Eva Bradley's Blog

Mello-Roos Taxes

Mello-Roos taxes are assessed to special tax districts, known as Mello-Roos Districts or Community Facilities Districts, for the purpose of financing public services and/or facilities including streets, police protection, fire protection, elementary schools, parks, libraries, museums, and cultural facilities.

California State Senator Henry Mello and Assemblyman Mike Roos spearheaded the successful passage of the Mello-Roos Community Facilities District Act in 1982. The Act passed in response to Proposition 13 (enacted in 1978), which limited the ability of local governments and developers to finance new projects.

Mello Roos District
The Mello-Roos act authorized any county, city, special district, school district or joint powers of authority to create a Mello Roos District with approval of a two-thirds margin of qualified voters in the district.

Property Owners
The Mello Roos District can issue bonds to pay for public improvements. The district’s property owners are responsible for payment of a “special tax” to repay these bonds. The act allows for considerable flexibility on how the special tax is calculated. The calculation often takes into account property characteristics such as square footage of the home and parcel size. Typically, the tax is included with your general property tax bill.

Time Limit
The special Mello-Roos tax stays in effect as long as needed to repay the principal and interest on the special bond along with any reasonable administrative costs. The Mello Roos tax may not stay in effect for a period longer than 40 years.

Property Sale
An increased value of the property does not affect the amount of the tax when property is sold.

Where in Tracy?   Homes built before 1982 are free of Mello Ross Taxes. In newer areas of Tracy a couple of home builders paid all Mello Ross taxes in advance, so homeowners don’t have to worry about it.  Please feel free to contact me if you would like to know which areas in Tracy are without Mello Ross taxes.                                                                     

In my opinion, this is a step in the right direction, taken by Fannie Mae.  I can only hope that other lenders will follow this.  It will help homeowners to stay in their homes after the foreclosure and at the same time it will stabilize neighborhoods and keep homes in better shape.

Read the full story here: http://bit.ly/bxVq9

Check out my November Newsletter; it contains many real estate related, useful information and good housekeeping tips. Please feel free to comment on the issues, or ask questions.

I came across this article in the newsletter I receive  from First Tuesday, and I think it is worth to be shared.  Please read it carefully, as it does clarify some of the aspects of the whole foreclosure process and different types of it:

http://blog.firsttuesdayjournal.com/?p=1833

Tracy Real Estate market is waiting for the “shadow inventory “, a release of some of the already foreclosed homes.  As of today, November 3rd, there are 189 active homes for sale in Tracy and surrounding areas.  That is a combined number of REO”s, “normal” and short sale listings. 

In Tracy and surrounding areas we have sold 139 homes in the Month of October.  These sold homes were an average of 43 days on the market before selling.  The average listing price was $236,718 and the average sales price was $243,393.  As we see multiple offers on many of the homes listed, the offers coming in were over the asking price. 

As most homes are selling for more than they were listed for, it seems that the appraisers have their hands full with appraising the homes for the value. This is mostly do to the fact that the appraisers’ evaluation is based on homes that have been sold recently in the same neighborhood.  Many deals fell through because the value could not be justified by the recent sales on record.  As a result, many buyers are asked to pay out of pocket to make up the difference. 

Those buyers, who have been qualified for an FHA loan, have little chance to a fair shot to get an acceptance on their offer.  Many buyers are coming in with cash at hand.  Others are frustrated with this market and giving up on buying all together.  In general, this is a buyers market, home prices are favorable, interest rates are still low, many people who are ready to buy homes…. but we don’t have enough homes to sell. Go figure.

Click here to see a daily interest rate lock advisory.

How to Reduce Your Mortgage

One Additional Mortgage Payment a Year

There’s a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars. The trick is to make one extra mortgage payment a year and apply that payment toward your loan’s principal.

This is the method being used by “Bi-Weekly Mortgage Reduction Services” and “Bi-Weekly Mortgage Savings Programs“. Only, when you do it yourself, you don’t pay a third party unnecessary set-up costs and fees!

Example: $100,000 loan, 30-year mortgage, 6.5% fixed interest rate

 One-time Payment

It may not be possible for you to increase your monthly mortgage payment. Keep in mind that most mortgages will permit you to make additional payments to your principal at anytime. Perhaps, five-years after moving into your home you receive a larger than expected tax return, or an inheritance or a non-taxable cash gift.  You could apply this money toward your loan’s principal, resulting in significant savings and a shorter loan period.

Example:

With a $100,000, 30-year, 6.5% fixed interest rate mortgage loan, the borrower will pay a total of $227,542.98 to pay back the loan in 30 years. That equals $127,542.98 in interest payments.

If the same borrower makes a one-time $5,000 payment the first day of year 6, he/she will pay a total of $204,710.75 and pay off the loan in 27 years (324 months). That’s a savings of $22,832.23 in interest.

Before You Look at Your First House

Experienced home buyers know that one of the first-steps in beginning a successful search for a new house is taking a hard, objective look at finances. Determining how much money you can dedicate to the purchase of your new house affects almost every aspect of buying a new home – including how we write the offer, which mortgage programs you will qualify for, shopping for the best mortgage loan and which homes are truly in your price range.

The 28/36 Rule
No more than 28% of your gross income can be applied to your mortgage, real estate taxes and insurance. And no more than 36% of your gross income can be applied to your mortgage expenses plus your regular debt expenses (car payments, credit cards, other loans, etc.).

If I may suggest, though: when you are ready to purchase your first home, please do so with the assistance of an experienced Realtor®, who has the knowledge of the local market conditions and can help you make the whole process smoother and with less hassle.

Homeowner warranties
A home warranty pays repair or replacement costs for the mechanical systems and built-in appliances that break down in a home. Warranties can be purchased by either the buyer or seller. When the seller is paying for the warranty, it is usually paid for and goes into effect at closing. The coverage period is normally one year.

There are many different companies offering home warranties and coverage of individual policies can vary widely. I use Old Republic Home Protection for over 10 years now, not only for my clients, but also on my own home. 

Usually, central heating and air conditioning systems, electrical, plumbing and major appliances are covered. It’s important that you read the policy closely and understand what is and is not covered.  The cost for a one year home warranty typically runs between $300 and $600, depending on the size of the home and the specific types of coverage.  In addition to the policy premium, there is normally a deductible of $50 – $75 to pay when making a repair claim.  

There are some very good reasons to pay for a home warranty when selling your home.  Providing a warranty can help set your home apart from the competition. Buyers will appreciate having a warranty and will feel more comfortable about buying your home without worrying about hidden problems. Providing a warranty can even result in a higher price, offsetting the cost.  Certainly it can make it easier for a buyer to make an offer. These assets make the home warranty an excellent marketing tool.  

This came just a minute ago from Cliff Cooler, the CEO of Central Valley Association of Realtors:

ADVANCE FEES FOR LOAN MODIFICATIONS NOW PROHIBITTED

“On October 11, 2009, Governor Schwarzenegger signed Senate Bill 94 (Calderon), and the legislation took effect immediately upon his signature. Thus, California law now prohibits any person, including real estate licenses and attorneys, from demanding or collecting an advance fee from a consumer for loan modification or mortgage loan forbearance services affecting 1 – 4 unit residential dwellings.”

Unfortunately, this came just a little too late for some homeowners, who already paid thousands of dollars modifying their loan, but it never got done…