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Archive for the ‘Real Estate: Buying Article Category’ Category

More and more people are investing in properties nowadays. One of the benefits for investing in real estate property is its appreciated value. Statistics show that the value of property has been increasing steadily over the last couple of years.

The second benefit of property investment is that it can offer steady income. When you buy a good property, you can rent it out to other people. You can invest in a property at a holiday destination that is packed with tourists every year. In this way, you will be able to rent out the property at a high price. During tourist season, many tourists will rent the property. You can discuss with the local real estate agent about the best place to invest in properties.

The third benefit is that you will get tax advantages. To find out what type of tax advantages you can ask the your local agent or lawyer for advice.

The fourth benefit is that you don’t have to stay at hotel when you buy a property at the foreign country. Most of the times hotels are not clean. Many people have slept before at the hotel so there is a high chance that it is dirty.

The fifth benefit is that a real estate property is tangible asset. Investing in a good property is not as risky as investing in the stock market. The price of the stock can goes up and down. The increasing number of population is the reason for the steady increasing value of the real estate property.

The sixth benefit is that you can control the amount of profits you earn from the land, house or condominium you sell. You can raise the value of the property by renovating it or building a house on it. A few renovations can improve the appearance of the property. You can also furnished the house to increase the value. You can increase the durability of the systems in the house by hiring someone to maintain them.

The seventh benefit is that foreigners can profit by using their money to purchase the properties in another country. Usually, the value of the money of the foreign investor is bigger than the value of the money of the country where they invest in the real estate property.

The eight benefit is that it offers a good leverage. For example, if you use $100,000 to invest in three real estate properties, you will be able to get a high return.

The ninth benefit is that you will get instant equity. You don’t have to wait 1 – 2 years to see the profit of the real estate investment shows up.

The tenth benefit is that there is a lot of investment possibilities. The value of the real estate property can increase up to 40 – 50% over 2 – 3 years or more.

With recession gripping the world economy and inflation rising tremendously, it has become quite difficult to buy a house in big cities like London and Paris. Rising real estate prices has made it impossible for people migrating from countryside or abroad to have affordable housing. People are increasingly feeling that it is unable to achieve the dream of having own home in such posh locations.

To counter this feeling, the governments in many countries have introduced a scheme that has been quite beneficial for both public and private workers. The shared ownership is one such scheme that will not only allow dreaming for a house but also provide sources that can help in achieve that dream. Such properties are usually provided by authorised housing associations or societies who have enough experience and knowledge of the area.

The new home build buy is a popular scheme followed under shared ownership properties. It works on the concept of part buy part rent basis. Under the concept, any individual or family is allowed to buy a house in the area of his preference on part basis. He is allowed to buy a part of the house which is roughly 25 to 75 percent of the entire property. The rest of the property is used by buyer on rental basis. The rent is usually a subsidised amount that needs to be paid to landlord i.e. housing association. It is possible for buyers to buy the remaining portion fully in cash or raise a mortgage.

These houses are provided by housing associations or societies which are basically non-profit organisations are working along with government to provide affordable housing to common man. The associations not only provide the required services free of cost but also forward the list of areas or apartments that have been covered under part buy part rent scheme. It is important for potential buyers to enter into contract with any of these associations before signing papers for purchase. It is necessary to become a member of the housing association to make the purchase. for instance, UK government has agreed with NHS to provide accommodation on shared ownership. This helps public workers buy their own house at locations that are near to their work place.

Keep a Clean Credit

Most of the first time buyers cannot afford to give the full payment for the home they wish to buy. So for them to complete the buying process they need to get mortgage loan. Therefore, it is necessary that you have a clean credit history. To do this, secure yourself first a copy of your credit report before you start your house hunting. Then, start checking your credit and verify that all information provided in your record is true and correct. Speak to any creditors to update your record in cases your card has been cancelled or there are balances that have been paid off.

Get Pre-approved First Before House Hunting

Getting pre-approved will help you save time and effort in looking for houses you cannot afford. Contact a mortgage professional and tell him how much you can afford and get pre-approved before you start finding for the best home for you. Pre-approval means that you have been approved for the purchase by a lender that gives you the advantage in bidding for a home. Getting pre-approval often depends on your monthly income, debt and credit history.

Aim for a Home That Is Within Your Budget

Make sure that you have the financial capacity to purchase the house that you want. For you to be able to handle this, take into consideration your income, debts and your expenses and how these factors would affect your ability to buy a new home.

Check Out the Neighborhood

Examine the locations and price ranges for the type of home you are looking for. If you are interested in a particular neighborhood, know the available amenities, schools, property taxes, crime rates, and other neighborhood features of the area. Talk with different people who live in the area and visit at different times of the day. Research is very important in buying the perfect home for you. Remember that when you buy a home you are not buying just a home but the entire neighborhood package.

Seek for Professional Help

The process of buying a home is a difficult process thus it is necessary that you seek for the help of the professionals in home buying. There are many multiple listing services available on the web that can help you learn information about home buying. They could help you find the perfect home for your budget and preferences. You can also hire a real estate agent to assist you in picking the home that would best suit your needs. There will be a lot of things and papers to deal with along the home buying process and hiring agents can be very helpful in making all these tasks easier.

Hire a Home Inspector

It is very important that you hire a home inspector before you buy a home. They can help you spot potential problems before you purchase your home. Inspecting the condition of a house is a significant part of the home-buying process and should be integrated in your purchase contract as a condition of closing the sale. One or more professional home inspectors should scrutinize and examine the whole property to look for defects or malfunctions in the building’s structure, such as the roof, plumbing, or foundation, and detect pest infestations or dry rot and other damages.

If you’re thinking it’s time to take that leap forward and buy a home, the first thing you’re going to need to know is what you can afford. You don’t want to waste your time (or your agent’s, if you’re using one) looking at (and getting attached to) homes that are out of your price range. Rather, have a good idea of what you can afford and set a limit to your big purchase.

To know how much you can afford, you will need to figure out your debt-to-income ratio. This figure is a percentage that’s based on how much personal debt you’re carrying in relation to your income. Lenders will use this in determining how much mortgage debt you’ll be able to handle.

Although in some areas, the debt-to-ratio percentage differs, the general debt-to-income ratio is 36%. Another good guideline to remember is to keep the gross monthly income going towards your housing expense at not more than 28%.

So, using this guideline, how can you find out how much of a monthly house payment you can afford?

1. First of all, figure out the total monthly debt you can handle by multiplying your monthly gross income, before taxes and any other expenses, by 36% (or 0.36).

2. Next, add up all of your family’s FIXED monthly debt expenses. These are your expenses that are regular and don’t change. They would include your automobile payments, minimum credit card payments, student loans, child support, etc. These would not include varying expenses like groceries – simply your fixed expenses. Once you have this amount, you would subtract it from your total monthly debt that you figured out in the first step.

3. The number this leaves you with would be your maximum mortgage payment allowance. It is the most you can afford.

You’ll need to remember that the number you come up with will have to include not only your mortgage payment, but also insurance and property taxes. There are calculators you can use online to help you figure out what you can afford based on that amount.

If you’re wondering if you can buy a house after foreclosure, the answer is yes, you definitely can, but only after a certain amount of time has passed. Now, to clear, there is no restriction on buying a house after foreclosure, only on qualifying for a new mortgage after a foreclosure. Mortgage lenders consider a recent foreclosure as a significant credit risk, so they want to see that you’ve reestablished your credit history before they’ll lend you money to buy a house after a foreclosure.

In today’s mortgage marketplace, the two dominant sources of mortgage financing are Fannie Mae conventional and FHA-insured. Fannie Mae guidelines tend to be more stringent than FHA, so if you have a past foreclosure and some bruises on your credit, it’s likely you’ll be able to qualify sooner and more easily under FHA guidelines.

The downside to FHA loans, however, is that you’ll be hit twice for mortgage insurance, once at loan closing (called upfront mortgage insurance, or UFMIP) and on a monthly basis as part of your mortgage payment for a minimum of five years. Monthly mortgage insurance is only required on Fannie Mae loans if you put down less than 20%.

Fannie Mae Foreclosure Waiting Period

The standard waiting period after a foreclosure under Fannie Mae conventional guidelines is 7 years. In other words, you’ll need to wait at least 7 years after the completion date of your foreclosure to qualify for a new Fannie Mae loan.

It’s possible that you can get this waiting period reduced, but only if you can document significant extenuating circumstances beyond your control that led directly to the foreclosure.

What constitutes “extenuating circumstances” can be very subjective, so expect lenders to exercise a lot of their own discretion when determining what qualifies. Many lenders are afraid of buy-back risk from Fannie Mae, so don’t be surprised if some choose to take a hard line even though Fannie Mae guidelines appear to allow for your situation.

FHA-Insured Foreclosure Waiting Period

Under FHA guidelines, the standard foreclosure waiting period is a less stringent 3 years. FHA also allows for reductions due to extenuating circumstances, but as with Fannie Mae guidelines, what qualifies can be very subjective and will differ from lender to lender.

Conclusion

If you have a foreclosure in your credit history, I encourage you to take the necessary steps to reestablish your credit during the waiting period. Clear up any derogatory credit items, pay accounts on time, and pay down and eliminate debt so that when you’re ready to qualify for a new home loan, your credit will be in the best shape possible – which will help you qualify for the best deal possible.