12% give or take a few hundreths of a percent depending on where you're at, but when you add a Mello-Roos tax, that effective rate could hit 2.2% plus.

I thought I'd write a little about Mello-Roos taxes since there is always some confusion over it.  A Mello-Roos Community Facility District is the full name and is most commonly referred to as Mello-Roos, special assessment or CFD. A Mello-Roos Community Facility District is an area or development that has a special tax imposed on the owners of the real property in that district for the purpose of building the infrastructure required for the new community.  These items can include streets, schools, parks, water, sewage, drainage, new police and fire services as well as electricity.  The builder usually seeks financing in the way of selling bonds to cover the costs of the initial build out.  Those costs are then levied onto the property owner in the form of a Mello-Roos tax. These taxes usually last for 30-40 years.

Essentially what you're paying for with the Mello-Roos taxes is the cost of building everything (streets, schools, parks, water, sewage, drainage) in the development spread out over every property in that development.  

It's very important for you and your agent to know the Mello-Roos taxes on the house you're looking to buy.  It can make a huge difference in your payment.  

Here is the data from an actual tax bill from 2012.  I did not include the address for obvious reasons.  This is a property in Murrieta with an assessed value of $322,000. The $1,840.03 is your standard base tax rate.  Each line item that follows that is a special assessment, or Mello-Roos tax.  As you can see, there is an extra $4,101.76 in taxes on this property per year, or $341.813 per month on top of your standard taxes. Thats a grand total of $648.485 per month and $7,781.82 just in property taxes.  

 

Taxing Agency                                                           

 

Installment 1                  

Installment 2

Base Rate 1.14288%

 

$1,840.03

$1,840.03

FLD CNTL STORMWATER/CLEANWATER

 

$2.00

$2.00

CSA 152-MURRIETA STORMWATER

 

$5.00

$5.00

Murrieta CSD

 

$22.72

$22.72

Murrieta Parks & Rec

 

$22.50

$22.50

Murrieta Fire Protection

 

$20.00

$20.00

Murrieta L&L 19

 

$341.62

$341.62

Murrieta CFD 2000-2 The Oaks

 

$1,623.57

$1,623.57

MWD STANDBY EAST

 

$3.47

$3.47

EMWD STANDBY-COMBINED CHARGE,

 

$10.00

$10.00

  

 

1st Installment                                                 

 

Due Date:

12-10-2012

Status:

Due

Taxes Due:

$3,890.91

Penalties Due:

$0.00

Additional Fees Due:

$0.00

Total Due:

$3,890.91  

 

2nd Installment

 

Due Date:                          

04-10-2013

Status:

Due

Taxes Due:

$3,890.91

Penalties Due:

$0.00

Additional Fees Due:

$0.00

Total Due:

$3,890.91

 

In other words, if you were choosing between two houses at the same price with one of them in this Mello-Roos area versus one that is not, you would be paying an extra $341.81 per month for the property in this Mello-Roos community.  Make sure your agent verifies this information on any property you're looking at.  As you can see, it can make a big impact on your payment.

Please feel free to contact me with any questions or concerns.

 

Posted in Taxes