Mello Roos 101: Community Facility Districts and the Bank Owned Home
Category: Real Estate Trends
Published: Wednesday, February 04, 2009
One of the things to consider when shopping for a Murrieta bank home or Temecula foreclosure is whether or not the REO property is located in a Mello-Roos Community Facility District, commonly referred to simply as a Mello-Roos or CFD. Used by developers of master planned communities to fund the construction of public improvements such as schools, roads, sewer and water infrastructure and park facilities, CFDs create a special tax item for the property that is in addition to the standard property tax. Contrary to the ad valorem tax based on the value of the land, CFDs are usually fixed rate charges established for a period of time and spread across the number of homes in the subdivision.
For example, if the construction of the public improvements for the new development cost $500,000 and there are 500 homes in the neighborhood, each home would be assessed $1,000 to cover the cost of building the improvements. This fee could be applied to the original purchase price of the home, or added as a line item on the property tax for a fixed number of years. In either instance the Mello-Roos tax is collected and paid to the city to fund the cost of the public improvements.
How CFDs Affect Murrieta and Temecula Bank Home Pricing
Many of the neighborhoods constructed during the last few years in Murrieta, Temecula, Menifee and Winchester utilized Mello-Roos districts to fund large scale public improvements. In most instances these fees appear as a separate line item on the property tax bill. Unlike the ad valorem tax, the CFD does not fluctuate with the price of the home, therefore the original amount of the CFD will remain in place, regardless of any other decline in home value.
Investors hoping to cash in on the current over stock of Temecula and Murrieta foreclosures should not worry about finding a CFD on the property of their dreams. With the current low pricing fueled by record numbers of Riverside County foreclosures, the ad valorem portions of area property tax bills are the lowest homeowners have seen in years. The CFD portion may calculate to a few hundred dollars per month, yet the standard portion can easily fall in this foreclosure market to around $100. Coupled with the bigger houses, larger yards and interior amenities such as granite countertops and ceramic tile floors found in most Murrieta and Menifee foreclosures, buyers are still coming out ahead in the bank owned home market.
Another plus for buyers of Temecula area foreclosures that have CFDs is that the neighborhoods are usually better developed than their older, non Mello-Roos counterparts, with important infrastructure and quality roads. The schools are newer and the parks a bit nicer. CFDs fund vital and necessary public services and do so at low rates usually amortized over 30 years or more. Don't let the cost of a CFD deter you from purchasing a bank owned beauty today. Get the facts by calling Oak Tree Realty Group Murrieta today at 1-951-973-7177 for a customized showing.
The $8,000 first time homebuyer’s credit is set to expire in November and buyers are busy finding the best deals on Murrieta foreclosures and Temecula bank homes. The team at Oak Tree Realty Group Murrieta points to possible neighborhoods for great deals on affordable Murrieta bank homes.
Murrieta foreclosures led Southwest Riverside County home sales during the month of July according to market analyst MDA DataQuick. Nearly 1,000 homes changed hands last month and the experts at Oak Tree Realty Group Murrieta put the numbers in perspective.
Buyers of Temecula foreclosures may have less competition from first time homebuyers in the coming months, thanks to a plan by the City of Temecula to complete 110 half-finished condominiums and turn them into affordable housing apartments for rent. The team at Oak Tree Realty Group Murrieta offers insight into the plan.
Categories
RSS Feed |
Agent Roster |
Join the Team |
REO Director |
Sitemap