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Best Times to Buy

A Conventional wisdom says that you need to stay in a home a minimum of five years to ensure that you recoup your purchasing costs. But with some markets soaring, this advice doesn't always apply.

It's All About the Market

Market conditions play a huge part in any decision about when to buy. Housing market values have varied widely from region to region in recent years. While the Florida market has seen meteoric rises in home values, Ohio has seen its real estate prices go into negative territory in the last year.

Do not buy high and sell low - if your market is softening or has hit its peak and is heading south, you may want to wait on your purchase.

The magazine Smart Money has created a worksheet to compare the costs of renting vs. buying using market appreciation calculations to determine at what point you come out ahead. Plugging in the price, down payment, your income bracket, interest rate, and current market appreciation rates, the worksheet will break out what you will gain.

For example, say you were to buy a $400,000 house in Boulder, Colorado and you estimate the market will soften from the current 11% appreciation to about 9 percent annually. If you stayed in the house three years, you would recover $88,750 in equity at the end of that period; if you stayed five years, you'd realize $120,360.

It's All About You

The top three reasons people file for bankruptcy are change of job status, divorce, and unforeseen health expenses. If you face any of these challenges and don't have a financial cushion, this may negatively impact your ability to pay a mortgage. Big life events dictate your readiness to buy now or to wait for a little more stability.

Signs you should not buy right now:

• Will you be moving within the next five years?
• Will you be having kids soon?
• Will you be making a job change?
• Have you recently filed for bankruptcy or is your credit score below 630?

If you answered yes to any of these questions, or you are experiencing other life-changing events like illness, marriage, divorce, or breakup, you may want to wait.

Your Financial Future

Aside from life events contributing to your decision, getting your financial house in order before you begin your home search is key. Even with all the programs available for buyers with a low-or-no down payment, if your debts are growing steadily and you don't foresee an increase in your income, you are putting yourself in greater financial risk by taking on a mortgage.

With only a few exceptions, many loans for people who are still repairing their credit or recovering from bankruptcy carry higher rates than those available once your credit is in better shape. So the question comes down to this: Do you buy now, before prices appreciate higher than you can afford, but do so with an expensive loan? Or do you wait and repair your credit, then get a favorable loan, and pay more for your home?

That's the sort of analysis you need to go over with a financial counselor or mortgage broker before you start hitting open houses.

Ways to Cushion the Blow

On the other hand, if you are willing to buy a home that needs a bit of work and, over time, you can afford to get it done, your home could appreciate faster, strengthening your financial position. If you are willing to take on a roommate or renter, you can also soften the expense of a mortgage, which almost always costs more than rent. Buying a home is a risk, and it's worth asking yourself hard questions about what you're willing to do to protect yourself from getting in over your head.

If you answered "no" the life-change questions, and have the down payment or equity from your current home, you still need to look at interest rates and at how buying affects your taxes. You can't time the stock market, but you can time interest rate hikes, as they are a little easier to predict. If they are going up fast, you can jump in before they rise too far; if they are already high, you will have to calculate how refinancing in the future affects your budget.

What to Do First

If you are anxious to get moving, be patient. You have a few things to do first:

• Go to open houses - get the lay of the land
• Talk to a mortgage broker to get pre-approved
• Interview agents (You may want to find an agent at the same time as you look for a mortgage broker - a good agent can recommend reputable brokers and help you make sense of the terms of the loan)
• Review credit report and scores with mortgage broker to determine if any repairs are needed
• Use Zillow.com to find info on neighborhoods that interest you and then use the Home QandA feature to ask current homeowners

Abraham Martinez

martinezgrand@gmail.com

Understanding Points, Rates and Fees

Not only do you have to understand what type of mortgage you should choose, you have to understand the costs associated with your mortgage. All of these costs will be paid upon closing your mortgage.

Purchase Points

Purchase points, also known as a "buy-down" or "discount points," are an up-front fee paid to the lender at closing to buy-down or lower your interest rate over the life of the loan. Each point is equal to one percent of your total loan amount. If you have a $100,000 loan, one point would equal $1,000. The more points you buy, the lower your interest rate, but the more money you'll need at closing.

How do you decide whether you should buy points and if so, how many? Well, the decision should be based on how long you plan on living in your home and what you can afford to pay each month toward your mortgage. If you plan on living in your home for more than five years, it's probably a good idea to purchase points. The longer you live in your home, the more you can save on interest over the life of the loan.

Interest Rate

When you get a mortgage, you are charged an interest rate.this is the rate which the lender charges you for using their money to buy a home. It determines how much your monthly payments will be. Generally speaking, the higher the interest rate, the higher your monthly payment.

Mortgage interest rates change constantly.daily, even hourly. If you speak to a lender and are quoted a specific interest rate, that's not to say you'll necessarily get that rate when you close on your loan. Not unless you formally lock-in that rate with the lender.locking in an interest rate will guarantee you get your loan with a particular interest rate. Lenders will allow you to lock in for 15, 45 or 60 days. But the longer you lock in, the more expensive it will be, since it's more of a risk to lenders.

Fees

There are always fees associated with getting a mortgage, these fees cover the cost of processing and underwriting the loan. These fees can include charges for ensuring the title to the home is free and clear; paying for a land survey; or paying for a home appraisal which gives you the estimated value of the property (lenders require an appraisal to close on your mortgage).

Deciding which mortgage to get may depend on what each lender does because different lenders may charge different amounts. Some may charge lesser closing fees to lure you in, but may charge you a higher interest rate, which means you may pay more in the long run. But everyone has different needs.you may or may not be able to afford to pay more at closing and are willing to pay more over the long term.

Before it comes time to close, do your homework, make sure there are no hidden fees, and ask your lender lots of questions so that you understand all the costs involved with your mortgage.

*Please consult your tax advisor.

Abraham Martinez

Home Business Realty

martinezgrand@gmail.com

How Does Escrow Work?

If you've ever made an informal bet with a friend, you may have asked a third person to hold the money until the wager was resolved. When you take out a mortgage to buy a home, you're doing something similar by opening an escrow account.

How it works

When you put money in escrow it is held by a neutral third party (called an escrow agent) who works for both the lender and the borrower. The agent's role is to carry out the instructions agreed upon by both parties. The money is released when all the terms of the agreement are met. Escrow can be involved in anything from multimillion-dollar building projects to purchases made on online auction sites.

When it's used

When your mortgage closes, your lender will usually require you to open an escrow account to cover property taxes and homeowner's insurance. You'll make an initial deposit, followed by payments to the account every month. (Usually these are added to your regular mortgage payment.) The escrow agent will then release these funds as your taxes and insurance premiums come due.

Its purpose

The idea is to protect the lender by ensuring that you pay your taxes and insurance on time. If you default on your property tax, for example, your municipality can put a lien on the house, which would make it difficult to sell. Or if your house burns down and you've neglected to pay the insurance, the lender would be left with no collateral.

How you benefit

Escrow can benefit borrowers by helping them spread insurance and tax expenses evenly over 12 payments. For example, assume your yearly property taxes are two payments of $1,000 each, and your insurance is $400 annually. If you paid these directly, it would mean three large payments a year; your escrow costs, however, would be a manageable $200 a month.

Escrow payments

Your escrow account will have a built-in cushion -- if you miss a payment, the lender must still be able to pay your accounts on time. However, federal law prohibits lenders from requiring more than two months. expenses in escrow. And because your tax and insurance costs will change slightly from year to year, the lender will review and adjust your escrow payments annually.

When escrow may be waived

In most states, the money you place in an escrow account earns no interest for you. For that reason, many borrowers prefer to pay their taxes and insurance directly. Lenders may agree to this if your down payment is more than 20 percent, although some will raise your interest rate slightly to compensate. Once you agree to putting funds into an escrow account, however, it is difficult to cancel it, so make sure you fully understand the arrangement before your mortgage closes.

Abraham Martinez    

Home Business Realty

martinezgrand@gmail.com

What is Short Sale?

A Short Sale is a situation in which the lender will agree to accept less than what is owed on the original loan as the sale price, which enables the homeowner to sell their property quickly. In most cases, a short sale is accepted due to a financial hardship with the homeowner, and the home has negative equity. 

Abraham Martinez

martinezgrand@gmail.com

To My Way Of Thinking

When all is said and done, there is a bit of truth in everything. There are negatives: qualifying for a loan is more difficult (thank goodness) than in the 4 years past; there are markets that have suffered 30+% declines in sales, inventories are way up; and the sub-prime tsunami is still rocking the industry and will continue to do so for many months to come.

On the positive side there is one irrefutable fact: we are in a bullet-proof business. There will always be people who have to sell and buy. When interest rates hit 19% back in ‘80-81, sales occurred. Were there fewer buyers who could qualify? Of course there were. Did sellers have to confront the reality of the market to secure a sale? Indeed! However, when you put a motivated seller and buyer together… ca-ching!

There is nothing like real urgency and motivation to spur people into accepting the realities of the environment in which business is conducted. Real estate is, after all, just that… a business that depends upon the consumer’s willingness to absorb the product.

Abraham Martinez

info@martinezglobalonline.com

Leverage Real Estate Using Options

By Derek Pierce

What if I told you there was a way to profit from deals with no liability, no risk of money, no credit required, and no obligation on your part?

Sounds good right?

Well, it`s not totally true...

You could risk a whopping $10 bucks.
Yep, that`s all it takes to get into a profitable real estate deal and you`re not asked once about your finances, about your credit, nope, none of that...

The method is using Options.

Yes, Options are a powerful way to leverage real estate to get paid mega bucks without any financial obligations on your part.
Options simply give you the right to purchase a property at a set price for a certain amount of time. The Option to buy does NOT obligate you to buy, it simply gives you the option.
Now, on the flip side, if you`re the seller giving the Option, you are obligated to sell the property to the buyer if they exercise their Option within the allocated time frame.
Now, imagine for a moment, the potential by simply getting Options on properties in your own area, then reselling them for enormous profits and the only time you go to the bank is to deposit or cash your check...

Why would someone, give me the option to buy their house?
Well, until you`ve been a motivated seller yourself, it`s hard to explain. When people have some underlying situation, they need you and they need your help.
It`s all about how you position yourself. If you go into the deal thinking, "Boy, if I could just get this option" then you`re going to be eaten alive.

You`ve got to be confident and realize the seller needs you more than you need them. If the seller is in any way motivated, they`ll want you to do everything you can to get the house sold so they can move on with their lives.
Do options work for everyone?
Absolutely not.

You`re looking for the handful of motivated sellers it will work with and the others may need some other creative method to getting rid of their house.
What`s great about options is you could have as many deals in the works with literally no liability and minimum money on your part, all while you crank up your marketing to find buyers for your deals. This method works regardless of area, regardless of appreciation, and regardless of the price of the property if you`re getting leads from sellers that are motivated.

Now, why I did I say you could risk $10? Well, $10 is all you need to give your seller to make the deal legally binding. It`s called legal consideration and without it the seller could later claim they didn`t get any consideration for the option. So, whenever you get an option to any property, be sure to give the seller $10 to seal the deal.

Abraham Martinez

info@martinezglobalonline.com

The Market Commands

The swings of the economy influence in the real estate market. Factors like access on the credit, monetary stability, growth of the economy, generate conditions propitious to conduct real estate operations. A buying market characterized by more buyers than sellers, distinguishes by prices in rise and sales in short term. On the contrary, a selling market, in where there are more sellers than buyers, is characterized by prices in loss and longer terms to conduct the operations. Also it is necessary to consider seasonal factors, that influence in certain type of operations, as in the case of the houses of "weekend", which they find the greater amount of interested in the stations of spring and summer. To buy Real Estate, means an investment of great importance, is for that reason that we not only suggested to think to him about the comforts that the property offers, but to have in special consideration the valuation of the property in the course of the time.

Abraham Martinez

www.MartinezGlobalOnline.com

What’s in a Number?

It seems everyone – homeowners, buyers, sellers, and investors alike – have been wondering what’shappening to home prices. Are they falling, rising, or stabilizing? But consumers may be confused over sometimes contradictory reports. For example, why does NAR’s monthly median home price index tend to be higher than recent prices reported in the Case-Shiller index? The details are in the data.

Case-Shiller tracks 20 metro areas; many of these are in California and Florida. It also gives greater weight to more expensive homes – a price decrease in a $1 million home is 10 times greater than a decrease in a $100,000 home. NAR metro price series tracks 150 metro areas, and all home values are treated equally.

Where Have All the Buyers Gone?

Household formation just isn’t what it used to be. Over the past two years, net job gains have increased by 4.3 million, according to both company payroll data and household survey data, and U.S. aggregate personal income has risen by $1.4 trillion. Such gains should have translated into about 2 million additional homeowners, yet only 600,000 new households were created during that time. Over the same period, housing affordability has actually improved. Still, many people have evidently doubled-up with additional roommates or have moved back with parents and family members. Why? NAR’s economists believe that buyers are hoping to time the market, waiting for lower home prices and interest rates. Foreclosure worries are also having an effect.

Construction Spending Fell by 1.7% in January, More Than Expected

Spending on construction in the United States fell 1.7% in January, according to published today by the Department of Commerce. Economists consulted by MarketWatch were expecting a fall of 0.7%. In year terms, spending on construction fell by 3.3% this month. Moreover, it has revised downwards the figure of the previous month, from a fall of 1.1%, a fall of 1.3% in December.