By: Tina Feston, Atlanta Realtor
Some people may wonder if it is even possible anymore to make money from real estate. The answer is an emphatic “Yes!” Like any other investment, the goal is to buy low and sell high, and by finding foreclosed properties that banks are anxious to unload, you can certainly do the “buy low” part.
The skill you need is to know how little you can pay, and know ways you can purchase distressed real estate while risking little or none of your own money. When people default on their mortgages, the process of foreclosure isn’t instant, or even quick. It is a long, protracted affair during which many legal steps must be followed. Look at it from the bank’s point of view: a borrower has defaulted on his or her loan, has stopped making payments, and pretty soon the bank is going to be stuck with a piece of property that they’re probably going to have a hard time selling. It is far from ideal for the lenders.
When lenders are buried in repossessed real estate and cars, it is a losing situation for them. Every day that a foreclosed house sits empty is a day that the grass grows, the mice get in, and the property values of surrounding real estate drop a little due to blight. Banks are faced with owning an undesirable property whose desirability will most likely continue to drop.
That’s why savvy real estate investors can step in and purchase property from lenders. Even if you only offer a fraction of the asking price, they may consider it, because they have a lot to lose by hanging onto the asset and not much to gain unless real estate in that particular area experiences some unexpected boost, such as a retail or industrial operation locating nearby.
In a slow housing market, obviously people are reluctant to buy real estate. But people still need a place to live, and real estate is the one of the few assets that we have a finite amount of. While some neighborhoods may not like having a rental property down the street, they’d much rather have a rental property than an abandoned, boarded up house that looks worse by the day.
If you are able to buy a foreclosed house for a great price at a decent interest rate, once you make any necessary repairs, you can rent it to one of those people who are averse to buying, and they will most likely cover your monthly mortgage payment and then some with their rent. You’ll be rescuing an undesirable property, making the neighbors happy, you’ll be providing someone a home, making them happy, and you’ll be taking the albatross of undesirable property off the neck of the mortgage lender, which will make them happy.
Successful investing in real estate doesn’t just happen when the market is going up rapidly. In fact, a stagnant or contracting real estate sector is a great time to get in on the ground floor of this type of investment. Business cycles come and go, there is only a finite amount of real estate on the planet, and the world’s population continues to grow. The question isn’t so much “if” real estate investments will pay off as “when” real estate investments will pay off. Successful investment in real estate, like any other worthwhile endeavor, will require brains and hard work, but done right, an investment in real estate can be a sound, long term asset that continues to pay off.
Showing posts with label investor. Show all posts
Showing posts with label investor. Show all posts
Tuesday, November 9, 2010
Sunday, October 10, 2010
8 Tips to Getting Your Loan Modification Application Reviewed
Many homeowners seeking a loan modification to lower their monthly mortgage payments and avoid foreclosure continue to find the application process a complex web, often causing them to give up before their application is ever reviewed by their mortgage company.
Certified housing counselors for CredAbility, a national nonprofit credit counseling and education agency, speak daily with hundreds of homeowners seeking a loan modification or other solutions to keep their homes. The organization has several tips for people that will help them increase the chances that their application is reviewed as quickly as possible.
"A homeowner needs to collect and send several documents that tell the mortgage company why you need a modification, and it needs to be done in a timely, organized manner," said Michelle Jones, senior vice president of counseling for CredAbility. "Once a homeowner has submitted these documents, they need to stay in regular contact with the company. With hundreds of thousands of applications under consideration, homeowners must take matters into their own hands to make sure their application gets to the right person at the company."
Here are CredAbility's recommendations for homeowners seeking a loan modification:
Speak With a Nonprofit Housing Counselor to Understand Investor Rules for Your Loan. Every homeowner's mortgage loan is different, so don't rely on information you may have heard from your neighbor or your sister-in-law, even if they received a loan modification. For example, if your 30-year, fixed interest rate loan is owned by one investor, and your neighbor's is owned by another investor, the rules governing a loan modification may be quite different. A certified counselor at a nonprofit credit counseling agency can help you find the investor who owns your mortgage and determine your options.
Submit All Documents That Prove Your Current Income. Income verification is critical, but homeowners sometimes don't provide their mortgage company with recent documents. If you lost a job in June, don't provide pay stubs from March. In addition to recent pay stubs and other traditional income sources, homeowners should also provide a document called a "contribution letter." This letter explains the source of any household income that is not easily verified. For example, a servicer will want to know the total household income of a married couple, even if only one person's name is on the loan. The letter could also include income verifying that you have a roommate that pays rent.
Submit Current Bank Statements. Recent bank statements allow your mortgage company to verify your income and expenses. This information enables the mortgage company to see your monthly expenses for food, utilities and other expenses and determine whether you will have enough money to make your mortgage payment.
Mail Your Documents to the Mortgage Company. Many people prefer to send all of their documents by fax or scan their documents and send them via email. However, postal mail is usually more reliable, especially if it's addressed to the person you spoke with at the mortgage company. Faxes often get lost.
Label Each Page With Your Name and Loan Number. One of the most common complaints among homeowners is that the mortgage company loses their documents. You can help your own cause by writing your name and loan number on each page of every document.
Fully Explain Any Recent or Unique Income Changes. For example, a bank deposit may show various one-time transactions, such as an asset sale, cash gifts from family members or a bonus. Unless you explain this one-time increase in income, the servicer may not understand it and use this information to deny your loan modification.
Include a Timeline in Your Hardship Letter. Every application for a loan modification must include a "hardship letter" that explains the reasons for your request. But the letter must have specific dates explaining when an income loss has occurred. If your spouse lost her job on July 15 and your family income will decrease by $3,000 beginning in August, your letter needs to provide these details.
Call Your Mortgage Company Every Week. Many homeowners work extremely hard to submit all of their paperwork to the servicer - and then wait for weeks before picking up the telephone to call them about the status of their application. This is a mistake for several reasons: the person handling your application may quit; the application may be transferred to another person; the company may need more information. You get the picture.
Certified housing counselors for CredAbility, a national nonprofit credit counseling and education agency, speak daily with hundreds of homeowners seeking a loan modification or other solutions to keep their homes. The organization has several tips for people that will help them increase the chances that their application is reviewed as quickly as possible.
"A homeowner needs to collect and send several documents that tell the mortgage company why you need a modification, and it needs to be done in a timely, organized manner," said Michelle Jones, senior vice president of counseling for CredAbility. "Once a homeowner has submitted these documents, they need to stay in regular contact with the company. With hundreds of thousands of applications under consideration, homeowners must take matters into their own hands to make sure their application gets to the right person at the company."
Here are CredAbility's recommendations for homeowners seeking a loan modification:
Speak With a Nonprofit Housing Counselor to Understand Investor Rules for Your Loan. Every homeowner's mortgage loan is different, so don't rely on information you may have heard from your neighbor or your sister-in-law, even if they received a loan modification. For example, if your 30-year, fixed interest rate loan is owned by one investor, and your neighbor's is owned by another investor, the rules governing a loan modification may be quite different. A certified counselor at a nonprofit credit counseling agency can help you find the investor who owns your mortgage and determine your options.
Submit All Documents That Prove Your Current Income. Income verification is critical, but homeowners sometimes don't provide their mortgage company with recent documents. If you lost a job in June, don't provide pay stubs from March. In addition to recent pay stubs and other traditional income sources, homeowners should also provide a document called a "contribution letter." This letter explains the source of any household income that is not easily verified. For example, a servicer will want to know the total household income of a married couple, even if only one person's name is on the loan. The letter could also include income verifying that you have a roommate that pays rent.
Submit Current Bank Statements. Recent bank statements allow your mortgage company to verify your income and expenses. This information enables the mortgage company to see your monthly expenses for food, utilities and other expenses and determine whether you will have enough money to make your mortgage payment.
Mail Your Documents to the Mortgage Company. Many people prefer to send all of their documents by fax or scan their documents and send them via email. However, postal mail is usually more reliable, especially if it's addressed to the person you spoke with at the mortgage company. Faxes often get lost.
Label Each Page With Your Name and Loan Number. One of the most common complaints among homeowners is that the mortgage company loses their documents. You can help your own cause by writing your name and loan number on each page of every document.
Fully Explain Any Recent or Unique Income Changes. For example, a bank deposit may show various one-time transactions, such as an asset sale, cash gifts from family members or a bonus. Unless you explain this one-time increase in income, the servicer may not understand it and use this information to deny your loan modification.
Include a Timeline in Your Hardship Letter. Every application for a loan modification must include a "hardship letter" that explains the reasons for your request. But the letter must have specific dates explaining when an income loss has occurred. If your spouse lost her job on July 15 and your family income will decrease by $3,000 beginning in August, your letter needs to provide these details.
Call Your Mortgage Company Every Week. Many homeowners work extremely hard to submit all of their paperwork to the servicer - and then wait for weeks before picking up the telephone to call them about the status of their application. This is a mistake for several reasons: the person handling your application may quit; the application may be transferred to another person; the company may need more information. You get the picture.
Subscribe to:
Posts (Atom)