If you qualify for the particular foreclosure home you wish to purchase with a fixed interest rate, then you should choose the fixed rate mortgage 99% of the time. In this article you will learn why the ARM can be such a bad idea and how you can overcome the anxiety of your decision based upon the facts. Because current interest rates are so low—and have been that way for some time now—making a choice with regard to an adjustable rate mortgage versus a fixed rate mortgage is not difficult.
The recent and continued mortgage crisis can be directly attributed to the sub-prime mortgage meltdown and do a great degree the adjustable mortgages that were the flavor of the day in the real estate industry.
There are several ways to accomplish the purchase of buying homes without using any cash. this article is just a couple of way of doing it. Owner occupents are the focus as these tactics are available to investors.
Federal Housing Administration (FHA) foreclosure homes are different from any other type of foreclosure home in that there are several methods of buying a property utilizing low money down or no money down techniques. It is essential to first understand the several different ways in which the FHA lists the foreclosure homes that they are selling.
The current real estate environment is ripe with potential issues that must be taken into consideration. Local real estate prices, mortgage worthiness and local economic and employment conditions are only some of the variables that an investor in foreclosures must take into account. If someone is just beginning to invest in foreclosures to build their real estate portfolio, it is important to understand that decisions made now can and will affect financial flexibility later.
The real news is that short sales are so badly named it should be against the law. If there is any truth in advertising they should be called “Long Hard Haul Sales” which is much more appropriate. The word short sounds like it will take a short time to buy one but that is so far from the truth that they are on different planets.
What short sale means is that the bank will take less than what is owed on the property. “Short” has nothing to do with time frame and less to do with a short amount of pain. The link below discusses some of the changes that are coming down the pike regarding short sales but as a word of caution…don’t be in a hurry to close the deal and move into a short sale.
And if you are selling a short sale you will not be paid by the hour because if they did you would be making below the legal limits of minimum wage. Workers in Bangladesh will feel bad for you and perhaps send money, stuffed animals and kind letters. But they won’t envy you.
Short sales are like Chinese water torture. One drip of hope at a time followed by weeks of silence and buyers that are ready to jump ship every other day. At the end of the process will it be worth it to anyone? Well that depends on who you are and what you expected to begin with. Speaking from as little exposure as I could possibly have with short sales and only listening to coworkers moan and complain as they slow go both broke and insane, I wouldn't put myself through the ordeal or any of my clients.
It is not that I don’t have any patience. It is just that I don’t need to have every experience in the world to know what I don’t want to experience. I don’t want to eat cockroaches dipped in chocolate, I don’t want to jump out of an airplane naked and I don’t want to live through the drama and gnashing of teeth that are associated with short sales.
Webinar on Short SalesThe first secret is to make a reasonable offer. Many of us feel that the banks and asset managers are willing to take a dramatically lower price than the asking price. This is not the case. We can lose a good deal on a foreclosure by trying to make it a great deal. In order to know what we are willing to offer on a foreclosure home we need to cover the second secret. That secret is to be prepared with the supporting data in advance of making an offer. By checking the recent sales we can often see what the home should sell for under normal circumstances.
By knowing what other similar homes have sold for recently we are more likely to have a better idea on what to offer in order to make a wise but rapid decision on what to offer rather than a knee jerk reaction to the pressure that we feel when we are trying to make quick decisions. The last secret we sort of covered within the second secret. The third secret is to make a decision quickly and be determined. If we have done the two first secrets we are far more likely to be able to make the decision to either pass on the foreclosure or to make an offer. Foreclosures are as often underpriced as they are overpriced.
Understanding the difference between what a good price is and what a ridiculous offer is allows us to make the decision quickly. The reason for the value fluctuations is often because the appraisers for foreclosures are many times under a great deal of pressure themselves to get the appraisal done and move on to another. This haste can lead to great opportunities.
Many investors wait for everything to be in line before they move on to the next step in the process. As an example, an investor may have a ratified contract on a foreclosure that needs repairs and wait until the house has settled and then start doing the repairs. As soon as the repairs are all complete, they then move on to the marketing stage of the investment that they have made in order to sell it.
This is completely unnecessary and increases carrying cost which has to be factored into the profit from the purchase and sale of the foreclosure. Carrying costs are the same as lost profits in the best case scenario. It is fair to say that it is factored in as lost income if the investor had been more proactive. It is even fair to say that the expense of paying the mortgage during the carrying phase is an expense rather than lost profits. The wise investor waits only for the ratified contract and then begins to market the property in the hopes of finding a buyer that is ready willing and able to purchase even if the house needs some repair.
By advertising early we are able to give the end buyer the chance to select their own colors for carpet and paint if the home requires it. Either way the carrying costs can be dramatically reduced if we market the property prior to taking possession. This way we can move on to the next deal more quickly as well and increase our volume over the course of time.
