Damian Forrester
Displaying blog entries 61-70 of 102
I would like to welcome Bill Erickson to the Forrester Group at Century 21 Hometown Brokers, Billings MT. Bill specializes in residential real estate and can be reached at 406-860-6411. Call him today for all your Real Estate needs.
Thank you Yvonne Kelly, of Stockman Bank for providing this great information on what to expect as a Seller when a Buyer is requesting any type of financial contribution from them, based on the type of loan they are receiving.
SELLER CONCESSIONS
CONVENTIONAL
Occupancy Type LTV/CLTV Ratio Maximum IPC
Principal residence or Greater than 90% 3%
Second Home 75.01-90% 6%
75% or less 9%
Investment Property All CLTV ratios 2%
FHA
Currently max is 6% however a change to 3% is possible coming up this summer.
The seller and/or third party may contribute up to 6% of the property’s sales price toward the buyer’s closing costs, prepaid expenses, discount points and other financing concessions.
Inducements to purchase
Certain expenses, paid by the seller and/or an interested third party, on behalf of the borrower, are considered “inducements to purchase” and result in a dollar-for-dollar reduction to the sales price of the property before applying the appropriate LTV factor. These expenses include property before applying the appropriate LTV factor.
VA
Maximum seller contribution is 4%.
Any seller concession or combination of concessions which exceeds 4 percent of the established reasonable value of the property is considered excessive, and unacceptable for VA-guaranteed loans.
Do not include normal discount points and payment of the buyer’s closing costs in total concessions for determining whether concessions exceed the 4 percent limit.
RD
No limit
Real Estate Loan Officer
Stockman Bank - Heights
(406) 896-4839
fax (406) 896-4847
Billings.org has all of your Open Houses on one site from all the Billings Brokerages. Call me today for your own personal tour on all Homes in the Billings and surrounding areas.
Emily is also at...
1119 12th Ave in Laurel from 12-2 and
5441 Golden Hollow from 2:30-4
Have a great weekend!!!
Much thanks to Kelly Duray of Western Security Bank for supplying this information. Kelly can be reached at the information below for more information. Thanks Kelly!
Reminder: Members of the military and certain federal employees serving outside the US have an extra year to qualify for the first time homebuyer credit.
http://www.irs.gov/newsroom/article/0,,id=215594,00.html
Additionally, there are new benefits for members of the military and certain other federal employees:
Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual's spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.
|
Kelly Duray |
Visit this site to see more information on the 2010 Billings Spring Parade of Homes.
Also on April 24, 2010 you can visit me at 306 Stonegate starting at 10am until 5pm. This home was built by Classic Design Homes for more information please contact me today.
Visit with me today to make an appointment with the Builder to discuss, Plans, Lots, Additional options for your new home.
Three other homes are available TODAY for you to review the designs and individual styles. Ask to day or call me to set an appointment.
Damian Forrester 406-697-3282
Damian Forrester 406-697-3282
Open Houses For APRIL 18, 2010
We will be at the following open houses listed below. We look forward to meeting you!
Open Houses:
5441 GOLDEN HOLLOW BILLINGS, $319,000 VIRTUAL TOUR
3126 CABIN CREEK BILLINGS, $359,900 VIRTUAL TOUR
Subdivision Lots Available:
High Sierra Subdivision in the Heights has open up lots for sale. Two Lots are listed now, but more to come. Priced from $42,500 - $52,900, Minimum sqft 9,600 sqft., BRING YOUR OWN BUILDERS. Plat Map (Updated plat map will be available soon)
DRIVE BYS:
1212 Clark, Townhouse, $154,900
1060 Sierra Granda, $280,000
8445 Sailfish, $290,900
81 Jack Rabbit, Columbus, $689,00
2604 Keel Dr., New Construction, $237,000
122 South 29th, $158,900
807 3rd Avenue, Laurel, $174,900
708 Fir, Mobile on rented lot, Laurel, $20,000
1119 12th Avenue, Laurel, $211,900
Call today for more information 406-697-3282!
Many investors are generally familiar with the concepts lease option and contract for deed (aka "installment land contract"). Many investors confuse the two, and this article will help you understand the tax, legal, and practical issues between them.
Lease options
First, let's start with the lease option, which is really two things, a lease and a purchase option. A lease is a contract for the use and possession of land, creating a landlord/tenant (or "lessor/lessee") relationship.
A purchase option is a unilateral agreement wherein the optionor ("seller") agrees to give the optionee ("buyer") the exclusive right to the purchase the leased premises. The option price is generally set at a fixed price at the inception of the lease, although it does not have to be. At any time during the option period (which generally corresponds to the lease period), the tenant can exercise his option to purchase.
An option is not the same as a regular purchase contract, which is a bilateral agreement. A bilateral contract legally binds both parties to the agreement, whereas an option only binds the seller. An optionee is not bound to buy; it is his option do so (or not to do so).
A lease with option arrangement is not a sale, but rather a landlord-tenant relationship. In rare cases, a court may re-characterize the transaction as a sale if it looks like a sale. Furthermore, the IRS does not classify a lease option as a sale until the option is exercised (see, Tax Court Memorandum 1999-11).
Contracts for deed
A contract for deed (aka "installment land contract") is an agreement wherein the buyer makes installment payments on an arrangement similar to an automobile financing. The seller holds legal title to the property as security for payment, while the buyer has "equitable" title. When the buyer pays the full amount due under the contract, the seller delivers legal title to the buyer.
Equitable title gives the buyer the right to live in the property, improve it, rent it and otherwise enjoy all of the benefits of ownership. However, since the buyer does not have legal title, he cannot use it as collateral for a home equity loan (although in some states, banks will lend against an equitable interest in a contract for deed).
The IRS generally treats a contract for deed as a sale, which means the buyer has the tax benefits of ownership. Thus, the payments of interest that are made by the buyer in possession are deductible as "mortgage interest," even though the buyer does not have legal title to the property.
A contract for deed seller must report the transaction as an installment sale on form IRS Form 6252. Once sold, the seller cannot claim depreciation or any other tax benefits of the property. If the buyer defaults on the contract and the seller exercises his legal option to reclaim the property, the tax code treats the transaction as a foreclosure.
The legal process for repossession of the property is not entirely clear in every state. Some state statutes (e.g., IL & PA) clearly spell out the process, which is somewhat more involved than an eviction, but clearly less burdensome than a full-blown foreclosure. In most states, the process is not clearly defined, so courts deal with a buyer's default on a case-by-case basis.
Which is better?
In summary, the lease option is a landlord-tenant relationship until the purchase is complete; the contract for deed is a sale at the inception of the agreement. In rare cases a court may re-characterize lease option transaction as a contract for deed, but this is limited to situations where the transaction looks like sale (as in the case of a long-term lease option with a declining balance purchase price).
Which formula is better? It depends on the situation and your goals. A lease option transaction is not a sale, so you will benefit from market appreciation if the tenant declines to exercise his option to purchase.
A contract for deed sale will allow you to get more a down payment from the buyer, since it "feels" more like a sale. In higher-priced neighborhoods the rents may not command enough rent to cover your underlying mortgage payments.
A contract for deed sale will allow you to collect interest payments, which are generally more than you could collect in rent. On the other hand, a property sold is already sold for tax purposes; thus, you cannot use a 1031 tax-deferred exchange on a property sold by contract for deed when the buyer pays off the debt balance.
The entire balance paid on the contract will be due as a capital gain, which can be a huge tax liability if you have a low basis in the property. Furthermore, a defaulting buyer on a contract for deed is generally harder to get out of the property, particularly in a court proceeding.
The pros and cons
In summary, the benefits of lease options are . . .
• Legal control of the property
• Ability to claim depreciation
• Ability to defer gains by 1031x
The downside of lease options are . . .
• Less money down
• Less of an incoming payment
• Continued landlording responsibility
The upside of the contract for deed is . . .
• More money down
• Higher monthly income
• No landlording headache
The downside of the contract for deed is . . .
• Potential tax hit
• Transfer tax due at sale
You must decide on a deal by deal basis which transaction works best for you in terms of work involved, tax issues and, most importantly, cash flow.
We will be at the following open houses listed below. We look forward to meeting you!
OPEN HOUSES:
1060 Sierra Granda, Billings, $280,000 Billings, 1:00 - 3:00PM
8445 Sailfish, Billings, $290,900, 1:00 - 3:00PM
NEW LISTINGS:
807 3rd Avenue, Laurel, $174,900
DRIVE BY:
1212 Clark, Billings, $154,900
I found this great article from a fellow Realtor, I'll take no credit for it. He explains the facts about the Zillow's home value calculation. For a free estimate on what your home is worth in the Billings, Montana area click here.
The truth about Zillow’s Zestimate
Here's some great exposure for our fine city, great article....
"The Bright Lights of Billings"
There's even a great photo of Shane Colton of The Law Offices of Edmiston and Colton and his trusty sidekick "Libby".
Displaying blog entries 61-70 of 102
