Can I use my bank to finance my home purchase?

Palm Springs is a second home market with unique micro neighborhoods of homes where the competitive pricing can vary significantly. The pricing can affect the appraised value of the home. Whether fee land or lease land, its is recommended that you use a local lender. You want a lender who knows the local market and works with local appraisers to ensure the success of underwriting your home loan. Also, most national banks and lenders will not finance the purchase of a home on lease land.

Do I need to provide proof of funds or be pre-approved when making an offer?

A seller will want to know that you have the sufficient assets or are pre-approved for loan when reviewing your offer. If paying cash, you should have a letter from your bank or investment advisor that says you are qualified to purchase a home for cash in the price range you are looking at before you start looking at homes. If you are planning to finance a home purchase, a pre-approval letter is very important to have before you start looking at homes so you won’t lose out on submitting an offer if you have to wait for a pre-approval letter.

How long will it take to buy and close on the home?

If you are paying cash and the home is on fee land, you can easily close in less than 30 days if the seller agrees and there are no other issues. You should plan on 45-60 days to close on lease land. You can close earlier on lease land but there is an additional charge to facilitate the process.

What happens on closing day and when do I get the keys?

The escrow company will handle the closing and the title company will file the sale with the county. This process can take the entire day and you may not be notified until late afternoon or early evening. Also the seller can stay in the house until 6 PM on closing day. Your agent will give you the keys when notified by the escrow company that the sale has closed.

What is a home warranty?

The standard home warranty is a one-year service contract that protects a buyer against the cost of unexpected repairs or replacement of major systems and appliances that break down due to normal usage. The home warranty is typically paid as a closing cost by the seller. Click here for additional information on home warranties.

How much are real estate taxes?

You can estimate your annual real taxes to be 1.23% to 1.25% of the purchase price i.e. 1.25% X $500,000 home purchase equals $6,250 for annual real estate taxes. You pay real estate taxes on both fee land and lease land. More information on real estate taxes can be found at Assessor-County of Clerk-Recorder, Riverside California and the Office of The Treasurer-Tax Collector, Riverside California

What is The Mills Act?

The Mills Act is an incentive program in California for the restoration and preservation of historic buildings by property owners. Owners of these buildings may qualify for property tax savings of between 40%-60% for each year. The program is administered by the city where the building is located. Read more at the California State Parks Office of Historic Preservation.

What is Fee Land and Lease Land?

Some homes and condominiums in Palm Springs and in other cities of the Coachella Valley are on lease land. The leases are either Indian leases or private developer leases.

Typically homes on lease land cost less. The cost savings of home ownership maybe reduced by up to 30%

If purchasing on lease land, it is important to consider the term of the lease if you are financing and resale in the future. A 15-year mortgage needs a minimum lease term of 20 years. A 30-year mortgage needs a minimum lease term of 35-years.

Once a structure is built, the land beneath it can be of no other use to the landowner (as well as the homeowner). Therefore, by owning a structure on leased land, the homeowner enjoys the use of the land without the capital outlay associated with the land. The result can often be that the prospective homeowner can afford “more home” for less money.