What is a Preliminary Report and How do I Read it?

March 10, 2014

When purchasing your home in South Lake Tahoe you will come across many different documents. Thankfully, your SoTahoe  Realtor will be there to help you understand these sometimes confusing terms. But, it never hurts to be prepared and get familiar with the important documents that you will come across.

A Preliminary Report, also referred to as a Prelim, will provide you with some of the most crucial and pertinent information in regards to your South Lake Tahoe home purchase. The Prelim is prepared prior to the issuing of title insurance. It provides buyers with the opportunity to review issues that could affect the title of the home.

Below are some of the key points that buyers should take notice of:

Vested Owner’s Name – This name should match the owners name on the purchase agreement exactly. If the names are different, there could be a problem with who actually owns the property and if they have the legal right to sell it.

Type of Estate or Interest – Here is where you can find out the extent of the owners interest in the property. The most common type of interest held is “fee simple” or “fee” which is the highest level of interest an owner can hold.

Easements – Listed you will find the type and location of all easements. Easements are a right given to another person or entity to trespass upon land that person or entity does not own. For Example easements are used for roads or given to utility companies for the right to bury cables or access utility lines. Almost all properties will hold some type of easement.

Legal Description of the Property – This is exactly what the title implies. The property will be geographically identified and will include the Assessor’s Parcel Number (APN).

Deeds of Trust – Includes all existing loans held against the property.

Covenants, Conditions and Restriction – Also known as CC&Rs, are property restrictions and agreements that have been place in a prior deed.

Notice of Default – Will alert you to any existing foreclosure proceedings.

Tax Liens, Judgments or Bankruptcy – Another important section that identifies any claims by creditors affecting the seller and/or property that will be excluded from title insurances coverage. Bankruptcies will be listed if a copy of the petition has been filed in the relevant county.

List of Standard Exceptions and Exclusions – All standard items not covered by title insurance.

When reviewing your Prelim, keep in mind that not all lenis, defects or encumbrances will be listed. Nor is the Prelim a concrete list of the condition of the title of the property. The Prelim is simply used to inform you of matters which could affect the title of your soon to be Lake Tahoe property. Your title insurance policy will actually be the instrument to protect you from issues should they be raised. But don’t worry if these terms don’t make sense! Your SoTahoe Realtor will be there for you every step of the way to make sure your transaction goes as smoothly as possible.

Thank you Century 21 @ Tahoe Paradise for such an informative article.

The information in this article was obtained from various sources. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information.

5 Tips for Getting your Offer Accepted in South Lake Tahoe

August 6, 2013

The tables have turned for South Lake Tahoe Real Estate and many would agree that it is now a seller’s market compared to a few years ago. Many buyers are becoming frustrated after being beat out time after time by investors or all cash offers. While a first time buyer might think their situation is hopeless, cash is not king in all situations.

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Thank you Century 21 @ Tahoe Paradise for sharing such an informative article!

Tahoe Lifestyle Properties

April 1, 2011

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Builders, banks offer free job-loss insurance to home buyers

April 1, 2011

The insurance programs would make borrowers’ mortgage payments for up to six months if they become unemployed during the coverage period.
March 27, 2011
By Kenneth R. Harney

Insurance programs that make borrowers’ mortgage payments for up to six months if they lose their jobs during an initial one- to two-year coverage period are gaining popularity. Home builders are offering it to new buyers, and some of the country’s largest banks and mortgage lenders think it’s a win-win idea for shaky economic times.

Better yet, the bank, builder or other sponsor of the plan typically provides it free — no direct, out-of-pocket cost to the consumer — as part of its marketing package. Most programs come with specific dollar ceilings on coverage, often ranging from $2,000 to $2,500 a month. Some limit the amount they’ll pay to principal and interest only. Others cover principal, interest, property taxes and homeowners insurance up to a specific amount.

Although there are no hard statistics on the number of such plans in the marketplace, Teri Cooper, executive vice president of Mortgage Payment Protection Inc. of Heathrow, Fla., one of the largest providers of “involuntary unemployment” policies, estimates that as many as 200,000 buyers are covered by her firm’s Mortgage Guardian programs alone.

Bank of America, which operates a “borrower protection plan” that the bank funds itself, says it has covered thousands of new mortgages — limited to those with initial principal balances less than $500,000. Terry H. Francisco, a spokesman for the bank, said the plan has covered $110 million in monthly payments for unemployed borrowers during the last two years. During 2010, the bank provided 156,000 purchasers with its protection program; as of last December, mortgages covered by the plan totaled $36 billion in loan balances.

In the Seattle-Puget Sound market, Quadrant Homes, a subsidiary of Weyerhaeuser Real Estate Co., recently began offering an insurance plan as a way to reassure buyers that they’d be able to withstand an unexpected job loss.

With unemployment figures scarily high, said Ken Krivanec, Quadrant’s president, “we wanted to give our buyers a little of the confidence they might need” to move ahead with a purchase.

Virtually all involuntary unemployment programs charge borrowers nothing for the coverage directly, but there’s often plenty of fine print that limits payouts under certain circumstances.

Here’s a look at some of the features that buyers and borrowers should focus on when they’re offered free job-loss mortgage insurance.

Five Tax Tips, Tricks and Traps for Homeowners

March 9, 2011

By Tara-Nicholle Nelson for Trulia, Broker in San Francisco, CA

Ask a roomful of homeowners what’s so great about owning versus renting, and you’ll hear them holler in unison: “the tax deductions!” And it’s true – homeowners who itemize their taxes are able to deduct 100% of their mortgage interest and property taxes from their income tax returns.

That means that if you’re in a 28% tax bracket, Uncle Sam effectively subsidizes about a third of your borrowing costs or more, making your home more affordable or allowing you to buy a larger home than you could have otherwise. Also, big chunks of your closing costs are tax deductible, and hundreds of thousands of dollars of any profit (or capital gains) that you realize when you sell your home are exempt from income taxes.

At tax time, it’s critical to know what you’re entitled to, so you can claim it. So, here are five essential need-to-knows about home-related income tax tips to help you get the most tax-reducing bang out of your home-owning buck – and to avoid hefty home ownership-related tax traps.

1. You Have to Itemize Your Return to Claim Your Deductions

During the recent debate on Capitol Hill about whether the mortgage interest deduction should be eliminated (it won’t be, not anytime soon), it came out that nearly 40% of homeowners lose out on their major tax advantages every year when they fail to itemize their income taxes. If you own a home and otherwise have a fairly simple return, it might be tempting just to take the standard deduction – and if your mortgage, property taxes and income are low enough, the standard deduction might outweigh your homeowners’ deductions. But you’ll never know if you’re losing out on the tax advantages of itemizing unless you try; before you grab a pen and start filling in that 1040-EZ grab those forms from your mortgage company and answer the questions on tax software like TurboTax, which will automatically do the math on whether itemizing or taking the standard deduction will result in the lowest tax bill – or the highest tax refund – for you.

2. Plan Ahead and Be Strategic When Taking a Home Office Deduction

According to the Small Business Administration, the average home office deduction is $3,686 – multiply that by your tax bracket – 15%, 20%, 30% or whatever it is, and that’s what you’ll save on your taxes by writing off your home office. Know, though, that the space you designate as your home office cannot be exempted from capital gains tax when you sell your home later. The $250,000 (single)/ $500,000 (married filing jointly) income tax exemption for capital gains is only good on your personal residence, after all – not including any space in your home you’ve claimed as your tax-advantaged office. If you foresee selling your home for much more than you bought it in the future, near or far, discuss this with your tax preparer to see if the few hundred bucks you save is worth the capital gains complication later.

3. Tax Relief for Loan Modifications, Short Sales and Foreclosures Is Only Around Through 2012

While the long-term housing outlook is beginning to look up, 2011 is projected to be the peak year for foreclosures during this market cycle. Distressed homeowners who are on the brink of a short sale, loan modification or foreclosure should be aware that normally, any mortgage balance that is wiped out by one of these outcomes is taxed as what the IRS calls Cancellation of Debt Income, or CODI.

Under the Mortgage Debt Forgiveness Relief Act of 2007, the IRS is currently not charging income taxes on CODI incurred through a loan mod, short sale or foreclosure on most primary residences through 2012. But right now, banks are taking many months, or even years, to work out mortgages in all of these ways; the average foreclosure in New York state right now occurs only after 22 months of missed mortgage payments. If you foresee any of these outcomes in your future, don’t put things off. Do what you can to get to closure on your distressed home and loan, ASAP, while you won’t have income taxes to add as the insult on top of your significant housing injury.

4. Project the Income Tax Consequences of a Refinance or Property Tax Appeal

Homeowners everywhere are working on applying for a lower property tax bill on the basis of the last few years’ decline in their home’s value. Those who have equity have flocked en masse to refinance their 7% home loans into the 4% to 5% rates of the last few months. These strategies offer some of the heftiest household savings out there for the corresponding investment in time and money they take. But here’s a caveat for savvy homeowners who slash these costs: remember that property taxes and mortgage interest, the very costs you’re minimizing, are also the basis for the major tax benefits of being a homeowner. So plan ahead for your income tax deductions to go down along with your taxes and interest.

5. Don’t Forget Those Closing Costs

If you bought or refinanced your home in 2010, you may be so focused on your mortgage interest and property tax deductions that you forget all about your closing costs. Any origination fees or discount points that were paid to your mortgage lender at closing are tax deductible on your 2010 return, get this – even if the seller paid your closing costs. If you can’t figure out exactly what you paid, look for your HUD-1 settlement statement, that legal sized paper full of line item credits and debits that you should have received from your escrow provider or title attorney at, or just after, closing. Can’t find it? Drop your real estate agent or mortgage broker an email; they can usually get a copy to you quickly.

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