If I Pay Off The Back Taxes On A Home, Will I Own It?

I’m Ilyce Glink and here’s today’s real estate question: If I pay off the back taxes on a home, will I actually own it? Okay here’s your answer: not quite. Let me explain. If a property owner doesn’t pay the tax bill for a piece of real estate, the county assessor can actually sell the property to someone willing to pay the taxes. But in most cases, the investor who pays the tax bill doesn’t immediately get ownership of the property. Instead, the original owner has time to repay the investor the amount of the tax bill plus some interest rate, which is called redeeming the taxes. In many counties the owner has up to two years to bring the tax bill current and the investor might receive as much as 18 percent interest over that time. Now in an era where interest rates are at historic lows, 18 percent is a pretty awesome rate of return. And many people go into buying up properties at tax sales but aren’t really looking to take possession of the property. They’d rather have the homeowner redeem the taxes and earn a good return on their initial investment. Occasionally, there are situations where a tax sale may have been in error and the person that put up the money to buy the unpaid taxes at the auction may end up getting his or her money back, but they won’t get any interest on the cash. That’s not so good. If the taxes are redeemed, then the owner actually keeps the property. But if the two-year period elapses and the owner fails to repay the amount that’s owed plus interest, the title in the property would transfer to the ivnestor. And trust me, many investors wind up with title to the property. I have a friend whose brother lost several properties he owned because he failed to pay the back taxes. This is incredible to her. The properties were worth several hundred thousand dollars apiece and the investor picked them up for less than $10,000 per property. Wow. Now, that is an amazing rate of return, right? Even if the propeties needed a tremendous amount of repair. To find out more, contact the assessor’s office in your area. Thanks for your question. Don’t forget to share this video and follow me on Twitter and Facebook. Until next time. I’m Ilyce Glink.

Self-Employed? 3 Tips to Get A Mortgage

If you’re self-employed, getting a mortgage can be a lot harder than it is for someone who has a full-time job working for somebody else. So what can you do if you want to buy a house but don’t have a full-time job? I’m Ilyce Glink with today’s Real Estate Minute The good news is most lenders are willing to work with self-employed borrowers once they’ve taken a few extra steps. So I want you to follow these tips to smooth out your mortgage application process. First, you’ll need access to at least the last two years of your personal tax returns that show enough income to qualify you for the mortgage you want. And, depending on the type of business you own, you might have to provide a corporate tax document. Be sure to let your accountant know about your plan to get a mortgage well ahead of time so that you can decide how your tax return will show enough income to qualify for a mortgage down the line. In addition, you’ll need all sorts of other documents, including personal and business account statements, a profit and loss (also known as a P&L) statement for the business, and even a business tax return, if applicable. You can expect to see lenders take a deep dive into your business docs, especially if you’re not wildly profitable. And, if you have a small ownership interest in other companies, you can expect them to ask for documentation pertaining to that business as well. Anything special or different about your financials means lenders are going to do an extra-deep dive, they’re going to be extra-interested, and they’re going to require all kinds of more detail. Next, lenders like to see that you have some extra cash in a savings account. It’s called “reserves” and when you’re self-emplpoyed, having even more cash on hand, such as 6 months’ worth of mortgage payments, may actually improve your odds of getting a mortgage. Keep your documents as organized as possible. A lender will want to see where certain deposits – like a cash gift may have to be documented with a letter stating no repayment is needed – where those came from and how you paid for major expenses. All of that is going to be top of mind for lenders. Now, if your credit isn’t perfect, you should think about offering the lender a higher down payment in order to offset a lower credit score. Or, consider an FHA loan, which allows lower credit scores and a higher debt-to-income ratio. Or, if a business partner or relative is willing to help ask if they’d be willing to co-sign your mortgage. Talk to a mortgage broker who deals with different sorts of lenders, different sorts of borrowers, some of whom may be better suited for self-employed individuals. I’m Ilyce Glink. For more details and links, visit my website thinkglink.com, where we’re rebuilding America one house at a time.