How to Purchase Bank-Owned Homes and Properties

How to Purchase Bank-Owned Homes and Properties

Have you been wanting to cash in on the latest mortgage crisis? If you know how to buy one of the many bank-owned homes and properties on the market, you can make a killing!

With all of the recent foreclosures and bank-owned homes on the market today, it's a great time to get a great deal. Many of these bank-owned homes are available for an incredibly low price if you know what to do to get your hands on one. Follow these steps to get a great house at a great price!

1. Call the real estate agents and the banks in your local area. These places typically have a list of foreclosed properties and bank-owned homes in the area. You can even start your search by visiting the websites of local real estate agents and searching the Multiple Listing Service, or MLS, on their site.

2. Search through the public records. The public records are usually located at City Hall or your county's courthouse and you can find financial information about the houses that you are interested in. This is where you will find out how much is owed in back taxes and if the property or home has any liens placed against it. Many of these expenses will be tacked on to the price of the house so you will need to make room in your purchasing price for these fees.

3. Crunch the numbers. Once you have decided on a property or a few potential properties, start doing some calculations so you can get the best deal. Determine how much the bank would have to sell the property for in order to come out even. Consider any repairs that need to be done in order to bring the house to code. Then, subtract the total of these fees and costs from the home's estimated value. That will give you a good price to start at when it comes time to negotiate a deal.

4. Contact the lender that owns the home you decide on. You want to speak with someone in the asset management department, the REO department or the bank-owned homes department. The name of the department varies by bank, but make sure you speak with someone who is involved with the homes that the bank owns. Ask to make an appointment so you can take a tour of the home or property you have chosen.

5. Start the negotiations. Once you have found a home that you want to purchase, make an offer to the bank. Typically, you will be dealing with the person who you spoke with when taking a tour of the home. Don't start the negotiations too low, but keep in mind the extra fees you will need to pay for repairs, liens and back taxes. Ask to have a purchase agreement written up and make sure the contract is agreeable before signing it.

Bonus Tip: Try to find a bank or real estate company that has many foreclosed or bank-owned properties available. They will usually be more willing to give you a bargain just to get it taken off their accounting books.

Five Facts about Reverse Mortgages

Five Facts about Reverse Mortgages

There are many myths and misconceptions going around the mortgage industry about reverse mortgages. Here are five important things you should know about them when deciding if one is right for you.

Reverse mortgages are becoming more and more popular among senior citizen homeowners because of the freedom and convenience that they offer. Basically, reverse mortgages allow homeowners to withdraw equity from their home in order to supplement their income. As a result, seniors who participate in a reverse mortgage have more money for bills and for enjoying their years in retirement.

Three Types of Reverse Mortgage

There are three basic types of reverse mortgages that senior homeowners can take advantage of.

The single-purpose reverse mortgage is the least expensive and it is designed for homeowners with a moderate income. Unfortunately, it is not available in all states.

Proprietary reverse mortgages are more expensive than a traditional home loan but there are no restrictions on income, medical requirements or purpose.

Federally-insured home mortgages are very common and they are backed by HUD. If a homeowner chooses this type of reverse mortgage, however, the federal government requires them to go through counseling where a qualified counselor will explain the obligations of the mortgage to the homeowner. The homeowner must receive a \"certificate of counseling\" before their loan can be processed.

Payments

Payments for your reverse mortgage can be made to you in several ways. Many homeowners take their payment as a lump sum. Others prefer to receive a monthly payment for as long as they live in the house. Still others choose to take cash advances while leaving the rest of the money in the bank. Homeowners involved in a reverse mortgage can choose either of these options or a combination of them to suit their individual needs.

Qualifying for a Reverse Mortgage

Generally, any homeowner over the age of 62 can qualify for a reverse mortgage as long as they own their own home. If the homeowner does not own the home outright, they must pay off the mortgage with the funds from the reverse mortgage. The home they get the reverse mortgage on must be their primary residence, too.

Repayment

When a homeowner has a reverse mortgage, they are not responsible for repaying the loan as long as they live in the home. However, they are still responsible for other expenses incurred as a homeowner, including property taxes, insurance, repairs and maintenance.

End of the Reverse Mortgage Loan

A reverse mortgage ends when the homeowner either sells the house or passes away. In some instances, the reverse mortgage may also end when the homeowner is no longer able to live in the home for at least 12 consecutive months. This often occurs when the homeowner moves into an assisted living facility or when they move in with a family member because they can no longer take care of themselves. The home can then be sold and the loan can get paid off by using the proceeds. If the homeowner has died, the heirs can refinance the home with a traditional mortgage or they can receive the money left over once the mortgage has been paid off with proceeds from selling it. If the proceeds of the sale do not cover the mortgage, the lender simply absorbs the loss.

Paying Points On Your Home Loan - A Good Idea?

Paying Points On Your Home Loan - A Good Idea?

Hi there, welcome to part two on points, commission, fees and expences. In this installment we talk about using points to buy down your rate on your mortgage. Crunch the numbers and do what makes financial sense.

Points, to pay or not to pay?

On the first installment we got as far as mutual funds, and got bogged down in the age old debate, NO LOADS vs LOADS this time we will just let that sleeping dog lie, and move on to another topic.

Let’s talk a little about points as it relates to the mortgage industry. Once again you have two camps, the no points no matter what camp, and the, hey it’s okay if it will get me the best rate, camp. And that’s the bottom line isn’t it? We want to know we got the best rate possible for our unique situation, and we want to be sure we are comparing apples to apples.

In the mortgage industry points are used to buy down the base rate on a lender's rate sheet. There will always be the base rate with zero points, then there will be pricing for one point, one and a half, two, two and a half, etc…These tax deductable points are also called discount points.

I cannot tell you how many times I got on the phone with a potential borrower and the first thing they tell me is that they will not pay any points for any reason. I think this attitude comes from the practices of some bad, small lenders who used to charge up to five points on a loan. Think about that for a moment. Your loan amount is five hundred thousand, and you have to pay twenty-five thousand off the top just to get the job done. That’s a hard pill to swallow.

Now take that half a million dollar loan and let’s give it a six percent rate. Your monthly principle and interest payment is going to be $2,997.75. Now let’s pay two points to get that rate down to four and three quarter percent. The cost of points is ten thousand dollars. Your new monthly payment is $2,608.24. That is a savings of $389.51 a month. Over the life of your loan your payment of ten thousand in points is going to save you $140,223.60. If I were to trade you 140k for your 10k payment, how long would you stand there doing the trade? I’d stand there all day. There is a catch though. If you are not going to stay in the house more than two years you may not make back that ten thousand in points, so let’s do the numbers. It is going to take you 25.67 months to pay off the ten thousand you used to pay points. After that it is all savings. If you are going to stay in the home for a year then move, you will waste money. It will take you just over two years to make back that ten grand.

In the scenario we just went over, as long as the borrower is going to stay in the home more than two years, it would seem foolish not to buy down the rate using the discount points. Despite running numerous calculations for borrowers I would still find people so point adverse, that they would not entertain the notion of paying points.

That is really all I have to say regarding points and the mortgage industry. Bottom line, crunch the numbers and you will be able to see if you should be paying points or not. There is no hard fast rule as every loan and every borrower is different. Keep an open mind and do what makes best financial sense.

Good Luck and Happy Financing.

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