Thursday, January 6, 2011
Tuesday, January 4, 2011
How to Minimize or Avoid Paying a Down-Payment
If your income and credit will be accepted by a rental agency for an apartment, then you can get approved to buy a home with no down payment. The reason that many people choose to rent instead of buy is that they believe they will need to have enough savings to cover 20% of the home’s purchase price in a down payment. Fortunately, lenders realize that most people (particularly those who do not already own a home) will be unable to come up with a 20% down payment and have designed programs precisely for that situation. Consequently, renters are advised to speak with a mortgage company to learn about available mortgage programs before signing a rental lease.
Be aware that a zero-down mortgage will probably not get you the most competitive interest rate. You will be paying a premium for the ability to borrow funds without providing security in the form of a down payment. The interest rate may be reduced with a down payment of as little as three to five percent, but you will always pay a higher rate for the privilege of not having a down payment. You will need to have excellent credit in order to qualify for a no-money-down loan with a competitive interest rate.
Many people do not realize that getting a no-money-down loan means that you will not be required to pay any closing costs. In this case, the lender is actually providing the borrower with more than 100% financing.
One of the ways that lenders help borrowers with little or no down payment is to provide them with what is commonly known as a piggyback loan. In this type of program, the borrower receives a mortgage loan equal to 80% of the home’s purchase price and a second mortgage loan that is equal to 23% of the purchase price.
If lenders can’t or won’t assist a borrower, a government guarantee program might allow the borrower to qualify for a zero-down loan or a down-payment assistance program. These loan programs are often very competitive and are usually open to low-income families and current or former members of the military.
A loan program that doesn’t require any money down has fairly high interest rates. However, today’s interest rates are low and dropping steadily. Therefore, buying a home with a no-money-down mortgage loan has never made more sense.
When you are in the market for a no-down-payment or zero-money-down home loan, carefully research lenders and their loan programs. Each lender is different and some specialize in the area of no-money-down loans.
First-Time Buyer Programs
If any of the following situations apply to you, then you might be eligible for a special first-time-buyer mortgage program that will provide you with a no-down-payment option or down payment assistance:
no-money-down loan program provides a great opportunity for first-time buyers and buyers with limited cash reserves. There are even programs for borrowers with shaky credit histories and those who are self-employed
•You have never bought a home, or have not bought a home in the past three years.
•You do not have adequate documented funds to be used as a down payment.
•You have previously filed for bankruptcy.
•You are self-employed, or cannot provide adequate verification of your income.
•You have previously been turned down for a mortgage loan by a mortgage company or other lender.
•You have slow credit, damaged credit or no credit.
Further Considerations
The following text lists the things that you will need to research before pursuing a zero-down mortgage. This information is important for every borrower, regardless of the type of loan, but it is much more important when you are trying to get a no-money-down loan.
•Your Credit Report: You need to know in advance what is on your credit report. Having minor blemishes credit report usually is not a problem for most borrowers, but a large number of significant credit problems can reduce the amount that you will be able to borrow. Your debt should be as low as possible prior to applying for a mortgage loan, because one of the factors used by lenders to determine your creditworthiness is your debt-to-income ratio. Also check whether the majority of your debt is spread out over different accounts, because a lender will view several accounts more positively than a single account.
•Your Available Cash: Even when you are trying to get a no-money-down loan, you should try to increase your liquid cash as much as possible before you apply for a mortgage loan. One way to do this is to liquidate some assets, such as stock holdings and bonds. Lenders will often overlook blemishes on your credit report if you can cover at least two months of debt payments with your reserve cash.
•Find the Best Lender: In order to find the best mortgage program for your particular situation, you need to research the individual lenders offering no-money-down loan programs. Because lenders define zero-down mortgage programs in different ways, it is important to find the lender who offers the right type of program for your specific situation.
•Investigate Other Types of Loans: Perhaps other types of loan programs will meet your needs, giving you the opportunity to become a homeowner even when your cash reserves are inadequate for a standard 20% down payment. It is not uncommon for lenders to allow you to borrow two separate loans – one for the down payment and closing costs, and another for about 80% of the purchase price of the home.
Conclusion
Overall, a no-money-down loan program provides a great opportunity for first-time buyers and buyers with limited cash reserves. There are even programs for borrowers with shaky credit histories and those who are self-employed. No matter what your particular situation is, there is a lender who can help to make your dream of home ownership a reality. Just remember that if you can afford a monthly rent payment, you can afford to purchase a home. By considering important factors in advance and researching lenders and their loan programs, you will find a program that will work for you.
Even if you do not have adequate reserves to cover 20% of the purchase price, if your credit and savings history are in good condition and your income is documented correctly, most lenders will be more than happy to work with you to find a program to help you purchase your next home.
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Real Estate Investing: Getting The Best Deals
By: Alex Oakley
Sometimes it is difficult to have both parties feeling comfortable toward the possible end of a real estate deal. The seller wants to get the most money they can and the investor wants the lowest price possible to ensure profitability.
Having a good rapport with the seller will go a long way in accomplishing the feat of pleasing both sides. The more rapport you have with the seller, the more willing they will be to stay at the negotiating table to hammer out a deal. This will be especially true with owner financing. Many sellers are hesitant to try owner financing for fear of the investor backing out of the deal and them not getting their money. This is especially true in no money down investing. In traditional buying and selling of property, the seller gets a big check at closing. So one can see why a seller will be hesitant to try owner financing. So, with owner financing, rapport will be even more important than it ordinarily would.
Some investors think being "hardcore" and being stern will get the job done while other investors prefer flexibility. It all depends on personal preferences and the situation. Some situations will require more flexibility.
Finding the seller's lowest price
In some cases, you may be able to find out what the rock bottom price of a property will be through conversation. As the conversation continues and rapport builds, the seller will volunteer that they will take a lower price than they are asking. Often times they won't volunteer this information. This is where some sales techniques can help you find out what the rock bottom price would be.
The seller's realistic expectations
Try and find out what the seller will actually settle for. Some investors like to use the question "What do you realistically expect to get for your house?". The key word in that question is "realistically". Actually, real estate investors write a lot about using this phrase. You will see this written in real estate investing books. After all, this is where I got the idea. Often times the use of that one word will lower the price.
You could also do this by selecting a range. If the seller is asking $200,000 ask them if they realistically expect to get $190K to $200K. If they say yes then you essentially have lowered their price from 200 to 190. Of course it is not that simple. Lots of conversation and negotiating will probably go into this, but you get the idea.
No real estate agent
Many investors will ask the seller to lower their price by a few percent simply because the seller has no need for a real estate agent. If the seller was using a real estate agent, they would have to pay them commission. This is generally anywhere from 3% to 6%. There are several factors that go into the agent's commission so it can vary widely. It makes sense that the investor would ask the seller to do this. The seller would be saving that money that would ordinarily go to the agent. This works pretty well and you can actually get a bit of a decrease by asking the seller that simple little question.
Author Resource:-> For more information on no money down real estate investing, please visit our website real estate investing advice.
Article From Real Estate Pro Articles
Chris Colgan Team
Re/Max Regency
www.ChrisColgan.com
703-485-1435
Monday, January 3, 2011
Typically, a pending ratio indicates the supply and demand of the market. Specifically, a high ratio means that listings are in demand and quickly going to contract. Alternatively, a low ratio means there are not enough qualified buyers for the existing supply.
Taking a closer look, we notice that the $150K - $200K price range has a relatively large number of contracts pending sale. We also notice that the $0K - $50K price range has a relatively large inventory of properties for sale at 244 listings. The average list price (or asking price) for all properties in this market is $314,189.
A total of 2742 contracts have closed in the last 6 months with an average sold price of $290,858. Breaking it down, we notice that the $200K -$250K price range contains the highest number of sold listings. Alternatively, a total of 339 listings have expired in that same period of time. Listings may expire for many reasons such as being priced too high, having been inadequately marketed, the property was in poor condition, or perhaps the owner had second thoughts about selling at this particular time. The $150K - $200K price range has the highest number of expired listings at 48 properties.
You might be wondering why average days on market (DOM) is important.
This is a useful measurement because it can help us to determine whether we are in a buyer's market (indicated by high DOM), or a seller's market (indicated by low DOM). Active listings, or properties for sale, have been on the market for an average of 119 days.
Analysis of sold properties for the last six months reveals an average sold price of $290,858 and 44 days on market. Notice that properties in the $550K - $600K price range have sold quickest over the last six months. The average sold price for the last 30 days was $313,233 with an average DOM of 50 days.
Since the recent DOM is greater than the average DOM for the last 6 months, it is a negative indicator for demand. It is always important to realize that real estate markets can fluctuate due to many factors, including shifting interest rates, the economy, or seasonal changes.
''The average list-to-sales ratio for Prince William County is 100.3%.''
Ratios are simple ways to express the difference between two values such as list price and sold price. In our case, we typically use the list-to-sale ratio to determine the percentage of the final list price that the buyer ultimately paid. It is a very common method to help buyers decide how much to offer on a property.
Analysis of the absorption rate indicates an inventory of 3.3 months based on the last 6 months of sales. This estimate is often used to determine how long it would take to sell off the current inventory of listings if all conditions remained the same. It is significant to mention that this estimate does not take into consideration any additional properties that will come on the market in the future.
Chris Colgan
Re/Max Regency
Search Area Homes For Sale
www.ChrisColgan.com
ChrisColganTeam@Gmail.com
703-485-1435