Banking Finance

The Three Secrets of Buying a Bank Owned Home to Live In

by Bill De Ridder, President of QualityFirst Real Estate

1.      Find the Right Location – Even though you are looking for great deal, real estate, as always, is all about location.  Don’t be seduced by a great price into living in an area where you and your family are not happy. One of the first keys to finding a good bank owned home is to select the area you want to live. Right now, there are bank owned homes in every community. Maybe not as many in some areas as others, but there are bank owned homes in every city.  The next step is to be open to broadening the area you have selected.  By expanding the circumference of your target area, you exponentially increase the amount of bank owned homes to select from.  If being in a certain school district is your number one concern, check the boundaries of the district and allow a search of homes in the entire area. 

Another suggestion is to look for homes that are smaller than what you really want. Take a look at homes that can possibly be added on to and remodeled. Many if not most bank owned homes are in some sort of disrepair. By looking for a home that can be bought for less money than your budget, you can find more selection of homes to choose from. The most important single thing a buyer can do to find a good bank owned home is to find an agent that works REO’s. Agents that list and sell bank owned homes either have a list of homes that are coming on the market or are on the market and know the ins and outs of how much to offer the bank and how to make the buyers offer look better simply by knowing what terms the bank most likely will accept.

2.      Here is why REO homes and Short Sales take so long to close escrow.  The main reason that REO homes and Short Sales take so long is the amount of loans that are being processed by the banks and loan servicing companies. Each asset manager is handling a workload in excess of 200 files at all times.  Each file is a complex financial puzzle and no two files are the same. 

There are an incredible number of moving parts in each file that need to be addressed. If the home is bank owned, is the home still occupied by the previous owner or possibly a tenant?  If so, the bank needs to initiate an eviction on the previous owner or offer relocation assistance to help the occupant some financial help to find a new place to live. If the home is tenant occupied, the bank must comply with federal guidelines and give the tenant adequate time to relocate or again offer relocation assistance.  Once the home is vacated, the bank must rekey the home and secure the property.  Then a BPO (Broker Price Opinion) which is a mini appraisal, must be performed by three independent brokers to give the bank a current values “as-is” and repaired.  Once the BPO’s are received by the asset manager at the bank, a decision must be made whether or not to make the suggested repairs.  If repairs are going to be made, contractors must be hired and contracts signed and work completed. This can take anywhere from 3 or 4 days to several weeks. 

Only at this point can the property be ready to put on the market.  Once on the market, if priced right, we normally get multiple offers on homes. The asset manager must review each offer, often times going back to all potential buyers and ask for the buyers “highest and best” offer. This can go back and forth for quite some time until the asset manager approves the best offer for the bank (not always the highest offer).  If the home is a short sale, there are an entire different set of issues that must be dealt with. The home can be marketed much sooner but there are delays that are much more protracted in the negotiation of the purchase.  The challenge in getting short sales accepted and closed depends on a number of factors. 

Short Sales are definitely the new preferred method of dealing with loss mitigation by lenders. But there is currently no conforming method to contract with the banks. While most banks want the same information from the seller, each bank has their own way that they want it presented.  If the short sale package is either incomplete or sent in the wrong order, this delays the process not only for that file but the other 200 plus files behind it. 

Other major hurdles in negotiating a short sale occur if there is more than one loan on the property. When an offer comes into the bank, the banker first checks to see if there are more than one loan on the property – running a title search to see what liens and judgments are on the property. If there are multiple liens on the property, each lender and lien holder needs to be dealt with.  This can take a long time. The listing agent should be handling that negotiation with lenders – not the buyer or the bank. If there are two or more different banks involved it can be very complicated and delays are common as the paperwork weaves its way through the respective organizations.

3.         What can you do to speed up the REO home escrow and closing process?

            Look for pre-approved bank short sales.  You are looking for a bank sale that was           approved but has fallen through for some reason. The bank has a price it is ready to  accept and you just need to make the offer. Check the Internet listings and the MLS - but the best option is a knowledgeable real estate short sales specialist who has lots of contacts to find short sales not listed on the MLS.

            If you need financing to buy the house, you should be pre-approved for loan, not “pre-     qualified”.  The bigger your down payment and payment in cash will help facilitate getting the home. Having all financing set will speed up the process.

            Another good way to speed up the sale and make sure you get the house is to offer to buy the house “as is”. Banks like that.

Once you do get an approval on a property, be prepared to do your inspection quickly and respond to seller disclosures. Typically you only get 10 days to complete and remove any contingencies. Have an appraiser and inspector selected and ready to go on short notice.

For prime “move in ready properties in good locations, there are often multiple offers. You need to be prepared to pay a price over the asking price. The more cash you can bring to the table, the better your chance of getting the house. Even if there are no other offers on the home, be prepared for the bank to reject your first offer and make a counter offer.  A larger “short sale specialist” agency with lot of agents and lots of contacts with banks may be able to negotiate directly and speed up the process.

Finding and purchasing a distressed, bank owned home is a challenge. However, if you are prepared, have your financing in place, and are working with professionals who know the short sale and bank owned property environment in your region, you have a much better chance of getting the home of your dreams at an incredible price.

How To Owner Finance Your Home

You’ve seen the real estate ads in the classifieds section of the newspaper: “Owner Financing Available” or “Owner Will Carry”. An owner financed real estate transaction enables the buyer of the property to make payments directly to the seller.

This allows the buyer to purchase the real estate without having to apply for a mortgage from a bank or financial institution. The seller also has the option of selling the loan to an investor for cash.

Of course, there are lots of variables that work into a price offer including type of property, location, age of house, equity, is the buyer making the monthly payments, etc. These are just some of the things an investor likes to see. Investors buy all sorts of real estate notes and deeds of trust. Every house is different, every loan is different and every deal is different. Use the above list to make the loan more attractive to an investor.

ADVANTAGES OF OWNER FINANCING THE SALE

Sell Your Property For Your Desired Asking Price
A buyer may be perfectly happy to pay market value (and maybe more) for a house that requires a smaller down payment and that a bank won\’t help them finance.

Charge a Higher Interest Rate Than a Bank Would Give
By charging a higher interest rate than a bank (say 7.5 – 8.5%) you are, in effect, increasing the overall sales price of the property, and making the note more attractive for an investor.

Faster Sell
You can sell a home with owner financing a lot quicker than with bank financing and there can be tax advantages in spreading the buyer’s payments out over time (talk with an accountant about that).

Great Monthly Cash Flow Investment
Many owners simply like the idea that they can receive a monthly income and a high interest rate from a property even after they have sold it – and no longer have to worry about repairing leaky roofs or replacing dead water heaters.

Sell The Note To An Investor
A seller who owner financed the deal also has the option of selling that note to an investor for cash either right after closing or after waiting a number of months or years (give me a call or email and I can get you more information about selling your note).

DISADVANTAGES OF OWNER FINANCING THE SALE

Cash At Sale = Small Down Payment
Seller receives only a small or even no down payment.

Buyer Won’t Pay
The seller takes the risk that the buyer will not make payments and will have to be foreclosed on. (Forte Properties uses a loan sevicing company to act as an intermediary when selling Owner Financed homes in Austin Texas.)

Due-On-Sale Clause
If I owner finance my house won’t I activate the Due-On-Sale Clause in my mortgage and if I’m only getting a small down payment and monthly installments how will I pay the bank loan back?

The Due-on-Sale Clause is a provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home. It is probably the most talked about, feared and misunderstood topic in real estate.

You can also do a simultaneous closing, where a few days after the close of the house with the buyer you receive a check for the note from an investor.

If you’re going to owner finance your home and you know you want to sell the note this is a great way of doing it because the investor is there for the whole process and you don\’t have to start over again 6 months later with another appraisal, inspection, credit check, etc.

REAL ESTATE PROFESSIONALS – Providing owner financing could mean the difference in having your client sell their house quickly or having it sit on the market for months, years or not selling it at all.

Asking a seller to offer owner financing to buy their home can be a tricky proposition. Sellers often reject the suggestion of owner financing because nobody has explained the benefits or proposed owner financing as a way to sell the home. Most sellers’ knowledge is limited to traditional bank mortgages.

http://www.GreatHomesTexas.com – Austin Owner Finance Specialists

Homeowners have woken up to the fact that an excellent way to perk up their lifestyles as well as their bank accounts is home financing. Take finances for renovating your home and increase your home value. In due course of time, your neighbors will be surprised to see the new you!

For those who are not into the nitty-gritty of financial matters, here are some basics of home financing known by millions of Americans.

Kinds Of Home Financing

Usually, loans for home financing are categorized as secured and unsecured. The latter is a loan, which has a fixed frame of payment. The secured loan also has the same feature with the difference that if you are unable to pay within the fixed time, the lender has the right to seize your asset and sell it in order to raise funds for paying off the loan.

With remodeling and home improvements projects, the asset is used as security is usually your home itself. There is a separate document for pledging your asset. It is called a deed of trust or mortgage. Do you know that you can pledge the same asset for more than one loan? In this case, the loans are unambiguously ranked in priority. This explains all the fuss about first and second mortgages.

Why do people take secured loans?

1)To obtain a lower rate of interest

2)To borrow more cash in home financing

3)To mitigate taxes

Loan Qualifications

The first step is to discuss with your lenders about YOUR options. It is a tendency of the lenders to focus on THEIR options. Hence, it’s a good idea to begin with a reputable mortgage broker, as he or she may give you a range of loans. Besides this, your lender may pre-qualify you for more than one loan. They are well-versed with the lending rules; hence, it’s better to have them by your side.

Remember, lenders of home financing are interested in your

1)Income

2)Credit record

3)Property value

4)Debts

What Are “Points”?

Many loans have something called points. They are nothing but a fee for taking the loan. Points are denoted as the percentage of loan amount. One point= one percent. Points help the lender pay for the expenses incurred in arranging for the loan and to make a profit as well.

Kinds Of Interest Rates

The loan in which the interest rate remains unchanged throughout the loan period is called fixed rate loan. There are loans in which the interest rate may either rise or dip in accordance with market rate such as prime rate. The variable rate is always two percentage points more than the existing prime rate.

Choosing Your Lender

There are three sources that can help you in home financing:

1)Mortgage brokers

2)Specialized lenders

3)Banks

Mortgage brokers are usually associated with regional and national banks, insurance companies, specialized lenders, and even the affluent class. Their diverse association is their specialty. It means you can obtain a broad spectrum of home financing options from them.

Specialized lenders specialize in a single or a couple of loan types. Their specialty is their deep knowledge about the loans they deal with. They are experienced enough to offer you extremely competitive rates for home financing.

Banks work if you have a good rapport with the lender and he or she agrees to give you a broad range of home financing options.

So, start preparing for making your home a dream place with home financing!

When looking to buy a new home, finance home tips are a great way to gather basic knowledge before embarking on this endeavor. There are many sources for these, the most available being the Internet. A brief search will allow a multitude of helpful ideas and resources to be found from many different backgrounds.

When asking the local real estate agent or mortgage broker questions, the answers only come from one point of view. By browsing online for ideas, one will find many different takes on the same questions from a large variety of reputable sources. Dependent upon the nature of the questions, the need for a specialist may arise and many are available online.

There are many websites that will have consultants available to answer any questions regarding finance home tips. They are not only available via email, but on many websites there is a live chat feature that allows one to speak directly and instantly to a live person. This greatly reduces the amount of time waiting for an answer to possibly a very simple question, thereby moving the process along that much quicker.

For new home buyers particularly, there are many unknowns when first purchasing a house. With so many variables involved, the need for some help will not only arise, but be most welcome at the time. The financial aspect of home buying is one of the largest issues in the planning of a new home purchase as there are many costs and fees that are added on to the actual price of the house.

Knowing which of these is the responsibility of the buyer and which are the sellers is paramount in helping save money during this. These tips can assist a buyer in knowing what they will need to cover in the way of additional costs as well as the seller’s end of things. Once all these costs are realized and put on paper, then the actual financing can be set in to motion.

Many mortgage companies offer very competitive rates with each other. One of the easiest ways to compare these is with an online search. This lets a side by side comparison to be done without the high pressure of a salesman present.

Finance home tips for the best mortgage companies and the best mortgage rates will be found on many consumer websites. These companies have done the research in advance of any home buyers and can offer some of the best advice for the new homeowner. These will show which companies offer the best rates and are the most reliable for the new buyer along with company profiles to insure that the best decision is being made.

By taking some time and doing the online research, a wide range of tips and ideas can be brought directly to the new home buyer. This allows them to build a very decisive plan before going shopping for their new house. A well informed consumer is a well armed consumer and these tips will be the basis for their arsenal.

Renovating your home is a stressful process but it is a great way to improve its appearance and make it a more enjoyable place to live. A home renovation can greatly improve the way you and your family live, and once it is completed it will increase the value of your home. Renovating your home is probably one of the biggest financial investments you will ever make but if the financing is properly structured you can save thousands of dollars in interest charges. There are many different options available when it comes to financing a home renovation and we will examine three different options to see which is the most cost effective.

One alternative that many homeowners use for financing a home renovation is their credit cards; this is probably the most expensive way to go. Most credit cards charge approximately 18%-30% interest and if you consider the monthly compounding the interest charges are phenomenal. If you were to use a home improvement project of thirty thousand dollars as an example, with a credit card that charged 19% interest the payments would be approximately $459.00 per month for interest only payments. That means if you paid only the minimum payment every month you would never bring down the balance.

Another option is an unsecured loan such as a line of credit or bank loan. An unsecured loan is a loan that the bank gives you based solely on your credit history and since there is no collateral for the bank, this type of loan is a higher risk so the interest charges are higher. The average unsecured loan charges an interest rate of 10% -13%. Using the last example of a thirty thousand dollar renovation and a ten year term with an interest charge of 10% the monthly payment would be $383 per month. This is a much less expensive way to go to finance a large project.

The third alternative is a secured loan such as a secured line of credit or a refinance. The difference between a secured loan and an unsecured loan is that the bank uses the equity in your home as collateral. This type of loan is much less risky, so the homeowner is rewarded with lower interest charges. Interest charges range depending on the type of secured loan you decide to go with, a secured line of credit generally fluctuates with the prime rate. The least expensive choice is a refinance, what this means is that you take your renovation and combine it into your current mortgage.

With a refinance you are increasing your current mortgage amount and monthly payment but by doing so you are saving a loan payment and getting great rates that range anywhere from 4%-6%. A homeowner whose house is worth $250K and they owe $180K has a monthly payment is $1062. If they were to consolidate the $30K renovation into their current mortgage the payment would be $1239/month. That would save the homeowner $206 per month when compared to a traditional bank loan. It is apparent that the most cost effective way to finance a home renovation is a secured loan, now deciding on which type of secured loan that is best for your personal situation.

There are many factors to consider and each homeowner’s situation is different so the best thing to do is to get some help from a professional. A specialist at the bank will recommend programs offered by their bank, not necessarily what’s in your best interest. Using a mortgage broker will offer you unbiased advice because they are familiar with all of the different banks and their programs and they have access to the best rates available. Whichever way you decide to finance your renovations be sure to consider all of your options.

ICICI Bank is one of the largest home loan providers in India. It offers a home loan at very attractive rate of interest with lots of benefits like free personal accident insurance, no prepayment charges on home loan, doorstep service, etc.

The bank provide home loans ranging from Rs.2Lakh to Rs.1Crore that suits to everyone needs. The loan is available for the first purchase in ready construction, under construction property, purchase in ready sale, self construction and extension of existing house.

ICICI Bank also provides Land Loan, Home Improvement Loan, Office Premises Loan, Home Equity Loan, Balance Transfer, EMI Under Construction, Property Overdraft, Lease Rental Discounting, etc.

Features-
1.ICICI bank finance up to 80% cost of the property
2.Option to choose between fixed and floating rate of interest or the combination of both fixed and floating rate of interest.
3.Loan repayment tenure is ranging from 5 years to 25 years.
4.Free personal accident insurance
5.Insurance option for home loan at very affordable rate of premiums.
6.No prepayment charges for home loan
7.Doorstep service for home loan documents
8.Option to add the income of spouse and children to enhance loan eligibility.

Eligibility-
1.Available for Indian Resident (salaried and self employed) and also available for NRI (salaried only)
2.Minimum age is required 21 years at the time of loan sanctioning.
3.Loan repayment is permitted up to 65 years of age or before retirement.
4.Regular source of income
5.Processing fees is 0.5% loan amount or Rs.2,000/-, which ever is higher.

Required Documentation for Home Loan-
For Salaried-
-Application form with photograph
-Identity Proof
-Residential Proof
-Income Proof
-Bank Statement
-Signature Verification Proof

For Self Employed-
-Application form with photograph
-Identity proof
-Residential proof
-Proof of business existence
-Detail of business
-Bank Statement
-Last 3 years IT Return receipt
-Signature Verification Proof