Creative Financing
Seller FinancingAs the seller, you have the option of financing the buyer's purchase with the equity you have in the property. You can finance part or the entire mortgage for the buyer. Before setting-up a private mortgage, it is wise to consult with your attorney.
Carrying Back a Second MortgageIn the case of "carrying back a second mortgage", the seller loans the buyer part of the seller's equity. In this scenario, the buyer would finance the majority of the loan with a traditional mortgage lender and finance the remaining amount with the seller. Typically the buyer would pay a slightly higher interest rate on the loan financed by the seller.
Financial Issues
The Purchase PriceThe seller and buyer's mutually agreed upon purchase price for the property. As the seller, you should know up-front that the buyer would like you to finance the deal. Knowing that you will be financing the deal may affect your willingness to make adjustments to the sales price.
The Down PaymentThe size of the down payment may affect the buyer's commitment to honoring the mortgage contract. The larger the down payment the buyer invests, the stronger his/her motivation to protect the investment. In addition to making the monthly payments, the buyer's commitment to the investment would include a willingness to maintain and upgrade the property, as well as make tax and insurance payments.
The Interest RateAt a minimum, the interest rate you charge should match current interest rates traditional mortgage lenders are offering for loans of the same term. You may want to charge an additional percentage point as compensation for the work involved with servicing the loan.
The Buyer's Credit & IncomeYou'll want to review the buyer's credit history to determine the buyer's willingness to pay his/her debts. A credit report will give you a better understanding of the buyer's financial history. Red flags would include late payments and loan defaults. If a buyer has a less than commendable credit history, you may decide not to finance the loan or you may require a larger down payment. In addition to the buyer's credit history, you'll want to review the buyer's income sources. Is the buyer's salary sufficient to make the monthly payments? Does the buyer have additional income sources that could be accessed if the buyer lost his/her job?
AmortizationThe amortization period is the length during which the loan is repaid. The longer the amortization, the longer you are at risk that the buyer will default on the loan.
Balloon PaymentA common practice is to have the full amount of the loan due on a certain date, usually in 5 to 10 years. As the lender, this gives you a profitable short-term investment with the provision that your principal investment will be recouped in just 5 to 10 years.
The buyer is usually in a better position to secure traditional financing after 5 to 10 years. Both the buyer's equity in the property and record of timely mortgage payments can help the buyer secure a loan to cover the balloon payment.
Escrow for Tax and InsuranceLenders typically require borrowers to pay 1/12 of their annual taxes and insurance costs as an escrow payment due with each mortgage payment. Then, the lender makes the borrower's annual tax and insurance payment. While this adds time and hassle to the seller-financer, it also protects you from the unfortunate situation of having a buyer make his/her mortgage payments but not tax and/or insurance payments.
Lender's Title InsuranceA smart investment is a lender's title insurance policy. The policy protects your lien on the property from being defeated by a prior lien or other interest in the property, which, if exercised, would wipe out your security. Things that can affect your rights as the seller-financer include marriage, divorce, death, forgery, a judgment for money damages, a failure to pay state or federal taxes, and more. Be sure to include the cost for your lender's title insurance as one of the buyer's closing costs.
Closing the SaleBoth buyer and seller will be responsible for paying the usual closing costs. You will also want the buyer to pay all the costs associated with setting up the mortgage financing. This would include the cost of having your attorney create the mortgage note.
Alternative financing such as seller financing is a great option for a seller if they are in a position to do so. It can mean a higher interest rate return than they might get if the money were in the bank. A good down payment would make it less of a risk.
Sam Orlando
First Texas Realty
www.FTXR.com
Most agents make it a point to tell you that they're the smartest real estate professional ever. But where is all of the info to back it up? I would rather give you all the information you need to make an informed decision when it comes to buying or selling your home. I love working with informed clients. I find that our transactions go much more smoothly when we all understand the process and we're all on the same page. Here are just a few things that I wanted you to know about real estate.
These are all very basic real estate facts. If you are interested in learning more about real estate or if you are thinking of buying or selling a property, feel free to contact me. I'd love to help you with your next transaction.
Sincerely,
Sam OrlandoFirst Texas Realty2202 AVE IRosenberg, TX 77471(281) 344-0007 (281) 222-1005sam@ftrealty.net www.ftrealty.net
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Real Estate a Real Investment
Another year another opportunity.
Many people look to the future with a pessimistic view, especially in view of all the up and down economic news, but I like to look at it as opportunity. Many people look at the real estate market as being a down market, which it is, but it also opens doors of opportunity.
As a home buyer or investor, it is a great time, because there are some great buys out there. As a seller, it is not the best of times, but if you prepare your home properly, you should have no problem selling your home. You may say, how can I compete with all the foreclosures? I would say no problem, you just have to out smart them. What I mean is most foreclosures are sold "as is", and many people do not want to buy a home as is. They do not have the time to deal with repairs.
I recently took a listing in an area that had quit a few foreclosures. I was not so sure exactly what the outcome would be, but I went over the house with the sellers. We went over what they needed to do to get their home in top shape. They did the things that I suggested, and it sold in one week. Even though there were foreclosures all around the neighborhood, it sold at full price within 7 days and closed with in two weeks. Knowing what to do and what not to do when selling your home is very critical. You can spend a lot of money on fixing up your home, but if it is spent on the wrong things, you have wasted a lot of time and money. I do not want to pull my own chain, but by having a Real Estate professional that has the right eye for what needs to be done, can save you much more than the real estate commission you will pay, and save you a lot of frustration.
For buyers it is a wonderful time because the prices are very good right now. There are many buyer incentives such as the $8,000 first time buyer tax rebate, the $6500 move up rebate, and a lot of good deals out there, especially if you can do some handyman repairs.
For some one that is renting, what is the question??? Either pay your landlords mortgage, and in the end, end up with nothing, or use that same money to be making an investment into your own future.
What a great time to invest in real estate, and what better investment than real estate. It is a real tangible asset that will not dissipate into thin air like your money in the stock market. If the market goes up or down, you still have your home or property. I do practice what I preach, I have always had my investments in real estate, from rental property to land. I have found it to be a great way to invest my money.
We all have the tendency to look at the glass either have full or half empty. I choose to look at it half full. It is a great time to invest in real estate.
Sign up today on our "Auto Notification System", that will automatically email you properties as soon as they hit the market FREE of charge, any price or area. Or give me a call to help you determine what you need and do not need to do to sell your home.
281-222-1005
Prepare Your Home to Sell
With the housing market slowly stabilizing you’ve decided to list your home. But what, if any, improvements should you make before selling?
With quick and often low-cost improvements, or you can make some higher-dollar changes with the goal of adding value to the home and increasing your asking price. The reality is that all houses benefit from a little "spiffing up" before being shown to buyers, and smart home sellers will take the time and effort to do so.
View Your Home From a Buyer's Eye
Just a few minor things like fresh paint, tidy closets and cabinets, spotless windows and a clutter-free feeling are small things that are essential to make a home really stand out. You usually have only one opportunity to inpress a potential buyer.
If you of your house as a commodity to be sold for top dollar, and you’ll soon be eager to make needed improvements.
If you are intersted in selling your home give me a call for a free no obligation Market Analysis of your home or property.
Broker/Owner
http://www.ftrealty.net/listyourhome
I think people are seeing the great opportunity in purchasing a home right now. HAR/MLS statistics show that July 2009 showed a significant improvement in single-family home sales across greater Houston, with the highest volume since July 2008 and the second highest median price in history
The HOI showed that 72.3% of all new and existing homes sold in the second quarter of 2009 were affordable to families earning the national median income of $64,000, down only slightly from the record-high 72.5% during the previous quarter and up from 55.0% during the second quarter of 2008.
Many people wanting to buy a home, wait for various reasons and miss the opportunity at hand. During the 1980's in the Houston area, the prices had dropped significantly and many took advantage of the situation, but many let fear of the market scare them into not doing anything and they missed a great opportunity. Unless you are living under a bridge, you will need a place to live, and either you will pay someone else mortgage through rent, or you can be making an investment of your own, in a home.
Don't miss out on a great opportunity to get a great deal on a home.
Broker/Owner, First Texas Realty
For a FREE List of Foreclosures: www.huddeals4u.com
How To Save Thousands On Mortgage
Bi-Weekly Mortgage
Did You Know?
Making one extra mortgage payment a year will knock years off your mortgage and save you thousands of dollars.
Click here to learn more.
If you would like to pay off your mortgage about 10 years early on a 30 year mortgage and save literally thousands in the process...legally, would you be interested? Well you can, and you can do this by only paying one extra mortgage payment per year. It is called a bi-weekly mortgage.
Although there are many companies that charge a fee to do this, you do not have to pay anyone anything to make this happen. It is very simple just take your mortgage payment and divided it by 12 and add that much to your regular payment to go directly on your principle.
For example if your payment was 1200/month divide it by 12 which is 100 and when you make your payment, pay $1300. This will save you thousands and will pay off your mortgage about 10 years early.
If you search for "bi-weekly mortgage" with an Internet search engine, you will be overwhelmed by the number of companies offering "Bi-weekly Mortgage Reduction Services" or "Bi-weekly Savings Programs." Beware, you are entering dangerous waters.
It is a great way to get out of debt without a lot of effort.
For more great real estate tips visit our website at www.FTXR.net
Broker Owner, First Texas Realty
If you’re thinking about remodeling your kitchen, or finishing your basement, you probably want to get your investment back when you sell your home. But when it comes to payback value of home improvements, some are definitely more profitable than others. As a general rule, kitchen and bathroom projects usually get a nice return on investment, typically 90% or more.Things like adding rooms tend to pay back the least.
There are a number of factors that go into determining how well a project will pay back. Payback value depends a lot on the current market conditions in your area. If the market is hot and homes are selling fast, you can expect a higher payback value than you would get in a slow market.
The type of project you do and how it fits in with other homes in the area can have a big influence on payback too. If you put your money into the wrong type of improvement, you won’t get your money back. But if you're smart about what you do, you can make money. The payback will be better on improvements that are in demand and conform to neighborhood standards. Adding a second bathroom in a neighborhood where most homes have two bathrooms will give a high return on investment. Building a large addition that makes your home twice as big as the other homes on the block probably won’t pay back very well. Likewise, the popularity of a project will factor into how much it pays back. An improvement heavily customized to your wants and needs won’t pay back as well as something more common to other homes in the neighborhood.
Another factor to consider is the cost of the improvements. If you can do the work yourself, you can save significantly on the cost of the project and greatly improve the chances of getting a good return on the investment.
The list below is compiled from several published surveys and shows typical payback for some popular remodeling projects:
If you are thinking about selling your home check out our "Ultimate Homes Selling System "
Sam Orlando, Broker/Owner
What You Need to Know About Buying a HUD Homes
HUD Homes have been around for a long time, but never with as much inventory as they have right now. Buying a HUD home is a great window of opportunity here because it's a niche market that many people know about--but few participate in. I sold many HUD homes in the mid 80's which was almost a mirror image of what's happening today. Oil prices went thru the roof. Banks went belly up. The housing bubble-and then the crash. Auctions and HUD Homes sales took over where traditional sales left off. I guess I could say that I was known as a HUD Home Specialist in my area. What FHA has done now was to extend the $100-down repo program that allows borrowers to purchase HUD-owned properties. In fact, some of the properties offer financing of up to 110% of the loan amount, which could include repairs up to $5,000. In some markets, there are additional "incentives" to borrowers, with up to $2500 in paid closing costs. In order to purchase a HUD owned property, you must use a HUD approved real estate broker. We offer a FREE list of HUD and bank foreclosed properties emailed to you as soon as they hit the market.
What You Need to Know When Buying a HUD HomeBuying a home thru HUD and closing the deal is completely different than anything you have ever done before. Here are some of the things you need to know ahead of time.* Real estate agents MUST be a HUD approved (which could take a month)* Agent & buyers work with the management company (not HUD)* New HUD listings begin with a "bid process" submitted to the management company* Each property has it's own "incentives" and it's important to know the "codes"* Homes that will be owner-occupied are given first preference* Can bid MORE than offered price but buyer must pay the difference* HUD has an appraisal - but it's not automatically provided and has to be requested by the buyer* There is a property condition statement for each home* It's recommended that the buyer get a home inspection (their expense)* Can be purchase non-owner occupied and HUD could offer 85% LTV loan* Penalty of $10 per day if closing does not occur according to the date on the contract.* HUD provides the title work
Whether you are a investor or a home to live in buyer, it is a great time to buy with the interest rates around 4-5%, and the home prices at such great bargains.
If you have a interest in purchasing a HUD or bank foreclosed home you can sign up for FREE at HUD deals. If you have any additional questions please give us a call at 281-344-0007or email me at sam@FTXR.net
FOR A FREE LIST OF HUD AND BANK FORECLOSED HOMES GO TO
by: Sam Orlando
A great way to pay your mortgage off early, (up to 10 years of payments), and save literally 10's of thousands of dollars without a lot of effort.
A bi-weekly mortgage is where you pay 1/2 of your payment every two weeks instead of one payment once a month. You may say well how can that save me that much money, isn't it the same thing? No it is not, you actually end up making one extra payment per year, that goes directly on the principle. You see there are 52 weeks in a year which would be 26, 1/2 payments. Say for example your payment was $1000/month. 12X$1000=$12,000. Now if you pay $500 for 26 payments 26X$500=$13,000 the extra $1000 would go directly on the principle.
You can check for yourself just how much you can save and how early you can pay off your loan at by clicking here
If you search for "bi-weekly mortgage" with an Internet search engine, you will be overwhelmed by the number of companies offering "Bi-weekly Mortgage Reduction Services" or "Bi-weekly Savings Programs."
Beware of Bi-Weekly Mortgage Reduction Services and Savings Programs.
You can do it yourself without having to pay a company to do it for you, by simply dividing your payment by 12 and sending in that much extra each month. Just make sure and tell your mortgage company that you want the extra funds to go directly on the principle.
These "Reduction Services" and "Savings Programs" are charging you fees to "make a bi-weekly mortgage payment" for you. The enticement is that they will save you an impressive amount of money on your mortgage and reduce the number of years you pay on your mortgage.
If you want to pay your home off early and save a lot of money, this is a great way to do it. Call me if you have any specific questions on the process.
281-344-0007
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