Posts Tagged ‘lenders’
The Need For Alternative Commercial Hard Money Lenders
Loads of investors operating within the commercial property industry have noticed challenges happen with how their properties are financed and paid for. As the value of many commercial real estate has dropped so much recently, lots of property owners have began utilizing alternative means of financing. Should you find yourself in this situation hard money commercial loans may have the ability to help you out.
The banks tend to shy away from greater risk loans but this can be exactly where commercial hard money lenders genuinely shine. Many people seeking financing from banks might be turned down but alternative commercial lenders may indeed grant you that loan.
While banks are somewhat limited in what they are able to charge as interest on loans, these lenders have no such restrictions and will charge based on the risk involved. But it’s vital to understand that if such a lender is taking a risk in lending to you that a bank was not willing to, it is going to come at a greater expense. At the root of this cause of greater cost are supply and demand principles.
Hard money commercial lenders will always demand that the property being borrowed against serve as the collateral for the loan. This property can then be transferred to the lender should the borrower not make the payments on the loan. Loan foreclosure seldom means that the lender is going to profit on the transaction and he will most likely be fortunate if he breaks even. Monetary loss is more likely in such a case.
A money lender will in most cases sell off the collateral as quickly as he or she can in order recoup the income lost. After all the majority of the people today are in the lending business and not the real estate investment business. A lender ordinarily would prefer a foreclosure not happen. Continued payments on loans is generally the far more desirable outcome for hard money commercial lenders.
A shorter term is most typical for hard money commercial loans. They typically are for up to three years. Lots of them only go for a year or less time.
Should you do get a hard money loan you’ll want to make certain that the lender doesn’t charge early payment fees or exit charges. Some lenders will charge these exit charges irrespective of how timely you paid off the loan. This is undoubtedly a thing to steer clear of.
Some thing else to become conscious of is that lots of hard money lenders will charge higher interest rates if a loan isn’t paid off on time. An additional rate of three percent appears to be what is seen as a fair going rate. But you will discover some lenders that actually charge up to ten additional points. Plenty of borrowers simply can’t withstand that kind of hike and so ought to try to not get a loan from people today who charge it.
Although some hard money commercial lenders act as brokers finding new investors to fund loans each time, most have access to mortgage funds as a supply of cash. Being comparable to mutual funds, these huge resources give commercial hard money loan providers the wherewithal to issue credit.
How To Buy Real Estate – Yes, YOU CAN!
If you want to buy a house but don’t think you can for any of the following reasons, this article is intended to give you correct information so that you can make smarter choices and open yourself up to a world of wealth, possibilities and realistic expectations.
The truth is you are being unrealistic when you believe the following reasons to be true:
I can’t buy property now because…
I am here to tell you that you CAN buy property, regardless of any of the above.
In this day and age, there is absolutely NO reason why anyone can’t own their own home. The strict days of the 20%-down-excellent-credit-and-stable-well-paying-job loans are over, replaced by no-down-payment-prior-bankruptcy-and-stated-income loan programs.
With the wide array of today’s diverse lifestyles comes an abundance of opportunities and programs created for each and every possible situation. Businesses need to make money, and the best way to open themselves up to a larger range of customers is to offer services for the vast and varied circumstances of each individual.
Many lenders today offer little to no down payment programs, poor credit leniencies and even no proof of employment or salary requirements (in lender speak, it’s called “stated-income programs” where you simply state your income to the lender without having to prove it with pay stubs, W2′s, etc. This is widely used by freelancers and consultants).
In addition to the countless programs offered by lenders, there are now government grants and (often free) services available for the low-income, low reserve home buyer as well as plenty of programs for first time home buyers. Government programs and many private loan programs also offer assistance for closing costs (the costs required up front to pay for lender fees, escrow & title charges, etc.), with some programs requiring the seller to pay for most of them.
For a list of government grants, go to http://www.cfda.gov (The Catalog of Federal Domestic Assistance) or http://www.firstgov.gov (The US Government’s Official Web Portal). Click on “Benefits & Grants” to get to their grants page.
“Ok, that’s great,” you’re thinking, “but the real estate market is so inflated now, even if I could qualify for a loan, how am I going to afford a house in the neighborhood I want?”
Welcome to the wonderful world of foreclosures, tax auctions and rehabs (otherwise known as fixer-uppers)! It is a myth that all foreclosures and tax-defaulted properties are in poor, run-down neighborhoods. One good thing about foreclosures and tax-defaulted properties is their indiscrimination. They occur in gang-ridden crack neighborhoods, middle class neighborhoods and elite million dollar communities alike.
Another benefit is that they are generally much cheaper than the lowest priced house in the same neighborhood. We all know the difference between retail and wholesale. You could go to the mall and buy a shirt for retail at $20 or you could go to the garment district in the city and buy the same shirt for wholesale at $10, or better yet, with the advent of the internet, you could do all your wholesale shopping online in the comfort of your pajamas.
The same is true for real estate. If you wouldn’t spend that extra $10 dollars to buy a shirt at retail, why would you spend an extra $10,000 (or usually more) to buy a house at retail?
In the industry, houses that are listed on the market are considered retail. Houses you find through foreclosures and tax auctions are considered wholesale. These are discounted houses, available at a low price for a quick sale, usually because the Bank or County is seeking to simply make back the money they’ve spent on it before (and after) the buyer defaulted. This equals to huge savings for the educated buyer.
Rehabbing is buying houses that are a little less than perfect and fixing them up, either to sell for a profit or to keep as a residence. Some people enjoy the challenge of buying a property that needs a complete overhaul (new roof, extensive remodeling, structural fixes, etc.) while others prefer a “cosmetic fixer,” a house which needs a little touch up paint here and there, some flowers planted in the yard, maybe even a new kitchen countertop, etc.
Cosmetic fixers are a fun and easy way to make money. You get to do a little artistic handiwork (even if you’ve never done it before) and make money at the same time. The quick profits you yield can be rolled over into a bigger and better house, you can repeat the process over and over again, working your way up from a $50,000 house to a $500,000 house within a few years – and the best part, it’s all tax-free!
Called a “1031 Exchange,” the gains you receive from selling the house can be tax-deferred as long as you continue to buy an equal or higher priced house with the proceeds you make from the sale. Unlike a straight sale of a residence, there are no occupancy requirements or live-in time restrictions for a 1031 Exchange. For a residence, federal law states that you must live in the home for 2 out of 5 years of ownership in order to avoid capital gains tax. You may choose to live in it for 2 years and bank the proceeds – yes, tax free! – or you may choose to flip it and do a 1031 Exchange – yes, tax deferred!
If you’re sitting there scratching your head, thinking all this sounds like too much work when all you want is simply a house to call your own, chances are good you can still find a great deal in the retail market as well.
If you are convinced, or even slightly convinced that you just might be able to buy a home after all, here are some steps for the average, traditional home buyer.
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The first step is to figure out how much you are willing to spend. Get your finances in order by evaluating your current total monthly income against your current total monthly outgo. If you are paying $800 in rent now, how much more can you afford per month? If you don’t want to pay any more than $800 a month, but really can, I urge you to look at the bigger picture. Is it worth it to spend a little more per month now to ensure you have an investment that could reap significant returns for you a few years later? Is it worth it to invest that $800 a month (and a little more if necessary) into YOUR future prosperity and not your landlord’s? Is it worth it to live without Direct TV or 100 cable channels or 3,000 cell phone minutes in the short term to invest in your financial freedom in the long term?
Be careful not to overstretch, however. You still want to enjoy your home without cursing it for breaking your bank. Depending on your financial situation, it may not be necessary to cut costs or stretch to purchase a home, but if so, what is owning your own home worth to you?
- The second step is to find the right lender or broker. You need to find a lender/broker so that you will know how much house you can afford. They will tell you how big of a loan you qualify for, based on your income vs. your debt (debt-to-income ratio), how much the monthly payments will be approximately, and how much your upfront costs will be, if any.
- Once you find the right lender, the third step is to find an agent. As a buyer, you do not pay an agent. The agent makes a commission from the seller’s final price. The commission (usually 6%) is split between the buyer’s agent and the seller’s agent (and their broker). If you can, be your own agent. If you find a house you like on your own, you can often offer the seller a lower price since they won’t have to pay part of that to the agents and can afford to lower the price for you. Sellers usually factor in the agents’ commissions when setting their asking price.
- The fourth step is to get to know the market. Knowing what to buy, when to buy and where to buy is key to making money in real estate. Watch the market, talk to agents, sellers, buyers, investors, anyone who might know the neighborhoods you’re interested in. Be open to neighborhoods you haven’t thought of or heard of. Your agent can help you with this too. If you have found a good agent, they will share with you their knowledge of the market based on their experiences being in it every day.
- Know what you want and why. There are numerous ways to make money in real estate. They range anywhere from simply buying low and selling high, to rental income property, to purchasing notes and certificates, to the aforementioned ways and more. Do you want to make a quick, instant million? Or do you want a modest but steady stream of income to be comfortable? Or do you just want to buy a house to live in, a house your children can grow up in? Study your options and go with the one that appeals to you regardless of whether you know anything about it and whether you think you can do it or not. Find your niche in the market and follow it.
- Learn from others who have done it. If your knowledge is insufficient due to lack of experience, let someone else’s experiences guide you. Take courses, read books, talk to others who have led the way and have achieved success in what you want to do. Don’t listen to anyone who hasn’t done it themselves, especially ones who tell you that you can’t. “Borrow” someone else’s knowledge until you gain your own through experience. There are a lot of materials out there to get you started.
Above all, the BEST thing you can do for your success is believe in yourself, believe it CAN be done and go out and do it! Stop wasting your time making up excuses why it CAN’T be done and start spending your time more effectively by finding ways it CAN.
Teresa Franklyn is author and publisher of The Daily Dose, a popular inspirational online publication. When shes not passionately typing away at her computer, she enjoys investing in Real Estate for fun and profit. For more information and helpful links about how to get into Real Estate, visit her website at http://www.followyoursoul.com. To read about her adventures as an Owner/Builder, visit her Blog at http://followyoursoul.blogspot.com
Author: Teresa Franklyn
Article Source: EzineArticles.com
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Sell a Home in Today’s Market – The Best Strategies
Today home sellers who want to move their properties in the existing market conditions face a number of challenges. Selling a home in today’s market requires part ingenuity, part creativity and in some case just part luck. Despite the existing market conditions; however, there are some techniques home sellers can use to improve how their property fares in the current market.
When attempting to sell your home in the existing market conditions it is important to understand the challenges you are facing. Not only must you compete with other home sellers but you often must compete with buildings as well. Unfortunately for most home sellers, builders can take advantage of the fact that they have partnerships with lenders. These affiliations can make financial incentives available that the average home seller is not aware of. In reality, there is really nothing that a builder can offer that you as an individual seller cannot match; provided you take the time to do your research.
Most home sellers reduce their prices as a first step when trying to make their properties more attractive to buyers. Unfortunately, that technique usually does not work because quite simply in most cases it is not the price that is preventing the property from selling. If a prospective home buyer is constrained by their income or do not have the cash for a down payment and closing costs then reducing the price will not help the situation. In this situation it actually makes better sense for the home seller to offer to cover at least a portion of the home buyer’s closing costs, if not all of the home closing costs. In such situations, the seller could actually come out far better financially by offering to pay $5,000 in closing costs than dropping the price of their home by $10,000.
In the event the buyer is facing income restrictions, there are also possible solutions which can assist both the buyer and the seller. In this type of situation the buyer is likely facing restrictions which are imposed by lenders restricting maximum ratios regarding income to expenses.
Once again, reducing the sales price by $10,000 will not help such a buyer. Instead, the savvy seller might consider paying points for the buyer. This will help to reduce the interest rate for the buyer while at the same time retaining the same sales price as well as the loan amount. The result would be a reduce monthly mortgage payment for the home buyer which could be enough to assist them in being approved for the loan. Yet once again, a home seller may be able to purchase points for a buyer for less money than they would pay by reducing the sales price.
Another option for motivated home sellers is to purchase a temporary buy down for the buyers. Purchasing points is known as a permanent buy down because the lowered payment and rate will endure for the duration of the loan. Sellers could; however, offer to buy down the payment during the first years of the mortgage.
This is known as a temporary buy down. For example, the seller might offer what is known as a 3-2-1 buy down. In this scenario, the first year of the mortgage would be calculated at 3% below the prevailing interest rate while the second year would be calculated at 2% below the prevailing rate and the third year of the mortgage would be calculated at 1% below the prevailing interest rate. Sellers might also consider what is known as a 2-1 buy down where only the first two years are reduced. Another option would be a 1-0 buy down. In that scenario only the first year of the loan would be calculated at below the prevailing interest rate.
The total cost to the home seller for a temporary buy down depends on the type of buy down they purchase; however, you can generally expect it to be about half the price of a permanent buy down. For home buyers who are constrained by current income requirements; however, the purchase of a temporary buy down can provide a strong incentive and could even help buyers attain approval for a loan that would not otherwise be possible.
By investigating lower cost alternatives, home sellers who have faced challenges in the current housing market may find it is not as difficult as they first imagine to sell their house. Taking the time to research your market and work closely with your agent to pinpoint your target market can help to bring positive results despite the softening market.
Andrew owns a website that provides many home selling tips You can visit his website at: http://www.buy-and-sell-house-fast.com/home-selling-guide.shtml
Author: Andrew Webber
Article Source: EzineArticles.com
Duty tariff
Foreclosure Investing
Foreclosure Investing encompasses a few different types of Real Estate investing. Foreclosure Investing can be very profitable and a sure fire way to become financially independent. Foreclosure Investing can also be a very slippery slope and can lead to financial ruin if done improperly.
Buying foreclosed property at an Auction is one type of Foreclosure Investing. At this point in the foreclosure process the property has already been foreclosed on by the lender and is now up for auction to the highest bidder. An investor would find out the day, time, and place of the auction and come prepared to bid on a certain property or properties. The goal would be to buy a property at a substantial discount so that the investor could re-sell for a profit, or use the property as a lease/rental investment property. This can be a great way to buy real estate at a discount but there are many draw backs to purchasing property this way. There are title concerns, insurance concerns, and there is also the concern that an investor can get caught up in a bidding war and end up paying more for the property than what it is worth. The investor would then end up with negative value upon re-sale, or not be able to collect enough in lease/rent to make the property a profitable investment.
Real Estate Owned or R.E.O. investing is another type of Foreclosure Investing. An R.E.O. is a property that has been foreclosed on by the lender but has not as yet been put up for auction. When certain market conditions arise lenders end up with a surplus of R.E.O’s on their books. The lenders need to get these R.E.O’s off their books and are usually willing to deal with investors in this scenario. This is a perfect time for an investor to invest in R.E.O’s. To do so the investor would need to contact the lender directly to negotiate a deal. The investor would be looking to by properties in As-Is condition that are being sold below market value. Often the lender will even offer financing to the investor on these properties. With the proper knowledge and investor can make a killing purchasing R.E.O’s. An investor can also end up losing money if he/she does not get the property at a low enough discount and repairs, closing costs, etc. end up costing more than planed. This type of Foreclosure Investing is a lot less risky then buying at the auction however there are several market conditions that have to be in flux in order to do this type of investing.
Pre-Foreclosure Investing is a third type of Foreclosure Investing. This type of investing can be done under any type of market conditions and can be a great way for and investor provide a service for the people who are about to lose their home. At this point in the foreclosure process the property owner has received a default notice, warning that the foreclosure process has been started. An investor that has access to these default notices would search through them looking for properties that still have some equity. Then the investor would contact the owners of the properties directly to negotiate a deal to purchase the property at a discount before it is foreclosed on. Once the investor has the property in his/her name, the investor would then resell the property for a profit or hold it as an investment property. The foreclosure process is different from state to state but the opportunity to help the owners out of this horrible situation and make a profit doing so is always there. Purchasing Pre-Foreclosure properties can be a great way to give an investor financial stability. Investors can also find themselves in a whole lot of financial and legal trouble if they don’t follow the state laws, use the proper forms, and treat the property owners poorly.
There is a ton of information on Foreclosure Investing. Unfortunately there are far too many Foreclosure Investment experts or so called “Guru’s” that practice unethical methods of Foreclosure Investing that have no regard for the property owners in trouble. Foreclosure Investing can be done Legally and Ethically if an investor has the proper knowledge and tools. If done properly the investor can be seen as a White Knight to property owners in foreclosure and end up making a substantial income in the process.
Don’t get “SCAMMED” by some Foreclosure Expert “Guru”! Learn how to become a “White Knight” Foreclosure Investor! Read the Foreclosure Investment Report for more information on Ethical Foreclosure Investing. Follow this link:
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Author: John F Langford
Article Source: EzineArticles.com
Pressure cooker
Is It Worth Buying a Repossessed Home at Auction?
The housing market is in crisis, estate agencies are closing hand over fist and unemployment’s rising. To top things off, hikes in the cost of living are making life very difficult for homeowners who stretched their finances too far when house prices were high.
But there’s a bright side to every story. The positive slant on this terrible situation is that there are an increasing number of opportunities for buying a repossessed home. If buying a home of your own has been an unreachable dream for the past decade, it might soon be a reality. Interest rates are at an all time low and mortgage rates should eventually follow. If you’re a first time buyer without a property to sell, the world’s your oyster… provided you can borrow the money.
Obviously there are advantages and disadvantages to buying a repossessed house or flat. The smoother you can make the process and the more pitfalls you can manage to avoid, the more successful your first step onto the property market will be.
Most people think auctions when they think about home repossessions. And that’s a good place to start. The USA has a database of repossessed homes but the UK doesn’t, and many UK home repossessions are sold at auction by lenders.
Household name auction house Allsops is an independent property consulting company with a solid reputation for residential property auctions. Probably the UK’s largest, they sell around a billion pounds’ worth of homes a year at auction, spread across seven massive auctions a year with between 250 and 350 properties at each auction. A good choice if you feel safer dealing with a well known brand name. But there are also local property auctions in most major towns.
Estate Agents also sell repossessions, although they don’t always proclaim the fact. You’ll have to actually go in and ask. Another route into buying a repossessed home is to simply ask around the banks and building societies in the area you want to buy, personally. While they don’t openly advertise repossessions they need to sell the repossessions on their books and they’ll probably be happy to give you details. Another simple way to find repossessed homes for sale is check for announcements in the local papers. Offers are always publicised in case a better offer comes along, to ensure the best possible deal for the seller.
The internet has revolutionised buying repossessed homes. There’s a good choice of specialist online providers who collect together UK house repossession auctions in one place so you can search them effectively from one place, Repossessedhousesforsale.co.uk is one. They hold a database of UK auction properties including details of local auctioneers and auction dates, and provide links to online auction catalogues, property details and guide prices. A great way to save time.
Whichever route you arrive at an auction by, buying a repossessed home at auction can save you a fortune in estate agency fees. But it’ll still cost you money and you need to be prepared.
The same as an ordinary home purchase, buying at auction requires a deposit. You’ll generally need to fork out 10% of the purchase price, which means you need to have a firm grip on exactly what you can bid based on how much cash deposit you can scrape together. You pay the deposit as soon as you’ve bought a property, before you leave the auction house.
After that you have 28 days to pay the balance, no excuses. Buying a repossessed home at auction is a legally binding contract and you can’t back out. Because the wheels of mortgage lenders tend to turn very, very slowly it’s wise to get your loan agreed before you go anywhere near an auction house.
In difficult times, auction mortgages are as rare as ordinary mortgages. There are fewer deals around and – perhaps unsurprisingly – nobody seems to be advertising auction-specific deals. The first port of call should be your bank. Provided you have a good relationship with them, they should be able to give you a very quick decision about whether or not they’d be prepared to lend the money to buy a repossessed house.
Once you know what your bank can or can’t offer, it’s a good idea to let a Mortgage Broker loose on your case. Independent brokers, unlike tied brokers, have access to the entire UK mortgage market and can trawl around to find you the best deal. And they know the lingo, which helps. A tip: remember to tell your broker that you want a mortgage specifically for buying a repossessed home at auction. He or she will co-ordinate your mortgage approval date with your chosen auction date so everything is ready in good time.
But what of the future?
Will we all be knee deep in low cost repossessed homes and flats for the next decade? Are property prices due to keep falling, or will they recover? Predictions are mixed.
Savills is another of the property big boys, a leading name in UK residential estate agency and commercial property. While they don’t auction repossessed homes they do a great deal of research into the housing market and their views are well respected. In an article published in The Times on 14th November 2008 Savill’s Head of Residential Research Yolande Barnes said,
“… the roots of Britain’s downturn lie in the credit crisis and the consequent withdrawal of funding by lenders… The UK housing market really is a different country: in the US as many as one home-owning household in 16 has defaulted on its mortgage or faces repossession, compared with fewer than one in 200 in Britain. To predict that the UK housing market will fall by 40 per cent and remain at these new, corrected levels is to ignore the role of finite supply and the use of equity.” In other words, don’t be fooled by all the doom and gloom.
Sadly Yolande seems to be swimming against a pessimistic tide. Most experts insist that the housing market is broken, and will remain so for the foreseeable future. It appears that things could swing either way. Whoever is right, it doesn’t change the fact that buying a repossessed a repossessed home, in today’s market, can net you an excellent deal. Provided you can find the finance!
Mark Jenkins is a writer for HouseRepossession.co.uk. Independent guidance on all aspects of house repossession, repossessed houses for sale, quick house sale and buying repossessed houses.
Author: Mark R Jenkins
Article Source: EzineArticles.com
Tissot virtual reality
What Costs Are Involved in Selling a House Or Flat?
In this time of great need, any option to sell is mostly something that a lot of people are looking for, just so as to be able to have ready cash that they can use on expenditures or in paying for outstanding debts. In many cases, it’s for the latter than the former. Lacking any other forms of ready cash or income, and in most cases, heavily burdened by debt, a lot of homeowners are currently backed up with financial dilemmas and are sadly made so desperate by the sheer number of debts they have incurred and compounded by piling expenses that they are left with one very basic, almost primitive thought for a way out: sell the house.
While it may really sound like the solution is just as bad as the problem, the truth is, done properly and with a lot of thought, selling the house you own and live in may actually allow you to not only earn enough to stave off debt collectors and lenders, it may even help you pay off your entire debt. On top of this, should the sale of the house be substantial, the homeowner who sold the house may even have surplus income which could be used in relatively less frugal purposes, since the trend today with finances is the removal of expenses that are deemed to be frivolities and just stick to frugality.
Now that we have established that there are significant benefits to selling your house, let us take a look at the particular costs that are involved in selling your house:
Standing home loan – It goes without saying that a homeowner who has taken out a mortgage or two on their home is in no position to sell the house for as long as they have not completely paid off the loan. Carefully plan out how you intend to complete the payment to your standing loan, since there are lenders that practice giving a penalty to early payers, as strange as that may be to some. Also consider that there may be some other fees and payments that need to be dealt with before your loan is completely settled, so it may be a good idea to get in writing every payment included in settling the loan, just so that there is no confusion or loose ends that are left.
Commission – Money that goes to the broker, known as the commission is often the largest expense in the entire process of selling a house, ranging anywhere from 5% to 7% of the selling price. Different real estate agencies will typically charge different rates, so it may be a good idea to ask around and see which particular real estate agencies can offer you a god deal, or that agency where you stand to get the most value for what they charge. Some real estate agencies will even allow a homeowner to market their own homes, although unless you have a natural gift for selling, the sales industry is hardly a place for amateurs.
Closing expense – Following the amount that goes into the commission of the broker who helped sell your house, another significant expenditure is the closing cost. Closing costs are typically made up of the title insurance expense, which is a huge amount in itself, pro-rated property taxes, which is rarely anywhere near the amount you expect it to be, document preparation fees, and, of course, legal fees for the services of a lawyer. Closing costs are rarely standard, so be sure to get a good estimate well ahead of the due date of closing.
Nick Stoles has been freelancing as a writer for the past 5 years. His articles on popular financial topics like forex trading, real estate and various product reviews can be found on many websites. His latest article published at http://www.autofloormatshop.com where he share tips on buying an auto floor mat for your car.
Author: Nick Stoles
Article Source: EzineArticles.com
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