Common Ways of Holding Title
By Administrator | December 7, 2011
Common Methods of Holding Title
Sole Ownership
Sole ownership may be described as ownership by an individual or other entity capable of acquiring title. Examples of common vesting cases of sole ownership are:
1. A Single Man or Woman:
A man or woman who is not legally married or in a registered domestic partnership. For example: Bruce Buyer, a single man.
2. A Married Man or Woman as His or Her Sole and Separate Property:
A married man or woman who wishes to acquire title in his or her name alone.
The title company insuring title will require the spouse of the married man or woman acquiring title to specifically disclaim or relinquish his or her right, title and interest to the property. This establishes that both spouses want title to the property to be granted to one spouse as that spouse’s sole and separate property. For example: Bruce Buyer, a married man, as his sole and separate property.
3. A Registered Domestic Partner as His or Her Sole and Separate Property:
A registered domestic partner who wishes to acquire title in his or her name alone.
The title company insuring title will require the domestic partner of the person acquiring title to specifically disclaim or relinquish his or her right, title and interest to the property. This establishes that both registered domestic partners want title to the property to be granted to one partner as that person’s sole and separate property. For example: Bruce Buyer, a registered domestic partner, as his sole and separate property.
CO-OWNERSHIP
Title to property owned by two or more persons may be vested in the following forms:
1. Community Property:
A form of vesting title to property owned together by husband and wife or by registered domestic partners. Community property is distinguished from separate property, which is property acquired before marriage or before a registered domestic partnership, by separate gift or bequest, after legal separation, or which is agreed in writing to be owned by one spouse or registered domestic partner.
In California, real property conveyed to a married person, or to a registered domestic partner, is presumed to be community property, unless otherwise stated. Since all such property is owned equally, both parties must sign all agreements and documents transferring the property or using it as security for a loan. Each owner has the right to dispose of his/her one half of the community property, by will. For example: Bruce Buyer and Barbara Buyer, husband and wife, as community property.
2. Community Property with Right of Survivorship:
A form of vesting title to property owned together by husband and wife or by registered domestic partners. This form of holding title shares many of the characteristics of community property but adds the benefit of the right of survivorship similar to title held in joint tenancy. There may be tax benefits for holding title in this manner. On the death of an owner, the decedent’s interest ends and the survivor owns the property. For example: Bruce Buyer and Barbara Buyer, husband and wife, as community property with right of survivorship.
3. Joint Tenancy:
A form of vesting title to property owned by two or more persons, who may or may not be married or registered domestic partners, in equal interests, subject to the right of survivorship in the surviving joint tenant(s). Title must have been acquired at the same time, by the same conveyance, and the document must expressly declare the intention to create a joint tenancy estate. When a joint tenant dies, title to the property is automatically conveyed by operation of law to the surviving joint tenant(s). Therefore, joint tenancy property is not subject to disposition by will. For example: Bruce Buyer, George Buyer, as joint tenants.
4. Tenancy in Common:
A form of vesting title to property owned by any two or more individuals in undivided fractional interests. These fractional interests may be unequal in quantity or duration and may arise at different times. Each tenant in common owns a share of the property, is entitled to a comparable portion of the income from the property and must bear an equivalent share of expenses. Each co-tenant may sell, lease or will to his/her heir that share of the property belonging to him/her. For example: Bruce Buyer, a single man, as to an undivided 3/4 interest and Penny Purchaser, a single woman, as to an undivided 1/4 interest, as tenants in common.
Other ways of vesting title include as:
1. A Corporation*:
A corporation is a legal entity, created under state law, consisting of one or more shareholders but regarded under law as having an existence and personality separate from such shareholders.
2. A Partnership*:
A partnership is an association of two or more persons who can carry on business for profit as co-owners, as governed by the Uniform Partnership Act. A partnership may hold title to real property in the name of the partnership.
3. Trustees of a Trust*:
A Trust is an arrangement whereby legal title to property is transferred by the grantor to a person called a trustee, to be held and managed by that person for the benefit of the people specified in the trust agreement, called the beneficiaries.
4. Limited Liability Companies (LLC)*:
This form of ownership is a legal entity and is similar to both the corporation and the partnership. The operating agreement will determine how the LLC functions and is taxed. Like the corporation its existence is separate from its owners.
*In cases of corporate, partnership, LLC or trust ownership – required documents may include corporate articles and bylaws, partnership agreements, LLCoperating agreements and trust agreements and/or certificates.
Remember
How title is vested has important legal consequences. You may wish to consult an attorney to determine the most advantageous form of ownership for your particular situation.
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Understanding the Reward and Realities of Home Ownership
By Administrator | December 3, 2011
The Rewards and Realities of Homeownership
As with anything in life, you’ll find advantages and disadvantages to consider in regards to deciding if homeownership is the best option for you. It’s important to look at both the rewards and realities of homeownership before you commit to one of the largest financial investments you can make.
THE REWARDS OF HOMEOWNERSHIP
Invest in your future
Your monthly mortgage payments are not going into the pockets of a landlord. Instead, with each payment, you build equity in your home and contribute to your own long-term, personal investment.
Lighten your tax load
You’ll find homeownership opens up a world of potential tax savings. Typically, the interest paid on your mortgage is tax deductible which can provide significant financial relief. To discover all the possible tax advantages available to you upon purchasing a home, it’s best to consult with a trusted tax advisor.
Develop your credit further
Homeownerships is one of the best investments you can make. Additionally, making monthly mortgage payments on time will further improve your credit history and will help you with future and additional investments.
Remove questions
With homeownership, your monthly payments are no longer subject to increases by the renewal of a lease and the discretion of a landlord. This will help you make a long term budget plan and remove variable factors in your future financial decisions.
Find freedom
With the only potential parameters being homeowner association guidelines or city codes, you are able to remodel, renovate, and redecorate according to your own personal tastes. You are free to make your home your own — however you see fit.
THE REALITIES OF HOMEOWNERSHIP
Know the numbers
Certain renting situations provide coverage for the expenses of some or all the utilities. This is not the case with homeownership. Not only will the utilities be the responsibility of the homeowner, but property taxes and homeowner’s insurance also will be additional expenses.
Expect repairs
There’s no more calling the landlord to fix what might be broken. Any repairs and maintenance that are required on the home and/or appliances will be your responsibility. And, you can expect that these will always come with a bill or invoice to pay.
Stay put
Renting provides flexibility. You regularly are given an opportunity to resign a lease (or not) and suffer only minimal penalties if you decide to break the lease prior to the time of renewal. On the other side, owning a home is a long term investment and will be more financially beneficial the longer you stay in the home. Project ahead; can you see yourself happy in that home and in that neighborhood 5 to 10 years down the road? Deciding to move out of a home does not remove your financial responsibility as the home owner; plus, the process of selling a home can be a time consuming and costly endeavor. It may not happen as quickly as you would like or hope.
Be ready to gamble
The housing market is perpetually unpredictable. While the hope is that the home will appreciate in value over the time of ownership, this is not always the case in every market. If and when the time comes to sell your home, be prepared for whatever condition the market might be at the time. Housing prices could be down, the market may be slow, and the home may have depreciated in value. Owning a home is typically a sound investment, but it provides no guarantees.
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Real Estate Appraisal Help
By Administrator | November 22, 2011
What can be done to protect from a low appraisal?
Be proactive. Federal rules allow you to provide the appraiser your own comps — recently sold properties of similar size, condition and amenity levels in your immediate market area. Your realty agent can help you pull them together before the appraiser arrives. Or for a fee of $200 to $300, you can hire an experienced local appraiser to assist you.
Sara W. Stephens, president-elect of the Appraisal Institute, the largest group in the industry, says, “If you know there are comparable sales in the neighborhood” where the price was affected by a divorce, financial distress or heavy seller concessions to the buyer, “make sure you call the appraiser’s attention to” these factors. And give the appraiser a list of all the value-enhancing upgrades and improvements you’ve made, including dates and costs.
Accompany the appraiser during his or her inspection of the house. Ask questions crucial to competency: Where are you based? How long have you been in the business? What certifications and professional designations do you hold? Are you a member of the local multiple listing service (MLS), an essential trove of data for any accurate appraisal? Do you know local agents or brokers who can supply you with pending sales information and guide you on neighborhood price trends?
If the appraiser doesn’t have good answers, you are much more likely to end up with a poor appraisal. Alert the lender to your concerns as early as possible.
After the appraisal is completed, always ask for a copy to review; it’s your right under federal law. If the value comes in low, check everything in the report, from selection of comps to the accuracy of property measurements. If you find serious mistakes and the appraiser refuses to make corrections, appeal directly to the lender. Most have procedures to follow regarding “reconsiderations of value.” Ask for a second valuation by a locally competent appraiser, even if that costs you more money. Ken Harney
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FHA Loan Limit Back to $729,750
By Administrator | November 19, 2011
Congress Passes FHA Loan Limit Increase
and Flood Insurance Extension Nov 18 ,2011
Last night Congress passed an omnibus bill, which included an increase to the Federal Housing Administration (FHA) loan limit and extension of the National Flood Insurance Program. If the bill is signed by President Obama, the FHA loan limit will be increased to $729,750 for San Mateo and Santa Clara counties and the flood insurance program will be extended until December 16.
The bill, which passed by a 298-121 vote in the House and 70-30 vote in the Senate, did not include an increase to the conforming loan limit. The Fannie Mae and Freddie Mac loan limits for high cost areas will remain at $625,000.
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HARP Refinance Program Expanded
By Administrator | October 31, 2011
Borrowers who are current on their home loans may be able to refinance for lower interest rates, even if they are seriously upside down. The Federal Housing FinanceAgency (FHFA) announced on Monday that it will broaden the scope of the Home Affordable Refinance Program (HARP) by removing the current 125 percent loan-to-value cap for fixed-rate mortgages backed by Fannie Mae and Freddie Mac. Other program enhancements include, among other things, reducing certain fees, eliminating the need for a new property appraisal if the FHFA has a reliable automated valuation model (AVM) estimate, and extending HARP until the end of 2013. New federal guidelines for the HARP changes should be released to mortgage lenders and servicers by November 15.
The basic eligibility requirements for an enhanced HARP loan are as follows:
• Existing mortgage loan must be owned or guaranteed by Fannie Mae or Freddie Mac. Copy and paste into your browerse here http://www.makinghomeaffordable.gov/get-assistance/loan-look-up/Pages/default.aspx
to see whether a borrower has a Fannie Mae or Freddie Mac loan.
• Existing mortgage loan must have been sold to Fannie Mae or Freddie Mac before June 1, 2009.
• Existing mortgage loan cannot have been refinanced under HARP previously (except for Fannie Mae loans refinanced between March and May 2009).
• Current loan-to-value (LTV) ratio must be more than 80 percent.
• Existing mortgage loan must be current, with no late payments in the past six months, and no more than one late payment in the past 12 months.
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July 15th, 2011 New Short Sale Law Effective Immediately
By Administrator | July 25, 2011
On July 15, in a major victory for REALTORS®, Governor Jerry Brown signed into law California Association of REALTORS® (C.A.R.)-sponsored bill SB 458 (Corbett), which extends the protections of SB 931 (2010), to ensure that any lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans, regardless of whether the lender is a senior or junior lien holder.
Under previous law (SB 931), a first mortgage holder could accept an agreed-upon short sale payment as full payment for the outstanding balance of the loan, but unfortunately, the rule did not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens and ensures that once a lender has agreed to accept a short sale payment on a property, all lien holders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.
SB 458 contains an urgency clause making it effective upon signing. Silvar
The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference,” said C.A.R. President Beth L. Peerce. “SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lienholders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.”
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Asset Depletion
By Administrator | July 20, 2011
Asset Depletion –
Allows the use a borrower’s assets for more income and get your Debt to Income (DTI) under control.
Many borrowers have assets but their income is not sufficient to qualify for a loan. Maybe the borrower is self-employed and their tax returns do not indicate enough income to qualify. Or maybe the borrower is retired and no longer has enough income. Asset Depletion is a way for an underwriter to use a borrower’s assets to provide more income to qualify. After all, the borrower’s assets are in an income bearing vehicle, like checking, savings or money market accounts, or stocks, bonds and mutual funds…the assets are working for the borrower and generating income. We can use those assets to help your borrower qualify. Although this makes perfect sense, it is highly irregular for an underwriter to approve a borrower using assets as income. However, our underwriters understand the logic in approving a borrower who has demonstrated their ability to save and accumulate assets. Asset Depletion is simply an Underwriter’s tool to apply more qualifying income by calculating a return on the borrower’s “liquidable” assets.
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Homepath 3% Down
By Administrator | July 8, 2011
Fannie Mae Offering Buyer Assistance and Agent Incentives
Fannie Mae is currently offering buyers up to 3.5 percent in closing cost assistance through October 31, 2011. A $1,200 selling agent bonus is also available to selling agents who close on an owner occupant property and meet all eligibility requirements and terms and conditions.
Terms and Conditions:
• Buyers and/or selling agents (the agent representing the buyer) must request the incentive upon submission of initial offer.
• Initial offer must be submitted on or after June 14, 2011 and close by October 31, 2011. Initial offers made prior to June 14 are not eligible for the June 14 – October 31 incentive.
• Sale must close on or before October 31, 2011. No exceptions will be made to this deadline. (Note: Initial offers submitted after September 15, 2011 may not close by the incentive deadline of October 31, 2011.)
• Buyers must be purchasing a HomePath property to use as their primary residence to receive closing cost assistance. Second homes and investment properties are excluded from the incentive.
• Sales closed via the retail channel are eligible, including those utilizing public funds. Pool and auction sales are ineligible.
• Buyers must sign the Owner Occupant Certification Rider to the Real Estate Purchase Addendum.
• Buyers with total closing costs under 3.5 percent are not eligible to receive the difference as a credit.
• Properties where Fannie Mae acquired the property in connection with financing under a reverse mortgage are not eligible. Ask the listing agent for details.
• Buyers should consult their lenders for guidance on financing. Lenders and mortgage products may impose their own limitations on the use of the 3.5 percent incentive. For example, the lender may consider the incentive a Seller Contribution and limit the amount to 3 percent. In those instances, the remaining 0.5 percent will no longer be available to the buyer.
• Fannie Mae reserves the right to remove any property from promotion or end the promotion at any time. Any dispute over the payment of the incentive shall be resolved by Fannie Mae in its sole discretion.
NO PMI
No Apprasial
3% Down Payment
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408-356-2506
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Buying a Second Home?
By Administrator | June 30, 2011
Tips for buying a second home and help making a wise decision.
We live 45 minutes from the beach town of Santa Cruz, Ca and have inquiries from many of our clients about beach homes as an investment or second home.
Visitors to Santa Cruz are often taken with the city due to the ocean, the bluffs and the town itself. This leads them to investigate the possibilty of buying a second home. When we talk to buyers about this great opportunity we talk of the location, accessibilty, lifestyle and investment opportunity. Santa Cruz and the outlying beach cities are unique in the fact that are located next to the pacific ocean. While there are lots of beach towns, Santa Cruz has a lack of buildable land which leads to less supply and helps keep home values strong. Accesibilty is another key ingridient. The abilty to easlily travel to your vacation home will enhance your abilities to use it more often. Santa Cruz is located 45 minutes from the San Jose airport. Lifestyle elements are important, do you like to surf, walk on beaches and the bluffs? Recreationaly the sky is the limit with all the things to be done, biking, hiking, visit the board walk.
Finally the investment value needs to be evaluated. Weighing the amount of time you will spend at your second home vs the cost of operating and maintaining the home. Also we need to think about the expected appreciation over time.
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Some Pitfalls to Avoid When Getting a Home Insured
By Administrator | February 21, 2011
Here are some tips the panel shared:
• Each insurance company is different and has its own limitations of coverage, so it’s important to shop around and make sure you are dealing with a true insurance professional who knows the business.
• While there are lenders who may insist that insurance should cover the amount of the loan, insurance companies will only cover the value of the home. The amount an insurance company will cover differs from the appraised value because the appraised value includes land, while home insurance just covers the structure.
• The condition of a house affects insurance coverage more than the age of a house. The following may affect coverage:
- Roof condition – Some companies may deny coverage if an additional layer is placed on top of the original layer.
- Trees and brush in close proximity to the house
- Distance of a fire hydrant or fire station to the house – Some insurance companies will not insure a home if it is more than three miles away from a fire station
- Certain pets
• You have to think in terms of risk. Would you take a risk on a condition that you have observed? Inform you client about a potential problem so it can be fixed right away.
• In the case of condominiums, work closely with the lender. It’s important to know the insurance company that handles the master policy, what the HOA master policy entails, and get a copy of the certification of insurance for the master policy.
• Once you have all insurance documents, get them to your escrow officer as soon a possible.
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