First Time Home Buyer Tips

For the first time home buyer, buying your first home is one of the most exciting things you will ever do. If you have spent years living in apartments, there is nothing more satisfying than owning your own property. The process can be a little lengthy and you might hit a few bumps in the road to home ownership. The following tips will help the first time homeowner avoid some of the hiccups.

Step one is to talk to a real estate agent about the home buying process. It should not be a sales meeting and you should be able to find an agent that will agree to meet with you about the basics without having to sign a sales agreement with them. If you cannot find a good agent to talk to, you might want to consider talking to a loan officer at your bank or a mortgage broker.

An equally important tip is to get your finances in order before you apply for a mortgage. Order a copy of your credit report so you can check it for accuracy. Mistakes are common and you want to make sure that there is no fraudulent activity. You have the right to dispute errors on your credit report. If you come across something that you know is an error, circle it and send it to the reporting agency along with a letter of dispute.

Next, you should really study the mortgage industry. You need to be able to find the right loan and lender most suitable for your needs. Familiarize yourself with industry terms like debt to income ratio and adjustable rate mortgage. Learn the difference between pre-approval and pre-qualified. It will all seem foreign at first, but taking the time to learn the business will spare you from headaches in the future.

Also, you need to figure out what your wants and needs are. What kinds of amenities are you looking for? How many bedrooms? One story or two story home? You also need to consider the size of the down payment and figure out what you need to do to come up with the money for it.

You must learn about how real estate agents work. There are buyers agents and sellers agents. A buyers agents responsibility is to negotiate the best deal for the buyer. The goal of the sellers agent is to get the price that the seller most desires. The best way to find the right agent is to ask your friends for suggestions. They have all probably been in the same boat, so they can probably recommend a good real estate agent.

When meeting with a potential agent, pay attention to how they treat you. Make sure they listen to you when you talk about what you want. Also, how are their follow up skills? Do they take the time to return your calls or emails? If they do not take the time to respond, move on. There is a better agent out there for you.

When looking for a home, consider all of the possibilities. Look up real estate agents websites. Do not rule out For Sale by Owner Properties and foreclosed homes. Housing and Urban Development (HUD) homes can often be found for very reasonable prices. You do need to find an agent that is approved to sell HUD homes if you choose to take that road to home ownership.

Before you even think about making an offer, you need to consider the resale value. You might plan on being there for a long time, but you just never know. You might opt for a different climate to alleviate your allergies or you could simply be transferred by your company. You want to pick a good location that will be attractive to others as well.

Another issue that cannot be ignored are the deed restrictions, which govern what you can and cannot do with the property. If it has always been your dream to have a pool, you want to make sure that you do not buy a home in a subdivision that will not allow it because of deed restrictions.

Home inspections are an important part of the equation. Talk to your agent to find out when the inspection will be performed. It varies state to state. Sometimes the inspection will be right before the contract is signed and other times, they are performed right after an offer is made.

Finally, make sure you stay on top of things. Any number of problems can crop up at the last minute and delay the purchase of your home. If you are not sure about something with the paperwork, do not be afraid to ask questions. You might think of something that everyone else has overlooked.

Purchasing a home is a time consuming and sometimes frustrating task, but it is worth it when you have your backyard barbecues.

Lessons Learned When Buying Auction Property

I’ve always been interested in property, having completed studies in interior design and have had a few lucky purchases when it comes to houses.

I picked up a bargain with my first house, an ex-local authority end terraced place that I purchased for an absolute snip. After the usual updates eg. new kitchen, bathroom and windows etc, I was able to sell it with a profit margin enough for a decent deposit on a beautiful Victorian property that needed a fair bit more work, albeit cosmetic.

I did become quite attached to this house but due to a nasty divorce, I found myself in the position of having to sell up again. I was sorry to put it on the market but got used to the idea and have been looking at my options.

The one that appeals to me most at the moment is buying an auction property. The house sale has gone through relatively smoothly and I have convinced my parents to let me move in with them. My father keeps stressing at the thought that I might get fleeced with an auction property but I believe I’ve done sufficient research, and that I can be restrained enough, to not go over budget or do anything silly.

I’ve been devouring property papers, I’ve even been to see what goes on at the auction and how to bid. I have to say, it’s very exciting. Watching the professionals bid on auction property is gripping stuff and totally absorbing. I see some of the houses sell for next to nothing and I’m sure I can grab a bargain of my own.

I’ve read enough to know that when I buy an auction property, I will need a 10% deposit on me on the day so I wait until the money comes through from my house and find the excitement is building. I’ve received my listing from the auction house and narrowed my choice down to three houses. I’ve made arrangements to view all of them this weekend and, at my father’s insistence, will be taking a builder with me, just in case there is anything wrong that I don’t pick up.

By the day of the auction I have one house that I have set my heart on. More like setting myself up for a fall, according to my father but he’s always scornful of everything he doesn’t understand.

The builder is concerned about a crack in the wall but it looks old to me so I’m not going to worry. He’s also making noises about something called ‘asbestos’ in the garage roof. Like I’d be concerned about the garage! Anyway, I’m hoping I’ll have enough cash to buy it outright so I don’t have to worry about a mortgage.

The auction gets under way and it takes about an hour to get round to the property I want. Bidding begins and I feel sick with anticipation, and sick with the thought of ‘what if I don’t get it’. I hold back to start to see how the bidding goes but I’m soon waving my hand in the air like I’m trying to guide a plan into landing.

It’s all over so quickly and within minutes, I am the proud owner of my first auction property. If only I had the money I could do this all day – it’s such a buzz! Money exchanges hands and I set off with my keys to show my father the house.

He, also, is concerned about the crack in the wall. To ease his concerns I’m getting in a structural engineer, just to make sure everything is above board and my investment is safe.

Oh dear, he says, scratching his head and sucking in his breath. Don’t you just hate it when they do that, it doesn’t mean anything! However, it turns out that due to a coal mine that used to be active in the area many years ago, the house has suffered some subsidence. It has been left derelict for some so nobody was bothered about it.

Looks like I’ll be staying with my parents for a little longer after all! While the workmen are underpinning the wall against the garage, they dislodge the makeshift roof and find this asbestos stuff. After downing tools, they tell me I have to get this stuff professionally disposed of before they will continue.

So, that’s just under 25,000 pounds for all the structural work before I even think about the cosmetics! I couldn’t get a mortgage on the property because of the structural problems so I’ve had to borrow it from my father. I can’t believe that my bargain auction property has become such a problem and now it looks like, once I’ve done all the hard work on it, I’ll have to sell it on again just to pay my father back.

Short Sale Investing: Guidelines on Both a Buyer and a Homeowner’s Perspective

The cost of maintaining a real estate property is indeed treated an expense that must be spread over the asset’s useful life even if it depreciates. In real estate, when you shed a sum for maintenance, repairs, and other property necessities to be used to generate sales, you treat the item as an expense. Let’s put things in a much comprehensible example: let’s say you purchased a van to be used for your business. The van losses its value the very minute you drive it out of the dealership and the measure of the loss in value is known as depreciation expense. This happens on both vehicle and property investment. But in the case of an asset, when what you’re indebted cost more than the original value of the house, this only calls for one thing: a short sale.

Now how do you go about short sale investing? The following may answer this query in both an investor and a seller’s end:

Learn the trades of a short sale like the back of your hand. Or to put simply, you should learn the dealings from inside out. Short sale is the process by which a homeowner deals with a bank or a lending firm concerning a property on the brink of foreclosure. This usually happens when the property is no longer a marketable one and the homeowner out of negligence or incapacity to pay the mortgage owe more than the entire cost of the house. Therefore, to make it simple and comfortable on both end, it is a must that short sale is well elucidated and detailed for the benefit and understanding of both parties.

Short sales are not a speedy course of action. If you’re a homeowner who’s in the process of short selling, you have to realize that this isn’t a speedy process. This isn’t the same as a 30-day release of results. It takes more than that and certain things would probably dishearten you. So for the faint hearted, this isn’t the way to go. You have to deal with painstaking paperwork and formalities, red tape considerations, and a lot of other hindrances that may come along the way. So it pays that you brace yourself for the inevitable.

Consider your figures. You do not just invest on short sales without doing the math. This is of course on a buyer’s perspective. On average, if the property you’re rooting for has a value of no more than $150,000, aiming for at least $20,000 in the sale is already a sound number. However, if it goes the other way around, and basing on your calculation, you wouldn’t be netting $15,000 at least, then it’s not going to be worth it. Keep in mind, the property may require renovation and reconstruction cost that would perhaps cost you more, so you really have to weigh your options.

Finally, just take it easy. If you’re a homeowner, expect to meet stumbling blocks that will stand between the short sale procedures. If you’re the buyer, be emphatic. Understand that a homeowner is going through a difficult time. Make the homeowner comfortable in own your pace. When you’re able to do this, you’ll most likely end up getting the sale.

Read more: http://www.articlesbase.com/wealth-building-articles/short-sale-investing-guidelines-on-both-a-buyer-and-a-homeowners-perspective-1473343.html#ixzz0peFF6L4P
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Avoid Top Ten Mistakes Made by Real Estate Investors

Real estate investment is perhaps one of the most lucrative forms of investment today. But it is also equally risk bound especially when one is not well versed with the trends and nuances of the real estate market. So if you are contemplating on investing in real estate, it is best to avoid costly mistakes in real estate investment especially when you invest your hard earned money into it. Knowing the most common mistakes made by real estate investors helps one steer away from making such mistakes in the future and ensures good return on investment.

Here are the top ten mistakes made by real estate investors, according to bankrate.com. Bankrate has put together the top ten mistakes after speaking to established, full-time real estate investors and other professionals involved in real estate investment such as bankers. Read on to know them and avoid them.

1. Not planning up ahead. Lack of a proper plan is the biggest mistake made by novice investors. Finding a house after forming a proper investment strategy is the right way instead of looking for a house to fit the plan. Many make the mistake of buying a house because it seems to be a good deal and then trying to see how they can fit it into their plan. Instead of buying a house and thinking one can plan in due course, investors should rather concentrate on the numbers and try to make offers on multiple properties. This will ensure a good property that not only matches their investment model but also works out well with the numbers they had planned for.

2. To believe you can make money quickly. The second major mistake that real estate investors make is to think it is very easy to get rich in real estate. This is only a myth and the reality is that investing in real estate is a long term project.

3. Doing it single-handedly. For becoming a successful real estate investor one needs to build a team of professionals who would assist the investor in his deals. This would ideally include a real estate agent, an appraiser, a home inspector, a closing attorney and a lender.

4. Making excess payment. One another reason that investors in real estate goof up in their investment is by paying too much for the properties they buy. Paying too much and locking up all the funds in the erred property deal will leave you with no money to redeem yourself.

5. Leaving out the groundwork. Not doing your homework could be a costly mistake if you were a real estate investor. Every field of business needs sufficient amount of homework to be done, and real estate investment is no exception. Learn the fundamentals and then venture into investing in properties.

6. Throwing caution to the winds. Investors have to exercise a certain degree of caution and take earnest efforts while making a deal. New investors often fail in this regard and sign a deal without doing adequate research on the property.

7. Miscalculating money flow. Investors whose strategy is to buy, hold and rent out properties need to ensure sufficient cash flow for maintenance. Property managers could be expensive and the owner has to incur more expenses such as mortgage, taxes, insurance, advertising costs etc. Investors have to allocate their budget such that all these expenses are taken care of, or end up having their asset turn into a liability.

8. Lowering the volume. A larger volume of deals or transactions helps in increasing the profits by reducing the impacts of marginal deals.

9. Getting trapped in your own deal. Having more number of options at hand for the property you buy is a wise strategy. This helps one to be prepared for fluctuations in the real estate market. Plans to rent out the house could go awry when the rental market slumps. Having alternative plans helps you cut down losses and tackle unexpected situations.

10. Making incorrect estimates. People who plan to rehab their house need to check if they will still reap the benefits at double the time that they had estimated. This ensures they do not miscalculate and lose money on the deal.

Read more: http://www.articlesbase.com/real-estate-articles/avoid-top-10-mistakes-made-by-real-estate-investors-151870.html#ixzz0peFljr8N
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The Truth about Mortgage Rates

The best rumors have the longest staying power, and the untruths about the connection between Bank of Canada interest rate cuts and mortgage rates is a prime example. Why? Well, though Bank of Canada interest rate cuts do affect the financial industry, they do not affect every segment of the financial sector; some segments are directly affected, others are only indirectly effected, and then there are segments that are directly or indirectly effected depending on the financial product. The mortgage industry falls into that third category.

Shocked? Well, you’re probably not alone. The idea that Bank of Canada discount rate changes cause mortgage rates to change is a common misconception that’s been perpetuated for years. So, let’s set the record straight!

TRUTH: When the Bank of Canada adjusts interest rates, it does affect interest rates of financial products. However, only interest rates for short-term financial products—things like car loans, credit cards, etc.—are directly affected by Bank of Canada interest rate cuts or hikes. Meanwhile, 10, 15, 30, and 40-year fixed mortgage loans are considered long-term financial products. As such, the Bank of Canada’s decisions do not directly influence fixed mortgage rates.

TRUTH: Though Bank of Canada rate cuts have no direct influence on fixed mortgage rates, the Bank of Canada’s decisions do directly sway one type of mortgage loan: Adjustable rate mortgages (ARM), which are also sometimes referred to as variable rate mortgages, IF the ARM is specifically stipulated as being tied to the prime rate.

TRUTH: Fixed mortgage rates are based on mortgage bonds (sometimes called mortgage securities), NOT the 10-year T-bill. Therefore, what actually has a direct effect on a mortgage rate increase or decrease is the buying and selling of mortgage bonds.

TRUTH: Though Bank of Canada rate changes do not have directly influence fixed mortgage rates, they can have a Domino Effect on fixed mortgage rates. How so? Well, the purpose of the Bank of Canada’s rate adjustments is often to increase or decrease consumer spending. For instance, when interest rates are cut, the goal is to increase consumer spending. As a result, investors speculating that the Bank of Canada’s tactic will work pull their money out of the bond markets (which are less volatile, low return investments) and put their money into stocks because they believe they can make greater profits from their investment. When this happens, that can cause mortgage rates to fluctuate. Remember: Mortgage bonds / mortgage securities affect mortgage rates. If money is cashed out from mortgage bonds, rates will increase. Conversely, if the monies are withdrawn from other types of bonds, mortgage rates may dip or they may remain unchanged.

So, what does all of that mean if you’re looking to modify or refinance your mortgage, or if you’re waiting for mortgage rates to change before you apply for a mortgage loan? First, it means that you should keep an ear out for what the Bank of Canada is doing regarding interest rate cuts and spikes ONLY if you’re interested in a variable rate mortgage—which would not be ideal for most consumers in the current economy. However, if you prefer a fixed rate mortgage, it means you can (and should) stop wasting your time tracking the 10-year T-bill and keeping tabs on the Bank of Canada. Instead, keep watch on what’s happening with mortgage bonds so you’ll know when mortgage rates are where you want them!

 

The Flexibility you Need: Benefits of Home Equity Lines of Credit

You may wonder what the differences between home equity loans and home equity lines of credit are.
Home Equity

When you have a mortgage on your home but the value of the property exceeds the amount owed, the difference between the outstanding debt and the property value is referred as Home Equity. This remaining property value can be used to guarantee another loan: A Home Equity Loan or Line of Credit.

Home Equity Loans are secured loans with a fixed or variable interest rate, a fixed loan amount and a fixed, though negotiable, repayment program. A home equity loan is just like any other loan, only it is secured with the equity you have built on your home and thus carries fewer interests.

A Home Equity Line of Credit on the other hand, comes only with a variable interest rate, there is no fixed loan amount, though there is a credit maximum and the repayment is extremely flexible. The home equity line of credit is also secured on the home equity.

Interest Rate

Since both are secured, the interest rate charged is considerably low. Only home equity loans with a fixed rate can have a slightly higher interest. Home equity loans with a variable rate usually carry a somewhat lower interest rate. Home equity lines of credit, on the other hand, carry only a variable interest rate that is usually similar to the home equity loan fixed interest rate.

Loan amount

Home equity loans come with a fixed loan amount that can equal or be a bit higher than the home equity value. Home equity lines of credit are somewhat different: There is no loan amount, a credit maximum amount is set and you can borrow as much money as you need up to that amount. For example: If a $50.000 limit is set you could borrow $10.000 and a month later borrow $20.000 more. And so on till you reach the credit maximum.

Repayment
Home equity loans come with a fixed repayment schedule which has to be followed strictly with some exceptions. Though, there are in some cases grace periods and waivers you could apply for, if you request a home equity loan you will probably have rigid installments or at least a fixed amount plus a variable amount depending on interest rate variations.

Home equity lines of credit let you repay the amount you owe they way you want to do it. You have an open line of credit where you can borrow and repay as much as you want as long as you do not exceed the credit limit. Moreover, as opposed to home equity loans, lines of credit do not require to be renewed as you can always borrow more as long as there is credit left. If your home equity grows either by an increase on your property value or because of a reduction on your mortgage debt, you can ask for your credit maximum to be recalculated.

Read more: http://www.articlesbase.com/credit-articles/the-flexibility-you-need-benefits-of-home-equity-lines-of-credit-279295.html#ixzz0peKezPxB
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