Archive March 2020

THE IMPORTANCE OF PAYING PROPERTY TAXES

Property taxes are a very important part of homeownership. Homeowners can either have the taxes added to their mortgage statements that the lender deposits in an escrow account or they can pay them separately but it’s important to pay them. Governments assess property taxes based on location and value. Property taxes paid by homeowners are used by counties and states to provide critical services and infrastructure such as police services, fire services, schools, roads and highway construction, and other uses that vary by jurisdiction. 

As home prices continue to rise which means higher property taxes, it is important that homeowners pay property taxes because failure to pay tax results in the local government imposing a tax lien on your property that has to be paid within a certain period or else the property gets foreclosed.

How Property Tax Liens Work

When a homeowner fails to pay their taxes, the local government imposes a tax lien on your property. A tax lien is a claim on the owner’s property. When a homeowner fails to pay their taxes after 12 months the county will then create a certificate for the amount of the unpaid taxes. The certificates are then sold to individuals or investors so that the unpaid property taxes are monetized. Therefore, investing in tax lien certificates help to support states maintain police, fire departments, hospitals, and other necessities. There are three major parties involved in these transactions, the homeowner, investor, and the courthouse. These certificates are bid on, either by bid down auction where the interest rate is lowered per bid or a premium bid or bid up where the winner is the highest bidder. Individuals who want to invest their money have paid for the certificate because the interest imposed on the unpaid tax is now received by the investor rather than the local government.  Moreover, after the redemption period, they are able to begin the foreclosure process and possibly possess the property. If this process is done with sound research and proper paperwork, the owner of the lien can then control the ownership rights to the property. While foreclosure is an option, it is in the interest of the owner and the mortgage originator to work together to so that the owner is able to pay the taxes before the redemption period because a tax lien takes precedence over the lien of the mortgage lender. The tax foreclosure window is typically a 60-day period to get letters out to all parties invested in the property. Those who wish to foreclose will need to also produce a deed application that carries a fee as low as $39 but can be up to $875 in some states but differs per state. If the foreclosure process is complete then the investor would be able to get a property free and clear just for the fees paid in taxes which would be a great investment.

Chron.com reports(link is external) that tax lien states are Alabama, Arizona, Colorado, Florida, Illinois, Indiana, Iowa, Kentucky, Maryland, Mississippi, Missouri, Montana, Nebraska, New Jersey, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Vermont, West Virginia, and Wyoming. The District of Columbia is also a tax lien jurisdiction.

Illinois has the highest interest on tax liens of 36% followed by Iowa at 24%. Indiana, Missouri, Montana, and South Dakota have the lowest interest rate of 10% which is added to unpaid taxes. The redemption periods are also typically less than three years.

Your Guide to the Home Appraisal

You’ve found your dream home and now it’s time to cross all your T’s and dot all your I’s before it’s all your own. And one of the first items on your closing checklist the home appraisal. So, what exactly is that?

The home appraisal is essentially a value assessment of the home and property. It is conducted by a certified third party and is used to determine whether the home is priced appropriately.

During a home appraisal, the appraiser conducts a complete visual inspection of the interior and exterior of the home. He or she factors in a variety of things, including the home’s floor plan functionality, condition, location, school district, fixtures, lot size, and more. An upward adjustment is generally made if the home has a deck, a view, or a large yard. The appraiser will also compare the home to several similar homes that were sold within the last six months in the area.

The final report must include a street map showing the property and the ones’ compared, photographs of the interior and exterior, an explanation on how the square footage was calculated, market sales data, public land records, and more.

After it is complete, the lender uses the information found to ensure that the property is worth the amount they are investing. This is a safe-guard for the lender as the home acts as collateral for the mortgage. If the buyer defaults on the mortgage and goes into foreclosure, the lender generally sells the home to recover the money borrowed.

Give Your Deck A Facelift!

Hanging out with your family or hosting friends on your old, dingy deck is not very appealing. Lucky for you, refreshing it doesn’t have to be difficult or expensive. Try your hand at the makeover ideas below!

Restore your decking. Depending on the shape it’s in, sometimes all your deck needs is a little love. If it’s still fairly new, your deck might just need a deep cleaning and a new coat of sealant. There is a multitude of deck finishing and cleaning solutions on the market to choose from to achieve this. However, if it’s more worn down, the rejuvenation process may be a bit longer, including searching for larger repairs, tightening any hardware, giving it a good cleaning, applying a stain, sealant, and paint, and more.

Add lighting. Ambient lighting can completely transform your outside space into a relaxing, cozy oasis. Consider adding solar lights that don’t require a plugin or battery replacement. The lights turn on automatically when the sun sets, making your deck come alive. You can also consider paper lanterns, rope lights, mason jar lamps, or small twinkle lights, depending on the style and mood you’d like to set.

Build a privacy screen. Privacy screens come in all styles, shapes, and sizes. Consider purchasing and installing bamboo fencing or lattice panels for a quick and easy solution. Or, if you are feeling a little more adventurous, you can build a wooden frame and grow climbing plants or vines or stretch outdoor fabric in between. Whichever route you end up choosing, make sure you get the most out of your efforts by evaluating all lines sight before building.

Home Equity. Getting a home equity line of credit allows you to borrow money against the value of your home. You receive usually up to 80 percent of your home’s value, minus the amount of your loan.

Retirement Funds. Homeowners can consider pulling money from a 401K or IRA account, even though they aren’t specifically meant to cover a home renovation. This option might incur additional penalties or tax payments, but maybe worth it when making improvements that will benefit them financially in the long run.

HOW YOU CAN FINANCE YOUR HOME RENOVATION

How You Can Finance Your Home Renovation

Outdated kitchen. Overrun backyard. Unusable basement space. If you have a home renovation project on the mind, the first thing you have to consider is how you are going to finance it. Here are the most common options to make your dreams become a reality.

Cash. Paying in cash is the most straightforward financing option, just save until you have enough money to cover the expenses. This will help eliminate spending outside your budget; however, it can also extend your timeline.

Mortgage Refinance. If you’ve been making payments on your home for a few years and your interest rate is higher than current market rates, you may be eligible for a mortgage refinance, reducing your payments and freeing up some money.

Cash-Out Refinance. You can tap into your home equity and borrow up to 80 percent of your home’s value to pay off your current mortgage plus take out more cash to cover the renovations. This option is encouraged only when you’re making improvements that will increase the value of your home, as it can add a lot of interest and fees.

Home Equity. Getting a home equity line of credit allows you to borrow money against the value of your home. You receive usually up to 80 percent of your home’s value, minus the amount of your loan.

Retirement Funds. Homeowners can consider pulling money from a 401K or IRA account, even though they aren’t specifically meant to cover a home renovation. This option might incur additional penalties or tax payments, but may be worth it when making improvements that will benefit them financially in the long run.