What is a Supplemental tax bill?

What is a Supplemental tax bill?



In Los Angeles county taxes are paid on a fiscal year starting from July to June of the following  year.

Taxes are assessed on the values as of January 1st of every year.

So when you purchase a home, although your taxes will be calculated based on a certain percentage of the sale price (currently 1.25%) the new bills won’t be adjusted until your property is reassessed.  Reassessments are only done when the tax office receives the transfer information  after closing.  It could take several months for this to take place.

If your seller was paying taxes on a lower assessed amount, you will be getting a separate supplemental bill for the difference between what you owe for the higher amount from the day you closed until the date the new tax bill is generated with the new assessed amount.

You may get two supplemental tax bills depending on when you purchased your home.  For example, If you close on your home in March and the fiscal year is from July to June, you will owe taxes for the bill from March to June of the year you closed and then possibly from July to June of the following year if the reassessment wasn’t done until after the second bill was generated.

What if your taxes are included in your mortgage payment through an impound account?

This is where things get a little tricky.  If your mortgage company has an impound account calculated on the higher amount (which they should), then yes, they should have extra in the account.   However, Supplemental tax bills do not go to the mortgage companies, only to the owners.  Mortgage companies are only allowed to keep a certain amount in excess in the impound account for a certain period of time.  So you may get a refund for the extra amount before you even get the supplemental tax bill and not know what it is for.  Sometimes the mortgage company will adjust your payment DOWN when they get the tax bill before it’s assessed and then there wouldn’t be any extra in the account.  Then when they reanalyze your account on the yearly anniversary, they would have to adjust your payment back up to meet the correct amount to cover the taxes and insurance.

So if you get a notice from your mortgage company that your payment is lower than what your lender estimated, don’t get too excited!  And if you get a refund check, don’t run out shopping!  You will have to pay the bill when it comes in.  But the good news is, it’s only the first year when you purchase a home that you will get the supplemental tax bill.

Now if you purchased a home for LESS than what the house was assessed for which would make the tax amount the seller was paying higher than what you will owe, the opposite would be true, and you would get a refund! Now you can resume shopping.

What if your value decreased after you purchased your home?  You may qualify for an automatic reassessment, or you can request a Decline-in-Value review.  Claim forms are available online and can be filed between June 1 and November 30.   You can find out how to go about the process at http://lacountypropertytax.com or www.assessor.lacounty.gov

By Colleen Craig, SocalMtgPro, The Mortgage Ninja

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What is a 1031 exchange?

What is a 1031 exchange?

Section 1031 of the Internal Revenue Code allows a taxpayer who owns a property held for investment or used in a business to exchange a relinquished property and defer paying federal, state capital gain taxes and depreciation recapture taxes if the taxpayer acquires a “like-kind” replacement property to be held for investment.  This allows taxpayers to potentially use all of the proceeds from the sale of the relinquishes property to leverage into more valuable property, increase cash flow, diversity into other properties, expand business operations, reduce management or consolidate into one large replacement property.

How long do I have for a 1031 exchange between sales?

You have 180 days between the sale of the relinquished property and the closing of the replacement property.  You must identify the replacement property within 45 days from closing on the sale of the relinquished property.

This is for informational purposes only and not legal advice.  To find a 1031 exchange expert in your are click here.

Click here to apply

By Colleen Craig, SocalMtgPro, TheMortgageNinja

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Solar panels and refinancing

Solar panels and refinancing.

It is a problem if you have solar panels if you want to refinance or sell your house?

The answer is that it depends on which type of program you participated in and if you financed them.  When you finance them, there is a lien put on the property.  It can be subordinated to the new first mortgage and most of the solar companies have no problem subordinating.

If you participated in one of the HERO or PACE programs, which means that you are paying it back through the property taxes, you will not be eligible for a conventional loan unless it is paid off through the refinance.  The reason being, that property taxes take precedence over a first mortgage and Fannie Mae and Freddie Mac won’t take second lien position, in the case of a a default.  Currently as of the writing of this, FHA and VA is the only options.

Contact me today if you have any questions about refinancing!


By Colleen Craig, Socalmtgpro, The Mortgage Ninja






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Halloween Trivia – Why do we do what we do?

Halloween Trivia – Why do we do what we do?

The word Halloween comes from ALL Hallows’ Eve, a Christian celebration that takes place the night before All Saints’ Day.  The holiday has ancient pagan roots, and today it’s also a high holy day for Wicca, the nature-oriented and ancient religion dominated by white witches.


The ancient Celtic end of summer harvest festival called Samhain took place on November 1st.  It was believed that on this day, the world of the gods would be visible to humans.  Since this was a time when the souls of the dead were believed to visit homes and leave messages in dreams, many fortune tellers felt that it was the best time to predict future events.


Leaving food out for the dead came about because ancient people felt that ghosts might be hungry after a year of being deprived, but if they were given food, the spirits would leave everyone alone… and TRICK or TREAT was born.

Dunking for apples wasn’t just a game.  It was a ritual of good fortune.  The more apples you could get, the better your luck would be during the following year.  If a maiden was able to snag an apple, she was sure to be married within a year.

Bonfires were set in the hopes that the sun would come out and stay for longer periods of time so that the harvest would yield more crops.  The bonfires also attracted mosquitos, which in turn attracted owls and bats – who were therefore incorporated in the whole of All Hallow’s Eve mythology.  And the lighting of bonfires was also a way to ward off evil spirits.  They were also supposed to encourage fairies to come out of the mounds and walk among us and some people believe that’s why we dress up to become something we’re not.  Costumes and masks were believed to confuse or frighten away evil spirits.

The Irish and Scottish are responsible for the tradition of carving Jack-o-lanterns, which was part of their harvest celebration.  Originally they carved faces in turnips and potatoes, but when they emigrated to America, they began carving pumpkins as well.  The lighting of a candle in the jack-o-lantern is the same as the Druids lighting fires, it also showed the souls of the departed where to go, and was a protection against evil spirits.

Halloween was believed to be the easiest time to contact the dead because the veil was supposedly at its thinnest.   BOO!  Happy Halloween!

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Mortgage Loan Application checklist

Mortgage Loan Application checklist



When applying for a home loan, you will need to supply your lender with…


•·  If you rent: Name, address and phone # of your current landlord.

  • If you own your home and if your mortgage is not reported to the credit bureau: 12 months canceled checks will be needed (i.e private loans)


•·         Name and addresses of your employers for the last two years.

•·         Copies of your last two years W-2’s and federal tax returns

•·         A copy of your last 2 paystubs.


•·         Complete copies of the last two years business and personal tax returns.


If you receive child support or alimony and are relying on this income to support your request for credit:

  • Evidence of income receipt (ie canceled checks or a payment history from probation for the last 12 months)

If you receive social security or pension Income:

•·         Copy of the award letter

•·         Copy of the most recent checks received or bank statements showing automatic deposit.



(Including checking accounts, savings accounts, money market fund accounts, stocks, bonds and investments)

•·         Copies of all pages of the last two monthly statements or the last quarterly statements for 401k or IRA


•·  A detailed credit explanation letter for any derogatory credit on your credit report may be required.

  • Proof that any collection accounts, charge offs, judgments and tax liens have been satisfied may be required.
  • Copy of all bankruptcy papers including the discharge of debtor and list of creditors.



A copy of the executed sales contract or lease contract.


•·         Copy of your discharge papers showing an honorable discharge (DD214)

•·         Original Certificate of Eligibility


•·         A Copy of your divorce decree and/or property settlement agreement documenting any financial obligation to your previous marriage.


Copy of your most recent mortgage statements

Copy of your homeowners insurance policy

Copy of your property tax bill


If you are properly prepared with your documentation as early in the process as possible,  You will have a much smoother transaction therefore alleviating any stress that comes with the process.

By Colleen Craig, SocalMtgPro, The Mortgage Ninja

For a downloadable checklist click here


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What is a 203k Loan

What is a 203k Loan



In Southern California, FHA loans were just not utilized over the past 10 or so years because of the FHA Maximum Mortgage limits But now that the limits have been increased and the prices have decreased, FHA loans have become the most utilized loans especially for first time buyers.  HOWEVER, because it was not a popluar loan, you would be amazed at how many lenders/brokers and realtors do not know much about them.

So what is a 203k loan and why use one?


When a buyer wants to buy a home that needs repairs utilizing FHA financing, normally the repairs would have to be completed prior to the close of escrow.   The repairs would normally fall on the responsibility of the seller.  With so many foreclosures in today’s market, the bank is the seller.  And many times the home in need of repair is listed “as is”.  Which in the past would require a cash buyer or conventional financing.  This is another reason that people in the business decided to shy away from FHA loans.  I believe it was pure ignorance of the programs that were available by the brokers and the realtors couldn’t properly prepare their seller for what to expect that gave FHA loans a bitter taste.



Here we go….203k loans for dummies


*  203k loans allow you to FINANCE the cost of the repairs in the new loan amount. (Not to exceed 110% of the after improved value determined by the appraiser and 203k consultant) What does this mean?  I buy a house for 200,000 that needs 50,000 in repairs and I can borrow the extra 50,000?  Too good to be true?  NOPE.  That’s it in a nutshell….

ok details please………


*  Down payment is based on the sale price PLUS the final cost of the repairs x 3.5% so for example:


Sale price is 200,000 (DO not calculate 3.5% on this)  PLUS 50,000 in repairs/costs (which includes certain costs and reserves the lender will require) 250,000 x 3.5%.  Down payment is $8750.00 (closing costs are separate as usual)


* Buyer will hire (lender can recommend) a HUD approved FHA 203k Consultant to go to the property with the buyer to determine the required repairs and wish list repairs.


The fee charged by the consultant can be included in the mortgage.  The fee can range anywhere between $ 400 to $1200 depending on the repairs required.  Please check with the consultant prior to scheduling your appointment.


*Buyer will obtain estimates from several licensed contractors for the work to be completed depending on how extensive the repairs.

Three estimates are recommended for each contractor but not necessary.  FHA says that buyer can act as their own general contractor only if experienced and licensed. However most investors do not allow this anymore.


The consultant will determine the “required” repairs versus the “wish list repairs”. You must start with the required repairs and then move on from there for you wish list. This is an important step for the consultant and appraiser so that you don’t over improve the home and exceed the comparable properties in the area.


Eligible Repairs


  1. Structural alterations and additions
  2. Garage (attached /detached/new)
  3. Remodel kitchen or bathroom
  4. Install appliances
  5. Changes to eliminate deterioration and reduce maintenance
  6. Repair swimming pool (up to $1500)
  7. Modernize plumbing/heating/air conditioning/electrical systems
  8. Install or repair roofing /gutters/downspout
  9. Install flooring /title /carpet
  10. Energy conversation improvements
  11. Major landscaping /decks/fencing
  12. Improvements for accessibility ( e.g. handicapped ramp)
  13. Interior and exterior painting
  14. Improvements that are a permanent part of the real estate


Ineligible Repairs


  1. New Tennis court
  2. Gazebo or bathhouse
  3. Additions or alterations to provide for commercial use
  4. Photo mural
  5. Television antenna or satellite dish
  6. New Swimming pool
  7. Outdoor fireplace/hearth/barbecue pit  (Sorry to those of you in California! Sob)


* Once the consultant completes his report of required and wish list repairs, the lender will forward it to the appraiser for an “After Improved Value”.  This is where you may run into problems with OVER improving the property based on current values.  Between the consultant, appraiser and buyer – the FINAL FINAL report will be tweaked to come up with a final report that the contractors will be hired to do.


* So now the file is submitted to underwriting and approved ( you need to qualify at the full amount you are borrowing of course, which may include your current mortgage payment for the home you will live in during the rehab period) and the normal steps for closing will occur.

(BIG PLUS – you can include 6 months of mortgage payments in the new loan amount since it’s assumed that you will have TWO housing payments duringthe rehabilitation of the new home.  This money will be deducted each month during the rehab process) This is optional.

* Closing occurs, and the work begins within 30 days of closing/funding. (This is when your mortgage payments start since this is when you started borrowing the money – however, if you included the 6 mths mtg payments, they will be deducted from escrow starting when your first payment is due)

* Disbursements are made throughout the following 6 months from the escrow account (normally 4 draws with one final inspection, but  this can be increased for higher repair amounts) as the work is completed.

Remember you paid the seller for the price of the home, and then you borrowed an additional amount of X which is sitting in an escrow account to pay the contractors (your total loan is the total amount you borrowed)

Once the last disbursement is made and the final inspection showing COMPLETED AS PER THE CONTRACT……..you are done! Simple As 1 2 3  – okay maybe not, but that’s why having an experienced lender on your side is crucial!

There are specific properties and repair requirements for this type of loan, so please contact Colleen Craig FHA 203k Specialist for more details if this program sounds like it might be a fit for your new home

See full size image

Happy Rehabbing

By Colleen Craig, SocalMtgPro, The Mortgage Ninja




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First Time Homebuyer Grants for Police Officers, Veterans and Military in SCV and SFV

First Time home buyer Grants for Police Officers, Veterans and Military in Santa Clarita and San Fernando Valley are now available as of May, 2013!

Are you a police officer, Sheriff, CHP, active military or Veteran looking to buy a home in Santa Clarita or San Fernando Valley?

The Housing Affordability fund is currently offering $2,000 grants to qualified first-time home buyers.  (First time home buyer is defined anyone who has not owned a home in the past 3 years) who are actively employed as Police officers, Sheriff or CHP officers, and any active member or Veteran of the U.S. Military.

The grant does not need to be re-payed and if approved for the grant, you will receive the funds after closing.

This grant is for any closed escrow after may 6, 2013 and certain restrictions apply,  and funds are limited so please contact me for more details.

By Colleen Craig, Socalmtgpro, The Mortgage Ninja





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I can pick my own interest rate?

I can pick my own interest rate?

How come other lenders haven’t told me that I can pick my own rate?

Before I get into the rates and fees, make sure you check to see that the loan professional you are working with is actually LICENSED with the NMLS which I explain why here and you can check by clicking here

Ok here’s the skinny on how interest rates work:

Interest rates can change daily and even hourly and are priced based on several things called RISK factors.  Remember, the bank/ investor makes their decisions and pricing based on the likeliness of getting paid back.

  1. Loan Amount
  2. Loan to value (sale price divided by Loan Amount)
  3. Credit Score (middle of all three)
  4. Purchase or Refinance (cash out or not for refinance)
  5. State and County of home (collateral)
  6. Qualifying Ratios (Debt to income ratios)
  7. Condo,Single Family, Duplex or Multi Family
  8. Length of time for lock period (25, 30, 45 days – longer time needed, the higher the price)
  9. Owner Occupied or Investment property

Now, once all this information is provided, we PRICE IT OUT and get our quotes.  (Banks only have ONE option, while mortgage Bankers have Many banks and investors to pull quotes from – therefore getting you the best possible rate at that time)

This is where it gets tricky.  We get a spread of rates to choose from.  I call this above, at or below the line.

Each rate offered either pays back money (points) above the line, or costs money to get – below the line

(Rates below are just an example to make it easy to understand and is not a current rate quote)

If the rate is PAR, this means the company must charge you the company minimum (otherwise they would be doing the loan for free, which wouldn’t be worth your business) Most likely, no less than 1 point.  (Average could be about 1.5%)

If the rate you choose is giving Back money, then you must use it towards  your closing costs.  If the bank/seller is paying your closing costs, then  you would need to choose one of the other rate options.  Some loan officers won’t even give you an option only because they know how the loan should be structured the best for you but won’t take the time to explain it to you.

The other thing to look at when comparing rates, are the FEES. There are NORMAL operating fees and what some people call JUNK fees.  I honestly haven’t seen many junk fees lately due to regulations, but these are the most common operating fees:

  1. Processing Fee
  2. Underwriting Fee
  3. Document prep Fee
  4. Application Fees
  5. Credit Report Fee
  6. Tax Service Fee

Be sure to see what the Mortgage company fees are and break them out of the ENTIRE list of fees.  We are required to estimate all third party fees when doing our estimate, so it can get a little confusing as to which fees belong to which party.

Be sure to compare rates on the same day and preferably at the same time if the market is moving quickly in either direction.

Some banks or credit unions will only change their rates once a week which might not give you the best rate if the market has since moved in a favorable direction.

So to recap, the questions you should be asking when comparing company’s once they have your details.

  1. Is the loan officer personally Licensed with the NMLS
  2. What are the rate options with and without points
  3. What are the mortgage company specific fees
  4. How long is the rate good for (if the rate expires before you close, you may incur an extension fee)

So don’t always ASSUME that the rate on your approval letter is the rate you are getting.  I personally qualify my clients at the Highest rate with the highest fees to leave room for the market to move, so that you don’t find a home and not qualify because the rates have moved during your search.

As always, make sure you are working with a professional that you can TRUST to be there with you throughout the entire process.

Happy  Hunting!

Serving all of Sunny California!

By Colleen Craig Socalmtgpro, The Mortgage Ninja

(661) 310-8536








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$4,000 Grant for First- Time Homebuyers who buy within the San Fernando and Santa Clarita Valleys!

$4,000 Grant for First- Time Homebuyers who buy within the San Fernando and Santa Clarita Valleys!  

The Southland Regional Association of Realtors is currently offering grants to qualified first-time home buyers who purchase an REO/foreclosure or short-sale property, or an approved NSP2 rehabbed home from the Los Angeles Neighborhood Housing Services (LANHS) and have low to moderate income-level.

The grant will be $4,000 and paid to applicants after the close of escrow.  Repayment is not required.

VIP! There are a limited number of grants, and they will be awarded to qualified applicants based on availability of funds and according to individual applicant need, as determined by the reviewing committee.  No one is guaranteed the grant just by submitting an application.


  • Applicant must be a first-time homebuyer, as defined by the State of California
  • Applicant must use a REALTOR member of the SRAR in the purchase of their home through the close of escrow.
  • Applicant must purchase an REO/Foreclosure or Short-sale property, or an approved NSP2 rehabbed home from the Los Angeles Neighborhood Housing Services.
  • The home to be purchased must be within the jurisdiction of SRAR
  • The applicant must not exceed the following income limitations:
  • 1-2 Household members = $95,1603
  • 3 or more household members = $111,000
  • Applicant must attend the Los Angeles Neighborhood Housing Services First-Time Homebuyer seminar and must prove the successful completion of the seminar with the certificate provided by LANHS


It may take 30 days or longer to receive the funds.

Call Colleen with any questions

The Socal Mtg Pro!  (661) 310-8536









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There is a fire sale on real estate!

There is a fire sale on real estate!

Bloomingdales is having a sale!  90% off everything in the store!  But I think I’m going to wait?

Wait….for what?

I think they might have a 95% off sale……okay…you wait for that, I’ll be back!


Now if that were true of Bloomingdales or ANY store, would you wait?

I just had this conversation with my client that I’ve been working with for over a year.  They were in escrow but canceled the escrow because of termite repairs.  I followed up with them a little while after they canceled the escrow and this is what they told me.  We think we are going to wait because we think things will go lower.

Alrighty then.

Now my next call was from a client who is a real estate investor that lives in Beverly Hills.  We were working out how he could finance the 9th property he was about to buy this year.   He was like a kid in a candy store.


real estate investors

I wished I could have let the first client listen to the conversation with the second client.

So how do we educate people without sounding like we are just self serving sales people trying to make a buck?

The FACTS ….the facts……and nothing but the facts……

real estate facts1.      My burberry rain boots were normally 226.00 and now they are 22.50! (not true But if it were,) Good deal? DUH!

2.       Rates haven’t been this low for anyone in this lifetime.  Good deal?  DUH     (This is FACT!)

There is a FIRE SALE on real estate……….DUH!  (THIS IS FACT)

Santa Clarita Real Estate FIRE sales……

Now I ask again……there is a fire sale on real estate….interest rates are at their lowest……..are you still going to wait?

If so…..good luck and I’m sorry you couldn’t make it to the party!

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Is your Loan officer a Big talker but couldn’t pass the mortgage exams?

Is your  loan officer a big talker but couldn’t pass the mortgage exams!

Lawyers pass the BAR exams in order to practice law.   

CPA’s, Accountants and tax attorney’s all pass different tests in order to obtain their designations.

Doctors , Surgeons and dentists pass a multitude of exams in order to practice medicine.

And NOW loan officers must pass extensive exams in order to originate loans!


What is the Difference?

There’s a lot of alphabet soup out there when it comes to registration and licensing.  DRE, DOC, NMLS etc.  What does it all mean? If a loan officer has their real estate license, does that mean they are LICENSED?  Nope! Not under the NMLS !

Effective July 1, 2010 all Mortgage Bankers and Mortgage Brokers Across the country will require their loan originators to be licensed through the NMLS (Nationwide Mortgage Licensing System)

However! Based on an exemption in the laws, the big Interstate Chartered Banks do not require their loan originator working for a big bank such as Chase, Wells Fargo and Bank of America to be licensed. Currently they only require them to be REGISTERED with the registry.

The S.A.F.E. Act states:  The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (the S.A.F.E. Act) requires the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the National Credit Union Administration, and the Farm Credit Administration (collectively, the Agencies) to jointly develop and maintain a Federal registration system for individual employees of Agency-regulated institutions who engage in the business of residential mortgage loan origination. The statute requires these individual mortgage loan originators to be registered with the Nationwide Mortgage Licensing System and Registry (Registry), a database established previously by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators to support the licensing of mortgage loan originators by the States.

Is your loan officer licensed?  You can find out here:


In order to get LICENSED, loan officers (not working for a Chartered Bank)  must go through extensive testing, background and credit report checks etc.

Here is a chart to show the differences between what is involved in getting licensed. Please note, that some Chartered banks require internal background or credit checks as they would ALL employees.  This only applies to the NMLS requirements for loan officers.

SAFE ACT CA LO’s Chartered Bank LO’s
Licensed Yes No
FBI Background Yes No
Fingerprinted Yes No
Assurity Bonded Yes No
20 hours upfront education Yes No
8 hours continuing education Yes No
Credit checked Yes No
Fed and state testing Yes No
Complaint mechanism Yes No
Licensing  fees and renewals Yes No

.I’ve come across many loan officers that talk a big game.  They bad mouth other loan officers, they rip their articles apart, they make it sound as though they are the only game in town.  Yet, I’ve recently looked up these bully’s only to find that they were unlicensed and unable to pass the National and state exams.

If you fail, you must wait 30 days to test again, if you fail a second time, you must wait another 30 days, and a third time?  You guessed it, you must wait another 30 days.  If you fail the 4th time, you must wait to retest and  are unable to originate loans for 6 months!

I’ve heard of loan officers that have failed and are somehow still originating loans!  How Is this possible?  Well it all comes down to enforcement.  These loan officers are most likely putting the loan applications in another loan officers name (someone who is licensed) and they are probably working out a commission deal illegally under the table.

So if you have applied for a loan, and the last page of the application is not signed, or is signed by a name you have never heard of?   Most likely that loan officer you applied with is not licenced and was unable to pass the tests or background checks.

DO you want to know of your loan officer is licensed?


So, the next time you speak with a loan officer that is talking a big game.

Check to see if they have their NMLS license and make your own decision!

NMLS# 254430

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