Short Sell To Avoid Foreclosure

Short Sell To Avoid Foreclosure

The names change, but the problem remains the same. Some people call it the housing crisis while others have named it the mortgage crisis. Recession is mentioned as a possible result of the problem while confident money experts recommend patience until the dust settles.

Whatever it is called, there seems to be a vicious cycle spiraling down to disaster. Homeowners have given up, and some foreclosed homes are on the market at prices that would have been a great bargain five years ago. Individuals in dire straits cannot sell their homes and face foreclosure if they cannot unload the property in a market filled with homes that have been placed on the market by lenders that want to unload them. Unfortunately, other homeowners who might buy these bargains cannot sell their homes because it is suddenly difficult to get a mortgage. Homeowners also have trouble selling their homes unless they agree to bargain basement prices. Other homeowners find themselves living in homes that are not worth the mortgage that secures them.

Help is available for those caught in parts of the vicious cycle, and a short sale is a possibility for some homeowners looking to avoid disaster. Lenders are a diverse group so anyone looking for hardship assistance should immediately contact their lender to ask for help. A short sale might be a good option for the lender and the homeowner. The lenders have already foreclosed on many properties. Most of these companies do not want more foreclosures, and they do not really want to deal with selling the property.

In general, the basic process for a short sale works like this. The lender agrees to accept the fair market value of the property rather than the amount owed on the loan as a settlement. The homeowner sells the property at the agreed price. The homeowner provides the proceeds to the lender as the settlement. The credit rating of the homeowner will not be affected by the short sale.

A short sale deal usually takes about sixty days from start to finish depending on the local market. The appraisal process often takes about two weeks to determine and agree on the fair market value. The approval of this amount by all the parties involved takes approximately two to five days. Closing escrow usually takes from two to four weeks and the deal is done.

The homeowner should avoid a negative impact on their credit rating by the short sale, but there may be tax implications. All homeowners should discuss the entire process and agreement with a tax professional before initiating short sale negotiations.

Real Estate Bubble Burst—No End in Sight

Real Estate Bubble Burst—No End in Sight

Leading analysts say that the real estate market has not even begun to hit bottom. Freddie Mac, with Fanny Mae the nation’s largest real estate lenders, reported on May 28, 1980 that its Conventional Mortgage Home Price Index (CMHPI) sustained a 10.4 percent drop in U.S. home values during the first quarter of 2008 following a downward revised 9.9 percent drop in the fourth quarter. Over the four quarters ending with the first quarter of 2008, home sales prices fell an average of 4.4 percent in the CMHPI Purchase-Only Series – the largest annual fall in values over the 39-year history of the series.

Housing markets are experiencing a burst bubble after an explosion of higher housing values in the last few years. Intermediate Capital managing director Tom Attwood said recently that sub-prime loans were merely "a catalyst" for the inevitable pricking of the credit market bubble as "disciplines were bypassed in favor of loan book growth at almost any cost". "Particularly striking has been the depth and breadth of home-value decline across the U.S." said Frank Nothaft, Freddie Mac vice president and chief economist. "In the past we have seen regions that were still appreciating while the national average had registered a decline. In the CMHPI Purchase-Only Series we saw all nine regions of the country experience price declines at the same time.

“While we expect to see further declines in average home values throughout this year and into 2009, we will be watching very carefully for signs of stabilization in indicators of real housing activity, such as a leveling off in home sales, now that the traditional home-buying season spanning late spring and early summer is underway”.

A new Housing Predictor analysis shows that the crisis will deflate the value of U.S. homes in the majority of the country between 55 and 70% on average from the markets highest peaks. The amount of deflation depends in large part on whether the housing market experienced double-digit appreciation during the real estate boom. Many markets have already seen home values fall as much as 50%. The deflationary figures represent a record high housing deflation on a national level for real estate markets following the biggest inflationary bubble in real estate values in history.

The real estate crisis has established itself as the largest economic problem facing the U.S. economy, spilling over into many other sectors. The analysis, conducted over the last six months, determined that the over-whelming majority of housing markets in the U.S. are now deflating or teetering on the edge of deflation. Credit markets continue to tighten complicating the problem.

Comparisons with the great crash of 1929 are being tossed around. Then it was an over-inflated stock market; here we had an overinflated real estate market bubble that burst. 'We are in the midst of the worst financial crisis since the 1930s," warns the eminent financier George Soros in his latest book, The New Paradigm for Financial Markets.

Ways to Stop Foreclosure

Ways to Stop Foreclosure

by Dan Hartshorn

Foreclosure is the process by which a creditor regains possession of a property when the borrower has stopped making payments on the loan. This situation can arise for many legitimate reasons, including loss of job or income, medical situations or a death in the family. Foreclosure should be considered a last resort by both parties, as it involves time and money for legal proceedings, hurts the borrower's credit, and often results in loss of money by the lender. There are several options available to stop foreclosure. They should all be seriously evaluated as a possible way out of a bad situation.

The first thing to consider is a Loan Modification plan. This is very popular and is suited for people who can make current mortgage payments, but cannot pay for past-due payments. For instance, if a medical emergency resulted in a homeowner being out of work for several months and unable to make mortgage payments, a Loan Modification plan will stop foreclosure by folding past-due payments into the principal owed. Payments are continued normally from that point forward. The new principal balance is reamortized over a new term, but this is usually well worth it for the homeowner to stop foreclosure.

Forbearance is another good option and it buys the mortgagor time by slowing down the process of the foreclosure. Essentially, the homeowner promises to take certain steps in exchange for the creditor temporarily ceasing legal action. This step may include making home repairs or improvements, or listing the property for sale with an accredited Realtor.


Often the option to refinance the home is one to consider in an effort to stop foreclosure. There are many different types of loans available to consumers today and the field is very competitive. For example, an interest-only loan could make sense depending on market conditions. The advantage of an interest-only loan is that monthly payments are significantly lower than with more traditional loans. The disadvantage is that nothing is being paid toward principal, so in a soft or downward-trending market where home values are decreasing, there is considerable risk of losing money in the long run. Any serious effort at attempting to stop foreclosure should include thoroughly evaluating refinance options with a loan specialist.

Sometimes it is possible to stop foreclosure with a short sale. This involves selling the home on the market for less than what is owed to the lender. The mortgagor or representing lawyer then negotiates with the lender to settle for less than they are owed instead of proceeding with foreclosure. Sometimes this makes sense to the lender if the loss from the short sale is less than what they stand to lose from legal proceedings and fees associated with foreclosure. If possible, work directly with the lender's supervisor who is responsible for handling short sales.

Ample documentation will be required for a short sale. Exactly what will need to be provided will vary from lender to lender. In general, one can expect to prove loss of job or income in writing as well as a hardship letter describing the homeowner's current financial or medical situation. Other common forms of documentation include an estimated net sheet showing the expected sales price of the home, copies of bank statements and market comparisons of other homes sold in the area.

Finally, it may be possible to arrange a Deed in Lieu transaction. This is where the borrower hands over the property to the lender instead of paying off the debt. This of course results in the homeowner being out of a home, but if this is an option, it is often far more desirable than foreclosure. This is particularly true if there is not much equity built up in the home. One advantage for the mortgagor is that his credit history will not blemished with a foreclosure mark, which will certainly make future borrowing more difficult. Another advantage is that the homeowner gets to merely walk away from the debt situation and avoid the hassles and stigma of foreclosure.

Deed in Lieu is only possible if both parties, in good faith, agree to the arrangement. A lender may opt for this if the value of the property is close to, or exceeds the amount of the debt owed. Once the deed in lieu is accomplished, the home can be sold on the market by the lender, who then keeps all the money resulting from the sale in order to recover the debt. Even if the lender only breaks even, or comes out slightly behind, this is often a big savings over the cost of the legal proceedings of foreclosure.

Foreclosure can be a complicated and costly process for both the borrower and the lender, and can have some very negative consequences. It is often in the best interest of both parties to stop foreclosure by proceeding with one of several better options. Whether this action involves loan modification, forbearance, refinancing, a short sale, or a deed in lieu, totally depends on the circumstances of the situation. The value of the home, amount of equity, amount of the loan and living situation of the homeowner all play a role in evaluating which option is best.

A Real Estate Professional Can Increase the Money in your Pocket!

A Real Estate Professional Can Increase the Money in your Pocket!

When you’re thinking about selling your house, and you want to get the most money for it, don’t automatically assume that selling it yourself is the best way to do that. It’s true that you will cut out the fee that is paid to any third party Realtor, but this isn’t necessarily to your advantage and the reason for this is that usually a good real estate professional will be able to get more for your home than you could selling it yourself!

Having decided to at least consider allowing a Realtor to list your home, don’t just sign up with the first one you ring, or the one with the most billboards/ads in the newspaper. Their ability to market themselves doesn’t necessarily mean that they are good at selling homes, just that they’re good at convincing people to list with them. Speak to several real estate pros and really find out if they are as good as they claim to be.

Ask the Realtors you meet with very specific questions such as how many homes they’ve had listed with them in the last 6 months, how many of those homes sold, and of direct relevance to putting more money in your pocket by using a real estate professional instead of selling your home yourself, how many of the homes they sold went for the listing price. The last question is the one that will separate the good real estate professionals from the rest, because a good Realtor will only allow you to list your home for what they know it will sell for, they won’t list it for more because they know they’ll have to come back and ask you to lower the price later. You need to know an honest answer to what your home is worth because that’s how much you can really expect to get for it, so once the Realtor gives you a figure on what your home is worth ask them if that’s what homes similar to yours are selling for in the current market. Choose the real estate professional who can show that they’re experienced and skilled enough to give direct answers to your questions and is someone you feel you can trust to sell your home.

Selling a home is a big decision and in a buyer’s market, it’s more important than ever to choose the right strategy to get the most from your property. There’s nothing wrong with selling your home yourself, but chat to a few real estate professionals first and see if they can convince you by their track record that they are worthy of your listing. What have you got to lose?

Stop Foreclosure- Save My Home

Stop Foreclosure- Save My Home

Even the best of us can get into financial trouble and wind up with an impending foreclosure on our home. Fortunately, a foreclosure doesn’t have to be the only way out of a temporary setback in finances. The other thing that is on the side of the homeowner who is staring foreclosure right in the face is the fact that the government has certain guidelines that need to be followed completely before a foreclosure becomes a reality.

Most homeowners have probably never even thought about foreclosure or how to stop one or what they can do to prevent it in order to save their home. Lots of options and foreclosure help do exist for the homeowner who is looking to stop a foreclosure including loan modification, the refinance of the existing mortgage, or even refinancing all existing loans including car, installment, education, and home equity. Additionally, the homeowner may have the option to utilize either a short sale or a deed in lieu.

Foreclosure help can be as close as your local bank, a finance agency, or an Internet lender. If you want to stop a foreclosure on your home, then you need to look for that help and take advantage of it. Typically, an impending foreclosure must be publicly listed for a specific period before the foreclosure can actually take effect.

The homeowner has that time to make all attempts to stop the foreclosure. The first thing that you want to do is to contact the holder of your deed and notify them that you are, in fact, trying to stop the foreclosure by looking into several options starting with your request to them for a loan modification.

A loan modification can be set up in several ways, and typically involves some level of forbearance. Forbearance involves a delay or postponement to the obligations of the loan. Payments might be postponed.

The lender can grant a temporary hold on the principal amount that is due and collect the interest portion of the payment only. The monthly payments on the interest that is due can be made in full or the amount can be added to the balance of the loan. The second option means that the payments you make once you resume the repayment of the loan are actually larger due to the larger loan balance.

Additionally, quite often, previous unpaid payments are postponed until a later date. However, your lender may require that you pay the interest on those payments or that you make a token of your commitment by paying at least one full mortgage payment. Forbearance policies vary from lender to lender, therefore the terms that you are offered may differ from terms that someone else might be offered.

Additionally, the lender can achieve a loan modification by decreasing the amount of your payments by offering to refinance the mortgage with different terms including an extension on the number of years left to pay or a change in the interest rate that is charged on the balance of the loan. Moreover, the lender may consider adjusting the balance of the loan in certain extreme situations.

The homeowner can simply refinance the loan to acquire lower interest rates if they are available. This will reduce the size of the mortgage payment. Plus, if the homeowner increases the number of years or term on the loan, this will also reduce the amount of the monthly mortgage payments. If a homeowner decides to refinance the loan, this can decrease the payments sufficiently to make them manageable for regular payment. This should enable the homeowner to come to terms with the lender and stop the foreclosure.

All homeowners should understand the following terms when it comes to owning property, but especially so, when it comes to foreclosure or attempts to stop a foreclosure. The deed is the legal document that is given and held as security for the repayment of the loan that was taken to purchase the home. A lien is the legal claim that the lender has against the property for repayment of the loan. A deed in lieu refers to the presentation of the deed in place of the debt obligation.

If all else has failed and no other option exists to stop the foreclosure, the homeowner can offer a deed in lieu of foreclosure to the holder of the mortgage, the mortgagor or the mortgagor can request a short sale. The deed in lieu releases the homeowner from all financial obligations to the mortgagor in return for the homeowner signing over all rights to the home. Additionally, a deed in lieu allows the homeowner to avoid the status of a foreclosure even though he still loses his home.

This is an excellent strategy for future financial dealings. If the homeowner undergoes a foreclosure, this appears on his credit report for several years and works negatively against him. With a deed in lieu of foreclosure, the homeowner can avoid that stigma and all of the ramifications that go along with it.

If the home facing a foreclosure has decreased in value to the point that it is no longer worth the value of the loan, the mortgagor may consider a short sale. A short sale involves selling the property for less than the balance of the outstanding loan.

However, the lender or mortgagor will incur costs with a foreclosure, therefore, a short sale may be the best financial solution for this particular foreclosure. If the home cannot sell on the market for the amount due on the loan due to its depreciation or a decline in the housing market, then the short sale will at least provide a viable option to recoup the majority of the money due to the lender.

If you are facing a foreclosure and want to stop it, take the challenge and look for solutions to your problem. Attempt to refinance your loan. Ask for a loan modification and forbearance. As a last resort, offer a deed in lieu of foreclosure or for a short sale to avoid the stigma of a foreclosure on your credit background.

How to Save Your Credit and Avoid Foreclosure

How to Save Your Credit and Avoid Foreclosure

By Tye Winston

If you're in default and can't meet your house payments, and you're unable to sell your home to repay the mortgage, you may think foreclosure is the only option left.

It's not.

It may be possible to save your credit rating and your self-esteem by using a transaction many lenders actually prefer to foreclosing.

In the real estate and lending field, the transaction is called a “deed-in-lieu of foreclosure”. It's not for everyone, but its well worth exploring to see if it works for you.

Foreclosure is a legal proceeding that affects more than your home. Your credit rating will be damaged as a result. While having a foreclosure on your record is not the end of the world (people go on to rebuild their finances and buy again), it's in your best interest to keep that ding off your history if you can.

That's where the deed-in-lieu (DIL) comes in. In simple terms, the transaction is an agreement with your lender: you will give them the deed to your house in exchange for releasing you from the obligations of your mortgage.

Why would you want to deed your home to the mortgage company? If your circumstances aren't going to allow you to keep the home, the DIL will be far less damaging to your credit rating than a foreclosure.

The DIL can also free you of further financial obligation to the mortgage company, even if you owe more than the property is currently worth. The DIL also avoids the legal and mental stress of foreclosure. And you may receive better terms than you would with a foreclosure.

Why would your mortgage company want to accept a DIL? For them, the foreclosure process is expensive and lengthy, so in most instances the DIL will save them money, time and work.

What are the requirements for a DIL? You'll want to get the assistance of a Real Estate Attorney to help you. The points here are not legal advice, just information to get you started.

First, the DIL has to be completely voluntary – your lender cannot and will not suggest it. You need to raise the option with them, and the sooner, the better.

When you do, the mortgage company will look at several things to decide whether to reject or agree to a DIL. They want to be sure you've tried all other reasonable alternatives, and they'll have criteria you need to be aware of before speaking to them.

For one, you'll need to provide proof of income. If they believe you have the resources to make your payments, they won't agree to the DIL.

Investing in Real Estate

Investing in Real Estate

Real estate happens to be a commodity that is finite in its existence. What there is of it happens to be all there is of it. Investing in real estate adds diversification to your investment package. Additionally, it typically provides a lower risk over the long term as well as a higher rate of return. Individuals can decide to purchase real estate properties and turn them around for a profit.

They can also decide to rent the property out. If they decide to rent their purchase, then they need to be concerned with locating and renting to good tenants. Moreover, the rent must be enough to cover all costs and operating expenses associated with the property including the mortgage, taxes, homeowners insurance, renovation costs, and the cost of upkeep and repairs in order to turn a profit.

Real estate for sale is listed in public newspapers and online. Contacting the listing agent or any local real estate office is the best way to go about purchasing real estate. Some sellers may elect to use a lawyer rather than a realtor for the sale.

A certain risk element exists when investing in real estate, especially with a foreclosure. Foreclosures may have undisclosed problems that can add to the cost of your investment.

Additionally, you will deal with lots of tenants, good and bad, over the years, and some of these may end up costing you money in costly repairs or legal fees.

It is best to have a plan before you begin investing in real estate. Chart out what you intend to accomplish and include when and how. Investing in real estate full time allows you to be your own boss and to create financial freedom for yourself.

In fact, retirement plans can be used to purchase real estate. However, purchasing real estate in this manner does not allow you to deduct depreciation should it occur. It does, however, allow you to include the income and the appreciation of the real estate. Both of these remain usually tax free in your IRA until the time when you begin to withdraw your money.

Investing in real estate requires some research and a workable knowledge of both your retirement plan and the real estate investment. For example, if you purchase the real estate with both cash and borrowed money, only the portion allocated to cash is tax free. This is why an all cash purchase is the best and simplest way to go. Specifically, a special tax known as the UBIT tax, or unrelated business income tax, comes into play whenever there is a debt-financed income involved in retirement plans.

The following plans may be used to purchase real estate: Roth IRA, traditional IRS, or single individual 401 (k) plan. You must be able to transfer your money from your retirement plan, probably through your broker, to a plan that includes real estate investment.

A real estate investment trust, or REIT, invests in various forms of real estate or assets related to real estate. The real estate may include hotels, shopping centers, office buildings, and mortgages that have been secured with real estate.

An Equity REIT is the most common form. Its real estate investments are designed to make money for their investors through the collected rents. A mortgage REIT either invests in property secured by mortgages on real estate or loans money to developers and owners. A hybrid REIT is a combination of the two.

Investing in real estate can lead to a higher rate of return with a lower risk for a loss. Do some thorough research before investing in any real estate property. Remember that a certain risk element exists when investing in real estate and consider your options carefully.

Investing in Real Estate

Investing in Real Estate

By Susan M. Keenan ©2007

Real estate happens to be a commodity that is finite in its existence. What there is of it happens to be all there is of it. Investing in real estate adds diversification to your investment package. Additionally, it typically provides a lower risk over the long term as well as a higher rate of return. Individuals can decide to purchase real estate properties and turn them around for a profit.

They can also decide to rent the property out. If they decide to rent their purchase, then they need to be concerned with locating and renting to good tenants. Moreover, the rent must be enough to cover all costs and operating expenses associated with the property including the mortgage, taxes, homeowners insurance, renovation costs, and the cost of upkeep and repairs in order to turn a profit.

Real estate for sale is listed in public newspapers and online. Contacting the listing agent or any local real estate office is the best way to go about purchasing real estate. Some sellers may elect to use a lawyer rather than a realtor for the sale.

A certain risk element exists when investing in real estate, especially with a foreclosure. Foreclosures may have undisclosed problems that can add to the cost of your investment.

Additionally, you will deal with lots of tenants, good and bad, over the years, and some of these may end up costing you money in costly repairs or legal fees.

It is best to have a plan before you begin investing in real estate. Chart out what you intend to accomplish and include when and how. Investing in real estate full time allows you to be your own boss and to create financial freedom for yourself.

In fact, retirement plans can be used to purchase real estate. However, purchasing real estate in this manner does not allow you to deduct depreciation should it occur. It does, however, allow you to include the income and the appreciation of the real estate. Both of these remain usually tax free in your IRA until the time when you begin to withdraw your money.

Investing in real estate requires some research and a workable knowledge of both your retirement plan and the real estate investment. For example, if you purchase the real estate with both cash and borrowed money, only the portion allocated to cash is tax free. This is why an all cash purchase is the best and simplest way to go. Specifically, a special tax known as the UBIT tax, or unrelated business income tax, comes into play whenever there is a debt-financed income involved in retirement plans.

The following plans may be used to purchase real estate: Roth IRA, traditional IRS, or single individual 401 (k) plan. You must be able to transfer your money from your retirement plan, probably through your broker, to a plan that includes real estate investment.

A real estate investment trust, or REIT, invests in various forms of real estate or assets related to real estate. The real estate may include hotels, shopping centers, office buildings, and mortgages that have been secured with real estate.

An Equity REIT is the most common form. Its real estate investments are designed to make money for their investors through the collected rents. A mortgage REIT either invests in property secured by mortgages on real estate or loans money to developers and owners. A hybrid REIT is a combination of the two.

Investing in real estate can lead to a higher rate of return with a lower risk for a loss. Do some thorough research before investing in any real estate property. Remember that a certain risk element exists when investing in real estate and consider your options carefully.

The Downside to "For Sale by Owner"

The Downside to "For Sale by Owner"

While there are some attractive things about selling your own home without the aid of a Realtor, there are also some drawbacks. While a lot of people see the attractive savings in real estate commissions, they don’ t realize the little things that the Realtor does that help sell the property, find the right buyer, and even safeguard a sale from falling through.

For Sale By Owners, also called FSBOs, are willing to go to great lengths to sell their homes themselves. They often put in many hours for the sake of savings and independence. However, they often must put in these arduous efforts because they don’ t have the experience to sell their homes efficiently. Here are some of the hazards the dedicated FSBO may encounter during the sale process

The homes are on the market longer. For one thing, the standard MLS only allows only real estate agents access, so this limits the self-marketer to smaller MLS publications and newspaper/Internet ads. This lack of exposure often keeps the home on the market longer.

The homeowner covers marketing fees. While the cost of putting an ad in the paper doesn’t seem like much, over time it gets expensive. Add in the costs of color flyer's, a sign with brochure holder, Internet advertising space, and maybe even your own website, and it adds up fast.

Buyers or browsers? Often the FSBO gets a different sort of buyer those who only want to see the home and not necessarily buy. For some reason they don’t mind inconveniencing the FSBO with their purposeless intrusions. Sometimes they will even get people who just want new decorating ideas. A realtor will screen those out.

Prequalification. The FSBO also often does not pre-qualify buyers like a Realtor will. Prequalifying cuts down on intrusions for showings that may amount to nothing.

Buyers want to save money, too. If a buyer knows you are saving a commission, he or she may offer you lots less than you are asking. Although you can use this financial cushion for negotiating a final price for a truly interested buyer, you are wasting your time with buyers who think they are entitled to your entire commission savings.

These are only a few of the problems a homeowner can encounter when selling his or her own home. Before you launch yourself into this world, consider all your choices carefully, and listen to a listing presentation from your local Realtor.

What is a Real Estate Short Sale

The real estate market is quickly racing into a downward spiral. Many homeowners are being faced with higher interest rates, as they move further into their home loans. These interest rates are forcing more and more homes into foreclosure. With foreclosure comes the chance of a short sale. But, for the home buyer, what is a short sale, and how can they take advantage of it?

A short sale refers to the fact that a home is on the market for a price that is “short” of the entire loan value. This term can be deceiving, especially if the homeowner has taken out a second mortgage or refinanced the property. The price of the home will be set by the lender and not by the homeowner. The lender has the right to say no to an offer just because they want to. The lender is never required to accept any offer, even one that is exactly what the home is being advertised for. Home buyers will need to keep in mind that short sales are one of the hardest real estate deals to complete. Depending upon the lending institution, a homeowner that is pre-approved, has a loan commitment in hand and is offering the exact price advertised, may either close on the home in days or never get the deal done.

For homeowners who wish to try and take advantage of a short sale, there are a few things to keep on hand in order to make the process as smooth as possible.

The most important asset a home buyer can have when trying to purchase a short sale home is a great real estate agent, that is versed in short sales. The real estate agent will be able to guide you through the process of short sales and help with all needed paperwork and forms required by banks.

In order to take advantage of a short sale, the home buyer will need to be pre-approved for the loan amount. The bank can take or leave any offer you put on the table, they can even counter offer with a higher price. Having a pre-approval letter will ensure the bank you have the funding you are proposing, and increase the trust between the two parties.

The hardest asset is patience. A short sale may not be short at all. If the home is facing foreclosure, rest assured you will be able to continue the short sale process even after the foreclosure has occurred. Patience is the greatest commodity for home buyers trying to take advantage of a short sale.

Home buyers need also remember that short sales are not going to be the deal of the century. The lender will be offering the home at market value, most of the time. Homeowners will find the best information about the homes worth, by investigating comparable home sales in the area. If the bank is offering the home for 3-5% below comp home values, you can be sure this is the best deal you are going to get.

Short sale homes are not the easiest real estate endeavor to embark upon. When dealing directly with the lender, home buyers will need the trained guidance of a great real estate agent, a pre-approval letter and a lot of patience.

What is Title Insurance

Prior to closing on your new home, your real estate agent told you that they have ordered title insurance for you, and you will see a credit on the settlement statement for that expense, and that there might be a date-down fee tacked on, too. You remember seeing something in the contract about the seller providing you with title insurance, but since it was a boilerplate contract, you did not pay much attention.

Now is the time to pay attention.

Title insurance is your assurance that nobody else has a viable claim to ownership of your new home, or sometimes even worse, use of the property. You want to receive a “clean” title to the property, without encumbrances or unacceptable liens or easements.

Title insurance companies maintain detailed archives of records on properties in the areas in which they operate. Some companies operate on a national scale, while others are very localized and only serve one or two counties or parishes.

What they all have in common is that they do a detailed analysis of the records that have been recorded with the local county clerk, not only affecting the property, but the seller of the property, too. The title insurance company will issue a report on the condition of the title, along with a list of any exceptions. You must pay particular attention to any exceptions listed, and notify the seller immediately if any of them are unacceptable to you. You should review the report personally, and have your attorney review any questions you might have with you.

Say, for instance, the seller had the plumbing in the house repaired in the last four months, but “forgot” to pay the plumber when the bill arrived. Notice of an impending mechanic’s lien may have been filed with the county clerk, and now there is a “cloud” on the title, meaning the seller cannot give you a clean deed. In most cases, you as the buyer can demand, and receive, a credit at closing to pay off that lien.

Trickier clouds on a title involve easements. Easements give someone else the right to enter onto your property for a specific purpose. However, some of those easements may have been granted a century ago to a utility or oil-drilling company, giving them free access to any part of what was then an empty field. Today, there could be hundreds of homes sitting there – all subject to that same easement. Not many homeowners want to see an oil well suddenly sprout up in their front yard, but it could, and has, happened.

Some title companies will issue insurance for certain exceptions, based on what their underwriters perceive as the risk involved. This added cost may not be specified in the contract for sale, and an object for negotiation between the buyer and seller.

Getting a “date down” report is important, especially if there is a long delay from the time the original commitment for title insurance was received and the actual closing date. The title insurance company will usually require this report if the closing is going to occur more than a few days in the future. The “date down” report looks at the records from the date of the commitment to today, and notes any activity that might be problematic for you, the buyer.

If any problems with the title are found after you buy a home, and it was not listed as an exception, the title company will have to bear the expense of clearing that problem from the title to the property. Most lenders will require this form of insurance when you buy a home, to secure their lien (mortgaged interest) against the property.

Interest Rate Hikes and Refinancing Your Home Loan

Short term interest rates went up again in March, which was sobering news for homeowners with adjustable rate mortgages. Refinancing has also gotten a lot more expensive, but here are some tips to help you decide if refinancing is the best option for you.

1. Calculate the Impact: This year, about 10 percent of all residential mortgages will need to be re-priced, according to the Federal Reserve. To measure the impact on your mortgage, look at the promissory note from your mortgage lender. You’ll find out when your rate lock expires and how much the interest rate is allowed to go up.

In most cases, your interest rate can’t increase more than 2 percent points a year. However, sometimes that rate hike can be as high as 5 percent. If you had a $200,000 load with a 4.5 percent interest rate that is repriced at 6.5 percent, you will be paying about $300 more a month.

2. Weigh the Costs: Refinancing can take a lot of money and you should figure out if it’s worth the upfront costs. If you have to pay $3,000 in closing costs, you’re only saving $150 a month by refinancing and it would take about 2 years to make up the refinancing cost.

You need to also consider other fees such as the appraisal fees, and loan and origination fees. On top of those costs, you have to pay title insurance, which can be up to tens of thousands of dollars.

3. Find the Best Lender: If you already have a lender for your current mortgage, you might want to consider using them again because you have already established a history with them. You may even want to consider negotiating even more of a discount.

4. Don’t Opt for Interest Only: People who have interest only loans are going to feel the biggest pinch because many of these homeowners have not been paying down any principle. Once the rates are adjusted, they will have to pay back the principle that has been accruing plus a higher rate of interest.

If you are looking to refinancing, stay away from the payment option ARM. These are loans with a very low starting rate of 1.5 percent. The problem is that they adjust within one to six months.

5. The Good News: Some economists say the Federal Reserve may stop raising rates after another quarter point hike on May 10. If you don’t want to take your chances, you can take out a home equity loan because loans have a fixed rate.

To find out more about refinancing options, click here to get connected to a trusted mortgage broker in your area.