Tuesday, February 24, 2009

How Credit will affect your Ability to Buy a Foreclosure

So you want to get in on the great real estate deals before they are gone but you’re not sure about your credit scores and how they will affect you ability to buy. Maybe you know your score but you think it’s too low to qualify for a home. Maybe you’ve filed bankruptcy in the past and are wondering how long before you’ll be able to qualify for a mortgage or maybe you’ve got bad credit and want to know what steps to take in order to clean up that credit score to qualify for a mortgage.

These are all great questions and things every person should know before they venture out into the real estate market in search of great deals. By contacting a lender you’ll have a good source of information regarding your scores and how they stack up. But that lender won’t be able to help you repair your credit. Getting a grip on credit situations will help you in the long run whether buying a new home a car or applying for a credit card knowing what you can expect and how to handle your credit will make your life easier know and in the future.

Monday, February 23, 2009

Good People are Losing Their Homes too

You watch the real estate market continue to flounder. Prices continue to fall and foreclosures are still the topic of almost every conversation. Most of these conversations revolve around the irresponsibility of home buyers who bought with no money down or bought just too much home. But people who played by the rules are losing their homes too.

Sue and John Tate sold their home for a tidy profit and used all their equity gain as a down payment on a new home. It wasn’t big and it wasn’t full of upgrades and amenities. It was simply newer that their last home and in a great neighborhood. Their payments were affordable and taxes were low. John and Sue couldn’t have been happier. Then it happened. John got hurt at work. He tried to continue with his job but he just couldn’t do it and was forced to go on social security disability. The couple’s income was drastically reduced but John and Sue were responsible people and had a nest egg to fall back on. Besides John knew his injury was just minor and he’d be back at work in no time. But as weeks turned into months John wasn’t getting any better and their savings was dwindling. Sue tried to find another job to fill the gap in their income but no jobs with that kind of income were available to her so she took a night job at a fast food restaurant, after all something was better than nothing and every penny would help but if things didn’t change soon John and Sue would be faced with losing their home.

Is Now the Right Time to Invest in Real Estate?

You see it on the news every evening…foreclosures continue to rise. Prices continue to fall. But there is some good news as well, sales are up. That’s right the market for foreclosures is booming and sales are rising at a steady rate. Short sales are selling as well. Does this mean it’s time to finally get into the real estate market for a good investment? Who knows? But if you think it’s the right time for you to get in on the deals consider a few things.

Qualifying for a home isn’t as easy as it used to be and most people will need a down payment. If you are a buying a home to live in you may be able to get an FHA loan with only 3.5% down and asking the seller to pay your closing costs. If you are buying a rental, be prepared to put 10% or more down and probably closer to 20% plus your closing costs.

Remember that home prices may not stabilize for a while longer so don’t get caught in bidding wars with too good to be true foreclosure prices. The banks prices their homes low for a fast sale at a higher price so don’t fall into that trap.

Homes are not the only real estate investment out there. Vacant land has dropped significantly as well and many vacant land sellers have the ability to call the paper on their land. Before the bottom fell out many small builders and investors were buying land lots, building homes on spec and selling at a significant profit. Buying a lot now for future use may be an excellent investment since building a home is not necessarily a quick process. You’ll need to plan for many things and you’ll need home plans before you can plan much of anything. There are many different Home Plans to choose from featuring different sizes and styles and amenities. Vacant land can be an excellent investment and spec homes are a gold mine if done properly.

Whether you are buying a home to live in, to rent or a piece of land for a custom or spec home remember we are not out of the woods yet but there are deals to be had if you are in the right place at the right time. Be on the look out.

Tips for Buying a New Home before Yours Goes into Foreclosure :Family to the Rescue

Anything that seems too good to be true either is or will be in the near future unless you know ways around it. That holds true for this scenario of a second chance to own a home before losing one to foreclosure.

Last year many people were easily able to buy another home then let their current home go into foreclosure or attempt a short sale. All of these people were current on their mortgage and were able to afford their payments. The thing that bothered them most and the reason they ultimately made the decision to attempt this drastic move was falling home prices. They watched as people around them lost their homes to foreclosure and those foreclosures coming back on the market for sale at hundreds of thousands of dollars less than the home they currently owned and continued to make regular payments on. In essence they were GIVING money to a bank, money they would never see again for a very long time. Not only were they losing money monthly in payments they were also tied to this home for who knew how long. When would their equity recover so they could actually sell their home and simply break even?

The decision to buy a new home before walking away from the other was a financial decision for these people. They sacrificed their good credit in order to buy a home that was in line with the falling values rather than staying in a house so upside down they were looking at potentially 10 years before their equity recovered. It was a financial decision, a business decision, not a moral decision. The guidelines were clearly spelled out in their loan documents. If you stop making your payments we’ll foreclose on your house and trash your credit. They chose this path in hopes of recovering and moving on with their lives instead of being stuck in financial purgatory not of their own making.

Today lending guidelines have changed and for those who waited, the option to buy a new home is no longer available. Today, banks will no longer off set your current home payment with potential rental income of that home. If you have less than 25% equity lenders will not apply rent to offset your current payment. So what options are available? Where there’s a will there a way and now parents and other family members are stepping in to help their own. These relatives are often financially secure with money in the bank and their home is paid off. These family members are now qualifying and buying new homes for their kids and grandkids. A home that is often equal or better than what the kids are currently struggling to afford and at such an affordable price these kids can easily make their new home payment. Since they are dependant on a family members credit they are making wise financial decisions that will not jeopardize their parents credit and they are getting a new lease on life without financial worry.

Tuesday, October 14, 2008

House Cleaning

In today’s tough real estate market home sellers need to pay attention to the smallest of details, for they can be the difference between selling your home and watching it sit on the market month after month. These details can range from minor repairs to a major restaging. For any home to sell these details must be a part of an overall plan that includes correctly pricing your home for the real estate market today.

One detail that is often overlooked by sellers is a thorough and comprehensive cleaning of your home before putting it on the market. A clean home will not only appear organized and well kept but will tell potential buyers that you as a seller have cared for your home. This is an important factor for any buyer. When buyers see a dirty home they’ll wonder about things they can’t see. They may not consciously realize they are doing this but every buyer will register a dirty home on some level. Seeing a dirty home, any buyer concerned about the condition of a home, will not get that all important “Warm and Fuzzy” feeling that most often leads to an offer. Remember, for most buyers, a home purchase is based on emotion. So make sure your home is clean, organized and well kept. It will go a long way to selling your home without breaking the budget.

For my sellers I always recommend a good home cleaning service to come in and do an overall cleaning of the home before the first open house. This is a top to bottom cleaning that should include all hard surface floors, windows, bathrooms, kitchen cabinetry and baseboards as well as vacuuming under and around furniture. A good home cleaning service can, within a few hours, have the home looking and smelling clean, and most importantly pass the white glove test. From there it’s an easy task to perform touch ups on a regular basis.

When having your home professionally cleaned it’s important to specify things that are particularly important for the sale of your home. A clean kitchen should be the main focus with the bathrooms a close second. Windows should also be an important part of a professional home cleaning. If your cleaning crew does not do windows there are many good window cleaning companies that can handle the task. Before your crew leaves it is advisable to walk though the house and inspect their job. If something has been missed or is not done to your satisfaction let the cleaning crew know. A good professional home cleaning service wants a happy customer and will make sure the job is completed to the homeowner’s satisfaction.

Every home under the right conditions will sell. To ensure your home has the best possible chance of attracting the few buyers out there, make sure your home is a complete and attractive package that buyers simply cannot resist. Price and appearance are two of the most important factors in the sale of a home. Discuss the price with your agent to arrive at the best possible dollar amount to attract buyers. Once you’ve attracted them with a great price show off your homes true potential with a clean and sparking appearance that tells every buyer your home is special. These are the homes that sell, so don’t over look the appeal of a clean home because it can be one of the most important reasons buyers are attracted to your home.

Wednesday, September 3, 2008

Buy and Bail: Fraud or Fair Play

I just read an article from the Press Enterprise telling its readers about acts of Fraud perpetrated on innocent Mortgage Companies. WHAT? These same mortgage companies that gave out bad loans like candy are now reported as the victim? The writer is less than objective and the article is nothing more than scare tactics. One commenter in particular was very astute at summarizing the real root of why buying a new home before letting your current home go back to the bank will never get anyone in trouble with the law or with their new mortgage company. In a nut shell: if you state you’ll be leasing out your current home and living in the new one, the lender really doesn’t care whether you actually lease it out or not. What he does care about is that you make your new mortgage payment; he doesn’t care what happens to the old home as long as you pay your new mortgage payment. Does anyone honestly think the new mortgage lender will say “Wait a minute; you let your old home go into foreclosure when you told me you were leasing it out...you lied so I’m going to foreclose on you too, even though you pay your mortgage payment on time every month.” Does anyone really think that will happen? No it won’t. The new lender simply wants you to make your payment...so if you loose your job, get a demotion or your pay is cut, as long as you keep making that payment the lender could care less about your situation. They are in business to make money not trouble for themselves.

Read it and Have a Good Laugh...Look for admirers comments


Thursday, August 21, 2008

Actions and Consequences: Buying Before Foreclosure

Loosing a home to foreclosure is never an easy choice but for some people it may not even be a choice...for others, they weigh the consequences and make an educated decision. Which ever scenario applies there are definitely hurdles to over come and penalties that apply. Many people over look the causes and focus on the action without taking into consideration that most banks expect people to get foreclosed on. That’s why they structure their mortgage contract to spell out exactly what steps will be taken to protect their interest in the property. It’s business for them and nothing more.

When banks started making money easier, they knew there would be people who would default. What they didn’t realize is the magnitude of the crisis they created. With the nation facing foreclosure, home prices falling and neighborhoods turning to ghost towns is it a wonder that people who aren’t loosing their home are letting it go into foreclosure also? Picture this:

Mr. and Mrs. Taylor bought a home they could afford. They put 20% down and were very comfortable with their payment. Many of their neighbors however were not as responsible and chose to buy more home than they could afford and applied for a bad loan to do it with, banking on future equity to bail them out. So, now the crisis hits and people everywhere are stuck. They have a house worth far less than they owe and have a payment they simply can’t afford. What choice do they have but to let it go?

Now let’s look at Mr. and Mrs. Taylor again. They are happy with their home. Unfortunately everyone around them is loosing theirs. The neighborhood is slowly turning into a slum as vacant homes are vandalized. Yards are dead. The value of their home declines further and they start to realize they have made a mistake also. The home they invested in is now worth far less than they owe as well, despite their 20% down payment. What should they do? Should they stay in a home where they could be paying on a mortgage for literally years before they break even or should they use their good credit to escape this mess? A mess that was never their fault to begin? They are an innocent victim of the foreclosure crisis.

Should they buy another home then let theirs go into foreclosed or sell as a short sale? Or should they suffer the upcoming years of a mortgage and home that are worth less than they owe; paying money into limbo never to be seen again. If they buy another home now they’ll have a new loan for less than they are paying now, bought in a market where equity is guaranteed in the next 5 years. It’s not an easy choice because Mr. and Mrs. Taylor have always taken their responsibilities seriously. Do they do the right thing or the smart thing? This choice is one being considered all over the United States and more and more people are making the smart choice, knowing full well the consequences they’ll have to deal with.