What is a HELOC. It is a Home Equity Line of Credit loan and we often find that they don’t get discharged when they are paid off. The reason for this is that this type of loan is similar to a credit card. The loan can be drawn on and paid back during the period of the loan which may range for as long as 30 years.
Many homeowners do not even realize that this type of loan is still secured by a mortgage on their home. When they go to sell the property they discover that the lien has not been discharged. It is important to remember that when you pay off a HELOC you must specifically request in writing that the loan be closed and discharged unless you plan to draw on it at a later time.
Sometimes an owner of property may think they will save some money by preparing their own deed to transfer their ownership interest. Perhaps they just want to add their spouse to the deed, which sounds pretty easy to them. They should not do this unless they have legal knowledge and fully understand what they are doing. Here are some examples of problems that can be created:
You decide to add your minor child to the deed and then decide to sell the property. The minor child does not have the legal capacity to convey an interest in property. You find out that you will need to go to court and have a legal guardian appointed for the child.
You add your spouse to the deed without stating the tenancy. One of the parties dies and the other decides to sell the property. The surviving spouse assumes they automatically inherited the property at the death of their spouse and only finds out they did not a week before the closing was to take place. You will need to file probate which will take months and perhaps cost you your sale.
You prepare your own deed and fail to have owners release rights of homestead.
You prepare your own deed and leave out some of the names, use the wrong names, fail to include a trustee certificate, fail to get park owner consent, the deed is not properly acknowledged or executed.
There are many ways to create title issues when you don’t fully understand the process. Contact us and we can see that your deed is prepared properly.
In an update year, assessments as of April 1st should be fairly representative of market value. Because sales are based on emotional likes and dislikes of buyers, there is no one right number, but rather a range of numbers depending on the negations and motivations of the buyers and seller involved in a transaction. The industry standard indicates that plus or minus 10% is reasonable because an opinion of value is subjective and will vary by this amount.
When there is a decline in the real estate market, taxpayers may see that their assessment is higher than what they could expect to sell their property for (market value). That does not invalidate the towns assessment of your property when they account for the local assessment to sales ratio because every year the New Hampshire Department of Revenue Administration (DRA) calculates an equalization ratio. This ratio represents the difference between the assessment and the market transactions (sales). Here is an example:
In the town where you live in New Hampshire, the DRA published the an equalization ratio of 1.15% as of 4/1/2017. The assessment on your home is currently $300,000. Homes similar to yours are currently selling for $250,000. You may think that you are being over assessed, but this is where the equalization ratio comes into play.
To determine the market value of your home you would take the assessment of $300,000 and divide it by the ratio of 1.15% which gives you an indicated market value of $260,870. Although this number may be higher than the $250,000 sale price, it is considered fair and equitable so long as it falls within the 10% allowance.
So long as all properties are being assesses similarly, the assessments, even if they are higher than current market value are fair and equitable because everyone is being treated the same. The real estate market is constantly fluctuating which makes comparisons of assessment and sales very difficult. The Form PA-34 that you complete at closing is one of the tools that the DRA uses in determining the equalization ratio.