Depending on your location the percentage of a mortgage down payment for a home can vary from state to state. 20% or 22% is common and these days’ banks are less inclined to agree financing a 100% mortgage loan. So unless you have a benefactor like a rich aunt to help you out, you’d better put on your thinking cap to work out where you are going to get this lump of lucre?
- Joking aside, we have all heard the saying that charity begins at home. So if you do have a relative with funds it’s worth checking out if they’d be prepared to put up an interest free or low interest loan. If it’s interest free then obtain a “gift letter” from the person who gave you the money, verifying the money doesn’t have to be repaid.
- Here’s an old fashioned, idea open a savings account with your preferred lender and put aside a chunk of money after each paycheck. If you are engaged to marry or considering a permanent commitment you can open a joint account. You need to do this for at least a couple years if $1000 a month is a possibility you could get a $25,000 deposit together after a couple of years of saving.
- If your employment package includes stock options you could consider cashing these in. Check out your company policy on rules when applying.
- If you have stocks consider selling these where penalties are small compared to cashing in on 401(k)’s and IRA’s which have massive penalties if you cash in early. “An exception to penalties on withdrawals from retirement accounts that lets first-time homebuyers withdraws up to $10,000 from an IRA to use as a down payment on a home purchase”. Consult an accountant about any tax implications
- Cash in a with profits life insurance policy but do weigh up the surrender value against the loss of cover for loved ones.
- Check if your company participates in an “Employer Mortgage Assistance Program” for a $600 – $6,000 loan at 2% interest rate?
- Get a Co-Owner to enlist with you as a partner to share costs including any down payment and to be responsible with you for paying the mortgage loan. Ask your advisor to give you relevant details.
- Get on the state gravy train and take advantage of state loans and grants available for this, you may need a government insured FHA mortgage. For a modest fee consult a HUD qualified housing counselor.
- Save thousand$ in closing costs and you may currently use up to 6% of a FHA loan towards closing costs.
- Negotiate with your lender for the amount charged for the loan arrangement origination fee and this can contribute towards part of the closing costs or see if the lender can consolidate the closing costs into interest paid over the loan term and consult with a non-profit housing councilor to help you compare the true cost
- Some sellers may cover closing costs but this is a less common practice as the market is swinging in favor of sellers
- Try out your realtor for a discount on their commission. They can only say no and may say yes to keep your business
- If you are relocating for employment your employer just may agree to contributing a payment towards a down payment in place of a relocation package
- Borrow up to $50,000 from your 401(k). Some companies allow their employees to borrow up to 50% of amount invested (capped at $50,000). Get independent advice from an accountant as well as your company HR about pitfalls and repayment requirements
These are just some of the ways you could raise the money but do consider and research the consequences of the options if you follow them. The safest and surest way is to save some money each month and accrue interest. For those who can’t wait for some years until they have enough for a deposit then other options mentioned here can be considered.
Real Estate Investing takes a lot of learning before you can finally hit the right timing. It takes a lot of effort to reap the rewards that you are targeting. Buying, selling and renting out properties and profiting from it is achievable.
When a buyer signed a contract to buy your home, do you think it’s time to go to cloud 9 and celebrate? No. So many things can still happen. You will encounter challenges like financing problems in the process, jittery buyers, and imbalance of power between a buyer and a seller and so on and so forth. When the ownership of the house is officially transferred to the buyer during the closing day that is when you can say the buying and selling transaction is really done. So what should we do to avoid falling into this trap?
- Research Before Buying - Anything that you purchase will be subject to your assessment to decide, is this worth the money and what are the known risks? The same criteria apply to buying a house and you are going to weigh up and compare similar places in the same and different neighborhoods. It’s not just about any appraisal value it’s about condition, the safety of the neighborhood and availability of nearby facilities like good parks, nature trails, schools, shopping malls and places where employment might be found like industrial zones or a major airport. Also, is there a risk or any history of subsidence caused by mining or is the house in a flood zone? And, what is the history of the home, it’s best features and upgrades and prices it sold for over the years including the price the current seller paid and when?
- The “I can do it all” Mentality - Where buyers can be confident in this field especially if they have done this many times over in the past and never encountered any glitch. However, there’s no telling that one hopeful, important transaction can turn sour if you do it on your own. Any investors in real estate know that to reach out is the smartest thing to do. Tapping all sorts of possible resources, getting a mentor and reaching some experts in the field is a sure ball. A good attorney for example is someone to keep and to consult whenever you encounter legal challenges. So don’t just do all the work, utilize a team of experts who can minimize your real estate challenges, today! Also, get advice about financing your projects for bridging loans to pay for house purchase and any rehab. Unless you have a cash rich partner you will need this until the buyer signs on the closing day. Also your professional network should include other experts in real estate, like a good realtor, banker, lawyer, builder, tree surgeon, kitchen and bathroom fitter and so on.
- Financial Incapacity - It is vitally important that the buyer has the financial capability and flexibility. It shouldn’t just be that you need qualified buyers but sellers as well need to be solvent and be weary if they have issues with the lender. One has to consider the following expenses and take into account all the cost associated with the attorney, closing fees and so on. New real estate investors should also look at short term financing costs, any cancellation fees and prepayment penalties. Looking at every cost involved will help the transaction journey to be a stress free one. This will also build buyers credibility in the process. So do your homework before purchasing a property and list down all the necessary costs involved and this is even more important to house flippers because your profit is still tied up to the amount of time it takes to purchase the home, rehab and resell it.
- Rental Investment - If you don’t sell the house perhaps your plan is to rent it out and get a regular income? If so, you also need to plan and factor in wear and tear and maintenance costs. Electrical appliances will break down and eventually they need replacing. Trees and gardens and any decking all need maintenance by the appropriate specialist experts and this costs money.
Whether you are buying houses to flip for a quick profit or in for a longer term investment as a landlord you need to network with other specialist experts and you need to plan your financing and budget for predictable expenses. Also make sure that whatever you sell or rent you would be delighted to receive yourself if you were the buyer or the renter. This way you will gain respect as a person of integrity who can be trusted and this is worth as much as the balance in your bank account.
There are probably hundreds of articles written about how to sell your house fast. And some of us figured out the best ways after the house is sold. And so you tried to reach the home buyers when you decided that it is time to sell your house. So, what are the considerations that we can provide for you to sell your house fast? Read on…
- Concentrate on curb appeal to sell your house fast. In real estate, first impression matters. The outside appearance of a house will be the first thing that greets a buyer. Spend a reasonable sum of money dedicated to upgrade the façade of your house. Fresh paint or a new vinyl covering could liven up a rather gloomy appearance. Trimming bushes, cut tidy well maintained lawn can practically transform a house into a homey and livable place that will attract buyers. In addition to that, if your house looks good outside, buyers will see it as an added benefit when they are buying the house because they no longer have to spend time and money for this one important part of the house.
- Transform your house into a ready to move condition to sell your house fast. Major expense for repairs doesn’t have to happen. All that’s needed is attending to the necessary repairs that have to happen right before you sell your house. Examples are leaky faucet, a broken light bulb, broken doorknobs, any electrical wiring and just about anything that meets the immediate eye of the home buyer during the visit. Home buyers can be meticulous about the aesthetic value of the house. And like me, I would prefer to move into a house that looks like it is safe, secure, clean and tidy which brings me to the third topic.
- Make it a point that the house is clutter free to sell your house fast. It should very well delight the buyers to see a tidy house. An eyesore can be disappointing and will give a home buyer the second thought especially if they have visited another house already and they are now at the stage of comparing the houses they’ve been to before making the most important decision of their lives. Harmony in a house can be easily achieved without doing excessive hard work. Put yourself in the home buyer shoes and organize your house in such a way that it will look attractive and clutter free. You can also rearrange the furniture and remove all the unnecessary ones that are only blocking the space of your house. Learn to become minimal and neutral in your choices of colors. If you think you missed the boat last year, this time, check out what colors is trendy for the year 2014 and repaint your living room to attract home buyers.
- Be sensible with your asking price to sell your house fast. Pricing your house for sale appropriately is very important. Check out what’s the fair price of your house. Have it appraised before selling so you have an idea of the market value of your house. You can make use of the internet tools available online to compare prices in your area. You might set your price a bit higher than most houses in your neighborhood if you have several new changes in your house and point this out to the potential buyers that your house has more features to make them understand your asking price. Of course, most home buyers will try to negotiate with you and you must be willing to meet halfway so you can both arrive in a win-win situation to sell your house fast.
We at Working With Houses also respect the fact that some sellers really need instant cash for their house and so we make it our responsibility to get to the point of helping the seller by giving an immediate solution to their needs. We offer to close in a short amount of time so they can sell their house fast. If it is possible for you to close on the home within 30 to 60 days, this will probably help you in getting the contract faster than most home buyers.
So Sellers, do you have a house that you want to sell fast? Contact us!
You decided to take on a mortgage.
Here’s an idea: Just picture yourself in ten years time when the kids have finished college and you have just a few years before retirement catches up with you. Do you and your spouse really want to be rattling around in a great big family house and half an acre of garden and yard to maintain? Why not consider now paying off your mortgage sooner as interest rates are likely to go up rather than go down. Several circumstances had played right in front of you, seeing people struggle after losing a job and ultimately losing their home is an example. Paying your mortgage as soon as possible will help you save thousands of dollars in the years to come. It does not apply to everybody but if you have a few extra bucks at the end of each month then why not consider this.
Paying off your mortgage will also give you the security and peace of mind of having a place to live that is free from any debt in preparation for tomorrow. No one knows what tomorrow will bring as far as job security and our health. So by paying off early you can buy peace of mind and still have a saleable asset.
Let’s look at the ways to pay off mortgage that will help us debt free earlier than we thought possible:
- Pay your mortgage biweekly – this strategy is good as it will not allow interest to build up. If payment is made every other week then you were able to pay 26 half payments or 13 full monthly payments at the end of the year. There are several instances where you can make this payment possible. It also helps to pay in advance when you are receiving bonuses or commissions from your present job. It won’t hurt your pocket and it will certainly help you attain that goal of paying in advance in order to be debt free.
- Consider mortgage refinancing to a short term loan – the secret is to look out on the interest rate, if it dropped then refinancing is one of the best option. You can shorten the term of your loan and reduce the interest rate or both. You are the one who has the power to control your loan and no one else. You can refinance into a mortgage for 10, 15 or 20 years, it’s your choice.
- Planning is vital with your finances – do your own computations in advance before you get committed into a mortgage arrangement that you will regret later. Think of your budget first without compromising your dream house. However, your cash flow has to come first and determine what it is that you’re entering into and how it works. Don’t just go into a situation that you have no knowledge about. As the saying goes ‘ignorance of the law excuses no one’. So be prepared and decide what’s best for you and for your future.
- Financing terms and conditions – as I have mentioned never enter into any terms that you are not familiar and no knowledge about. Adjustable rate mortgages does offer lower initial payments, this can be a way to convince buyers to buy the home that later on they will find out that they cannot actually pay it. Don’t fall into this trap; this is okay for folks who want to buy their dream house now but financially they are too stretched to meet the monthly payments, as long as your prospects of increasing your salary significantly in two to three years is achievable, then this is okay for you. On the other hand if you still got cash in your pocket after making a regular monthly payment then this plan does not make sense for you.
If you’re lucky and you are not feeling the pinch after you paid off your bills then make hay while the sun shines and pay your mortgage off early.
This guest post is by Kate Flynn
Budget is always a leading factor when designing any space. In rehabs it becomes especially important as all money out affects the bottom line for profit. When selecting finishes, fixtures and appliances make sure to understand your market!! It is crucial to know what you are competing against to maximize your purchases.This means pull those comps and visit some homes! Look at what a real estate buyer will be impressed with and also what unnecessary selections were made in a home. Just because you can allocate funds for top of the line selections throughout the home doesn’t necessarily make it the best decision for the project.
Homebuyers will constantly question the decisions you made while viewing your rehabbed property. Make sure your decisions make sense to these potential buyers! A great example of this is in flooring. If you opt for a high end material, use it wisely! Did you consider the safety of that surface? Although polished marble has been used for centuries and usually delivers a grandeur impression it is a material I rarely select. As a floor it is breath taking but also a liability headache. Any water on that polished floor and you have just installed a rather expensive slip and slide for real estate buyers!! A honed marble will deliver similar results and provides adequate traction for walking.
On the other end of the spectrum do not be overly cheap when choosing finishes. As noted earlier a good rehab designer will understand saving on selections to maximize profit. Trying to save a penny here and there on finishes can greatly impact time on market. I don’t know about you but I would much rather pay a couple hundred dollars more on quality selections and avoid the holding costs of a real estate property sitting on market.
Having a designer on your rehab projects may seem like just another added cost or even headache to deal with. I get that. Being in design for over a decade I understand the stigma that can come with my job. As a designer and project manager for Real Estate investors, I have been able to see the major benefits of a capable designer for renovations! The best run projects I have worked on have worked like clockwork because each element was handled by an expert in their field! In a business where time is money having a good arsenal of experts becomes invaluable! It also provides a strong sense of accountability if issues do arise!
The wisest decision on every project is to do the proper research and always plan in advance! Always think of the end user’s needs when specifying finishes and fixtures. Prepare a budget and stick to it. Lastly, have fun and enjoy the transformation!
About the Author:
Kate is the passionate woman behind Kate Flynn Designs, LLC. She has a penchant for design inundated by color, form, light and function. Recently she has been collaborating with Professionals in the Real Estate Industry particularly in the design, renovation and staging of listed homes for sale. You can also connect with her on her Facebook Page.