Tax Relief Expires on 12/31/2013 - Riverside, CA Real Estate

Homeowners in Riverside, CA or the Inland Empire can still benefit from the Mortgage Debt Relief Act and avoid any tax liability when doing a short sale, but they have to act NOW.

Before this Act, many homeowners often had their outstanding home mortgage cancelled by their lender. However, they did not understand that this cancelled debt was considered taxable income by the IRS. This law is set to expire at the end of 2013, so debt cancelled in 2014 or later will be considered income in the year received.

No house + extra taxes = double pain

How Short Sales Work

Sometimes, rather than trying to take back a home, a lender will allow a borrower to sell the house for less than the mortgage amount. This is called a “short sale”.

Here is a quick example:

Let's pretend you lost your job and can't keep up the payments on your home in Riverside, CA. You still owe $300,000 on your mortgage, but the house value has dropped to $275,000. If the bank agrees to a short sale, you would sell the house, pay the commission and other closing costs – let's say it's $15,000 – and turn the remaining $260,000 over to the bank. If the bank then forgives the $40,000 gap between this $260,000 payment and the $300,000 mortgage balance, the forgiven $40,000 would show up as cancelled debt on a special form sent by the lender called Form 1099-C. This $40,000 is usually considered taxable income.  
But, thanks to those tax law changes, when a short sale through 2013 involves a principal residence, the cancelled debt is not considered taxable income.

Back to Work Program

We got some great news a few months ago when the Federal Housing Administration decided to reduce the waiting period for a homeowner to qualify for a new FHA loan after a short sale, bankruptcy or foreclosure. Now Riverside homeowners could buy again in as little as 1 year as long as the guidelines are met. 


This information is brought to you by your Riverside CA Realtor: Catalina Castaneda. Specializing in homes and real estate in Riverside CA and the entire Inland Empire.

You Could Be Saving Up to $300 on Your Mortgage Payment Right Now - Riverside, CA Real Estate

 New Home Values Help Homeowners Shed the Extra PMI Payment

 

 Homeowners who bought when the economy began to sink may now have enough equity to cancel private mortgage insurance thanks to home values increasing in 2013.   Home price gains of 20 to 30 percent in Riverside and San Bernardino areas has helped lift housing prices in some places to the 78 percent loan-to-value threshold to cancel PMI or refinance. 

Home prices increased so rapidly across Riverside County and the Inland Empire in Southern California in 2013 that consumers who are currently paying private mortgage insurance on their home loans may have enough equity to shed the extra PMI payment.

The fee is included onto the monthly mortgage payment for those who bought their homes with less than 20% down payment.  This is a great opportunity to get rid of that fee and pad the pockets of Riverside and California homeowners who may have been hassling to stay afloat in an underwater economy.  The private mortgage insurance savings can add up to hundreds, and possibly thousands, of dollars a year.  It can represent between $100-$300 a month which can be used towards a new car, make home improvements, save money for the kids college or simply put aside towards retirement. 

As an example, if you bought your home in Riverside or the Inland Empire in January 2009 for $242,000 with less than 20 percent down, your current loan balance would be around $219,000 and could have appreciated to $282,76, which means a Loan-to-Value below 77.4 percent.

If you want to know if your Loan-to-Value is nearing 78 percent, you can get a free home valuation of your home by going to www.ValueMyHome4Free.com. 

Be PROACTIVE, you could be saving hundreds of money starting now!

This information is brought to you by your Riverside CA Realtor: Catalina Castaneda. Specializing in homes and real estate in Riverside CA and the entire Inland Empire.