Purchasing a condo can be a great option for many buyers. Condos frequently feature desirable locations, minimal maintenance, and smaller price tags than single-family homes and home buyers today are considering a simpler lifestyle. But condo living, good or bad, can present unique challenges;
Pros
1. Amenities. In many condominium communities you'll find you have access to a clubhouse, pool, exercise facilities, concierge, or even door security. These great perks cost you nothing extra and are quite the draw for many buyers.
2. Cost. In many cases, you can find a condo in your preferred neighborhood for a cheaper price than a single family detached home. This can come in handy when parents want children to go to the best public schools in the area. They may not be able to afford the house around the corner, but they can afford the condo in a community.
3. Maintenance. Most condominiums require very little maintenance from their tenants. Yard work and the like are done and paid for through your monthly dues. Reserve funds are saved up by the condo association for larger periodic repairs, such as roof replacement and painting.
Cons
1. Monthly dues. While the condominium unit itself may come with a cheaper price tag, once you add in monthly dues or fees you could see yourself being priced out of the property. While monthly condo fees cover on-going maintenance and contributions to a reserve fund for small emergency repairs, condo associations may assess separate fees for unexpected expenses or to fund major property improvements like repaving.
2. Resale. There are fewer buyers looking for condos. Large families are generally on the hunt for a single family dwelling.
3. Limited Space in General. You may luck out and find a condo with a garage or storage units. If so, you are in the minority. If you have lots of things to store, and no extra space to put them, remember to add in a storage rental space into your monthly expenses before buying.
4. Less Privacy. You share a wall with your neighbors. You may even have neighbors above or below you. In this case, remember the noise factor.
5. Subletting. Did you know that a condo board can make it "illegal" for you to rent your unit out? Be sure to check out the rules before you buy, especially if you are considering using the property as a rental unit at some time.
Condos make ideal homes for singles and couples who lead busy lives and don’t spend much time at home, but consider your lifestyle—both now and in a few years—and make sure a condo really Is the right fit for you.
Monday, March 14, 2011
Friday, March 11, 2011
Buying Preforeclosures
An often overlooked home buying strategy these days includes looking for pre-foreclosed properties. Pre-foreclosures are known as properties that have reached the final stages before they get repossessed or taken back by the lender or bank. The owner is still in complete control of the property or home, although the bank or lender will repossess soon if the owner doesn’t attempt to rectify the situation.
When buying real estate, there are several benefits to pre-foreclosures. Although there are several obvious ways to purchase a home, pre-foreclosure is a great option. Even with its benefits, many people miss out simply because they aren’t familiar with pre-foreclosures.
In most cases, the owner has no choice but to sell the house, and therefore will listen to just about any offer they receive. Due to this very reason, you can find pre foreclosures for sale at nearly 40% off market value. This is an ideal time to purchase, especially if you are looking to save a lot of money.
Along with the great pricing you receive, you’ll also have the luxury of dealing directly with the owner and the real estate agent - no third party banks involved, like with short sales and foreclosed properties.
This is a great advantage, with buyers being in total control of pre-foreclosure sales. In the event that the home owner decides to turn down your offer and cannot find another buyer, he will lose everything. Even if you offer the owner a small price, he will be able to make a little bit of money selling the home.
You can find pre-foreclosures that are up for sale pretty much the same way that you can find homes in which the bank already has control of. Ask your real estate agent or you can look in the local newspaper, or on the Internet. Once you have found a pre-foreclosure for sale, it’s up to you and the real estate agent to seal the deal and get the home of your dreams at a very affordable price.
When you compare foreclosed properties with pre-foreclosed properties, you’ll find that there is less competition involved with pre-foreclosures. Not only are pre-foreclosed homes a better option than a foreclosure but many times you can pay less than market value for the home and instantly reap the benefits of increased value.
Meet with a real estate agent and ask about pre-foreclosed properties and negotiations to get you in a home quickly.
When buying real estate, there are several benefits to pre-foreclosures. Although there are several obvious ways to purchase a home, pre-foreclosure is a great option. Even with its benefits, many people miss out simply because they aren’t familiar with pre-foreclosures.
In most cases, the owner has no choice but to sell the house, and therefore will listen to just about any offer they receive. Due to this very reason, you can find pre foreclosures for sale at nearly 40% off market value. This is an ideal time to purchase, especially if you are looking to save a lot of money.
Along with the great pricing you receive, you’ll also have the luxury of dealing directly with the owner and the real estate agent - no third party banks involved, like with short sales and foreclosed properties.
This is a great advantage, with buyers being in total control of pre-foreclosure sales. In the event that the home owner decides to turn down your offer and cannot find another buyer, he will lose everything. Even if you offer the owner a small price, he will be able to make a little bit of money selling the home.
You can find pre-foreclosures that are up for sale pretty much the same way that you can find homes in which the bank already has control of. Ask your real estate agent or you can look in the local newspaper, or on the Internet. Once you have found a pre-foreclosure for sale, it’s up to you and the real estate agent to seal the deal and get the home of your dreams at a very affordable price.
When you compare foreclosed properties with pre-foreclosed properties, you’ll find that there is less competition involved with pre-foreclosures. Not only are pre-foreclosed homes a better option than a foreclosure but many times you can pay less than market value for the home and instantly reap the benefits of increased value.
Meet with a real estate agent and ask about pre-foreclosed properties and negotiations to get you in a home quickly.
Thursday, March 10, 2011
Is It A Deal Or A Scam
Many homeowners have been acting in a fit of desperation and not thoroughly checking out real estate facts, leading them into unaccommodating scams. Con artist have successfully duped homeowners time and time again from everything including Title fraud, Local and Overseas investments to Foreclosure frauds, just to name a few.
I Can Save Your Home!”
There are plenty of sales pitches a scam artist rescuer will explore to get your home and money. I can save your home and your credit”is a typical phrase to lure homeowners to sign over their title or get the mortgage payments sent directly to them.
In some cases, the "rescuer" will also try to collect a stiff fee before they assist the homeowner. In the worst cases, the "rescuer" may also obtain a second loan on the property, take the proceeds and leave town, or rent out the home -- forcing the current distressed resident to be evicted. And while the ownership may have been transferred to the "rescuer," the homeowner still owes the monthly mortgage payments to the bank.
And on the flip side, it's even more offensive when lenders who offer to "save" the troubled homeowner suggest refinancing their home with high fees, high interest rates and a new costly loan.
There is a simple resolution to stopping this abuse from a scam artist and that is talking to a real estate agent AND an attorney before you sign any documents.
Is that Overseas Investment too Good to be True?
Con artists utilize this real estate scam to play on your desire of getting something for very little - an easy investment. Investors are told to send investment checks, and initially they receive a small check in return, supposedly "proving" the system works. Then, their returns dwindle and no other checks are received in the mail. People tend to fall for the overseas angle because it is exotic-sounding and they think they are, in some way, taking advantage of a new discovery or resource others are not aware of. But, if you are not familiar with overseas investments or the real estate market, why take a chance on someone's word?
So what is the simple resolution to stop a con artist in their tracks before getting a hold of your money? Consult a reputable real estate agency or just call up a legal consultant. Do not use the con artists contacts use your yellow pages and call on your own!
I Can Save Your Home!”
There are plenty of sales pitches a scam artist rescuer will explore to get your home and money. I can save your home and your credit”is a typical phrase to lure homeowners to sign over their title or get the mortgage payments sent directly to them.
In some cases, the "rescuer" will also try to collect a stiff fee before they assist the homeowner. In the worst cases, the "rescuer" may also obtain a second loan on the property, take the proceeds and leave town, or rent out the home -- forcing the current distressed resident to be evicted. And while the ownership may have been transferred to the "rescuer," the homeowner still owes the monthly mortgage payments to the bank.
And on the flip side, it's even more offensive when lenders who offer to "save" the troubled homeowner suggest refinancing their home with high fees, high interest rates and a new costly loan.
There is a simple resolution to stopping this abuse from a scam artist and that is talking to a real estate agent AND an attorney before you sign any documents.
Is that Overseas Investment too Good to be True?
Con artists utilize this real estate scam to play on your desire of getting something for very little - an easy investment. Investors are told to send investment checks, and initially they receive a small check in return, supposedly "proving" the system works. Then, their returns dwindle and no other checks are received in the mail. People tend to fall for the overseas angle because it is exotic-sounding and they think they are, in some way, taking advantage of a new discovery or resource others are not aware of. But, if you are not familiar with overseas investments or the real estate market, why take a chance on someone's word?
So what is the simple resolution to stop a con artist in their tracks before getting a hold of your money? Consult a reputable real estate agency or just call up a legal consultant. Do not use the con artists contacts use your yellow pages and call on your own!
Thursday, February 24, 2011
Life after Bankruptcy and Qualifying for a Home
Bankruptcy can help relieve you of your debts and stop harassing creditors from contacting you but have you thought about life after bankruptcy? Will you be able to qualify for a new home?
You can be approved for a new mortgage at a normal interest rate within 24 to 30 months after your discharge. If you can prove the bankruptcy was caused by medical reasons or a divorce you probably can be approved much sooner. But there are qualifications that you must meet to get a new mortgage and this all depends upon how you re-established yourself after the bankruptcy discharge.
Even if you don’t meet all the qualifications you can still get a mortgage but it will come with a higher interest rate and a larger down payment. Lenders will be inquiring about your finances and looking to see if you’ve paid your bills on-time since the bankruptcy.
So How Much Credit is Enough?
If mortgaging a new home, it will take more than a bank card with a $500 limit to re-establish your credit. Begin by concentrating on the necessities and time will work miracles. Start establishing the following:
1. Bank checking and savings account
2. A secured credit card from a reputable institution
3. An auto loan
You will need at least 3 credit references since your bankruptcy.
Put Your Financial House in Order
It all starts with your money. Have you noticed that most people in dire financial straits seem to have everything? Large screen televisions, expensive appliances, fancy cars, etc? When you are discharged from bankruptcy you must cut expenses and stop throwing money away on useless things however the problem here lies with our mindset – we believe everything we have is a necessity; the new wardrobe, the mini-mansion, the over-priced automobile; you may very well deserve these things but if you can’t afford it you simply have to understand the obvious – You Can’t Afford It!
Did You Know –
After your bankruptcy discharge you can re-build your credit score within 24 months up to a high 800? But this requires paying all bills on time and securing new credit responsibilities to show that you’re ready.
I wish I could say that you’ll be automatically qualified but this all depends on what you’ve done since your bankruptcy and the lender’s guidelines.
Things that will Kill a Mortgage Loan Application
Start anticipating a bumpy ride; I know this sounds negative but it’s best to be prepared and after a bankruptcy it’s not a walk in the park. There are twists and turns but it will prove to be well worth the hassle so never give up.
There are things that will likely kill or just delay your chances for a new mortgage;
1. Poor credit since bankruptcy
2. High debt to income ratio
3. Job instability
4. Tax liens or levies against your paycheck
5. Insufficient down payment
Reality hurts sometimes but when you’ve been given a second chance you should know you have to prove yourself all over again. The most important thing here is to know that you must take a hard look at how you’re living and the work you must put into re-establishing your credit. This will improve your chances not only for a mortgage but living encumbered without the benefits of good credit.
You can be approved for a new mortgage at a normal interest rate within 24 to 30 months after your discharge. If you can prove the bankruptcy was caused by medical reasons or a divorce you probably can be approved much sooner. But there are qualifications that you must meet to get a new mortgage and this all depends upon how you re-established yourself after the bankruptcy discharge.
Even if you don’t meet all the qualifications you can still get a mortgage but it will come with a higher interest rate and a larger down payment. Lenders will be inquiring about your finances and looking to see if you’ve paid your bills on-time since the bankruptcy.
So How Much Credit is Enough?
If mortgaging a new home, it will take more than a bank card with a $500 limit to re-establish your credit. Begin by concentrating on the necessities and time will work miracles. Start establishing the following:
1. Bank checking and savings account
2. A secured credit card from a reputable institution
3. An auto loan
You will need at least 3 credit references since your bankruptcy.
Put Your Financial House in Order
It all starts with your money. Have you noticed that most people in dire financial straits seem to have everything? Large screen televisions, expensive appliances, fancy cars, etc? When you are discharged from bankruptcy you must cut expenses and stop throwing money away on useless things however the problem here lies with our mindset – we believe everything we have is a necessity; the new wardrobe, the mini-mansion, the over-priced automobile; you may very well deserve these things but if you can’t afford it you simply have to understand the obvious – You Can’t Afford It!
Did You Know –
After your bankruptcy discharge you can re-build your credit score within 24 months up to a high 800? But this requires paying all bills on time and securing new credit responsibilities to show that you’re ready.
I wish I could say that you’ll be automatically qualified but this all depends on what you’ve done since your bankruptcy and the lender’s guidelines.
Things that will Kill a Mortgage Loan Application
Start anticipating a bumpy ride; I know this sounds negative but it’s best to be prepared and after a bankruptcy it’s not a walk in the park. There are twists and turns but it will prove to be well worth the hassle so never give up.
There are things that will likely kill or just delay your chances for a new mortgage;
1. Poor credit since bankruptcy
2. High debt to income ratio
3. Job instability
4. Tax liens or levies against your paycheck
5. Insufficient down payment
Reality hurts sometimes but when you’ve been given a second chance you should know you have to prove yourself all over again. The most important thing here is to know that you must take a hard look at how you’re living and the work you must put into re-establishing your credit. This will improve your chances not only for a mortgage but living encumbered without the benefits of good credit.
Thursday, February 17, 2011
New Homebuyers Save Bigger with a 15Yr Mortgage
Did you know more homebuyers are choosing a 15-year mortgage over a 30-year mortgage than ever before? It’s not that difficult to understand why; Not only is now the best time to buy a new home but you get to become mortgage-free sooner.
15 year mortgage loans are offered at a lower interest rate; while the 30 year mortgage interest rates are steadily climbing, the 15 year mortgage interest rates have declined.
If you would take out a $200,000 15yr mortgage loan today with an interest rate of 4.75%, your monthly mortgage loan payments would be $1043.00; compare that to today’s 15 yr interest rate and you could take out that same $200,000 mortgage loan at 4.05% with monthly payments totaling approximately $1480;
Yes, it’s a few hundred dollars more to pay off your mortgage loan sooner and that’s a hefty monthly payment, but you get to shave off 15 years to being completely mortgage free; who says you have to spend that much? You could consider a smaller home or a different part of town to lower the price of the home. The important element here is in just 15 years, you will own your home free and clear.
OK, that idea looks fabulous, right? Keep in mind, qualifying for a 15yr mortgage loan means less debt-to-income ratios with more income. Why? Well, you’re telling the lender that you can afford more for your investment.
The 15yr home mortgage loan is especially good if you’re looking at your retirement options. Many retirees are unprepared today because of many payments their still responsible for. What’s more advantageous than being mortgage free? Just think, 50 years old and your mortgage is paid off. Today’s scenario is more like 65 years old and your mortgage is paid off, so that’s 15 years advantage you have to saving over a thousand dollars per month.
Now many potential new homebuyers still sit on the fence, not sure if renting or buying a home is the best decision for them; well, hurry up with that decision because the consensus is, mortgage interest rates will gradually climb throughout the year. Today’s 4.5 to 4.75% interest rate could hit 5±% by years-end.
The 15 year mortgage won’t fit everyone’s lifestyle, but it sure is worth considering. Don’t look at it as paying a mortgage, because it’s really making an investment in your future.
Tuesday, February 15, 2011
What The New FICO 8 Score Means To You
Increasing numbers of lenders are turning to the FICO 8 score released in 2009. The new system offers 15% greater accuracy in predicting repayment. It is gaining the most use in the mortgage and large limit credit sectors. It was quickly adopted as an industry standard among home loan lenders. Even though it is not the official name and is used for other credit, it is often called the FICO 8 Mortgage Score.
What Is the New Fico 8 Score?
The FICO 8 Mortgage Score is a refined version of the old FICO, or regular credit score. By improving the model, it permits a better prediction rate for repaying loans. This increases the security and amount of credit that a lender can offer.
It uses the old FICO score range of 300 to 850. The main adjustment focus on how a few factors affect the score.
Piggybacking:”
Many people were using a scheme to artificially boost their credit rating. A friend or relative with a high credit score would add the person with a low score as an authorized user to their credit card. This boosted the lower score by piggybacking it to a well-established, creditworthy account. The new FICO 8 includes ways to distinguish between piggybacking, married couples with different names, and domestic partners to avoid this artificial manipulation of the system.
End Of High Risk Credit Inflation:
Another system manipulation targeted by the FICO 8 Mortgage Score is credit inflation. Under the old scoring system, your score would increase with your credit limits. Consumers could acquire multiple cards with expanding limits over time to artificially boost their score. Many of these people maximized their credit lines, creating huge risks.
To balance out the risk, FICO 8 takes into account how much of the credit available to a customer is being used. Large amounts of credit with a low percentage used will provide a big boost to credit scores. Some critics argue that this worsens credit inflation. Industry experts counter that a person with a lot of credit and very little of it used are most likely to repay debts. On the other hand, someone with maxed out credit cards and a second mortgage is very likely to default, even though they have a large amount of credit.
Improved Payment Histories And Targeting:
One of the most important changes is how the FICO 8 analyzes credit history. Late payments matter a bit less, compared to an overall history of repayment. Under the old system, late payments could seriously lower credit scores. Under FICO 8, the main focus is the rate of repayment. After all, someone who often pays late but always pays completely is much less of a risk than a person that is often timely but defaults on debts.
A related aspect is better targeting of consumers. A person with a poor history but a couple of recent years with better income and payments can actually carry relatively low risk. On the other hand, someone with a good history but overextended credit may be a big risk.
How Does This Affect Foreclosures And Mortgages?
Foreclosure typically causes a credit score drop of around 150 points. This is not caused by the mortgage default alone. Statistically, those experiencing foreclosure will also default on most or all of their other debts as well. This is where the FICO 8 changes can benefit those losing their home to foreclosure.
Due to the way the new system calculates scores, it is more important than ever to stay current on other debts when facing foreclosure. Under the old system, a foreclosure can cause serious negative effects for several years. FICO 8 will allow a recovery of credit score within a few years.
Pay your other debts in a timely fashion and make payment arrangements if you cannot meet your current obligations to avoid further negative reporting. Remember, the FICO 8 Mortgage Score takes into account total payment history. If you show that you are not like the average borrower and the foreclosure was an isolated default, the system will raise your credit score.
What Is the New Fico 8 Score?
The FICO 8 Mortgage Score is a refined version of the old FICO, or regular credit score. By improving the model, it permits a better prediction rate for repaying loans. This increases the security and amount of credit that a lender can offer.
It uses the old FICO score range of 300 to 850. The main adjustment focus on how a few factors affect the score.
Piggybacking:”
Many people were using a scheme to artificially boost their credit rating. A friend or relative with a high credit score would add the person with a low score as an authorized user to their credit card. This boosted the lower score by piggybacking it to a well-established, creditworthy account. The new FICO 8 includes ways to distinguish between piggybacking, married couples with different names, and domestic partners to avoid this artificial manipulation of the system.
End Of High Risk Credit Inflation:
Another system manipulation targeted by the FICO 8 Mortgage Score is credit inflation. Under the old scoring system, your score would increase with your credit limits. Consumers could acquire multiple cards with expanding limits over time to artificially boost their score. Many of these people maximized their credit lines, creating huge risks.
To balance out the risk, FICO 8 takes into account how much of the credit available to a customer is being used. Large amounts of credit with a low percentage used will provide a big boost to credit scores. Some critics argue that this worsens credit inflation. Industry experts counter that a person with a lot of credit and very little of it used are most likely to repay debts. On the other hand, someone with maxed out credit cards and a second mortgage is very likely to default, even though they have a large amount of credit.
Improved Payment Histories And Targeting:
One of the most important changes is how the FICO 8 analyzes credit history. Late payments matter a bit less, compared to an overall history of repayment. Under the old system, late payments could seriously lower credit scores. Under FICO 8, the main focus is the rate of repayment. After all, someone who often pays late but always pays completely is much less of a risk than a person that is often timely but defaults on debts.
A related aspect is better targeting of consumers. A person with a poor history but a couple of recent years with better income and payments can actually carry relatively low risk. On the other hand, someone with a good history but overextended credit may be a big risk.
How Does This Affect Foreclosures And Mortgages?
Foreclosure typically causes a credit score drop of around 150 points. This is not caused by the mortgage default alone. Statistically, those experiencing foreclosure will also default on most or all of their other debts as well. This is where the FICO 8 changes can benefit those losing their home to foreclosure.
Due to the way the new system calculates scores, it is more important than ever to stay current on other debts when facing foreclosure. Under the old system, a foreclosure can cause serious negative effects for several years. FICO 8 will allow a recovery of credit score within a few years.
Pay your other debts in a timely fashion and make payment arrangements if you cannot meet your current obligations to avoid further negative reporting. Remember, the FICO 8 Mortgage Score takes into account total payment history. If you show that you are not like the average borrower and the foreclosure was an isolated default, the system will raise your credit score.
Monday, February 14, 2011
How FHA New Guidelines Affect You
Over the course of the past few years, the Federal House Administration has implemented a number of changes to home loan rules. At first, many observers expected severe rules and difficulties for many home buyers. Thankfully, the new rules and conditions are not as bad as originally considered. They also seem very well-made to improve the housing market for lenders and buyers alike.
These changes help improve the FHA's ability to provide low interest home loans and continue to allow the agency to provide more loans to more people.
End of 2008:
580 was set as the minimum credit score. The down payment help program (Nehemiah) was ended. Down payment minimums were set to 3.5%.
Beginning of 2009:
The minimum credit score was raised again. This new standard was set at 620.
Late Fall 2010:
Further insulating the agency from high risk, the minimum score was raised to 640.
There were three main changes to the standards:
High Mortgage Insurance Standards; Private mortgage insurance, or the mortgage insurance premium, was raised from 1.75% to 2.25%. This causes a slight increase in monthly payments, but it is not considered a burden by industry experts. It is paid along with the loan, spreading out the costs over the loan lifetime.
This was implemented in April of 2010.
Down Payment and FICO Scores; The minimum score standard qualifies a purchaser for the small 3.5% down payment option. Buyers with a lower credit score may still qualify, but will be required to pay 5-10% down on the home. This reduces the risk for the FHA, while leaving low down payment loans available to buyers with a good credit history.
Reduced Seller Closing Offers; Sellers now can only provide half as much towards closing costs. Under the old policy, the person selling the home could provide up to 6% in closing cost assistance. The recent changes only allow a 3% contribution.
Rounding out these new rules, fresh standards were drafted for lender enforcement. Some homeowners will be affected more than others by these changes. Low income purchasers and those with an uneven credit history will be most burdened. However, the average home purchaser benefits greatly from these new policies.
Overall, these changes fulfill FHA's mission to provide low-cost loans and increase homeownership. They reduce the risks of lending and increase available capital. With higher repayment rates, the FHA will be able to offer more loans over the long term.
These changes help improve the FHA's ability to provide low interest home loans and continue to allow the agency to provide more loans to more people.
End of 2008:
580 was set as the minimum credit score. The down payment help program (Nehemiah) was ended. Down payment minimums were set to 3.5%.
Beginning of 2009:
The minimum credit score was raised again. This new standard was set at 620.
Late Fall 2010:
Further insulating the agency from high risk, the minimum score was raised to 640.
There were three main changes to the standards:
High Mortgage Insurance Standards; Private mortgage insurance, or the mortgage insurance premium, was raised from 1.75% to 2.25%. This causes a slight increase in monthly payments, but it is not considered a burden by industry experts. It is paid along with the loan, spreading out the costs over the loan lifetime.
This was implemented in April of 2010.
Down Payment and FICO Scores; The minimum score standard qualifies a purchaser for the small 3.5% down payment option. Buyers with a lower credit score may still qualify, but will be required to pay 5-10% down on the home. This reduces the risk for the FHA, while leaving low down payment loans available to buyers with a good credit history.
Reduced Seller Closing Offers; Sellers now can only provide half as much towards closing costs. Under the old policy, the person selling the home could provide up to 6% in closing cost assistance. The recent changes only allow a 3% contribution.
Rounding out these new rules, fresh standards were drafted for lender enforcement. Some homeowners will be affected more than others by these changes. Low income purchasers and those with an uneven credit history will be most burdened. However, the average home purchaser benefits greatly from these new policies.
Overall, these changes fulfill FHA's mission to provide low-cost loans and increase homeownership. They reduce the risks of lending and increase available capital. With higher repayment rates, the FHA will be able to offer more loans over the long term.
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