Archive for November, 2010
Creative Financing Methods For Real Estate Investing
Creative financing methods for real estate investors are very important because no matter how much money an investor has he will need more money as he becomes more successful.
Creative financing methods allow the investor the leverage of purchasing or controlling four to ten times the same amount of houses if he uses cash for their purchases. If the investor has little or no money to start with creative financing is his only choice except for hard money loans or private financing.
Hard money loans are expensive and are called predatory loans because the hard money lender usually loans a low enough percentage of the After Repaired Value ARV that he has minimal or no risk if the investor defaults and he has to foreclose.
Private money loans generally have much better financing costs and interest rates but may not always be available when the investor needs them. So the investor should use any and all financing that is in place against the house.
The first creative financing technique is to have the seller allow the investor to take over the seller’s mortgage. There are not financing or recording costs but the investor has a moral responsibility to pay the mortgage payments timely or give back the deed to the seller if he is having financial problems.
The second creative financing technique is called “seller financing” and this is where the buyer/investor gives the seller a mortgage back for his equity in the property with the intent of paying off this seller mortgage and the first mortgage at closing.
Getting a second mortgage for the seller’s equity virtually allows the investor the ability to purchase the house for very little or no down payment or closing costs except for the document stamps for the seller’s mortgage.
Occasionally investors will find houses where there is no mortgage on the property and the seller will take back owner financing for all or most of the purchase price. Everything is negotiable in these situations with regard to the loan amount date of expiration and interest rate charged by the seller.
These properties are unique opportunities for the investor because of the reduced closing and carrying costs. A typical offer to a seller is to receive interest only monthly on the principal at 1 above the current Certificate of Deposit interest rate i.e. 6 or 2 above this rate deferred to closing and paid all at that time i.e. 8. There is no need to offer hard money rates as the seller wants the investor to sell and pay him off as soon as possible and charging a high interest rate won’t help the investor with his cash flow.
Our experience is that 90 of the sellers take the 6 because they like to know that you are doing well and their measure is this monthly check. If the investor needs his cash flow he can offer a higher deferred rate such as 10 which usually works. It can be seen that creative financing techniques can propel an investor into many more deals than using his or borrowed cash.
This powerful money leverage technique of using “Other Peoples’ Money” OPM is a basic financial tool used by both professional and novice investors to increase their ability to control properties.
About the writer:nbsp;nbsp;Discover How To Make Every Real Estate Deal Profitable with an artificially intelligent piece of software that shows you how to make money Every Time in Any Market and it even prints an Irresistible Offer for the seller.Click Here To Learn More
Closing Time – Respa And You
Finding the home of your dreams can be one of the most exciting times of your life. But when you find the place you’re ready to hang your hat you’ll have to forgo the welcome mat and housewarming while you enter the consumer world of mortgage brokers lenders settlement procedures and closing costs.
Fortunately in America home buyers are protected by the Real Estate Settlement Procedures Act RESPA. In effect since 1974 RESPA is a consumer protection law that requires lenders and brokers to give borrowers information related to mortgage fees closing costs and other behindthescenes details when purchasing a loan. The act is enforced by the US Department of Housing and Urban Development HUD and if you’re new to the process of buying a home you should take the time to familiarize yourself with some of the regulations that protect you. Below is a list of some of the rights mortgage consumers have under the law:
KNOW WHAT YOU’RE PAYING FOR
Though it may seem obvious it’s important to know exactly what you’re paying for when you purchase a loan for your new home. Many first time home buyers are intimidated by the process and fail to ask pertinent questions. For most of them this will be the single most important purchase of their lives. So before you sign on the dotted line ASK your lender or broker what services they’ll provide and what fees they’ll charge along with the interest rate and points.
THERE ARE NO STUPID QUESTIONS
Much of the language involved in purchasing a mortgage is specific to financial worlds that most people only have a passing acquaintance with. If there are terms you don’t understand ask for clarification. You have the right to know what the various fees and terms represent before they become part of your financial life. Get the information you need to make the best decision for your future.
SHOP AROUND
There are a wide range of financial products and services out there. Loans differ bank to bank and broker to broker so don’t take the first mortgage you are offered shop around. Like shoes cars or cheese a mortgage is a consumer product though it will cost you significantly more! Even when builders offer you incentives to use their lender you have the right to look around for the best deal you can get. Though choosing a different provider may loose you certain concessions by law it cannot affect the final price of the house. Your mortgage will be with you for a while make sure you compare prices and services before you commit.
BUY IN GOOD FAITH
Though a good faith estimate may differ from the final terms of mortgage you have the right to one of these from your lender when you apply for a loan. The estimate will detail the expected fees at closing including inspections title insurance and taxes. Think of it as a quote. You can use Good Faith Estimates as a way of comparing offers from competing lenders.
WHAT ABOUT COLD FEET?
Circumstances and minds change all the time so make sure you know what your lender’s refund policy is. Before you buy ask which fees are nonrefundable should you choose to back out of the agreement.
FORGET YOUR MANNERS
Though it’s not normally polite to ask people how much money they make when it comes to your mortgage broker it’s just fine. Your broker is providing a service and you have the right know how much they’ll be getting paid by you and the lender when they find you a mortgage you want.
YOU DESERVE CREDIT
Or at the very least you deserve a credit rating that is based on your financial history NOT your culture religion where you come from your sex marital status age or whether or not you receive government assistance. It’s the law.
HOW TO TAKE NO FOR AN ANSWER
If your credit history is a mess you will probably have to take no for an answer but if you get turned down for a loan you have the right to know why. You can benefit from the experience by asking the lender why your application was refused and they have to tell you.
A FREE EDUCATION
When you apply for a loan your lender or broker should provide you with a copy of the settlement costs booklet entitled “Buying Your Home” published by the US Department of Housing and Urban Development HUD. Giving a general overview of the settlement process in America this booklet will take some of the mystery out of buying a home. Give it a read! It may even give you ideas for negotiating terms conditions and costs that save you money on your mortgage.
About the writer: John C. West is the owner of Specialists Real Estate in Las Vegas Nevada. With over 25 years experience in the Nevada Real Estate market John and his professional team will help you find the perfect home in Las Vegas start to finish. Visit them online at www.summerlinrealty.com or contact John toll free at 8775746231.
Choosing The Right Apartment: Children Are A Priority
Moving with children can prove to be a difficult taskespecially if you have young children. When you are looking to move into a new apartment you have a lot of things that you want to keep in mind and when you add children or a family into the mix your key priorities increase and can change drastically. If you are moving to get into a safer neighborhood you may want to look for safe and kidfriendly neighborhoods. Another priority that you may want to seriously consider is the school zone that your new home will be within.
A new home needs to have access to things that will keep your children entertained and this will depend greatly on the age of your children. If you have young children about toddler age you will want access to a park with a lot of different and safe kiddie equipment for them to climb and play on; whereas if your kids are older maybe young teens you will want a park where they can play soccer or baseball/softball and other activities that they will enjoy such as a library a swimming pool or a skating rink.
Schools are another huge factor that needs to be planned when you are moving to a new area. Again this will depend on the ages of your children. If you have younger children then you will want to focus on the elementary schools that are available; if you have preteens then you want to look at middle schools; and if you have teenagers you want to look at high schools. When looking at schools be it elementary or high school you want to take into consideration several different factors such as the student to teacher ratio and the scores of different tests that will show you how well the students are learning their subject material as compared to other schools in the state or country.
Money should not necessarily play the most important role in deciding on a new home when you have children. When you are moving to a new area with children you want to focus on what the best schools and areas to live in will benefit your children rather than saving money and moving into an area that can prove to be dangerous to your children. The age of your children should also play a key role in determining where you want to move because the age of a child will determine what he/she enjoys doing as well as what level of schooling they will require be it elementary middle school or high school.
About the writer: Zack Fair writes for Apartment Ratings website Apartmentreviews.net that features ratings and reviews for Miami Apartmentsas well as Los Angeles Apartments and so much more. Choosing the right apartment is not easy so read their ratings and reviews on an Apartment Ratings site apartmenteviews.net.