Buying a Home in Foreclosure - The Basics for Buyers

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Turn on CNN or pick up the Wall Street Journal any day this week, and you are bound to see a story about the number of home foreclosures taking place in the United States right now.

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While it is always sad to see people lose their home due to foreclosure (especially so many people), it also represents investment opportunity for home buyers. In fact, buying a foreclosed home often means that you can get the property for less than market value. Upon hearing this, most people immediately want to know how it's possible. Here's how it works.

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Buying Foreclosures Can be a Good Investment

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The first thing you'll notice above is that I said buying a home in foreclosure "can" be a good investment, suggesting the possibility (but not the certainty) of getting a good deal on a home. This is what attracts people to the practice of buying foreclosures in the first place, the possibility of getting a home for less than market value.

Some people use this practice as a way to purchase the home they intend to live in. Other buy foreclosure homes for a living, turning them around for a profit and moving on to the next deal. Regardless of which camp you fall into, there are certain things you need to know about buying a home in foreclosure before you venture out to do so.

Why It's a Good Investment

Foreclosure is an expensive process for the lending institution. Lenders are good at making loans -- it's what they do. But they're not so good at managing and marketing foreclosed homes. On top of that, many foreclosure properties need maintenance and/or repairs, which adds even more costs that the lender must pay.

Bearing this in mind, it's easy to see why most lenders want to avoid the foreclosure process as much as the homeowner wants to avoid it. And when they do take possession of a home, they want to sell it off as quickly as possible. Typically, this is done through a real estate auction. Many homes sold at auction start out below market value. And unless inexperienced bidders drive the price up at auction, the buyer often comes away with a great purchase -- at or near "wholesale" price instead of market value.

So the real estate auction is one way to purchased a foreclosed home, but it's not the only way. In some cases, the homeowner will avoid foreclosure by selling the home through a "short sale." In this scenario, the lender allows the homeowner to sell the home for less than the amount owed to the lender. Pricing a home this way will normally ensure a quick sale, which is what both the homeowner and the lender want.

The longer the lender keeps the non-performing loan (a mortgage that is not being paid by the homeowner), the more money they lose. That's why they are usually eager to get the loan off their books quickly, and it's also why lenders sometimes agree to short sale techniques to begin with.

So now we have talked about two ways the savvy investor / buyer can get a foreclosed property on the cheap - through a real estate auction, or through the short sale process. Combine this with the number of foreclosure assets on the market right now, and you can begin to see why this is such a hot topic among real estate investors right now.

Buying a Home in Foreclosure - The Basics for Buyers

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5 Tips for Buying a Home in Today's Market

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Whether it is your first home or you consider yourself an old pro at home buying the recent economic downturn caused the guidelines for obtaining a home mortgage much more stringent than before. So if you are thinking about buying a home, you will save yourself a lot of headache and heartache if you follow these 5 steps.

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Establish Credit

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If you are a prospective first time homebuyer your first job may be to establish credit. No lender is going to finance your home purchase until you can prove or show a history of borrowing and paying back on time. A good way to get started is with a credit card. It is possible to pay many of your monthly expenses with a credit card with no fees involved if you pay the entire balance off at the end of the month. If you have had credit cards make sure that your payments are made on time.

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Face The Past

Now is the time to clean up any past credit problems. Find out if there are any unpaid bills that need to be paid. Lenders evaluate your credit history so if you spend too much on a regular basis and have been slow to pay, the odds of getting a mortgage these days are mighty slim.

How To Clear Up Credit Problems

You can improve your credit score by first getting a copy of your credit report. If your score is not in the high 700s or higher, then rethink your budget, lower your expenses, possibly consolidate your bills and make sure that you start immediately to make your payments on time. In fact, pay more than the minimum amount on your credit card so that credit companies do not see you as Just Hanging On

Evaluate What You Can Afford

In the long run, what with tax breaks and appreciation, buying a home can be less expensive than renting but that does not mean that it is less expensive in the short run. When it is your home, a problem with a leaky roof is your problem, not the responsibility of the landlord. In addition to paying the principle and interest, you must also budget for taxes and in many areas for homeowner association dues as well. Also, if you have been living in a condo or an apartment and plan to move to a home with a yard, you will have to figure in the cost of landscape management.

Evaluate The Market

When you have a general idea of what you are looking for, it is easy to hop online to find out the projected cost for buying it. Sometimes you may have to settle for less than you originally planned but you can get a real good idea of the market before you actually go out to see any properties in person. For example, a search for Evergreen CO Real estate shows over 300 3 bedroom, 2 bath homes currently on the market. Prices range from a high of million to a low of 9,000. Find the price range you are looking for an study the homes online.

Get The Right Mortgage

Talk with reputable lenders and get yourself pre-qualified and pre-approved for a loan amount. This gives you and the seller the confidence that when you put in an offer on a home you can afford that the lender will approve the loan assuming that the property also qualified or appraises for the selling price.

Happy Hunting

Armed with pre-approval from you lender, you can shop for homes in your price range with every confidence of success.

5 Tips for Buying a Home in Today's Market

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Debt-To-Income Ratios When Buying A Home

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The first thing a lender looks at when determining your ability to qualify for a mortgage is called your "debt-to-income" ratio. That is the percentage of your gross monthly income that you spend on long term debt. This includes your mortgage payment, taxes, insurance and HOA fees. I also includes any consumer debt payments such as credit cards, student loans or installment payments. Plus it includes car payments.

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Now you're wondering just how much that new car payment can reduce the purchase price of your new home. Let's crunch some numbers. Say you earn 00 per month and have an average car payment of 0 per month. Calculating based off an 8% interest rate that car payment would cut your purchase power on your new home by about ,000. That makes a considerable difference in the type of home you will be able to purchase.

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It does not matter if you feel you can afford both the more expensive home and the car payment. The mortgage companies approve based on their guidelines not yours. You should still take the time to get pre-qualified with a lender.

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Getting pre-qualified with a lender is one of the first steps in any home purchase. Your Realtor should be able to refer you to a good one. Realtors work with lenders on a daily basis and can offer valuable referrals based on past experience with lenders. That experience is invaluable when searching for well qualified professionals.

The lender will crunch the numbers and evaluate your credit to determine what you qualify for and the terms. That car payment will come into play here and affect how much of a home you qualify for.

If you're thinking of purchasing both a home and a car in the near future, purchase the home first or you may be living in the car.

Debt-To-Income Ratios When Buying A Home

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Buying a Home Using Seller Financing

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Have you been looking at a piece of real estate to call your own, but can't get the financing through a traditional lender? Maybe it's time to look at some other options. When buying a home most people think they can only get financing through a bank, but that isn't so. There are other forms of financing out there. One form, which is quite popular, is known as seller financing.

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With seller financing the buyer pays a certain amount down to the seller and then pays the rest of the mortgage in monthly payments, much like he would a bank. Both parties agree to a certain interest rate which is paid monthly as well. This form of financing can be beneficial for a buyer in a few different ways. First off, homeowners aren't usually as strict when it comes to less-than-perfect credit. They are also more willing to work with a buyer on the type of payment desired, such as balloon or interest only.

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Sometimes they will even allow the plan to be adjusted at a later date to a different type. Generally, homeowners are more flexible with the required down payment, although many of them do prefer a higher payment. Also, the closing costs won't be as expensive because there are no loan points to pay, and the buyer can often move into the house more quickly because he doesn't have to wait for a loan to be approved.

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Seller financing isn't the only non-traditional method of financing, but it is one to consider. Don't give up on getting that house. You never know what a seller will be willing to do to help you out.

Buying a Home Using Seller Financing

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Buying a Homes in San Jose CA - Is Now the Time to Buy San Jose Real Estate?

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There are many things about San Jose real estate that you will want to know before you begin getting serious about the homes for sale there. As of October 2010, there are specific price trends, demand trends, total inventory of homes, and market conditions that you should educate yourself about. This will help you know when and where to buy your first or next home in San Jose, California.

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Prices on homes for San Jose real estate are looking very good right now. In November of last year, prices were a bit steep at a median of 0,000 as opposed to just under 0,000 now for an identical home. Keep in mind that "median" is not the same as "average." In real estate, medians are generally used instead of averages because a few high-end homes can skew the numbers significantly. By calculating the median, or midpoint, a more accurate representation of local housing prices is given.

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The demand for homes raised and lowered a bit from January to May of this year. In May, the demand for house skyrocketed in the popular spring buying time as the average number of days on the market plummeted from 150 days to about 80. Since then, the number of days that San Jose real estate stays on the market before being sold has leveled out at about 100.

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The amount of "inventory" simply means the amount of San Jose real estate that is for sale. When the inventory is higher, there is a great supply for buyers to choose from, allowing them to have a greater say in setting the price.The number of homes for sale in San Jose has been climbing steadily since mid January of this year. Then there were 1,500 homes for sale and as of October 3, 2010, 2,858 homes were for sale.

The market conditions have been heading steadily in one direction since January of this year. By taking median price, inventory levels and days on the market into consideration, it is possible to calculate what kind of market it is. Currently, listed homes can last for several months on the market while maintaining a current sale rate. This is called a "cold market" or a buyer's market. In markets like this, prices are bound to fall and buyers can negotiate lower prices. This means if you are interested in investing in San Jose real estate, now is the time to do so!

Buying a Homes in San Jose CA - Is Now the Time to Buy San Jose Real Estate?

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Top Tips for Buying Real Estate in Colorado

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The process of buying a new home can be difficult and stressful if you are not prepared. Follow these simple tips to ensure that your new home buying process will be as stress-free as possible!

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1. Use a qualified Realtor. The hunt for a new home starts simply enough. Before you know it, though, the process can get very tricky and involved. Having a realtor on your side will help immensely.

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2. Don't speak to the seller or the other realtor until the contract has been signed. Leave all communications to the professionals. You don't want to unintentionally give too much information away that might end up costing you money.

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3. Be ready to purchase your new home. Getting pre-qualified, or even better pre-approved, will strengthen your negotiating position and help you get a better price on your new Colorado home.

4. Look at houses in your price range. If you look at homes that are just above your price range, you can get emotionally involved in a house that you will end up being able to not afford. By restricting your house hunt to homes you can afford, you avoid this potential problem.

5. Write your contract so that it will be accepted and not simply countered. This will help you avoid the emotional blow ups and losing a deal. Think of negotiations as an art form rather than being extremely ego-involved. Respect all involved parties.

If you follow these tips, you will be well on your way to enjoying not only your new Colorado home, but also the entire sales process. Buying a Colorado house doesn't have to be painful and stressful, if you are prepared!

Top Tips for Buying Real Estate in Colorado

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What you should know before buying a Canadian real estate assets for the U.S.

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Many Canadians dream, in the south for the winter, but not only to beat the cold. You need to invest in real estate on their minds. Our strong dollar combined with a collapse of the housing market in the U.S. spells opportunity for many. But Canada and the United States are not the same country, and what we have in common, we have differences. Each investor money Canadians see the United States must have a basic understanding of some key differences betweenBuying a property in Canada, compared to a purchase on So, before you put the spinner in Florida or Texas to get started, read on.

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Control Systems:

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Talk to a tax consultant who has experience with real estate investing in the U.S. that countries differ with respect to the taxation of property investment.

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United States

1031 exchanges to obtain capital gains from the sale of investment property helddeferred and rolled up into a purchase of a similar type of property when purchased within 180 days. This can often be deferred capital gains, at the end of an asset is final and not be replaced; If capital gains are realized (the property is sold and the collection), the seller is 15% of the total net income (provided that the property has been taxed more than a year, if significantly lower rates above); Property taxes are generally similarthose in Canada, but if you are a Canadian-owned and just in a state like South Florida or California, you can be much higher "non-residents' property taxes and the room or if you invest in other Member States of United States; Similar to Canadian tax laws will not be taxable on your principal residence, but the United States, you can deduct the interest charged on your home page.

This contrasts with Canada

Sell ​​your real estate investment in Canada, you have to pay capitalgains tax to 50% of net income. Canada is not yet possible to extend the gain from an exchange. The "profit" or "loss" is added and the income is taxed at the rate in force (which could be much higher than normal rate of 15% in the U.S.); Similar to that of the United States in relation to your expenses can be written in taxable income to the ownership of capital goods such as billing related. See the previous two articles to tax-time tips: Part 1 and Part 2

Before theSouth Loon this winter:

Whether it's "non-residents' property taxes in the city / country you are considering; If (not buy and use another Exchange 1031-strategy) is already in the States and the sale of the property you are obligated to pay U.S. taxes on sales. You pay only the first of the United States, but the statement of income in Canada (taxes paid in the United States) files. So, you have to pay once (you will receive a tax credit to CanadaTaxes), but there are two shoulders (February / March 2008 Money Sense has an excellent article on this topic) files; Rents are two deposits for taxes, too. You must claim the income (and costs) in both countries pay taxes and receive a credit card for your Canadian taxes.
The differences in lending between Canada and the United States:

The "credit crunch" or "collapse of the subprime market" has had a dramatic impact on the credit in the United States and sunk inBorder with Canada. Because of the economic crisis, lenders have changed dramatically in the guidelines and policies of both countries. United States, there were almost as many loans to all applicants. The term "Ninja" loans were invented in the UP The acronym stands for "no income, no job, no assets." Many people were given mortgages beyond their means. While the first important phase of ARM (adjustable rate mortgages), to raise prices started foreclosures started popping up all over theNation. Canadians should not fear the same here by chance loans very different environments.

United States

Hundreds of banks across the country with hundreds of differences in credit policies and guidelines; License varies for each state, which can be a mortgage broker. Some states do not test or license is for everyone! Banking regulation is regulated at federal and state, which in turn may be less stringent lending criteria aBank or institution to another.

And Canada

A bank controlled by the state law controls what banks can do and what not to do across Canada; Only five of Canada's largest banks control the majority of all departments of the bank; All five major banks in Canada are able to raise money to pay mortgages, but have also acquired (and monitors) (for borrow money too) many trust companies and licensed broker; Mortgage brokers are regulated by the ProvinceCanada, most provinces require extensive training and successful test of a license agreement.
The economic conditions in the U.S. and Canada:

The Canadian economy continued favorable economic conditions, with unemployment at historic lows, higher wages and enjoy the appreciation of homes. At the same time, a recession in the United States in many areas of American experience houses hidden devaluation, unemployment and a worsening of the consumerTrust.

And 'possible to find some bargains in the U.S., such as seizures accumulate, devalue property / houses (even double-digit in some states - Florida, Michigan, California) continues, and our Canadian dollar parity with the dollar to sit. But before you start, do your research. Most economists still believe that we are in the midst of the subprime fiasco. They provide for the continued depreciation of the entire nation (of course much worse in some areasother) for the better part of two years. So if you really know an area is better soon, waiting for me personally, leading into summer and the beginning of 2009. The election, the war, the federal policy of "saving" for millions of borrowers credit and the worst scenario is expected to hit the subprime fall of 2008, all factors that influence investment in years and is a game of 'chance, not knowing what will happen to purchase.But with the strong dollar is a good time to go south, and noting that the dream house in Florida, right?

Some final thoughts (in this article anyway) on investments in U.S. real estate market, if you intend to purchase in the United States and are a Canadian citizen residing in Canada for three types of help to get the funding.:

A mortgage in the U.S. through a U.S. bank, RBC Centura like, or a Canadian bank-ownedMontreal Harris Bank; Purchase with all cash, so you do not have to deal with cross-border financing issues (for example, pulling equity from your home or other properties in Canada, or ask your rich aunt for money!) To purchase a lot to the south, and Starting a business in the United States with assets (a holding company will not work because they have the capital or income generation should), who received a mortgage from a lender in the United States.

What you should know before buying a Canadian real estate assets for the U.S.

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5 Tips for buying a bank owned REO

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The new sales index was present at home and reported that 46% of purchases of new homes in this market is captured. The building is 65%, building permits are at record levels, and the deepening housing values ​​make it harder for owners to refinance to lower prices or take money from their homes. It 'so bad? Do not look for the first time home buyer or investor to make a profit to buy a foreclosure. Here are ten tips to ensure thatclose to the proper functioning of loan applications and manage the funding of the first. Foreclosures are at record levels right now, and every day more and more of these properties are put on the market, which means an opportunity for you. The buyer.

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Tip # 1
Get Pre-qualified
This step is the first and most important purchase of a house. With the tightening of credit standards for all banks, you must be willing to take this action and obtain from your mortgage brokerLoan Officer to find the product mortgage that suits you. A few minutes later, a loan officer can tell you how much your home will qualify for, with the information provided for your income and assets. Debt relative to income is generally not more than 45%, but even in this market, we saw the automatic credit approvals up to 65%. Get a pre-qualification letter from your loan officer is crucial to the purchase of a house, and should be given to your real estate adRepresentative or agent of the seller to prove that you buy to be fit for the home, and you are ready, able and ready to be a buyer.

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Tip # 2
Get daily and weekly MLS listings
Let soon establish a bank REO. This simply means that the owner went into foreclosure, and no one bought it for cash at the auction. If this happens, the bank foreclosure, will the assets, real estate (REO) Real property held by the bank. Every day that theseProperty is not sold, the bank loses money on this property and the payment of interest on them. Normally, when many financial institutions, their fiscal year ending December 31 so they are more likely to have better conditions for you to negotiate the buyer, and finally the good of their books, their position in the fourth quarter loss, and go ahead.

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Once a property is purchased by the bank as an REO, it is generally listed with a sales representative assigned by the bank's List MLS. Multiple Listing Service. A good way to obtain these lists via e-mail in your mailbox, it is primarily a real estate agent to work with them and wants to start receiving this REO-list. You can also adjust the position of fairness, postcode, square, contributions from the seller, etc.

Tip # 3
Eager to make an offer solid
For many buyers and investors excited when they sit with their realReal Estate Agent> preparing to write an offer to the seller. The offer is binding only if accepted by the seller, so many people use them. A concept of evil, around which the lowball offer and the offer would be all the seller less than the value of the property. Many investors are the application of this strategy offers many daily functions, 40% to 50% below the sale price, in an attempt to create a really hope a lot on the property. WhenYou put together your offer, make sure you have an offer solid. What I mean is try to avoid this unexpected result that the seller would not accept the offer. If you try to sell your house now, and the profits of the sale of your new home to buy, are an example of this is to buy something for its share to you in a position in the home. A bank will consider all offers, and if there are multiple offers on properties held by a bank, they are normally see, they pay the mostfor the property. Also note that real estate is a career for many people, and I'm here in large numbers in Colorado. Hedge funds, private investors, Wall Street types, all have representatives here in Denver waiting for properties to come on the market at a deep enough money can buy for the money, and to turn a profit. It happens every day. In general, the bank is ready to go for the investor to buy one because it offers manyInvestors pay in cash at the time the loan is to finance up to 30 years. Some banks have also commented on the type of loan that you are getting is to go with the investor and for this reason. A recent example is the lender, the FHA is not strong, he said, and banks in difficulty, with the tightening of credit conditions. The lender has decided to investors, the money should go.

Tip 4
Be aware of falling property investors liquidity in the overall price
A perfect example of this was a duplexfor sale in Denver, CO area. The price was $ 165 000 in the comparable quarter and had listed the property at a discount of 10%. It 'was in District 2008 2 My client put his offer of $ 155K, and has been refused or rejected. In the month of November to the beginning of this year's fourth quarter, which is an indication of the last quarter of the fiscal year for many banks and financial companies. The property has not sold, and the bank has lowered the price of $ 130K. This is another 10-20%Lowest prices, and offered to ask my clients to complete $ 130K. What happens at that time was that real estate investors look at their points of record profits on the case in a deal for $ 130K in cash as well. The Bank reviews the two offers, but the case was assigned to the investor because they have the money to open in full for $ 130K now required. You should be aware that there are many large real estate transactions, but the discount, the more eyes onProperties. A smart thing to do would be to try to get at least 10-15% below the value, as many investors looking for money only those positions for the acquisition of equity of 30% -40% of the below market value.

Tip # 5
They have the bank pay all closing costs and minor fix-ups
The owner-occupied real estate, you will receive up to 6% seller concessions for your loan. This means that asking the seller to pay closing costs of 6% to get to buy property. WellExample is a VA loan for my clients, I last month, where they purchased the property of their VA benefits $ 315 000. Under VA regulations, the seller can pay up to 4% of closing costs, which in this case was $ 12 600. The entire loan paid by the bank that has acquired its interest rate at a lower rate of 5.5%, in addition to the attachment of bank accounts in the pool garden built, and laid him in a new ship and the pool cover. The banks will do everything necessary to induce the buyerCharger if they have a solid offer.

5 Tips for buying a bank owned REO

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