Mission Viejo Home Buyers Beware of Barriers
Buyers looking to take advantage of current low interest rates, looking for an escape from escalating rents, and in search of a personal income tax writer off – beware of the barriers you may face when choosing a Mission Viejo home to purchase. These barriers to buying come in a number of forms and carry a range of monetary consequences. Let’s take a closer look at the most common barriers buyers may encounter when pursuing a home purchase today.
If you are one of the countless number of people attracted to the low down payment (3.5 %) option available to qualified buyers through the Federal Housing Administration (FHA) home loan program, beware of falling in love with a condominium you cannot buy. Yes, using an FHA loan to purchase a condominium requires that the condominium you are buying is in a tract approved by the FHA. The FHA approval status is kept up to date on the U. S. Department of Housing and Urban Development FHA Approved Condominium website: https://entp.hud.gov/idapp/html/condlook.cfm. You need to know the name of the condominium development and the city or zip code to retrieve the status from the web site. This is not always immediately available from the home listing information. Your best bet is to work with your Realtor to figure this out for you. And just a side note, you may run into situations like what’s going on in Ladera Ranch, where none of the condominiums are FHA approved, due to the mandatory Lifestyle Enhancement Fee, required to be paid every time any Ladera Ranch property is sold, does not meet FHA guidelines, and therefore disqualifies every Ladera Ranch condo community. And yes, the Ladera Ranch people know this is a problem. And no, the FHA condo approval web site is not available on weekends.
Life Style Enhancement Fee
What is this Lifestyle Enhancement Fee, you are no doubt wondering. In the case of Ladera Ranch, it amounts to one quarter of one percent of the purchase price of the property paid to the master HOA every time a property is sold. The buyer is usually the one asked to pay this fee, so add on .0025% of the purchase price you’re paying to you closing costs. For a $650,000 home that would cost you $1,625. Is this fee tax deductible? Ask your tax professional.
If you’ve got your sights set on buying a home offered for sale through an auction, read the fine print. You may be asked to make as much as a 3% initial deposit, which on a $650,000 purchase would be $19,500. This, for an FHA buyer, is essentially your entire down payment demanded up front. And, you may be asked to pay 5% Auction Fee for the privilege of participating and purchasing your home through the auction. That would be an additional $32,500 on a $650,000 purchase. How does that make you feel? Buyers beware.
I’m Leslie Eskildsen, Realtor.
Call me. Text me. 949-678-3373
Email me. Leslie@LeslieEskildsen.com
Helping you make the right move in Mission Viejo, Coto de Caza, Rancho Santa Margarita, Irvine, Laguna Niguel, Laguna Hills, San Juan Capistrano, San Clemente, Laguna Beach, Newport Beach, Dana Point, Corona Del Mar, and other Orange County communities.