There is a craze that is only about 4 or 5 years old with the banking industry, and that is reverse mortgages. As the homeowner pays a regular mortgage, the principle goes down and eventually, they owe nothing more on their property. In a reverse mortgage, the owner takes a paid for property, and the bank pays a monthly payment to the owner. It has been sold to (typically older homeowners) as a way to stay in the home they love and still have the life style they have dreamed about. What it really has done, is put a lot of elderly and unsuspecting homeowners into foreclosures. I'm sure all your banker friends will tell you the wonderful stories about the people they have helped stay in their homes and maintain their pre-retirement lifestyles. They never will tell you about the other side.
There are several problems with a reverse mortgage. The first is that it mainly targets the elderly. (Statistically speaking, they are the ones with paid for homes.) Therefore, the business is full of rip-offs and con-artists. If you think this is a good avenue for you to go down, be careful in selecting a company that will underwrite the mortgage. Secondly, Interest rates and closing costs are typically higher than other mortgages. Third, you are taking a paid for property and turning it into debt. Pay close attention to this next sentence. 100% of all foreclosures, had a mortgage against them. There has never been a paid for home, foreclosed on.
If you still think that this is a good idea for you, well, good luck!
If you click the title, it will take you to Dave Ramsey's website for more information.
Have a great day everyone!!
Tuesday, March 31, 2009
Friday, March 27, 2009
First time homebuyers
Owning a home is one of the greatest blessings that one can ever achieve in their life. It can also be a curse if you are not mentally prepared for it.
There is a common misconception that homes can be maintinence free. That is one of the biggest false ideas one can have. I am going to say this once and I want everyone to listen. ALL HOMES NEED TO BE MAINTAINED! (I hope I wasn't unclear about that.) Painting needs to be kept up with and bushes need to be trimmed and cut, the grass needs mowed and landscaping continually updated. If cracks in the concrete driveway are not sealed, eventually the water destroys the driveway causing even costlier repairs. Am I making myself clear? If you are not mentally prepared to own a home, then the home you buy will become a curse to you. There are some ways to make sure that this does not happen
Sit down and outline your goals. Ask yourself how long you intend to own this particular home. How long until you outgrow it, start a family, etc. If you do improvements on the property, understand that statistically, you will only get $.50 to $.80 of every dollar you spend back out of the property when you resell it. If you expect to get $150,000 out of a $75,000 property, you will be seriously disappointed.
Find a real estate agent that you are comfortable with. Next, prepare yourself with the proper mind set of owning a home. Thirdly, don't borrow more money than you are comfortable with, even if the bank will loan more, your friends say you can afford it, and your broke brother-in-law, tells you that you can beat the banking system, DON"T DO IT! No one has to pay the mortgage other than you.
Right now, first time home buyers are eligible for a tax credit of up to 10% of the purchase price of the home, up to $80,000. (Maximum credit is $8,000) This money is available from January 1st 2009 to December 1 2009. You can call or email me with more questions on this. Thanks everyone and have a great weekend.
There is a common misconception that homes can be maintinence free. That is one of the biggest false ideas one can have. I am going to say this once and I want everyone to listen. ALL HOMES NEED TO BE MAINTAINED! (I hope I wasn't unclear about that.) Painting needs to be kept up with and bushes need to be trimmed and cut, the grass needs mowed and landscaping continually updated. If cracks in the concrete driveway are not sealed, eventually the water destroys the driveway causing even costlier repairs. Am I making myself clear? If you are not mentally prepared to own a home, then the home you buy will become a curse to you. There are some ways to make sure that this does not happen
Sit down and outline your goals. Ask yourself how long you intend to own this particular home. How long until you outgrow it, start a family, etc. If you do improvements on the property, understand that statistically, you will only get $.50 to $.80 of every dollar you spend back out of the property when you resell it. If you expect to get $150,000 out of a $75,000 property, you will be seriously disappointed.
Find a real estate agent that you are comfortable with. Next, prepare yourself with the proper mind set of owning a home. Thirdly, don't borrow more money than you are comfortable with, even if the bank will loan more, your friends say you can afford it, and your broke brother-in-law, tells you that you can beat the banking system, DON"T DO IT! No one has to pay the mortgage other than you.
Right now, first time home buyers are eligible for a tax credit of up to 10% of the purchase price of the home, up to $80,000. (Maximum credit is $8,000) This money is available from January 1st 2009 to December 1 2009. You can call or email me with more questions on this. Thanks everyone and have a great weekend.
Wednesday, March 25, 2009
Buying investment property
In today's real estate market, everyone is looking for a great deal. It's a buyers market, there are hundreds of foreclosures, we have been told, so why can't we seem to find that deal? We have all heard, and some have seen, the late night cable shows offering to sell us for "Only three easy installment of $19.95 and you can have the secrets that only the wealthy know! Make thousands of dollars in your first week of business buying and selling real estate." I could go on and on about the ridiculous claims, but we have all seen them.
When looking for a REAL deal, take some time and list your goals. Ask yourself questions like, 1.)"Do I want to live in an investment property, or do I want that quick flip?" (Flip investments are a totally different animal altogether so do not confuse this post with Flips. We will talk about those at a later date.)
This is extremely important for you to decide. If you can live in the investment property, you will have some advantages that others might not. If you can live there while you are working on it, that's even better! It spreads your risk out and makes your return more solid. (Yes, it will take longer to realize the return, but we all know that the tortoise beat the hare in the race.)
2.)What is my time frame for my return on investment?
If you are working a cash deal, and by the way, I think that is the way to go on investment property, if you had to wait a little bit, no one would be breathing down your neck for payment of a mortgage. If you are working on a line of credit and have other arrangements made with a lender, then you have to make sure that when you close on the property, that you have done all your homework and are ready to move as fast as possible. You do not want to purchase a property in April and have to pay for the heat in the winter time. Ideally, if you could purchase something at the end of January, work on it for three months, then during April or the first of May list it with an agent that you trust. As always, having a good agent on your side can benefit you in both knowing about the deals coming up, and then selling them when you are done.
3.)How much work do I want to do myself, or do I want to hire it all done?
There are no free lunches in this world. You must work for everything you get. When you are starting out, this is the most important thing you can remember. When you are independently wealthy, you should still remember it.
4.)How much money am I willing to spend?
Communicating with your realtor will help them determine what properties that come available will work best for you. There are lots of foreclosures that come available and only last for a few days or even hours! Know how much you are willing to spend and then be willing to walk away. There has never been a deal so great that it will never come around again. With that being said, there are deals that come and go and people kick themselves for years for allowing it to pass. You don't want to be afraid of pulling the trigger on a deal, but conversely, do not be afraid to walk away. Your realtor, if they are any good at all, can advise you when to ..."hold 'em and when to fold 'em"
When looking for a REAL deal, take some time and list your goals. Ask yourself questions like, 1.)"Do I want to live in an investment property, or do I want that quick flip?" (Flip investments are a totally different animal altogether so do not confuse this post with Flips. We will talk about those at a later date.)
This is extremely important for you to decide. If you can live in the investment property, you will have some advantages that others might not. If you can live there while you are working on it, that's even better! It spreads your risk out and makes your return more solid. (Yes, it will take longer to realize the return, but we all know that the tortoise beat the hare in the race.)
2.)What is my time frame for my return on investment?
If you are working a cash deal, and by the way, I think that is the way to go on investment property, if you had to wait a little bit, no one would be breathing down your neck for payment of a mortgage. If you are working on a line of credit and have other arrangements made with a lender, then you have to make sure that when you close on the property, that you have done all your homework and are ready to move as fast as possible. You do not want to purchase a property in April and have to pay for the heat in the winter time. Ideally, if you could purchase something at the end of January, work on it for three months, then during April or the first of May list it with an agent that you trust. As always, having a good agent on your side can benefit you in both knowing about the deals coming up, and then selling them when you are done.
3.)How much work do I want to do myself, or do I want to hire it all done?
There are no free lunches in this world. You must work for everything you get. When you are starting out, this is the most important thing you can remember. When you are independently wealthy, you should still remember it.
4.)How much money am I willing to spend?
Communicating with your realtor will help them determine what properties that come available will work best for you. There are lots of foreclosures that come available and only last for a few days or even hours! Know how much you are willing to spend and then be willing to walk away. There has never been a deal so great that it will never come around again. With that being said, there are deals that come and go and people kick themselves for years for allowing it to pass. You don't want to be afraid of pulling the trigger on a deal, but conversely, do not be afraid to walk away. Your realtor, if they are any good at all, can advise you when to ..."hold 'em and when to fold 'em"
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