Posts Tagged ‘closing costs’

The benefits of rent to own homes are immense. Buying properties by the rent to own method helps in acquiring the ownership of the concerned homes, without dealing with the banks and mortgage companies.

The idea of the rent to own properties is growing very briskly in the real estate market. Some people choose this option just for the sake of checking out the neighborhood, prior to giving full commitment of purchasing the property. The overall outlook of the rent to own homes, make them a perfect solution for the investors.

Most of the people have found their ideal homes by the process of rent to own. Renting to own is fast becoming the preferred choice of the first time investors in the real estate market. This method is similar to the method used for the rent to own vehicles, wherein the vehicle is first leased, and during the lease if the person likes it, the decision of purchasing it is taken.

The fact that the down payments required in the real estate market are increasing with the time, will not be negated by anyone. In such a scenario, buying the rent to own homes is a much better choice, as the down payments required to be made in this method are very low.

Another important benefit of rent to own homes is that the individuals do not have to worry about the closing costs of the property. The agreement regarding the appropriate price of the house is done between the buyer and the landlord.

In some cases, the payments made towards the rent are accumulated by the landlord as payments towards the price of purchasing the property. In such cases, the landlord asks for a payment that is higher than a month’s rent. This is done for substitution of a large down payment. But, these rates are negotiable.

Another benefit of rent to own homes is, the renters can decide during the course of the lease about not buying the property in the future. This is permitted without any kind of repercussions.

The price of the concerned property remains the same throughout the period of the lease. The landlord is not permitted to increase the price during the course of the lease.

Rent to own investors have to keep in mind the ailments of buying property through the rent to own option. There are potential considerations in buying rent to own homes. This is because, the tenant buyer deals with an investor and not with any financial institution or bank, for this purpose.

The unscrupulous investor, who have a better understanding of the fundamentals of the real estate market, can cheat the new tenant buyers into signing a bad deal. Hence, it is always recommended that the buyers do a thorough review of the property before investing in it. The inspection of the property will result in a proper deal that will prove fruitful in the future for the tenant buyer.

Charles W. Moore, a U.S. Army Veteran began Real Estate Investing in 2001. He’s a Successful Investor, and Author of, “Million Dollar Rent To Own Real Estate Secrets Exposed.” Get his Free Report on Rent To Own Real Estate Investing [http://www.Rent2OwnExposed.com] at: [http://www.Rent2OwnExposed.com] – Learn Real Estate Investing, Stocks Markets and Internet Marketing, visit: http://www.REIeBooks.com

Author: Charles W. Moore
Article Source: EzineArticles.com
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Buying a home is a part of most people’s lives. It fits right into our finances with saving for retirement and health insurance. It is simply a part of our finances.

You can turn to a lot of places for advice when buying a home. You can talk to a realtor, a mortgage lender or even your family. But there are some tried and true personal finance laws that fit the home-buying situation perfectly.

Rule 1: Do your homework

It used to be that you were told to learn as you go. After all, the saying says that you only learn by making mistakes. Not true. Don’t feel as if you need to just go out and jump into a home because that is what you are expected to do. Take some time and do your homework.

If you don’t have the money and the time to devote to a home, then buying is not for you. Look at your finances, job situation, family life and goals when deciding what and when you want to buy. Don’t forget that owning a home is a big deal. You will not only have monthly payments, but you will also have insurance premiums, property taxes, utilities and possibly even PMI to tack onto the cost. Renting could be a better choice for right now.

Rule 2: Buy what you need

If you buy something just to tide you over, you might find that it doesn’t last long. Advisors will tell you to buy quality and for the long term when it comes to big ticket items. The same goes for a house. Yes, buy a small starter home if that is what you want and what your finances dictate. But unless it is a roomy home at a good price, you may have to move fairly soon. And all of the commissions and closing costs could be avoided by simply buying what you need now.

Rule 3: Fixed-rate is the only way to go

I know that you may be thinking that adjustable rate mortgages have the potential to go down in interest rate. Well, they can. But what will you do if it goes up? A fixed-rate mortgage gives you the security in knowing that what your payment is today, it will be tomorrow and twenty years from now. It’s not going to go up and throw your budget in the pit. If you have extra cash, go ahead and add it to your payment and get rid of that mortgage early.

What is the perfect term? It depends on your finances. But remember, you will own your home quicker, have more equity faster and pay less interest over time if you pay off your mortgage in 15 years versus 30 years.

Rule 4: Have a backup plan

If you haven’t noticed it now, you will. Things go wrong. Often. They just do. And you will be glad you have a backup plan when you are down to your last penny. I see nothing wrong with taking out a equity line of credit and not using it. Just tuck it away for an emergency. Don’t touch it until absolutely necessary. Or better yet — forgo the temptation and make sure that you save some emergency money. You will need about three months worth of expenses for safety’s sake. But if you aren’t a good saver, your home equity will be a good backup plan.

Rule 5: Take your time

Like rule number one, you should simply take your time and have everything lined up before you jump on in. Take the time to search for a home. Look at the neighborhoods, the market and the homes that interest you. The more you know, the better you will be at negotiating. There is no big hurry. There are plenty of homes out there. Dream homes are a dime a dozen, believe me. If they weren’t, so many people wouldn’t own homes.

It all boils down to being wise in your decisions. Look at your finances, goals and needs before you consider anything else. These factors are the necessities. The rest is just nice. By using your financial sense, you will find that homeownership is a natural part of life.

Martin Lukac represents RateTake Refinance Loan marketplace. RateTake matches consumers with multiple lenders offering low rates. Got too much credit debt? Get Debt Consolidation help and you’d be surprised what we can do together.

Author: Martin Lukac
Article Source: EzineArticles.com
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Selling a new home versus an older home has it own set of challenges. Normally with older homes owners need to spend time and money making minor to moderate repairs before putting the home on the market. Sporadically, there are major repairs that need to be addressed before this can be done or there needs to be some concession in price. With newer homes this is unusual. Things are usually still in fine condition; paint is new, the carpet is not worn, and things aren’t falling apart. When selling your new home your efforts will need to be focused elsewhere.

Determine Minimum Selling Price

If you are selling a new home then chances are something unanticipated has happened. Most families stay in a home for a long period of time before selling so they build equity and pay down the mortgage. Real estate is a wonderful investment because typically over time its worth appreciates. Unfortunately if the home is new then it is likely that not much equity has built up while still having a high mortgage balance. No homeowner wants to experience a loss when selling their home so in cases like this it is important to determine what your minimum selling price is. Take into account mortgage payoff, closing costs, realtor commission, and any other fees that are tied to selling. Depending on the real estate market you may not make a bundle on the deal but at least you won’t lose your shirt.

Preparing Your Home

Even though your home is in good conditions don’t neglect the small stuff. Take the time to thoroughly clean the inside of your home and remove as much clutter and debris as possible. Do this on the exterior as well, trim and mow the lawn and cut back any over grown bushes and shrubs. Make your property look good, inside and out. Since you may not have the flexibility in negotiating price you are going to have to do everything you can to get the most out of it. The price, condition, and amenities are going to be the focus of selling your home.

What Are Your Homes Strengths

Sit down and put together a list of your homes strengths and amenities, such as; hardwood floors, granite counter tops, new furnace, new roof, and so on. Take pictures and include the information on a flyer. When selling a new home you can expect to get more money because it is in good condition but if your profit/loss margin is narrow you need to emphasize the strengths your home has to offer. Go beyond the home itself and look at the schools and neighborhood. Anything that can be a selling point should be considered and find resourceful ways to present this information to buyers.

Develop a Marketing Plan

As you draw closer to putting your home on the market you may consider using a local real estate agent. In this case he or she will take care of the marketing for you but if by chance you can’t afford to utilize their services you will be forced to market the home yourself. To get started, place a “for sale” sign in your yard along with a color flyer with pictures and high points of your home. Contact the local newspaper and take out an ad. Post your listing on real estate sites on the internet and lastly, tell as many people as you know that your home is up for sale.

Hold an open house as often as you can and expect potential buyers to bring representation so be prepared to work with at least one agent. Stage your home so it takes on a warm cozy feel and make your home appear spacious.

Yes, there are hurdles to overcome when selling a new home but it is not by any means impossible. Know what to expect and plan accordingly and you will be able to get through this while getting the best price possible for your home.

Jason is a life long resident of Boise, Idaho and provides real estate information on the Boise Idaho Real Estate Market for buyers, sellers, and investors. Visit BoiseRealEstateInfo.net to get started.

Author: Jason Deines
Article Source: EzineArticles.com
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I am often asked the question, “Is real estate a wise investment?”

My answer to this question is yes, I believe in investing in real estate (RE) as an asset class for the long term. But no, I am not a fan of investing in individual real estate properties as an investment.

I want to clarify; I am talking about buying real estate as an investment outside of or in addition to your home residence.

I know there are many people who may disagree with the opinions expressed here. Yes, there are exceptions to the general rule and if you know what you are doing, are an expert at speculative RE and fixing up homes and comfortable with the inherent risk of owning property you can be successful at using RE to increase your wealth. But I would say these people and situations are now the exception.

I always find it interesting that you hear so many stories about people that made tons of money in rental real estate, but rarely about the frequent disasters as people don’t talk about those as much. Just like you always hear about the amount of a gambler’s winnings but rarely the full amount of their losses.

One of the most important aspects of owning an individual investment property is understanding the numbers and viewing it as a business. If you are not sure what the Net Operating Income (NOI) is for the property you are considering, you should NOT buy it.

Here are the primary reasons why I do not recommend directly investing in real estate properties:

1) It is one of the few investments that can cost you significant money and time.
Owning property as an investment can include such costs as: interest on the loan, closing costs, cost of finding renters, cost for months without tenants, cost of additional insurance, cost of repairs and upkeep on an investment property and management fees just to name a few. Many people do not consider all the costs of owning a real estate property.

2) It is a leveraged investment which increases the risk.
Most people take out a loan to buy the investment whether it is a house, apartment building, or land. They are leveraging their initial investment and betting that the investment will be worth more. Leverage magnifies both gains and losses. (This is great on the upside, bad on the downside.) If the real estate market has dropped in value, you may not be able to sell the property for what you put in and you still have a cash outflow requirement every month.

3) It is not a diversified investment.
Most real estate is an investment in one property in one specific location. You are generally putting many of your eggs in this one basket which once again increases the risk. (Diversification is one of the most important tenants of investing. At my firm we are fans of low cost mutual funds and ETFs due to the inherent diversification of this type of security.)

4) It is a highly illiquid and non-marketable asset.
Depending on the real estate market it can take a long time to sell a home. Even during good markets, it usually takes more than two months to sell and close on a real estate property. Anyone who has owned a home during a buyer’s market, such as now can tell you their nightmare and frustration of having the house on the market for over a year (or years).

How about vacation homes?
Even with regards to vacation homes, if you want a vacation home to enjoy as your vacation home, do it, if that makes financial sense for you. I view that differently than just buying a second house purely as an investment. The enjoyment and pleasure you get by having a vacation home makes up for the risks and costs of the real estate. The main objective of a vacation home is to be used and enjoyed is different than a property bought primarily as an investment. (Often times it is much cheaper and more convenient to rent a vacation house for several weeks a year than to have the costs of owning a vacation home.)

REITs
If you believe in and want to invest in real estate, I AM a proponent for Real Estate Investment Trusts or REITs. REITs are a security that trades like a stock and invests directly in real estate by owning a portfolio of properties and/or mortgages. REITs allow you to own real estate as an investment in this asset class with the advantages of:
1) Having an expert picking the properties
2) Without the hassle, costs and obligation of maintaining an individual property
3) Not incurring the individual property risk due to lack of diversification (because many properties, mortgages, and/or locations may be owned by the REIT)
4) It being a marketable asset that can be quickly bought or sold through a major exchange.
5) A REIT by itself is a diversified investment

Conclusion
Although I do not recommend buying individual real estate properties as an investment, real estate as an asset class usually improves your portfolio diversification since it has a low correlation to the general market. Therefore, generally I do recommend committing a small portion of your portfolio to this class, not as a market call on this sector (especially now), but based on my belief in its ability to dampen the overall volatility of your portfolio in the long term.

Please note while we are not big fans of REITs right now, especially commercial property REITs, we should be in the future as the economy improves and supply lessens due to lower prices.

Tara is a CERTIFIED FINANCIAL PLANNER(tm), life coach and partner at Main Street Financial Solutions.

Main Street Financial Solutions ( http://www.msfsolutions.com ) provides knowledgeable, customized financial planning and investment advisory services.

Author: Tara Conti
Article Source: EzineArticles.com
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Experts estimate that most people who use a Realtor will pay as much as 10% of your selling price in costs associated with selling. The cost of selling a home yourself can range from 4% to 8% of the selling price of your home. When you’re estimating your expected gains, remember that the cost of selling a home can be deducted from that figure for tax purposes.

To give you an idea of what the costs of selling a home in the current market are, take a look at the information below. We’ve included estimated costs based on a $250,000 home sale, as well as some tips for lowering or eliminating them to lower your overall cost of selling your home.

Sales commission

If you list your home with a Realtor, expect to pay 4 to 6% of the sales price, or $8,000 to $12,000 in real estate commission.

Tip: Shop around. Real estate commissions aren’t written in stone. A Realtor may be willing to accept less of a commission in a slow market, or you may be able to save money by contracting with a Realtor for specific services only rather than a contracted listing.

250,000

-12,000

238,000

Closing Costs

Taxes, both transfer taxes and property taxes, and legal fees associated with the closing and finalizing of your home sale will be 2% to 4% of your sales price, or $4,000 to $8,000.

Tip: Check the laws in your state. If you’ve prepaid your property taxes for the year, you may get a credit instead of a bill. There may also be other refunds on prepaid escrow costs for home insurance and other costs of selling a home.

238,000

- 8,000

230,000

Paying Off Your Mortgage

Whatever the remaining principal balance is on your current mortgage will have to be paid off upon the sale of your home. Just to keep things simple, let’s say that you still owe $50,000 on your current mortgage. If there’s a prepayment penalty, you’ll need to deduct that from your eventual sales price as well.

Tip: Ask your lender to prepare a payoff statement for you to check your figures. If there is a fee charged for the service, you can deduct it as one of the costs of selling a home.

230,000

50,000

180,000

Repairs to Your Home

The cost varies widely depending on the age of your home and how well it’s been maintained. At the very least, you should get a home inspection to identify any possible problems to avoid being surprised by them at closing. You should plan on paying about $300 for a home inspection.

180,000

300

179,700

Pre-Sale Facelift

Again, the cost varies with the work that’s needed to get the house looking its best. Conservative estimate: $300 for new paint, screws and hardware, carpet for living room floor and landscaping service

179,700

400

179,300

Moving costs

The cost of moving from one home to another are included in the cost of selling a home. It may be as little as $1000 to as much as $12,000 for a cross country move. Let’s be conservative again – $3,000

179,300

3,000

176,300

Other relocation costs

You may need to replace appliances, pay off school transfer or gym fees, or pay storage for your furniture. There are many unexpected costs of selling a home which may amount to nothing, or add up to a good chunk of change.

Even without adding in other relocation costs, you can see how the cost of selling a home can reduce your final cash gain. The good news is that most of those costs are deductible on your taxes.

Learn more at www.House-Selling-Pros.com.

Author: B Shelton
Article Source: EzineArticles.com
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The present global economic situation has made it harder for homeowners to sell their homes as quickly as they would like to or need to and doubly more difficult to sell their homes as private owners. There are, however, free or low priced alternatives to selling your home by an agent if you want to sell your home yourself. One of the best ways to get your house in the public eye is to use several of the best online methods to list your house. Posting your house online will instantly allow possibly millions of viewers to see your listing and make it statistically more possible to sell your home quickly by yourself.

Here are a few techniques used by many people to successfully sell their homes online by owner.

1. eBay – eBay is a huge marketplace that allows the typical person to list just about anything online for the world to see. Selling a house on eBay is no different than selling a car, piece of furniture or jewelry. Just set up an account on eBay, take some great pics of your home, upload them to your account, decide on how you will sell your home and activate your listing! Of course, there are several elements to take into consideration before listing, such as whether or not you will sell by auction or fixed price, whether you will offer other options such as offer closing costs paid by owner, and if you will offer any other bonuses to buyers. There is much success in selling on eBay and while it is not free, it is very inexpensive to list and sell a home by owner on ebay. eBay usually charges a small fee for listing and a percentage fee for sales. Sometimes the company offers deals that are special at certain times of the year for sellers, so be on the look out for these specials. If you want a worldwide selling audience, there is no better way to get your house listed fast than through eBay.

2. YouTube – YouTube? Yes, YouTube! If you’ve ever surfed through the YouTube site, you can find various homeowners who have uploaded great video tours of their homes for sale complete with purchase information. There is no charge for using YouTube and you never know who will actually look at your listing, but the more appealing and creative you are in your listing, the better chance you have for receiving interested contacts. If you have a moderately decent quality video cam and common sense, you can produce a fun and informative selling video of your home.

3. Craigslist and other free listing sites – Craigslist is one of the most well known free listing sites available today, but of course there are several others you can use. The online and hard copy listing company, IWANA, also offers limited free listings for anyone. If you want to get your house listed online for free and fast, go to Craigslist, choose a city to list it in and upload as much information including pictures, that you wish. You will be surprised at how many contacts you may receive who are interested in your home simply by using this listing site.

These are just some of the available online sources that allow you to list homes for sale either free or with minimal cost. If you want to sell your house online, be sure to be as creative as possible in your listing, offer minor bonuses that interest buyers and think outside the box!

P.S. Orr has been writing articles for 6 years on a variety of topics of interest. Come visit the latest website at http://www.latexmattresstoppershop.com/ which helps people find the best deals on latex foam pillows and more information about natural latex bedding essentials.

Author: P.S. Orr
Article Source: EzineArticles.com
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