How to Be a Wise House-Shopper in a Great Buyer’s Market!
There’s no doubt about it – there are a great many bargains in the real estate market today if you’re a person looking for a new home. However, we highly recommend that you don’t get dazzled by all the opportunities and make a potentially expensive and poor decision. To that end, I’d like to offer you some common-sense guidelines to follow.
Guideline 1: Pay Attention to Your Budget
Before beginning your search for that new home, sit down and come up with a monthly payment you can handle with ease and then look for the house that fits that budget.
Guideline 2: Save Up for a Down Payment
Due to the “mortgage meltdown,” lenders are currently much more cautious about giving out money. Depending on the situation, they may insist on a minimum down payment of 10% or one that’s all the way up to 25%. So, start saving!
Guideline 3: Improve Your Credit Score
A good credit score is a great way to make the whole process easier when you apply for a loan. Today’s lenders scrutinize such scores more closely today than in the past. If you don’t have a good score, work hard to get it up into an acceptable range. It’ll save you money on interest charges and down payments in the long run!
Guideline 4: Get a Pre-Approved Mortgage Loan
If you’re a first-time home buyer or simply a buyer who wants to make sure you stay within your means, it’s a wise idea to get a pre-approved mortgage.This is simply the process of applying for a mortgage and getting approval for the loan prior to buying a home.
A “pre-approval” is an indication that the lender is ready to extend a mortgage to you once you’ve located the right property. And it has several benefits. First of all, it saves time and energy. Once you have a pre-approved loan amount, you’re required to stay within the limits of that loan in terms of the price you’ll pay for a house.
First, when working with a realtor, ask him or her to limit the choices to those stated in the loan. This prevents the agent from showing you properties which are out of your range. By the way, they’ll really appreciate those parameters because it’ll help them zero in on properties with the best chance of sale!
Second, you can spend more time looking at homes you really like and, simultaneously, not wasting time on houses that aren’t within your budget. This allows you to focus on the details of the homes you do like in order to make sure you select the right one; for example, kitchens, baths, garages, etc.
Third, you can bargain more effectively with sellers once they know you’re pre-approved. In the current market, that’s a great relief for many sellers because they realize they have a reasonable certainty of selling their property when working with a pre-approved buyer.
Fourth, you can close faster with a pre-approved loan because there’s no time lost in the usual processing period for loans. For example, an appraisal can be ordered right away, and you have the potential to cut a 30-day closing to two or three weeks.
Finally, the seller will prefer to deal with you, particularly if he or she needs to move quickly.
Now, you have some common-sense guidelines to follow when seeking a new home in today’s market! You can learn even more by contacting us today.
How Do I Find the Property Value Trends in My Area?
Knowing property value trends can be very helpful to you as a buyer, seller or investor. As a buyer, you can pinpoint bargains in areas that are trending upward (or downward) in price. As a seller, you can use the information as part of the bargaining process to get the maximum price from the sale. As an investor, you can use the latest forecasts and trends to determine whether you want to invest, when you want to invest, and how much to put into a property.
Remember, the trends are not guarantees of future performance; they're an educated guess as to which way the market is moving.Whatever your real estate goals, you want the latest and best information, and you want it from experienced professionals. In terms of your neighborhood and/or city, your local real estate agent is the best source for weekly and monthly trends. After all, it's their job to stay on top of such trends in the markets they serve.
Other organizations provide state, regional and national forecasts. They're often updated on a monthly or quarterly basis. Sources of Information Thanks to the Internet, there are many, many sources for data on real estate property value trends.
For state trends, go to the Federal Housing Finance Agency website (http://www.fhfa.gov/Default.aspx?Page=215). Click on your state to get the Housing Price Index (HPI).
If you're wondering exactly what the HPI measures and how it's calculated, here's what the site says: "The HPI is a broad measure of the movement of single-family house prices. The HPI is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or re-financings on the same properties.
This information is obtained by reviewing repeat mortgage transactions on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac since January 1975. The HPI serves as a timely, accurate indicator of house price trends at various geographic levels. Because of the breadth of the sample, it provides more information than is available in other house price indexes." So, if you want property value trends for Nebraska from the FHFA site, click on "State HPI Summary" and scan down the list of states until you find Nebraska. The handy table gives rankings and trends in quarterly, 1 year, 5 year and "Since 1991Q1" columns.On the same site, you can also click on "Research and Analysis," and you'll get a list of government and industry sites which will provide you with information on property trends. Note: The FHFA site doesn't provide predictions; it simply reports data. To get analysis and predictions, try the respected RealtyTimes.com. It reports on current market conditions and provides advice to consumers as well. Another site for information on residential properties is Zillow.com.
To find local information, fist click on the "Local Information" tab. That takes you to the page where you'll find the "State," "City," and "Nearby Neighborhoods" tabs. Click on the appropriate names, and you have local information! There are many, many other websites from which you can gather property value information.
I don't have the space to list them all, so here's a partial list of major industry and governmental agencies:
- National Association of Realtors = Freddie Mac
- National Association of Home Builders
- Census Bureau
Of course, the network, cable, and satellite channels report many of the finding from the sources listed above on a national basis. But, if you want local information, I recommend you work with your local real estate agent! He or she is best positioned to give you the latest information on property value trends.
To see what I can do for you in that regard, please contact me today!
What Are Pre-Foreclosures in the Real Estate Market and How Can They Benefit Me As an Investor?
A foreclosure is a formal legal process. Lenders begin the process when home owners fail to live up to their mortgage obligations. As a result, the lenders want the property back and, depending on the state, file a law suit or a notice of default.
A pre-foreclosure sale is one that takes place between the date when the lender files suit and when the property is scheduled to be sold at a public foreclosure action or a trustee’s sale. A pre-foreclosure is not a formal legal process; it’s an opportunity for you to help beleaguered home owners out.
Before I discuss the benefits of pre-foreclosures for you as an investor, let’s step back a moment and look at the reasons for foreclosures.
Beyond the recent “mortgage meltdown” due to the recession, there are many reasons that foreclosures occur. Often, people tend to think that foreclosures occur because of poor financial management by home owners and others.
While this certainly can be true, there are really many different reasons why foreclosures take place – personal problems (divorce, illness, etc.), the tendency of first-time buyers to overextend themselves, etc. Also, before the recession, foreclosures were caused by predatory lenders, lenient terms by all lenders, and low interest rates.
Now, let’s look at the benefits of making a living as an investor in the pre-foreclosure market.
What Are the Pros of Working in the Pre-Foreclosure Market?
If you’re a careful investor, the pre-foreclosure offers you many benefits:
- The ability to buy properties at a deep discount
A pre-foreclosure sale is one that takes place between the date when the lender files suit and when the property is scheduled to be sold at a public foreclosure action or a trustee’s sale. A pre-foreclosure is not a formal legal process; it’s an opportunity for you to help beleaguered home owners out.
Before I discuss the benefits of pre-foreclosures for you as an investor, let’s step back a moment and look at the reasons for foreclosures.
Beyond the recent “mortgage meltdown” due to the recession, there are many reasons that foreclosures occur. Often, people tend to think that foreclosures occur because of poor financial management by home owners and others.
While this certainly can be true, there are really many different reasons why foreclosures take place – personal problems (divorce, illness, etc.), the tendency of first-time buyers to overextend themselves, etc. Also, before the recession, foreclosures were caused by predatory lenders, lenient terms by all lenders, and low interest rates.
Now, let’s look at the benefits of making a living as an investor in the pre-foreclosure market.
What Are the Pros of Working in the Pre-Foreclosure Market?
If you’re a careful investor, the pre-foreclosure offers you many benefits:
- The ability to buy properties at a deep discount
- The ability to craft deals that cost you very little money.
- No complicated paperwork
- The ability to inspect properties (to avoid “money pits)
- The ability to structure sales agreements with favorable terms.
- The opportunity for personal and financial freedom (you can set your own hours, rules, etc. as an independent investor)
Now, as you know, every field has its disadvantages as well as advantages. So, let’s look at the cons next.
What Are the Cons of Working in the Pre-Foreclosure Market?
Perhaps the number one disadvantage isdealing with the owners of the properties. They’re not in a good situation, and, most of the time, they’re not happy about it.
That means you need to deal with their anger and frustration in a diplomatic manner and have a thick skin at the same time. The best way to do this is to approach the situation as a problem-solver; that is, you’re there to help them make the best of a bad situation and to help them avoid the embarrassment of foreclosure.
A second disadvantage is that there’s a lot of courthouse work to do to ensure any pre-foreclosure deal is profitable; for example, making sure there aren’t liens or other legal entanglements. You’ll definitely need to pay attention to all the details in these records.
The final disadvantage is that you’ll face some stiff competition in this market. So, you’ll have to stay on top of it at all times!
Now, as you know, every field has its disadvantages as well as advantages. So, let’s look at the cons next.
What Are the Cons of Working in the Pre-Foreclosure Market?
Perhaps the number one disadvantage isdealing with the owners of the properties. They’re not in a good situation, and, most of the time, they’re not happy about it.
That means you need to deal with their anger and frustration in a diplomatic manner and have a thick skin at the same time. The best way to do this is to approach the situation as a problem-solver; that is, you’re there to help them make the best of a bad situation and to help them avoid the embarrassment of foreclosure.
A second disadvantage is that there’s a lot of courthouse work to do to ensure any pre-foreclosure deal is profitable; for example, making sure there aren’t liens or other legal entanglements. You’ll definitely need to pay attention to all the details in these records.
The final disadvantage is that you’ll face some stiff competition in this market. So, you’ll have to stay on top of it at all times!
And if you have any questions or topics you'd like to discuss, contact us today!
Need to Avoid Foreclosure? Follow 10 Common-Sense Guidelines!
Here’s a fact that may surprise you – lenders hate foreclosures almost as much as you do! After all, they’re losing money and have to follow a complicated legal process to take the property back. This tells you, if you’re facing the possibility of foreclosure, that it’s in your best interest to work with your lender.
So, if you’re having trouble keeping up with your mortgage payment, contact your lender immediately and inform them of the situation. Also, you can contact a HUD-approved Housing Counseling Agency or call them Toll FREE (800) 569-4287 or TTY (800) 877-8339
Now, if you’re unable to make your mortgage payment, I recommend you follow the guidelines below. They’re straight from HUD with some additions on my part.
Guideline 1: Definitely Don't Ignore the Situation!
Guideline 2: Contact Your Lender Immediately!
As I said earlier, lenders hate foreclosure nearly as much as you do. So, most have options to help you through tough financial times. It depends on the lender, but such options may include:
• modifying the mortgage length or interest rate.
• waiving fees or penalties.
• deferring payments through temporary forbearance.
• increasing monthly payments to cover past due amounts.
• modifying an adjustable-rate mortgage to a fixed rate, etc.
Guideline 3: Open and Respond to All Lender Mail Right Away!
Normally, the first notices you receive from a lender will give you one or more of the options listed under Guideline 2. So, definitely open that mail immediately because those options can help you through a rough time. If you don’t open the mail or toss it out, you’re only making matters worse because they may include notices of pending legal action. And, believe me, foreclosure courts don’t accept any excuses regarding failure to open mail!
Guideline 4: Know Your Mortgage Rights!
Always learn the specifics of your loan documents so you know what your rights and those of the lender are under the terms of the contract if you can’t make the payments. If you don’t understand the contract provisions, talk to a counselor or a real estate attorney. Also, remember that foreclosure laws and time frames vary by state. This means you need to contact the appropriate state office to learn what’s involved in the foreclosure process.
Guideline 5: Understand Foreclosure Prevention Options!
HUD has free and valuable information on options for preventing foreclosure (also called loss mitigation). These options can be found on the internet at http://portal.hud.gov/portal/page?_pageid=33,717348&_dad=portal&_schema=PORTAL.
Guideline 6: Contact a HUD-approved Housing Counselor!
HUD funds free or very low cost housing counseling nationwide. The counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339.
Guideline 7: Evaluate Your Spending and Budget. Budget, Budget!
After healthcare, your first priority should be keeping your house. So, that means you need to look at where your spending goes and “cut out the fat.” By that, I mean zero in on “optional” expenses – cable TV, memberships, daily trips to the coffee shop, eating out, etc. If you’re not careful, these expenses can tear the heart of your budget, and they’re easily avoided! All the money saved by foregoing these items can go to making your mortgage payment. Also, delay payments on credit cards and other "unsecured" debt until you’ve have paid the mortgage.
Guideline 8: Employ Your Assets!
Guideline 9: Avoid Foreclosure Prevention Companies!
I repeat – avoid these companies! Some are legitimate; some are scam artists. In either case, you don’t need to pay them hefty fees for foreclosure prevention! Sometimes those fees can amount to two-to-three months’ worth of mortgage payments! Why do this when, for free, you can work with a counselor or with the lender?
Guideline 10: Don't Lose Your Home to Foreclosure Recovery Scams!
You may be contacted by firms claiming that they can stop your foreclosure right away if you sign a document appointing them to act on your behalf. If that’s the case, tell them to get lost! This is a scam where you end up signing over the title to your property and becoming a renter in your own home!
Never, ever sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD-approved housing counselor! Want to talk more about options for preventing foreclosure? Contact us right now at and we can provide you with that information!
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