Puget Sound Real Estate and Community Blog

Income tax, sales tax, estate tax, excise tax, alternative minimum tax…and just when you thought you’d paid them all…along comes your property tax bill as a homeowner. But did you know that the National Taxpayer’s Union estimates that as many as 60% of homes are assessed for too high of a value, resulting in an incorrectly larger property tax bill? Chances are good you might be in that group of people paying too much, so taking the time to review your property tax bill could save you a nice chunk of change.

First, contact me for a copy of your property card. Once you have that, be sure to review the card and confirm that the basic information about your property is correct. For example, is the square footage and number of rooms for your home accurate? If the number is incorrect, the county may change the assessment without a formal appeal. If everything on the property card is correct but the assessed value still seems too high, your next step is to gather the following documentation to support an appeal.

If you have a current appraisal that supports the value being lower using recent market-value information, King county will accept a copy of the appraisal with the appeal. If the appraisal is outdated, you can order a new one–just call me for a referral to a great appraiser.

I can give you current market information for your neighborhood, and help you see how your market value and assessed value stacks up against your neighbors’. You can also visit the local assessors website at http://your.kingcounty.gov/Assessor/ to look through the public records for other homes that have similar features to yours, but have lower assessments.

Submitting an appeal is generally a fairly simple process, but make sure to take the time to fill out all forms in advance and be prepared with your documentation if there is an in-person hearing that needs to take place.

More good news - according to the National Taxpayers Union, about 33% of property tax appeals succeed! Taking the time to review the accuracy of a tax bill could easily save you hundreds of dollars per year, adding up to thousands of dollars during the time you own your home. Please feel free to contact me for more information on this money-saving tip.

For more information visit http://your.kingcounty.gov/assessor/ValueDisputes.htm to find out when appeals are heard, and how the process for submitting a property tax appeal works.

David J Edwards
REALTOR
Keller Williams Realty Southeast Sound
Phone: 425-890-8045
Fax: 425-902-1899
E-Mail: david@davidjedwards.com
Website: http://www.davidjedwards.com
Blogsite: http://www.davidjedwards.com/real-estate-blog.asp
Mobile Site: http://davidjedwards.mofuse.mobi
Community Reports: http://www.topmarketer.net/CSR/CSReport.aspx?CV4GU5KAYOEF
 
David J Edwards is a full time real estate agent and REALTOR with Keller Williams Realty specializing in Residential Real Estate for buyers and sellers.

A Reverse Mortgage is a home loan which allows you to borrow from the equity that you have built up in your home over time. Unlike other loans or lines of credit, as long as you live in your home, you do not have to make any payments on the money you borrow.

Who is eligible?
Any homeowner who is at least 62 and has substantial equity in their home is eligible to obtain a reverse mortgage. Your income, credit score or health history are NOT used to determine eligibility, making almost all senior homeowners eligible.

How much money can I receive?
Your Reverse Mortgage amount is determined by the following factors:
• Age of the borrower (age of the youngest borrower if more than one)
• Appraised value of the home
• Current interest rate
How do people use the money?
You can use the money any way you wish. Many use the funds from a Reverse Mortgage to pay for home improvements, in-home care, health-related expenses, property taxes and insurance, or to generally improve their standard of living above what Social Security provides. Often times, seniors obtain a Reverse Mortgage for the sole purpose of paying off their current mortgage, eliminating their monthly payment.

When does the loan have to be paid back?
Reverse Mortgages do not have to be paid back until the last surviving borrower dies, sells the home, or moves out. The total amount owed at the end of the loan equals all funds borrowed, plus accrued interest, servicing costs and mortgage insurance.

Are Reverse Mortgages safe?
The Housing and Urban Development (HUD) and Fannie Mae Reverse Mortgages are regulated by the federal government. Unlike regular loans, Reverse Mortgages do not have monthly payments. Your home cannot be foreclosed upon because of late payments. When the loan is paid off, you can never owe more than your home is worth.

How do interest rates affect my loan?
The interest rate is calculated using a formula set by the federal government. The interest rate at the time of closing is the initial rate for the loan. Ninety percent of the Reverse Mortgages obtained in the United States are done so with the FHA Monthly Adjustable program. A fixed rate option is also available and may be appropriate in some situations.

Are there any costs associated with Reverse Mortgages?
There are fees associated with obtaining a Reverse Mortgage. These costs can typically be financed into the loan itself, which means there are generally no out of pocket costs required. You will receive a “Good Faith Estimate” with your application, showing the precise costs of your loan. In most cases, these fees will be lower than standard sales commissions and moving expenses if you were to sell your home.

Is a Reverse Mortgage the best option for me?
This depends on your individual circumstances. If you are planning to sell or move out of your home in 1-2 years, or if you only need a small amount of money, a Reverse Mortgage may not be the best option for you because of the up-front costs.

Who holds title to the home?
The homeowner retains title to the property and can sell, payoff, or prepay the Reverse Mortgage at any time without penalty. The Reverse Mortgage lender does NOT hold title or take possession of your home when you or your heirs pay off the loan.

How can I receive the money?
You may choose from 4 options or a combination of these:
• A credit line that grows over time
• A single lump-sum disbursement
• Equal monthly payments for as long as you or a co-borrower live in your home
• Equal monthly payments for a fixed period of time

Are the funds you receive considered income?
The money you receive is a loan and is not subject to federal income tax. Additionally, these payments will not affect Social Security or Medicare payments. There are no income or asset requirements for borrowers receiving a Reverse Mortgage, nor are there any medical or insurance requirements. Be sure to consult your legal and tax advisors regarding your tax options.

How do I get started?
As a safeguard for seniors, you are required to attend a counseling session through a HUD-approved counseling agency. Lenders are required to provide you with a list of 5 counselors, two of which must offer the session by telephone. Before or after this counseling session, you can then make application with your lender and begin the loan process.
REVERSE MORTGAGE HIGHLIGHTS
• Must be 62 or older
• No income, credit or health qualifications
• Repayment is required only when you no longer live in your home.
• Proceeds from the loan are tax free and can be used for any purpose.
• You can never be asked to pay back more than the value of your home.
• You maintain ownership. The lender does not take control of title.
• If they choose, heirs can keep the home once the Reverse Mortgage balance is paid in full.
• All liens must be paid off at closing
• Closing costs can be financed in most cases.

Myths about Reverse Mortgages
The lender will own your home – FALSE!
You and your family or your estate retains ownership of the home. The lender does not take control of the title. The lender’s interest is limited to the outstanding loan balance.

Reverse Mortgage lenders just want to sell your house - FALSE!
Reverse Mortgage borrowers may remain in the home for as long as they wish. However, should they decide to sell the home for any reason, the loan would become due and payable 12 months from this date.

Your heirs will be saddled with the loan - FALSE!
A Reverse Mortgage is a non-recourse loan. The lender does not have recourse to anything other than your home; not your income, other assets or your heirs.

You need a certain level of income, good credit, or good health to qualify - FALSE!
A Reverse Mortgage has no income, credit, or health requirements.

You have to make monthly payments on your Reverse Mortgage - FALSE!
There are never any monthly payments. Payment of taxes, insurance and general upkeep of the home are the only responsibilities of the homeowner.

Your home must be debt free to qualify for a Reverse Mortgage - FALSE!
You may have a mortgage or other debt on your home. However, any debt or mortgage(s) must be paid off first with the proceeds of the reverse mortgage.

Only the “cash poor” or desperate senior citizens can benefit from the Reverse Mortgage - FALSE!
Even though some seniors may have a greater need, a Reverse Mortgage can also be an excellent financial or estate planning tool for many seniors.

There are three huge announcements that are changing the financial markets around the world.  First, we have been talking about the fear over the safety of money in savings for many Americans. Banks are either folding or on the brink of collapse, bonds are losing some or all of their value, and stocks are dropping at an alarming rate, all causing tremendous fear and anxiety for investors.  

This fear caused a flight to quality of such magnitude that the return on Treasuries was actually negative.  People are actually willing to pay money in order not to lose money… forgetting all about any type of return for their investment.  And this panic lead to a modern day “run on the bank”.  There was $180 Billion taken out of money market funds due to a lack of confidence.  This resulted in a “breaking of the buck”, which means that the Net Asset Value or NAV of some money market funds dropped below $1.  Virtually all investors consider money market funds very safe and do not expect any change in the principal value, so a $1 invested will always result in a $1 balance plus any interest.  But once the $1 valuation was broken investors panicked and the flood gates opened.  This caused the Treasury to step in.  

Treasury Secretary Hank Paulson announced that the US government will guarantee money market funds.  It should be noted that this does not include high yield, enhanced type, or riskier money market funds.  This action is helping settle the markets and as a result stocks around the world are marching higher.  

Another big announcement that is helping to calm the global markets and regain confidence is the Fed’s decision to create a market place for illiquid mortgage debt.  As we know, the mortgage mess has buried many companies, some were previous giants with long histories like Lehman, Bear Stearns, Fannie & Freddie.  The big problem is that there are no buyers for this debt in the current marketplace.  So the Fed is stepping in to create a vehicle to make these purchases of mortgage debt and provide a liquid marketplace.  This has been very well received and should do a lot of long term good to help the housing and lending environment. Stocks around the world have responded very favorably to this.

And there is more…stock shorting.  The amount of greed is incredible.  Many short sellers have used currently illegal tactics such as “naked” short selling.  This means they are shorting a stock without the required step of first borrowing it.  This has exacerbated the problem in financial stocks as they get unmercifully beaten down.  This in turn hurts their balance sheet which also limits their ability to take on credit.  And this is the vicious cycle we have been witnessing.  Worse yet are the short sellers who sent armies of individuals to use scare tactics on message boards to convince people the sky is falling.  The SEC has placed a ban on short selling in 799 financially related stocks.  This ban will last through October 2nd and can be extended if needed in 30 day increments.  Some other countries around the globe are also instituting similar bans.  There are some politicians and others who are commenting on what a negative move this is, as well as saying there are legitimate short sellers.  The problem is that they have failed miserably in policing this problem for a very long time.   It is the equivalent of an electronic store saying, “pay for what you take with the honor system”.  While some will actually pay what is due, there is no doubt that the store will be wiped out in a short period of time.  The SEC did the right thing here and hopefully this will add another level of calm to the current financial crisis.  

These 3 steps will not fix everything, but it sure looks like a step in the right direction.  The health of our financial system and confidence that our hard earned savings will not be wiped out is extremely important.  What good is earning a paycheck if there is no place to safely save that money.  Prices will undoubtedly continue their volatile ride, but should remain within the trading range.