Buying A Foreclosed Home Or Property – A Wise Decision?

Foreclosure as the name suggests means a situation in which a homeowner or a mortgagor is unable to make payments of principal and/or interest payments on his or her mortgage, so the lender, be it a bank or Mortgage investor, can confiscate (take possession of the property) and sell the property as per the conditions in the terms of the mortgage contract which is laid out in the fine print so to say on the note or mortgage. A home that was kept mortgaged becomes a foreclosed home or what lenders call REO (Real Estate Owned) when the owner of the home is unable to or unwilling to release his/her mortgaged home by paying his dues. We are seeing a lot of other situations where the lender is taking back possession called in-lieu of foreclosure. (Common practice lenders are giving Cash for keys)

The first stage of a foreclosed home is pre-foreclosure that happens when the home owner has missed his/her one to three payments (as outlined by mortgage) and is thus considered overdue on the loan. A formal cautionary letter or notice is then sent to the homeowner based on which he/she will have to react at the earliest and make the due payments. In such situations, most of the time foreclosure home owners are driven to sell their home or real estate property to home buyers for fast cash or some at that point choose to explore short sale options.

Quick and easy sale of home or real estate property for cash is always advantageous for home sellers. Foreclosures can in some cases benefit a seller who will either get paid in full at the foreclosure sale or get the house back to sell again for a second profit. Most of the house sellers are always in a look out for a better deal when they are trying to sell their house for fast cash. The main advantage that the home sellers get is that they can appeal to the large number of home buyers by accepting the greatest number of financing plans. (Please see some of my other post for financing options)

Also for home buyers or Investors, the main advantage behind buying a foreclosed home or real estate is financial savings. Buying a foreclosed home at a foreclosure auction will be much cheaper than under normal context. Buying the foreclosed or pre-foreclosed property by paying less will allow the home buyers to do some investments in its betterment and/or selling it at higher price than it costs. It is a general belief that on an average a home buyer saves up to 20% to 30% when buying a foreclosed property or home. TIP: FHA 203K LOANS WILL ALLOW FOR PROPERTY REPAIRS

Along with advantages, there are also some disadvantages in buying a foreclosed home or property. For home buyers, the condition of the interior of the home usually remains undiscovered. IF YOU BUY AT AUCTION Home buyers always tend to buy the foreclosed home or property at a very low market price so that they can afford to spend some amount in doing some restoration or repair work. Remember the tip call me if you would like information on a 203k loan

There are various ways to invest in foreclosed properties. The most popular way is by purchasing a real estate property or house and then giving it on rent to create a positive monthly cash flow. The second popular way to earn money is to search out foreclosures, buying them, investing in repairing and remodeling and then selling them at a high price. The third way is to purchase a nice foreclosure that is under priced and sell it immediately at a higher cost. TIP: IF YOU BUY AND SELL WITHIN A YEAR YOU WILL PAY TAXES BASED ON THE BRAKET YOUR IN - IF YOU WAIT A FULL YEAR IT IS ONLY 15%. - IF YOU LIVE IN IT AS YOUR PRIMARY RES FOR 2 YEARS THEN GUESS WHAT 0% TAX RATE

Over the years, it is empathized that buying foreclosed homes is very remunerative. Foreclosures are on the rise and people are unable to retain their home any more. They are anxious to sell their homes quickly before they are foreclosed on and will often short sale the property or sale at or close to payoff. With more and more homes popping up for sale, home buyers will have enough to choose from. Home buyers can pay fast cash for homes that are foreclosed or going to be foreclosed; thereby helping the mortgager to ease out his/her stress. TIP: I HAVE FOUND THAT LOWER CASH OFFERS ARE BECOMING MORE ATTRACTIVE TO LENDERS.

In today's fast paced lifestyle, many people are lagging behind on payments. Plenty of people are facing financial problems. So, if you are encountering foreclosure or a pre-foreclosure, trying to relocate or transfer job, divorce, multiple mortgage, or just need to sell your house fast, there are many home buyers who will simply solve your real estate issues or your foreclosure problems and provide you with a fast cash offer on your house. I have a number of Investors that buy property under these terms and will close fast if you have any questions or would like more information please call me or send an e-mail


In Closing

If you are new to investing or you are a home buying looking to get a good deal I highly recommend you hire a home inspector to help point out all the potential problems in the new property.


Sincerely


Barry Lynn Miller Jr.

Buy Your First House Before You Can Afford It

Purchasing a home is most likely (especially at a young age) the biggest and often the best investment that you will ever make. Why not make that investment now? I will be trying to explain the differences between know and later.

If you are saving up with the goal of getting your dream home within the next two to five years, the following ideas could help you buy your house sooner than you planned. You will find in some of my early blogs that on a $200k property you would have a difference of $88k in equity and cash verse taken 48 months to save for down payment.

* Buy from a motivated seller. A motivated seller is someone who has a house he or she wants to get rid of quickly. It could be that the owner was unable to sell the house on his or her own or that, even though the house was listed through a real estate agent, it just didn't sell. Because only about 5 percent to 10 percent of sellers are truly motivated, you may need to relax your must-have requirements in a house. The seller might also be facing foreclosure and its better to sale for less rather than let it go back to bank.

* Find a seller who doesn't need cash upfront. Most sellers will need the money from the sale of their home to buy their next home. Instead, look for someone who has already bought his or her next house. Vacant properties or homes that have been rental properties also are good candidates. By looking for properties like these, you'll be working with sellers who are more likely to wait to get their money.

* Structure your offer as a lease purchase. Instead of buying right away, offer to rent the home for four or five years at a set rate. This will help the seller cover the current costs of the property while giving you the ability to live in your home now, continue to save for the down payment or enroll in a reputable credit repair program and then buy the home when you're ready. Make sure you're offered the option to buy the home at or below today's value. If the seller is not willing to go along with this, then look for someone who is more motivated to sell or make sure the property is a desirable place that anyone would buy. Common mistake is buying a property simple because you found terms you could afford this would put you in a property that might be hard for you to sale at a later date as well.

* Other programs are available as well such as contract for deed, Wrap around mortgage, hard money loans, and special government programs. If you have any questions about other programs like this see the rest of my blog or give me call or send an e-mail.
See if you can get the seller to give you a credit toward the purchase of the home for each month that you pay rent. Say $100-$200 per month I like to negotiate the credit based off a standard amortization schedule of say 6.5%-7.5%.

Using these ideas, you'll be able to buy that special house this year rather than waiting another two years or more. If the home you get is worth $200,000 today, then at a 10 percent appreciation rate, you could make an extra $40,000 or more simply by getting into the real estate market years ahead of schedule.


In closing

Purchasing a home is most likely the biggest and often the best investment that you will ever make. Why not make that investment now?

Save or borrow for the Downpayment

The numbers do not lie if you buy now it will cost you less these numbers are based on saving over 700 per month and who can do that these days. I will try to show you why it’s better to borrow the down payment verses save for the down payment.Say your going to buy a Home for $200,000 and the Expected Period in House You Buy is 30 years we will use an Estimated Property Appreciation Rate of 4.00% per year, an Income Tax Bracket of 27%, a Pre-tax Rate of Interest on your Savings account of 5.00% , After-tax Rate of Interest on Savings 3.65% Number of Months You Rent Before You Buy lets say 48 months You still have your Current Monthly Rent of $650 to contend with along with other expenses like the following will also be used for the calculations. Monthly Real Estate Taxes $55 per month, Monthly Home Owners Insurance $65 per month, Monthly Rental Insurance $35 per month

The Loan Information for the Buy Now Save First scenario are has followed Purchase Price now $200,000 price later$233,972, Down Payment now(FHA ) $7,000 Down payment later at 20% is$46,794 Loan Amount now $193,000 loan amount later $187,178 Interest Rate now 6.000% and later 6.500% Loan Term (in years) 30 years for both and if you buy now at 27 the payoff will be at 57 and if you wait you would be in your 60’s (note I have programs and ideas to cute this down so don’t let the 30years scare you). Monthly Mortgage Payment now of $1,157.14 and later would be $1,183.10 even with large down because of price difference and the chance rates will be higher ( Rates are at an all time low another reason for know) Monthly Mortgage Insurance Payments of $154.4 for now but will fall off later and that amount is not in finally calculations and MI for later is $0.00 Buy Now Loan Balance Reaches 80% of Appreciated Value in Month 43 where the MI will fall off. Results - Assuming a 30 Year Holding Period Buy Now Save First Cost of Rent $86,508 Cost of Renters Insurance $4,658 Cost of Lost Interest on Down Payment $13,890 later $73,907 Cost of Points Net of Tax Savings $4,235 Later $3,550 Cost of Other Upfront Charges $7,461 Later $7,738 Cost of Monthly Mortgage Payments $754,856 Later $614,333 Cost of Monthly Mortgage Insurance Premiums $9,449 Later $0 Cost of Homeowners Insurance $42,402 Later $33,752 Cost of Property Taxes $26,192 Later $20,848 Less: Tax Savings on Mortgage Interest $123,322 Later $111,708 Less: Increase in Property Value $448,680 Later $414,708 Less: Reduction in Loan Balance $193,000 Later $137,296 Equals - Net Cost $93,482 Later $181,582


Conclusions The Cost of Saving First Exceeds the Cost of Buying Now by: $88,100 Saving First Would be the Better Choice Only if Your Monthly Rent is Less Than: ($12)

A Complete Real Estate professional has knowledge of both sides of the business if you would like your personal report please send me the details so I may provide you the upmost service you deserve. I pride myself on making sure all of my clients have all the information they need to make an informed and educated decision before making any real estate purchase. Sincerely yours

Barry Lynn Miller Jr

Buying a Diamond in the Rough

It may be your budget, or the thrill of doing it all yourself, but you are in the market for a diamond in the rough. But just how rough can a house be before a lender decides not to take the risk on a mortgage?

When you negotiate the contract, make sure that you include a provision for a home inspection for structural integrity, defects and potential problems. This isn't part of the appraisal, it is a separate detail. A home inspection ascertains the health of the house you are buying. Whether it is a bad roof, leaky plumbing or termite damage, a professional inspector will find all of the major problems. As part of your report, you will receive a list of what needs to be repaired or replaced, the time frame and the potential costs. If you are buying a fixer-upper, you may find that your lender will require an inspection. Some will and some won't. But you should insist on one to protect your best interests. P.S. You will also like to have a financing contingency clause in case your lender decides the property is unacceptable. Ask me about 203k loans which allow for escrowed repairs.

What if you luck out and there are no major problems, just minor ones? Maybe the carpet is worn and needs replacing. Perhaps the deck needs a little work. New paint and fresh air could be all it needs.

Minor, cosmetic concerns are usually not strong enough to scare away lenders, but could lead to negotiations between the buyers and sellers. This is where my experience and negotiating skills really come in handy. (Barry Lynn Miller Jr. RE/MAX Properties Unlimited)

If you want certain things repaired by the seller, such as the mailbox fixed and the deck painted, we have to make sure it is in the contract. If it is, the seller must perform. We may be able to have the appraisal include the repairs spelled out in the contract. This can help you when getting the mortgage, as lenders will only lend on the lesser of the appraisal or purchase price. We just have to make sure that it is all in the contract.

Occasionally, your seller may ask to perform the repairs after closing. Many buyers simply ask for a seller's concession. Instead of installing a $5,000 carpet before closing, the seller agrees to reduce the purchase amount by the $5,000 it will cost the buyer to put in new carpeting.

But if you don't have that $5,000 in hand to buy the carpet, don't expect your lender to give it to you. Even if your contract states that the seller will give you back $5,000 after closing, don't expect it to happen. Cash allowances written into contracts can't happen. The lender will not allow the seller to hand over cash at closing. As your real estate agent I will steer you away from this and help construct a sales contract that will please both the buyer and the seller. (Again a 203k FHA loan might be the ticket) But don't expect to come home with $5,000. It just won't happen Lenders are doing their due diligent to insure that it doesn’t and I’m sorry but no funny business on my watch.

Buying a fixer-upper can and will be rewarding. You get to choose how you want to improve the home. But it is a lot of work and definitely not for every buyer or lender. Your best bet is to be completely upfront with your lender about your intentions. This will help the transaction to go smoothly. This process of buying a diamond in the rough works really well with foreclosures and you may sometimes buy them at 80% of the value.

In conclusion

It may be your budget, or the thrill of doing it all yourself, you are in the market for a diamond in the rough. But just how rough can a house be before a lender decides not to take the risk on a mortgage? I do have special financing options for REO and foreclosures that most lenders will not even consider give me a call today if I may be of any assistance.

Sincerely Yours

Barry (Lynn) Miller Jr.
RE/MAX Properties Unlimited

Rates Drop

Rates dropped today over a 1.6% and are back up .75% for a total down for the day of .85% to price which is equivalent to just over .5% to the interest rate at the end of the day if you missed this rate drop and would like to be added to my daily rate watch system. Please send me an e-mail with ADD TO RATE WATCH in the subject line and you will receive rate updates throughout the day so that you will stay on top of the market and know what rates are doing. So that you can make an informed decision when to lock or float your loan or move quickly on a Real Estate property you might otherwise not be able to afford.

Example -A 120K property at 6.5% rate last week is $100 cheaper with the 5.5% interest rate you could have locked today at so send me an e-mail and save money.

Complete Real Estate Proffessional

I started my career at the age of 20 as a Manufactured Homes Sales person in 1994. Were I worked with clients and made it a goal to insure financing for all types of borrowers. Honestly I got so good with the financing side of the business that my boss at the time created a position for me (which at the time was unheard of in that industry) in which I was the finance manager over 4 different locations. In 2000 I came to realize that my passion was the finance side of the business and I found great enjoyment out of my work not for the monetary reason you might think. It was for the enjoyment I got from helping people who had difficulties obtaining a mortgage through conforming means referred to today as the sub-prime market. In 2002 I started working for Charter West Mortgage, LC under a program called net branching which allowed small town mortgage professionals who desired to run their own business while still having the ability of staying competitive with the big lenders out there. Early in 2008 after the fall of the sub-prime market in mid 2007 I decided to earn my Real Estate License and I currently work as both a Mortgage Broker under CharterWest Mortgage, LLC and as a Real Estate Agent with REMAX Properties Unlimited. My advantage over other Agents is the knowledge of both sides of the business my primary focus is the Real Estate side and secondary is the Mortgage side. I basically maintain my mortgage connections to insure my clients get the best rates and programs available I can explain and interrupt all the lingo to insure you�re getting a fair price for your mortgage. So if you are looking to buy or sale Real Estate give me call and I will save you money

Eastaboga AL property - Eastaboga AL homes for sale

Eastaboga AL property - Eastaboga AL homes for sale

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Barry (Lynn)'s Blog

Barry (Lynn)'s Blog