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Archive for November, 2009

Willing to work on a Foreclosure?

November 30th, 2009

Buying a foreclosure can be a good idea. But remember one thing before you make this move: you may need to put in some work. Most foreclosures are beat up ? some worse than others. Once an owner knows that their home is entering foreclosure they give up on it. In turn, by the time a buyer comes around it has often times been damaged and is in need of some major upgrades.

So, are you willing to put in the time, money, and hard work? Since you can buy a foreclosure well below market value you may be open to all the work that needs completed. Before you decide, make sure you know who will be doing the work. Will it be you? Or will you hire professional help? This is important from a budgeting perspective.

For some investors a foreclosure is a dream come true. For others, this is not what they are looking for. No matter what, make sure you know the pros and cons of buying a foreclosure. Also, take note of how much as well as the type of work that needs to be completed. This way you will know for sure what you are getting yourself into. Investing in a foreclosure can be a great move as long as you know that you will probably have to make some repairs.

Preapproval Letter for Home Buyers

November 27th, 2009

If you?re thinking about investing in a new home you may find that having a preapproval letter from a mortgage lender is a great way to start. The preapproval letter isn?t necessary but it can help you seal the deal and speed up the process once you find the home you want.

Preapproval letters hold more clout than prequalification letters and the extra paperwork will let you know exactly how much the lender is willing to give you. Sellers tend to prefer working with a buyer that is preapproved because the there is no question about whether they will qualify for a loan and how much they can get. If there is a bidding war the preapproval letter can be key in swinging things your way.

You may also find that realtors are a bit more zealous when you have a preapproval letter as it signals to them that you?re serious about making a purchase.

While a preapproval letter may help you throughout the home buying process it doesn?t necessarily guarantee you?ll get the amount you?re preapproved for. The bank does reserve the right to learn about the property to make sure it?s worth the investment. Preapproval letters are also limited to a certain amount of time so if your preapproval letter expires you?ll have to get a new one and complete all the paperwork again.

Mortgage 101

November 26th, 2009

Buying a home is a complicated process with a lot of terms you don?t normally deal with being thrown at you all at once. Learning the basics of a mortgage can help you navigate the experience with greater ease.

Principal ? The principal is the amount of money you are borrowing from your mortgage lender.

Interest ? Typically a percentage of the principal is calculated as the interest you will be charged for taking out the loan. This amount is spread out across the life of the loan.

Taxes ? Your property taxes are based on a percentage of the value of your property. Typically this is part of your monthly payment and at the end of the year your mortgage broker will either send you a check for this amount so you can pay the taxes or they?ll pay them for you.

PMI ? PMI stands for Private Mortgage Insurance. If your down payment on the home is less than 20% of the home?s total value then you will have to pay a PMI fee monthly in your mortgage.

Foreclosure ? If you cannot or do not make your mortgage payments the mortgage lender can repossess your home and sell it to help defray their costs and recoup what they can on the loan.

photo credit:?woodleywonderworks

Short Selling for the Home Seller

November 25th, 2009

With the housing market down as drastically as it is and with prices as sky high as they were in the recent past, in addition to the less-than-scrupulous mortgages that were becoming the norm a lot of people are finding themselves in a situation where they owe more on their mortgage than the home is currently worth. This is called being upside down on your mortgage or your property.

The best thing for an upside down property seller to do is to hold onto their home if they can until the prices turn around, but if this isn?t possible there are a couple options. The dreaded foreclosure or a short sell. A short sell is a way to avoid a foreclosure and it can save the bank some money, in fact the bank won?t approve a short sell unless it is a financially good deal for them.

So a short sell may be a good way for a seller to go, they can get out from under their home and sell the property at a price that is reasonable for the current market. But you don?t get to walk away unscathed. A short sell will affect your credit rating, it won?t be as bad as a foreclosure would be but it?s still going to be a negative notation. A short sell is considered a settlement and will remain on your credit report for seven years. This can affect your ability to get another mortgage for a few years, depending upon the rest of the credit report.

Benefits of Vacation Property Foreclosures

November 24th, 2009

Buying a vacation property foreclosure can be beneficial in many ways. Even if you do not end up moving in this direction, you should definitely consider this option. Here are three benefits to keep in mind:

1. A lower price. When buying a vacation home you are probably concerned with price. Fortunately, most foreclosures are sold below market value. For some, the lower price is reason enough to move forward as soon as possible.

2. The property will probably need some work. How is this a benefit, you may ask? Some people don?t mind doing a little bit of work because it gives them a chance to put their own special touch on the home. With foreclosures, there is usually something that you can do.

3. You will be open to buying more properties. Due to a lower price you will probably be able to consider a wider variety of properties ranging from condos to single family dwellings. It is nice to have a large selection laid out in front of you. This way you can see what you like, what you don?t like, etc.

These three benefits of buying a vacation property in foreclosure have been enough to push many buyers in this direction. Are you going to be next?

photo credit:?Toprural

Buying a Short Sell Home

November 23rd, 2009

Buying a home that is being sold on a short sell situation can be a good deal. In these situations the owner owes more on the mortgage than they?re willing to accept as the purchase price. The problem for buyers is that the bank ultimately has discretion on whether they will accept the short sell or not.

This means that you can go through every step in the process from paperwork to an accepted offer, from inspection to down payments and the bank can still refuse the deal. You?ll get your down payment back but not any money you?ve put toward inspections or other services. You?ll also have wasted a significant amount of time which can be crucial for some people. Not to mention the emotional rollercoaster a short sell can be.

The bank basically wants to make as much money as they can, in a short sell situation they?re accepting a loss and their major determination is whether they?ll lose more on the short sell or a foreclosure. As a last ditch, after a potential buyer has done everything from their end the bank will try to work out a deal with the seller to keep them in their home and not write off the short sell amount. This is where the potential buyer can totally lose out so one thing to look for is a short sell where the seller has already moved, they?re less likely to deal with the bank to keep their property.

Historic Buildings in Miami

November 23rd, 2009

Miami, location of the hit TV series “Burn Notice”. And why shouldn’t it be? Since the 1980′s when “Miami Vice” stormed our living rooms, the city has been known for its exciting and exotic jet-setting locales. But beyond the bikinis and fast boats lies a city with a unique history all its own. All one need do is look and they will find a multitude of historic sites and buildings. From race tracks, to mansions worthy of “Scarface”, to even a 900 year old monastery, Miami is a city that has something for everybody. (more…)

Your Position as a Real Estate Buyer

November 20th, 2009

When buying real estate you may feel that the seller has the upper hand. After all, they have what you want and you can only do so much to get it. But remember, as the buyer you are also in good position. This is particularly true in a slow market, such as the one the United States is facing right now.

The main thing to remember is that you are not the one who needs to make a sale. The seller has their property on the market for a reason ? they want to get rid of it. You should use this to your advantage when buying. Do you get the feeling that the seller is desperate? If so, you have even more of an upper hand.

Of course, you need to be honest, respectful, and reasonable. You cannot expect a seller to take whatever offer you make, even if they are in a hurry to close a deal. It is your job to negotiate for the lowest possible price. If you hire a real estate agent you will probably have a better chance of making this happen.

You should never make a deal as a buyer unless you are 100 percent comfortable with the price, as well as the other terms and conditions. It may feel as if the seller is in the driver?s seat, but you have some advantages as well.

What is a Short Sell?

November 19th, 2009

In the real estate world the term short sell is starting to be tossed around a little bit and it has some people confused so let?s examine what a short sell is.

In real estate a short sell is when the proceeds from the sale of a piece of property (whether there is a home on it or not) are less than what the balance of the loan are.

This is happening more and more in this economy because with the housing crisis many people are finding themselves upside down on their home loans, which means they owe more than the home is worth. So in these situations if the homeowner has to sell and is lucky enough to find a buyer the price will probably be lower than the amount owned on the home loan.

In a short sell situation the lender can decide whether to accept or deny the offer. Usually a short sell is a way to prevent a foreclosure, it?s a last ditch effort for many. So this is often what the bank considers when decided to accept the short sell offer or not, will the foreclosure cause them a greater loss than the short sell.

If you?re in the market for a new home both a short sell and a foreclosure may be incredible deals, pricewise, for you.

photo credit:?Johan Larsson

What is an Acceleration Clause

November 18th, 2009

An acceleration clause in a mortgage gives the lender the right to demand payment of the entire loan balance or perhaps require some other form of collateral which would defray any losses they may experience or fear they may experience.

Acceleration clauses are designed to protect lenders from landing in a situation where they lose great sums by supplying someone with a mortgage. It is not a clause designed to screw over the property buyer and the lender will not enforce the acceleration clause unless certain situations arise. Some of those situations include a loan default, the title is transferred to another person, the taxes aren?t paid, or the breaking of loan covenants. Each situation is a little different and the lender has the discretion whether to enforce an acceleration clause or not.

If there is an acceleration clause in your mortgage agreement this isn?t a reason to balk at the agreement. Unless you plan on defaulting or committing some other faux pas against the mortgage covenants then you probably will never run into a situation where the acceleration clause is called into effect. Remember the acceleration clause is a form of insurance for the lender, it is not designed to harm the buyer.