Kentwood Blog


How 2009 Property Taxes Affect

Posted: 15 Feb 2010 08:52 AM PST

How 2009 Property Taxes Affect
Your 2010 Transaction at Closing

 There are two options available for paying real estate taxes in Colorado.  The first is to pay the entire amount of the prior year’s taxes in full on or before April 30th.  It is also possible to pay the real estate taxes in two installments, the first on or before February 28th and the second on or before June 15th. 

 Depending on the time of year that a property closes and which method the lender uses to pay property taxes, one of Kentwood Real Estate’s primary title company affiliates will follow one of several procedures for collecting taxes at closing. 

 For closings that take place during the first couple of weeks of each year, before the counties have certified knew mill levies, the title company will normally escrow from the seller 120 percent of the previous year’s property tax amount (or use the most recent assessed value, if higher).  These are short-term escrows and no escrow fee is charged.  Once the mill levies are certified and the actual tax amount is available, the prior year’s (2009) taxes will be paid from the escrow, and the difference will be refunded to the seller. 

 Lenders also play a role in how the title insurance company determines what real estate taxes to collect at closing.  Depending on the time of year, lenders typically request that title companies handle the payment of prior year’s real estate taxes in one of two ways. 

 The first option is to collect from the seller (by means of a debit entry on their Settlement Statement/HUD-1) the entire amount of taxes due and remit that amount to the appropriate county treasurer prior to April 30th.  The second option is for the title company to pay only the first half of the prior year’s taxes.

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How Will the Pending End of Government’s Lifeline

Posted: 15 Feb 2010 08:50 AM PST

The Federal Reserve plans to stop buying mortgages by the end of March, and the tax credit for home purchases will end with contracts signed by April 30th.  The pending end of the Federal Reserve’s lifeline to Fannie Mae and Freddie Mac could drive mortgage rates back to the six percent-plus range.  Rates are currently below five percent, and if they jump back up to six percent or more, many people will not be able to afford a home.

 Fannie Mae and Freddie Mac are the largest purchasers of mortgages in the country.  The Federal Reserve has been injecting cash into these institutions since December 2008, resulting in very low interest rates on conforming loan amounts, generally $417,000 or less.  The Federal Reserve is planning to stop subsidizing Fannie Mae and Freddie Mac by March 31, 2010.  At that time, economists expect that mortgage interest rates will rise. 

 Higher rates may deter buyers from considering a new home purchase because their monthly mortgage cost may increase significantly.  For example: the monthly payment on a $400,000 mortgage will increase $250 if interest rates increase one percent.  Now is a great time to be a buyer or seller, as mortgage rates are still low.  It is uncertain how interest rates will respond in the future, but the consensus is that rates will likely rise. 

 Extending the tax credit for home purchases past April 30th could help keep the housing industry afloat.  Considering the election that’s looming this year, many expect that congress will decide to extend the tax credit.  But regardless of what happens, the Denver Real Estate market will be affected one way or another.

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New Mortgage Regulations May Affect Closing Date

Posted: 15 Feb 2010 07:10 AM PST

The Housing and Economic Recovery Act of 2009 (HERA) is a wide-ranging piece of legislation that strengthens and modernizes the regulation of government-sponsored enterprises Fannie Mae and Freddie Mac, along with the Federal Home Loan Banks.

 Part of HERA imposes sweeping changes in the lending industry, placing greater focus on consumer protection.  HERA aims to assure borrowers are better informed about the loan process and better protected against deceptive lending practices.  These changes will have a direct impact on how Realtors structure their transactions and how lenders keep the consumer informed of loan charges through stricter disclosure requirements.

 There are four key elements of HERA.
. If the home buyer is financing the property, the new regulatory and investor guidelines will impact and perhaps even dictate the closing date.  After July 30th, the earliest any home purchase transaction can close is seven days after the homebuyer receives the initial mortgage disclosures from the lender.

            . With the exception of the credit fee, the lender cannot collect upfront fees until 
            the initial disclosures have been received.  Disclosures that are over-nighted are
            considered “received” the next business day (except Saturdays), allowing fees to
            be collected the following business day.

            . The homebuyer must receive a copy of his/her appraisal a minimum of three
            business days prior to closing.  A homebuyer who believes the required 3-
            business-day review period is not necessary may waive that requirement in
            writing.

            . Any increase of more than .125 percent in the Annual Percentage Rate (APR)
            from the initial Truth in Lending Disclosure (TIL) requires that the TIL disclosure
            be revised and reissued to the homeowner.  The homebuyer must receive the
            revised TIL disclosure at least three business days before the closing.  If the TIL
            is mailed, it is considered “received” three business days after the mailing.

 For details on several ways to expedite your closing, consult with a reputable title company or consult an experienced real estate professional with Kentwood Real Estate.  Kentwood provides one-stop shopping for all your Denver Real Estate needs in addition
to dependable answers to all your real estate-related questions.

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About Tom & Dee Cryer

Your Friends in the Homeownership Business!
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