Protect Your Credit by Freezing It

February 3, 2011 By

In today’s world where you are able to purchase everything from all season radial tires to downloading your favorite groups latest mp3 album, we have grown accustomed to making purchases online without a moment’s thought. And over the last few years this practice of making online purchases has opened up more and more people to identity theft.

Identity theft occurs when someone is able to access another’s credit information, and uses this information to make unauthorized charges using that other person’s credit, without their prior knowledge. This is a crime whose statistics are staggering to say the least as it was reported that more than 10 million Americans were the victims of identity theft between 2008 through 2009. When someone’s identity has been stolen there are many consequences that become attached to this crime which can adversely affect the victim. One way of fighting identity theft is through the process of freezing your credit.

When you are the person who is the victim of identity theft, and you have decided that freezing your credit is your only avenue for recourse, there are a few things that have to happen. First you need to understand what freezing one’s credit actually means. The process of a credit freeze, also known as a “security freeze” involves a person working with all of the recognized credit reporting agencies and having their credit information locked or frozen so that if someone were to try to use your credit, it cannot happen if the action has to be accomplished by it being reported to one of the credit reporting agencies. Once you have decided to go with this course of action, either a password or a pin number will be established and this is for the purpose of your being able to either temporarily lift the freeze or permanently have it removed.

The problem is that this solution can become a double edged sword. On the one hand you have essentially stopped anyone including a credit card company from being able to take a look at your credit history and information. This makes it difficult for a credit card company to issue a credit card in your name, so someone attempting to fraudulently have a credit card issued in your name will not be able to do this, but it also means that while the freeze is active you will not be able to get a credit card either. And for someone who is trying to re-establish their credit history, this makes that a pretty tough thing to do. And another issue arises when your address and or your name needs to be updated. These two things usually happen automatically when either occurs, but with your credit information frozen, you will have to do some extra leg work and do it manually. All three of the reporting credit services, Experian, Equifax and Trans Union have been on board with the practice of credit freezes for several years now. Each of these credit reporting agencies have different fees associated with this service which usually range from $5 to $10 dollars but in a few states can run as high as $20 dollars.

The other thing that freezing your credit does not accomplish is limiting someone from attempting to commit identity fraud by using your already established accounts including any non-credit checking accounts, savings accounts and any established credit card accounts, but if you suspect that someone has or is using your identity and committing identity theft, it is still a prudent move on your part to contact the above mentioned credit reporting agencies and have them apply a credit freeze for you.

As you consider this information from the standpoint of purchasing a home, be aware that lending practices have become more stringent in the past several years, making it more difficult for buyers to secure mortgage financing on a home purchase, making it that much more important to maintain, and even grow, your credit score.

Filed Under: Lending Markets

Getting closer to an era of owner financing?

February 1, 2011 By

With the fallout of the U.S. recession that began at the end of 2007, credit standards have tightened making it more difficult for many home buyers to secure a home loan.  In some cases, borrowers have the income to cover their note and cash for a sizable down payment, but are still unable to secure a loan through conventional means for various reasons.  In these circumstances home buyers must often resort to high interest rate loans, come up with large down payments exceeding 20%, or forgo purchasing a home altogether.   Buyers often tend to give up at this point.  However, there is an additional option that is available to buyers given a willing seller.  This option is owner financing.

In the early 80’s interest rates reached a peak of 18%, making homes in their target price range unaffordable for many buyers due to the high interest payments, which required creative financing options to purchase a home.  Many sellers resorted to offering owner financing at lower interest rates in order to get their home sold.  In this environment owner financing often made sense to both sellers and buyers and as a result, owner financing was a common occurrence.

In today’s market the playing field has changed.  Interest rates are at low levels that have not been seen in decades, housing inventory is sky high, and home values are low.  On the surface this seems like the perfect time to buy a home.  However, the number of qualified buyers is down significantly due to the tightening of credit standards and the overall loss of people’s net worth due to the global economic meltdown.   As a result, many of those who need to sell their home are not able to secure a buyer and many of those who want to buy a home are not able to secure financing.

Although circumstances have changed since the early 80’s, the need of a buyer and seller to come up with creative financing options exists. The combination of continued tight credit standards, low home values, high inventory, and a struggling economy will only exacerbate the need for creative financing in the coming years.

Austin Texas REALTOR® Brian Talley of Regent Property Group LLC was recently faced with a financing challenge while working with a client he was helping find and purchase a home.  Brian explained, “My buyer was a doctor with 20% cash down and income to cover a note for a house they targeted to buy.  They were preapproved to purchase a home but after securing a purchase contract for a home they loved, the bank decided the buyer was too high of a credit risk and rejected the file.  Since the buyer had 20% cash down, we suggested that the buyer and seller consider owner financing.  At first the seller was hesitant to take this path, but they needed to sell so they entertained the option.  The buyer really liked the house and was willing to consider owner financing.  I connected both of them with a local third party Austin attorney and title agent that specializes in owner financing.  He explained the process and risks to the buyer and seller, and both decided that it made sense.”

Brian Talley went on to say, “The buyer offered a slightly higher price than the list price and a 20% down payment for a 2 year balloon loan.  The sellers would net a large amount of cash after paying closing costs to help them find alternative housing in the short term.  Once the buyer refinanced the home within the next two years the seller would receive the balance of their equity from the sale.  They both decided to proceed with the sale via owner financing.  Not only did the seller get the home sold only 7 days after the buyers initial conventional loan was rejected, the seller received a higher price for the house, paid less in closing costs, and got the home sold after sitting on the market for months.  Regarding the seller risks, if the buyer were to default on the loan then the seller would get the house back via foreclosure and the seller would get to keep the 20% down payment on the home.  The seller could then put the house back on the market with the chance of making even more money on another sale.  Meanwhile, the buyer was able to purchase the house they wanted at a fair price and can now take the time to sell an asset to come up with the cash to refinance.  It was a win-win.”

While not all circumstances are right for owner financing, it is a viable option that can be considered in today’s market.  With the prospect of increasing interest rates and a struggling economy in the future, the need for owner financing should only increase.  Unfortunately, many buyers and sellers are not aware of this option or may not understand it.  Simply understanding this option is a good start.  The first step is to connect buyers and sellers with a qualified professional and/or attorney that has experience handling owner financing transactions.  Once the process and risks are understood, buyers and sellers will be prepared to exercise this option if the right circumstances present themselves.

About the Author: Austin Luxury REALTOR® Brian Talley of Regent Property Group LLC, an expert in Lake Austin homes for sale and Austin luxury homes for sale.

Filed Under: Lending Markets

Loan Modifications: An Alternative to Foreclosure

January 28, 2011 By

In March 2009, the federal government introduced the Home Affordable Modification Program (HAMP), which assists homeowners by providing incentives to lenders which are willing to modify the terms of an existing primary or secondary mortgage and allow for lower monthly payments.

Qualifying homeowners whose mortgage lenders agree to participate in the HAMP program can benefit from lower monthly payments that result from a renegotiated lower interest rate as well as a 40 year repayment period.

Eligibility is limited to borrowers who are facing foreclosure on their primary residence, which was financed on or before January 1, 2009 and which has an unpaid principal balance of $729,750. The goal of the modification is to ensure that monthly mortgage payments do not exceed 31% of the borrower’s monthly income, so that any or all of the following steps may be considered when modifying the terms of the loan:

  • Reduction of the interest rate to as little as 2%
  • Extension of the loan term to 40 years
  • Reducing the amount of the principal that must be repaid per month by deferring part of the principal repayment until the loan is paid off – in such cases, interest on the deferred part of the principal can be waived.

Once a homeowner qualifies and the monthly payments are modified, a trial period of three to four months is necessary to ensure that the new monthly payments are indeed kept current. After the successful conclusion of the trial period, the mortgage is permanently modified, and the new monthly payments and terms remain in force until the loan is paid off.

It should be noted that there is no fee to participate in this program, and that the Department of Housing and Urban Development (HUD) provides free loan counseling as a part of the HAMP program, and paying for any type of HAMP related consultation or advice is strongly discouraged. However, the final determination of whether or not a borrower is able to participate rests with the lender, which determines eligibility according to federally issued guidelines and formulas.

Lenders are granted incentives for each HAMP modification that they approve; however, they are under no obligation to approve any application and they do so only in cases where it is clear that the incentives make it worthwhile for them not to proceed with foreclosure. The decision of whether or not to approve a HAMP application takes into account not only the ability of the borrower to make the lowered payments on a regular basis, but also the lender’s own interests concerning the property.

In addition to lender incentives for participating in the program, a lender receives additional incentives for the first three years so long as the borrower makes timely monthly payments. The borrower also receives the same incentives of one thousand dollars per year in monthly installments for every mortgage payment made on time during a given year. Even if the borrower has been late on one or more payments, the incentive payments are made for the months in which the payments were made on time so long as the loan remains in good standing.

Separate programs for secondary mortgages, as well as specific programs for borrowers who become delinquent in their mortgage payments as a result of unemployment, are also available under the HAMP program. While the criteria for qualification are very strictly applied, and the lowered payments may still be too high for some borrowers, the HAMP program offers a viable method of staving off foreclosure for borrowers who are able to qualify and to maintain timely payments under this innovative federally guaranteed mortgage relief program.

Filed Under: Mortgage Information

Is it Time to Refinance?

January 24, 2011 By

The question of when to refinance or even if to refinance has plagued homeowners for years. Millions of people around the country have to take out mortgages on their homes because they are not able to come up with the entire purchase amount for the home that they are buying. A mortgage is a loan, but it’s oftentimes viewed as “good debt” because the loan is on a piece of property that will potentially increase in value over time. For this reason, it is recommended to have a mortgage to help build your financial stability and to establish your credit. Once you have purchased your home and closed on your mortgage you may begin to think about refinancing your home to get a better interest rate. There are a few key points that you should consider when evaluating whether it is the right time to refinance or whether you should wait.

The best time to refinance your home is when you can refinance your mortgage to take advantage of a lower interest rate that will lower your monthly payments. To determine whether it’s a good time to refinance you will need to do a simple calculation to see how long it will take to recoup the expenses that it will cost you to refinance.

Let’s take a very easy example to see if a person would be better served to refinance their mortgage or not. Our example is a mortgage on a home for $100,000 at 6.00% interest. This person has a mortgage for a term of 30 years. The monthly payment for this mortgage would be $600. For our example, let us say that the person has been living in their home for 5 years, so they have 25 years left on their loan, and they are able to qualify for a new lower interest rate of 4.5% if they refinance their mortgage and move it to a new loan company. The biggest question that this person will need to find out is how much it will cost them to refinance. Just like when this person closed on their original loan there are a lot of fees that must be paid to complete a refinance. There might be origination fees, points, appraisal fees, attorney fees, title insurance, or inspections. All of these fees could add up to thousands of dollars. Let’s pretend that this person’s fees would total $1500.

Our next step is to run the numbers. What we find is that when this person does a refinance their monthly payment lowers by about $133. With this lower monthly payment, this person in our example is able to recoup their costs for the refinance in exactly 12 months. If this person intends to stay in their home for longer than 12 months, they will save money by going through the refinance process. Additionally, if this person stays in their home for the remaining life of their loan, they will save over $12,000 in interest because of the lower interest rate.

Rates are at historic lows right now so it would behoove you to run this exact scenario for the current state of your mortgage if you have one to see what rate you might qualify for, and then to see how long it will take you to recoup the cost that you will pay for your refinance. If you plan to stay in your home longer than it would take you to recoup the cost of the refinance, then it is generally a wise decision to go through with the refinance. These steps will help you make the best decision for your situation!

Filed Under: Mortgage Information

Financial District Broadluxe Open House

January 22, 2011 By

There’s currently more than 189 open houses scheduled for Sunday, January 23, 2011 as Bostonians plan to brave the winter elements to preview some of the latest properties to hit the Boston real estate market.  One open house worth checking out on Sunday is a studio loft-style condo at 99-105 Broad Street in Boston’s Financial District.

Broadluxe Financial District Studio

If you’re searching for a first-time homebuyer opportunity, a turnkey pied-à-terre, or a downtown Boston investment property, unit 5F at the 44-unit Broadluxe condominium development should be on your list to see. The approximate 539 square foot studio condo, which features exposed brick and beam, is listed for $309,900.  Broadluxe is a concierge-served building with an excellent downtown location, and units feature extra deeded storage in the basement of the building. Unit 5F will be held open on Sunday, January 23, 2011 from 11:00 AM to 1:00 PM.

Broadluxe Financial District Condos

Broadluxe Loft 5F

Filed Under: Boston Open Houses

Vacation Rentals for the Savvy Investor

January 20, 2011 By

Investors sometimes forget about other options for rental properties.  Most people buy an investment property to rent out yearly. If an investor chooses a home or condominium wisely and manages it as a vacation rental, the return on their investment can far outweigh a typical yearly rental property.  Here are some things to consider when pursuing a vacation rental.

Location – You must first decide on the location and if the city ordinances and condominium or housing associations allow vacation rentals.  One of the most important decisions you will make is the location.  The location should optimally be a resort or vacation destination where you rent the property out year round.  Winter does not always mean you wouldn’t be able to rent it out.  There are several ski resort destinations in the winter that are also golf destinations in the summer.  You want your property to be busy all year, not just in a specific season. Although sometimes you might be able to make enough money during the season that you would be able to slide through the off-season.  I would highly advise you to visit the location you decide in the winter and summer before making a purchase. Since the owner usually wants to reserve the home for their own use a few times a year, it’s important that the homeowner enjoy the area as well. If you’re concerned that you want a high return on your investment, you should look at vacation rental web sites and look at other owner’s property calendars and rates.  Find out if they’re busy or not. You should do all the research up front before you decide if the location is right for a vacation rental and you.

Amenities – After you decide on the location, what should you look for in a vacation rental property? Think of what you would like if you rented out a property with your family on one of your own vacations.  In the warmer regions, a swimming pool is a must and in the winter months a hot tub would be best especially for the smaller homes or condos where the property only sleeps 2-4 people.  If you were vacationing and wanted to go snow skiing, think how nice it would be to come back to your rental and jump into a bubbling hot tub. Likewise, if you were vacationing in a warmer climate you would like a pool to cool off during the warmest months. It would be best if you had both! If you don’t have a swimming pool or hot tub, it doesn’t mean that the property won’t rent out, it just means it might not rent out as much, or at a comparable rent to other nearby properties, since these types of well equipped rental properties go first.  For larger rentals that sleep 6 people and more, not only pools and hot tubs but game rooms with pool tables and video games are very nice. Sometimes during the winter the weather is not desirable to even go out in and if the property has some of these amenities, the guest wouldn’t mind spending the day at the rental.  Upgrade the TVs to flat panels and put TVs in the bedrooms too or at least the master bedroom.  Make sure the beds are large, king size beds are the best. Don’t think of this as a regular rental where you put the minimal amount into it.  The guests are paying as much per night as a hotel or resort most of the time, so you have to make sure they want to come back and the amount they are paying reflects what they’re getting.

Advertising – There are several websites out there advertising vacation rentals, but as always, you get what you pay for.  When anybody looks up anything on one of the search engines, the larger more popular websites come up on page 1.  Those are the ones you want to advertise on or get your management company to advertise on.  Type your city name followed by “Vacation Rental” into Google and see what websites come up on page 1 or 2. Your local management company nor your personal website will more than likely not come up on page 1 or 2.  This is very important that you research where your management company (if you decide to use one) advertises since most will not spend much money to advertise. Someone in Europe will never see that your property is even up for rent if you don’t advertise on the major sites. They will never see your local management company that has their own local website with your property on there. It’s great to create your own website for the property to include your availability calendar, rates, additional pictures and more information, but it should only be as a link from the major vacation rental websites.  I would suggest a website that covers the United States and Canada and one or two additional websites that cover European and Latin American countries including the UK, France, Germany, Spain, etc….Before you signup on any website, logon to their site and see what vacation rentals are being advertised in your city or state. If there are just a few, then the website is probably not worth advertising on.  The most expensive ones are the ones that are worth it and you’re probably going to be spending anywhere from $600-$1,000 per year on the advertising costs depending on the number of countries you advertise in. You should cover at least some European countries and the United States and Canada.

Contracts and Charges – Contracts are very important.  Each of the major websites have contract examples for you to review.  Start with one of them and add your own information according to your location.  If you have an attorney, it would be a good idea for them to review it.  You can put almost anything in a contract including that they have to vacate the property if they disturb the neighbors within a number of hours, no parties (if that is your wish), pet policy, smoking policy, weather issues, cancelation policy, security deposit returns, vacation insurance suggestions.  The contract has to cover more than just the amount of money and dates.  Most vacation rental contracts are from 3-5 pages long.  Security deposits are a must and the same amount should be charged for anybody whether they stay for 2 nights or a month.  Don’t make it too expensive that would scare people away.  Look at the other rentals in the area and see what the norm is in your area for the size of the home and its level of furnishings. Security deposits can be used for not only damages to the property, but policy violations including not picking up after their dog, smoking in the home, etc.

Management –  You can manage the vacation rental yourself if you’re one that answers emails and voicemail quickly.  Remember when someone searches for a vacation rental, they’re excited about going to the location and are sending out numerous requests for quotes for their stay at a number of properties.  If you or your management company decide to answer their email days later, most likely they have already chosen another property.  It’s very important that you answer email from the renter the same day, and it’s best within hours, with a quote of total costs including all security deposits and cleaning fees. No hidden fees. As part of vacation rental management, the owner or management company must make sure that the property is extremely clean and sanitized inside and out.  Pay attention to detail, cleaning windows, baseboards and ceiling fans at least on a rotational basis.  If there are hot tubs and/or pools, these must be clean as well with the water being changed in the hot tub often, most of the time after each guest.  If you’re going to manage it yourself, check up on your cleaning person and also pay them more since you must insist on very detailed cleanings.  The cleaning person must also restock all the paper products, soaps,.. etc.. and a number of loads of laundry so they’re doing more than a regular cleaning person does that might be cleaning your home weekly.  Pay them well and they will want to do the extra detailed cleaning. Most all vacation rentals charge a cleaning fee on top of the rental fees so give that to them, don’t try and make money on the cleaning fees.  Calendars should also be managed and kept up-to-date online so guests can see them.  This probably means management of more than one calendar.  Remember if you’re advertising on a few of the major vacation rental websites, they have calendars on their sites and if you build your own website, then link to one of theirs so you minimize the number of calendars you keep up to date.

Vacation rentals can be very profitable and a great alternative for real estate investors. This opens up a whole new market for realtors once they understand the level of investor they have and if they could buy and operate a successful vacation rental.

About the Author: Eric Miller is a broker associate /owner with Keller Williams Realty in Fort Lauderdale with over 10 years of experience. Eric Miller and Associates is an award winning team of Ft. Lauderdale realtors and can be found online at FortLauderdaleGroup.com, where you can view every Fort Lauderdale condominium listed for sale.

Filed Under: Real Estate Investing

Financial District Broadluxe Studio Loft Condo Now Available

January 19, 2011 By

Central location and convenience are the story behind the latest listing to hit Boston’s Financial District.  A studio, unit 5F, at the loft-style Broadluxe condominium development hit the market earlier this week.  Unit 5F is essentially the second true resale in the building since the auction in 2008 and the subsequent sellout of the remaining units.

Unit 5F at Broadluxe, a downtown Boston studio loft-style condo boasts approximately 539 square feet and is being offered at $309,900.  The exposed brick and beams, convenient floorplan (554 KB PDF), and extra deeded storage in the basement of the building presents a nice package to those looking for city center living.

Downtown city living loft-style exposed brick and beam studio unit in an elevator served concierge building. In the heart of the Financial District, you’re moments from the Waterfront, all downtown amenities, and the newly completed Greenway. Gas cooking, granite counters, stainless steel appliances, extra deeded storage. In unit W/D hookups. For pure turnkey move in, furnishings negotiable.

An open house will take place at Broadluxe unit 5F this weekend, Sunday, January 23, 2011 from 11:00 AM to 1:00 PM. Moments from the Rose Kennedy Greenway and the Waterfront, Broadluxe’s Financial District location has proven to be a coveted spot in downtown Boston.  For more information, use the Contact Us link tab at the top of this page.

Broadluxe Financial District Condos

Broadluxe Loft 5F

Filed Under: Financial District Condos Tagged With: , ,

Boston Property Taxes Continue Rise

January 15, 2011 By

Boston property taxes are continuing to rise, from last year’s $11.88 to now $12.79 per $1,000 of assessed property value.

With assessed home values remaining relatively stable in many Boston neighborhoods and an approximate 8% increase in the tax rate, many Bostonians will face larger property tax bills during fiscal year 2011.

Relief is available, however, as the residential exemption will continue to be available to residents who maintain their Boston home as a primary residence. The fiscal year 2011 residential exemption subtracts $124,695 from a property’s assessed value, saving qualified homeowners approximately $1,595 on their tax bill.

For an example of how to calculate taxes for your condo, as well as a historical look at tax rates in Boston, visit our newly updated Boston property taxes article.

Filed Under: Boston Condos Tagged With:

Put Your Personal Items Away

January 15, 2011 By

The two things that most sellers want is top dollar for their property and a quick sale. Careful planning on what to do with your home when you put it up for sale will lower the number of days on market. One very important step is to put all your personal items away including family pictures. Try and disconnect yourself from the home or condo and realize this property will not be yours for very much longer. Buyers want to imagine their own items and pictures in the home, making it feel like a home to them. You don’t want buyers to focus on who lives in the home or condo now, but what will it be like for them to live there in the near future. Putting your personal items away also helps the home appear larger since there is less clutter.

All counter tops and dining room tables need to be kept clear. Think of a model home you walk into, you don’t see any clutter or personal items. Everything is clean and clear of all newspapers, magazines, knickknacks and food items. No dirty dishes in the sink. A cluttered home makes the buyer feel uncomfortable and will potentially push them out of the showing quickly. It also sends a message to the buyer that you may not be taking care of the rest of the home if you can’t keep it clean – what else is wrong with the home?

As part of de-cluttering, don’t forget the closets and kitchen cabinets. Buyer’s love to open up closets.  Make sure shoes are nice and neat and boxes are not stuffed to the ceiling – nothing makes a closet look smaller than boxes from floor to ceiling. Kitchen cabinets should be nice and neat as well, rearrange and straighten food items, dishes and glassware. Think of how a buyer would feel coming into a sparkling clean and neat home. They want to live there!

About the Author: Eric Miller is a broker associate /owner with Keller Williams Realty in Fort Lauderdale with over 10 years of experience. Eric Miller and Associates is an award winning team of Ft. Lauderdale realtors and can be found online at FortLauderdaleGroup.com, where you can view every Fort Lauderdale condominium listed for sale.

Filed Under: Seller Advice

Real Estate Goal Setting

January 12, 2011 By

Create and Achieve Your Real Estate Goals!

A new year presents an ideal opportunity for reflection and goal setting. The purchase or sale of a new home may also be your goal this year. Maybe your goal includes an improvement to your health routine. Whether the goal is large or small, creating it can create change in your life. Any change can be challenging, but a new year provides an impetus to create a fresh start.

Maybe your goal setting revolves around real estate, launching a home-based business or finishing a home remodeling project. Regardless, a few simple steps can guide you to making it a reality and bring you closer to realizing your dream. Achieving success at each of the steps requires that you acknowledge each step and take pride in your progress, as well. Enlist someone to act as your Goal Partner and keep them involved as you work through each of the steps.

Step 1: Set Your Goal

Write down the details of your dream. The goal that you’d love to achieve but feel is beyond your reach. Use a pen and paper and find a peaceful place where you can brainstorm freely. From these notes, create your list and start to jot down an action plan. Put your list away for three to seven days and then re-evaluate what you’ve written. Share your goal with your Goal Partner.

Step 2: Discover Any Potential Stumbling Blocks & What You Need To Succeed

Listing the potential problems and issues that may interfere with the completion of your goals can help diminish them. Their significance will lessen as you quantify them.

List the key products, people, educational steps, and processes that can help you reach your goals. Having a tangible list brings your knowledge base much closer. You can even include contact information or specific statistics that may benefit you in reaching your goal.

Step 3: Set Mini-Steps In Writing & Define An End Date

Break each goal into a series of small goals that will direct you to your dream goal. Set an end date for each goal to be achieved. Make it far enough away to give time for it to be possible, but close enough to make it relevant. Write the date next to each goal on your final list, culminating with your dream goal and subsequent date.

Step 4: Review Your Goal Often and Update Your Goal Partner Regularly

Add reminders to your email account or calendaring program. Determine how often you need to be held accountable (weekly, monthly, quarterly) and check in with your Goal Partner on a regular basis.

Step 5: Enjoy Your Success

Celebrate your small success and your large ones, together!

About the author: Real Estate Journalist Jennifer M. Miller writes on housing, home organization, and finances. 

Filed Under: USA Real Estate
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