Archive for Buying
Buying a Home After a Foreclosure – How Long Do You Have to Wait?
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There seem to be a lot of misconceptions about how long a foreclosure can stay on the credit report of former homeowners, how long the foreclosure affects their ability to borrow negatively, and how long they will be unable to purchase a new home. Some borrowers believe, mistakenly, that they will never be able to buy another house, qualify for a car loan, or even get a credit card at a decent interest rate just because they lost a house. While the foreclosure will have serious negative consequences, the myths surrounding the issue can be much worse than the actual effects.
The worst news is that a foreclosure will remain on a credit report for the full seven year reporting period. Although borrowers can request the bank to remove the record at any time and delete mention of the foreclosure, banks are rarely interested in doing this, and there is little that could force them to do so. Thus, former homeowners will most likely have to deal with having the negative mark on their credit report for nearly a decade, although its most damaging effects will be felt in the earliest years after the loss of the home.
This is because the longer in time the homeowners are removed from the initial foreclosure, the less of a drag it will be on their credit scores. Missed mortgage payments and then a foreclosure filing can instantly drop a FICO score into the low 500s or even the high 400s by the time the sheriff sale and eviction occur. But as time goes on, as long as the homeowners work on repairing their credit history by paying off any other debts, using borrowed money wisely in the future, and disputing negative or old information contained on the report, their score will begin to improve despite the foreclosure.
When borrowers would be able to qualify for a new mortgage after the loss of a house is almost entirely dependent on the effort they put into repairing their credit and establishing a new, on time payment history. They may be able to apply for a competitive loan within a couple of years after the foreclosure if they are able to show excellent credit since then. Saving up for a true down payment of 15-20% of the purchase price of the home is also important to the banks when considering whether or not to offer a housing loan. But homeowners who focus on credit repair may be able to qualify for a new loan within 2-3 years after foreclosure, while other borrowers may have to wait 4-5 before their credit repairs itself enough naturally.
Of course, if homeowners are able to stop foreclosure before the lawsuit, sheriff sale, and eviction have completely gone through, they will find it much easier to obtain any new credit later on. But, unfortunately, this may not be possible for some borrowers who have no other choice than to give up trying to save their home. The best they can do after this is to work on their credit report and make sure they get a fresh start after losing the property. Although it may take at least a few years to qualify for any new mortgage, this period of time should be used to pay off other debt, establish on time payment history, and save up for a down payment on a new home. While the effects of foreclosure can be severely negative, borrowers also have many options in mitigating the worst consequences to their ability to qualify for credit in the future.
2009 Obama Home Buyer Grants Makes $15,000 Available
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Are you looking to buy a new home or fix up the house you are living in? If so, Obama has many programs that can help you get the money you need to buy a new house by giving up $15,000 to help with you down
payment.
Fact: Government grant money is available to help all US citizens regardless of their incomes and credit history.
Fact: Foreclosures are so high now that buying a home is the best choice than any American consumer could make. It is truly a buyers market.
There is no need to be paying the stupidly high interest fees charged by the bank now that the Obama administration is freely giving out these grants. Did you know that a large credit card bill of around $10,000 takes nearly 50 years to pay off, even if you keep up with the monthly repayments, because interest of 17% is so high.
If you have been looking for a new house but can’t afford the deposit, it is now possible to receive the money you need from the government. Don’t go to the bank, because you will lose out. The grant programs offered by the government allow you to easily receive all of the cash you have been waiting for.
Fact: The only way to get your money is to apply, because the government will never tell you about these programs.
Any American who is thinking of buying a new home should apply for as many grant programs as possible.
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The First Time Home Buyer Incentive – A Great Government Aid Program
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In an attempt to revive the real estate market and our economy in general, the federal government is now offering a very big incentive to first time home buyers. If you qualify and are looking to purchase a home, you may be entitled to $7500 in tax credit just for buying a home. How does the first time home buyer incentive work and do you qualify?
In order to qualify for the first time home buyer incentive, you need to purchase a home in the United States and have it be your primary residence. In other words, you cannot purchase the home as an investment and rent it out to others for income. You must live there. Secondly, you cannot have owned a home for a minimum of three years. The program is basically targeting those who have been thinking about buying a house but have yet to do so. The hope is that this incentive will push them over the fence.
The amount of the tax credit that you can receive is up to 10% of the purchase price of the home, with a maximum payout of $7500.
The maximum annual income amount for an individual to qualify for this program is $75,000. The maximum amount for a household is $150,000. If your income exceeds these amounts but is less than $90,000 and $170,000 respectively, you may still qualify, but for a lesser amount.
The tax rebate must be payed back to the government, but they give borrowers fifteen years to do it and do not charge any interest. Small payments of around 6 percent a year are required.
Selling A House?
Real Estate Tips
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When looking into buying real estate, either for your primary residence or for investment, with prices down now is a great time to invest. What prices are in one city does not mean that they will be the same in another city.
House prices change from one area to another due to a variety of factors including: inventories, climate, crime rate, economy and population growth. The best performing zip codes within a city or area have low crime rates, good school districts along with the hospitals, malls and police stations. You should drive around in the neighborhood you are considering buying in at different times of the day just to get a good feel of the area. If you are near or on water and you are new to the area be sure to check and see what water levels are after heavy rains or in the spring if it is area where there is run off from snow.
At this time with so many foreclosed homes on the market, in almost all areas of the country, your real estate agent should be able to advise you of the best deals in your area. If you are buying investment property you should stay within your general area as it best not to be an absentee landlord, even if you have a good manager. Another tip is do not buy from the selling agent of the property, and that is because they represent the seller. You need to get someone, another agent, to represent you.
A good mortgage can also play a role in your investments. Always read your loan application carefully before signing it. Avoiding a prepayment penalty can save you thousands when selling. Understanding what your credit report says is essential. Do not order your credit report online. Most people do or they order their free report. What they don’t realize is by doing this they worsen the score, every time a report is pulled your score will lower. The lender will be pulling your report. You should order your credit report directly through the credit bureaus by calling their 800 numbers. Be careful, they will try to get you to order it online, be persistent, stay on the phone and ask for a written copy to be mailed to you. This is true copy and what the mortgage company or bank will receive.
Consider using a mortgage broker, the fee you will pay will be worth it because they represent several companies. They will have options available and you can choice the one right for you. Make sure that the bank or mortgage company does not sell you a higher interest rate than you qualify for. Don’t be afraid to negotiate with your bank or broker, you negotiated for the price of your home, you can do the same with the mortgage. Every fee on the mortgage is negotiable, the only things not, are the taxes, insurance and filing fees. When you use a broker, tell him you are willing to pay a half point origination fee, but you don’t expect to pay any back end fees.
Always read your closing documents very carefully and have an attorney present. It is better to spend a few hundred dollars now, on an attorney to save the possibility of a few thousand later to avoid a serious problem.
Investing in Real Estate?
Buying a Home As Though You Were Already Selling It
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When buying a home, buyers will tell me what they are looking for and will give me their price range. They sometimes overestimate the amenities and features while underestimating the cost. Everyone wants more for less, but there’s a strategy to buying the right house.
Home buyers need to know what they want and the only way to do that is to make sure they are obtaining updated information so they can make a wise decision on their purchase. Once the buyers are in-the-know, they need to convey precisely what the want to their agent. It is extremely important to be aware of various loan programs that its comfortably within your budget. There are always unexpected expenses, so have a cushion to allow for costs incurred before and after the purchase.
When you buy a home — look at it as though you’re selling it! If you do not get that “WOW” when you enter the home, it’s probably not for you — and may have the same impression upon others when you go to sell it. Consider these points when purchasing a home.
1. Location – Corner lots are in high demand as well as homes with a view or on a golf course. If the home has a street behind your backyard wall, make sure it’s a busy street as this is usually a turn-off for many homebuyers. If there is a street nearby, evaluate what future traffic may be driving on that street and notice the noise factor.
2. Upgrades – What the appraiser usually looks for is the amount of bedrooms/den, square footage, lot square footage, added garage space, granite counter tops, tile, upgraded carpeting, wood flooring, upgraded baseboards, pedestal sinks, covered patios, yard, storage, pool, lighting, and other unique features such as a sound system, intercom, alarm, compactor, built-in BBQ, and wet bar. If a home comprises of standard features, you should pay less but will probably have to upgrade to compete for a re-sale later.
3. Price – Many people buy a new home and discover that they need an extra $20-70,000 or more to upgrade and landscape. Pools are a good investment if YOU don’t have to pay for it. A re-sale home with a pool is not valued at the full cost of the home — it is a depreciating asset. A purchase price of $300,000 plus upgrades, appliances, and window coverings adds up! When it comes time to sell it, figure in the closing costs from both the buy and the sell and possibly paying for the buyer’s closing costs as well to see what your actual profits are. If possible, try to have the seller pay some or all of your closing costs so it does not cut into your profits.
4. Financing – Most buyers take advantage of an “interest-only” loan if the home is valued over $200,000 because the payments are lower. Many investors reject this type of loan because they want to lock in their rates payments. This is judgement call made by the home buyer and should discuss options with their lender and real estate agent. The advantage of having an interest-only loan, especially if there is a first and a second, is that you can pay more towards the principle with the amount you choose, whenever you choose, thus lowering your payment. A “principle and interest” loan means most of the payment is interest at first and a very small portion goes towards principle. In good growth areas, the appreciation usually accelerates faster than paying a smaller amount towards principle, but this idea will vary depending on location and the type of home itself.
5. Flipping – This is a concept that many believe is very profitable, and again, it will depend on the location and type of home. If you’re going to buy, repair, and sell the house in a short time, be sure to itemize your expenses and include closing costs, agents’ commission, remodeling, and permits. Time is also money so while you’re working on the house, you are also paying the mortgage. Making a profit depends on the market, supply and demand, and if the investment and time aspect is worth it. If you cannot sell the home in a timely manner, you will be paying the mortgage, taxes, utilities, homeowner association fees, insurance, and maintenance. Every month your home is vacant, you could risk having a hefty chunk diminish your profits.
It’s always best to do your research and obtain advice with an experienced agent who provides information about the area, growth, future infrastructure, and current appreciation within the city and its surroundings.
The best advice is to “buy low, sell high”, however, since we don’t have a crystal ball and are using our best judgement, it is not always that easy. In any case, investing in real estate is mostly likely to be an appreciating asset, combined with some good tax deductions, that allows a homeowner to move up with the home’s equity over a period of time. In short:
Be smart — learn about the market.
Be quick — when you find a deal, move forward!
Be lucky —be there at the right place, right time.
