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What Is Mello-Roos and How Can It Impact California Home Buyers?

Depending on where your home search takes you within San Diego County and the state of California, Mello-Roos may or may not be a consideration.  So, what is it and why should you care?  The short answer is that it is a special tax on homeowners who live in a community that used bonds to pay for the infrastructure within that community.  The Mello-Roos is basically the repayment for those bonds.  When we take our clients around to view homes, Mello-Roos is often viewed as a four-letter word.  Are there advantages to living in a community with this tax?  This post will discuss both sides.

Mello-Roos, also known as the Community Facilities District Act (CFD), comes from the names of its co-authors.  Senator Henry Mello and Assemblyman Mike Roos were instrumental in getting this act passed through the California State Legislature in 1982.  It was developed in response to the passing of Proposition 13 in 1978 which made it more difficult for local governments to use property tax revenue for public facilities and services.  In searching for other options to pay for these services, Mello-Roos was created.  Who decides whether a community will have Mello-Roos?

The community in which this tax is considered decides.  The vote must pass in favor of becoming a Mello-Roos community.  Once the vote passes, bonds are issued to support services such as schools, roads, parks, utility connections, sewer, police, fire and life safety.  Mello-Roos is typically paid annually or semi-annually.  The amount and term length of this tax varies from community to community.  When you break it down on a monthly basis, we’ve seen it as low as $80 per month and in upwards of $400 per month.  The term length of Mello-Roos is, on average, between fifteen to twenty years from the year the community was built. Read the rest of this entry »

Tags: california, faq, home buyer, kaplan, mello-roos, nobullagent, prudential california realty, san diego

Home Buyer FAQ’s: Should I Rent or Buy?

People all around San Diego County and, frankly, the United States are looking at their respective markets and trying to decide whether they should buy or rent.  It can be a difficult decision and one that can alter the way you and your family live day-to-day for years to come.  Interest rates are historically low and home prices have dropped (search current San Diego County home prices), but is it the right time for you?  As the summer moving season approaches, let’s discuss the positives and negatives to the question, “Should I Rent or Buy?”

Positives to Owning a Home, Negatives to Renting…

In a “typical” market, home ownership allows you to gain equity over time as you pay down your mortgage and your home value increases.  We cannot ignore that for the last few years the  real estate market in San Diego and most of the country has been far from “typical.”  Depending on who you talk to and where in San Diego County…the market is nearing the bottom, at the bottom or rising from the bottom.  Frankly, there are arguments for and against each.  The point is, I believe San Diego County is entering into a phase where the market will begin on a more “typical” path.  You will not see the equity increases of four or five years ago, but instead a more sustained increase over time.  We counsel all potential and current clients that they should be willing to hold on to their home for at least five years.  If not, now is probably not the best time to buy.  The bottom line is that the opportunity for equity, over the long term, is once again a reality. Read the rest of this entry »

Tags: home buyer, own, question, rent, san diego

Part Four: 10 “Must Ask” Questions Before Buying a Home

(Part 4 of 4, Questions 8-10 Below)

8. What is title insurance?

A title insurance policy protects a buyer of real estate against any loss or damages they might experience because of liens, encumbrances or defects in the title to said property, or the incorrectness of the related search.  In plain English, this policy states that no person can come to you after you have successfully purchased a property, also known as the close of escrow, and say “The previous owner owed me money so I’m going to attach a lien (debt) on the property.”  You have a policy that says when the home becomes yours, no one other than your bank has any rights to your property.  No debt will be conveyed

9. Should I have my future home inspected?

We recommend that all buyers purchasing a home, whether new homes, re-sale homes or for sale by owners, have a home inspection.  Purchasing a home could be the largest and is the most important investment decision you and your family could make.  If you were purchasing a used car you would most likely have a mechanic check it out thoroughly prior to completing the transaction. Why wouldn’t you do the same for a home where you could spend the rest of your life?

10. How much money in total will I need to purchase a home?

Each buyer’s circumstances are different.  Some buyers have a substantial deposit while others may not have the capacity to put anything down as a deposit, but can afford the monthly payment. Read the rest of this entry »

Tags: first-time buyers, Home Buyers