Tapping Into Your Home’s Equity

According to research conducted by the Federal Reserve, the best investment you can make is purchasing a home. Unlike the stock market, which can be quite volatile, the investment you make into your home is relatively risk free and generally provides a reliable return of the money invested. In fact, the Federal Reserve claims that those homeowners that sold their homes during the last five years made a net capital gain of $25,000 or more. At the same time, if you want to take advantage of this net capital gain, you don’t actually have to sell your home. In fact, you can tap into that equity in a number of different ways.

Refinancing Your Mortgage

One way to take advantage of the equity in your home is to take out a refinancing mortgage. When you refinance your mortgage, you actually replace the old mortgage with a new one. When replacing the old one, however, you borrow more than what you still owed on the home. This way, you can use the extra money in any way you please. If you managed to get a lower interest rate on your refinanced mortgage, you can potentially save yourself a little money as well.

Taking Out a Home Equity Loan

When you take out a home equity loan, you don’t replace the old loan. Rather, you still carry the other mortgage loan and you simply add another home loan on top of it. For this reason, home equity loans are often referred to as second mortgages. Taking out a home equity loan requires less paperwork than refinancing, but the interest rates tend to be several points higher than refinanced mortgage rates.

Preparing for a Rainy Day with a Home Equity Line of Credit

Just as with a home equity loan, a home equity line of credit is a type of loan that is in addition to your mortgage. This type of loan is different, however, in that you are extended a line of credit in the same way you receive a line of credit with a credit card. In this way, you can borrow against the line of credit as you need to, but you can also keep your balance at $0 if you don’t need to borrow against your equity. This type of equity loan typically has few up-front costs and you can usually get approved for one of these loans rather quickly. In addition, you don’t have to worry about paying interest until you actually borrow against the credit line.

If you need to tap into the equity that you have built in your home, be sure to explore your options and select the one that is right for you. At the same time, avoid taking out a home equity loan or refinancing your home for frivolous expenses. After all, your home is on the line when you refinance or take out a home equity loan and you want to be certain you can afford to pay the loan back.


About the Author: Shannon Kietzman is a well known author and trusted resource. Shannon regularly writes for http://www.electronicappraiser.com/, which is a leading provider of home appraisals that offers a nationwide personalized instant informational report about house values. For more information, please visit www.electronicappraiser.com .

Tips for Buying a Home in Foreclosure

If you are looking for an investment home, you might be interested in picking up a home that is in foreclosure. While buying a home that is in foreclosure can certainly be a great way to make some extra money, there are a few things you should keep in mind before moving forward. In this way, you can ensure the process is as smooth as possible for everyone involved.

Know Your State Laws and Regulations

When it comes to foreclosure, the proceedings vary from state to state. Therefore, even if you have purchased a home in foreclosure in the past, that doesn’t mean the proceedings will be the same if you are considering a purchase in another state. Similarly, if you are looking for homes for sale by owner on an MLS listing, keep in mind that the proceedings may be different on a home in a different state from where you live.

In some states, it is possible for homeowners to stay in a home for up to a year while going through foreclosure. This is particularly true in states where the mortgage system is used. In those where trust deeds are used, on the other hand, the owner may have only about four months before he or she has to vacate the premises.

Understand the Period of Redemption

Don’t get too excited about a purchase until the sale is finalized. Nearly every state allows the homeowner to enjoy a period of redemption. This means the owner has the right to take care of the financial default, which includes paying all of the costs of the foreclosure as well as paying back the missed principal payments and back interest. If the homeowner manages to accomplish this within the state’s designated timeframe, he or she can regain control of the home. Although this doesn’t happen often, it is possible. In order to gain a better understanding of how this works in your state, it is best to consult with a real estate lawyer.

Make Certain You Can Handle the Emotional Stress

When considering investing in a foreclosure, many people fail to think about the fate of the homeowner. More than likely, however, you will come face to face with the homeowner and the family that is losing its home. This is particularly true when it comes to homes that are for sale by owner. For many people, meeting those people that are losing their home can be quite upsetting and uncomfortable. Therefore, be certain you are mentally and emotionally prepared for this situation before you get started in the purchase process.

Homes go into foreclosure for many reasons. In some cases, the homeowner may have been laid off, fired, or unable to work due to medical problems. Others may have buried themselves in a debt they were unable to repay while others may be going through major life changes, such as divorce or the death of a loved one. These situations can be quite heartbreaking and can make an investor feel guilty about the purchase. At the same time, you may be helping the homeowner get out from beneath a burden that he or she can no longer carry. In that case, it can be a win-win situation for everyone involved.


About the Author: Shannon Kietzman is a well known author and trusted resource. Shannon regularly writes for http://www.electronicappraiser.com/, which is a leading provider of home appraisals that offers a nationwide personalized instant informational report about house values. For more information, please visit www.electronicappraiser.com .

Five Simple Steps to Homebuying

Are you planning to buy a new home? If this is your first home purchase, understanding the ins and outs of purchasing a home can be a bit overwhelming and confusing. With these simple steps, however, the process can be much simpler and easier to understand.

Step 1: Hiring a Real Estate Agent

Depending upon the route you want to take to purchase a home, you might want to hire a real estate agent to help you with the purchase process. If you are interested in purchasing a home directly from the homeowner, however, hiring an agent may not be necessary. Still, you should hire someone to represent you when finalizing the deal. That way, you can be certain you are not signing something that you will regret later.

Step 2: Get Pre-Approved for a Mortgage

In order to expedite the buying process, it is helpful to get pre-approved for a loan. When you get pre-approved for a loan, you know exactly how much you can spend on your home and how much you can expect to be able to borrow. This will give you a better idea of which homes you should look at and will also help you seal the deal more quickly after you find the home of your dreams.

Step 3: Determine the Location that is Right for You

Now, it is time to actually start doing some house hunting. In order to narrow down your choices, decide upon the type of setting you would like for your new home. Do you want to live in a rural location? Perhaps you would like to live in the suburbs or in the city. Or, maybe you want a home on the beach or in the mountains. Do you want lots of land or is a small city lot sufficient? Remember to consider your current family situation as well as your future plans so you can make a wise decision.

Step 4: Decide Upon the Type of House You Want

Once you have determined the right location for your dream home, it is time to consider the style of house that you want. Do you want a simple ranch home or are you looking for one with multiple stories? Do you want a basement? Are you interested in a condo or would you prefer a log home? The better you formulate a vision of the home you want, the easier it will be to find the one that suits your taste and needs.

Step 5: Consider the Amenities

Although you will pay extra for certain amenities, it is certainly easier to find a home with the ones you want rather than trying to add them on later. Some popular amenities that you might want in your home include:

• Air conditioning
• Deck
• Eat in kitchen
• Extra bathrooms
• Fireplace
• Formal dining room
• Jacuzzi / Pool
• Patio
• Screened porch
• Three car garage
• Wooded lot
• Proximity to schools / Work
• Location

Remember, purchasing a home with these amenities will cost extra, so make certain you are willing to pay more for the amenities you desire.

Whether you hire a real estate agent to help you find a home or you decide to work directly with a homeowner, you will have a much better experience if you know what you are looking for in a home. This way, you can narrow down your choices and view only those that truly suit your needs.


About the Author: Shannon Kietzman is a well known author and trusted resource. Shannon regularly writes for http://www.electronicappraiser.com/, which is a leading provider of home appraisals that offers a nationwide personalized instant informational report about house values. For more information, please visit http://www.electronicappraiser.com/.

Buying a new home, should you wait or purchase now?

Are you looking buy a new home due to a new job, a transfer or just because you are seeking a better neighborhood? If you are someone who has been keeping up on real estate news, the latest housing headlines are far from encouraging: Foreclosures are up, home prices are down and new-home sales are at record lows. All this dismal news has many buyers sitting on the sidelines, afraid to make a move. But, economists say, waiting for the bottom may not be the smartest strategy.

First, there's no agreement on when the U.S. real-estate market will officially touch bottom. If you believe the National Association of Realtors, it will happen later this year. Investment bank Merrill Lynch is much more pessimistic, predicting that U.S. home prices will drop another 15% this year and 10% in 2009, with perhaps even more depreciation in 2010. But even with this knowledge, evaluating your own personal situation, including where you live, how long you have owned your current home and what you plan to do with your new home, all are deciding factors on whether you should buy right now or wait a little longer.

Here Are Five Reasons To Buy Now:

1. Prices in the neighborhood you are interested in are relatively stable. Either they are holding their own or increasing, or the pace of decline is slowing significantly. If you have to move and don't like apartments, the small penalty you pay for missing the bottom may not mean much.

2. You plan to stay in the home for more than five years. If you can stick it out that long before selling, economists say you’ll probably ride out any downturn and come out ahead on price.

3. Your rent rivals a mortgage payment. If you can afford to buy, it can give you one bonus that renting can't: the mortgage-interest deduction on your taxes.

4. You've found the right house in the right area for you. The schools are great. You love the area and know it would be hard to find another house like the one you have your eye on. In a better market, you would most likely have much more competition for that home.

5. You've built equity in your house and are moving to a place where homes are cheaper. In your new market, your money will go a lot further.


Here Are Five Reasons To Hold Off:

1. You've lived in your house less than two years. Chances are you haven't had enough time to accumulate equity in your home. Indeed, you may have negative equity, if you live in many areas such as California, Florida, Arizona or Nevada.

2. Your job security is uncertain. If your company or business is in distress, it's probably better to stay put until the smoke clears.

3. You don't plan to stay in your next house at least five years. While it's not important to buy at the exact bottom of the market, it is important to stay long enough to ride it out completely.

4. You don't have good credit or a decent down payment. Do you have a job and income you can document? As a result of the subprime lending crisis, lenders are much more careful about whom they're giving their money to.

5. You have an existing home to sell in a neighborhood where prices are dropping precipitously or where the number of foreclosures is spiking. In this climate, you're probably better off waiting out the storm.

Greg Sullivan is the President of www.electronicappraiser.com, a leading provider of home appraisals offering a nationwide personalized instant home appraisalservice. For more information, please visit www.electronicappraiser.com.

Use a Realtor® when buying from a Builder or Not?

The number of new homes being built every year (In 2007 there were 1,620,000 housing starts as reported by Freddie Mac) http://www.freddiemac.com/news/finance/pdf/Jan_2007_FRECOM_Outlook.pdf ).

As a buyer of a “new construction home” should you use the expertise of the Realtor® on the buying side? Typically a Realtor® who helps a buyer find a home is recognized as a “buyer’s agent”, someone who represents the buyer.

As a buyer’s agent, the real estate agent owes you a certain amount of loyalty. They should be acting in the buyer's best interest. They should maintain confidentiality by not offering information to the seller/builder that would influence your ability to negotiate the best terms. And a buyer’s agent would disclosure to other parties of the transaction that they represent you, the buyer only.

Let’s examine a few areas where a Realtor® / buyer’s agent can help.

Negotiating:
Not every unit with a builder’s inventory is fixed in price. Builders are often negotiable on homes (especially in this market). Builders have been known to throw in everything from carpet upgrades to a new car if you buy one of their homes. Having a buyer’s agent on your side can take the pressure off of you negotiating with the builder. The buyer’s agent acts as a third party to the transaction, often like a messenger, “Don’t shoot the messenger, just because he wants a built in pool……for free”.

Builders often factor in a co-operating or buyer’s agent commission in the pricing of their homes. They are not charging you extra because you bring your agent to the table. The use of a buyer’s agent ends up being a free service. It is not commonplace for a buyer’s agents to charge you as the buyer a commission.

Don’t feel that if you don’t use a buyer’s agent that you will also be entitled to receive a discount off the purchase price, any price reductions will need to be negotiated separately.

Loan:
Many builders are associated with or have a marketing agreement with a lender. This is not necessarily a bad thing but using an on-site lender doesn’t give you the ability to shop different lenders for better terms. A Realtor® can guide you through the mortgage process and help you shop for the best terms.

Re-Sale Items:
Let’s face it, although this may be your dream home, you may not live in it forever. A buyer’s agent can help you with items that can affect you reselling your home such as the floor plan, elevation choices, lot location, and upgrades. Most agents would agree that unless your home has an elevator, a home with a master bedroom on the first floor is the most desirable configuration.

Your agent may recommend one lot location over another, or which direction your patio should face. Did you overlook the busy street your new home backs up to….your Realtor® may catch it.

Contract:
Builder real estate contracts are often very different than those commonly used in your state and tend to be slanted in the builders favor. They also do not like to negotiate on the fine print of their real estate contracts. A buyer’s agents are not attorneys but regularly prepare contracts. They can help you in some of the terminology within a contract and may be able to point out language and can or can’t live without.

Walk Thru and Inspections:
Let you buyer’s agent do some of the work for you. Buying a newly built home is very exciting, and you may visit the site daily to see how it is progressing, don’t be afraid to let your buyer’s agent give you an update or email you pictures of the progress, after all they are being paid for their service.

Finally:
Do your homework in selecting a buyer’s agent. Recommendations are worth their weight in gold. And make sure the builder will cooperate (compensate) with a buyer’s agent in advance of your first visit to your builder. Builders are not fond of showing you a property on one day and you showing up with your Realtor® the next to write a contract


Greg Sullivan is the President of www.electronicappraiser.com, a leading provider of home appraisals offering a nationwide personalized instant home appraisal service. For more information, please visit www.electronicappraiser.com.

Question: Why use a Realtor®?

Answer: …..The Multiple Listing Service (MLS)

Access to real estate information: Realtors® have many resources to turn to in assisting you in your home search that public web sites lack. The web has changed the way we all search for information. Many publications are now quoting that up to 80% of home shoppers initiate their search on the web. This is up from 0% about 10 years ago.

Real estate is one of the most commonly search subjects on the net. Every web portal from Google to Yahoo, to Earthlink, to MSN has a real estate tab or sub-site to simplify real estate search. The amount of real estate data on the web will blow your mind. To make things more complicated, every week new real estate sites come online. Realtors® have these public options available along with their local Multiple Listing Service (MLS). MLS as defined by Wikipedia as:

Multiple Listing Service (MLS) (also Multiple Listing System or Multiple Listings Service) is a group of private databases which allows real estate brokers representing sellers under a listing contract to widely share information about properties with real estate brokers who may represent potential buyers or wish to cooperate with a seller's broker in finding a buyer for the property. There is no single authoritative "MLS", and no universal data format. The many local and private databases--some of which are controlled by single associations of realtors or groupings of associations (which represent all brokers within a given community or geographical area) or by real estate brokers--are collectively referred to as the MLS because of their reciprocal access agreements. http://en.wikipedia.org/wiki/Multiple_Listing_Service .

Full use of an MLS system is generally only available to its members, Realtors®. MLS information is very time sensitive. Once a new listing is obtained from an broker and placed into their MLS system, it is immediately available to its members. A resourceful Realtor® can find a “hot property”, a price reduction or brand new listing by searching their MLS and immediately calling you to set up an appointment. These can be homes that may not be anywhere else on the net. It can take several days for property to go from an MLS system to Realtor.com where it will be viewed by the rest of the world. Don’t get me wrong Realtor.com can be a great place to start, but it gets its information from the local boards of Realtors® and the MLS.

A Realtor® armed with the knowledge of how to efficiently search the MLS system will be able to narrow your search with ease. How many times have you gone to a web site looking for a home and your results were in the hundreds or even thousands? It’s time consuming going through that many properties. MLS searches get very granular, giving your Realtor® the ability to input your criteria, save the search, and have it email them anytime a property match is found. A search could be as complicated as: Condominiums (in your favorite building) with only east facing exposure, between $300,000 and $339,900, that allow pets, come with owner financing, and include the window treatments. Try doing this search on Realtor.com.

Once you employ the help of a REALTOR®, he or she will have access to the MLS. If you are a seller your home will be immediately exposed to the community of agents who also belong to the same MLS. If a buyer, your agent will have up to date information of available homes that meet your discriminating taste; even if your dream home is a concrete home, only two stories, in your favorite zip code, built between 2000-2004, includes a finished basement, 4 bedrooms, 3 bath rooms, at least 2500 square feet on a ½ acre lot and a new roof. Try this one on Realtor.com…..

About the Author: Greg Sullivan is the President of www.electronicappraiser.com, a leading provider of home appraisals offering a nationwide personalized instant information about house values. For more information, please visit www.electronicappraiser.com.

Are you ready to buy your first home?

There are many great reasons to own a home. For one, the place is yours.

When you own your own home you have a place to raise your children and to be a part of a community. You can even pass your home down to your children and their children, creating security for generations to come.

Owning your own home can even help you reduce your taxes. You can deduct the interest on your mortgage and property taxes you pay on your home on the tax returns you file each year. These tax savings partially reduce, or offset somewhat, the actual cost of owning your home.

Another good reason to own your own home is that your monthly payments won’t ever go up, that is if you choose a fixed-rate mortgage! A fixed mortgage is one that stays the same for the life of the loan. If the mortgage is 30 years, you’ll pay the same mortgage payment each month for the entire 30 years of the loan.

So what are the risks of owning a home, you might ask? Overall, homeownership is a good investment for most people. If you understand the benefits and risks of homeownership, you can make the best decision about when to buy a home.

The first risk is that your monthly housing expenses can increase if your mortgage is higher than what you are used to paying in rent. On the flip side, rent goes up while your mortgage can stay the same. Another risk is that if an appliance breaks, you will have to pay for its repair or replacement. You are also responsible for the maintenance and upkeep of your home and your property.

If you are somebody who plans to move soon, the downfall of owning is that you have to wait to sell your home to move. Depending on the local real estate market, you might not be able to sell your home quickly. You should also factor in the likely expense of hiring a real estate professional. Fees can be negotiated and vary across regions. They also vary from professional to professional.

The last risk is that property values can depreciate. You can lose value in your home for a number of reasons, such as a recession, the condition of your home not being kept up, or a drop in a neighborhood’s home values. If your home loses value and you have to sell it for less than you owe, you will be required to repay the full mortgage.

Many people don’t even consider buying a home as they believe that you need great credit to become a homeowner. The fact is, you may still be able to buy a home with less-than-perfect credit. And remember, you can improve your credit over time.

Another myth about buying a home that often keeps people from looking is that you need to put 20% down. There are many types of mortgage products and programs that allow low and no down payments. But remember to factor in other costs such as closing costs, property taxes, moving expenses, and repairs.

So are you ready to buy your first home? Certainly the benefits outweigh the risks.
About the Author: Greg Sullivan is the President of www.electronicappraiser.com, a leading provider of home appraisals offering a nationwide personalized instant home appraisal services. For more information, please visit www.electronicappraiser.com.