Personal Finance

3 Common Myths About Real Estate Short Sales

3 Common Short Sale Myths There is a lot of misleading and incorrect information about Durham real estate short sales.

Many people don’t have a clear understanding of the purpose of short sales or how they actually work.

Essentially, a short sale is when one sells their home for less than the balance remaining on the mortgage attached to the property.

The proceeds from the sale are used to repay a pre-negotiated portion of the balance to settle the debt.

A short sale can be a solution for homeowners who really need to sell their home but owe more on the mortgage than the home is worth.

Understanding the short sale process can help make the most out of a real estate sale.

Here are some common myths and why they are false:

A short sale damages one’s credit record as much as foreclosure

In many cases a short sale is less damaging to your credit record than a foreclosure. Some lenders may think that the short seller acted in a more responsible manner than simply walking away from the property.

Although the amount paid may have been less than the mortgage balance outstanding, the loan was settled with the lender. Opting for foreclosure is often seen as a lack of responsibility.

To qualify for a short sale one must be behind on payments

This might have been true in the past, but it’s not anymore.

You just need to be able to prove that you are in financial hardship, which could be due to death in the family, divorce, job loss, mortgage rate hike or even loss of property value.

After a short sale you can’t buy again for five to seven years

This may be true in some cases, but not all. In certain situations the waiting period can be reduced as low as two or three years before you are allowed to purchase another home.

It would be wise to speak with licensed real estate professional or home financing specialist to get the most current options in the marketplace.

Pass it on

These are just a few examples of commonly believed short sale myths. A clear understanding of the short sale and the benefits it can provide is important for financially strapped homeowners.

Feel free to pass this important information on to someone that you feel would benefit from it.

Why Buying Real Estate Can Be A Smart Financial Move

Owning Real Estate Can Be A Smart Financial Move Buying Durham real estate doesn’t just give you a place to live; it can also be a very smart financial move.

This is because owning a home can be like having a forced savings account, which you are committed to for the long term.

Consistent Saving On Autopilot

Sometimes saving money on our own each month is difficult. It takes a lot of discipline to maintain a consistent savings plan.

However, paying your mortgage every month means that you are paying down the principal and working toward eventually owning the property outright.

In the early years of the mortgage, the payments will go primarily to the interest on the loan.

But over time, the portion of your payment dedicated to principle increases, which accelerates paying off the entire mortgage.

Make Yourself Wealthy Instead Of Your Landlord

In the long term, owning your own home may be a much better financial arrangement than renting a home. No matter how long you pay monthly rent, you will never own the real estate that you are living in.

When you are renting your home, it may also be possible for your landlord to increase your rent every year.

On the other hand, paying a mortgage on your real estate means that every month you get closer to owning the home.

In fact, most home mortgage lenders offer a fixed interest rate mortgage. This gives you a sense of control over how much you are paying every month, year to year.

In a fixed rate mortgage, every mortgage payment pays down a portion of the principle on your mortgage loan. In many cases this builds equity in your property and increases your net worth.

It’s a good idea to check with a professional mortgage lender to get an idea of the most up-to-date programs available.

Real Estate May Increase In Value Over Time

Over the years, your home might appreciate in value. Many experts say that the average home value increase each year over longer stretches of time, although this will vary according to the area you live in, the current economy and other factors.

Your home’s value may very well fluctuate throughout the years, but history has shown that over the long term, buying a home can be a very beneficial financial decision.

Understanding the benefits of home ownership, including the potential financial upside of purchasing your own home, can be an excellent way to further your overall personal financial plan.

Clever Tips for Paying Off Your Home Mortgage Faster

Pay Off Mortgage Faster Paying off the mortgage on your Durham home faster not only means that you’ll be able to enjoy the peace of mind that comes with completely owning your property sooner, but you may also save thousands of dollars in mortgage interest payments over time.

Below are seven clever tips to help you get your mortgage payments on the fast track.

Save for a large down payment
Make as large of a down payment as you can reasonably afford. The more cash you can put down, the less you’ll have to borrow from the bank. This will reduce your monthly mortgage obligation.

Read the fine print
When you are choosing a mortgage, ask your lender if there are restrictions related to paying extra principal monthly. Some lenders will charge you for making extra or early payments.

Prepay early in the life of the mortgage
The early years of a mortgage are interest-heavy. On a 30-year mortgage, throughout the first five to seven years, you payments are mostly interest. Request an amortization schedule of your mortgage to get a clear picture of how this works.

Be smart with unexpected fortune
If you get an unexpected chunk of cash, such as a gift, prize, work bonus, inheritance, tax refund or other windfall, consider applying it directly toward paying down the principal on your mortgage.

Double-check your records
When you make extra payments, ensure that they are processed correctly. Sometimes when the lender receives a payment that is outside of the monthly cycle, they may not know what to do with it. Make a special note and keep track of the payments yourself, so you can make sure they’ve been applied to your principal.

Increase your payment
Even increasing your monthly mortgage payment by a small amount may take years off the length of your mortgage. Consider how much additional you can afford to pay every month rather than just the minimum required payment amount.

Think about a bi-weekly payment
Many lenders offer accelerated, bi-weekly mortgage payment programs which can reduce your loan term by several years, saving mortgage interest over the life of the loan.

These are just a few techniques you can use to pay off your mortgage more quickly. Remember, the fewer years you pay on your home loan, the less mortgage interest you will pay over time.

When Can You Buy Real Estate After Foreclosure?

Waiting Periods After Foreclosure If you lost your Chapel Hill home due to foreclosure, you probably haven’t given up on the dream of owning a new home. The good news is that a number of guidelines have changed which may allow you an opportunity to buy that new home sooner than you think.

There are a few guidelines that lenders follow to determine when you’ll qualify for financing after foreclosure. Arming yourself with this information may help you qualify again for a mortgage.

Foreclosure With Extenuating Circumstances

Generally, lenders will take into consideration any extenuating circumstances surrounding the foreclosure on your North Carolina real estate.

Was there a death or illness that prevented you from earning money to pay your mortgage? Did you have a job transfer that came with a steep pay cut? Were you severely injured and temporarily disabled as a result?

You can add a memo that explains any lapses in credit worthiness to potential lenders. This report can be as long or as short as needed.

Many lenders will shorten the waiting period for documented extenuating circumstances. Traditionally the waiting period after a foreclosure is seven years. However, these waiting period guidelines may change and you would be best served by getting up to date information from a qualified mortgage professional.

Deed-in-Lieu of Foreclosure and Short Sale

You may be wondering what the waiting period for financing is if you have exercised a deed-in-lieu of foreclosure or successfully negotiated a short sale. Fortunately many lenders offer options if you were able to avoid an actual foreclosure.

Traditionally the waiting period for a deed-in-lieu of foreclosure can be four to seven years. If there were special circumstances surrounding the deal, you might be able to qualify in as little as two years. The lender may have certain down payment or credit score requirements as a condition of approval.

Getting financing after a short sale generally has the shortest waiting time before qualifying for a new home loan. Generally the lender will only require a two-year waiting period before they’ll approve financing. Once again, a call to a licensed mortgage professional will give you the most up-to-date information.

The good news about financing after foreclosure is that it is possible. Your dreams of owning a home can be fulfilled even if you have experienced a foreclosure in your past.

6 Tips For Buying An Older Home

Buying older homes Older Durham homes sometimes offer more charm and character than the newer houses of today. They boast gabled roofs, crown moldings, hardwood floors and antique fixtures.

Buying an old house is like buying a piece of local history. Its beautiful period features can give it a timeless beauty and grace that is hard to resist.

However, buying a house from another era can be an endeavor fraught with potential problems. Older houses are not necessarily built to the same electrical or plumbing standards of today. Plus, if they have not been maintained correctly through the years, they can turn into a serious money pit or a potential hazard.

Here are six tips to keep in mind if you are considering buying an older home:

Always hire a professional real estate inspector to take a close look at the property. A professional inspector is trained to spot structural damage or issues that might seem minor, but may cause major problems in the future.
Look for signs of moisture damage. Many old houses have problems with moisture because over the years they have settled.
If the old house you are considering has vintage wiring, such as the knob-and-tube technology that was popular around the 1920s and 1930s, plan to completely update the wiring for your safety.
You might need to add insulation. Many older homes don’t have insulation in the walls or attic, which can increase the size of your energy bill.
Be on the look out for iron pipes, which were popular up until 1940. They can become clogged with rust and may need to be replaced.
Have the house tested for asbestos, if it was built before the 1960s.

These are just a few things to which to pay attention out when buying an older home.

Take time to inspect the property thoroughly. With proper attention, you can mix today’s modern technology with your home’s period features to create a combination of charm and safety.

Reasons To Attend Your Own Home Inspection

Be present for your home inspection As a home buyer in Chapel Hill , you can get a feel for whether a home’s systems and appliances are in working order. However, you can’t know for certain until after the home’s been inspected.

This is why real estate agents recommend that buyers hire a licensed home inspectors immediately after going into contract. It’s the best way to really know the home which you’re buying.

By definition, a home inspection is a top-to-bottom check-up of a home’s physical condition and systems, including a review of the structure, and its plumbing and electrical systems. Home inspections are not the same as a home appraisal, which is a valuation of the property.

When you commission a home inspection, you should be present for it. Here are 3 reasons why :

Seeing For Yourself
There’s a big difference between reading a report and seeing “live” what may be right or wrong with a home. With first-hand knowledge of a potential issue, you’ll be in a better position to determine whether a problem warrants contract cancellation, or whether it’s an additional negotiation point.

Discovering The Home
Via a home inspection, you will learn where the systems reside within a home (e.g.; boiler room, garage), and how to operate them. This is a valuable educational opportunity and most inspectors are happy to share what they know. It’s also a chance to ask questions about maintenance and upkeep.

Better Understanding
A home inspector’s job is to review and disclose the condition of the home. The inspector’s report, however, is just a summary on paper. In being present for the inspection, a buyer will be able to visualize and understand the report’s conclusions more clearly. This can make for more effective re-negotiations with the seller, in the event that damage or distress is identified.

So, what should you do during the home inspection? Your primary tasks are to watch, listen, learn and ask questions. A professional home inspector will welcome your participation in the process.

Buying A Home In A Golf Community

Golf course communities It’s January, but home sales in golf communities remain strong like in the rest of the country.

If you’re looking to buy a home in a golf course community, either as a primary residence or as a vacation or retirement home, there are additional home traits which make buying on a golf course different from buying a typical Chapel Hill single-family residence.

Here is a quick primer of home characteristics to consider when buying in a golf community.

Land Plot
When looking at homes within a golf course community, be aware of its location with respect to the community entrance. Homes nearest to the entrance will receive the most drive-by traffic and may be slightly more noisy that a home which is situated far from the entrance. However, homes close to the entrance will also be more navigable for visitors.

Security
How security-conscious is the community? Golf course communities tend to be gated communities but each will have varying levels of security. Some will have 24-hour gatepersons to manage and monitor traffic into the community. Others will use a pass-key system. Determine what’s most important to you.

Proximity To Golf Course
Consider the physical location of the home relative to the golf course(s). Homes which are situated near tee boxes are less likely to be struck by errant golf shots, but may be louder because of chatty players. Homes off the golf course are typically free of all such hazard.

Amenities
Many golf communities feature amenities such as swimming pools, exercise facilities, and clubhouses. Some have tennis courts and other recreational outlets. Do these services require extra fees? Is there a mandatory membership cost, with minimum monthly purchase levels? Be sure to ask.

Association Dues And Restrictions
As with most planned community/association, golf communities typically require annual or monthly membership dues; and publish a list of rules by which homeowners must abide. For example, home improvements may be restricted by the rules of the community. Before buying, review the association by-laws carefully.

Golf course communities are a terrific way for golf enthusiasts play (nearly) year-round, and can provide a terrific lifestyle even beyond the golf game. If you plan to buy in a golf community, use the tips above to help with your research.

Then, when you’re ready, talk to a real estate professional for help with your purchase.

What To Do When Your Home Doesn’t Appraise At Its Purchase Price

Experienced home sellers in Chapel Hill know that reaching a sales agreement with a potential buyer can be just the start of the negotiation process. There are often inspection issues to resolve, among other items.

One particular negotiation point which can present difficulties for both buyers and sellers is when a home’s appraised value falls short of its contracted sales price.

Home appraisal remedies for home sellers Sometimes, this happens because the home’s price was inflated. Other times, it’s the result of a faulty appraisal.

As a home seller, there are some common appraisal problems of which you should be aware. Here are some of them, and how to seek remedy so that the home sale process remains smooth.

Inaccurate comparisons
An appraiser will assign your home’s value based on comparable properties and recent sale prices. However, some homes — notably those in foreclosure; sold via short sale; or which were abandoned — sell at a discount as compared to non-distressed properties. An appraiser may want to ignore these types of comparable homes, or make proper valuation adjustments.

Ignored market conditions
The housing market can improve quickly as we’ve seen in some U.S. markets since 2011. Appraisers, though, may not consider a local market’s demand and its rapidly rising prices — especially after the recent downturn from last decade. If an appraiser is not taking into account such information as multiple offer situations, low local inventory, and days on market, your home’s appraised valuation may be affected.

Slow turn-around time
Appraisers operate under strict time guidelines. When an appraisal takes more time than usual, therefore, it’s often the result of the appraiser’s uncertainty on the home’s value. This is a common scenario for unique homes for which comparable properties are scarce. It can also be the case for when an appraiser is unfamiliar with your area. If an appraisal takes an inordinate amount of time to complete, consider asking your REALTOR® to review the figures.

To err is human and appraisers make mistakes occasionally. How you handle those mistakes as a seller can be the difference between a sold home and a canceled contract.

3 Ways To Purchase Foreclosed Properties

Foreclosure sign The process of buying a foreclosed home is slightly different from the process of buying a non-foreclosure home. If you want to invest in Durham foreclosures, therefore, it is important to understand the different ways by which to purchase a foreclosed home.

There are three main ways to buy a foreclosed home.

Buying before the auction
Some delinquent homeowners may want to sell their homes before facing an actual foreclosure.In this instance, the homeowner, in agreement with the lender, agrees to sell the home for less than the amount owed on the mortgage.This is called a short sale. Short sales are “pre-foreclosures”, of sorts. By broadening your home search to include short sales, you can identify homes that may be sold at a discount.

Buying at the auction
Another way by which you can invest in foreclosure homes is by buying the home at auction. From area to area, the legal requirements for the sale of a foreclosed home at auction may differ. If you plan to buy at auction, you’ll want to be familiar with your area’s customary judicial proceedings.

Buying after the auction
Buying after the auction means buying bank-owned properties. This can be the most lucrative and safest means of investing foreclosure properties. This is because lenders often reduce the sales prices of their home inventory in order to “sell it quickly”. It can be expensive for banks to own foreclosed homes, and few banks are equipped for managing owned homes. Check with your local real estate agent to see what, if any, bank-owned homes are available for sale in your area.

The process of buying a distressed home is different from the process of buying a “traditional” one. Therefore, regardless of which path you follow to buy a foreclosed property, have an experienced real estate professional on your team.

Short Sale : Writing A Letter Of Hardship

A short sale is when a property is sold for less than its remaining mortgage principal balance, and executed as a way for both the existing homeowner and mortgage lender to reduce their respective losses.

Typically, although not always, short sales are reserved for situations of extreme financial hardship; just prior a bank beginning foreclosure proceedings.

Short sales are not automatic, however. Homeowners must often prove the merits a short sale to their lender, which often involves documenting that selling the home for less than its worth is the best and most viable option for all parties involved.

The short sale process starts with a letter of hardship.

To prove your short sale worthiness to the bank, you’ll be asked to submit a cover letter which explains your hardship, and to provide full financial disclosure. You will also need your original purchase contract, a balance sheet of your income and expenses, your asset statements and proof of income, and two years of federal tax returns.

Lenders prefer handwritten letters and are more apt to agree to a short sale for homeowners who may have lost jobs or encountered significant medical bills, as opposed to those who engaged careless spending.

Draft a compelling letter and avoid extraneous details. Be short, be thorough, and be complete.

In addition, note that the following traits can help speed your short sale approval :

The home is marketable
A second lien holder, if one exists, is amenable to short sale proceedings
A foreclosure is not scheduled within the next four months

Choosing to short sale your home in Raleigh or anywhere else , though, is not something which a homeowner should pursue alone.

The process of selling a home in a “distressed” state is significantly different from selling a non-distressed home. Homeowners selling in a short sale should seek the advice and counsel of an experienced real estate agent.

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