Author Archive
May
21
How Does the Sell and Rent Back Process Work?
Posted by: | CommentsFirst make a call to a specialist company and discuss your problem with the representatives. Specialist companies will deal with every customer sensitively. Since customer is considered king in every business, in sell and rent back business also the specialist company has to deal with the customer carefully and listen to his problems with loads of patience. The specialist company will tell you how the sell and rent back service works. The second step would be to do a free value assessment of the property. Someone from the company will visit your house within 24 hours and give you other details.
They will tell you the value of your property. The sell and rent back company will decide on the rental value of the property after knowing the rental value of other properties in that area. You are under no compulsion to accept their offer. Once the offer is accepted by you specialist Company will tell you to sign a legal contract with them relating to standard tenancy agreement. Sell and rent back company will make you understand all the terms and conditions of the contract before you sign it. You can tell your solicitor to look over the deal before signing it. They do not charge hidden costs or extra costs. They retain only a small part of your payment as a deposit. Once you’ve have signed the contract you’ll get your cash generated from sale of your property. You can pay rent by direct debit, check or cash.
By renting back your own home you’ll be able to avoid estate agents, tiresome public viewings, property chain breaking issues, the search for suitable rental accommodation as well as the tiresome business of moving itself. Due to credit crunch thousands of homeowners resort to private property sales to get out of bad debts and settle mortgage payment arrears. Maybe you’re one of the homeowners who simply have no choice but to use the money you’ll receive for the sale of your home to pay off bills, make payments on overdrawn credit cards and maybe even put a bit aside for a rainy day.
While this solves short-term problems like debt and payment arrears, it also means that you stand in danger of being exploited by greedy agents and landlords cashing in on the soaring demand for housing in the rental sector. Don’t fall into the trap of unscrupulous landlords or rental agents. Better visit specialist companies who will buy your house at a good price and rent it back to you, so that you do not face any problem.
Sell and Rent Back
May
20
Quick House Sale Changes the Course of Cash Flow to your Favour
Posted by: | CommentsThe world today is dynamic where money is always flowing and floating in the market. Every individual who participates in this constant transaction of cash sustains a certain equilibrium of cash inflow and outflow. But then, it may just happen at one time that there is a negative flow of balance, as when your expenditures are more than your income, that you find that money is emptying from your reserves. This means that this flow of money has taken a course unfavorable to you, and you are left dry in your banks.
So what do you do to overcome this shortage of cash? You can fall back on the ever-reliable property of yours. The equity you have stored in there can be converted into cash so that you are up and running again. With quick house sale, you are able to deal smoothly with an emergent situation. The fixed assets become liquid cash so that it flows and clears your troubles out of the way. With the rent back scheme, you can even keep staying in the house, going on with your normal life, instead of the trouble and the shame of having to move out.
Quick house sale is an option worth considering when you are faced with difficult situations such as repossession. It is also a very feasible thing when you are faced with divorce proceedings and the huge expenditure that goes along with it. Quick sale also helps you to separate in a judicious manner.
Also in a situation where one has inherited a house and is finding it difficult to manage it, many people wisely opt for a quick house sale. The house gets a manager who would furnish it out, and you may rent back this property if you want a joy of residing in your inherited property. This scheme comes in handy thus on different occasions.
Repossession
May
19
The Top 12 Commercial Mortgage Loan Problems To Avoid
Posted by: | CommentsThis article describes 12 recurring commercial mortgage problems that commercial borrowers and their advisors need to anticipate before it is too late. The following problems are common in traditional bank commercial real estate loans and should be avoided if feasible (special circumstances will periodically make some of these terms unavoidable).
Key Problem Number 1:
Tax Returns versus Stated Income
Most traditional banks will require several years of tax returns in order to qualify for a commercial real estate loan. The alternative is to use a Stated Income Lender that does not verify personal income or assets. Many borrowers will simply not qualify for a commercial mortgage loan if tax returns are used due to high business expenses (and low net income). Many lenders using tax returns will also continue to verify income after the loan closes. Stated Income Lenders will not engage in this practice.
Key Problem Number 2:
Special Purpose Properties
It is becoming increasingly difficult to get commercial loans for special purpose properties. Properties that do not fall in the categories of apartments or retail/office buildings are often placed in this special purpose classification. This means that business acquisition loans for commercial properties such as restaurants/bars and auto service businesses are frequently hard to find. Commercial financing will be even more difficult to locate for such specialized properties as churches, funeral homes, nursing homes and assisted living facilities.
Key Problem Number 3:
Recall/balloon features
These terms are used by many banks to effectively shorten most business acquisition loans to 3-7 years.
Key Problem Number 4:
Short-term loans (less than fifteen years)
15-40 Year Commercial Property Loans without recall/balloon features are available.
Key Problem Number 5:
Up-front Commitment fees
Under most circumstances, commercial borrowers should not pay such a fee. Please note that processing/retainer fees are not included in this discussion of commitment fees. Processing/retainer fees should be viewed as an acceptable and standard business practice when dealing with commercial loans.
Key Problem Number 6:
Business Plans
Under most circumstances, commercial borrowers should not use a lender that requires a business plan.
Key Problem Number 7:
Cross-collateralization
Commercial borrowers should not be required to use their personal assets as collateral for a commercial property loan.
Key Problem Number 8:
Sourcing and seasoning assets. Seasoning of ownership.
This particular problem will not be relevant to all business borrowers. However, if it is relevant, you should seek out a lender without sourcing and seasoning requirements or limitations. Most banks have strict guidelines for sourcing and seasoning of assets or ownership to qualify for commercial real estate loans. For a purchase, commercial lenders will frequently want documentation about where the down payment is coming from (sourcing). Commercial lenders will also frequently have very specific requirements stipulating that the funds must have been in a specific account for a specific period of time, often 3-6 months or longer (seasoning). Seasoning of ownership is similar to seasoning of funds, except this requirement involves the minimum time someone has owned a commercial property before they can refinance the property.
Key Problem Number 9:
Requirement to sign IRS Form 4506
IRS Form 4506 authorizes the lender to obtain a borrower’s tax returns directly from the IRS. This form is routinely required by most traditional banks and many other commercial lenders for a business acquisition loan. Commercial borrowers using a Stated Income Lender with Limited Documentation Requirements will avoid this requirement.
Key Problem Number 10:
Debt Service Coverage Ratio (DSCR) in excess of 1.2 for a business acquisition loan
The most flexible approach to DSCR for a commercial property loan will require a DSCR in the range of 1 to 1.2, with exceptions permitting a DSCR less than 1.
Key Problem Number 11:
Minimum commercial property loan size that is too high for your commercial mortgage needs.
It is not unusual to encounter a minimum commercial loan requirement of $500,000 to $1,000,000.
Key Problem Number 12:
Excessive length of the commercial real estate loan process
Many traditional banks require three to nine months to close a commercial mortgage. A more action-oriented commercial lender will close a commercial mortgage loan in 45 to 60 days.
For a free online six-part commercial mortgage course that addresses all of the problems described in this article, please visit http://steve.bush.googlepages.com/course or http://aexcfgllc.com for free enrollment information.
Ï © 2005-2006 AEX Commercial Financing Group, LLC Ï All Rights Reserved Ï
Rent Back
May
18
Home Insurance – an Absolute Necessity
Posted by: | CommentsA home has to be protected from all possible dangers. The best way to do that is to protect your home through home insurance policy. A home insurance policy can protect one from several varied situations, including fire and theft. Also, contents and possessions can be insured, along with the structure of the building and other equipments. Home insurance can be an expensive affair; this can be taken care of by deploying the services of a specialist broker.
There are a few things to be taken into consideration before taking a home insurance policy. The homeowner has to take certain precautions to ensure he does not get a raw deal. For instance, if the home has undergone some renovation work, the value increases. The current policy may not necessarily do justice to the actual value of the home. The competition in the home insurance sector is tremendous nowadays. Every new day brings about a more feasible offer. To get the best (or somewhere close to it) home insurance deal, one can undertake research of the plethora of offers that are in the market.
Should there be certain changes in the locality you are, it may lead to the increase or reduction of the home insurance policy. Generally, a customer’s insurance company contacts him should there be anything of that nature. Still, it would be foolhardy to expect your insurance company to update you on better deals from competitor companies. If the place you live in has damage or theft claims in recent history, the company will charge more. Here, the true value of the company is important. Also, of significance is the credit report.
Also, one can take steps to bring down the policy. Improving the safety measures can qualify the insured for a discount. Taking two or more policies can be helpful as well. One good advice is to shop around for the best deals.
Rent Back Fast
May
17
What If My Mortgage Lender Threatens To Evict Me?
Posted by: | CommentsThis document explains the eviction process used to evict homeowners in the UK due to unpaid secured loans. It offers advice on how to prepare for the court hearing and how to deal with lenders.
Firstly it is important to know that your lender can not evict you without a court order. If you have been given a court order by your lender (received in the post) it usually means that other attempts made by you and the lender to overcome the arrears have failed. Some lenders are very sympathetic to borrowers who have got behind in their mortgage payments and may wait 6 months before applying for a court order. Some lenders (of the sub prime variety) will be all to quick to take late payers to court.
In order to start the eviction process the lender will apply to the local court to issue a possession claim which will give you a date and time for a hearing in the county
court. You should have at least 28 days notice of the hearing date. (Note; a court hearing does not mean you will automatically lose your home.) Even if the court decides you cannot afford to stay there, you will not be evicted from your home on the date of the hearing.
What you need to do before the hearing
A document called particulars of claim will be sent as well. This sets out your lenders case for taking possession of your home. You will also receive form N11M called a defence form which you should fill in and return to the court within 14 days or receiving it.
It is important you give as much information as possible in the defence form as this give the court a chance to see your side of the story. The court will not evict people unless they have to so give them a good reason why they should order the lender not to evict you. You need to ensure you:
* Check the details of your lenders claim to see if you agree with them. Say if you think that the information is wrong.
* You will be asked how much you can afford to pay off the arrears. Prepare a personal budget sheet to work out how much you can afford to offer and show this.
* Put down an amount which you can afford, even if your lender has already refused this offer.
* If you are hoping that your circumstances will improve in the future (i.e. the reason why you got in arrears will change or improve), or you want time to be able to sell you home, then say so in the space provided.
You should send this document back 14 days after receiving it. If you have missed this date it is still worth sending it if it will reach the court before the hearing date. Remember to keep a copy.
What you need to on the day of the court hearing
* Come prepared to the court with short noted about what you would like to say at the hearing. Do not be afraid to refer to them when you speak.
* If your financial circumstances have changed since you filled in the court form work out a new budget sheet and take it with you.
* Take 3 copies of your latest personal budget with you (one for you, one for the judge and one for the lenders representative).
* Try to answer questions clearly, calmly and fully. Remember you have as much right to put your case as the lender and the judge will be keen to get the full story.
What should you say?
If you think you can pay off some of the arrears in staged payment let the judge know your plan. If the judge agrees the lender can not evict you if you stick to these plans. If the judge does not agree with this plan you can ask for an adjournment or postponement to give you time to sell your property yourself.
If you plan to pay off the arrears in a short space of time (by remortgaging or selling your property ask for an adjournment). You should also ask for an adjournment if you don not agree with the lenders figures. This will give the lender time to get detailed accounts ready for the judge.
If the judge does not accept any of your plans they can the district judge can make a possession order, which allows you a set period, usually 28 days, before your lender can take any action.
What if I can not pay?
If you subsequently find you can not pay the amount which the court has ordered you to pay, you should go back to the court and ask for the order to be changed. Use the form N244, available from the court office. You should also contact your lender and try to make a new arrangement.
Quick Property Sale
May
16
How to Rent to Buy Your Next Home Without Rent to Buy Investors
Posted by: | CommentsToday more then ever, more and more people are looking at Renting to buy their home, due to the credit squeeze of the sub prime mortgage market. What most people don’t realize is that they don’t need to rely on professional Rent To Buy investors to secure their own home. By simply using a basic marketing system, it is possible to find and move into your own home within 12 weeks!
So, if you have been asking yourself, could I ever secure my own Rent To Buy Home without an investor, the answer is a definitive YES. In this article, we are going to cover the three main way to make a Rent To Buy deal work, and you can use this to decide what way would be best for you and your family.
Before you decide what Rent To Buy purchase would be best for you, please consider your income, your budget, your credit rating and more importantly, the needs of your who family.
The Rent To Buy method covers various different ways to make a Rent to buy purchase work, so lets cover the three most common ways.
Method one for Rent To Buy is what we call Lease with the Option to purchase. The paperwork to support this method is a normal residential lease agreement and a call option deed. The lease agreement gives you rights to occupy the property and the call option deed gives you control of the asset financially for the term of the agreement. The buyer gets to try before they buy using this rent to buy method.
Method two for Rent To Buy is what we call a vendor financed deposit. The paperwork to support this method is a contract for sale of land, a second mortgage loan agreement and usually, a caveat to protect the title. Using this method, the buyer gets to buy the home using normally mortgage finance, and the vendor (owner) of the property offers vendor finance to fund the buyers deposit. The buyer will normally need clean credit to qualify for this rent to buy method.
Method three for Rent To Buy is what we call a terms contract. The paperwork to support this method is a contract for sale of land and a consumer credit code compliant installment credit contract. The buyer makes payments to the owner for a period of time that they both agree, so in basic terms, its like a delayed settlement with regular payments to occupy the property.
So, as you can see, these three Rent To Buy methods can make the prospects of owning your own home much easier then needing to qualify for a home loan under normal circumstances. The We Buy Homes Rent To Buy methods are always treated as an open book policy, so that everyone knows to good and bad points of Rent To Buy before they jump into such a deal.
Always remember to get independent legal advice before signing any documentation, and you should find yourself in a safe and profitable venture moving forward.
Passive Income
May
15
Home Insurance - the Importance of Shopping Around
Posted by: | CommentsThe basic idea behind home insurance is pretty simple; trying to recover from a household disaster without it however, is not.
Home insurance was designed to provide consumers with the peace of mind that if anything disastrous happens to their home or belongings then they should be eligible for a financial payout, thus easing the burden of replacing what has been lost.
The insurance is split into two categories, the first – contents cover is usually required by all consumers, both homeowners and those living in rented accommodation. The second, buildings cover, is likely to be required if you are a homeowner, but may be provide by your landlord if you are a tenant; this is something that should be checked as it is not always provided a standard.
With both types of insurance it’s vital that you do not underestimate the level of cover you require, otherwise you may find that any prospective payout(s) do not cover your losses.
It is common practice for insurers to bundle the two together – offering a discounted package if you take out contents and buildings cover from them. Although this is often the easiest option, it may not prove the most cost effective. Also, when purchasing a home, your mortgage provider will almost always insist that you have some form of buildings cover, as until you fully pay off the mortgage it is their investment too.
The specific premiums that you will be required to pay will vary considerably, depending on a number of factors, notably; the area, any past claims you have made, the age of your property and value of its contents.
Although the overall cost of home insurance hasn’t changed that much over the past decade, the breadth of cover however, tends to fluctuate. To clarify, the number of situations in which your insurer will pay out can range from accidentally breaking your TV to having a handbag stolen abroad.
For this reason it is important to go over all of the home insurance details with your insurer prior to taking out the house insurance. The internet is an excellent resource for researching and finding cheap home insurance.
Rent Back Fast
May
14
What the Bank Isn’t Telling you About your Mortgage Protection Plan
Posted by: | CommentsIf you are a new homeowner or you recently refinanced chances are you have received many advertisements in your mail box about Mortgage Protection Insurance. The letters may vary in style and wording but they all say pretty much the same thing. “You have not taken advantage of our low cost mortgage protection program, please fill in the information below and send it back as soon as possible.”
The problem is these letters or offers often leave you with a lot of unanswered questions. Who sent this letter and how did they get my information? Are they affiliated with my Bank? Do I really need Mortgage Protection? How much does it cost, and is it really a good idea?
First of all where did this letter come from? Well that depends. Sometimes a bank or lending institution may have given your name out to a third party insurance company that offers mortgage insurance and has some affiliation with the bank. On the other hand, it might just be a local insurance agent who is trying to generate business. The affiliated insurance company obviously got your information from the bank they are affiliated with but the insurance agent may have just got your information from the county clerk. You see, mortgages are a matter of public record and anyone with some time on their hands and a little know how can go down to the county court house and look up information regarding your mortgage. For some of you this may make you a bit concerned but it is perfectly legal.
So that is how those letters end up at your door but the more important question is what is mortgage protection insurance and do you really need it? Mortgage Protection insurance is just what it sounds like. It is an insurance policy designed to protect your family in the event that you are not around to pay your mortgage for them. The plan might be set up to pay off the loan if you die or if you become disabled. But to answer the question do you need it depends on a lot of other factors. Do you have dependents that are counting on you to pay the mortgage every month? If you became sick or injured and unable to work how long could you pay the mortgage without your current income coming in? Do you have other life insurance or disability insurance in place? If so is it really going to be enough now that you have taken on more obligations? When was the last time you had a professional evaluate your insurance needs? All of these questions should be taken into account before you make a decision regarding Mortgage Protection Insurance.
After considering all of these questions you still may be trying to figure out if mortgage protection insurance is a good deal for you or not. Again the answer is, it depends, and there are many things about mortgage protection insurance that you may not be aware of. Here are just a few examples.
If something looks too good to be true it usually is. For example many of the plans that are sent out from bank affiliates are very inexpensive so they may seem to be quite attractive however you need to read the fine print or find an advisor that can help you. The catch on these plans usually is that they will only pay off if your death or disability is the result of an accident. What happens if you purchase one of these plans and you have a health concern like, cancer, heart attack or stroke? They won’t pay dime one, that’s what happens! So be careful that you know what it is that you are buying. Especially if it is being sold through the mail and looks too cheap to be true. Accident plans only pay if you die in an accident, period.
One other problem with the bank sponcered plans are that most of them are set up with decreasing benefits. In other words your insurance benefit will decrease as your loan decreases. For example if you start out with a $100,000 mortgage and you pay on it for 15 years and now you only owe $72,000 your insurance contract’s death benefit will also drop to $72,000. At first this might not seem like a problem and it’s really not. But what if you could instead have a level benefit for the same price? For example what if you could have a $100,000 death benefit no matter how much you owed on the house and it didn’t cost you anymore to do it that way? Wouldn’t that be a better deal? Well that deal dose exist so you may want to be careful before you sign up for the first plan you see.
Another thing that you may want to look out for is that with almost all of the banks plans they are non-transferable. This means that if you change banks, or you refinance, or even if you just sell your home you now have to get a brand new mortgage insurance plan because the bank’s plan doesn’t carry over. What if your health changes and you don’t qualify? What if your new bank doesn’t offer mortgage protection (not all banks do)? What if a few years have gone by and now you are older and the costs have increased due to your age? If any of these things happen than you would have been better off buying a plan that was transferable from one mortgage to the next. Often you can not purchase these transferable plan through the bank but instead you need to go through an independent insurance broker.
The last thing you need to be aware of is that many mortgage protection plans are offered as a group benefit. Just like the term life insurance that you get from your employer. Group plans are offered to a group of people with the same set of circumstances and because of this they are easier to qualify for. This can work to your advantage or your disadvantage depending on your circumstances. For example if you are not so healthy and you already have a health problem like diabetes you will most likely get a very favorable rate if you purchase a plan as part of a group because the health risks are spread out amount the entire group and you are not left to bare the full cost of your illness alone. But what if you are in excelent health and you have no health issues whatsoever than you may be better off not lumping yourself in with a group of people that could verry well be less healthy than you. If you are willing to subject yourself to an easy medical exam in the comfort of your own home or office than you may just qualify for a much cheaper rate.
These are just some of the things you should take into account when considering mortgage protection insurance. But the most important thing to consider is will mortgage protection insurance by itself really protect you and your family? Even if you leave your home paid off for your loved ones will they really be able to afford to live in it without your income? Leaving your home free and clear for the ones you love is certainly a noble idea and a commendable one but have you really thought about what they would do to survive financially in that house without you to take care of them? If you really want to protect yourself, your home, and your family than perhaps you should consider talking to an advisor that can help custom tailor a plan to meet your exact needs. Is mortgage insurance a good idea for you? The only answer any qualified advisor can give without looking at your particular circumstances is, it depends. At this point one of the smartest things you can do is talk with a Registered Financial Consultant to determine exactly what you and your family need so you can make an educated buying decision.
Repossession
May
13
Four Reasons Not To Consider Home Mortgage Refinancing
Posted by: | CommentsWhile benefits abound for home mortgage refinancing, that doesn’t mean it’s the right choice for everyone. In fact, for some people, it could be a disastrous decision. Here are some examples of when you should just say no to the idea.
Reason #1: Credit Problems
Some people believe home mortgage refinancing will be the answer to their credit problems because it will reduce their monthly payments and free up income so they can pay off their other debt. However, if you are already having credit problems, you may not qualify for a low enough interest rate to make house mortgage refinancing worth the effort. In fact, you could end up with a higher interest rate plus a longer pay-off.
Reason #2: Paid on Loan for Long Time
If you’ve already been paying on your home loan for two decades, home mortgage refinancing may not make much sense either unless you choose a 10 or 15 year term for the new loan. Otherwise, you might end up paying a lot more for a loan you’d have paid off in another couple of years. There are also other options to consider, such as reverse mortgages and lines of home equity that might make more sense in your present situation. Before you refinance at this point, you should consult a financial advisor.
Reason #3: Equity is Nearly Gone
Your home’s equity is the difference between its value and the amount of debt owed on it. If you want to get a good rate on your home mortgage refinancing, you need to still have at least 20% of your equity available as a cushion. That means if your home is valued at $400,000 but you owe $300,000 you don’t want more than $80,000 of your equity tied up in other debt, including home equity loans or as collateral for other loans.
If you’ve used up a great deal of your equity already, you don’t want to attempt to get house mortgage refinancing. Instead, you should try to find other ways to cut your spending until you pay down the debt and free up some of that equity. You could, of course, try to get a higher appraisal which might be wise if it’s been awhile. However, if you’ve maxed out that much of your equity you need more help than home mortgage refinancing can offer.
Reason #4: Spending Issues
One of the biggest reasons not to secure home mortgage refinancing is if you’re not going to use the freed up cash wisely. Too many people who choose this option end up overspending after they sign the paperwork that they end up in worse financial shape after receiving the funds than before. All of the benefits of taking out the new mortgage are lost, but the borrower still has to deal with the problems associated with the loan.
If you know spending is a problem, consider getting credit or debt counseling instead of refinancing.
Repossession
May
12
Tips on Avoiding Mortgage Problems
Posted by: | CommentsWhen times are good, times are very good. When times are bad, homes are repossessed. It is safe to say that the good times are over for home owners who have a mortgage to pay off and like clockwork the repossession industry is shifting up a gear.
The ability to sustain repayments on a mortgage can change rapidly. There are many home owners who have secured properties during the past few years who are now facing the prospect of losing their homes because they can’t keep up with their monthly mortgage repayments.
Property affordability has dropped considerably in the last few months as interest rates rise and lending criteria tightens. While it is easy to use hindsight to see that many home owners who are facing the prospect of losing their home should not have leapt onto the property ladder in the first place, it is more sensible to focus on the issues that they should have considered before applying for a large mortgage.
When assessing whether or not to buy a property, a prospective borrower should first look at whether or not the mortgage they wish to apply for is simply too big. It sounds so simple – and that’s because it is. Mortgage lenders offer products with income multipliers of more than five times an applicant’s salary these days which is more than twice as much as it used to be.
This raises the question – why the increase? Twenty years ago lenders assessed that borrowers could only afford a mortgage of about two to three times their annual wage. Why are they now suggesting that borrowers can sustain a mortgage of five times their salary?
Even if a borrower secures a mortgage that they can afford at present, potential future changes in the terms and conditions attached to the mortgage and potential changes to the household budget should be accounted for.
The most obvious factor that can, and probably will, change is the mortgage’s interest rate. When interest rates increase, monthly repayments on variable rate mortgages also increase. When fixed interest rate periods expire, the interest rate payable on a fixed rate mortgage may also increase. Both of these scenarios will result in an increase in the monthly repayment amount due on the mortgage and will therefore lower its affordability.
Finally, borrowers should factor in the possibility that their income may reduce. Any reduction in a household’s income will naturally lead to the mortgage, as well as other bills, becoming less affordable. There are various insurances available to mitigate reductions in income and borrowers should research this carefully when applying for a mortgage.
Borrowers who plan ahead and factor in potential changes in the variables detailed above will have a much better chance of funding their mortgage through the bad times and therefore holding on to their home.
Repossession
