Important Tips To Keep In Mind Prior To Investing In Real Estate (Part 2)

I'd like to throw a few things. People who looking to buy a home for the purpose of building a foundation of wealth should remember the following.

FHA loans have a greater default rate than conventional. The less she or he pays down, the more likely it is that the borrower is to default.

Points: They're negotiable. Take the number of points, put a % sign to it and just multiply by the loan amount. That'll give you the total cash amount that'll be charged in points on the loan.

One point raises the yield (on a typical 30 year fixed) by one-eighth of a percent.
Two points raisies yield one-fourth, and so on, up to eight points, which would then equal 1 full percentage points. So: Take for example an $80,000.00 loan with say, 3 points is going to amount to 3% times 80k which equals $2400. dollars.

To get into a single family residential, one of the most popular types of loans is called the FHA(B). The discount points on FHAs are negotiable, with the interest rate being set by the lender.

Another option is to take over a VA loan. These are made to eligible military members, guaranteed by the Veterans Administration, and in some cases in really rural areas, direct loans can be made to you by the VA themselves. VA loans are fully assumable. Even better is they can be had for virtually nothing down. The exception would be if the purchase price exceeds the appraisal value. Ask for a CRV. This Certificate of Reasonable Value is what the appraisers use to estimate the value of a VA backed home. A word of caution, since this blog pertains to investing, keep in mind that VA loans ae assumable only for the house, townhouse or condo you're actually going to live in. No vacation homes or investor activities here. So, non-vets can assume, but for owner-occupied only. Again, the discount points here are negotiable between the veteran and the lender; the lender sets the rate, not the government.

The last thing is the purchase money mortgage, also known as Seller Financing. These are loan instances where the loan is made directly by the seller to the buyer. The seller takes back a portion of the mortgage or the Deed of Trust as a part of the purchase price. The buyer, however, still receives the deed to the realty. The drawback here is that you as the seller can't place a deficiency judgement against the buyer if the buyer defaults on the loan. *See the 2nd paragraph for likelihood indicator.* So, if your buyer defaults and you don't collect the back amount owed, then at the foreclosure sale if there is one, you can't seek a deficiency judgement against them. Intelligently weigh the risks to yourself before closing this type of deal.


That's it for now.

To liquidate a part or all your purchase money mortgage note, click on the link below
http://SDI.Financial.officelive.com

I couldnt agree more. Once you have established a relationship with a good loan officer, they will work with you even during the down cycles like this one. My loan officer has confidence that I will not go into default and the underwriters are in house. All one happy family.

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a business relationship is nice, but building a positive personal relationship with your loan officer can help build extra confidence in future transactions. Perhaps a round of golf, and or lunch followed by thank-you card in person or via email. Should one let the loan officer win the game of golf? well, that's why you take him to lunch after you win, and then have your secretary send thank-you cards.

Dallas Investments & Development inc, Real Estate..

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