Monthly Archives: September 2010

No Credit History? How To Gain Your Credit Score

According to conventional definition, a credit score refers to a numerical expression, which represents the person’s credit worthiness. A credit score is generally based on a credit report that’s obtained from the major credit bureaus. According to the US Faire Credit Reporting Act, a person can get a free copy of their credit report from the major credit bureaus, namely” TransUnion, Equifax and Experian. The credit report is provided at no cost, and can be requested every 12 months. Here’s how to gain your credit score.

Collect All The Require Information

Before getting a free credit report, first obtain all your account numbers and loan statements, since the credit reporting bureaus may ask that you provide the account numbers and payment amounts, to validate your identity. A credit score is often generated by tracking data from a person’s credit report, into software which analyzes it, and releases a number afterwards. The three major credit bureaus do not necessary use the same system, and use different names for it, therefore it should not come as a surprise if the scores the churn out are a bit different.

Go To annualcreditreport.com

Next, go to annualcreditreport.com, which is the only authorized Web site of the FTC. From here, you can link to the three major credit bureaus. Credit experts however frown on going to sites like the Free Credit Report, because despite their name, they actually charge monthly fees for their credit monitoring service. Once you’re in the site, choose your state from the pull-down menu, and start filling your information.

Ask For Credit Reports From The 3 Major Credit Bureaus

The next step would be to request for credit report from the 3 major credit bureaus, since you won’t be charged with any fees. However, because you’re only allowed one company per year, order them on a staggered basis throughout the year instead.

Print Your Credit Report

Once you request your credit report, print it out once it appears, because the major credit bureaus won’t send them to you via email. Look for links on the first page of the Web site, which allows you to print the report. While getting a credit report usually comes at no extra cost, these companies are allowed to advertise other paid services, such as a credit monitoring service, which goes for a small monthly fee.

A person’s credit score ranges from 500 and 850, and this scale numerically defines a person’s credit worthiness. The credit score is valued, and analyzed by banks, credit unions and other financial institutions, as well as by employers, mortgage companies, and even by your landlord. Once you obtain your credit score, make sure you regularly track your credit by signing-up for a free online credit report.

A free online credit report helps you quickly find out whether there’s an error or inconsistency in your credit history, so that you can immediately have those errors erased or corrected, and you’ll have a much easier time dealing with potential lenders.

What are Some Considerations for Reverse Mortgages

People who enter into reverse mortgages are not desperate. They are typically people who want to take advantage of the equity they have built into their home. There are many reasons why people need access to their equity. These reasons could include having a financial cushion in their day to day lives, they want to enjoy life after saving and making do for most of their lives, they may have an unforeseen emergency where they need access to money .

Reverse mortgages are a new type of loan for this generation, they have been here for approximately 20 years. These loans are safe for seniors, who we are often concerned about if they take out these loans. Whilst this may have been true in the early versions of these loans, today the terms and conditions have been improved where they are much more practicable and safer. A reverse mortgage is not a free loan, it must be paid back if that is the intention in returning your equity whilst your alive otherwise on your death the money lent through this mortgage will be paid back. As with all loans this type of loan does attract the usual fees and charges. The fee’s can be quite ranging depending on your financial institution. The fees are very similar to the ones that apply to any new mortgage application. The interest rate you will need to pay will be very similar to the current interest rate on new mortgages people have to pay for purchasing new property. This makes sense as a reverse mortgage is in itself a loan for a mortgage on a property. The interest is only on the amount you borrow, not the full amount of your property value. Financial institutions do make huge profits from lending to the property market, reverse mortgages were invented to provide these companies with a new revenue stream in this financial market.

In deciding whether a reverse mortgage is for you, you need to take into account the following in your decision. Like any decision to take out a loan, you need to think carefully and not rush into it. Firstly remember like any loan a reverse mortgage is not a panacea to solve all your financial problems or to live life to the hilt on credit. You need to take into consideration your age, your current health and what is the usual life expectancy of people from your family and society in general. Ages are continually climbing due to better health practices and technology, and better nutrition. What is your plans in being in the same home in 5 to 10 years, anything under 5 years is a problem for these types of loans. Is this the best type of loan, from the many types of loans on the market, with the huge choice of loans ensure that you check out as many as you can, from as many lenders as you can. Does the reverse mortgage loans terms and conditions really suit you and will not cause you grief at some point into the future. If you are still keen at this point, as a final step make sure you speak to a reverse mortgage financial counselor.

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How does Owner Financing work – Owner Financed Homes For Sale

Selling a house or other Austin, TX real estate with owner financing may be unfamiliar territory for many, but anyone who plans to sell property against the current background of tough lending conditions may want to brush up on the basics.

Understanding the concept of owner financing is easy: the seller assumes the role of a bank and finances the buyer’s purchase.

The decision to provide owner financing, however, can be much more difficult; although providing owner financing could mean the difference in being able to sell a house, it could also mean a great amount of risk for the seller if the buyer eventually defaults on the loan.

As the U.S. struggles with a sluggish real estate market, owner financing presents a way for buyers and sellers to close deals that might not be possible with conventional financing.

There are some deals that just simply cannot get done (with conventional lending) because the credit markets are too tough for a particular buyer to qualify or because the type of transaction is perceived to be too risky.
There could also be a situation in which a buyer may not have sufficient capital for a down payment. Partial owner financing, in that case, can help fill in the gaps in closing a deal.

In addition, the benefits of owner financing can appeal to sellers who are trying to unload property. Closing a deal on a house, for example, may take considerably less time with owner financing than with conventional financing. While a conventional lender will scrutinize the collateral property to determine the level of risk, a seller who is already familiar with their property can form his or her own risk assessment relatively quickly.

Owner financing may also be an attractive choice for investment, potentially offering high rates of return. A seller can negotiate an interest rate that the buyer will pay them that is more favorable than would be available for other sorts of investments.

Furthermore, seller financing can provide some tax benefits by spreading out a large gain over time (check with your accountant or CPA).

If the seller structures the loan as an installment sale, there can be certain tax advantages to the seller as well in terms of the timing of recognition on the capital gain. The seller would need to discuss the details with a tax advisor.
Seller financing can be used to pay for a property either in full or in part. The terms of a full loan look similar to those of a conventional loan; however, a seller has a great deal of freedom in setting the terms, such as the interest rate and the duration of the payment period.

For instance, a seller might wish to provide owner financing as a short-term arrangement of five years, after which the borrower is expected to refinance the loan, presumably with conventional financing.

While sellers can be more flexible than banks in considering prospective buyers, they should nevertheless think like a bank when reviewing potential buyers. Examining documents and reports such as tax paperwork, proof of employment and credit history is prudent in determining a buyer’s ability to pay off the loan.

A seller who provides owner financing will need to get the mortgage recorded in accordance with the specific execution and acknowledgement requirements of the State of Texas. Sellers should also work with a title insurance company to perform a title search and purchase title insurance to secure the right priority for the mortgage.

A title insurance company can also serve as a good resource for understanding how much it will cost to record the mortgage. In Texas, the cost to record a mortgage or deed of trust is minimal, consisting of a basic administrative fee added to an amount that varies according to the number of pages.
Generally, the overall cost to seller finance will depend on how many documents are involved and how sophisticated those documents need to be. The size of the property and the intensity of due diligence procedures factor into these costs.

If it’s a simple scenario, such as a small little residential deal, it might be under a thousand bucks. If you provide seller financing for a sophisticated apartment building or strip center it can be multiple thousands of dollars. If you’re in the Austin, TX area, Forte Properties is your #1 choice for owner financed home transactions.

Documentation is perhaps the least of a seller’s worries. For most sellers, the initial decision to provide owner financing can be the most significant hurdle they encounter.

Documentation-that’s not a big deal. It’s done all the time, there are a lot of good lawyers that do it. It’s deciding to do it, and deciding on how to manage the risks inherent in providing owner financing when you’re a casual seller-that’s the biggest difficulty. Again, if you are interested in owner financing whether you are a home buyer or seller, Forte Properties in Austin, TX can help you every step of the way.

In most cases, sellers prefer to have cash instead of a promise by the buyer to pay them later. In addition, sellers who consider owner financing need to understand the risk that the buyer might not pay you in whole or in part, or might have financial distress situation arise down the road, where after a year or two the payment stream to you is disrupted by their financial distress.
Because sellers do not have the same resources as conventional lenders, financing a buyer can be even more intimidating. While banks can absorb the risk of nonpayment by spreading it across their entire loan portfolios, an individual seller isn’t typically able to do that. Furthermore, it’s more difficult for a seller to choose the best loan terms in accordance with the perceived risk/return.

There’s no science to that because you’re not a conventional lender. Because of the serious risks involved with seller financing, sellers should do their homework ahead of time and decide whether it is an option within their level of risk tolerance. Preferably, a seller should make this decision early in the process of selling a property, well before any offer is on the table.
You need to decide that up front so that you can package your materials in contemplation of what you’re willing to do relative to seller financing.
Lawyers who are familiar with financing and financial documents can be critical resources in the time preceding and immediately after making the decision to offer owner financing. A lawyer can help a seller understand the ramifications of owner financing and design the appropriate paperwork.

Sellers just need to be prepared for what happens if the deal goes south. Sellers can then adjust the language and terms in their loan documents accordingly, such as setting a higher interest rate that’s reflective of the higher risk, or requiring personal guarantees and other forms of credit enhancements.

As the popularity of owner financing has increased, the Texas Association of Realtors has witnessed an increase in the use of its promulgated “Seller Financing Addendum”. If you are considering a Austin, TX purchase involving owner financing (either as a buyer or seller), you should consult Forte Properties. They have a team of real estate professionals in various facets of the real estate market and are very familiar with the Seller Financing Addendum and all other documents required when buying or selling homes with owner financing.