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        <title>Newport RI Real Estate Blog</title>
        <link>https://www.hoganassociatesre.com/blog/banks-financing/</link>
        <description>Read Hogan Associate's take on real estate trends and life in Newport, RI.</description>
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    <guid>https://www.hoganassociatesre.com/blog/3-lessons-learned-from-warren-buffets-take-on-real-estate-investing.html</guid>
    <link>https://www.hoganassociatesre.com/blog/3-lessons-learned-from-warren-buffets-take-on-real-estate-investing.html</link>
        <author>jeff@hoganri.com (Jeff Brooks)</author>
        <title>3 Lessons Learned from Warren Buffet's take on Real Estate Investing</title>
    <description> <![CDATA[ 
Investing in Real Estate? Lets ask Warren Buffett, the infamous investor worth billions who is commonly known as “The Oracle of Omaha”.  His insight in investing I’ve always found to be a very simple, easy and straight forward. This article delves into two real estate investments he’s made. Here’s a few points I walked away with;


-Ignore the outside noise and chatter

When we were in the depths of the Great Recession Mr. Buffett was buying up companies left and right, while the rest of the market went running for the hills. His Berkshire Hathaway holding company bought Prudential Real Estate as his method of jumping into the real estate market. But years ago, he made a few real estate plays himself, ignoring the noise around him, he focused on the future and existing income and made a seemingly simple decision.


 -Look at not only existing income, but future potential


Along with a few friends (we all wish we had friends like Warren’s don’t we?) he purchased a Manhattan mixed use building. The existing tenant had reduced rent, but he knew what the real rents should be. His investment made a few decades ago pays out his initial investment regularly. If you purchased a three family today and in your retirement were able to collect the purchase price as income annually, would you worry about the surrounding present day marketplace as much? There are few investments you can rely on as heavily as a real estate investment.


 -You don’t need to be a savvy investor to be successful; you just need to be patient


If you’re looking to make a quick buck in real estate without any risk you’re going to be in for quite the surprise.  Real returns are found overtime. Especially so in real estate.  As you collect income off the property and pay off debt, you’ll experience one of the best investments of your lifetime.


Warren made out handsomely on his investments.  No investment is risk free in this world, especially when there’s reward involved. We just need to approach it with the simplicity that Warren suggests.  Present incomes don’t always justify present value. Ignore all the buzz around you and focus on the specific investment. No matter what the market does 1, 5, or 20 years from now, there will always be a finite amount land and people will need a place to live, work and play. If the potential is there and your patience can warrant it, real estate is always a great investment.


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    <pubDate>Mon, 05 May 2014 10:13:00 -0400</pubDate>
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    <guid>https://www.hoganassociatesre.com/blog/will-real-estate-be-affected-by-the-government-shutdown.html</guid>
    <link>https://www.hoganassociatesre.com/blog/will-real-estate-be-affected-by-the-government-shutdown.html</link>
        <author>jeff@hoganri.com (Jeff Brooks)</author>
        <title>Will Real Estate be Affected by the Government Shutdown?</title>
    <description> <![CDATA[ 
The Government Shutdown may affect Real Estate over the coming weeks. Perhaps not market values, but existing transactions, and buyers looking to make offers.  Being a Realtor, I’m certainly not furloughed and neither are most other private sector jobs.  But in a community like Newport RI, it may end up affecting us more directly than we’d like.


 


Nearly 900,000 federal employees were told not to come into work on Tuesday.  That’s nearly a third of all persons being paid directly by the US.  These people include members of the DoD, National Parks, Memorial Administration, FHA and IRS.  Since 1975 there have been 17 government shutdowns, averaging nearly a week. Ranging from 1 to 21 days each.


 


How it Affects Newport County:


 


Here in Newport County, the Department of Defense is a major industry.  Many local citizens may see a smaller paycheck this week, and if it continues, no paycheck.  This comes out to less spending at restaurants, stores, gas stations and even some people putting buying a house on hold.  This will hit our local economy minimally, but as everyday marches on the more we’ll see it in our day-to-day lives.


 


How it Affects Purchasing a Home:


 


It may delay closings for home owners or buyers currently under contract. With as much as 90 of the FHA furloughed, and 2/3rds of the IRS not coming to work, much of our mortgages written in the US will have to be postponed.  Every FHA loan needs to be approved by the Federal Housing Administration.  Everyone acquiring a loan needs to provide tax documents to their lender.  This time a year this typically is not much of an issue, but if you’ve asked for extensions, the wait could be much longer than usual.  These are all taken for granted in our day-to-day activity of selling real estate, but without them, we could road blocked for some time.


 


How it Affects the Marketplace:


 


A major reason of the shutdown is the “Raising of the Debt Ceiling”, the US’s ability to increase our borrowing amount to continue functioning as a country.  If we can’t increase our borrowing amount, we’ll have to cut spending or we will default on our debt obligations. Not unlike you and me with making credit card payments, if we miss a payment, our rates go up.  Same goes for the United States.  If interest rates go up, this will cause mortgage rates to rise as well.  In short; higher rates mean less buying power.


 


What To Do:


 


If you’re under contract to buy a home contact your mortgage broker/lender. Make sure he has everything, his underwriter doesn’t expect any hiccups and any documents needing to be OK’d by FHA are already stamped.  If you need anything from the IRS or FHA anticipate delays, ask for extensions now so there are no surprises. Call your State Rep and explain to him how this gridlock has hit you personally.  In short, everything will be OK as long as we’re prepared, but the longer this shutdown goes one, the more it will effect us all.
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    <pubDate>Mon, 07 Oct 2013 08:35:00 -0400</pubDate>
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    <guid>https://www.hoganassociatesre.com/blog/5-ways-the-fiscal-cliff-haswillmay-affect-your-real-estate-decisions.html</guid>
    <link>https://www.hoganassociatesre.com/blog/5-ways-the-fiscal-cliff-haswillmay-affect-your-real-estate-decisions.html</link>
        <author>jeff@hoganri.com (Jeff Brooks)</author>
        <title>5 Ways the Fiscal Cliff has/will/may affect Your Real Estate Decisions</title>
    <description> <![CDATA[ 

The ball at Time Square wasn't the only thing that dropped last night.  The US economy took a cliff dive thanks to our elected officials on Capital Hill.  The so-called “fiscal cliff” has been looming for months.  The Senate threw out a life line passing a Bill on New Year’s Day but the House must ratify the Bill before it is presented to The President. 




So we’re not there yet, but here’s an outline from the current Bill explaining how it affects your real estate and what it means for 2013:


1. CAPITAL GAINS


-Capital Gains and dividends rose from 15 to 20 depending on your tax bracket.  Please keep in mind, the exclusion of $250,000 for singles and $500,000 for married couples is still in place, so as long as you’ve owned your home for at least 2 years and your gains are less than the aforementioned amounts, this increase won’t affect your sale.  Dividends for REITs, (Real Estate Investment Trusts), will be affected by the increase, potentially decreasing the value of large apartment complexes and office buildings.


2. DEBT RELIEF ACT


The Debt Relief Act has been extended for at least 1 year.  This is a huge sigh of relief for sellers in the Short Sale process.  If this act expired, short sellers would have to pay income tax on forgiven debt, further burdening already stressed families. 


3. ESTATE TAX


The Estate Tax will also increase.  Previously, the exemption was $5.125 million per person at a rate of 35 for any in excess.  If we fell off the preverbal cliff, the exemption would drop to $1,000,000 and increase to a rate to 55.  Not good for a sizable number of families across the nation and especially here on the East Coast.  With the bill passed early Tuesday morning, the exemption will be set to $5 million at a rate of 40.  Please keep in mind, this is only a bill and is not yet set into law.


4. DEDUCTIONS


Deductions have been capped for singles making more than $250,000 and couples making more than $300,000.  If you fall into this bracket you’ll have a limit on the amount you can deduct on your taxes.  This includes mortgage interest deductions, depreciation and other investment property deductions.  This will not affect most American families but can affect people with jumbo loans as well as investors who have sizable loan interest to deduct and properties to depreciate. 


5. INCOME TAXES


Income Taxes increase for earners of more than $450,000 for singles and $500,000 for couples.  The increase will be from 35 to 39.6.   This could negatively affect higher end real estate by drying up a pool of potential buyers, but any affects would be minimal.


Please keep in mind, this situation is fluid.  Discussions will be on going for at least the next few months.  The “Sequester,” or automatic spending cuts going into place at the end of February, has not been addressed nor has a solution for the predicament the debt ceiling will impose… when we reach it… again… 


For financial advice please consult with your financial professional, but for any Real Estate advice please contact any of our highly qualified agents here at Hogan Associates.


PS: Happy New Year


 


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    <pubDate>Tue, 01 Jan 2013 19:08:00 -0500</pubDate>
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    <guid>https://www.hoganassociatesre.com/blog/5-things-to-know-about-a-203k-loan-when-buying-real-estate-in-ri.html</guid>
    <link>https://www.hoganassociatesre.com/blog/5-things-to-know-about-a-203k-loan-when-buying-real-estate-in-ri.html</link>
        <author>jeff@hoganri.com (Jeff Brooks)</author>
        <title>203K Loans and buying RI Real Estate: 5 Things to Know</title>
    <description> <![CDATA[ 
 


What is a 203K Loan?


An FHA 203k Loan is a rehab loan backed by the Federal Housing Authority. It allows home buyers to borrow to make repairs to a property after closing.


Why would I use a 203K Loan?


Typically for most conventional loan approvals the property has to be habitable and pass inspections.  Many times the seller can not fix problems that may arise such as furnace issues, old roof, peeling lead paint, non-functioning plumbing or electrical systems.  When these deficient conditions exist, a bank may deny a conventional loan application.  If you apply for a 203k Rehab Loan, however,  you may be able to borrow enough money to purchase the home AND make pre-approved repairs after closing.


How much can I borrow with a 203K?


A 203k Streamline loan is the simplest, most straight forward product.  The maximum  loan amount in a streamline is roughly $35,000 depending on the value of the house.  The “post completed” value of the home needs to be equal to or greater than the total loan.  A Standard 203k can be used for much larger jobs and can lend loans upwards of $100,000 above the purchase price  This tends to be used by contractors for homes in desperate need of repair.  They require much heavier leg work and sometimes require a higher down payment and interest rate.


How 203K loans work:


At the closing you’ll be signing paperwork for one loan, but the seller is paid out the purchase price while the contractor receives up to half the construction costs to get the job started.  The bank then requires “requisitions”, or proof of work, from the contractor to disperse funds.  An inspector needs to approve the requisitions to allow the contractor to be paid.  The bank typically holds back 10 until the job is completed to ensure the satisfaction of you, the homeowner, and the inspector.


What can I do with my 203K rehab loan?


The beauty of the program is what you can use the funds for.  Generally they’re used for major repairs; New roof, septic, heating, electrical and plumbing systems.  But they can also be used to increase the energy efficiency of your home  You can also use the monies to pay for up to 3 full months of mortgage payments while you perform the work  Many people may want to use it for cosmetic repairs.  As long as you can show the room in question is “in need of repair” you can use those funds to help finance a beautiful new kitchen.


All in all the FHA 203k Loan is a fantastic product.  It may take a bit extra work but by opening a wide range of possibilities for home buyers it can make your dream home available within your budget.  A number of lenders offer this product including Noah Anacleto who can be reached at (401)-847-4747.  Call any of our experienced agents to discuss creative loan strategies or the local real estate market.
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    <pubDate>Tue, 17 Jul 2012 13:52:00 -0400</pubDate>
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    <guid>https://www.hoganassociatesre.com/blog/fha-loans-demistified-10-useful.html</guid>
    <link>https://www.hoganassociatesre.com/blog/fha-loans-demistified-10-useful.html</link>
        <title>FHA Loans Demystified - 10 Useful  Tips for Borrowers and Homeowners Alike</title>
    <description> <![CDATA[ 



As a Rhode Island real estate agent who has recently navigated both ends of FHA backed transactions, I can personally attest to the fact that FHA loans are making a strong comeback as a useful alternative for first-time home buyers and home buyers with less than perfect credit.  My experience as of late has enlightened me to the fact that both industry peeps and consumers alike are often still in the dark about the FHA process and what it means to a sale.  So, I'm here to offer an inside scoop.


Tips for Potentail FHA Borrowers:


1.) There are three FHA loan programs:


1. FHA 203(b) fixed-rate mortgage (15- or 30-year loans)  2. FHA 251 adjustable-rate mortgage  3. FHA 2-1 buy-down loans


2.) To qualify for an FHA mortgage, borrowers must:




Have a positive credit history spanning the last two years.


Show consistent or increasing income.


Have a steady employment record (two years or more with the same employer is perfect).


Have no bankruptcies in the last two years.


Keep the mortgage payment at approximately 30 of their gross income or less.




3.)  The FHA does not supply the loans, rather they insure them to protect the lenders. This program means less risk for lenders which creates low down payments for borrowers.


4.)   Not all lenders deal with FHA mortgage loans. Before applying for a mortgage loan, applicants should always check first to make sure that the lender actually processes FHA loans. The lender should also be FHA-approved.


4.)  The most popular FHA loan has a minimum cash investment requirement of 3.5 but permits 100 of the money needed at closing to be a gift from a relative, nonprofit organization or government agency.


5.)  Shop rates when looking for a FHA mortgage.  The rates are established by the lender, not the government, so they will vary.  FHA loan rates are typically higher than conventional (nongovernment guaranteed) loan rates but shouldn't be a lot higher unless you have credit problems.


 


Homeowners Considering FHA Backed Buyers:


1.)  There is LESS risk involved with FHA borrowers because the FHA guarantees the loan, so the lender doesn't take on a financial risk by extending credit. 


2.)  Agreeing to consider FHA backed buyers is a great way to generate additional interest and increase the pool of qualified buyers.


3.) Though all FHA mortgages require a home appraisal, they do not require a home inspection. 




The FHA now allows what are called &quot;as is&quot; appraisals. These appraisals allow for minor property defects from wear and tear, for example. They also help sellers to keep mandatory repair costs lower as well. Such defects include minor items like leaky faucets and even missing handrails.




4.)  If the buyer chooses to conduct a home inspection, and most will, the FHA-insured mortgage must meet one of the nationally recognized building codes. Any code violations/failures must be addressed and remedied to reach closing. http://homeguides.sfgate.com/fha-home-inspection-guidelines-6927.html


5.) Sellers with FHA-backed mortgages themselves who wish to sell their homes also have another option open to them, and that's loan assumption. In other words, you could allow a prospective buyer to assume your loan as long as the lender feels he's qualified.


Lastly, it is important for both homeowners and consumers to know there is a maximum borrowing limit for FHA backed loans.  Currently, the cap on a single family in Rhode Island is $475,000.00.
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    <pubDate>Thu, 29 Mar 2012 14:22:00 -0400</pubDate>
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    <guid>https://www.hoganassociatesre.com/blog/to-rent-or-to-buy-a-tool-to-help-you-decide.html</guid>
    <link>https://www.hoganassociatesre.com/blog/to-rent-or-to-buy-a-tool-to-help-you-decide.html</link>
        <author>jeff@hoganri.com (Jeff Brooks)</author>
        <title>To Rent or To Buy Newport RI Home or Condo?</title>
    <description> <![CDATA[ 
To Buy or To Rent? A tool to help you decide.


Many factors enter into the decision to rent or buy a RI home including the anticipated rate of appreciation, anticipated rent increases, your tax bracket and how long you expect to stay. If you're wrestling with this common real estate decision, take a look at this Rent vs Buy calculator. It's one of the best ones out there because it rolls every possible permutation into a tidy little graph and a one sentence conclusion.


So plug in your numbers, and see what's best for you. If it turns out that buying is the way to go... well, you know where to find me
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    <pubDate>Sun, 19 Feb 2012 16:39:00 -0500</pubDate>
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    <guid>https://www.hoganassociatesre.com/blog/unanswerable-real-estate-questions-hopeful-thoughts-about-the-bottom.html</guid>
    <link>https://www.hoganassociatesre.com/blog/unanswerable-real-estate-questions-hopeful-thoughts-about-the-bottom.html</link>
        <author>leslie@hoganri.com (Leslie Hogan)</author>
        <title>Unanswerable Real Estate Questions &amp; Hopeful Thoughts about &quot;The Bottom&quot;</title>
    <description> <![CDATA[ 
Punxsutawney Phil - Correct 40 of the Time


&quot;Is this the bottom?&quot; the buyer asked.


&quot;Yes.&quot; I replied. &quot;Yes, it is, and there will be 6 more weeks of winter too.&quot; Like Punxsutawney Phil, I make predictions at this time of year. Unlike Phil, I actually consider the indicators.  I'm pretty confident I can best his 40 success rate. (source: National Climatic Data Center)


Here are a few reasons I believe we may actually be at or near the bottom - offered with WAY more authority than Phil's suggestion of a prolonged winter.


1. In 2011 outstanding mortgage balances went down $30B every month. Steady, sustained improvement means momentum. Momentum is what pulls you out of troughs like this.


2. Job gains are accelerating. January brought 243,000 new non-farm jobs to the US economy. More momentum.


3. Unemployment hit 8.3 last month, continuing a slow downward trend.


4. Boston's housing market, an early barometer for RI, is back. Over 1,000 new luxury residential units were announced for downtown Boston in the 3rd quarter of 2011 - the highest level of activity since 2006.


5. Boston is the dominant source of second home buyers in greater Newport. More luxury residences in Boston? More vacation home demand in greater Newport.


5. Credit is loosening slightly. Banks now lend up to 3.5 times earnings up from 3.2 during the depth of the crisis according to Capital Economics. 8 of the deals that fail, fail because the buyer can't get a mortgage.


6. Restaurant business is up. People are spending less, but they're going out. Look around. It's better.


7. Demand for commercial space on Thames Street and the waterfront business district is stronger. It no longer has that ghost town feel that was so alarming a couple of years ago.


8. Car sales and chain store sales are up. Even I bought a new car this year, (but only after the indignity of arriving at the dealership on a tow truck.)


9. The stock market has been stong and is now approaching pre-recession levels.


10. I predict Punxsutawney Phil will be wrong this year, and there will be continued mild weather until spring. Warm weather increases real estate activity and that's good for our real estate market.


In summary, for all you bottom seekers, yes, this feels like &quot;the bottom.&quot; Time to buy a house from a beleaguered seller, borrow at the lowest rates in recorded history and enjoy your piece of this beautiful, investment-worthy community.
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    <pubDate>Mon, 06 Feb 2012 12:48:00 -0500</pubDate>
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    <guid>https://www.hoganassociatesre.com/blog/rhode-island-home-buyers-what-are-you-waiting-for.html</guid>
    <link>https://www.hoganassociatesre.com/blog/rhode-island-home-buyers-what-are-you-waiting-for.html</link>
        <author>jeff@hoganri.com (Jeff Brooks)</author>
        <title>Rhode Island Home Buyers, WHAT are You Waiting For?</title>
    <description> <![CDATA[ 
It’s easy to feel negative about Rhode Island's real estate market when all you hear is bad news.  &quot;Houses are not selling,&quot; &quot;There are no buyers,&quot; &quot;Banks won't lend,&quot; and &quot;The economy is too weak for the housing market to improve.&quot;  Rhode Islanders need to look past the headlines and see the big picture. The greatest buying opportunity in our lifetimes, especially for first time home buyers and investors, is right now.  Here are a few reasons it’s an absolutely awesome time to buy:Low Rates - Mortgage rates are at historic lows.  Two decades ago a 10 mortgage was a great deal.  In 2012, rates range from 3.75 - 4.5.  Every .5 drop n a 30 year, $300,000 mortgage, puts $90 a month, $1,080 a year, or $32,400 over the life of the loan RIGHT IN YOUR POCKET  Low rates make home ownership much more affordable


High Inventory -  The absorption rate, (the length of time it will take to sell the existing inventory at the current pace), on Aquidneck Island is now 13 months.  In a normal, balanced market the absorption rate is 6 months.  The sheer volume of inventory is making sellers more flexible than ever.  Make an offer. You might be surprised how hard a seller will work to make the sale.


Low Prices - Headline after headline tells us home prices are depressed.  Sellers are reducing asking prices to attract buyers.  It's not just the rates that are working in your favor. Low prices are rapidly increasing affordability.


Flexible Financing - It's true that it's harder now to qualify for a mortgage, but there are still savvy lenders out there helping credit worthy buyers get the financing they need.  Take a look at this blog post on how to buy a home with 10 Down and No Private Mortgage Insurance (PMI). Associate yourself with a knowledgeable agent and they will lead you to experienced lenders who will work with you.


More and Better Short Sales - Now that banks are slowly starting to make a little money, they are more 
willing to write off losses. This development will grease the wheels for
 more short sales with less aggravation.


Tax Breaks - Interest on mortgage payments is deductible, and during the early years of your loan, most of your payment is interest.  Not only do you increase your equity with each payment, but you decrease your tax burden  And that's not all. In addition to tax deductions while you own the home, there are benefits when you sell  The first $250,000 in profit for single individuals and the first $500,000 in profit for married couples is tax free provided you have lived in the home for over than 2 years.


Future Rental Options - Buying now at the right price and rate increases the likelihood you can make money renting your property in the future.  As rents rise, fixed rate mortgage payments stay the same, and cash flow increases as the spread between rents and carrying costs widens Every market offers opportunities.  Right now low prices, low mortgage rates, tax sheltered gains and the mortgage deducion favor buyers.  If you have the financial wherewithal to obtain a mortgage, well… really… WHAT are your waiting for? Move ahead; don't look back; take advantage of this opportunity before the inevitable upswing. You'll be glad you did
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    <pubDate>Wed, 04 Jan 2012 01:09:53 -0500</pubDate>
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    <guid>https://www.hoganassociatesre.com/blog/10-things-you-must-consider-when-contemplating-a-short-sale.html</guid>
    <link>https://www.hoganassociatesre.com/blog/10-things-you-must-consider-when-contemplating-a-short-sale.html</link>
        <title>Short Sales in RI: 10 Things You MUST Consider</title>
    <description> <![CDATA[ 
Before we get into the nitty gritty, let me start off by saying a few things about myself. My real estate career began after my employer, a boutique financial firm where I was CFO, closed abruptly.  When the shock wore off, and I finished mourning, I picked myself up, dusted myself off and started over in real estate.  It wasn't easy, but now I find tremendous satisfaction in helping homeowners understand the options and the obstacles to getting back on their feet. The point I'd like to make here is this: things happen, you can adjust, and you can start over. Yes, the economy is bad. We are at close to 10 unemployment. Your home value probably has dropped, and, if you owe more than your house is worth, a short sale may provide the relief you need to get your financial life back on track.Here are the things you need to consider:1. If you can't afford to keep your home, and your home is worth less than the balance of your mortgage, you may be able to avoid foreclosure by participating in a short sale.  In a short sale the bank agrees to allow you to sell your house for less than your mortgage balance as a first step toward settling your outstanding debt.2. Short sales can be preferable to foreclosure in several ways. Unlike a foreclosure, a short sale puts YOU in control of the sale, not the bank. Your home sale will be handled like any other listing, with one exception. Before an offer is fully executed, the bank must agree to the price and terms. 3. A short sale can be preferable to foreclosure because it MAY cause less damage to your credit.  A short sale MAY also result in a shorter waiting period before you are able to finance another home.4. In order for a bank to consider a short sale you must prove that you have been subject to legitimate Hardship. Living beyond your means, buying another home, problems with neighbors or outgrowing your current home do not qualify. Hardship means hardship, and examples include unemployment, divorce, medical emergencies, bankruptcy or death.5.  Once you establish legitimate Hardship, the bank will consider other factors including the current Market Value of the home. You must produce hard comparable data to demonstrate that your home is worth less than the unpaid balance owed to the lender.6.  You mortgage must be in Near Default Status. It used to be that lenders would not consider a short sale if your payments were current, but that is no longer the case. 7.  You must be able to demonstrate that you have no other assets with which to satisfy your mortgage obligation.  Be ready to provide copies of your tax returns, pay check stubs and/or financial statements. Should your lender discover undisclosed assets, they will deny the short sale and expect you to apply those assets toward your mortgage balance.8.  No set standard applies to lender approved short sales, and a variety of outcomes is possible. Sometimes you can negotiate away the balance owed  and eliminate your debt entirely. Other times, the bank will obtain a deficiency judgment against you. In that case, the sale of your home will satisfy only part of your mortgage obligation, and you will have to repay the balance at a later time. A bank can also forgive your debt but issue a 1099 Tax Form.  The 1099 transforms the forgiven debt into taxable income for you. If this happens, however, you might qualify for tax relief on your primary residence under the Mortgage Forgiveness Debt Relief Act of 2007 (With the Emergency Economic Stablization Act of 2008 which extends benefits out to 2012).9.  Anyone who has participated in a short sale will tell you it is often frustrating and slow. On average, banks take 45-90 days to decide whether to accept or reject an offer submitted by the seller. Knowing what to expect makes the process a bit easier to manage.10. A very high percentage of short sales never make it to closing. Lack of experience on the part of the seller's agent is often to blame, and the result can be an unwanted foreclosure after the short sale fails.  Choose your Realtor carefully.If you stick with professionals who specialize in this area, you will give yourself the best shot at avoiding foreclosure and getting your financial life back on track.  If you would like to have a confidential conversation about whether a short sale makes sense for you, please call.



 

 
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    <pubDate>Sat, 29 Jan 2011 14:21:00 -0500</pubDate>
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    <guid>https://www.hoganassociatesre.com/blog/you-can-buy-a-home-with-10-down-and-no-private-mortgage-insurance-heres-how.html</guid>
    <link>https://www.hoganassociatesre.com/blog/you-can-buy-a-home-with-10-down-and-no-private-mortgage-insurance-heres-how.html</link>
        <title>You CAN buy a home with 10 down and no Private Mortgage Insurance. Here's How:</title>
    <description> <![CDATA[ 
As many people know, banking has become much tougher, and financing options have drastically shrunk since the recent banking implosion.  It no longer is just signing a purchase and sales and waiting for the closing.  Buyers in this market need expert advice on how to navigate banks and if paired correctly with the right mortgage product can save substantial money or actually make it to the closing.


In a recent deal, my buyer finally found a house that worked well for their family but needed updates to make it feel like home.  After reviewing the needed work and the intended down payment, we realized that the cash required for improvements wouldn't allow them to put 20 down forcing them to pay for Private Mortgage Insurance (PMI) - an added expense we were planning to avoid.  I suggested they talk to Citizens Bank who recently launched a 80/10/10 program that alleviates the need for PMI.  How it works is the buyer puts 10 down, the bank issues an interest only 20 year home equity line for 10 and remaining 80 is financed conventionally.  This saved my client $1476 per year, allowed them to pay it down without penalty at anytime and keep cash on hand to work on the house.


The alternative was to put 10 down and pay PMI unitl the loan was paid down to 78 of the sales price (which would conventionally take around 6 years) or pay for a new appraisal in 2 years and see if the value rose enough to have 22 equity in the house. 


The numbers went as follows:


 Purchase Price - $372,500


Option 1:  90/10


90 loan to value with a $335,250 mortgage at 4.75 - principle and interest would have been $1,748.82 plus PMI of $145.28 for a total of $1,894.10


 Option 2:  80/10/10 


80 loan to value with a $298,000 conventional mortgage at 4.75, priciple and interest was $1554.51 plus a $37,250 home equity line at prime plus 3.74 or 6.99 today interest only of $216.98 for a total of $1,771.49.


Long story short, the right mortgage product can save you money, help buy a property you thought wasn't an option and make the home buying process a much more enjoyable experience.  A good agent should know about all the current products and steer you in the right direction for the most succesful outcome possible.  If you have any further questions on current products or some suggestions you may not have thought about give me a call.


 


 


 

 
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    <pubDate>Thu, 20 Jan 2011 10:58:00 -0500</pubDate>
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