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Archive for March, 2010

Qualifying for your First Mortgage

March 31st, 2010

Before you go looking for that American dream and scouring the newspapers and open houses for that perfect home you should first find out how much home you can afford.

Lenders use a certain formula to determine how much they’re willing to lend you, but you can roughly count on three times your total annual income, before taxes. Of course this is just a rough estimate and a lot of other considerations will be evaluated first. And you don’t have to buy a home that falls in that price range, it’s not only allowed but in most cases you’re better off if you purchase a home that is less than the amount the mortgage lender approves you for.

Before you meet with a mortgage lender it is a good idea to get your credit rating in order, pay down your bills, and set aside a down payment.

The first step is checking your credit reports for any errors and cleaning up any black marks on your rating. The higher your credit rating the better.

Your next step is to pay down or off your debt. Mortgage lenders will look at your budget and your debt and use this to determine how much they’ll lend you so it really is a benefit to have as much debt paid off as possible.

And finally, having a down payment used to be optional or very minimal for home buyers but after the housing crisis that has changed and having a down payment can affect the interest rate you’ll be asked to pay.

Getting approved for a mortgage shouldn’t be an impulse decision, you need to prepare for your mortgage meeting so you can get the best deal possible on this huge investment.

photo credit:?tomeppy

What’s Needed on an Application Form for Tenants?

March 30th, 2010

If you are responsible for choosing tenants for a rental property either as part of your work or for your own investment property, it’s a good idea to have an application form ready for potential tenants to fill in. One or two pages is usually enough, but there are several pieces of information which are particularly important to include. Try to ask for all or most of the following on your tenant application form:

All the basic details – name, date of birth, current address and telephone number.
Current workplace and how long they have worked there, plus the name and contact details for a workplace referee.
Salary details and, if applicable, information on other income that the tenant receives.
How long they have lived at their current address, and the contact details for their current landlord if applicable; if not, details of a previous landlord are also useful to have.
Information about whether the potential tenants have children or pets.

It is important to conduct the tenancy application procedure fairly, and by giving each potential tenant the same application form to fill in, you can easily show that you are asking everybody for the same information – that’s much easier to do in a tenancy application form than by interviewing them or just having a chat.

Tips to Finding a Deal When Buying a New Home

March 29th, 2010

There are a lot of home deals on the market now, the problem is real estate is still not a sure bet and if you already own you will probably be stuck trying to sell your current home. But if you’re still ready to buy here are some tips that can help you find the best deals.

Patience

In the past real estate was about acting quickly and getting the deal before anyone else now its about waiting to get the right price and the right property. If you do your research and are willing to wait you can probably find your dream home at a reduced price.

Old Listings

Look for listings that have been on the market for 90 days or more. The rule of thumb is that listings more than 90 days old are stale and you can usually get a better deal. There doesn’t seem to be a correlation between houses on the market longer than 90 days and deeper discounts but the more owners pay that double mortgage the more likely they are to take a discount.

Look for Fixer Uppers

Many people give up on their little DIY projects when they realize their home is losing value, others just don’t care after a while. These homes can typically be bought for deep discounts and the reap the bigger rewards by doing the work yourself.

photo credit:?quimpg

Investing in Vacant Land Instead of Homes

March 26th, 2010

There are lots of choices when you are considering making a real estate investment – will you buy a family home, a condominium, a vacation rental property – or even a vacant block of land. Buying land is probably the least common alternative so it’s good to consider the pros and cons of this kind of real estate investment.

Some advantages of buying vacant blocks include:

If you don’t have a lot of money to make an investment with, vacant land may be one of the cheapest ways of getting into the market.
You might be able to decide later whether or not you want to build a home there – or just sell it off at a profit – but if you decide to build, then you’ve already paid of part of the block value.
Paying less for your investment than you would for another kind of property means you are at a lower risk from falling prices, and at a lower risk of foreclosure or a forced sale.

On the other hand, disadvantages of buying vacant land might be:

There is no income on your vacant land – nobody will pay rent to use an empty block.
Some land releases will have particular rules about keeping the block tidy, leading to maintenance costs for you, or there may be rules about a time frame within which something must be built on the block, which may not fit your schedule.

Keeping Good Records For Your Rental Property

March 25th, 2010

There are all kinds of bits of paperwork that your property manager is taking care of if they are looking after your rental property investment. Before you decide whether you would like to take on the management yourself, consider if you’ll have the time and energy to be responsible for maintaining all of these kinds of records:

Record of rent paid by the tenant, including the dates and the amounts; if the tenant falls behind in the rent, you will need to write letters or send breach notices to them and keep doing so until they pay.
Lease agreements and inventory reports for the start and end of each lease.
Records needs for tax purposes: for example, detailed listing of any repairs or maintenance carried out on the property, and a full list of all other expenses occurred, such as taxes or utility charges not paid by the tenants; you need to file all the relevant receipts for these items in some organized way in case they are needed later.
Depreciation records of the value of the property and sometimes of the value of particular items inside the property, depending on state laws and depending on whether your property is leased in furnished or unfurnished condition.
Government or legal documents – for example if electrical safety inspections are required at particular intervals, you need to make sure you have the up-to-date inspection reports organized.

photo credit:?sflovestory

Tips For Getting a Mortgage With a Low Interest Rate

March 24th, 2010

Everybody wants to pay the lowest interest rate possible on their mortgage, right? A lot of the time we spend worrying about whether or not our credit will be good enough to even get a mortgage, but we should also keep in mind that finding the mortgage with the lowest interest rate should also be a priority. Some of the key ways to ensure your home loan interest rate is as low as you can get include:

Try to keep your employment record as stable as possible. If you are the kind who regularly changes jobs – even if you are continuously employed for many years – then you are less likely to get an interest rate as low as somebody who has a solid history with only one or two employers.
Save up as large a deposit as possible before you start looking for your mortgage. If you can bring a deposit of something like 20 or 25 per cent to a lender, they will look a lot more favourably on you than someone who only has a five per cent deposit. In some cases, it really might pay to wait a little longer and save a little more to then be blessed with a considerably lower interest rate which will save you a lot of money over the years of your loan.
Do as much as you can to ensure your credit history is the best it can be. Obviously, this is a long term deal but do make sure you check into all the small things you can do to improve your credit rating.
Don’t try to borrow beyond your means. If your “income to debt” ratio is low – that is, you can easily make your repayments out of your current income – then the lender will be more likely to give you a lower interest rate, trusting that you will be able to pay off the mortgage in full over time.

Will A Mortgage Broker Really Help Me?

March 23rd, 2010

When you are considering buying a property and getting a mortgage, you might wonder whether it’s worth hiring a mortgage broker to help you out. Some people will tell you a mortgage broker might cost you money and give you biased advice and others will say that mortgage broker can save you thousands of dollars.

On the down side, not all mortgage brokers are actually going to help you out as much as you’d hope. They are not always as well-trained as you’d hope, may give you bad advice and may be inclined to direct you to particular lenders because they get some perk out of the deal. Additionally, you will often have to pay a percentage fee to your mortgage broker, so if they’re not getting you a better deal to compensate for this fee, you’re losing out.

However, on the plus side, if you find a good mortgage broker who gives you advice that really suits your situation, and has access to a wide range of lenders and loans, and can find a way to save you money on your repayments or loan fees, then you really can end up a lot better off. Particularly if your financial circumstances are a little complicated, they may be able to help you out to get a much better deal. They also handle the frustrating paperwork and communications with the bank or lender, which can take a lot of the hassles out of buying property.

In the end, you have to go with some instincts, and don’t be afraid to shop around to find a mortgage broker you feel comfortable with, or decide not to use one at all. After all, you are making one of the biggest investments of your life, and making a bad choice can have a big impact on your future.

photo credit:?woodleywonderworks

Beyond the Mortgage: Other Decision Factors for Buying a House

March 22nd, 2010

When you buy a house, there are two main things you tend to think about: do you like the house itself – are there enough rooms, do you like the layout, is the garden the right size – and can you afford the mortgage that comes with it. However, there are a bunch of other factors that need to be taken into consideration before you sign a contract and land yourselves with a mortgage for a house you love, but that might have some other issues. Before you sign on the dotted line, don’t forget to factor these considerations into your decision:

Check out the neighbors as much as is possible. If you feel comfortable going to introduce yourself, do so, and ask what they like about living in the neighborhood (and at the same time, check out whether you think they might cause you any problems). If you don’t want to speak directly too them, come by the property at a couple of different times of day and see what they’re up to.
Drive around to check for particularly bad noise pollution. People often visit a home open or inspection on a weekend, but it’s important to go back during the week – perhaps during working time or at peak traffic hour – and check for noise problems like heavy traffic on a nearby highway.
If you have children, you’ll need to look into the school situation – for example, try to find out if the local school has a good repuation or not. Some people end up moving house again so that their children can access a more suitable school.
One thing people rarely check for, but often regret, is for unusual odors or smells. These tend to come at particular times of day, for example if a breeze blows the smoke from a nearby factory over your house. The best way to find out about this is to ask the neighbors, or try to come back to visit the house at several different times before making a decision.

Keeping Your First Home As a Rental Property

March 19th, 2010

When you are ready to trade up to your second home, it is worth considering the idea of keeping your first home as an investment property which you can rent out. Of course, this is not always financially possible, depending on how much equity you have in the house and how much you are going to spend for your next home, but it is definitely worth sitting down and doing the figures before you dismiss the idea.

There are several factors to consider when you are deciding if keeping your first home as an investment rental property is a good idea. First up, you should check whether it is the kind of property that will rent easily and to good tenants. If not, then you may as well use your equity to invest in a more suitable property, but remember that buying and selling all costs money, so you may not necessarily end up better off.

You should also consider whether there are renovations or improvements needed before the property can be rented out, and how much these will cost. However, if you plan to sell the home instead, it is often advisable to make minor improvements anyway, so you may end up doing them anyway.

Finally, make an estimate of the incomings and outgoings for the home if you turn it into a rental property. Get an up-to-date estimate of the amount of rent you should be able to charge, and check your own records to see additional costs such as annual rates and maintenance costs. If the figures add up, then go for it.

Tax Tips for Landlords

March 18th, 2010

As tax season approaches there are a number of items a landlord must keep track of for tax time. Keeping meticulous records of everything will make your job easier and will help with taxes. Make sure to pay particular attention of the following items and you’ll find your taxes are easier to manage.

Purchase price. It should go without saying but sometimes the obvious needs to be stated, keep track of the actual purchase price of your property including all the additional fees that come along with a purchase.

Depreciation. This is a less concrete figure to keep track of but it’s important to keep track of your depreciation throughout the year so you get the most benefit out of your taxes.

Expenses. Every expense you have associated to your buildings needs to be itemized and documented as these are key deductions come tax time. Don’t forget to include your advertising, cleaning costs, maintenance and repairs.

Rent and other fees. Rent is something most landlords know to keep track of and all the good ones keep accurate records but it’s not just the rent that needs to be taken into consideration. All fees coming in to the landlord or your property management company need to be recorded for tax season.

photo credit:?Josh Thompson