The Mortgage Manifesto!

What is a short sale?

Today’s real estate markets are adjusting all over the country. Home prices are trending downward in more than half the major markets. Add the popularity of minimum-down and no-down loans, interest only loan programs and the many ‘optional-payment’ ARM’s with potential negative amortization and you end up with mortgage balances greater then the values of the homes being sold or refinanced.

This phenomenon has caused the rise of what is called ‘Short Sale’ transactions. A short sale occurs when the debt secured by the property offered for sale exceeds the net sales price. Under that scenario, one or more of the lenders who have a note secured by the property may accept less than the amount actually owed in the payoff of the loan amount.   For more................

How to Save Thousands of Dollars on Your Mortgage!

The dream of owning a home is becoming very allusive these days. Although everyone would like to have a home that is paid for free and clear, many people are forced to assume mortgages that will be paid over 25 or 30 years into the future.

Everyone is constrained to a certain degree by their budget. Yet there is a way to pay off the existing mortgage on your home quicker and save money in the process.

Almost all mortgages have built into them an Accelerated Payment Clause. This allows the borrower to pay more than the minimum amount of the monthly mortgage payment.

To do this you simply remit more to the lender than the usual mortgage payment every month. The benefit to this is that every extra dollar paid against the mortgage will lower the outstanding balance of the mortgage. This increases the equity in your home faster over time. Also, by lowering your outstanding balance, you will save on interest charges.

Effectively Using Lease Options-continued

Important Tips When Buying With Lease Options
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When purchasing property via "For Sale By Owners" (in other words, no real estate agents), always buy the property on a Land contract or a Contract for Deed. Both of these contracts are used when selling property between two parties without a real estate agent. Sit down with a real estate attorney and have them go over the details with you for a land contract.

If the seller offers a lease option to you, turn the offer down. Here's why. A lease is another word for renting their property, which means you don't own it.

If you are simply a renter of the property, the seller only needs to get a court order of eviction and your out of the property. If however you are the owner of the property, the seller will most certainly have to induce what is called a judicial foreclosure. The difference is probably $10,000 dollars or more in attorney fees, court fees and between 8-12 months time for processing.

A judicial foreclosure is very costly and time consuming for the seller, and would probably force him to negotiate more favorably towards you. All the while, the property is in a period of Stay, of course you are still required to pay the seller and follow through with your end of the contract. However nothing can be put into action until after the foreclosure is completed. Wow, that's a very important point.

Know that this has happen and the people ended up staying in the home mortgage free! They didn't fulfill their end of the contract by paying the seller their monthly mortgage payment like they should have, yet the seller couldn't do anything until the pending foreclosure had been resolved. Not even get the buyer to pay their monthly mortgage payment to them!

These are the extreme's. But it would be in your best interest to see that you are considered an owner then a renter.

Effectively Using Lease Options

Really, if you think about it, buying a property and renting it out is nothing new in the world of real estate investing. The practice has been going around much longer than any of the real estate gurus that created these "get rich" real estate courses!

So why is everyone making such a big hoopla about doing lease options?

No Money Down Deals
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One of the many reasons that lease options are so popular, is the possibility of creating a No, or Low Down payment to purchase the home. This is done by working directly with the seller of the house, and hammering out a deal between you and the seller.

That means, no banks, no credit checks and no qualifying! Of course, not every seller is going to be open to the idea of flexible terms for you, so it would be a good idea to work with motivated sellers.

Working With Motivated Sellers
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Although these deals are more difficult to find, they are out there and they exist. You just have to know where to find these deals. Many of these deals can result in no down deals if you offer the seller something that they desire. One such item is the sales price. Offer to pay maximum dollar before repairs to entice the seller to offer you good terms for buying the property.

While other investors come by and offer them low-ball insulting offers, you might get the nod for coming out and offering a better deal.

Remember, these people are in distress some how, and if you put together a fair offer for both parties, you may get the property at a really good price.

Tips for Investing in Real Estate

Beginning a hobby or career in real estate investing doesn't have to be so complicated or such hard work if you will only begin with what you have, right where you are at this moment.

Look for someone who really needs to sell their home and solve their problem. One of the fastest solutions if they are about to lose the house is to take over their payments on a subject-to contract. By giving them some walking money, they can afford to move and still have the cash to rent another home.

Then, clean up the property, lease it out to a future buyer on a rent-to-own basis which is called a Lease/Option. You get to collect an up-front, non-refundable deposit. Three to five percent of the future purchase price is a good figure to shoot for. You can actually do this every month and make some additional cash, or concentrate on this method as a full time lifestyle.

Have the renter/buyer sign a contract. You pocket the difference between what you're paying the original owner and the amount you're collecting from the new renter/buyer. The spread is higher on nice, expensive homes in great neighborhoods, so don't be afraid to search in these areas.

This is a good method of collecting extra cash flow every month. There is no limit to the number of these deals you can do other than your time and effort.

Call on every "For Rent" ad in the local paper and just ask if they would be willing to sell the property in a couple of years if you sign a long-term lease. If you get a yes, negotiate a fair purchase price, sign a contract and find a renter/buyer. It really is that simple. Of course, you want to have a lawyer check out the contracts on the first deal to protect both parties.

Try to get at least $150 more per month than you are paying. Also get a minimum of $1000 above and beyond what you have paid out as the option deposit. You don't want to be working for free, do you?

Let's look at some figures from actual lease/options. A couple were behind on their notes because he lost his job, and she didn't make enough to pay all the living expense. The stress was causing marital problems and they wanted to sell, but the house stayed on the market for six months with no takers.

It Takes Credit To Build Credit

Using a credit card wisely is an important step in building a good credit rating. If you're trying to re-build your credit or if you're young and just starting out, pay close attention the next time you receive a new card offer in the mail. When you're trying to build a positive credit history for yourself, using the right credit card makes sense. Making small purchases and then making your payments on time each month is a simple, reliable way to build an outstanding credit report.


What to Look For On a Credit Card Application

If you receive a credit card application that appears to offer a low monthly interest rate, don't make a decision until you turn it over and closely examine the Disclosure Box. In it you'll find a more important measure of credit terms - the Annual Percentage Rate, or APR. By federal law, the Disclosure Box will also tell you whether or not the card has what is called a grace period - a number of days, usually 25, until your purchase starts to accrue finance charges. If a card has a reasonable grace period and you pay off your balance at the end of each billing cycle, you won't have to pay finance charges. It isn't difficult to find credit cards that offer these grace periods, so if the Disclosure Box doesn't declare one then throw the application in the trash and look for a better offer.

If you don't have any credit history at all, a credit card company won't want to give you a very high credit limit, but that's probably best when you're just starting out. You don't want to be tempted to go into serious debt with your very first credit card.