Monthly Archives: July 2010

Getting the Most Out of Distressed Home Sales

If you have been dabbling in the foreclosures business you will have come across distressed home sales. These homes are sold by the owners themselves or their lenders to prevent the stigma of foreclosure. Let us say the owner has fallen on bad financial times and faces the prospect of foreclosure, the lender may opt to sell the property in a short sale to prevent foreclosing on the home owner. This way the borrower’s credit reputation is saved and the lender would not have to initiate foreclosure proceedings, which sometimes have a tendency to drag on.

It is no wonder that distressed home sales are pretty common, and they go by a lot of names. A distressed home can also refer to for sale by owner properties or FSBO, pre-foreclosure sales and short sales. Whatever they may be called they mean the same to both the seller and the buyer. For the seller, distressed home sales provide an easy way out of their financial bind and for the buyer they are attractive investment options.

Knowing the Basics When Buying

Dealing in distressed home sales can be very lucrative for property investors or new home owners but one can never be too cautious as in any big purchase. First you need to have a good credit standing to qualify for home financing. You also need to have a clear idea on the type of home you want and its location. These two considerations have the biggest impact on your budget. They you may want to consider using a foreclosure listings service, which can save you time and money from the time you start your search to the point where you are ready to sign your name on the dotted line.

When buying distressed homes the lender will give you the time you need to inspect the property before making a decision, take advantage of this opportunity by bringing along a seasoned contractor when you conduct your inspection as they have the eye for whatever repairs are needed in the home and the amount it will all cost. You would also want to enlist the help of a real estate lawyer to scrutinize the property’s title for hidden liens or holds that you will absorb when the ownership is transferred to you. With the right set of information you can begin negotiating for the price, be aware that lenders will be very inclined to give you a good discount on the final price.

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8th Deadly Sin

Borrowing money. In my opinion, one of the factors which have brought our economy to its knees is instant gratification, which manifests itself in the irresponsible use of credit. The slogan “buy now, pay later” is an incredibly alluring and destructive way of life, leading to addictive behavior. More than 50% of divorces are caused by money issues (shopaholic activities, excessive spending and gambling), and if you do the research you’ll find that most wars have a financial component to them. Throughout time we have been warned, “Neither a borrower nor a lender be, for loan oft loses both itself and friend, and borrowing dulls the edge of husbandry.” and “The borrower is slave to the lender”. In my book, that says it all!

There was a time when people took pride in saving, and we weren’t held captive to our credit scores, nor was there a need to restore our credit. We merely saved up for what we wanted or felt we needed. Regrettably, saving money is an almost obsolete concept; nevertheless, it can help you regain your financial stability. Consider these points:

1. There’s no need to shop for bargains if you’re going to pay with a credit card. On average, the price to borrow money (through credit cards) is 26%, where most markdowns average 5% to 20%. You do the math.

2. Don’t use the mall for entertainment purposes or because you’re bored. This only encourages impulse buying – the curse of every shopaholic.

3. Never shop without a list. This assures you only buy what you need and can afford.

4. Make sure you have the money to afford your list by keeping track of your bank balance. Use an old-fashioned checkbook ledger (free at your financial institution), and faithfully record all deposits and withdrawals. The difference between the two is your actual balance.

Most people have dug such a hole for themselves that they can’t climb out without assistance. There are some reliable and honest companies out there specializing in credit score restoration and debt reduction. Online Credit Strategies is a good place to start.

Debt Consolidation And Tips For Mortgage Refinancing

Many people discover that their credit card debt is out of control when they get their monthly bank statement. Mortgage payment, everyday spending, services and occasionally getaways or dining out can bring your balance over-the-limit fees. It’s time to consider debt consolidation to save your money – credit card balance transfer, home equity loan or mortgage refinancing.

One of the best ways to obtain debt relief is by consolidating your debts with a mortgage refinancing if the timing is right. Refinanced mortgage is a form of debt help for the borrower, who will be able to pay down the old mortgage with the money of a new loan. The benefit of mortgage refinance is based in not only debt consolidation of other debt, but in getting a lower interest rate, lower pay off, and taking cash out of the home equity. Although every borrower may have their particular reason for applying for a new loan, all of them share the desire for debt relief by reducing their mortgages’ interests’ rates and liquidating cash from their home equity when possible. Mortgage refinancing usually costs a couple of thousand dollars in closing cost besides the time you spend on research, application etc. Debt advice on home mortgage can easily be obtained through the mortgage lender, mortgage broker, financial institutions and Government Consumer Protection Offices.

Because secure loans and mortgages are backed up by collateral property or a guarantee for any other sort of asset, lowering the rates means more savings and debt relief. Mortgage refinancing could quickly reduce your debt if done properly. Mortgage refinancing lets you cash out your equity to be applied for debt relief purposes, and allow you to qualify for lower rates than a home equity loan. A single mortgage is often considered less risky than having two loans.

Taking a shorter term in your mortgage refinancing may further lower the interest rate. For instance, if your original mortgage is a 30-year loan, you may consider a 15-year mortgage while refinancing the loan. The monthly payment of a 15-year loan is about 20-30% higher than the one of a 30-year mortgage, not as high as out intuition tells us.

Genuine debt help comes when you weigh the pros and cons of debt consolidation. Obtaining a mortgage refinance may be the best option for debt relief, remembering that you will have to follow a similar process like the first time application so make sure to keep a good credit history before you apply. Be sure to get mortgage quotes from at least three mortgage lenders before you commit. Weight the pros and cons of your current mortgage, and compare the actual interest rates you are paying off in comparison to those resulting from your new debt management perspective, considering collateral involved in the debt and possible future risks as well. Your financial adviser can offer valuable advice for your debt relief.