Italian Real Estate

Reverse Mortgage

Posted on | October 3, 2011 | No Comments

A reverse mortgage is a great way for seniors to get some cash inflow to supplement their retirement funds. Whether it is to help with medical expenses or to simply get the most out of your retirement. However getting the mortgage can take some doing as there are some things you may want to consider when looking into getting one.

Reverse Mortgage Screening Questions

  1. Ask them questions. When you approach the bank to get this type of mortgage, you want to make sure you know everything there is to know about it. Make sure you ask questions and understand everything fully so that you do not end up making any mistakes down the road.
  2. Wait until you are older. The older you are, the more money you can get. So if you do not need this type of mortgage then you may want to wait a while so that you can get the most out of it.
  3. How to get the money. In this type of mortgage there are several means of actually getting the money. You can get it in the form of monthly payments, or one lump sum or even a line of credit. You need to decide just which method you want to use when you go in to get your reverse mortgage.
  4. Know your limitations. Even with this type of mortgage you still need to pay property taxes and maintain your home. If you do not fulfill these requirements the bank may collect on what you owe. So make sure you know what restrictions there are and ensure you abide by them.
  5. Be cautious of scams. Scam artists love this type of thing as they find it easier to target seniors. They will often offer to help you find the mortgage you are looking for as long as you pay them a fee. It is best to avoid these types and only go with verified and approved financial consultants to help you.
  6. Consider the costs. These types of mortgages can be rather pricey so make sure you look into just how much the bank expects you to pay. You can choose to pay all of it, or just some of it, in cash or add it to the loan amount.
  7. Make sure you will still qualify for social security programs. In some cases if you take out a reverse mortgage you may no longer qualify for various programs such as medicade. You need to be aware of this possibility and make sure to check whether or not this will effect you. If it does effect you then you may want to look into a mortgage that does not disqualify you from such social security programs.

A reverse mortgage is a great way to get some cash flow during your retirement but there is a lot to consider when trying to get one. Knowledge is your friend and it is best to educate yourself so that you get the best deal out there and so that you know all the risks and restrictions involved.

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Financial Advice On Mortgage

Posted on | June 26, 2011 | No Comments

If you have a mortgage and have been wondering how your house can work for you a little better then you may want to start some research into financial advice on mortgage. You bought your house years ago and knew you would be building equity but, not that you are the village idiot, you did not quite understand how the equity thing really works.

Equity is basically a savings account. Every time you make your mortgage payment you are contributing to your own savings by increasing the equity in your home. If you are like most Americans, your house payment is close to one third of your entire living expenses every month.

Equity is the difference between what your house is worth and what you actually have left to pay on it. And like I said that difference grows with each and every payment you make. By making small changes to the way you make your payments you can increase that equity and take years of payments and interest off of your mortgage.

If you have just gotten a thirty year mortgage on your new house then this financial advice on mortgage will help you pay that mortgage off in half the time it would normally take. Mortgages are set up to pay the interest first, basically. If you bought a house and received a 7% interest rate and you bought your house for $200,000 you will pay $14,000 in interest the first year you own the house.

The amount of interest and the amount of principal that gets paid adjusts for every month you make your payment on time. This is called an amortization. The last year you have to make mortgage payments will be almost all principal amounts with very little interest thrown in because you paid the interest up front.

Want to save paying all that interest? To do that all you need to do is pay a little extra every month on your mortgage. Any extra gets applied to the principal amount you owe on the house. Talk to your lender and make sure this is the case because sometimes the lender will put extra amounts into an escrow account and not apply them to the principal. So make sure first.

If the extra payments do go toward the principal then even if the extra you pay is only, say, ten bucks a month, you could still shave off six months from the end of your mortgage. Hey, six months is six months. If you want to pay more than that, like, even double payments you could very well take 15 years off having to pay the mortgage. That would probably save you tens of thousands of dollars in interest.

More good financial advice on mortgage is to make your payments twice a month instead of only once. This will increase the amount of payments you make by two a year and you will effectively take four years off your thirty year mortgage.

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Buying Investment Property – A Sample Strategy For Rentals

Posted on | June 16, 2011 | No Comments

Purchasing residential properties is an easy way for new investors to begin directly owning real estate. The business model associated with buying investment property for residential purposes is straightforward and most people can grasp the basic cash flow strategy without taking a course in accounting.

However every investor should study and understand the current and expected market conditions and choose only investments that are expected to earn profits under reasonable assumptions. The first step towards developing these reasonable assumptions and buying investment property successfully is to have a rational investment strategy.

Let’s examine an imaginary prudent investor’s four step strategy.

Step one – Evaluate your goals.

This includes your interests and desired level of involvement. You’ll need to consider whether you want to actively manage your properties or if you’d rather be hands-off. What type of properties will most likely bring the returns you seek? What kind of initial investment do you have available? Are you a sole investor or will you be part of an investment group?

Step two – Assess the market.

Simply buying investment property haphazardly all over town can lead to disaster and confusion. It’s much simpler to begin in one area and expand as your portfolio does. If you’re considering residential properties as rental units, start your research with the following area attributes: The migration of the residents, are they moving in or away from the area? How long do homes remain on the market compared to surrounding areas? What is the average annual market appreciation or depreciation?

Step three – You’ll need a team.

At very least your team should include a realtor and an attorney. As your portfolio grows, you may consider adding a tax advisor and an insurance agent. If you’re not the handy type you will definitely need a contractor on call to help you gauge repair costs and estimates.

Step four – Property selection.

If your goal is residential property then you’ll want to target those attractive neighborhoods that will appeal to employed tenants. Lower tenant turnover means less property damage and lower cost to rent again. Choose homes without those special features that result in higher repair bills or greater insurance fees i.e. avoid swimming pools and working fireplaces.

With a record high number of consumers who need to sell their homes, this is an excellent time for buying investment property. Decreased market values in many areas make it more possible to buy low for cash or with little debt and build equity. Making a real estate investment now should find one in a financially equitable position once home values return to normal.

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Buying Foreclosures – Auction Or Bank Owned Foreclosures

Posted on | June 15, 2011 | No Comments

The best investors for are those with the time and ability to research all the issues related to making an informed decision. If you’re willing to do the research, in this economy, you will find an abundance of properties to purchase. But before you spend any money, you want to be reasonably certain that there will be no creditor claims that will come back to haunt you even after you buy the property.

10 years ago the best way of was at a sheriff’s auction. This is the end of the foreclosure process in both traditional and non-traditional foreclosures and when the lender sells the property to the highest bidder in an effort to recoup some of the loss from the defaulted loan. Unfortunately you have little protection regarding any additional liens on the property or the property’s condition when at auction.

In many states the current owner may remain in the property for 10 days or longer after the sheriff sale and as a purchaser you will have no way of knowing the current condition of the property until after the current owner vacates. If they don’t vacate willingly you’ll have to initiate procedures to have them removed. This process can be tedious, expensive and time-consuming and definitely not for the faint of heart. Even still this was the best place to acquire properties for a steep discount.

From the Lender

In today’s economy, unless you have a specific piece of property in mind that you want to snag quickly, is much easier from the lender. When a property goes to auction, if there are no bidders the bank that initiated the foreclosure usually buys the property. These properties are called Bank owned or REOs. When the bank buys back a property, they will evict the occupants, clear out the property (just remove debris no cleaning) and list the property with an agent. As a prospective purchaser, this provides you with the opportunity to view the property and possibly have it inspected before committing.

In a stable real estate market, are listed only slightly below market value, however since banks are currently holding over 1 million foreclosed properties, these bank owned homes are being offered at prices comparable to or better than those at sheriff sale. The best part of purchasing a bank owned home is that instead of the sheriff’s deed which offers no protection from additional or unknown creditors, most REO sales provide a warranty type deed which offers cursory protection from others who may try to claim ownership.

Understand that neither of these options for factors in the condition of the property or any repairs that may need to be made and you will still need to perform your own research regarding the property and its appropriateness for your plans. However, for the foreseeable future, from the bank is the better deal.

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Commercial Property Investing Finance And Understanding Leverage

Posted on | June 15, 2011 | No Comments

Understanding the importance of leverage in commercial property investing finance is vital to making a profit with commercial real estate. The term leverage refers to an investor’s ability to borrow against a portion of the purchase price or value of collateral. By borrowing cash from a lender you have used someone else’s money to increase the size of your investment. Unless your goal is to own a few tracts of land to give to your heirs you need leverage to compete in commercial real estate.

Leverage can significantly enhance the profitability of an investment. By wisely using dollars provided by a lender you can make money on the money that you invest and on the money that you borrowed. The key to successful commercial property investing finance is to find those deals that will earn higher returns than the cost of the money you borrowed.

Commercial Real Estate Investment

For example assume that you find a commercial real estate investment that earns 9% per year and that you can borrow 75% of the money needed to purchase the property at an annual interest rate of 6%. You will need to invest your own cash to cover 25% of the purchase price for which you will earn a 9% annual return but you will also be earning 9% on the 75% that you borrowed.

However you are only paying your lender 6% for the borrowed funds therefore you are earning 3% each year. 3% may not seem like a windfall but when you’re using leverage properly it allows you to make larger purchases and take control of larger assets. 3% is not much of $100K deal but it looks much better when the deal is 3 million.

While leverage can greatly enhance the profitability of an investment it clearly increases and investor’s risk exposure. Problems arise when an investment is not producing a return that is greater than the cost of the money borrowed. Using our previous example, if you borrowed money at 6% per year but your investment earned anything less than 6%, you’re losing money and earning low or negative return. The better real estate investor understands commercial property investing finance and prepares for the unexpected. If you’re going to use leverage you must ensure that you will have the means to make payments under any circumstances.

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