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Real Estate

7 Ways To Save Money To Buy A House

Start Saving to Buy a House Now

There are literally thousands of ways to save money to buy a house. With many ways to buy a house,  purchasing a home is not as difficult as you may think.

First of all, you must understand that you “can’t have it all,” so discontinue that form of thinking. You must make sacrifices to buy a house and think of it as an investment for life. This should help to motivate you

You must make some sacrifices if you want to save money to buy a house. There are many ways to purchase a home with a number of home buying programs.

You must curtail your spending in other areas. Home prices are up all over the country. But you can still find affordable housing in the way of a cosmetic fixer (that is a fixer with no major repair problems), or a home with an anxious seller.

It takes skill to buy a house, but you can find that in these tips.

To buy a house understand the monthly payment of P+I+T+I, translated, this is the principle, plus interest, plus taxes, plus insurance, which, added together, equal the total monthly payment.

In order to buy a house, you must put down a down payment and pay additional escrow costs. Learn more here.

Understanding the P+I+T+I for different loan amounts will enable you to better prepare for homeownership. For example, if you could afford $1400, the total for a P+I+T+I monthly payment.

Determine what home cost would fall into this price range. Your mortgage broker will assist you.

Search the Internet or anonymously call mortgage companies for quotes. To purchase a home there are home loans that require 0%, 3%, 5%, and 10% down, plus the closing cost. There are many different home buying programs available.

The lower the down payment, the better your credit should be, to get a reasonable interest rate. The standard down payment is about 10% plus escrow and closing costs. It is a good idea to calculate escrow or closing costs upfront.

You will either pay a down payment or points (toward interest rates). The lower the down payment the higher your points to buy a home or vice versa, depending on your home buying program.

Save money to buy a house with different home buying programs.

Ideas for saving for your new home could include:

1. Selling a car or furniture for the new home buyer

Many of us have an extra car or a car with excessive monthly payments, insurance, and gas. Sell the car you are not using, or in the case of the overly expensive car, sell it to purchase an affordable model.

2. Get a part-time job and save the money as your new home buying check

You can create income for your home purchase. Even if the job is every other weekend, it will help. The money adds up fast, adding an additional $400 a month will end up adding $4800 to your home buying fund.

That amount of money is substantial for a new home buyer in many of today’s markets.

3. Temporarily discontinue a whole host of unnecessary things for serious homebuyers:

Saving money for home buying is a serious endeavor. If you are serious, you will not miss any of the things that bring you immediate joy. You will instead think of the long-term joy you will get as a new homebuyer.

Here is a list of things to discontinue if you are a serious homebuyer. Movies, parties, vacations, clothes, cable TV, voice mail, newspaper, and excess clothes shopping. You can think of more.

4. Use your tax return:

Put your tax return in the bank toward a down payment on your new home. After purchasing your new home, speak with an accountant. Find out how many more exemptions you can take during the year with your new home.

The accountant will tell you how to adjust your exemptions in order to get the money during the year to help with your new home payment if you are over-paying your taxes during the year.

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You can use your future excess taxes (or home deduction) toward your current monthly payments.

5. Use a windfall, such as an inheritance or large bonus:

Take this money and place as much as you can afford toward your down payment. There are many unexpected windfalls, everyone has them at various times. Be ready to save your windfall toward buying a house, just in case.

6. A few of you can live with your parents or in-laws while saving money for your homebuying fund:

There are a few parents or in-laws who will be willing to work with you. If you are willing to give your family a low monthly rent, this helps them and you.

That is, if you are not willing to live with them for free it takes a burden off of both of you, and you don’t feel like you are freeloading.

For example, if regular rent is $1200 dollars a month, offer your relative $600 a month and save the additional $600 a month. In a year you would have $7200 to contribute to your homebuying fund.

7. Ask for cash as gifts to add to your homebuying fund:

When you have a birthday, graduation, wedding, or any other celebration, explain to family members in advance that you are saving for a home. Request that you prefer cash gifts.

You can do this over and over and in no time you will have a substantial amount of money to add to your homebuying fund.

Summary

Purchase a home when you understand financing options and costs to buy a house. Your down payment and escrow costs can vary depending on many factors.

There are many ways to save money to buy a house, so don’t be dismayed. There are many home buying programs to assist you in buying a house the right way. Use this information too. 

7 Simple Steps to Buy a House, purchase a home with home buying programs. Save Money to Buy a House.

Should You Refinance Your Home Loan?

Should you refinance your home loan, pay off your home or buy another? Should be the first question you and your spouse ask yourselves before you decide to refinance your existing home loan.  

It takes skills to purchase a home or ask, should you refinance your home?

Recent reports show that some homeowners are borrowing to the constant enticement of lower home loan rates. And, without an analysis, find that they are backing themselves into a corner of more years and more costs on their loans, including more escrow cost and higher points. The savings they “thought” they were getting on a home refinance, turned out to be huge loss.

After you purchase a home, within a few months most new homeowners will get a barrage of snail mail suggesting you refinance your nearly new home.

The reason why you will be encouraged to refinance many times after the purchase, is because of profits for mortgage companies. Just remember, your home is not an ATM machine, it is best to ignore those offers for several reasons.

When you refinance a mortgage, companies collect a whole list of payments from your refinance, as with your original loan. Refinances wildly benefit the mortgage company but can hurt you badly. In fact, the people who do not get this memo may end up purchasing their own home 3-4 times during their lifetime when refinancing.

It is Not Wise to Refinance If:

-Your purchase is new ( less than 5 years old)

-There have been years of payments on your home, the focus – pay it off

-You are not going to save enough money to make a difference 

-Your home has been refinanced before

-The difference in the interest rates are small

-You will add another round of escrow cost

-You will get higher points to offset the so-called lower interest

-You are going to add years to your existing loan, losing the years you have paid

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It Is Wise to Focus on Paying off Your Existing Loan:

-So you can focus like a laser beam and live mortgage free with a paid off home.

-If you continue to have a payment after several years, your payment will go down in regard to inflation.

-There are many tricks in refinance loans, because of this you can make big mistakes and increase your chances of lost.

-If the difference of total money saved and new interest rates are too small.

-When you don’t have the expertise and cannot do research to understand the loan process first.

A True Story About a Refinance Loan That Worked

I counseled a woman and her husband, who wanted to know if they should refinance their home, due to a decrease in her husband’s salary.

Here is The Analysis We Did:

1. We obtained her original loan documents and discovered her original and current loan was 33 years. They did not know this; they were told it was a 30-year loan. And because it was stated in months, they did not bother to calculate it.

At the time of the analysis they had 23 years left on her original loan.
With a new 15-year loan, she will shave 8 years off her original number of loan years. This includes the years from the remaining:
23 years (original loan) – 15 years (the new loan) = 8 less years to pay a mortagage in total, with the new loan.

2. They original loan interest was 6.7%. The interest rate on the new loan was 3.8% for a 15-year loan.

So, now they has 2 out of 3 major factors that will decrease the cost of their loan. The cost will decrease by both significant interest rate and number of years. Because of this she will not lose money in the refinance but will instead save money, lots of money.

3. Their payment will go from $3400, Principle+interest+taxes+insurance, to $2400. They will pay $1000 dollars less a month in payments. Coupled with the decrease in years, this is a real winner and takes a financial burden off the family.

Why Did the Above Mortgage Example Work?

The above 3 facts are called being in the right place at the right time.  It was  right because the low interest rates intersected with the savings from years.

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They saw the savings and went with the new loan. Also, 5 years later, she had enough money after their finances improved, to pay off their new loan. Now, they live loan free and shaved 10 years off their mortgage.

This is one of a few cases I analyzed where it made sense and saved money to refinance. In most other cases, the refinance costs, coupled with years lost, do not make a new loan cost effective. Usually, the hidden costs are huge.

Considering the continuing low-interest rates on home loans, is it time for you to consider purchasing a home? — Or refinancing your existing home? Some homeowners are said to be refinancing their existing loan over and over.

If you are in the market for a new home, one of the best times to purchase a primary mortgage is when interest rates are low. Also, you need to find a reasonably priced home. But as far as refinancing, in my opinion, I do not feel that many of the constantly refinancing homeowners understand all the facts (and high cost) surrounding home refinancing. 

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A one-time refinance is appropriate if you have done your homework and analysis, before you contact a mortgage broker. Then you know that a refinanced loan will be a benefit to you.

If you do not correctly answer the question, “How does refinancing work?” before deciding to refinance, you could get yourself and your home loan security at risk. Know for absolutely,  if you should refinance your home loan. 

Refinancing an Existing 30-year Loan

1. Each time you refinance to a new 30-year loan, you can go over your 30-year period to 40 years, 50 years and sometimes 60. If a homeowner does this every 5 year for 20 years, then at the end of 20 years you will have 30 years left to pay on your mortgage. Instead of 10 years if you did not refinance your original loan.

The extra years of interest and principle will substantially increase the amount of money you pay on your mortgage over time. And this will increase the actual cost of your home.

The Solution:
 

-Calculate how many years you have already paid on your home loan.

-Look at the number of years on your new prospective loan

-Compare the interest rate of your old loan to your new loan

-Find out the total cost that will be charged to you for the loan, by the Mortgage Broker

-If you have a 30-year loan with 15 years left to pay. Then try for a 10-year loan if the interest rate is very low. There should be a significant difference between your existing interest rate and the new interest.

-Make sure every loan you get has no pre-payment penalties. Also, pay extra to principle each month to make sure you don’t go over the 30-year mark. Paying off any mortgage loan early can save thousands of dollars.

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The Purpose:  

The issue becomes, “Why are you getting the refinanced mortgage in the first place?” Are you desperate for money to use for medical purposes, college, or some other dire emergency?

Or, are you looking to save money on your overall cost and either put the extra savings into a general savings account, retirement? Perhaps you want to retire earlier with no mortgage, pay down other bills, or lower your existing payments due to financial stress? And Does refinancing your home work or hurt you?

These are questions you must answer and make your intentions crystal clear to yourself and your spouse before you decide to refinance.

How Much Will it Cost to Refinance Your Home Loan?

It will cost you a hefty sum of money each time you refinance your existing home loan or purchase one for a new home. And even the so-called no-cost loans will cost you. The purchase price of a new loan is either 2%-4% of the new loan. In the case of the no-cost loans; the fees are added into your loan as a higher interest rate on monthly payments.

You will, therefore, pay for the cost included in your monthly payments. It can take as long as four to six years to pay off the cost of your home refinance, so plan to stay put for a while if you choose to refinance.


Understand the Secrets to Buying a Great Home, Before You Start >


Home Loan Resources for Primary and Refinance Loans

There are several resources to help you make a wise decision when it comes to choosing a loan for a new home. Understand how detrimental repeatedly refinancing your existing home can be. Refinancing your home should be a rare consideration and carefully calculated decision before you visit a mortgage company.

Credit unions and your local banks offer the best solutions for a mortgage. If you do not have optimal credit and money saved in a bank or credit union then carefully select a mortgage company.

The U.S. Department of Housing and Urban Development offers numerous resources on its Web site, www.hud.gov, for homebuyers. It publishes an eight-page booklet, “Looking for the Best Mortgage,” which offers advice on finding the best deal. General tips include:

1. Contact several mortgage lenders
and brokers for information.

Check hsh.com to see what the average mortgage rates are now.

3. If you have a good relationship with your local bank, start with them. Especially if you have a substantial saving or checking account with them. The mortgage division is usually a separate business in your bank, but a relationship with the bank will make getting a mortgage easier.

4. Obtain all cost information, including interest rates, points, fees, down payment requirements and private mortgage insurance.

5. Negotiate your mortgage where possible. Mortgage deals vary from day-to-day. Once you find a deal you like, lock it in.

6. Federal law prohibits discrimination in mortgage lending, know your rights.

7. Understand your credit. If it’s not good, finding a loan could be difficult. To obtain a copy of your credit report, contact free credit report .
You should know your credit score and examine your credit report before you shop for a refinance.


Contact Me For a Free Personal Finance Consultation in Home Buying>


Sometimes credit reports have mistakes on them and they can be taken off by contacting your credit reporting agency in writing, before you shop for a loan.

The primary goal for you is to make sure you answer the question thoroughly, “Does refinancing your home work?”.  know should you refinance your home or buy a new one.

The More You Know, The More You Grow – Your Finances

MsFinancialSavvy, Lois Center-Shabazz
Lois Center-Shabazz| Money Strategist | Course Delta Agency

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3 Best Factors to Consider In Order To Buy a Great Home

There are many reasons you should buy a home. This article applies to owner-occupied ownership when you buy a home, only. Rental real estate is quite different than owner occupied home ownership. I will walk you step-by-step through key elements of the home buying process.

The loans are more difficult to qualify for than owner occupied. Tax deductions are much treated differently. If you do not hold home investment long enough, you could be required to pay short-term capital gains taxes. These home buying tips will enable you to understand the most important elements of home buying you should know before your search.

Home buying the right way take skill

 

The More You Know, The More You Grow In Useful Facts


Here Are 3 Factors to Consider Before You Purchase a Home:

1. Home prices are low or reasonably priced for your area, which makes the area affordable

Home prices fluctuate about every 7-10 years. Occasionally, due to a catastrophic event where there are a lot of foreclosures, the prices go way down. When the event is over, and people are back to work the prices usually go back up.

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The prices fluctuate from low to high for several reasons. Some of the reasons are:

1) If there is a big layoff in a town, everyone is trying to sell at the same time and there are few buyers, home prices may take a nosedive.

2) A major industry has moved out of a town and there are few buyers for a home, prices will go down, 3) Interest rates have spiked up and it is hard for buyers to qualify for a mortgage and therefore prices of homes may correct down.

On the other hand, prices go up sometimes when:

1) Loans are easy to qualify for (as in the real estate crises from 2003-2008), and people got loans who should not have them, this causes many loan defaults in a short period of time.

 2) A new high paying company may move into the area and there is a shortage of homes to buy, people start bidding up homes, as in some areas of the U.S. that have high employment and low inventory of homes.

3) New homes are not being built, and new companies move into the area quickly, so there is a shortage of homes.

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You get the picture. Real estate does not go up constantly, as some beginner home buyers tend to think, there are sometimes corrections in a high market, and low markets go high for various reasons.

Never Rush to Buy a Home:

The point here is that you do not want to rush and buy a home in an area that you are not familiar with; the prices may be high and at the top of a market. For reasons unknown to you, prices are starting to come down.

This is important to know because, if you must sell in a short period, you may have to sell for less than you paid for the house. This is called, being under water with a mortgage, you will lose money.

Typical appreciation for a well-kept home usually runs around 3-5% per year, according to the National Association of Realtors.

Know what is going on in your area, make sure you are not buying at the top of a market, unless you know you will be in the area for a long time, otherwise, you could be stuck with a home you can’t sell for more than you paid.

You Will Have the Best House, for The Best Price Possible, if You Follow the Home Buying Process; When You Buy a Home.


2. Buy a home when you have had a steady job for a while.

It goes without saying that income is what pays the bills. Make sure that the company you work for is stable or your business is on sound footing before you buy a home with a mortgage.

Most mortgage companies will want to see 2 years of tax statements, in addition to that. They will usually also order their own copy directly from the Internal Revenue Service. If you are self-employed, agents will ask for  actual bank records of your small business deposits.

During this time also make sure you have savings in place for a down payment, and escrow and closing cost. It is also a good idea to have additional savings to keep in place in case of a job layoff.

3. Buy a Home when you plan on living in the area for several years.

As I discussed in number 1, real estate goes up and down. When prices get high, many times there is a correction and prices come down for a while.

If you happen to NOT do your homework and buy in a real estate market that is about to come down, for a variety of reasons, you may find yourself upside down with your loan for a while.

This will take more years to make a profit on your loan. You will have to ride out the correction, and get back your escrow and closing cost as an initial investment. Normally it takes about 4 years just to get back your escrow and closing cost as the home value increases.

Corrections in the Real Estate Markets:

If you must ride out a correction it could take many years longer. If you happen to buy at the bottom of a real estate market, you could get lucky enough to ride up the value of your home, and you could sell much faster or a profit. It is important the house is well-kept and affordable for you.

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 In any case, you should study your area, study the real estate market, study the economy or the changing of the economy in the area, and know when to buy. That is; know if you are at the bottom or top of a market. Real Estate works best when it is held long term, a key factor in home buying tips.

In normal cases, it could take as long as 8-10 years to make a profit from your real estate purchase. Use this calculator to find out the home you can afford.

This will take more years to make a profit on your loan. You will have to ride out the correction, then get back your escrow and closing cost as an initial investment. Normally it takes about 4 years just to get back your escrow and closing cost as the home value increases. The home buying process tighly weaves, escrow, title, costs, mortgages and time. 

In any case, you should study your area, study the real estate market, study the economy or the changing of the economy in the area. And know when to buy, that is; know if you are at the bottom or top of a market.

Use all of these great home buying tips to buy a great home, but first understand the home buying process.

Home ownership dream for women

Lois Center-Shabazz| Money Strategist | Course Delta Agency

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3 Best Factors to Consider When You In Order to Buy a Great  Home

Secrets to the Timeshare Presentation

Time share presentation

Timeshare presentations include free cheap vacations, free gifts or free meals, including champagne breakfast, but not so fast. They are not really free. Because of the high pressure sales it is essential that you do your homework before attending a timeshare presentation, and please don’t buy on a whim.

The most important aspect of a time share presentation is to understand what you are NOT buying.

Understand the true meaning of a timeshare and read the contract before you sign under pressure. Most timeshare buyers buy under pressure while on vacation or walking through a mall, to get an invite to a high pressure sales presentation. I have spoken to many who have done this very thing and regretted it later. 

timeshare presentation vacations

The most common question I  am asked is, “Should I buy a timeshare to save money on taxes and own a wonderful place to vacation”?

I talked to a friend who did tax audits and was assigned to an 8 inch thick stack of timeshare tax foreclosures. This prompted me to look further into the timeshare craze. Later, even going as far as to spend a week in a timeshare condo owned by a friend, I and a friend, attended a high pressure sales presentation ourselves.

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The Definition of a Timeshare

The first thing you need to know is that when you purchase a time share you are purchasing the right to use a vacation room or condo typically for 1 week a year. This is if you purchase 1 unit. The quality of available condos go from type A to type D. A, of course being the nicest and best equipped.

You do not own a share of the building, you do not own a room, and you definitely don’t own the land that the condo is built on. What you buy is one unit of time or one week of time. Some people buy two weeks of time. 

Typical Timeshare Cost

Understand what it means to sign a timeshare contract; you are promising to pay in full the contract price of the time share, the interest payment, and the yearly maintenance fee.

The payment is usually from 8-12 years. The yearly tax and maintenance cost is for life.

A lady ask me at a conference, “why did my timeshare company send me to collections”?

I told her, “you  did not understand that you were purchasing the timeshare with a loan and lifetime maintenance cost when you signed the documents”. Of course, she said no.

For some strange reason most timeshare presentations don’t make it clear that the buyers have to pay maintenance for life, and the maintenance goes up over time. They assume you know you are signing for a loan. 

the timehare presentation vacations and lifelong timeshare obligation is not Home ownership dream for women

When You Don’t Pay The Time Share Loan Principle And Interest Payments

If you don’t pay the time share principle and interest payments you will be sent to collections. When the balance is not paid from collections, you will be foreclosed on. If your time share is paid off and you do not make the yearly tax and maintenance cost your time share will be sold for back taxes.

How Most Buyers Find Out About Timeshares

They go on vacation, on a honeymoon, or just stay at a resort hotel. The company who owns the hotel may also own a timeshare unit building.

They will offer a free $100 bill,  lunch, or dinner to coerce you into listening to a timeshare presentation, which is usually a high pressure sales presentation.

The company gets back the “free stuff” many times over when you make payments on the timeshare loan and the lifetime tax and maintenance cost. So, once again, you learn, there are “no free lunches”.

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A Motivating Factor For Buying a Timeshare

High sales tactics make some buyers think they are actually purchasing ownership in a condo unit. Some people are motivated by the false tax savings.

Because of the ease at which you can purchase a timeshare many people who buy them  do not itemize for tax savings. Also, they are in too low a tax bracket to actually receive a savings from the timeshare. The tax savings are tiny, almost non-existant.

For those in higher tax brackets the tax savings on a timeshare is too small to make a difference. Another reason people buy timeshares is because they enjoy the vacation swaps. This is when you can swap timeshares with others, to vacation in different locations. Some timeshare presentation vacations sales are simply fake.

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When Buyers Falter On Their Time Share Payments

Judging from conversations I have had with timeshare owners many don’t understand their obligations because:
1. They signed up under pressure – did not read the contract.
2. The sign up was quick and didn’t understand what they are buying.
3. Some are young and gullible, so they sign up without the knowledge of contracts.
4. Many people don’t understand that they have to pay taxes and maintenance cost every year for life. This is necessary to use the timeshare “time” alloted to them for the year.

Concentrate on buying “actual” real estate, learn the best way

The best way to get out of your timeshare contract during or after your vacation is to realize you usually have a 3 day right of rescission on contracts. That must be in writing, preferably notarized, and sent next day mail, certified. Rarely, does anyone realize this, or use this tactic.

Typical charges of a Timeshare

I have friends who bought a time share 16 years ago, they said they purchased theirs for $17,000.  Most of the 16 years their yearly tax and maintenance costs were $500 per year, a year ago it changed to $1000 per year. The timeshares are much more expensive now. 

That is a class A Timeshare, the highest value. Let me remind you again that you are “only buying” time to use a space, “not” any real estate.

Currently, a typical Class A time share is in the area of $25,000 principle or more, plus interest, and $1000 per year (lifetime) payments for tax and maintenance. There are different packages available.

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Selling A Timeshare Condo

Selling a timeshare is difficult because you don’t have the same high pressure sales tactic abilities that enabled you to sign. The market for used timeshare contracts is tiny almost non-existant. You are competing against current new timeshare sales. The first place you should start to sell your timeshare is to contact your timeshare company “in writing”, that you purchased from. They will usually charge you a small fee to take it back.

There are companies who promise to “exit your  timeshare contracts”, and they may be helpful. Do your homework, and make sure the company is legitimate. In recent news reports many who have used these companies say were ripped off, and their contract was still in tact after they paid the company.

The organizations representing timeshares say it is best to negotiate directly with your timeshare company to get released from your contract.

You do not have the expertise to do a timeshare presentation on timeshare vacations – to sell it on your own. Don’t make an unwanted timeshare a lifetime timeshare obligation. 

Stay away from timeshare presentations, buy a home, you deserve homeownership

Lois Center-Shabazz | Course Delta Agency

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Home Inspections for Home Buyers

Home inspections for home buyers

Are home inspections for home buyers necessary? In light of the endless possibilities of home defects it is in your best interest to use a home inspector before you purchase a home.

Large defects are very costly but small defects can become costly, if not repaired in a timely manner. Once you have closed escrow, the home belongs to you, and the burden of the repairs is on you, so it is wise to minimize the possibility of home defects before you buy.

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Steps to hiring a home inspector for new or used home:

  1. HIRE YOUR OWN HOME INSPECTOR
  2. HIRE INDIVIDUAL TRADESMEN FOR INSPECTION
  3. CRUCIAL AREAS TO INSPECT
  4. DON’T IGNORE THE ADVICE OF EXPERTS
  5. BUYING A NEW HOME FOR INSPECTIONS
  6. BUYING A USED HOME AND GET INSPECTIONS
  7. NEW HOME OR REMODEL CONTRACTOR WARRANTY

1. HIRE YOUR OWN YOUR OWN HOME INSPECTOR

Hire your own quality home inspection service, not one recommended by your realtor. The inspectors recommended by the realtor will want repeat business from the realtor, so they will have a strong tendency to rush the inspection and overlook crucial defects.

Find your own quality inspector by asking others in the area or go to the American Society of Home Inspectors website.

2. HIRE INDIVIDUAL TRADESMEN FOR INSPECTION

I prefer to hire individual tradesman, electricians, plumbers, carpenters and roofers to inspect within their trade. Most will inspect for free or a very small fee.

3. CRUCIAL AREAS TO INSPECT

The most expensive repairs occur with structural damage, buckling of uneven walls and uneven floors, inside or outside the home. You may seriously rethink your decision to buy a house with major structural defects, for this is a strong sign the house may need to be rebuilt.

Other major structural defects include major plumbing problems, electrical, air conditioning (new air conditioners can run an average of $2500), and roofs ( to go from a leaky roof to a good roof on a small house can cost $10,000 or more).

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4. DON’T IGNORE THE ADVICE OF EXPERTS

Now that you’ve had an inspection, take it seriously; get three contractors to estimate the repair job. Ask the homeowner to pay for the repairs before you close escrow or leave money in escrow to cover the repairs.

If the repairs are in excess of the value of the home, or horribly unreasonable compared to the value of the home, ask the homeowner to reduce the price of the home or you should strongly consider buying a different home.

5. BUYING A NEW HOME FOR INSPECTIONS

Some folks think new means perfect, good, great, or in the best shape. This is not necessarily the case. Many new homes have problems, because despite the required inspections, subcontractors and contractors make minor and even major mistakes that sometimes go unnoticed.

Don’t close escrow until the home has been inspected AND the needed repairs are made.

6. BUYING A USED HOME AND GET INSPECTIONS

Used homes present unique problems, they must be inspected by tradesmen who are very honest and experienced in their field. There are many hidden problems with older homes that are fixable but must be addressed before closing escrow.

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I have purchased both new homes and used homes that I had inspected before purchase. One beautiful new home I purchased was built by a quality builder and had more defects than the used homes I have had inspected in the past.

The contractor blamed all of the defects on his subcontractors work when he wasn’t looking.

In any event, I had the contractor fix every single problem pointed out to me before closing escrow. For a few years after closing escrow, I found a few other problems, which the contractor fixed.

7. NEW HOME OR REMODEL CONTRACTOR WARRANTY

Contractors usually warranty most homes for at least five years. Be sure to contact your builder as soon as you find a problem. Don’t let minor problems become major problems by putting off the repairs for a later date. This is why it is crucial to have home inspections for home buyers.

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Reverse Mortgage Pitfalls Require Senior Homework

Reverse mortgage pitfalls

Understand the reverse mortgage pitfalls so you know the limitations for your heirs and yourself as homeowner:

I have spoken to a few senior citizens who obtained Reverse Mortgages, but felt nothing but regrets afterwards. Perhaps they did not read the fine print in a brochure that is required by FHA to read before they purchase the loan. After getting constant complaints about Reverse Mortgages, the government has changed the program, but there are still many dangers you need to be aware of.

The pitfalls of reverse mortgages, first learn to buy a home the right way
This article will cover the following pitfalls of reverse mortgages:
What is a reverse mortgage?
How does a reverse mortgage differ from a traditional home loan?
The limitations of a reverse mortgage
Homeowners insurance and taxes
When a reverse mortgage must be paid or you are forclosed
Problems heirs have associated with reverse mortgages
Can heirs take over the reverse mortgage or does it have to be paid off?
When are reverse mortgage repaid?

What is a reverse mortgage?

A Reverse Mortgage is a type of loan open to seniors that are at least 62 years who have a home that is paid off or has a low balance, and they live in the house, and follow the terms of the loan.

The problem that many seniors seem to complain about is that they did not understand the very strict terms of the loan before they signed on the dotted line. Some told me the terms were so strict, it made their lives unbearable trying to live under the guidelines and stay in their home.

How does a reverse mortgage differ from a traditional home loan?

The Reverse Mortgage is different than regular home loans in that it pays you from your loan proceeds, and is available regardless of your current income. The up front fees and cost of the loan, usually taken from loan proceeds are very high–much higher than a regular home loan. You are not required to make payments on the loan while all signers on the loan are alive and live in the home. When the last signer of the loan dies or is out of the home for one year, the loan has to be paid off. A amount of time given to pay off the loan is short, so heirs must act quickly.

Home ownership the right way-is pure joy, what is a reverse mortgage

The limitations of a reverse mortgage

The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home, sales price or FHA’s mortgage limits, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you may borrow.

Bare in mind that borrowing costs are far greater than a conventional second mortgage, and once you get a reverse mortgage, you can’t get another loan on your home.

Homeowners Insurance and Taxes Must be Paid While You Are in The Home

With a Reverse Mortgage, you don’t pay monthly principal and interest payments and the lender pays you according to the payment plan you select. The payments will accumulate and add a balance to your home as a reverse mortgage loan that will be responsible for your heirs if they wish to keep the home.

Like all homeowners, you are still required to pay your real estate taxes, insurance and other conventional payments like utilities. If you get behind in real estate taxes or other required payments, you could be forced out of your home by foreclosure.

With an FHA Reverse Mortgage you cannot be foreclosed or forced to vacate your house because you “missed your mortgage payment.” But, you could be forced out for many other reasons, some of them subjective like allowing the home to fall into unacceptable disrepair. Your local property tax holder can foreclose if your property taxes are not paid, so can the reverse mortgage company.

what is a reverse mortgage

A Reverse Mortgage must be repaid in full if you meet the following criteria:

1. When you die or sell the home.
2. When you do not pay property taxes or hazard insurance or violate other obligations.
3. You permanently move to a new principal residence.
4. You, or the last borrower, fail to live in the home for 12 months in a row.
5. An example of this situation would be if you (or the last borrower) were to have a 12-month or longer stay in a nursing home.
6. You allow the property to deteriorate and do not make necessary repairs.

A subjective evaluation listed above is, “violating other obligations” that are normally listed in fine print. It is important to read all the information you can get from a non-sales person before considering this loan. Another subjective evaluation is if you “allow the property to deteriorate and do not make necessary repairs”. This gives way too much power to the lender to take your home if they feel repairs are not
adequate.

You can receive the money in a few different ways: In payments, in lump sum, or the combination of payments and lump sum. It’s better to receive the money in payments to guard against premature spending.

reverse mortgages repaid

Typical Senior Complaints of Reverse Mortgage Borrowers

Complaints I heard from seniors I consulted with were 1. They felt uneasy with the amount of monitoring. 2. If the money is taken in lump sum, there was a tendency to spend it quickly on unnecessary things. Remember, once the loan is taken, there can’t be another loan taken on the house. 3. Seniors have complained that after taking out a Reverse Mortgage the loan officer strong arms them into taking out expensive insurance they don’t need and can’t afford, such as Long Term Care Insurance.

After doing your research and reading all of the fine print about this loan, call a HUD counselor to be sure you get all of the facts before you decide this loan is for you.

An alternative to a Reverse Mortgage is to sell your house outright, place the money in the bank, and have the bank send you a monthly check to live off, in an inexpensive senior apartment. Another option is a traditional second mortgage IF, you can get a low interest loan AND easily afford the payments, and can  keep up the payments if you are sick or incapacited. You should have a responsible person to help you.

limitations about reverse mortgages

Complaints Heirs Have of Reverse Mortgages

The complaint some heirs have, is they were not successful in getting the remaining equity out of the home when their elderly relative dies. Currently, some heirs have told me, 1. They did not know their parents had a reverse mortgage and therefore did not act quickly to get a mortgage to replace the loan or sell the home. 2. another common complaint heirs have told me is they weren’t given enough time to get a new loan to pay off the reverse mortgage or sell the home and were therefore foreclosed on.

3. One women I talked to who actually worked at a Reverse Mortgage Company says that a common problem was that no one in the family could qualify for a loan to pay off the reverse mortgage before their time expired – the reverse mortgage company only gives them a set number of months.

Some stay in the homes for a few years, but with some it is only six months – it depends on many factors. At least one heir is supposed to take classes with the homeowner so they can get all the facts or the mortgage broker is supposed to give them all of the necessary information. This does not always happen.

HUD on Reverse Mortgages

Can heirs take over the reverse mortgage or does it have to be paid off?

When a homeowner over 62 takes out a reverse mortgage the mortgage payments or principle and interest add up in an account overtime. It does not have to be paid back as long as the person or persons who took out the mortgage are still alive and living in the home. The younger a person is when they take out a reverse mortgage, the higher the balance will be when they pass away if they live long.

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Consumer Finance on Reverse Mortgages

But, what happens to that balance that has accumulated in an account over time? Can the heirs inherit the balance and keep living in the home rent free as the balance continues to accumulate. No! The heirs are required to make contact with the company on a regular basis and let them know that they are working hard to get a new loan to pay off the reverse mortgage balance left by their parents or they are working hard to sell the home.

If there is a balance left after the home is sold and the reverse mortgage is paid off, the heirs will get the balance. If the reverse mortgage is large or has built up for a long time, even if it was small, the balance could be large and leave nothing to the heirs.

Avoiding Reverse Mortgage Pitfalls Work Best When:

The homeowner has read the FHA bulletin on reverse mortgages and taken the reverse mortgages class to understand the loan.

The homeowner has a responsible child with excellent credit who can qualify for a new loan or sell the home as soon as the last homeowner on the loan passes.

Sometimes it is best to take the money in payments, but if there are no responsible heirs it may be best to take all the equity, put it away, live off a small draw from the bank and leave the rest to heirs.

The responsible heir must communicate with the lender and stay in contact after the last homeowner dies to understand how reverse mortgages are repaid.

The homeowner ALWAYS pays required taxes and insurance while in the home. Also, the homeowner must maintain the home.

Because the interest and principle accumulates while the homeowner is alive there is always a possibility that all of the equity may be exhausted and the heirs could get nothing, especially if the homeowner takes the loan early, for example at 62 and dies at 92.

What is a reverse mortgage

Non-Owner Occupied Rental Real Estate As Investment

REAL ESTATE AS INVESTMENT
Non-Owner Occupied Rental Real Estate As Investment

Some investors prefer real estate as investment for long term investing, even though the work is difficult and the costs are very high. Even with property management its hard work. Property management firms are expensive, and when they quit you have to do the work until you find the next manager. You have to rely on property management to show up, tenants to pay their rent and both to properly maintain the property. Every time a tenant moves there are repair and replacement costs, sometimes those cost are huge. You get tax deductions for rental property, but not nearly as much as for owner-occupied property.

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Some owners are surprised to find that even if they a have mortgage on rental property, the rents are considered income, and the rental income is taxed.  Landlords have to file a schedule E (supplemental income and loss for landlords) to get all of their deductions associated with rental real estate. To keep tract of everything you are encouraged to keep a spreadsheet. You can get one online, free, one is google drive if you have a gmail account.

It takes a special person to own and maintain real estate as investment in the form of rental real estate. Depending on the cost, type and area is what depends on the difficulty of owning and making a profit off the real estate. Since the cost are very high (and if you get a loan – it is leveraged with debt), it could take a few decades before you see a profit.

The advantages of residential non owner-occupied rental real estate as an investment:

  • It is possible to have high returns when held long-term, if you hit a time in history when real estate is selling and is scarce.
  • You can depreciate the property (this is far more advantages for property purchased prior to 1987 though, the depreciation deduction is much less after that year).
  • You get a deduction for up-keep, but it is much less than the deduction you get for owner-occupied property.

Debt, the wrong kind is crippling. Use good debt to buy a rental property

Disadvantages of residential non-owner occupied rental real estate as an investment:

  • Non owner-occupied mortgage loans carry a higher interest rate than owner-occupied loans.
  • Required down payment for non owner-occupied loans is much higher than owner-occupied loans. In many cases requiring 20%, compared to an owner-occupied loan of 3%-10% down.
  • You must pay capital gains tax on profits, when you sell.
  • Yearly maintenance cost for residential non owner-occupied real estate is usually much higher than owner-occupied cost. Most people simply do not properly maintain property that does not belong to them, and some are very destructive.
  • Long-term maintenance cost can be phenomenally high.
  • It is difficult to find reasonably priced properties in quality neighborhoods.
  • Neighborhoods with a lot of “four rent” signs are particularly difficult to avoid vacancies, it also sends a message.
  • Lost rents are not deductible.
  • A low quality neighborhood (that with high unemployment), brings a low quality tenant, i.e. the default rate on rent payments are high.
  • The debt carried when the rental is leveraged with a mortgage.
  • The constant turnover of new tenants is expensive due to fix up costs each time a renter moves.
  • You have to keep your fingers crossed, that when it comes time to sell, the prices in the are will be high, the type of real estate you own will be in demand, and there will be enough appreciation

Ladies, it takes skills to purchase a home and non-owner occupied rental property

The combination of an owner-occupied/non owner-occupied residential real estate can be a viable consideration for those who feel some form of non owner-occupied rental real estate is a must, as an investment. An example of a combination of residential owner-occupied and non-owner occupied real estate is a four-plex where you live in one unit, and rent the other three.

The advantages of the combination owner-occupied/non-owner occupied real estate investment:

  • You can qualify for the lower interest owner-occupied mortgage loan.
  • You can qualify for the lower down payment of 10% allowed with your owner-occupied real estate.
  • You can deduct the repairs and up keep on the rental portion.
  • You are present to monitor the repairs and encourage maintenance.
  • You can depreciate the rental portion.

You have a better probability of purchasing a property in a quality community since your initial cost are lower than a non-owner occupied property. A quality community brings a higher probability of a quality tenant. Attracting quality tenants is probably the most important aspect of residential non-owner occupied investments. Real estate as investment works when there is a high demand for rental real estate in an area. You will then have a large number of people to choose from.

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Disadvantages of the combination owner-occupied/non-owner  occupied real estate investment:

  • Your tenants may know where you live, if the property is titled in your name.
  • You can only deduct expenses for the rental real estate portion of upkeep, but not your own.
  • You will be liable for normal capital gains taxes on the non-owner occupied portion when you sell. There is a capital gain exclusion on the owner-occupied portion.
  • If you actively participate in rental activities, you can deduct $12,000 in losses if you are single and $25,000 if you are married on all properties you own.

Getting all of your IRS benefits are possible when you keep a spreadsheet of every single income item, expense and money returned to your tenants.

Laws change on just about everything,  yearly. Consult directly with current Internal Revenue publications for the latest changes
about Real Estate as Investment.

See IRS publication 527 at www.irs.gov: Residential Rental Real Estate Property (includes vacation property)
IRS Schedule E – Supplemental Income and Loss From Rental Real Estate

Lois Center-Shabazz | Course Delta Agency

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3 Big Problems When You Buy Real Estate to Flip For Profit

When You Buy Real Estate to Flip For Profit it is Tricky
3 Big Problems When You Buy Real Estate to Flip For Profit

Flipping real estate for profit seminars, advertising, and marketing is going on in my town and all over the internet and television. Since I have experience in long term real estate investing and I have friends who have tried to flip for profit, I would like to share some of our experiences.

Home ownership the right way-is pure joy

I, and some of my friend’s own properties out of state and we constantly get letters from people who want to buy our properties? We get letters, cards, brochures and everything in between.

Some of the letters are almost begging us to sell our property to them. Some claim they have all-cash, and others claim they are immediately qualified to buy. Here are many of the problems flippers have with those properties, so you may want to think hard before you answer advertisements to attend a flipping seminar who makes their money up-selling tapes and books after the seminar, that don’t work.

  1. It is Difficult to Find Properties That Aren’t Ready for the Bulldozer

Many of the so-called flippers are going to public records to find owners who live out of state and therefore, their reasoning is that they should want to sell. Many of the properties have family members who are taking care of the properties, living in them, and paying the rent. When you buy real estate to flip the most difficult task is finding a property that is not near condemnation.

Money is more important than you think, understand home buying the right way

The fact that dozens of the flippers are going to public records to find sellers tells me the difficulty they are having finding quality properties to buy and flip. Many of the properties that are readily available are in bad shape, so after renovation there would be no profit. Properties that are held by realtors are already priced for the current market. Those that are auctioned off in foreclosure are usually bid up too high for a profit after renovation.

The surprises, especially to the amateur flippers are enormous. The missed surprises include hidden floor dry rot, floor and wall dry rot, rotten plumbing pipes buried under a slab, large holes in the roof, outside gas leaks, damaged foundation, bad electrical junction boxes in the wall or under the house, clogged main drain, asbestos in the outside shingles or inside in the walls, and mold. These are real life problems I have seen others have when buying a fixer or home to flip.

Any of these problems can take anywhere from $2000 to $20,000 or more to fix, each.

Home buying the right way take skill

  1. Flippers Real Estate Agents Offers That Generate Profits For the Flipper

Flippers contact homeowners and write ridiculously low offers, so they have money to flip for profit after fixing up the property. Most of the offers are rejected, even if the home is in bad shape. If the home is in an area with properties that sell quickly and the resale is high, they constantly beg for offers that are below appraisal. This process is easier in areas were homes have low sales value or with homes that stay on the market for a long time.

These homes tend to have more hidden disasters since they have stayed on the market longer. What happens is that the flipper, out of desperation takes the best offer they can get and after finding they bought a home in bad shape they will hide existing problems or get a false appraisal that is too large.

  1. Most Flippers are Forced to Get Financing from Investors

To buy real estate to flip you must have financing. Banks don’t want to do business with most of the flippers who have no assets, little experience, and may not sell the home before they run out of money for renovation, upkeep after renovation, and mortgage payments until the property sells.

After the flipper finds that the home was overpriced for profit and they find the house is in much worse shape than originally thought, then they find that after sharing their profit with their investor or pricing the home for the market, they don’t have much left after sales, sometimes nothing. Then, this is where the flip begins to turn into a flop. Because of these problems, most flips are not profitable, and many flippers constantly find themselves in deep financial trouble.

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Before you think you can buy real estate to flip you should have some command of  both real estate buying and selling, the construction process, and the tax consequences when you have to pay short term taxes. Read the FHA rules to flipping properties.

There are many more facts to consider that you will have the privilege to read when my new eBook about Real Estate Investing comes out.

You can get my sample of “The Ultimate Guide to A Great Money WorkOver” and 7 other eBooks along with expert help with my course.

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Lois Center-Shabazz | Course Delta Agency

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Should You Sell Your Home With a Real Estate Agent or Sale by Owner

Sell Your Home With a Real Estate Agent and Avoid Major Mistakes

Should you sell your home by a real estate agent or sale by owner

Here are major issues you may face selling your home by owner:

  1. Real estate agents know the process and documents you need to execute the entire selling process properly.
  2. The real estate agent will understand how to fill out all the real estate documents correctly.
  3. The real estate agent can monitor the process and make sure everything is done in a timely manner. They will get the right documents, and help you find the right mortgage and escrow company, title company or real estate attorney.
  4. Sometimes the real estate agent can negotiate a higher price for your home, than you can since they know the price trends in your area.
  5. Safety is a major concern when you do a “sell by owner”. When a real estate agent brings someone to your home, they have usually vetted them and met them at the real estate office in advance. Most of the potential buyers you let into your home will drop in randomly from the sign in your yard, so they may have sinister ideas when they come visit, and are not actually looking for a home.

I don’t recommend that anyone sell their home by owner unless you have a buyer you know already as a friend, relative, neighbor, or close associate. Make sure you research the process thoroughly before you start.

The only reason I can think of that anyone would want to sell a “home by owner” to the greater is that 1. You MUST sell to move 2. Don’t have enough equity to pay a real estate agency (the fee is as much as 6%-7% of the sales price).

I have sold two homes as a “for sale by owner” seller. So, it is possible to do a “sell your home by owner” home sell, but It wasn’t as easy as I thought it would be. If you sell you home with a real estate agent you will avoid mistakes that can cost you later.

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I made the decision since I had not owned the one home long enough to generate enough equity to pay a real estate agent commission, they other home I wanted all of the equity for a down payment on my next home.

These are the things I learned from my actual experience, my research, talking to real estate agents, and talking to others who had sold a home. I spoke with two friends who are ex-real estate agents, and they helped me quite a bit.

I also took an appraisal course many years ago in anticipation of starting a real estate appraisal business. I did not start the business, but I learned a lot about appraising homes.

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First, expect to be bombarded by real agent’s eager to list your home, when they see your, “For Sale by Owner” sign. They will contact you over and over hoping that you will become frustrated with the whole process, throw up your hands and say, “where is that pesky real estate agent? I’m listing my house with her or him, yesterday!” Unfortunately, sometimes you will feel like that, but don’t give up too soon.

The following “for sale by owner” information should be helpful: 

  1. There are many legal forms, those dreaded forms! They are dreaded but necessary for the legal transfer of your property to another person. You will need legal real estate sales and disclosure documents for your home sale.

You can get these documents from a title company or you can pay a real estate lawyer to do the work for you. The real estate lawyer will provide you with the documents and fill them out correctly, for no more than an hourly fee. Verify his/her fee, the time it will take, and agree on a fee before he/she fills out the documents.

  1. Then you need to decide how much to sell your house for. If your asking price is too high, your home could stay on the market a long time. If your asking price is too low you may lose money you deserve. There are several ways to find out the right sales price. If the homes in your neighborhood are very similar, i.e. square footage, number of bedrooms (bathrooms), and similar size yard, you can use the recent sales from the last two homes like yours, in your immediate neighborhood. It gets a bit more complicated when the homes are all different, but appraisers use a similar method.
  1. You will have to find homes with your similar square footage, number of bedrooms, number of bathrooms, and if the home is on a lake, gulf course or ocean, or has a lot of land. You can also pay for a sales appraisal, use your local yellow pages for a listing of real estate appraisers. The next option is to check city or county records. Just call your local city records office and ask them where you can find information on the most recent home sales in your area. Verify which of these homes are like yours and use those comparisons to price your home.
  1. Fix up your home to make it presentable to sell. That includes electrical and plumbing in tip-top shape, clean carpet, clean walls, clean doors, an attractive front door, and well-groomed landscaping, and maintenance painting, just to name a few.
  2. Let the buyer know that he/she can pay for an independent inspection of your home, and put it in writing. The new buyer can have an inspection for plumbing, electrical, and structural soundness as well as other things. To be on the safe side, I paid for an independent inspection on my home sells, I had several things fixed as a result, before I sold the home.
  3. Let them know that they need to choose a mortgage company, you can also talk to mortgage companies up front. Both buyers in my case had never purchased a home. So, I did some research on the best mortgage companies in the area and gave them several to choose from, this just helped to speed up the process.

In real estate and home buying successOpportunities don't happen, you create them.

The mortgage company gave them title companies to choose from or they can search for their own title company. For safety purposes, you could have the person go to your mortgage company of choice and get pre-qualified, before you show your home. This way you will know, who the person is, and that they are serious about purchasing your home.

  1. Talk to escrow companies before your put your home up for sale, (in the case of fee simple states-talk to a title company or real estate lawyer for closing).
  2. Now let’s get back to those pesky real estate agents. There may be an aggressive real estate agent or two who will present you a buyer. If that agent is willing to take 3 or 4%, which very few can, and they have a buyer, then you may want to talk, if your equity covers that reduced commission.

The problem you may experience is trying to negotiate with an experienced real estate agent, they will most likely try to get you to reduce your price for their buyer. Make sure you add up your cost, 4% to the realtor, fixing up the home for sale, your mortgage sellers cost (sellers usually pay around 2%), and your moving cost. This is one of the disadvantages you face when you sell your home with a real estate agent and you don’t have much equity.

Do you have enough equity in your home to pay these costs and still have a substantial amount to put down on another home? Most homeowners who sell their own home, do so because they don’t have enough equity to pay a real estate agent cost of 6 or 7%.

Home buying the right way take skill

So, don’t let an experienced real estate agent come along and talk you into decreasing the price of your home, and giving them 3 or 4% real estate commission, in that case you could have hired a real estate agent to do everything to begin with, and the agent could get full commission for your home. If there is not enough equity to pay the commission, you will have to come out of pocket to pay the commission, using an agent.

  1. Keep yourself safe. Consider “for sale by owner” only when you can’t justify the real estate agents commission (6-7% of sales cost). Take appointments from interested buyers, get caller ID and ask for their name and address first. Send a postcard to the address your potential buyer gives you to remind them of their appointment. If the postcard comes back, “not at this address” cancel the appointment.

10. Ask lots of questions on the phone of your potential buyer. Get their name, address, and employment and salary, if they are pre-qualified for a loan or if they will pay in cash, before you give them an appointment. Ask to see an ID before they look. Verify information you are given by searching the internet for their presence. Use a private investigator to authenticate information if you can afford it.

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Doing a “for sale by owner” can also be done by companies that help with the process. In other words, most areas have “for sale by owner” real estate agencies that assist you with the process to make sure the sells process is done right and they will help to keep you safe. These agencies usually charge a flat fee. Here you can “have your cake and eat it too”, you will sell your home with a real estate agent, but do it at a greatly reduced cost. The process and the contracts are different for each state, be sure to research your state.

If you have plenty of equity in your home, a real estate agent should be your first option. Make sure you get references on which real estate agent to use, don’t choose one at random. There are good agents and bad agents.

Lois Center-Shabazz | Course Delta Agency

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Owner-Occupied Real Estate Now and in The Future as A Personal Investment

Owner occupied real estate now and in the future

Owner occupied real estate purchase as an affordable home

Your owner-occupied real estate now and in the future, is one of the best long-term investments one can make. Time has shown that owner-occupied real estate can produce tremendous long-term returns. In a few areas of the country the tremendous returns have even been short-term. In some cases, homeowners have sold homes held 30 or 40 years, for 30 to 40 times their original cost.

The least expensive for maintenance cost is the owner-occupied real estate investment, simply because most owners correct problems as they arise.

The hardest part of real estate investing is to know when prices are inflated or low. To understand this, you must do a lot of research or endure a lot of pain until prices stabilize. Residential real estate as an investment requires, skill, intelligence, research, intuition, a lot of time, very hard work, and luck.

Here are items to look for before and during your owner-occupied real estate now and in the future home search, for a successful property.

Good Credit Score

Before you start to look for a home the first steps are to;
Get a copy of your credit report
Go over it closely, make sure all the credit listed belongs to you
If you Find credit that does not belong to you, write Experian.com and challenge the reporting with them.
Stop charging, and start paying off credit you already have
Pay off anything that is past due, and maintain your bills monthly

Quality loan

Do not get a loan until your credit is cleaned up to the best of your ability, this may take months to a few years. Save for a down payment or get a no down payment loan and pay more points (or higher interest rate). Research any mortgage company you plan to use and make sure they are legitimate.

If you are a first-time home buyer consider FHA loans, or NACA (naca.com) to help with the qualifying process. Every city has a first time home buyers organization in town to help with the buying process.

Home ownership the right way-is pure joy

Quality home – Well inspected

Make sure you are getting a quality home, by getting quality inspections from plumbers, electricians, HVAC, and carpenters. There are many home buying nightmares where buyers used a lone home inspector who missed most if not all the problems. If you find problems in an inspection, you will know what you are up against. You can either: 1. Find another home, or 2. Ask for a reduction in price so the problem can be fixed in your increased loan amount.

Home purchased at the bottom or middle of a market

Know if your home buying market is in a bubble or if your home is over-priced. If it is you may not be able to sell the home for several years, even if you must move.

Affordable price

An affordable price is a home that fits your budget and is generally around 30% of your gross. Create a sustainable “overall budget” before you buy.

Well maintained

Look for signs the home has been well-maintained. Inspect the heating and air conditioning units well, the roof should stand the test of a heavy water hose. The floor should be level when you place a marble on the floor it should not roll, if it rolls, you may have a serious foundation problem.
Value increases over time: The more jobs or tourism there is in the area, the more valuable the area may be in terms of increase in home value over time. Then an area with no jobs or tourism can transform in several years when something valuable is added. As well as places that go under due to a decline in an area that has no jobs or amenities. It is best to look at an area with amenities at the time of sell.

No monthly house payment or rent

After the mortgage is paid off, you will have no house note or rent to pay. This is a tremendous savings. But, you will still have maintenance and taxes. It is important to factor in taxes as you age. Will your retirement check be enough for taxes and home maintenance?

The advantages and disadvantages of owner-occupied real estate is listed below:

Key advantages of owner-occupied real estate are:
• You can qualify for the lowest interest real estate loans available
• You can qualify for low down payment consideration, of 5%-10%. There are also extra low-down payment loans for first time buyers who qualify, as low as 3% down.
• You qualify for a full array of owner-occupied tax deductions. IRS Homebuyers Credit
• Most owner-occupied homeowners take pride and joy in maintaining their own home, so the long-term maintenance is usually reasonable.
• Owner-occupied real-estate profits have been tremendous when held long-term.
• There is a capital gain exclusion for taxes up to $250,000 if you have lived in the house for 2 of 5 years.

Home ownership dream for women

Key disadvantages of owner-occupied real estate:

• The debt carried when a home is leveraged with a mortgage loan.
• The responsibility of up-keep, for some this is an advantage, since they enjoy the up-keep.
• You are responsible for taxes.

Your owner-occupied real estate now and in the future, has many more advantages than disadvantages.

Lois Center-Shabazz | Course Delta Agency
Author, Blogger, Course Creator, Investor, & Money Strategist

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A Word About Home Loans

A word about home loans

It is best to build equity in your home over a number of years. Your goal should be to pay your home off in 15 or 30 years or earlier, if possible. Then sell it, and live off the proceeds as part of your retirement, or leave money to your heirs to purchase their own home.

Should you decide to acquire a new home loan your income should easily support the new payment. If you do not have an income or your income is limited, you should not acquire a new loan. A loan has to easily supported by your income NOT your equity. The income you have is what you will use to pay your monthly mortgage with

Take the home buying course to get the best possible home

If you do acquire a new home loan you should:

  1. Have income to easily support your home loan.
    This sounds like a simple concept. But, for many who want a home they think, “buy the home first, then figure out how to pay for it”. Please don’t put the “cart before the horse”, so to speak. You make yourself susceptible to bad loans and bad lenders when you buy a home before you have done your research and determined that you can afford a quality loan. The keyword being quality. The high quality loan, the more qualified you are the more likely you are to stay in your home long term, build equity, and retire without a payment, because it will be paid off by you.
  1. Have researched an affordable, high-quality loan yourself or have a relative research one for you. Compare several home loans, read the fine print, ask plenty of questions, understand all of the terms of the loans. See home buying at Msfinancialsavvy’s home buying course where you will learn over 100 ways to successfully buy a home. It is targeted to women, buy of course men will benefit too. Home buying is tricky, so I recommend you take this very inexpensive home buying course well in advance of buying a home.
  1. Make sure the appraised value of other homes in your neighborhood substantiates the added cost of a new or additional home loan. Understand and verify in writing you have a high-quality loan with no balloon payment attached. Some home buying purchase a home based on emotions and not all of the facts they need to make sure they are not cheated. You can easily overpay for a home when you buy on emotions. This can happen if the sellers lie about amenities or if the neighborhood is going down in value, so for instance you check the last four home sales in the area, but home values are trending down, so you get a home that you could have negotiated way down if you had this information.
  1. Understand in writing, the actual interest rate of your loan, obtain an interest rate you can afford or do not obtain the loan. Sometimes interest rates change before signing for your new loan.

A word about home loans for successful home buying for women

  1. Understand it does not make good financial sense to replace a loan that is nearly paid off with a long-term loan of 15 or 30 years. Once you have your home paid off you are home free. No more payments, you can call it rent/mortgage free, so DON’T mess it up at this time. Especially if your income is not set after retirement, you don’t want to increase your liabilities with a new loan if you are not increasing your income.
  1. Visit, www.fdic.gov (see “looking for a mortgage”)
    There has been a lot of information in the media lately about predatory lenders, they prey on the poor, under-educated homeowners with lots of equity in their homes. If you know of anyone in this category educate them about the dangers of unsolicited home loans or home loans with potential balloon payments.

Remember; do not forget to read the fine print. Also, if you don’t have a job, don’t get another loan. If you need a business loan, don’t use your house; get a bank business loan or Small Business Administration loan, see www.sba.gov. Another option is to delay starting a business until you can acquire proper funding.

Home buying the right way take skill

Get a Quality Home or Mortgage With Big Thing Buying Skills

Home or Mortgage; Buying an Affordable Low Maintenance Home and Get a Quality Mortgage

YOUR BUDGET

The first thing you have to ask is, “How much house can we afford” The payments include P+I+T+I (principle+interest+taxes+insurance). Most of your payment will be principle and interest, taxes vary according to state, and insurance is not a very big cost.

But, you can figure it out with most online calculators. You have to know how to calculate P+I+T+I to get a quality home or mortgage.

You should be stable in your job or with your business before you decide to take the leap to sign on with a mortgage.  

Most banks want you to be on your job or in your business for a solid two years. Set up a file system for steps 1-8, don’t rush and do your research.

Home buying the right way take skill

Step 1

MORTGAGE COST

Below is a typical cost analysis of a home or mortgage with average tax state, always find out how much typical insurance and taxes are in your state before you decide your budget.

Choose a home price you think you can qualify for based on total payment. You will keep adjusting home price until you can find one that is close to your budget. Use my mortgage amortization calculator at LiveRichCalculators.

Say your home or mortgage costs are as follow:
$300,000  price of home
at, 4% interest
30 year
Taxes=6000/yr
Insurance=500/yr
Monthly Payment and Interest=1,432.5
Monthly Taxes and Insurance=541.67
Total Payment=$1,973.92

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Step 2

DOWN PAYMENT AND ESCROW COST

Find out what a typical down payment is at your credit union, bank, or mortgage company. Now, make sure you have the savings or start a savings account with the down payment and escrow cost.

If you find a buyer who is anxious to sell and they have a lot of equity in their home sometimes you can negotiate that they pay your buyer’s escrow cost.

For the example above the downpayment is:
5%=$15,000
A 1% escrow cost = $3000

Step 3

MAINTENANCE COST

Allow a monthly saving account for maintenance cost, most homes have maintenance repairs from time to time.

Old homes usually have a higher maintenance cost than newer homes, unless all electrical, plumbing and other major items replaced. The important aspect of a good home is a good inspection, preferably by tradesmen.

I prefer hiring an actual plumber, electrician, and carpenter to inspect your new home instead of one single home inspector. Some of those home inspectors only take a 6 month home inspection course.

The tradesmen work in the field every day for years. You should also do your own inspection with a moisture meter and electrical meter to see if there are any glaring defects.

If you place a marble on the floor does it roll or stay put, if it rolls you could have a damaged foundation. That is extremely expensive to repair. If you know the repairs you may be able to add those into your mortgage and fix after your move in.

Step 4

CREDIT REPORT

Get a copy of your credit report before you start to look for a home. Read it carefully. Some people are shocked at the mistakes that get on their credit report. Make sure you document the mistakes on your credit report and challenge them with Experian credit bureau.

Experian will usually send the corrections to the other bureaus. When all corrections are in place, get another copy of your credit report, and credit score. Getting an affordable, quality home or mortgage starts with a good credit report and high credit score.

Step 5

PAY OFF BILLS

You know what your bills are, and you know if they are excessive. You will need to find room in your budget for a mortgage. You don’t want a mortgage that increases your current bills per month too much.

Like you don’t want to get from $500 per month of rent to $1900 per month for a mortgage unless you have been saving at least $2500 per month so that savings will go into your mortgage.

You should also still have room for a savings account or two after you get a mortgage. You will need savings for home maintenance, car maintenance, and general emergencies. Pay off as many bills as possible before you start a mortgage.

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Step 6

SAVE FOR A DOWN PAYMENT AND CLOSING COST

Down payments are ranging anywhere from 5% to 10% down. The more you put down, of course, the lower your monthly payment will be. Then, there are buyers closing cost you must pay also. This is usually a surprise to new home buyers.

Closing cost is typically 2 to 5 percent of the purchase price. So, for a $300,000 home, the closing cost would be about $9,000.

Step 7

MORTGAGE RESEARCH

Before you decide to use a financial institute, do your research. If you have a credit union or local bank you do business with and you have good credit, it is usually relatively easy to get a loan at one of those places and you will save on additional cost that is charged by mortgage companies.

If you can’t get financing from your credit union or bank, research the best mortgage companies in your area. You can also ask friends and family who they had good luck with.

Before your visit anyone for a mortgage. Research mortgages, make absolutely sure you understand what a quality mortgage is. Know what the current rates are for a 15 year or 30-year mortgage.

Don’t allow anyone to give you a low-quality mortgage, if they think you have not done your research, some will try to give you a low-quality mortgage, even if you qualify for a high-quality mortgage.

If you qualify for a  low-interest high quality conventional low-interest rate 30-year mortgage, make sure you get one. The industry is full of nice, dishonest people, protect yourself.

Free printables for small business and personal use at MsFinancialSavvy; Daily Action Form, Budgeting Form, and Savings Form

Step 8

MORTGAGE RATES AND QUALITY

Call your local credit union or bank to get current rates on quality mortgages.

Use my mortgage calculators at LiveRichCalculators.

Use the department of housing website to read about various types of Mortgage Issues.

This is most of the information you need to purchase a quality home or mortgage if it is your first home or your second or third.

Get all the facts  to buy a quality affordable home with low maintenance.

Lois Center-Shabazz | Course Delta Agency
Interested in a Free Discussion about how I can help you with Fantastic Finances? Let’s Chat – Make an Appointment Here

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Summary

Remember that buying a home is a serious process. You should take your time and be very methodical.

Some places have home prices that are outrageous – in that case, you may have to drive a long distance to get to work, by living in an affordable area further from your center of town.

Some towns have affordable housing compared to income. Take your time it may take anywhere from 6 months to 5 years to go through the process I list above.  Article Updated 2019

How to get a quality home or mortgage with big thing buying skills