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California 1031 Exchange Audits

If you are attempting a 1031 exchange you need to keep your tax records squeaky clean because one of the top audit issues continues to be like kind exchanges, also known as 1031 exchanges. Under IRC Section 1031 and conforming California laws, if certain conditions are met, taxpayers may defer gain from the sale of property, either in part or full.

There are three general requirements:

  • There must be an exchange, as opposed to a separate sale and reinvestment, by the same taxpayer.
  • The relinquished property and replacement property must be “like kind.”  
  • Both the property given up and the replacement property must be held for investment or for productive use in a trade or business. Property held for personal use or primarily for sale is generally not eligible for nonrecognition treatment.

If at any time during the exchange, the taxpayer or his agent has receipt or control of any portion of the sales proceeds, this will generally result in gain recognition. Along similar lines, if the taxpayer does not reinvest the full amount of proceeds into eligible replacement property, or obtains other property in the exchange (referred to as “boot”), this may also result in gain recognition. If the transaction is done in accordance with IRC Section 1031 regulations, a qualified intermediary will not be considered the taxpayer’s agent.

The source of the original deferred gain on California property will remain with California, regardless of the location of the replacement property. When the replacement property is ultimately sold in a taxable transaction, the gain originally deferred on the California property will have its source in and be taxable by California.

Common Audit Issues

  • Sourcing of gains to California upon disposition of replacement property received in a California deferred exchange.
  • Taxpayer receives other property (boot) in the exchange but does not report the boot on their return.
  • Taxpayers do not meet identification or other technical requirements of IRC Section 1031.
  • Relinquished and/or replacement property are not held for investment or for productive use in a trade or business (i.e. property is used for personal purposes or is held primarily for sale).
  • The taxpayer who transfers relinquished property is a different taxpayer than the party who acquires replacement property.

We also continue to review certain “drop and swap” or “swap and drop” transactions. Not all of these transactions are ineligible due to varying facts and circumstances; however, where the form does not support the economic realities or substance of the transaction, we will recharacterize the taxpayer’s transaction as appropriate.

Recent Developments

Recently, the Board of Equalization decided several notable, although noncitable, like kind exchange cases. The three cases are:

  • Appeal of Frank and Mary Lou Aries, Appeal No. 464475 (swap and drop).
  • Appeal of Gerald J. and Carol L. Marcil, Appeal No. 458832 (different taxpayer acquired replacement property, rehearing granted).
  • Appeal of Howard Brief, Appeal No. 530872 (deemed contribution to a partnership).

The significance of these cases is that we are sustaining a taxable position where we have recharacterized the taxpayer’s transaction to reflect the realities of the transaction.

Determine How Much Mortgage You Can Afford

By: G. M. Filisko

By knowing how much mortgage you can handle, you can ensure that home ownership will fit in your budget.

Homeownership should make you feel safe and secure, and that includes financially. Be sure you can afford your home by calculating how much of a mortgage you can safely fit into your budget.

Instead of just taking out the biggest mortgage a lender qualifies you to borrow, consider how much you want to pay each month for housing based on your financial and personal goals.

Think ahead to major life events and consider how those might influence your budget. Do you want to return to school for an advanced degree Will a new child add day care to your monthly expenses Does a relative plan to eventually live with you and contribute to the mortgage

Still not sure how much you can afford You can use the same formulas that most lenders use, or try another of these traditional methods for estimating the amount of mortgage you can afford.

1. The general rule of mortgage affordability
As a rule of thumb, you can typically afford a home priced two to three times your gross income. If you earn $100,000, you can typically afford a home between $200,000 and $300,000.

To understand how that rule applies to your particular financial situation, prepare a family budget and list all the costs of homeownership, like property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care costs.

2. Factor in your downpayment
How much money do you have for a downpayment The higher your downpayment, the lower your monthly payments will be. If you put down at least 20% of the home’s cost, you may not have to get private mortgage insurance, which costs hundreds each month. That leaves more money for your mortgage payment.
The lower your downpayment, the higher the loan amount you’ll need to qualify for and the higher your monthly mortgage payment.

3. Consider your overall debt
Lenders generally follow the 28/41 rule. Your monthly mortgage payments covering your home loan principal, interest, taxes, and insurance shouldn’t total more than 28% of your gross annual income. Your overall monthly payments for your mortgage plus all your other bills, like car loans, utilities, and credit cards, shouldn’t exceed 41% of your gross annual income.

Here’s how that works. If your gross annual income is $100,000, multiply by 28% and then divide by 12 months to arrive at a monthly mortgage payment of $2,333 or less. Next, check the total of all your monthly bills including your potential mortgage and make sure they don’t top 41%, or $3,416 in our example.

4. Use your rent as a mortgage guide
The tax benefits of homeownership generally allow you to afford a mortgage payment-including taxes and insurance-of about one-third more than your current rent payment without changing your lifestyle. So you can multiply your current rent by 1.33 to arrive at a rough estimate of a mortgage payment.

Here’s an example. If you currently pay $1,500 per month in rent, you should be able to comfortably afford a $2,000 monthly mortgage payment after factoring in the tax benefits of homeownership.

However, if you’re struggling to keep up with your rent, consider what amount would be comfortable and use that for the calcuation instead.

Also consider whether or not you’ll itemize your deductions. If you take the standard deduction, you can’t also deduct mortgage interest payments. Talking to a tax adviser, or using a tax software program to do a “what if” tax return, can help you see your tax situation more clearly.

More from HouseLogic
More on the mortgage interest deduction (http://www.houselogic.com/articles/mortgage-interest-deduction-vital-housing-market/)

More on the tax advantages of homeownership (http://www.houselogic.com/articles/tax-tips-homeowners-preparing-2009-returns/)

Other web resources
A worksheet on home affordability (http://www.ginniemae.gov/2_prequal/intro_questions.asp Section=YPTH)

Freddie Mac information on home affordability (http://www.freddiemac.com/corporate/buyown/english/preparing/right_for_you/afford.html)
G.M. Filisko is an attorney and award-winning writer who’s owned her own home for more than 20 years. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

6 Creative Ways to Afford a Home

1. Investigate local, state, and national down payment assistance programs. These programs give qualified applicants loans or grants to cover all or part of your required down payment. National programs include the Nehemiah program, www.getdownpayment.com, and the American Dream Down Payment Fund from the Department of Housing and Urban Development, www.hud.gov.

2. Explore seller financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you would do with a mortgage.

3. Consider a shared-appreciation or shared-equity arrangement. Under this arrangement, your family, friends, or even a third-party may buy a portion of the home and share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and maintenance costs, but all the investors’ names are usually on the mortgage. Companies are available that can help you find such an investor, if your family can t participate.

4. Ask your family for help. Perhaps a family member will loan you money for the down payment or act as a co-signer for the mortgage. Lenders often like to have a co-signer if you have little credit history.

5. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your down payment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.

6. Consider a short-term second mortgage. If you can qualify for a short-term second mortgage, this would give you money to make a larger down payment. This may be possible if you re in good financial standing, with a strong income and little other debt.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Lender or Broker?

Make an Informed Decision

When it comes time to look for financing for your upcoming purchase, there are a couple of options. You can go directly to a lender or use a mortgage broker. Your real estate agent may have a list of good lenders and mortgage brokers in your area. In addition, most major daily newspapers have home buying sections in their weekend editions. This is another good place to find information about lenders and mortgage brokers in your area. And finally, a simple search on the internet will turn up many suggestions for home loans.

A lender typically is a bank, mortgage company, credit union or savings and loan. A mortgage broker is a middleman who is usually independent of a lender. Mortgage brokers arrange loans from various sources and earn a commission for their services.

Some lenders will charge for the pre-approval process given the extra effort involved. However, do not choose a lender solely because they don’t charge for this process. Look at all of the costs involved!

To choose a good lender, do research on those in your area. Check interest rates, fees and loan terms against other lenders. Just be sure to take the time to research and compare different lenders so you get the best deal. Often, lenders will look for borrowers without any special circumstances. That is, they’ll want a good or better credit score, documented income, and a standard piece of property to lend on.

Comparing mortgage brokers is a good idea too. If one happens to offer rates and terms that are drastically better than anyone else out there, this could be a warning sign! Remember, if it sounds too good to be true, it usually is. A good mortgage broker will be able to do your mortgage shopping for you. They’ll compare rates and fees, while looking for a lender that suits your individual needs. They should also be able to explain the details of the loan to your satisfaction. In addition, if any of the special circumstances discussed above low credit scores, undocumented income or a unique piece of property apply to you, a good mortgage broker can help make a difference.

Common Closing Costs for Buyers

You ll likely be responsible for a variety of fees and expenses that you and the seller will have to pay at the time of closing. Your lender must provide a good-faith estimate of all settlement costs. The title company or other entity conducting the closing will tell you the required amount for:

Down payment
Loan origination
Points, or loan discount fees, which you pay to receive a lower interest rate
Home inspection
Appraisal
Credit report
Private mortgage insurance premium
Insurance escrow for homeowner s insurance, if being paid as part of the mortgage
Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
Deed recording
Title insurance policy premiums
Land survey
Notary fees
Prorations for your share of costs, such as utility bills and property taxes

A Note About Prorations: Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th to the end for the month. The seller would owe for the first five days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Real Estate Syndication – Becoming a Promoter

Question What’s the best kind of partner for me?

Answer The best kind of partner is someone who has opposite or complementary types of skills. For example, if you are an expert in the real estate market and you don’t have great capital-raising skills, then you should absolutely find some one who has strengths where you have weakness es. If you have great skills in real estate, find someone who can raise capital. If you have great skills in capital, find someone who can find the deals in the real estate market; find someone who is in that market, in the trenches every single day. You also might think about taking people as partners who can handle property management and other types of maintenance functions.

Question In an LLC, does the manager have limited liability?

Answer Theoretically, the manager does have limited liability, but the best way to protect yourself is, first of all, to always act in good faith. That means using the operating agreement to specify the duties of the manager and the members. Always use a “hold harmless” clause and indemnification clauses, which are good for all circumstances, except for fraud, crimes and activities that are against public policy. Additionally, it’s not a bad idea to employ some insurance to protect yourself even further.

Question Where do we get joint venture or syndication agreements?

Answer Syndication agreements fall generally into two broad categories. First are the corporate documents that govern the partnership and the partners’ relationships with each other. If the entity chosen is a limited liability corporation or LLC, then an operating agreement would be drawn up that defines the relationships between the parties and describes the relationship the promoter has with the investors and the relationship the investors have with both the promoter and each other. The second category of documents that are required are the securities documents. The LLC documents can be drawn up by any attorney, provided that he or she has experience in this area. However, the documents that are required for the private placement memorandum are much more complicated. The creation of a syndication and accepting investments from passive investors automatically creates a security interest in the property. This means that the Securities and Exchange Commission has the right to put their hands all over your deal and inspect it at any time. So be very careful to have both of these documents drawn up in tandem. They need to be drawn up by the right kind of attorneys who have proper experience in this area, and who have proper training as well. Participants in the successful real estate syndication seminar will receive sample agreements of both types.

Question Have you always made money on your deals?

Answer No one has always made money on all of their deals. If you’re in the marketplace and you’re doing deals, some times things go wrong. Be up front about it; be candid. Everybody respects that things go wrong. As long as things go right more than they go wrong, people will like you and they’ll follow you. Also, and maybe most importantly, be a good communicator about problems – like you are about successes.

Joel began his career as a CPA with the prestigious firm of Price Waterhouse. During his time with the company’s Entrepreneurial Services Group, Joel immersed himself in the real estate syndication business. After reviewing hundreds of partnership agreements and preparing as many tax returns, he left Price Waterhouse in 1986 to start his own syndication firm, raising several million dollars in three short years. By 1990, Joel had built a property management firm of more than 40 employees with a portfolio exceeding $100 million. Joel continues to syndicate real estate and other assets, as well as counseling other promoters on successful syndication strategies. He is also involved in film financing and invests in early stage companies and other deals. For more information about Joel Block and his upcoming seminar, visit his site at http://syndicatefast.com/

Author: Joel G. Block
Article Source: EzineArticles.com
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Find the Home Loan that Fits Your Needs

By: G. M. Filisko

Understand which mortgage loan is best for you so your budget is not stretched too thin.

It’s easier to settle happily into your new home if you’re confident you can afford it. That requires that you understand your mortgage financing options and choose the loan that best suits your income and ability to tolerate risk.

The basics of mortgage financing
The most important features of your mortgage loan are its term and interest rate. Mortgages typically come in 15-, 20-, 30- or 40-year lengths. The longer the term, the lower your monthly payment. However, the tradeoff for a lower payment is that the longer the life of your loan, the more interest you’ll pay.

Mortgage interest rates generally come in two flavors: fixed and adjustable. A fixed rate allows you to lock in your interest rate for the entire mortgage term. That’s attractive if you’re risk-averse, on a fixed income, or when interest rates are low.

The risks and rewards of ARMs
An adjustable-rate mortgage does just what its name implies: Its interest rate adjusts at a future date listed in the loan documents. It moves up and down according to a particular financial market index, such as Treasury bills. A 3/1 ARM will have the same interest rate for three years and then adjust every year after that; likewise a 5/1 ARM remains unchanged until the five-year mark. Typically, ARMs include a cap on how much the interest rate can increase, such as 3% at each adjustment, or 5% over the life of the loan.

Why agree to such uncertainty ARMs can be a good choice if you expect your income to grow significantly in the coming years. The interest rate on some-but not all-ARMs can even drop if the benchmark to which they’re tied also dips. ARMs also often offer a lower interest rate than fixed-rate mortgages during the first few years of the mortgage, which means big savings for you-even if there’s only a half-point difference.

But if rates go up, your ARM payment will jump dramatically, so before you choose an ARM, answer these questions:

  • How much can my monthly payments increase at each adjustment
  • How soon and how often can increases occur
  • Can I afford the maximum increase permitted
  • Do I expect my income to increase or decrease
  • Am I paying down my loan balance each month, or is it staying the same or even increasing
  • Do I plan to own the home for longer than the initial low-interest-rate period, or do I plan to sell before the rate adjusts
  • Will I have to pay a penalty if I refinance into a lower-rate mortgage or sell my house
  • What’s my goal in buying this property Am I considering a riskier mortgage to buy a more expensive house than I can realistically afford

Consider a government-backed mortgage loan
If you’ve saved less than the ideal downpayment of 20%, or your credit score isn’t high enough for you to qualify for a fixed-rate or ARM with a conventional lender, consider a government-backed loan from the Federal Housing Administration (http://www.hud.gov/fha/choosefha.cfm) or Department of Veterans Affairs (http://www.homeloans.va.gov/vap26-91-1.htm/).

FHA offers adjustable and fixed-rate loans at reduced interest rates and with as little as 3.5% down and VA offers no-money-down loans. FHA and VA also let you use cash gifts from family members.

Before you decide on any mortgage, remember that slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment. To determine how much your monthly payment will be with various terms and loan amounts, try REALTOR.com’s online mortgage calculators (http://www.realtor.com/home-finance/financial-calculators/mortgage-payment-calculator.aspx).

More from HouseLogic
Evaluate Your Adjustable Rate Mortgage (http://www.houselogic.com/articles/evaluate-your-adjustable-rate-mortgage/)
Show Your Support for FHA (http://www.houselogic.com/articles/show-your-support-for-FHA/)

Other web resources
How much home can you afford (http://www.ginniemae.gov/2_prequal/intro_questions.asp Section=YPTH)
Why ask for an FHA loan (http://www.hud.gov/fha/choosefha.cfm)

G.M. Filisko is an attorney and award-winning writer who’s opted for both fixed and adjustable-rate mortgages. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

What s the Score

Your credit score or FICO score (for Fair, Isaac and Company, which created the system) is a number that indicates the health of your credit. The higher the score, the healthier your credit and the more likely a lender is to approve a loan with good terms. Scores can range from 300 to over 900, with the typical credit score falling in the 600s to 700s.

Credit scores take five different financial areas into account. The  five C s of credit that lenders will look at include:

Capacity. Are you able to repay the debt The lender verifies your employment information: occupation, length of employment, income.
He or she reviews your expenses: how many dependents you have, if you pay alimony and/or child support, your other obligations.

Credit history. Based upon your past payment habits, how likely is it that you will make your monthly payment The lender looks at how much you owe, how often you borrow, whether you live within your means, and whether you pay your bills on time.
BEWARE! As your credit score goes down, mortgage fees and costs, interest rates and other costs go up, up, up! A typical 7% mortgage with a few thousand dollars in fees can go up to an 18% monster with many thousands in fees if you have a low credit score.

Capital. Do you have enough cash on hand for the down payment and closing costs Are you receiving a gift from a relative Will you have reserve money left over after the purchase

Collateral. Is the value of the property worth the investment Is it in sufficiently good condition and is the price appropriate for the home If you do not repay the debt, will the lender be able to recover his investment

Character. Have you disclosed all your debts If you had previous credit problems, did you disclose them

Specialty Mortgages: Risks and Rewards

In high-priced housing markets, it can be difficult to afford a home. That s why a growing number of home buyers are forgoing traditional fixed-rate mortgages and standard adjustable-rate mortgages and instead opting for a specialty mortgage that lets them  stretch their income so they can qualify for a larger loan.

But before you choose one of these mortgages, make sure you understand the risks and how they work.

Specialty mortgages often begin with a low introductory interest rate or payment plan  a  teaser  but the monthly mortgage payments are likely to increase a lot in the future. Some are  low documentation mortgages that come with easier standards for qualifying, but also higher interest rates or higher fees. Some lenders will loan you 100 percent or more of the home s value, but these mortgages can present a big financial risk if the value of the house drops.

Specialty Mortgages Can:

  • Pose a greater risk that you won t be able to afford the mortgage payment in the future, compared to fixed rate mortgages and traditional adjustable rate mortgages.
  • Have monthly payments that increase by as much as 50 percent or more when the introductory period ends.
  • Cause your loan balance (the amount you still owe) to get larger each month instead of smaller.

Common Types of Specialty Mortgages:
Interest-Only Mortgages: Your monthly mortgage payment only covers the interest you owe on the loan for the first 5 to 10 years of the loan, and you pay nothing to reduce the total amount you borrowed (this is called the  principal ). After the interest-only period, you start paying higher monthly payments that cover both the interest and principal that must be repaid over the remaining term of the loan.
Negative Amortization Mortgages: Your monthly payment is less than the amount of interest you owe on the loan. The unpaid interest gets added to the loan s principal amount, causing the total amount you owe to increase each month instead of getting smaller.
Option Payment ARM Mortgages: You have the option to make different types of monthly payments with this mortgage. For example, you may make a minimum payment that is less than the amount needed to cover the interest and increases the total amount of your loan; an interest-only payment, or payments calculated to pay off the loan over either 30 years or 15 years.
40-Year Mortgages: You pay off your loan over 40 years, instead of the usual 30 years. While this reduces your monthly payment and helps you qualify to buy a home, you pay off the balance of your loan much more slowly and end up paying much more interest.

Questions to Consider Before Choosing a Specialty Mortgage:
How much can my monthly payments increase and how soon can these increases happen
Do I expect my income to increase or do I expect to move before my payments go up
Will I be able to afford the mortgage when the payments increase
Am I paying down my loan balance each month, or is it staying the same or even increasing
Will I have to pay a penalty if I refinance my mortgage or sell my house
What is my goal in buying this property Am I considering a riskier mortgage to buy a more expensive house than I can realistically afford

Be sure you work with a REALTOR and lender who can discuss different options and address your questions and concerns!

Learn about the NATIONAL ASSOCIATION OF REALTORS Housing Opportunity Program at www.REALTOR.org/housingopportunity. For more information on predatory mortgage lending practices, visit the Center for Responsible Lending at www.responsiblelending.org.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Insurance Programs

Private Mortgage Insurance (PMI) enables homebuyers to obtain conventional home loans with relatively small down payments. Prior to the advent of PMI, lenders of conventional mortgages traditionally required a down payment of at least 20 percent of the home’s purchase price.

Saving enough money to make a down payment of ten or twenty percent is one of the greatest barriers to homeownership today, so that requirement shrank the pool of potential homebuyers. Having insurance helps first-time and moderate-income purchasers surmount this obstacle by reducing the down payment required to obtain a mortgage to as little as three percent of the purchase price. Both private and federal programs offer mortgage insurance. Down payment requirements may vary depending on the insurance issuer.

Lenders typically require mortgage insurance on low down payment mortgages because loss experience and studies have shown that a borrower with less than 20 percent invested in a home is more likely to default on a mortgage should problems arise. In other words, there is a good correlation between the size of the down payment made on a mortgage and the eventual likelihood that the mortgage will be paid-off according to its terms.

Although it is the borrower who normally pays for PMI, the insurance coverage protects the lender, not the borrower. The insurance protects lenders against default-related losses on conventional first mortgages made to mortgage borrowers who make down payments of less than 20 percent of the home’s purchase price. PMI typically provides lenders with a default guarantee covering the top 20-to-25 percent of the mortgage balance. The lender assumes the risk for the remaining (uninsured) portion of the loan.

Lenders are required to automatically cancel mortgage insurance on new mortgages once the equity in a home reaches 22 percent. Homeowners may request to cancel at 20 percent equity levels. Lenders are required to provide homeowners with the information needed to cancel their insurance. At this point, the insurer is no longer liable for default of the loan. If the loan was sold to Freddie Mac or Fannie Mae, homeowners should contact their lenders once equity reaches 20 percent because they have more lenient requirements for insurance. Equity levels are determined according to the purchase price of the home. Any increased values do not apply. However, if the homeowner feels that his property has increased significantly in value, dropping the loan to value ratio below 75 percent, than the homeowner may request a new appraisal and cancel the PMI. There are some exceptions to cancellations, such as existing mortgages and high-risk loans.

Fannie Mae and Freddie Mac currently require mortgage insurance on all low down payment programs with a Loan to Value (LTV) ratio of 90-95 percent. A down payment of 3 percent requires coverage of at least 18%. Down payments of 5 percent require coverage between 25 and 18 percent. Loans with 10 percent down require 17 to 12 percent insurance coverage. There are several different options available to borrowers to increase initial buying power and reduce monthly payments while maintaining a security and safety level for lenders. At the inception of the loan, lenders can either add a small percentage rate increase or add additional points at the close of the deal. Information on Freddie Mac Mortgage Insurance and Fannie Mae Mortgage Insurance is available online. Fannie has partnered with PMI Mortgage Insurance Co. in order to create more affordable housing opportunities. This insurance company s website has information about how PMI helps homebuyers, how to calculate PMI premium, products, realtor training and PMI cancellations requirements.

CalHFA is home to four divisions: homeownership programs, multifamily programs, mortgage insurance services and small business development. Its mission is to finance below market-rate loans to create safe, decent, and affordable rental housing and to assist first-time homebuyers in achieving the dream of home ownership. The Mortgage Insurance Services division helps prospective homeowners move past current mortgage insurance challenges and restrictions by utilizing the California Housing Loan Insurance Fund. The insurance fund encourages lenders to make loans to hard-to-serve borrowers and buyers with little or no money for a down payment and closing costs. It also assists lenders by insuring loans for borrowers with past payment problems. Insurance is provided to those homebuyers that meet the income and area requirements. For more information: read CAR s paper CalHFA, and visit CalHFA Mortgage Insurance website.

Mortgage Insurance Services Programs

This list constitutes an inventory of mortgage insurance programs requiring minimal upfront funds with participating lenders.
Cal Rural ACCESS 97/6 (conforming, statewide)
CalHFA Conventional
CalPERS 97 & 97/3 CalPERS members have additional benefits such as reduced Title and Escrow Fees through , Stewart Title and Old Republic Title. Other benefits are 30-day rate lock, 100% financing option, Free 60-day rate protection, two free float downs, controlled closing fees, closing cost assistance and reduced mortgage insurance rates. For more information go to CalPERS Advantage program.
CalSTRS 80/17
CalSTRS 95 Conventional
CalSTRS 95/5
Fannie Mae & Freddie Mac 97/3
Fannie Mae & Freddie Mac Conventional 95 & 97 LTV
Freddie Mac 100 & 100/3
Lease Purchase – ABAG Program
Lease Purchase 97/3
NHF – Access & Gold 97/7 Conventional

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