How not to buy a home
First, we go driving all over town to find all the houses we would like to live in and burn $50 in gas. We pay for take-out since we didn’t get home until late because we got lost, twice. Next, we try to remember where all these houses were and try to contact an agent to put in an offer on the one we like the most. Since the one we wanted just went under contract because we were not fast enough, we put an offer in for our second choice. The seller likes our offer and asks for a pre-approval letter from the bank, oops. After going to the third bank, we get pre-approved for a loan, but it is not for enough to buy the house we wanted and we don’t have enough money to meet the purchase price; bye-bye second choice. Now we are getting aggravated. Let’s put an offer on the third and fourth choices. The third choice seller takes our offer. We negotiate the finer details and set a closing date. Hurray for us. Two days before closing, the attorney calls and says the bank changed their policy last week and we no longer qualify for the loan. We can’t qualify for a loan now because our credit score dropped from all the other banks pulling our credit. This scenario can be typical...
view the listingAdvantages of an LOC part 2
I told you before how much more you can do with a line of credit than you can with a standard loan. Now, let me explain what you are looking for. Most large banks provide the kind of line of credit we want. There are a few things to ask for: – A variable interest rate (not my favorite either, but the way the interest is calculated comes out cheaper anyway.) – Open Line of credit – This is important, some banks offer a LOC that is structured like a loan. You don’t want that; you want as close to a checking account as possible. The account should come with either a debit card or checks and allow you to withdraw or deposit at any time (at least five withdrawals per month). This allows you to deposit income into the account, enabling you to keep the average daily balance low for most of the month and pay bills with that same money as bills come due. What are we going to do with such an account? This account does not charge interest until you pull money out, but as I said earlier, you can control how much interest is charged. Now, use this account to pay off the other debts, ESPECIALLY YOUR MORTGAGE. I will make a 2-5 thousand dollar payment on my mortgage every so often. The...
view the listingAdvantages of an LOC (Line Of Credit)
Many people don’t understand the differences between a loan and a Line of Credit. Here is where you will be amazed. Loan – You go to the bank to borrow money. They pay for the item you are interested in (real estate, properties for sale, rental property, etc.) and you have to pay them back at scheduled intervals which include a set amount of interest and principle each month. The payment you send is only credited to your account once a month, no matter how many payments you send in a month. If you pay on the first and they credit that payment to your account on the 30th, that means they have your money to invest for free for 29 days. If that set payment becomes too much to handle, oh well, you signed a contract of some kind and you’re stuck. LOC – Lines of credit are very different. The bank qualifies you for a line based on the equity in an asset (home, rental property, IRA, etc) or the provable income you make. That money is placed in its own account at the bank until you need it. If you don’t withdraw it, you do not get charged. That money can stay on standby forever if you like. Also, an LOC, in most cases (or ask for it), is on a variable interest rate that...
view the listingWhat banks are looking for in a real estate loan application
Although banks are hungry for the amount of business they had before 2008, they are still required to hold their ground with some regulations that are cutting their own throats. Over the last two months, I have interviewed over twelve (12) banks and lending agencies for loan requirements for my own use and found some hefty requirements. Banks do one of two things with a loan they create. They sell it on the primary market or keep the loan “in house,” meaning they receive the payments and earn the interest themselves. Most of your smaller community banks keep loans “in house,” which means they can make their own rules about the requirements for approving a loan. The rest are sold to Freddie Mac or Fannie Mae, which tell the banks the criteria of the loans they will buy. All banks differ a little in the home loan requirements, but as of this posting, these are the basic minimum requirements for getting a loan approved at the majority of banks. Requirements for standard homes: Debt to income ratio of 38% (no more than 38% of your monthly income goes out in debt payments, i.e. car loan, credit cards, mortgage, etc.) Credit score of 640 or better. Some will go as low as 580, but the interest rate is much higher. WARNING: Do not let them run your credit until...
view the listingOwner Financing
The mainstream media is currently trying to tell everyone that the housing market is getting better, looking up, showing promise. OK, where? As I have said before, the housing market is like every other market place, some cycles are great for the buyer and sometimes the market is great for the seller. Right now it is most definitely the buyer’s time. So, “where are the buyers?” you say. The ones that can buy are getting the best deals they can in REO’s and foreclosures. They are not going to waste their money buying in the retail market when there are so many half-priced houses on the market. The other buyers that are interested in your house are still waiting for the bank to approve them for a loan. Out of all the potential buyers in the market right now, only a small percentage can get funding to actually buy. So, how do I get my house sold without giving it away? Simple; you provide the funding. There are plenty of buyers out there, but many can’t get a loan. There are even more houses on the market to choose from. Therefore, it is important for you to stand out and provide something no one else will: owner financing. Most of the general public won’t finance their personal house because they are afraid. They don’t know what to do....
view the listingSmart Way To Use Credit Cards
The use of credit for investing has been one of the big contributors to the prosperity of the United States during the turn of the 20th century. We see it all over middle Georgia. It was also the main cause of the great depression of 1929 and a major contributor to our depression in 2008 (Note: The US has shown an economic downturn roughly every 40 years, anyway.). The use of leveraging someone else’s money or extending credit to invest has created most of the wealth you see today. Investing without credit means that you must use all of your own money to complete a transaction. That can take days or even years, depending on how big the transaction is (On the other hand, inflation might not have climbed so fast, either). Now, credit cards and debit cards have taken credit to a whole new level. Let’s look at how credit cards are being used and how they should be used. Most people buy items on a credit card that they don’t have the money to buy “quite yet,” so they walk into a payment commitment with a relatively high interest rate. They add the payment amount to the monthly budget and hope there is enough to cover it. A $400 shopping trip for school clothes, a computer, groceries, or to entertain clients, turns into an $800 expense...
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