Monthly Archives: April 2009

Author : Chris Esposito

All construction-to-permanent loans, especially owner builder loans, have two sets of interest rates – one rate during construction and one permanent mortgage rate once you are done building If an owner builder can find a way to lock the permanent mortgage rate now, prior to construction, he can save a lot of money over the next 30 years

For an owner builder to lock in an interest rate on the permanent mortgage prior to even beginning construction on the home, it would be a great advantage Consider that most loan products on simpler purchase and refinance mortgages will allow you to lock in the interest rate for a period of 15, 30, or maybe 45 days at best Now consider that an owner builder loan has a typical construction timeframe of twelve months That’s a rate lock that will need to last for 365 days

Therefore, to achieve this unusually long rate lock, an owner builder will need to find a construction loan that is a true construction-to-permanent loan, meaning there is only one closing that covers the entire process The land purchase, the construction phase, and the permanent mortgage are all wrapped into one product In this way, the loan can establish the permanent rate up front, prior to the start of construction And, in this way, the owner builder can take advantage of today’s relatively low interest rates

Looking at the big picture, specifically the country’s long term history of interest rates, you can get a 30 year fixed mortgage today at an interest rate that is pretty close to the lowest rates ever available In other words, there is no reason to believe that interest rates are going to go down over the long term Focusing on the big picture, interest rates will have to trend higher eventually

So, if you want to build your new home with an owner builder construction loan, you may need a full twelve months to complete the construction You will be managing the process yourself, overseeing the sub-contractors and the delivery of the materials Therefore, twelve months is not an unrealistic timeframe for the construction period

If you can lock in your permanent rate now, prior to construction, you can protect yourself against the possibility of interest rate increases over the course of the following year For example, an owner builder who locks in an interest rate of 6 25% today for a 30 year fixed mortgage on a $250,000 loan will save almost $60,000 over the next 30 years as compared to someone who gets a fixed interest rate of 7 25% Just that one percent increase in rate will make a difference of almost $60,000 over the life of the mortgage

Therefore, if your owner builder loan offers the option of locking in the permanent rate prior to construction, then you may want to jump at the chance while the federal government is attempting to keep rates as low as possible to stimulate the economy However, some people will feel that locking the permanent rate now is depriving them of the chance to hitting the jackpot in case interest rates happen to decrease over the next twelve months

Though interest rates today are relatively near their historic lows, there is always a chance that they could go down even more over the next year Therefore, make sure that your owner builder construction loan provides some protection for you For example, if your loan does not have any pre-payment penalties on the permanent rate, then you can always refinance once you are done building your home This refinance will act like a second closing, so there will be some closing costs involved However, if you plan to stay in the home for a long time, the savings over the life of the mortgage should be well worth it

For an owner builder construction loan to offer a permanent rate lock that lasts a full twelve months instead of the standard 15 days or 30 days, it provides a great opportunity for you to take advantage of the current rates before you ever even hammer the first nail for your new home And, if you want even more protection in the event that rates drop even more over the next year, then make sure your owner builder loan provides an easy means for you to refinance upon completion of construction – though you probably will never need it

Chris Esposito works with the Owner Builder 101 program to provide owner builder construction loans for people who wish to manage the construction of their own homes, without hiring a general contractor. Visit www.OwnerBuilder101.com, or call (877) 876-3688.

Syndication Source: Thought Search Articles Continue reading →

Author : Sal Farzin

Many homeowners are now finding themselves in a situation where they cannot afford to pay off their mortgage any longer This maybe because they had taken advantage of the short-term interest-only loans or had their properties valued lower than the loan they have obtained In such an event, there are some options available to them rather than to go through the whole process of mortgage foreclosure and run the risk of being evicted

Short sale is a good solution It involves the sale of your mortgage property at a low price Keep in mind that banks would rather take the money that your property As the borrower, you can propose a short sale to the lender so that everybody is benefited This strategy is getting very common in the U S

There are mortgage foreclosure specialists and buyers works as facilitators of short sales If you’re lucky, you might even be approached by them and have you sign a release or an authorization form of your property The specialists would write up all the paperwork involved, including the contract of sale The contract would contain the offered amount and all the conditions involved in the agreement You’re free to review the document before signing it Also included in the contract is a hardship letter indicating the reason why you can’t pay for the property and how the short sale can be beneficial to the lender

A short sale of the real estate can be advantageous to the homeowner or borrower because:

1 It can help them save their credit history

2 It can help them find a solution to an otherwise embarrassing situation

3 It could reduce the stress of finding funds to answer a certain financial obligation

4 It is the faster solution to mortgage foreclosure process

In today’s housing market, there are tons of property inventories And that causes the banks to lose a lot of money each day The whole foreclosure process can be a long and tedious one for the lender For the borrower, it is a stressful, embarrassing, and dreadful experience Short sale could actually stop the mortgage foreclosure process involved and benefit all parties involved Through it, the lender gets his money from the sale and the homeowner can walk just away from the property that he can’t pay for any longer The buyer gains advantage too as he ends up buying a good property at a discounted price

Sal provides information about the mortgage foreclosure process through his website on mortgage foreclosure process facts.

Syndication Source: Thought Search Articles Continue reading →

Author : Dee Power

Writing a business plan can be an overwhelming task Here’s how to make that task a bit easier

1 Don’t try to write the business plan in one day or even in one week Break the task into smaller chunks and set a realistic timetable to complete those tasks 30 days is a reasonable amount of time It helps to have a written task list with projected start and finish dates for each task As you complete the task, note the date The task list is to keep you on track and not meant to be a straight jacket

2 Start with the section you feel most comfortable with, this is one instance you don’t have to begin at the beginning Most entrepreneurs don’t have any hesitancy writing about the historical background of their company Or perhaps writing about the needs your products fill for customers would be a task that would get your business plan off to a good start What’s important is to actually start writing and stop procrastinating

3 Base your marketing on research It might seem easier to say that the market of your company is $5 billion a year and you expect to obtain a 1 56% market share, but that’s meaningless Define your market and how you will reach your market The market might be huge but you can only reach a small portion at a time Attack that market segment where you have the best chance of success

4 Spend quality time writing your business plan Don’t put it off until you’re exhausted from all the other tasks in your day If the morning is when you’re raring to go then designate one hour every morning to write your business plan Don’t let interruptions eat into that one hour Put your phone on answer, don’t look at email, or cruise the Internet You’ll be amazed at how much you can accomplish in that one hour if you stay focused

5 Give your business plan a rest After you’ve completed a section let it rest for a day or two, then go back and review what you’ve written You’ll be surprised at how much you can improve your business plan if you come back to it when you’re fresh

6 Have a few trusted people review your business plan If they understand what you’re doing and your strategies are clear, great However, if they don’t “get it” then you have some work ahead of you

Receive a complimenary business plan template. Send an email to businessplan@(nospam)businessplan-basics.com remove the (nospam). You will also receive our newsletter at no charge. Dee Power has written several books including Business Plan Basics Contact her through Capital Connection

Syndication Source: Thought Search Articles Continue reading →

Author : Carlos Scarpero

Reverse mortgages are an exciting and fast growing way for seniors 62 and older to keep their property and tap their equity to improve cash flow Many people have questions about reverse mortgages and here are some common questions and answers

What is a reverse mortgage?

A reverse mortgage is a loan for seniors 62 and older to tap their equity in their home They do not make any payments on the loan until the house is sold

Who qualifies for a reverse mortgage?

To qualify for a reverse mortgage, you need to be at least 62 years old and own the property free and clear or have a very small mortgage balance Unlike traditional mortgages, credit and income is not considered for reverse mortgage eligibility

How do I get my money?

This is up to you It’s your equity The only requirement is that any outstanding lien (mortgage or other debt against the home) on the property must be paid in full at the time the reverse mortgage is done You can take the remainder of your reverse mortgage funds as a lump sum, line of credit or monthly payments And the best part of all is, you can take any combination of these choices- some money as a lump sum to perhaps pay off bills, some as a line of credit to meet future needs, and some as a monthly amount to supplement your current income You can even change your mind down the road- it’s your equity, it’s your choice

What are some things that I can do with a reverse mortgage?

You can do anything you want with the proceeds as long as you pay off any liens against your home Once that is done, the funds from a reverse mortgage can be used for virtually any purpose- supplement your current income, pay off bills, home improvement, travel, the list is virtually endless

Why don’t I just sell my home?

Sometimes, that may be the best solution A good loan officer will answer all your questions about a reverse mortgage and then let you decide However, if you sell your home, where will you live? You also need to consider the costs associated with the sale

When does the reverse mortgage become due?

Once the home is no longer your residence, the loan becomes due Depending on the situation, you may decide to have children or other heirs sell the home, or if they want to keep the property, they will need to pay off the reverse mortgage either with their own funds, or by obtaining a regular or “forward” mortgage In any case, a reverse mortgage is an FHA insured “Non Recourse” loan which means that you will never owe more than the property is worth Of course, any remaining proceeds after the sale of the home will go to you or your heirs This is a very safe and highly regulated financial product

How can I find out how much money I qualify for?

This depends on your age, the property value and the amount currently owed The best way to find this out is to contact your loan officer or use the calculator on the AARP website

As you can see, reverse mortgages are here to stay For more information about reverse mortgages and to see if they are right for you, contact your loan officer

Carlos Scarpero is a Dayton, Ohio based reverse mortgage originator and expert. Learn more about reverse mortgages by visiting www.CarlosScarpero.com

Syndication Source: Thought Search Articles Continue reading →

Author : Jim Thornton

Buying a house these days is more difficult for young people purchasing their first home than it ever has been The uncertainty in the market has made it an opportune time if you are buying your first house to get a good deal, but the banks are making it harder to get a mortgage The more stringent guidelines that the banks have imposed are making it more challenging for people to qualify for a mortgage The good news is that the Canadian Government is trying to help They are offering government grants for first time homebuyers

These Canadian government grants for first time homebuyers are making it possible for people to get into their first house much sooner than they would on their own In addition, because there is no interest on the money and no monthly payment it makes it a little easier to qualify for a mortgage If you’re wondering if you will qualify for the government grants, for first time homebuyers you will be happy to know it is available, however if you have owned a house previously you do not qualify

You must also have good credit to qualify and a preapproval from a bank showing that you are approved for a mortgage It is important to note that not all banks will allow you to use a down payment that comes from a government grant First time homebuyers should seek out the help of a mortgage broker in this situation, they are aware of the banks that will allow down payments from the Canadian government grants for first time homebuyers program

So how does a person get a government grant? First time homebuyers must first speak to a mortgage broker and fill out an application for a preapproval The mortgage broker should be able to tell you who is administering the program in your area Once you get a pre approval, you will then make an appointment with the person in your area who handles the government grants First time homebuyers may find the experience a little overwhelming but your mortgage broker will help guide you through the process

First time homebuyers should be aware that it is necessary that you have some money saved by the time you move into your new house The bank will want you to save up enough to pay for your lawyer fees and any other costs you might incur at closing These are called your closing costs and the amount you should save is 1 5% of your house value, so if you buy a house worth one $100,000 you will need $1500 for closing costs

Many people ask if they have to pay back the government grants for first time homebuyers, and the answer is no, however there is a catch If you live in that house for twenty years you don’t have to pay it back, if you sell the house before the twenty years then yes you have to pay it back when you sell the house The good news is that there is no interest on the money so the balance won’t grow, and you can even keep the appreciation in the house What that means is, if you buy a house and then sell it five years later, and it’s worth 20% more than when you bought it, you can keep that

This is an amazing chance for first time homebuyers, if you’re ready to buy a house but you don’t have enough of a down payment its perfect The best thing is, houses grow in value about 5% each year and if you had to wait an extra year to save for the house you like today, it would cost you 5% more to buy If you’re interested, don’t wait because the Canadian Government Grants for first time homebuyers program is over in March 2009

Mortgage agents with Real Mortgage Associates are devoted to helping first time homebuyers through the process of purchasing a home.

They will also provide information to anyone interested in learning about the Canadian Government Grants.

Syndication Source: Thought Search Articles Continue reading →