Repair (5)

The real estate downturn of the mid-2000s is mostly over and the market is heating up, with prices rising in all over the U.S. In Wisconsin, the real estate market might be even healthier than in other locales, with new and existing home prices expected to rise 2.4 percent by early 2016. It might just be the perfect time to buy, but before you make any offers, you need to do a little planning to make sure you can pay out over the long run, especially if it's your first home.

Get Your Financial Ducks in a Row

Get All Your Rubber Ducks In A RowDo you have good credit? Do you know what good credit is or the factors that affect your credit? Have you had late payments, bankruptcies, judgments or other liens? If the answer is yes, the first step is to work on your credit score and report. Up until just recently, access to your credit score and full report was granted after putting down credit card info for a "free trial." that you would have to cancel right away to avoid a costly fee. Now, you can access your score and report for free, so there's no excuse for not knowing what's happening with your finances. Your FICO scores are ordered separately, usually for a nominal fee. Check it for discrepancies or old information. Much of the time you can contact the lender directly to resolve these issues. Or, contact the bureau and use their dispute resolution process. Most mortgage loan programs require a 640 score or higher, so fixing errors or having old information removed can make a big difference.

Do You Have Funds?

Do you have money for a down payment or closing costs? If not, how long will it take you to save? Start now. Make a commitment to stash funds away each month to help you meet your goal. Some loan programs are still available for 0% down but watch out for those; if the market should falter again you don’t want to owe more on the home than it’s worth. It also goes without saying that you want to refrain from big purchases that require credit, such as buying a new car, until after the home purchase process is over.

Are You Homeowner Material?

Owning a home is touted as a big factor in achieving the American dream, but it's not for everyone. Ask yourself:

Am I prepared for expenses like home repairs and landscape maintenance? Am I at risk for job relocation? Am I able to stay in one place for three to five years?

Talk to a Lender First, Not a Realtor

Resist the urge to call your realtor first. Instead, speak with a lender or two to find the best program. There are many loan products and even more lending institutions so it's worth shopping around for the lowest rate. A good lender will also advise you on the best ways to protect your credit while you a preparing to buy a house, which might include ID monitoring and credit report monitoring to ensure that someone else isn't using your good credit or your identity while you working on purchasing your home.

Use a mortgage worksheet to keep track of the information you receive from various lenders. It can be a dizzying amount of numbers and differences so keeping them in one place is important. When you are within 60 days of purchasing, your lender will issue a pre-approval letter for the amount you qualify for. Now you can call your Realtor and look for your dream home.

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Rookie mistakes when flipping a home.

photo credit: Jeremy Levine Design via photopin cc
photo credit: Jeremy Levine Design via photopin cc

With mortgage rates still at all-time lows and lots of homes available at prices below market, many people are turning to real estate investment for the first time.  In order to be safe, new investors often start out with flipping homes instead of holding a property for its rental value.  Here are some of the top mistakes rookies make in home flipping and how to avoid them.

Not Allowing Enough for Repair Work

This is usually the biggest mistake made by new investors.  People who have never renovated a home often underprice the repairs needed to make the home attractive enough to sell.  This is why seasoned investors recommend that new investors talk to a contractor BEFORE placing a bid on a home.  Getting a good price upfront will help determine if the house is worth the purchase. It is also wise to add a bit of cushion for Murphy's Law for things that just go wrong for no reason.

Allowing Emotion to Let You Pay Too Much

Some investors find the “perfect” home and go full steam ahead with the purchase.  They find a home with a discount in a hot area and they just KNOW that they can sell it for a quick profit.  This is where cold, hard facts should take the lead, not emotion.

An investor should never, ever buy a home for anything more than 70% of the home's repaired value.  This is a rule of thumb that has been used by many investors for years and it has served them well.  Paying more than the 70% will lead to smaller profits or even a loss.

Trying to Do Too Much

Many new investors envision themselves remodeling the bathroom, adding new paint and then finishing up the front lawn in a few weeks and then, voila, the home will sell.  However, it is best to let the pro's handle the tough work.  Repairing or remodeling a home can require some or all of the basic contracting skills such as carpentry, plumbing, masonry, painting and electrical.  It is simply too much of a daunting task to try and do all of this on your own unless you have considerable experience in these areas.  Even if you can do it all, wouldn't it be better to hire someone to do this type of hourly work while you search for the next deal?

Taking Too Long for the Repairs

Each month that you own a property is another month of expenses for items like utility bills, insurance and property taxes.  This can eat in to your future profits and may even cause yourself a loss.  Before buying the property sit down with your contractor and discuss the estimated time needed to repair the home.  If necessary, ask the contractor to break the job down into rooms and develop a timeline.  This will help you and the contractor stay on pace to finish the work and get it back on the market.

Your goal as a home flipper is to find a home at the right price that you can turn around and sell for a profit.  Don't fall in to the trap of these mistakes and don't get too attached to any home.  Always be ready to simply walk away from a potential deal and look for a new one.

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Hello - Thank-you already to this community, as I recently fell apon your site, and this will be my first blog post here !

You can see my entire blog through my portal here !

Having been though this mess several times beginning n the late 2007's, it was pretty clear that we were in for the long hall. 

Now, why is it that most agents steer away from "short Sales"? And even still - How come the perception for the consumer is not there.....at least not in my area. 

My first Short Sale closing happened in 2008, with a property in Southbury, one town south of our home base of Woodbury, CT.

At that time, I must admit, I was not too up on what and how this thing was getting done. But knew the concept behind it all.

So as I leap forward to today with confidence to rally the consumer, and rally our fellow Realtor - to take advantage of this opportunity to help those that need it. 

It is truly amazing, how even today, if a consumer walks into a bank or home, for either a loan or to apply for a rental - and they don't meet there criteria - its ends there. 9 times out of 10. Our local bankers doing there job? Or should we look at each and every consumer and look to do what would be best for them. We can! And I do. As a Licensed NMLS Originator & Branch Manager, it is our duty to do so. 

Short Sale attempt day one - I head up to the home, spend a few hours cleaning and get picture and show ready. Look at the comps, and make an attempt to see just how and what Flag-star will require. So with some help from this community already, I have my Flagstar "guns a blazing" & ready to "get er done".

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Whether you are dealing or have dealt with a short sale, foreclosure, BK, delinquency on your mortgage payments, or have a number of late payments elsewhere, your credit score is damaged and your finances are most likely in lockstep. However, recovering with bad credit will be difficult as interest rates inflate the cost of living and affect various other facets of your life and naturally you get caught in a downward spiral of poverty.

The best example of this is a home mortgage. Do not even consider pushing for another home without rebuilding your credit prior. The figures below will show you why.

The Ding Of A Delinquent Payment, Short Sale, Foreclosure, and/or Bankruptcy

Take a look at the impact of each situation on your FICO score. As you can see, regardless which consumer type you are, you will have incurred a significant ding on your credit score.

http://seattleshortsaleblog.com/wp-content/uploads/2012/05/impactoficoscore.jpg

Can You Obtain Credit?

There are great deals out there on the housing market but a big problem these days is the inability for homeowners to obtain credit to finance their home. Large agency investors such as Fannie Mae changed their minimum credit score requirement from 580 to 620. Anything under 620 is considered high risk. Your local bank may require a credit score of up to 660 or higher. The question is, even if you were able to qualify for a mortgage, should you finance with sub-par credit?

A Bad Credit Score Will Cost You!

These figures are based on rates from 9/12/11. The example below clearly shows you how much you will be affected from obtaining a mortgage without an outstanding credit score.

 

How Can I Quickly Rebuild My Credit Score?

Whatever situation you may be in, the longer you are stuck in a bad credit rut, the more exacerbated your financial situation may get. Here is how to prepare: If you have a low credit score and/or want to prepare your credit situation to qualify for excellent loans for your next home purchase, by the end of this article, talk to a Lexington Law credit specialist. I have personally researched and found them to be the absolute best company to work with in rebuilding credit scores. Here is a direct number provided through the short sale blog for a free consultation: 888-586-6113 or you can apply through their website.

Hope this helps!

Peter

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According to the Obama Administration’s October (2012) housing scorecard and “[…]the FHFA housing price index posting its largest annual gain in five years and new home sales at its fastest pace since April 2010” (Erika Poethig, assistant secretary for policy development and research at the Department of Housing and Urban Development) as well as numerous other sources, we can confidently say we have a recovering housing market. Even Warren Buffett, deemed as one of the greatest investors of all time, is bullish on the US housing market recently purchasing multiple real-estate brokerages including Prudential and his partnership with Brookfield Asset Management, a Canadian real-estate investor, to more than double his size of his brokerage business.

Our housing market is rebounding slowly due to various factors such as tight lending practices, fluctuations of supply & demand, and just the general current economic health but it is on its way to recovery. Will your client be ready to secure their next home investment and cease this opportunity?

Clear Capital exposed a sobering point: “Prices are 37.6 percent below the peak. This means a home bought for $200,000 in 2006 would be worth somewhere in the range of $124,800 today.” (source: dsnews.com) Prices were up 4.6% annually in October and as I have stated multiple times in previous articles, prices will not rebound in a U-shape but rather similar to a NIKE symbol. Concurrently, mortgage interest rates have remained at all-time lows with the latest report from Freddie Mac announcing a 15-year fixed-rate at 2.66% and 30-year fixed averaging 3.37%.

The opportunity is there and will be there for some time but are your clients preparing themselves to be able to jump on the bandwagon of nationally appreciating housing values?

A recent report shows that 23 percent of consumer mortgage requests were turned down by banks and I know from several sources around the Washington state that it is increasingly difficult to obtain a loan due to the fact that mortgage rates are so low that they aren’t incentivized to generously hand them out to just anyone.

I'm an agent. How do I prepare my client(future)? If your client had a short sale and got a significant ding on their credit score but want to prepare their credit situation to qualify for loans for their next home purchase, by the end of this article, have them talk to a Lexington Law credit specialist. I have personally researched and found them to be the absolute best company to work with in rebuilding credit scores. Here is a direct number provided through the seattleshortsaleblog for a free consultation: 888-586-6113 or you can apply through their website.

Hope this helps

Peter

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