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81	Can You End-Run The Two Year Rule? Can You End-Run The Two Year Rule? Source: Benny L. Kass - July 15, 2002 Q: We purchased our house in the l970's for approximately $40,000, and have put in about $25,000 of improvements. We lived there until September of 1999, when we retired and moved to a retirement home...
82	Can You Get A Loan Without A Termite Inspection Can You Get A Loan Without A Termite Inspection Source: Peter G. Miller - August 12, 2003 It was a simple question -- at least so it seemed -- that a reader raised with Ask Realty Times. The correspondent wanted to know if a seller must give a copy of the termite inspection to the buyer...
83	Can You Really Buy Real Estate with "No Money Down"? by William Bronchick, Esq. The late-night television airways are full of “nothing down” stories. Are they true? And, if so, is it possible to buy real estate with “no money down.” Furthermore, does it make sense to buy real estate with no money down? Everybody wants to buy real estate with no money down (especially if you have no money), since it is the ultimate form of "leveraging." However, keep in mind that there is nothing special about buying a property with no money down. On the other hand, if you can purchase the property at a substantially below-market price and with no money down, you then have a good deal. This is buying 100% loan-to-purchase, not 100% loan-to-value. The problem with buying a property at a below-market price is that lenders tend to "penalize" you with their loan regulations. Fannie Mae conforming loan guidelines usually require that an investor put up 20% of his own cash as a down payment. The 20% rule applies even if the purchase price is half of the property’s appraised value. Thus, the loan-to-value (LTV) rules are based on appraised value or purchase price, whichever is less. A common, but illegal, practice is for the buyer to put up the down payment and for the seller to give it back to the buyer after closing "under the table." An even dumber method is to over-appraise a property, effectively financing a property for 100% of its value. People may get away with it all the time, but these practices are loan fraud, punishable by a nice vacation at Club Fed. SIDE NOTE - REFINANCING YOUR EQUITY Many investors refinance every few years as property values increase, using the extra cash to buy more properties, as suggested in the best-selling book, “Nothing Down.” While this process does increase your leverage, it also increases your risk. There is nothing inherently wrong with taking out cash in a refinance, so long as the cash is used wisely. Spending the money as profit is not a smart use. If you end up with high LTV and/or negative cash flow on the property and housing prices fall, you are in for a world of financial hurt. A Real-World, Common-Sense “Nothing Down” Deal As you can see, there are smart and not-so-smart ways to buy “nothing down”. The following is an example based on a real deal I helped a student of mine put together: Sandy is interested in purchasing a home to live in, but she doesn’t have much cash. She just started her own business and cannot not qualify for a conventional or FHA low-down payment loan. Sandy finds a seller with a nice property, with very little equity, but a low-interest rate loan. Sandy leases the property from the owner for three years for $1,200 per month, with an option to buy at $162,000. The house is currently worth $179,000. The seller agrees to the discounted price because he saves a real estate commission and can wrap up the deal quickly. The agreement provides that the seller give Sandy a 25% ($300) credit towards the purchase price for each rent payment Sandy makes. Sandy also puts up $1,200 as a security deposit, which will be credited towards the purchase price when she exercises her option to purchase the property. After 12 months, the property has appreciated in value to $189,000. Or, if the property values do not increase, Sandy has made improvements to the property that increased its value. In addition, Sandy’s “equity” has increased because of the $300/month rent credit. Thus, after 12 months, Sandy’s equity position is $31,800: $162,000 original option price less $ 3,600 rent credit less $ 1,200 security deposit ------------------------------ $157,200 “strike price” $189,000 market value minus $157,200 strike price --------------------- Equals $31,800 “equity” Sandy exercises her option to purchase the property at the “strike price” (original option price, less credits). The Lease/Option “Refi” In funding a loan to buy the property, most lenders would consider this transaction a purchase, and base their LTV requirements on the option strike price ($157,200), not the appraised value ($189,000). So, if Sandy were to borrower 90% LTV, most lenders would have happy to give her .9 x $157,200, which is $141,000 (which is actually about 75% loan-to-value). In short, the lender is treating the exercise of a purchase option the same as a home purchase, effectively "penalizing" the buyer. A small number of lenders will treat Sandy's transaction as a refinance, in which case the LTV is based on the appraised value, not the option strike price. So, a 90% LTV refinance would allow a lender to give Sharon .9 x $189,000 = $170,100, which would cover the strike price ($157,200) and the loan costs (approx $4,000). In fact, Sandy would have enough cash left over to buy new furniture. Or, Sandy could simply borrow less, having a lower monthly payment. Either way, this is solid, “nothing down” deal. Note that a lease/option “refi” is not an ordinary transaction, so be patient if you are looking for a lender that will fund in this manner; it will take a lot of phone calls!
84	Capital Gains: What If You Don't Own Your House For Two Years Capital Gains: What If You Don't Own Your House For Two Years Source: Benny L. Kass - February 17, 2003 If you owned and lived in your home for two years, the law is clear: you can exclude from profit up to $250,000 if you are single or $500,000 if you are married and file a joint return...
85	Capital Gains - Determining Basis and Gain Easier Than You Think Capital Gains - Determining Basis and Gain Easier Than You Think Source: M. Anthony Carr - July 4, 2003 My last column on capital gains created a hailstorm of emails which could be divided into two camps: determining basis and the two-year live-in requirement...
86	Capital Gains Tax Relief Extended To Home Offices Capital Gains Tax Relief Extended To Home Offices Source: Broderick Perkins - January 16, 2003 Late last year, when the Internal Revenue Service published guidance about capital gains tax exclusions on the sale of your home...
87	CASH IS KING!! CASH IS KING!!
88	Show Me The Money!! Show Me The Money!!
89	Sub Prime Lenders… Sub Prime Lenders…
90	Cashing In On Delinquent Mortgages! Cashing In On Delinquent Mortgages! Donna Bauer:
91	Change Is Inevitable Change Is Inevitable Bill Woodall:
92	Flipping Properties (part 1) Flipping Properties (part 1) Bill Woodall:
93	Goal Setting Goal Setting Bill Woodall:
94	Networking Is For Winners Networking Is For Winners Bill Woodall:
95	Texas Foreclosure Procedures Texas Foreclosure Procedures Bill Woodall:
96	Choosing the Right House for You AND Your Spouse Choosing the Right House for You AND Your Spouse Written by Gary Allalouf However, it is also helpful to be as objective as possible when looking at properties. Therefore, by keeping the following things in mind when looking for your dream home, you will be able to avoid falling in love with a totally unsuitable house, simply because the bedroom has a magnificent view. Create a Budget The first step is to create a budget. Figure out how much you can and want to spend on a down payment. Then determine how much you can afford in monthly mortgage payments. With these things established, your real estate agent can hone in on the homes within your price range, eliminating those homes you cannot reasonably afford. Determine the Layout Another key element your real estate agent needs to know is the desired layout for your home. How many bedrooms do you want? Do you need a study? What about a playroom? Can you simply not live without a view of the mountains or the ocean? Once you have decided on these things, your real estate agent can further narrow down the list of properties for you to consider. Location The final factor you need to consider is location. How much of a commute to and from work are you willing to have? Do you have children and want to be close to a park or school? Do you want to be within walking distance from your favourite bar or restaurant? Having a certain radius to look within will also help to narrow down the selection of homes that you and your partner will agree on. The Neighbourhood Once you start actually looking at properties, you will have to start doing some more research, just to make sure that you’re not buying the a great house in a bad place. Do you like the neighbourhood your potential new house is located in? Are the neighbouring houses nice? Are the roads maintained? Are the people friendly? The House How does your house compare to others in the neighbourhood. Does it look out of place? Is it significantly larger or more expensive than others in the area? Despite being tempted to get the large house on the corner, real estate experts agree that it is better to have a smaller or mid-sized house when compared to others in the neighbourhood. Also, don’t be put off by cosmetic aspects of the house that can be easily changed once you move in. Always remember to look at the potential of the house, rather than what the current owners have done with the curtains or the paint. By following these steps, you and your spouse should find it much easier to agree on a home that fits both your needs and lifestyles! Search Hawaii and Oahu Real Estate
97	Close More Deals with Assumptive Language Patterns Close More Deals with Assumptive Language Patterns By Bill Twyford
98	Closing Costs Closing Costs First, the responsibility of who pays for closing costs is always negotiable. Local custom may dictate which fees the buyer will pay and those the seller pays. Typically, the buyer pays for home inspection services and escrow, deed preparation and recording fees, depending upon what is customary for the county the property is located in. He or she may also pay for title insurance, since this is required by the lender. The buyer is also responsible for any fees or costs associated with obtaining the purchase loan. The seller customarily pays the real estate agent's commission, as well as costs associated with transferring an unencumbered title, such as a title search, reconveyance deed and documentary transfer tax. Often, a seller will sweeten the deal by offering a one-year home warranty. Who will pay for what closing costs customarily differs from county to county and should always be clearly spelled out in the purchase offer. A creative sales associate will consider the cash, income and tax situation of the home seller and the buyer when constructing an offer. For instance, if the buyer is short of cash, the agent may ask the seller to pay the buyer's loan points up front in exchange for some other concessions from the buyer. In this scenario, the buyer and seller benefit and both get what they want.
99	Closing Costs When Buying or Refinancing a Home Closing Costs When Buying or Refinancing a Home Source: RealEstateABC.com - 2002 Introduction, Lender Associated Costs, Items Paid in Advance, Impounds or Reserves, Costs not Associated with the Lender, Refinancing Associated Costs, Asking the Seller to Pay Closing Costs - Advice and Rules...
100	Coborrower With Bad Credit Blocking Loan Approval Coborrower With Bad Credit Blocking Loan Approval Source: Henry Savage - April 23, 2003 Question: My boyfriend and I have found the perfect "starter home". The price is $250,000 and we have over $50,000 in savings so we can make a twenty percent down payment...
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