Thursday, November 30, 2006
Improve Your Credit Score Before Buying a Home
Several months before you begin to look for a home, you should take steps to get "credit approved" for your loan. Start by making a list of all your existing loans and credit cards, with the company names, account numbers and monthly payment amounts. This will help you to analyze the information shown on your credit report. Include all closed loans and credit cards if these records are available.
1) Get a Financial Check-Up
Make an appointment with a good mortgage lender, and request a full credit approval. As a part of the approval process, your credit report will be ordered. It will include data from the three main credit reporting agencies - Equifax, Experian, and Trans Union. The report will show three credit scores - one from each agency. The interest rate and type of loan available to you is related to your credit score.
The assistance of a mortgage professional to help you to understand your credit report and offer suggestions on how to improve your score is invaluable. For the average person, interpreting a credit report and dealing with errors is a daunting task. Credit reports are filled with frustrating jargon and codes. They are not written for the general public to read. Even more intimidating is the task of communicating with credit agencies to dispute or correct information.
2) Correct Mistakes
Credit reporting agencies often have mistakes in their data. The information in your credit file is input by computers. A computer weighs your data using complicated mathematical formulas to arrive at a credit score.
Nearly everyone has paid bills late for one reason or another. Perhaps a bill was sent to a wrong address, or you have had a dispute with a vendor. It is likely that you have some issues on your report that should be disputed or corrected. Each of the websites of the three main agencies has a dispute resolution page. Feel free to use it.
3) Deal With Real Credit Issues
You may have had serious credit problems at some point in the past. Reviewing this may be emotionally draining, and will bring up the underlying situation that caused the credit problems. Get advice on how long the issues will remain on your report, and how to re- build your credit worthiness.
Or, you may have a persistent habit of overspending. In this case, you should talk with a financial advisor or personal counselor to help you work out of debt, and establish better habits. The National Foundation for Credit Counseling offers low cost assistance for serious credit problems. If you place yourself under their supervision to handle your debts, you will not be able to obtain new credit during the work-out period - which may be years. Before doing that, ask a mortgage lender or financial advisor if there is a way to redeem your credit without their supervision.
4) Check Your Credit File
A law, passed in 2005, requires the three main credit agencies to provide a free credit file disclosure each year. It has been suggested that you could order a file from the first agency in January, one from the second in May and one from the third in September. The central site where your file can be ordered is annual credit report dot com. The purpose of this law seems to be to help people find out if they are a victim of identity theft. This enables you to monitor your file for any new credit that did not come from you.
If you take advantage of the free credit file reports, you should check them for mistakes. Use the credit report that you reviewed with your mortgage lender to compare with the data in your credit file. Keep in mind that the free credit file disclosure is not a credit report. It does not include a credit score.
5) Understand Credit Scores
Less than 620 - Poor
620-680 - Average - You may need to put more cash down on your loan.
680-720 - Good
720 - 800 - Excellent
800-850 - Seldom seen
6) Play by the Rules
The information in your credit file is scored by these factors:
35% - Payment history - Paying bills on time is very important. Today many people use auto draft or pre-written checks through online banking to pay bills. These help to prevent late payments. If you want a good credit score, do not pay late!
30% - The relationship between your available credit versus how much you have used is an important factor in your score. If you are over 50% drawn against your available credit, this will count against you. For this reason, it helps to keep old credit card accounts open, even though you do not use them. They build up the total amount of credit available to you, relative to what you have charged.
15% - The length of credit history on each loan has an effect on your score. A more seasoned loan is scored higher. For this reason it is not a good idea to open credit cards offering low initial rates, then close them after a few months and open new credit cards.
10% - The number of inquiries made on your credit report affects your score. Each time you open a credit card or new loan, your credit information is pulled. Keep these to a minimum. A recent law has made it possible for people shopping for homes or autos to have multiple inquiries, from the same industry (mortgage or auto), done over a 30 day period without penalty. However, to be on the safe side, do not allow your credit report to be pulled unless absolutely necessary.
10% - The types of credit used may hurt your score. Loans from finance companies, signature loans, furniture loans and some retail store loans are considered a poor judgment because of their high rates, and may count against you.
7) Improve Your Credit Score
It is easy and necessary to borrow money. We customarily make everyday purchases using credit cards, and set up loans for homes, cars and other purchases. Your credit score is especially important in the purchase of your home. It will affect the type of loan available, down payment required, and interest rate charged. A low score can cost you thousands of dollars in additional interest over the years. Even insurance companies factor your credit score into their decisions. More than ever, you need a good credit score, or you will pay the price.
Finance providers, rental agencies, car dealers, insurance companies and credit card companies are not going to help you improve your credit score. In fact, they have an economic interest in charging you a higher rate. It is up to you to be proactive about understanding and improving your own credit score. A good time to start is when you begin the mortgage approval process for a home purchase. It is a good habit to have.
Source: http://www.article-host.com/Roselind Hejl is a Realtor with Coldwell Banker United in Austin, Texas. Her website - Austin Texas Real Estate - http://www.weloveaustin.com - offers homes for sale, search MLS, buyer and seller guides. Let Roselind help you make your move to Austin. http://pickamortgage.blogspot.com http://pickamortgage.blog.com
1) Get a Financial Check-Up
Make an appointment with a good mortgage lender, and request a full credit approval. As a part of the approval process, your credit report will be ordered. It will include data from the three main credit reporting agencies - Equifax, Experian, and Trans Union. The report will show three credit scores - one from each agency. The interest rate and type of loan available to you is related to your credit score.
The assistance of a mortgage professional to help you to understand your credit report and offer suggestions on how to improve your score is invaluable. For the average person, interpreting a credit report and dealing with errors is a daunting task. Credit reports are filled with frustrating jargon and codes. They are not written for the general public to read. Even more intimidating is the task of communicating with credit agencies to dispute or correct information.
2) Correct Mistakes
Credit reporting agencies often have mistakes in their data. The information in your credit file is input by computers. A computer weighs your data using complicated mathematical formulas to arrive at a credit score.
Nearly everyone has paid bills late for one reason or another. Perhaps a bill was sent to a wrong address, or you have had a dispute with a vendor. It is likely that you have some issues on your report that should be disputed or corrected. Each of the websites of the three main agencies has a dispute resolution page. Feel free to use it.
3) Deal With Real Credit Issues
You may have had serious credit problems at some point in the past. Reviewing this may be emotionally draining, and will bring up the underlying situation that caused the credit problems. Get advice on how long the issues will remain on your report, and how to re- build your credit worthiness.
Or, you may have a persistent habit of overspending. In this case, you should talk with a financial advisor or personal counselor to help you work out of debt, and establish better habits. The National Foundation for Credit Counseling offers low cost assistance for serious credit problems. If you place yourself under their supervision to handle your debts, you will not be able to obtain new credit during the work-out period - which may be years. Before doing that, ask a mortgage lender or financial advisor if there is a way to redeem your credit without their supervision.
4) Check Your Credit File
A law, passed in 2005, requires the three main credit agencies to provide a free credit file disclosure each year. It has been suggested that you could order a file from the first agency in January, one from the second in May and one from the third in September. The central site where your file can be ordered is annual credit report dot com. The purpose of this law seems to be to help people find out if they are a victim of identity theft. This enables you to monitor your file for any new credit that did not come from you.
If you take advantage of the free credit file reports, you should check them for mistakes. Use the credit report that you reviewed with your mortgage lender to compare with the data in your credit file. Keep in mind that the free credit file disclosure is not a credit report. It does not include a credit score.
5) Understand Credit Scores
Less than 620 - Poor
620-680 - Average - You may need to put more cash down on your loan.
680-720 - Good
720 - 800 - Excellent
800-850 - Seldom seen
6) Play by the Rules
The information in your credit file is scored by these factors:
35% - Payment history - Paying bills on time is very important. Today many people use auto draft or pre-written checks through online banking to pay bills. These help to prevent late payments. If you want a good credit score, do not pay late!
30% - The relationship between your available credit versus how much you have used is an important factor in your score. If you are over 50% drawn against your available credit, this will count against you. For this reason, it helps to keep old credit card accounts open, even though you do not use them. They build up the total amount of credit available to you, relative to what you have charged.
15% - The length of credit history on each loan has an effect on your score. A more seasoned loan is scored higher. For this reason it is not a good idea to open credit cards offering low initial rates, then close them after a few months and open new credit cards.
10% - The number of inquiries made on your credit report affects your score. Each time you open a credit card or new loan, your credit information is pulled. Keep these to a minimum. A recent law has made it possible for people shopping for homes or autos to have multiple inquiries, from the same industry (mortgage or auto), done over a 30 day period without penalty. However, to be on the safe side, do not allow your credit report to be pulled unless absolutely necessary.
10% - The types of credit used may hurt your score. Loans from finance companies, signature loans, furniture loans and some retail store loans are considered a poor judgment because of their high rates, and may count against you.
7) Improve Your Credit Score
It is easy and necessary to borrow money. We customarily make everyday purchases using credit cards, and set up loans for homes, cars and other purchases. Your credit score is especially important in the purchase of your home. It will affect the type of loan available, down payment required, and interest rate charged. A low score can cost you thousands of dollars in additional interest over the years. Even insurance companies factor your credit score into their decisions. More than ever, you need a good credit score, or you will pay the price.
Finance providers, rental agencies, car dealers, insurance companies and credit card companies are not going to help you improve your credit score. In fact, they have an economic interest in charging you a higher rate. It is up to you to be proactive about understanding and improving your own credit score. A good time to start is when you begin the mortgage approval process for a home purchase. It is a good habit to have.
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Source: http://www.article-host.com/Roselind Hejl is a Realtor with Coldwell Banker United in Austin, Texas. Her website - Austin Texas Real Estate - http://www.weloveaustin.com - offers homes for sale, search MLS, buyer and seller guides. Let Roselind help you make your move to Austin. http://pickamortgage.blogspot.com http://pickamortgage.blog.com
Wednesday, November 29, 2006
Home Buyer - The Construction Inspection
Buyers of re-sale homes almost always have their homes inspected by a professional inspector. Buyers of new homes, however, often do not take this important step. There are several reasons for this:
1) The buyer is getting a brand new home, and thinks that the inspection is an unnecessary added cost.
2) The buyer feels that they are protected by the builder's one-year warranty for workmanship, plus extended structural warranty.
3) In many cases, the home is inspected by city inspectors as a part of the permitting process.
A Business Relationship
The construction of a home is a big project involving many contractors and suppliers. As the buyer and homeowner you are the financer and recipient of the final product. If you are like most people, this is your biggest investment. Understandably, most people want to establish a good rapport with their builder. They must rely on the builder throughout the job, and for warranty and service work after completion. They feel that they need the builder's friendship and good will, and do not want to risk damaging the relationship.
You will need to come to terms with this in your own mind. Do not allow your anxiety about the construction process to obscure the fact that you have a business relationship with your builder. You are working together under a contract. It is possible to be cordial and respectful, while maintaining the right to bring up problems and concerns. It is best to establish the ground rules for your relationship at the beginning of the project. At some point, you may need to tell the builder that something is not acceptable to you.
Schedule Inspections
Let the builder know at the outset that you will be getting a construction inspection. You may hear (from the builder or others) that this is unnecessary, that city inspections will be done, that this is an unusual step, etc. Stand your ground on the inspection decision. After you have let the builder know that you will be getting an inspection, send an email or written note clarifying when your inspections will be done. Make it clear that you will need to have the utilities connected for your final inspection. Allow enough time after the final inspection for corrections to be made before closing. Check with your inspector about which inspections he recommends. The three that come to mind are: foundation, pre-sheetrock, and final inspection.
Foundation Inspection
With some complicated foundations, you should have an engineer review the construction as it progresses. In other cases, a licensed inspector can do the job. Usually, city inspectors do a layout inspection, making sure the foundation does not overlap building lines. Whether or not you are in a city, ask your inspector to double check this. Ask for a copy of the “forms survey”, if the builder has one. If a forms survey has not been done, carefully measure from the property lines. If there is some doubt about whether the structure encroaches over building lines, have a survey done before proceeding. In addition to the layout, the inspector will check the steel content, depth of footings, post tension cables, and other parts of the foundation.
Pre-Sheetrock Inspection
Most builders invite the homeowner to do a walk through after framing, HVAC and plumbing rough-in, and electrical wiring are complete. This is a good time to look at your outlet locations and window and door placements. Make sure that any changes in the plans have been picked up and made by the sub contractors.
While you check for layout items, your home inspector can look closely at the construction. His report might include: broken plumbing lines, improper flashing, cut or bowed studs, inadequate bracing, beams that over-span their strength, AC ducts that are crushed, etc. These items are easy to correct at this point, before sheetrock and finish materials are installed.
It is not realistic to expect the construction to check out perfectly. Every builder in every price range will have some items to correct, both from the city and the third party inspector. Let your builder know that you will provide him with the report immediately, so that he can address the items before the walls are closed up.
Final Inspection
You will need to have all utilities on in order to complete this inspection. Normally, the builder requests a “walk-thru” inspection with you when the house is substantially complete. If utilities are on, you could schedule your inspector at this time. You can focus on paint and touch up items, while your inspector conducts a more thorough inspection, checking for leaks, non functional outlets, final grading of the lot, flashing problems, appliance operation, voids in mortar, etc.
The Construction Inspection
At some point you will sell you home, and your buyer will likely have your home inspected. Some of the items the inspector catches now may seem minor, but they will come up later in your buyer's home inspection if they are not corrected. It is in your best interest to have everything nailed down now. If there are items that cannot be fixed before closing, and you cannot delay closing, ask the builder to sign a written list of items to be repaired or completed.
Building a new home can be an exciting and rewarding experience. A new home can deliver the right floor plan and finishes for you. It is a complicated project and huge investment. The support, advice and information that you will gain from a third party inspection is invaluable. Do not leave out this important step in the building process. It is well worth the investment.
Article Source: http://www.article-host.com/
Roselind Hejl, CRS, is a Realtor with Coldwell Banker United in Austin, Texas. Her website: Roselind Hejl's Austin Texas Real Estate Guide - http://www.weloveaustin.com - offers a wealth of knowledge about the City of Austin, homes for sale, market trends and the buying and selling process. http://pickamortgage.blogspot.com
1) The buyer is getting a brand new home, and thinks that the inspection is an unnecessary added cost.
2) The buyer feels that they are protected by the builder's one-year warranty for workmanship, plus extended structural warranty.
3) In many cases, the home is inspected by city inspectors as a part of the permitting process.
4) Buyers believe that they can rely on the builder's reputation.
5) The builder is resistant to idea of third party inspections.
6) Buyers are not aware that a home inspection is a recommended alternative.
A Business Relationship
The construction of a home is a big project involving many contractors and suppliers. As the buyer and homeowner you are the financer and recipient of the final product. If you are like most people, this is your biggest investment. Understandably, most people want to establish a good rapport with their builder. They must rely on the builder throughout the job, and for warranty and service work after completion. They feel that they need the builder's friendship and good will, and do not want to risk damaging the relationship.
You will need to come to terms with this in your own mind. Do not allow your anxiety about the construction process to obscure the fact that you have a business relationship with your builder. You are working together under a contract. It is possible to be cordial and respectful, while maintaining the right to bring up problems and concerns. It is best to establish the ground rules for your relationship at the beginning of the project. At some point, you may need to tell the builder that something is not acceptable to you.
Schedule Inspections
Let the builder know at the outset that you will be getting a construction inspection. You may hear (from the builder or others) that this is unnecessary, that city inspections will be done, that this is an unusual step, etc. Stand your ground on the inspection decision. After you have let the builder know that you will be getting an inspection, send an email or written note clarifying when your inspections will be done. Make it clear that you will need to have the utilities connected for your final inspection. Allow enough time after the final inspection for corrections to be made before closing. Check with your inspector about which inspections he recommends. The three that come to mind are: foundation, pre-sheetrock, and final inspection.
Foundation Inspection
With some complicated foundations, you should have an engineer review the construction as it progresses. In other cases, a licensed inspector can do the job. Usually, city inspectors do a layout inspection, making sure the foundation does not overlap building lines. Whether or not you are in a city, ask your inspector to double check this. Ask for a copy of the “forms survey”, if the builder has one. If a forms survey has not been done, carefully measure from the property lines. If there is some doubt about whether the structure encroaches over building lines, have a survey done before proceeding. In addition to the layout, the inspector will check the steel content, depth of footings, post tension cables, and other parts of the foundation.
Pre-Sheetrock Inspection
Most builders invite the homeowner to do a walk through after framing, HVAC and plumbing rough-in, and electrical wiring are complete. This is a good time to look at your outlet locations and window and door placements. Make sure that any changes in the plans have been picked up and made by the sub contractors.
While you check for layout items, your home inspector can look closely at the construction. His report might include: broken plumbing lines, improper flashing, cut or bowed studs, inadequate bracing, beams that over-span their strength, AC ducts that are crushed, etc. These items are easy to correct at this point, before sheetrock and finish materials are installed.
It is not realistic to expect the construction to check out perfectly. Every builder in every price range will have some items to correct, both from the city and the third party inspector. Let your builder know that you will provide him with the report immediately, so that he can address the items before the walls are closed up.
Final Inspection
You will need to have all utilities on in order to complete this inspection. Normally, the builder requests a “walk-thru” inspection with you when the house is substantially complete. If utilities are on, you could schedule your inspector at this time. You can focus on paint and touch up items, while your inspector conducts a more thorough inspection, checking for leaks, non functional outlets, final grading of the lot, flashing problems, appliance operation, voids in mortar, etc.
The Construction Inspection
At some point you will sell you home, and your buyer will likely have your home inspected. Some of the items the inspector catches now may seem minor, but they will come up later in your buyer's home inspection if they are not corrected. It is in your best interest to have everything nailed down now. If there are items that cannot be fixed before closing, and you cannot delay closing, ask the builder to sign a written list of items to be repaired or completed.
Building a new home can be an exciting and rewarding experience. A new home can deliver the right floor plan and finishes for you. It is a complicated project and huge investment. The support, advice and information that you will gain from a third party inspection is invaluable. Do not leave out this important step in the building process. It is well worth the investment.
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Article Source: http://www.article-host.com/
Roselind Hejl, CRS, is a Realtor with Coldwell Banker United in Austin, Texas. Her website: Roselind Hejl's Austin Texas Real Estate Guide - http://www.weloveaustin.com - offers a wealth of knowledge about the City of Austin, homes for sale, market trends and the buying and selling process. http://pickamortgage.blogspot.com
Monday, November 27, 2006
Real Estate Not Always a Rock Solid Investment
(MS) - Conventional wisdom suggests real estate is a can't-miss investment strategy. So long as you have the available initial capital to invest, theoretically real estate is a lock to earn money, right? While that's a comforting notion, it's also untrue.
Like all investments, real estate comes with an element of risk. Unlike some investments, the risk involved with real estate can be great, as the initial capital you'll need is often greater than that with other, safer investments. For those looking at real estate purely as an investment strategy, it's easy to get burned. Consider the following potential pitfalls, each of which can turn a seemingly sound investment into a nightmare.
The Neighborhood
Neighborhoods are a big part of the risk element when it comes to investing in real estate. A change in neighborhood can make or break a property, which can make or break an investor. Consider the following scenario: you purchase a house with the intention of renting it out. With maintenance and property taxes, you likely won't see a significant increase in your cash-flow. In fact, you'll more than likely break even. This shouldn't come as a surprise, as the home and property's value rests in the re-sale value down the road.
However, if the neighborhood begins to decline, you're stuck on a multitude of levels. The market value of the property is certainly going to drop as the neighborhood continues to decline, lining you up to take a loss. In addition, as the neighborhood declines, you'll more than likely need to lower the rents, again costing you money and possibly costing you the property should you find yourself unable to make the mortgage payments.
Where most people find themselves in trouble is overestimating the gentrification efforts of depressed neighborhoods. Gentrification does not happen overnight and it's certainly not a guarantee. If it works out, you've made a very sound and potentially very rewarding investment. However, if gentrification efforts stall or fail, you're going to take a hit, one that could prove very damaging. The best thing to do to avoid such a fate is to heavily research any neighborhood you're planning on investing in. Oftentimes, severely depressed neighborhoods are best avoided by those new to the real estate game or those without the ability to endure a substantial hit.
Tenants
Another big risk to consider before investing in real estate is who your potential partners will be. Teaming up with a relative or friend or business associate is one thing. However, investing in a property is also a partnership with potential tenants. This can be a great unknown.
Your tenants are akin to partners because you'll be relying on them to make your mortgage payments. Any veteran landlord will tell you good tenants who consistently pay on time and treat the property well are hard to find. Particularly if you'll be investing in a property that is in a depressed neighborhood (with the hope of the area being gentrified), you're likely to find less reliable tenants. A bad tenant can be a nightmare, as laws often favor the tenant and removal is almost always a difficult, not to mention stressful, endeavor.
On top of that, should a neighborhood begin to decline or should unforeseen circumstances arise, it could be hard to find tenants. For example, beachfront property owners are often at the mercy of conditions beyond their control. Heightened ocean pollution or negative weather forecasts have been known to keep potential tenants away from the beach, forcing landlords to take a season-long hit or lower rents. Neither of those options is desirable and both could end up costing investors substantial amounts of money.
A good way to combat potential tenant problems is to always get first and last months' rent up front (and possibly a security deposit as well) and plan ahead for any scenarios in which your tenant could leave you in the dust.
Interest Rates
Hopefully, anyone considering investing in real estate understands the differences between interest rates. If you don't, learn the differences before you think of investing so much as a dime in any property.
Low-rate mortgages often seem too good to be true. And that's often because they are. Interest rates fluctuate, and anyone investing in real estate needs to be prepared. For example, if you borrowed $100,000 on an interest-only 4-percent loan, you'll pay $4,000 per year. With an adjustable-rate mortgage, however, your interest rate might climb to 10 percent, meaning you're now on the hook for $10,000 per year. That's an additional $6,000 per year you might not have planned on needing. Finding money to cover that interest-rate hike can be tough, as you likely won't be able to pass it on to your tenants. That makes planning ahead for potential interest rate hikes a key element to investing in real estate.
While real estate is often looked at as a high reward investment, for those considering making the investment, let it be known it's also high-risk, one that requires deep pockets to begin with.
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Saturday, November 25, 2006
Sell Your Home Faster with a Pre-Listing Home Inspection
The reports abound about a slow down in the real estate market. Homes are sitting on the market for longer periods of time, and sellers are finding that buyers are more concerned with the condition of the home. With more homes on the market to choose from, buyers can afford to walk away from a deal, if the conditions of the home are not to their satisfaction.
How well do you know YOUR home?
• Why wait for a buyer’s Home Inspector to uncover hidden problems, after you have already accepted an offer that could end up costing you thousands in a lower negotiated selling price?
• A Professional Seller’s Pre-Listing Home Inspection can help you identify critical areas of concern up-front
• You decide whether to perform repairs or disclose during initial negotiations
Pre-listing Home Inspection Benefits
There are many benefits to having your home inspected before listing. With a pre-listing inspection your home could sell faster and for more money without any renegotiations because results of the inspection will be presented ahead of time. Your potential buyer will be reassured about the condition of the home from the detailed inspection report. A pre-inspected listing will also give you the ability to fix any problems and deal with any issues ahead of time, so there won’t be any surprises.
1. Home could sell faster!
2. Home could sell for more money!
3. No more buyers walking away because they think there is a problem with the house.
4. No deal-killing home inspector picking your home apart after the deal is done.
5. No 11th hour renegotiations based on the inspector's findings.
6. No helpless feelings that an inspector has raised an issue that is not a big problem.
7. No more buyers getting cold feet when they find out the home is not perfect.
8. No more buyers walking away because they don't have time for an inspection. 9. No more parade of inspectors through your home before a multiple-offer situation.
10. You choose the inspector based on reputation and credentials.
11. You resolve any differences of opinion before the house goes on the market.
12. You fix any problems you like or recognize the problem and reflect it in the purchase price - take it off the table as a negotiating tool against you.
13. Inspection Report can be made available as an HTML web page link, to be included on your listing agent’s web site. That way, prospective buyer’s can see the report in advance.
Many inspectors will come back to re-inspect fixes
If you fix or improve areas noted in the report, many home inspectors will return to the home, to update the report to reflect the current status. This can be a big selling advantage, in particular in a slower market, where buyers are more concerned with condition and value.
As real estate market conditions continue to soften, you need every advantage possible to help your home sell. Don’t wait with your fingers crossed, hoping the buyer’s home inspector doesn’t find any problems. Consider a pre-listing home inspection to put you in the driver’s seat and to present your home in the proper light.
****Recommended Reading****
Scott Home Inspection - A Colorado Professional Home Inspection company serving Denver, Boulder, Fort Collins, Greeley and surrounding areas, including Radon testing, Mold inspector.http://www.scotthomeinspection.com/ http://pickamortgage.blogspot.com
Monday, November 20, 2006
Pre-Foreclosures Can you make money?
If you've been looking into the idea of making money in real estate by buying foreclosures, then you may have come across the idea of buying pre-foreclosure. Basically, pre-foreclosure is the period when the buyer is behind on payments, but the lender has yet to auction off the property. There's a good and bad side to buying in pre-foreclosure, so let's take a look at both.
When someone is facing foreclosure, they're often very motivated to get out of the mortgage completely. This gives you a good opportunity to buy the house for little more than the cost of taking over the mortgage payments. There are thousands of foreclosures advertised every month, so if you do your research or subscribe to a listing service, you can simply do drive bys and then approach the owners of properties you're interested in buying.
The downside is that properties are only in pre-foreclosure for about three weeks, so you need to be quick. In that time you have to contact the owners, get contracts signed, organize finance and anything else that needs to be sorted out. It's important to realize, too, that you're not going to be dealing with level headed, logical owners who realize that it's to the benefit of their credit history to avoid having a foreclosure listed there. It's much more likely that they'll be angry at the world in general, under a lot of stress and receiving numerous calls from debt collectors. They're not likely to greet you with enthusiasm and open arms.
It's also possible that the homeowner will find a way out of their situation before the courthouse auction occurs, in which case you may spend a lot of time putting together a deal that doesn't happen.
If you're serious about buying pre-foreclosures, then you need to let people know you're there as an option. Design a bold, eye-catching flyer that you can send or give to the house owners, and make sure it's motivational enough for them to call you. At the time you're trying to contact the owners they're probably overloaded with debt collection notices, so you need to make it clear you're something different. Stand out, and contact them more than once if necessary. Vary your approach, rouse their curiosity, and make sure you come across as someone who can help them, not just a pushy person wanting to make money out of their situation.
Buying pre-foreclosures isn't for everyone - you need to take action quickly, be diligent in doing your research, and be able to handle rejection, a lot of which will be nasty and unpleasant. It's important to keep on top of new listings, because the sooner you can get to an owner in pre-foreclosure, the better your chances of success. So spending money on a listing service will pay off in time saved. If you can handle all the different elements, pre-foreclosures can be a great way to build your real estate investment portfolio very cheaply.
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Visit the nations #1 site for foreclosures and find homes for half the price.(Click Here!)
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Thursday, November 16, 2006
Seven Potential Re-sale Problems
The selection of a home is an emotional decision, and it should be. You should tap into your emotional knowledge when choosing a home. Many personal factors will influence your selection of a place where your family can live comfortably and safely.
However, at some point in the future you may need to re-sell the home. Most people would like to receive at least 4% annual appreciation on the sales price of their home. Now is the time to look ahead and consider any possible sales objections that you may encounter. The value of your home as an investment is directly related to its marketability. If it is sought after by other buyers, your home will sell at the highest price possible for the market.
The issues noted here are not intended to be deal killers. The home you have selected may have some defects, yet meet your needs in many important ways. No home will be perfect. Your purchase decision should be given a careful evaluation and review with an eye toward resale.
Home flippers look for homes with marketing problems such as these. Homes priced below market are perfect for their remodeling solutions. You, too, may think creatively when considering a home. Many problems can be corrected or mitigated. With good design sense, you may be able to make the necessary decisions to improve the home, and perhaps do the work yourself. Or, you may be willing to get design help and use a builder for the work. Remodeling adds a level of risk and difficulty to your home purchase, but possibly, a higher level of satisfaction and monetary reward.
Here are 7 potential re-sale problems:
Site Difficulties
Unusual Easements or Restrictions
If unusual easements or restrictions were not disclosed up front, you may not be aware of them until you see the survey and title work. If you discover these, I suggest that you take a step back, and consider whether you will accept an unusual easement or restriction on your use of the property. Some examples: neighbors may cross the property, house expansion is limited, or major pipelines are underground.
Lack of Yard
If a home has much less yard area than others in the neighborhood, buyers tend to eliminate this choice. A steep slope may make the grounds difficult to use and maintain. Yards that have been terraced or landscaped may be exceptions. Compare your property to the yards offered by competing homes.
Commercial View
Homes in suburban areas that view office buildings or retail centers are less attractive to buyers. Buyers choose suburban neighborhoods for their concentration of single family homes, separated from commercial areas. This may not be a problem in more urban areas.
Flag Lot
These are lots with a long narrow strip, leading to the area where the house is placed. Your home will have almost no street frontage, and there may be a building in front of your home. A flag lot in a country setting with a long driveway leading to a large tract may be an exception to the rule. In a subdivision of homes with road frontage, buyers will avoid this type of lot.
Likely Objections
High Tension Wires
The general reaction by buyers to high tension wires crossing near the lot is to simply eliminate the choice.
Steep Driveway
I have shown many buyers who will not get out of the car when the driveway is unusually steep.
Busy Street
The noise related to a busy street is a turn-off to many buyers. This is more of a problem if the busy street is in front of the house.
Too Exposed
Most buyers want a certain degree of privacy in the back yard. If the building behind your prospective home looks down on your backyard or into your family room, this will be a sales objection. This could be mitigated by trees or screening.
Neighborhood Concerns
Declining Values
If you perceive the neighborhood to be declining, this is a must to avoid. Choose areas that show pride in ownership. However, if you see tear downs and new construction, then the neighborhood may be going through a renewal period, and may be a good risk.
Safety or Security Problems
If you sense that there are security problems - drug dealers, robberies, or safety concerns for your children, take a step back and look at the facts and data on these issues before buying. These kind of problems will turn away buyers fast.
Market Matters
Seasonal or Limited Market
Some homes have a limited market - a vacation area, a primarily student market, or an age restricted subdivision. This may suit your needs, but keep in mind that your re-sale will be limited to this set of buyers.
Remote Location
In most cities, areas that are closer to downtown tend to have a larger buyer pool than homes located in remote areas. However, you may choose to trade the privacy and setting of a country home with the resale potential.
No Comparable Sales
This indicates a possible re-sale problem. The home may be very unusual compared to homes around it, or the market may be slow. Understand the underlying reason for few or no comparable sales.
Extended Marketing Time
Has the home that you are considering been on the market a long time? Was the price simply set too high? Has the market been slow? Or, is there a problem with the house that you will need to correct?
Oversupply of Homes
This is a fundamental re-sale problem. If the balance of supply and demand tips in favor of buyers, then sellers will have to compete more aggressively, and prices are usually driven down. A common source of excess supply is from new homebuilders in the area. Or, sales may be slowed by an economic recession or high interest rates. The oversupply of homes on the market may be a temporary situation.
Non-conforming Styles
Lacks a Typical Amenity
In an area where nearly all homes are on the golf course, or have a pool, or include a garage, buyers will tend to overlook homes that lack these features. In an area of mostly older buyers, a home with the master upstairs may have trouble selling. Look carefully at what is generally offered in a given area to the majority of buyers.
A-typical Style
Homes that do not fit in to the neighborhood may have trouble selling. For example, the urban modern style may be a good fit in older eclectic areas, but would be hard to sell a uniform suburban neighborhood.
Inspection Issues
Water Drainage Problems
Poor water drainage may be a serious and costly remediation problem. Talk with an expert about improving the drainage around the house, and evaluate any previous damage caused by flooding of the interior or water standing under the house. Be sure that you have all the facts on the table and an improvement plan ready.
Structural Defects
Structural defects have an underlying cause. They may be due to loose fill on the lot, clay soil, drainage issues, or poor construction. It is crucial to know the source of the problem, and the cost to repair, before taking on a house with structural problems.
Inspection Issues
Excessive repairs noted on your inspection report indicate that the house was not maintained or was poorly constructed. Be prepared for some serious work on the house. An incorrect application of stucco or other siding may have water damage or mold behind it. A mold infestation may be expensive to remove. Be prepared to document your repairs in order to show a future buyer that the problems have been completely solved. These issues tend to have some stigma attached.
Insurance Claims
It is important to know the facts about a previous insurance claim. If it was due to a fire or flooding problem, you should have full disclosure. Large insurance claims are a red flag, and may result in difficulty in obtaining insurance on the home. Many homes have had repairs covered by insurance, such as hail damage, and these are not a re-sale problem.
Improvement Obstacles
Costly Improvements
You may not be able to recoup the cost of certain improvements to your home. These may include imported fixtures, unusual artistry or craftsmanship, exotic woods, European appliances, rare plants, hand decorated walls, etc. If these finishes are similar to locally available materials, they may not have a market value equal to their cost. In general, swimming pools and tennis courts do not contribute the full amount of their cost in the value of the home.
Over Improved
Homes that are over improved for the area, or have excess acreage, often have a difficult time recouping the additional cost. Most people feel safer buying one of the cheaper houses in the neighborhood.
Non Functional Floor Plan
Floor plans that make living in the home difficult will turn away buyers. Excessive level changes, rooms that are out of proportion, poor access to the backyard, low ceilings, few windows, and other layout issues will result in a re-sale problem. This may be an opportunity to take down walls, add windows and doors, and make creative changes to improve the functionality and value of a house. Design skill and a fairly high budget will be necessary.
Out Dated Finishes
Most homes have some outdated finishes - from needing freshening up, to a complete makeover. This is where design skill and perseverance can completely transform a house. If you are new to remodeling, consider your budget carefully. Often the work required is quite extensive and may grow as the project develops.
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Source: http://www.article-host.com/ Roselind Hejl is a Realtor with Coldwell Banker United in Austin, Texas. Her website - Austin Texas Real Estate - http://www.weloveaustin.com - offers homes for sale, market trends, buyer and seller guides. Let Roselind help you make your move to Austin, Texas. http://pickamortgage.blog.com http://pickamortgage.blogspot.com
Monday, November 13, 2006
10 Steps to a Smoother House-Hunting Experience
House hunting can be the most exciting part of the home buying process. But it's also where a lot of first-time home buyers make mistakes. Without a solid plan, the house hunting process can be a lot of effort with little reward.
Here are ten tips to help you get the most out of your house hunting experience.
1. Create a Realistic Checklist
Get out a piece of paper, put on your "realism" hat, and start writing down the things you need in a home versus the things you want. You can organize them on the page however you like, as long as you separate the needs and the wants. Put a box next to each item, and then make photocopies.
When you visit a home, take a copy of the checklist with you and write the home's address at the top. Then just go through the house and check off what it does and does not offer. This will help you remember which house had what, especially when you're looking at many properties.
2. Be a Proactive Hunter
Obviously, your real estate agent will help with the house hunting process. But don't rely solely on your agent. Go out there and do some hunting yourself. It's a necessity, but it's also exciting!
3. Get Web Savvy
The Internet can reduce your house hunting time by 50 percent or more. By previewing homes and researching neighborhoods online, you can weed out the ones you don't want to visit. This will save you time, energy and gas money! Create a new folder in your Internet favorites or bookmarks. When you find a real estate website that's particularly helpful, save it to the folder. This way, you'll only have to scour the Internet once.
4. Play Detective
When visiting a home, don't be shy about asking the sellers (or their agent) plenty of questions. Be friendly about it, but be thorough. Likewise, feel free to do a reasonable amount of "snooping." Don't violate the seller's privacy – just be sure to look in all the dark corners, the basement, tools sheds and the like.
5. Validate the Asking Price
If asking prices were set in stone, they would be called "selling prices." Always compare the asking price of a home to recent sales in the area. Your agent should be expert at providing such "comps" to help you validate (or invalidate) the seller's asking price.
6. Visit During Rush Hour
That peaceful property you visited at 10:00 in the morning might be totally different at 5:30 in the evening. By visiting a home during rush hour, you're evaluating two things at once. First, you'll find out if traffic snarls make it hard to enter or exit the neighborhood. Secondly, you'll be able to judge the noise factor at its noisiest time of day.
7. Test the Drive
While we're talking about rush hour, why not test out the morning commute to your work? It might seem silly to do a rush hour commute from a home you're only considering, but think about how much time you'll spend commuting day after day. It's a big quality-of-life issue, so it deserves some consideration.
8. Look into the Future
Talk to the city or county to find out what their plans are for the area around the home. Will that beautiful forest across the street be a shopping center or a highway in two years? You won't know unless you do the research. Don't expect the sellers to volunteer such information, because it's not in their interest to deliver bad news about the neighborhood.
9. Bring a Digital Camera
Digital cameras are ideal for house hunting. You can take pictures of the homes you visit and save them in labeled folders on your computer. Which home had the swimming pool? Which one had the wood floors and crown molding? Just look at the photos and you'll remember.
10. Bring a Devil's Advocate
When visiting a home that could potentially become yours, it's easy to get wrapped up in the emotion of it all. Sometimes, emotion has a way of clouding our better judgment. A great way to counter this is to bring a friend or family member along on house hunting trips. In addition to providing company, a "disinterested witness" can offer an objective point of view. This is crucial when making such a large purchase.
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* You may republish this article online if you retain the active hyperlinks below. Copyright 2006, Brandon CornetBrandon Cornett writes on behalf of Jimmy Jacobs Custom Homes, a home builder in Georgetown, Texas since 1988. Learn more about Georgetown, Texas real estate by visiting www.jacobshomes.com Directory: http://www.articledashboard.com http://pickamortgage.blogspot.com http://pickamortgage.blog.com
Friday, November 03, 2006
Points or not to Points?
Mortgages can have many terms that are determined based on the clients personal financial situation. But should you pay points above and beyond the interest rate or not?
Points are a single payment that are paid on the percentage of the loan amount. For example, let's say you take out a mortgage of a total of $200,000 and you have to pay 3 points. You must pay a total of $6,000 in points to a lender. The lender is the person who supplies the money so you can buy the house in consideration. Your total interest rate may be lower, however, for paying these one time, up front fees.
You may want to consider taking a slightly higher interest rate that will end up less than these one time fees. Often, points are considered extra bonuses for the broker. Points are usually considered extra income on a deal. You can get a lower interest rate by paying these one time fees, however, it may not be the best option.
You need to accept the terms that best fit your situation. Try to get the lower interest rate without the points. Mention your positive attributes as a borrower and see if they won't forget the points. Usually, if you have decent credit, and some money on had, you can really negotiate.
If you have bad credit or some problems with income to debt ratio, then you may have to pay the points that the lender is requiring. Your negotiating power will definitely decrease if your credit is not up to par.
In every situation, try not to pay points! They are usually accepted as exchanges for a lower interest rate. However, you may not pay less than if you have a slightly higher interest rate.
Points for an amount of 1 or 2, may be worth it because the total payment of the one time fee may be less than the total amount paid in interest above the rate that is made.
If presented with mortgage terms that are not satisfactory to you, work on negotiating new terms. Delete the points and extra fees, and ask for a deal that fits within your financial situation.
There are many choices when it comes to mortgages. Whether or not you use an adjustable rate mortgage or fixed rate mortgage, be sure to understand all terms that you may agree to. If the lender is not willing to give you an itemized report about the mortgage, then ask to see exactly where your money is going. Don't ever sign papers without representation or reviewing the before the closing so you know exactly what it is that you are accomplishing.
Points are generally negative aspects of a mortgage, so don't pay them if you can negotiate the terms without points in your favor.
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John R Blakefield is a mortgage and real estate specialist. For more information, articles, news, tools and valuable resources on home mortgages or investment loans, refinancing, debt solutions, visit this site: HTTP://www.scourtheweb.com/mortgage/. HTTP://PICKAMORTGAGE.blogspot COM
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