So you are thinking of buying a fixer upper, fixing it and reselling it. The key is in planning, good estimating. The oft heard phrase "Buyer Beware" is never more appropriate than when considering the purchase of a fixer-upper. You must know exactly what you*re getting into before buying.
It*s commonly believed that fixer-upper properties represent easy money that is ripe for the taking - that you can buy it, do a little work on it in your spare time, then flip it (sell it) and make lots of money. This isn't the case most of the time. Although, with proper planning and thought, money can be made by buying *fixer uppers*. And for many first time buyers who intend to live in the house while working on it, buying a fixer-upper can be a great option. By buying a fixer upper you get sweat equity. You will gain equity in the home by bringing it up to normal standards. The key is to buy a home below market price and to be able to put less money into it than a comparable good home. If you can buy a ready to move in home (in top shape) for $200,000 and you want to buy a fixer upper for $150,000. Then you should not have to spend more than $25,000 to fix it up to make it a deal. It*s also less risky buying a fixer-upper when you can live in the house while fixing it. And of course, by living in the house for at least 24 months you should qualify for the IRS exemption of no capital gains. The most important thing to know before making a decision on such a purchase is what needs to be fixed. Do a spreadsheet. Jot down all the costs. Give yourself a cushion for unseen expenses. Any time you are spending money on improving a home with the notion of selling it later, strive to spend your money on things that buyers can easily see. Things like new paint and removing trash from the property cost little but have instant impact on curb appeal. Simple landscaping is the best. Landscaping does not bring a large return. Houses that have only cosmetic problems like peeling paint, an overgrown yard, shag or worn carpet or lots of wallpaper are the best bet. Fixing and cleaning cosmetic issues is fairly easy and inexpensive. It virtually always gives a good return on investment, particularly when you can do the work yourself. Kitchen and bathroom remodeling usually pays a nice return. Don*t be afraid of buying a fixer-upper in need of this kind of repair. Again the key is don*t go over the top. Do a good job, a nice job. But if it is a $100,000 house you don*t want to put in Granite counter tops and a jetted tub. Properties with structural damage, or a floor plan that requires major work to remedy, may not be "fixed up" at a profit. If you do not have construction experience or done a fixer upper before. Have an inspection for hidden damage performed by a home inspector, a friend that has experience, or construction professional before buying a fixer-upper. Michigan purchase agreements have inspections clauses in them; make sure you use that clause when doing a fixer upper. Then be sure to negotiate to try and get the seller to pay for all or part of the cost of needed repairs uncovered by the inspection (that were unseen). Often, sellers will be willing to lower the sales price to sell the home "as is" instead of paying for the repairs. Give the seller three choices, fix it themselves, hire a contractor to fix it, or reduce the sales price so you can fix it. Be careful that you don*t over pay. Especially if you plan to resell quickly, paying too much up front can doom your plans for quick profit. Research the market for reselling and have an exit plan for selling the house in place before making an offer. Remember when buying a fixer upper to put in the cost of paying a realtor to re sell it. Many people forget this. They have figured a $6,000 profit but forgot about the selling commission.
What about the cost of the mortgage and interest? If you aren*t living in the home, the mortgage payment is a cost! If it is going to take 4 months to fix it up then figure the payment as an expense. A $1500 payment adds up. In four months it is $6000 of profit eaten up. What happens if the house doesn*t sell right away? What happens if you have to sit on the house for 10 months? At $1500 a month then $15,000 of your profit is gone.If you are not going to live in the home there is one last thing item to remember is that if it is a second home, or investment property (in Michigan) you do not get the homestead exemption. Your taxes are going to be much higher. Approximately 40% higher. You have to figure that in as a cost also.
Good luck and happy house hunting.
For more tips on buying and selling Michigan homes or any home go to www.russravary.com
Search Michigan Real estate
Friday, July 20, 2007
Sunday, July 8, 2007
Appraisal Myths and facts
Myth: An appraisal determines your sales price. Did you know that one appraiser can appraise a Wayne county home and come up with one price and another different appraiser can appraise the same Wayne county home and come up with a totally different price. A third one can come up with a third price. They may never come up with the same price with they all appraise one Michigan house for sale. The appraisal process is very subjective. That is why it is better not to pay for an appraisal and use a CMA, comparative market analysis.
Myth: An appraisal is a guarantee of what my house is worth. My lender used the appraisal three years ago and the house was worth more than you are saying it is worth now. If your appraiser said your Oakland county home was worth $300,000 two years ago it was because there were homes similar to your that were selling for that price. Unfortunately Michigan house prices have fallen in 2006 and 2007. So many Michigan houses for sale were over priced when they went on the market in 2007.
Fact: An appraisal is a tool that lenders use to find out if the value of the home is there to give a loan out. Appraisers are licensed by the state and take continuing education classes. In Michigan appraisers have over 2000 hours of schooling and internship under another appraiser. The lender does not ask for a guarantee of value they are looking for a professional opinion.
Fact: Sometimes appraisals are rejected by the bank. Banks have other appraisers that double check the appraisal. If that appraiser feels the value is not there then they give a different value and the original appraisal may not be used.
So when you are ready to price your Michigan Home whether it is a Livingston county home, a Wayne county, a Washtenaw county home, or Wayne county home call me(russ ravary) to get you a CMA of your home. That way you will have the necessary information to price your home. It will give you what is for sale locally, what homes that are similar in size, style, and condition have sold for recently. That will give you the information to make a sound decision.
To get more information on selling your home go to my website http://www.russravary.com/ or search Michigan homes for sale
Myth: An appraisal determines your sales price. Did you know that one appraiser can appraise a Wayne county home and come up with one price and another different appraiser can appraise the same Wayne county home and come up with a totally different price. A third one can come up with a third price. They may never come up with the same price with they all appraise one Michigan house for sale. The appraisal process is very subjective. That is why it is better not to pay for an appraisal and use a CMA, comparative market analysis.
Myth: An appraisal is a guarantee of what my house is worth. My lender used the appraisal three years ago and the house was worth more than you are saying it is worth now. If your appraiser said your Oakland county home was worth $300,000 two years ago it was because there were homes similar to your that were selling for that price. Unfortunately Michigan house prices have fallen in 2006 and 2007. So many Michigan houses for sale were over priced when they went on the market in 2007.
Fact: An appraisal is a tool that lenders use to find out if the value of the home is there to give a loan out. Appraisers are licensed by the state and take continuing education classes. In Michigan appraisers have over 2000 hours of schooling and internship under another appraiser. The lender does not ask for a guarantee of value they are looking for a professional opinion.
Fact: Sometimes appraisals are rejected by the bank. Banks have other appraisers that double check the appraisal. If that appraiser feels the value is not there then they give a different value and the original appraisal may not be used.
So when you are ready to price your Michigan Home whether it is a Livingston county home, a Wayne county, a Washtenaw county home, or Wayne county home call me(russ ravary) to get you a CMA of your home. That way you will have the necessary information to price your home. It will give you what is for sale locally, what homes that are similar in size, style, and condition have sold for recently. That will give you the information to make a sound decision.
To get more information on selling your home go to my website http://www.russravary.com/ or search Michigan homes for sale
Thursday, July 5, 2007
appraisals
When to order an appraisal
You have completed the loan application, put in a purchase offer. When do you order an appraisal? You order an appraisal after the home inspection. You don't want to order and pay for an appraisal until the house passes inspection. If the house fails inspection you don't order the appraisal until you have a signed addendum stating the the seller will do the repairs, give you a lower price, or you accept the house as is. Then you order the appraisal
Appraisals are performed for the benefit of the lender. They are trying to justify the loan amount based on the appraised value. The appraiser will have a copy of the Purchase agreement. (contract). The typical cost of an appraisal is $275 - $350 and is normally paid to the lender upfront by the borrower. Appraisers charge more for rental properties, FHA appraisals, and multi family properties. Commercial appraisals start at $1500 and go up to $5000
An appraisal is subjective. One appraiser may come up with one value and another may come up with a totally different value. An appraisal is not what the house should sell for, it is a educated estimate of value using different value approachs.The most common way an appraisal is done is that the subject house ( the house being bought) is compared to 3-5 homes that are similar in style, size, and location that have sold in the last 6 months. So your appraisal is based on homes that have sold recently that are like yours and near yours!
STYLE By style I mean they compare ranches with ranches. They will not compare a ranch to a colonial. ( or 2 story)
SIZE, AGE By size I mean they compare square footage, number of bedrooms, bath rooms, age, garage, ammenities. Your home may be 1200 sq ft 2 bedroom,1.5 bath, built in 1999, with a 2 car garage. One of the ones that sold may be 1200 sq ft, 3 bedroom, 2 bath, built in 1952, with a 1 car garage. The appraiser has a general formula that he uses to give value to a 3 bedroom versus a 2 bedroom, A home built in 1999 is worth more than one built in 1952 so more value is given to the 1999 home. This gets very complex. What the lender is looking for from the appraiser is that he is not giving some ridiculous value to say the garage or the age. Remember very little value is given to updates. Bigger value would be given to an addition or a garage.
Location If it is in the city lenders like to see the comparable sold homes that the appraiser is using to be within a half a mile. Without crossing main roads or railroad tracks. This common sense, because if you cross a main road the houses can be totally different. The lender wants the appraiser to use the houses closest to the subject property. So if a similar house sold on the same street the appraiser is supposed to use it.That is how many times appraisals are different. Appraisers may be using different comparables (sold houses) and may be using a little different adjustments for the value of a three bedroom home versus a two bedroom home. It gets even more difficult when homes are not selling, or there are very few comparables close by. They sometimes have to go further away and futher back in time. Up to a year ago.
Appraisals are reviewed by the bank. Sometimes the bank has a review department in house or they pay another appraiser to review the appraisal. So there are checks and balances in the system.
What happens is your house does not appraise for the sales price ? Most houses do but every once in a great while one won't.Either the appraiser appraised it for less than the sales price or sometimes the bank rejects the value of the appraisal and will come back with a lower value of the house. What the means to you the buyer is that the sales price must be reduced or you have to bring more money to the table. For example you bought a home for $200,000 and you are borrowing 100%. The bank or the appraiser says it is only worth $190,000. The bank is only going to loan $190,000. You either have to go back to the seller and renegotiate the price or you have to come up with $10,000.
VA Appraisals: If you are getting either of these government mortgages, the appraiser will not only look at valuation but will also look at the condition. If defects are noted, they may require that they be fixed prior to closing. Since the borrower has such a low downpayment, Lenders want to make sure that Borrowers are not hit with any up-front maintenance expenses. The Seller is not obligated to make the repairs; consequently, they will have to be negotiated.
Appraisals are not a guarantee of value. Most lenders will have a disclaimer to that effect. Remember, the appraiser has a copy of your fully negotiated contract BEFORE establishing the appraisal value. It is more of a confirmation of value.
If you want more information on mortgages and the mortgage process go to my website www.russravary.com
You have completed the loan application, put in a purchase offer. When do you order an appraisal? You order an appraisal after the home inspection. You don't want to order and pay for an appraisal until the house passes inspection. If the house fails inspection you don't order the appraisal until you have a signed addendum stating the the seller will do the repairs, give you a lower price, or you accept the house as is. Then you order the appraisal
Appraisals are performed for the benefit of the lender. They are trying to justify the loan amount based on the appraised value. The appraiser will have a copy of the Purchase agreement. (contract). The typical cost of an appraisal is $275 - $350 and is normally paid to the lender upfront by the borrower. Appraisers charge more for rental properties, FHA appraisals, and multi family properties. Commercial appraisals start at $1500 and go up to $5000
An appraisal is subjective. One appraiser may come up with one value and another may come up with a totally different value. An appraisal is not what the house should sell for, it is a educated estimate of value using different value approachs.The most common way an appraisal is done is that the subject house ( the house being bought) is compared to 3-5 homes that are similar in style, size, and location that have sold in the last 6 months. So your appraisal is based on homes that have sold recently that are like yours and near yours!
STYLE By style I mean they compare ranches with ranches. They will not compare a ranch to a colonial. ( or 2 story)
SIZE, AGE By size I mean they compare square footage, number of bedrooms, bath rooms, age, garage, ammenities. Your home may be 1200 sq ft 2 bedroom,1.5 bath, built in 1999, with a 2 car garage. One of the ones that sold may be 1200 sq ft, 3 bedroom, 2 bath, built in 1952, with a 1 car garage. The appraiser has a general formula that he uses to give value to a 3 bedroom versus a 2 bedroom, A home built in 1999 is worth more than one built in 1952 so more value is given to the 1999 home. This gets very complex. What the lender is looking for from the appraiser is that he is not giving some ridiculous value to say the garage or the age. Remember very little value is given to updates. Bigger value would be given to an addition or a garage.
Location If it is in the city lenders like to see the comparable sold homes that the appraiser is using to be within a half a mile. Without crossing main roads or railroad tracks. This common sense, because if you cross a main road the houses can be totally different. The lender wants the appraiser to use the houses closest to the subject property. So if a similar house sold on the same street the appraiser is supposed to use it.That is how many times appraisals are different. Appraisers may be using different comparables (sold houses) and may be using a little different adjustments for the value of a three bedroom home versus a two bedroom home. It gets even more difficult when homes are not selling, or there are very few comparables close by. They sometimes have to go further away and futher back in time. Up to a year ago.
Appraisals are reviewed by the bank. Sometimes the bank has a review department in house or they pay another appraiser to review the appraisal. So there are checks and balances in the system.
What happens is your house does not appraise for the sales price ? Most houses do but every once in a great while one won't.Either the appraiser appraised it for less than the sales price or sometimes the bank rejects the value of the appraisal and will come back with a lower value of the house. What the means to you the buyer is that the sales price must be reduced or you have to bring more money to the table. For example you bought a home for $200,000 and you are borrowing 100%. The bank or the appraiser says it is only worth $190,000. The bank is only going to loan $190,000. You either have to go back to the seller and renegotiate the price or you have to come up with $10,000.
VA Appraisals: If you are getting either of these government mortgages, the appraiser will not only look at valuation but will also look at the condition. If defects are noted, they may require that they be fixed prior to closing. Since the borrower has such a low downpayment, Lenders want to make sure that Borrowers are not hit with any up-front maintenance expenses. The Seller is not obligated to make the repairs; consequently, they will have to be negotiated.
Appraisals are not a guarantee of value. Most lenders will have a disclaimer to that effect. Remember, the appraiser has a copy of your fully negotiated contract BEFORE establishing the appraisal value. It is more of a confirmation of value.
If you want more information on mortgages and the mortgage process go to my website www.russravary.com
Tuesday, June 19, 2007
Michigan foreclosures
A Buy in Bank Foreclosures?
Everybody watches late night TV and sees the infomercials on how people made millions buying bank foreclosures. Can you do it? It is possible but banks have closed many of the loopholes in the lending process.
Michigan foreclosures. Let me explain what happens in the foreclosure process in Michigan. A homeowner falls 3 or more payments behind on the mortgage. The bank then sends them a letter that they are going to start foreclosure proceedings against the homeowner. Sometimes the banks are very quick to get a letter out and start the foreclosure proceedings. Other times some banks take months to get the foreclosure process started.
Then it is usually turned over to a foreclosure attorney to handle. The house is then scheduled to be sold at “ sheriff sale”. The home is auctioned off. Unfortunately many people think you can steal the homes at the sale. There are deals there at the sale but you have to do the research on the homes and their value. But what usually happens is the bank will buy the home back. The reason they do this is because they have a mortgage on it. Let’s say the house is worth $120,000 and the homeowners owe $100,000 on a mortgage. The bank will buy it back up to the $100,000 to recover their costs and to get the other possible liens off the home. You could buy it for $101,000 or more and the bank would probably let you buy it.
If the mortgage was $90,000 then the bank would bid up to $90,000 to keep their interest in the property. So up to this point the only way you can get a deal on the property is to out bid other buyers on a home.
Now the bank owns the home. The original owners may still be living in the home. They have up to 6 months to pay the bank the full amount to keep the home. This seldom happens.
The bank usually waits for the six month redemption period to lapse. They then contact 3 different real estate agents. The bank will ask the realtor to give them a price that the house should sell for. The bank is asking the realtor for a price, that price usually is fair market value in the eyes of the realtor. So that foreclosed home is no deal. It is around fair market value. The bank then hires a realtor to change locks, winterize the home, clean carpets, and if necessary get the home in saleable condition.
So the bottom line is that the bank is trying to recover what they are owed on the house or get fair market value. So most homes that are foreclosed are not great deals. Though there are some fixer uppers that may be deals. Ask your real estate agents to look for them. There also are HUD foreclosures that go through a little different process. There may be deals in them. I will be talking about them in another section.
The key to buying homes cheaply is to know values of the neighborhood and city and look for fixer uppers or homes below market value. Search Michigan Homes.
If you need a realtor to help you look go to my website www.russravary.com
Happy house hunting
Russ Ravary
Everybody watches late night TV and sees the infomercials on how people made millions buying bank foreclosures. Can you do it? It is possible but banks have closed many of the loopholes in the lending process.
Michigan foreclosures. Let me explain what happens in the foreclosure process in Michigan. A homeowner falls 3 or more payments behind on the mortgage. The bank then sends them a letter that they are going to start foreclosure proceedings against the homeowner. Sometimes the banks are very quick to get a letter out and start the foreclosure proceedings. Other times some banks take months to get the foreclosure process started.
Then it is usually turned over to a foreclosure attorney to handle. The house is then scheduled to be sold at “ sheriff sale”. The home is auctioned off. Unfortunately many people think you can steal the homes at the sale. There are deals there at the sale but you have to do the research on the homes and their value. But what usually happens is the bank will buy the home back. The reason they do this is because they have a mortgage on it. Let’s say the house is worth $120,000 and the homeowners owe $100,000 on a mortgage. The bank will buy it back up to the $100,000 to recover their costs and to get the other possible liens off the home. You could buy it for $101,000 or more and the bank would probably let you buy it.
If the mortgage was $90,000 then the bank would bid up to $90,000 to keep their interest in the property. So up to this point the only way you can get a deal on the property is to out bid other buyers on a home.
Now the bank owns the home. The original owners may still be living in the home. They have up to 6 months to pay the bank the full amount to keep the home. This seldom happens.
The bank usually waits for the six month redemption period to lapse. They then contact 3 different real estate agents. The bank will ask the realtor to give them a price that the house should sell for. The bank is asking the realtor for a price, that price usually is fair market value in the eyes of the realtor. So that foreclosed home is no deal. It is around fair market value. The bank then hires a realtor to change locks, winterize the home, clean carpets, and if necessary get the home in saleable condition.
So the bottom line is that the bank is trying to recover what they are owed on the house or get fair market value. So most homes that are foreclosed are not great deals. Though there are some fixer uppers that may be deals. Ask your real estate agents to look for them. There also are HUD foreclosures that go through a little different process. There may be deals in them. I will be talking about them in another section.
The key to buying homes cheaply is to know values of the neighborhood and city and look for fixer uppers or homes below market value. Search Michigan Homes.
If you need a realtor to help you look go to my website www.russravary.com
Happy house hunting
Russ Ravary
Thursday, May 31, 2007
Pros and cons of home ownership
PRO
A Place to Call Your Own Perhaps you are ready to settle down in your community and want to have the feeling of permanence and involvement that comes with owning your own home. Maybe you need more space for your family. Or maybe you want more freedom than you currently have as a renter to change your home to suit your individual taste and needs.
CON
Financial trouble from illness or loss of a job: When you own a home and fail to keep up with your mortgage payments, the mortgage lender could call the loan, which means payment in full or foreclose on the mortgage. This could result in the loss of your home as well as the equity you've built. A renter, on the other hand, can downsize to a cheaper apartment to cut expenses
PRO
Another interesting thing is when you own a home, your credit rating goes up a lot as well, thus you are able to get better loans at a lower interest rate.
CON
Your home loan needs to be paid on time and so is your home insurance. Therefore, it can take a toll on your financial commitments. So be sure to plan your home loan payments properly. Though there are various tax rebates and deductibles when owning a home, you still need to pay property tax each year.
PRO
Scheduled Savings When you are a homeowner, your monthly mortgage payments serve as a type of savings plan. Over time you will accumulate what lenders call "equity," an ownership interest in your house that you may be able to borrow against or convert to cash by selling the house. On the other hand, renters continually pay rent to a landlord for as long as they rent without the opportunity to build up equity.
CON
You are also liable for any damage that is caused to your neighbor´s property if the cause comes from you or your property. An example would be a fire breaking out from your home and spreading to your neighbor´s homes damaging their properties. In this instance, you are liable to pay for the damages caused.
PRO
Retirement Savings: Long-term home ownership can provide beneficial retirement security through the growth of equity.
CON
There are no guarantees: Even if you work hard at maintaining your home, property values can drop, depending on the neighborhood in which you live. This is why it's important to choose a house and neighborhood that have strengthening value in the real estate market.
PRO
Stable Housing Costs While rents typically increase year after year, the principal and interest portion of most mortgage payments remains unchanged for the entire repayment period. Because of the effect of inflation, you pay the same amount with ever "cheaper" dollars.
CON
Repair and Maintenance. Don't forget that responsibilities such as mowing the lawn and taking care of needed repairs come along with home ownership. Actually, the promise of getting the advantages of home ownership without the accompanying repair and maintenance responsibilities is a major factor in the popularity of condominiums. As an owner, you must pay for any unexpected costs such as a new roof or heating system. This is why a family budget and a savings strategy are important
PRO
Tax Benefits Homeowners are eligible for significant tax advantages that are not available to renters. Most important, the interest paid on your home mortgage usually is tax deductible and therefore can save you a substantial amount each year in federal income taxes. There may be tax deductions for improvements you do to the home. Check with your CPA or tax preparer as tax deductions change often.
CON
High Costs Usually you can expect to pay more for housing as a homeowner than you did as a renter, especially for the first few years. Even if your mortgage payments are less than your previous rent payments, as a homeowner you must also pay property taxes, homeowners insurance, all utilities, and upkeep expenses.
PRO
Increased Value Houses typically increase in value over time. It's not unusual for a house that sold fifteen years ago to be valued at much more than its selling price today. This increased value is as good as money in the bank to the homeowner.
CON
There are some disadvantages to owning a home. For example, you are liable for any accidents and injuries on your property. Getting a home insurance policy covering such cases can offset this. However, there is a cost involved.
PRO
Once an owner, always an owner: A first home often leads to a better second home. Owning and properly maintaining the property also offers a sense of accomplishment.
PRO
A home is yours forever. As long as you can afford the mortgage and taxes, you don't ever have to move. There's no landlord to terminate your lease, raise your rent or deny you permission to make changes to the property.
My bottom-line advice: Buying a home I believe is a good investment because it is yours. It forces you to save and build for your future. Sure you could rent cheaper but you live by somebody Else's rules. So when you buy don't over-invest in your home, either when you buy it or when you make subsequent improvements. Buy only as much house as you need. Plan to stay a long time. Don't view your home as your primary retirement savings. You home will bring you many memories, long term stability, and a sense of pride. Whether you own a home in Livingston County, Wayne County, Washtenaw County, Oakland County, or Macomb County it is a start towards your future. Search for Livonia houses for sale, Novi houses for sale or any Michigan homes for sale.
For more mortgage and real estate information go to my website www.russravary.com
I also have a great Michigan things to do section for lots of fun things to do in Michigan.
May life treat you and your family well this weekend.
Russ Ravary
A Place to Call Your Own Perhaps you are ready to settle down in your community and want to have the feeling of permanence and involvement that comes with owning your own home. Maybe you need more space for your family. Or maybe you want more freedom than you currently have as a renter to change your home to suit your individual taste and needs.
CON
Financial trouble from illness or loss of a job: When you own a home and fail to keep up with your mortgage payments, the mortgage lender could call the loan, which means payment in full or foreclose on the mortgage. This could result in the loss of your home as well as the equity you've built. A renter, on the other hand, can downsize to a cheaper apartment to cut expenses
PRO
Another interesting thing is when you own a home, your credit rating goes up a lot as well, thus you are able to get better loans at a lower interest rate.
CON
Your home loan needs to be paid on time and so is your home insurance. Therefore, it can take a toll on your financial commitments. So be sure to plan your home loan payments properly. Though there are various tax rebates and deductibles when owning a home, you still need to pay property tax each year.
PRO
Scheduled Savings When you are a homeowner, your monthly mortgage payments serve as a type of savings plan. Over time you will accumulate what lenders call "equity," an ownership interest in your house that you may be able to borrow against or convert to cash by selling the house. On the other hand, renters continually pay rent to a landlord for as long as they rent without the opportunity to build up equity.
CON
You are also liable for any damage that is caused to your neighbor´s property if the cause comes from you or your property. An example would be a fire breaking out from your home and spreading to your neighbor´s homes damaging their properties. In this instance, you are liable to pay for the damages caused.
PRO
Retirement Savings: Long-term home ownership can provide beneficial retirement security through the growth of equity.
CON
There are no guarantees: Even if you work hard at maintaining your home, property values can drop, depending on the neighborhood in which you live. This is why it's important to choose a house and neighborhood that have strengthening value in the real estate market.
PRO
Stable Housing Costs While rents typically increase year after year, the principal and interest portion of most mortgage payments remains unchanged for the entire repayment period. Because of the effect of inflation, you pay the same amount with ever "cheaper" dollars.
CON
Repair and Maintenance. Don't forget that responsibilities such as mowing the lawn and taking care of needed repairs come along with home ownership. Actually, the promise of getting the advantages of home ownership without the accompanying repair and maintenance responsibilities is a major factor in the popularity of condominiums. As an owner, you must pay for any unexpected costs such as a new roof or heating system. This is why a family budget and a savings strategy are important
PRO
Tax Benefits Homeowners are eligible for significant tax advantages that are not available to renters. Most important, the interest paid on your home mortgage usually is tax deductible and therefore can save you a substantial amount each year in federal income taxes. There may be tax deductions for improvements you do to the home. Check with your CPA or tax preparer as tax deductions change often.
CON
High Costs Usually you can expect to pay more for housing as a homeowner than you did as a renter, especially for the first few years. Even if your mortgage payments are less than your previous rent payments, as a homeowner you must also pay property taxes, homeowners insurance, all utilities, and upkeep expenses.
PRO
Increased Value Houses typically increase in value over time. It's not unusual for a house that sold fifteen years ago to be valued at much more than its selling price today. This increased value is as good as money in the bank to the homeowner.
CON
There are some disadvantages to owning a home. For example, you are liable for any accidents and injuries on your property. Getting a home insurance policy covering such cases can offset this. However, there is a cost involved.
PRO
Once an owner, always an owner: A first home often leads to a better second home. Owning and properly maintaining the property also offers a sense of accomplishment.
PRO
A home is yours forever. As long as you can afford the mortgage and taxes, you don't ever have to move. There's no landlord to terminate your lease, raise your rent or deny you permission to make changes to the property.
My bottom-line advice: Buying a home I believe is a good investment because it is yours. It forces you to save and build for your future. Sure you could rent cheaper but you live by somebody Else's rules. So when you buy don't over-invest in your home, either when you buy it or when you make subsequent improvements. Buy only as much house as you need. Plan to stay a long time. Don't view your home as your primary retirement savings. You home will bring you many memories, long term stability, and a sense of pride. Whether you own a home in Livingston County, Wayne County, Washtenaw County, Oakland County, or Macomb County it is a start towards your future. Search for Livonia houses for sale, Novi houses for sale or any Michigan homes for sale.
For more mortgage and real estate information go to my website www.russravary.com
I also have a great Michigan things to do section for lots of fun things to do in Michigan.
May life treat you and your family well this weekend.
Russ Ravary
Saturday, May 26, 2007
First time home buyer
Buying your first home can be scary, but if you follow these tips, you will do just fine! Many young people do not realize that they can afford a home, they can get approved for a mortgage. Sometimes you need little or no money to buy a home. There are Government programs for first time homebuyers (FHA) and there are 100%, no money down programs.
The key is to plan ahead. You may need to repair your credit, save for a down payment, get more time on a job, save for closing costs. You need to know what you have to do to get started. You may be one of the "great buyers" and have everything you need to get started right now and not know it!Many times you do not need money. We can ask the seller to pay your closing costs. There are many programs that offer low rates and no money. 100% financing may be the way to go for you. But taking the first step and seeing what you need to do now is important. It will make the home buying process so easy. Call me to set up an appointment to go over your credit report, and credit scores.
You may have imperfect credit, have to much debt, or improve your credit scores. The key is to get started. Even though you may have bruised credit, or too much credit I have helped many people improve their credit. They then we able to buy homes.
Create Your "Wishlist"Make your wish list. Focus on the features you want in a home: 2 bedrooms or 3? 1 bath or 2? Garage or no garage? Knowing what you're looking for will help you focus your search. And it will help your local Wayne County real estate broker, too.
Search Michigan houses for sale. Think about where and why you want to buy in an area. How far to work? School? Family?Drive by, and look at many Wayne County homes (again we handle Oakland County houses for sale, Washtenaw county houses for sale, Livingston County houses for sales, as well as Wayne county houses for sale. We just use Wayne county as an example in this report). See as many possible to get a better feel for ones available in your price range. Visit my site often and search for homes. Keep track of what you like and dislike about each home that you visit by printing and using our Home Visits Worksheet.
Also consider the market value of the home, any special circumstances surrounding the sale of the home, how much you can afford to pay for the home, and the condition of the home when determining whether the home is right for you.
When you find a Wayne County home in your price range and you want to buy it, visit the Wayne County neighborhood at various times to get a more complete understanding of its activity. Talk with your prospective neighbors about what it's like to live in the area. Take a day and commute to your job from the area. And look at the home more critically -- you may discover flaws you hadn't noticed during your first visit.
Another aspect to consider is the financing you will use to purchase the home. For example, the seller may help pay closing costs such as transfer taxes or points on a mortgage. If this is the case, you may be more willing to accept the seller's asking price. Your local Wayne County real estate sales professional (Russ Ravary) can offer some assistance regarding how much you should offer, but the final decision is yours.
The key is to plan ahead. You may need to repair your credit, save for a down payment, get more time on a job, save for closing costs. You need to know what you have to do to get started. You may be one of the "great buyers" and have everything you need to get started right now and not know it!Many times you do not need money. We can ask the seller to pay your closing costs. There are many programs that offer low rates and no money. 100% financing may be the way to go for you. But taking the first step and seeing what you need to do now is important. It will make the home buying process so easy. Call me to set up an appointment to go over your credit report, and credit scores.
You may have imperfect credit, have to much debt, or improve your credit scores. The key is to get started. Even though you may have bruised credit, or too much credit I have helped many people improve their credit. They then we able to buy homes.
Create Your "Wishlist"Make your wish list. Focus on the features you want in a home: 2 bedrooms or 3? 1 bath or 2? Garage or no garage? Knowing what you're looking for will help you focus your search. And it will help your local Wayne County real estate broker, too.
Search Michigan houses for sale. Think about where and why you want to buy in an area. How far to work? School? Family?Drive by, and look at many Wayne County homes (again we handle Oakland County houses for sale, Washtenaw county houses for sale, Livingston County houses for sales, as well as Wayne county houses for sale. We just use Wayne county as an example in this report). See as many possible to get a better feel for ones available in your price range. Visit my site often and search for homes. Keep track of what you like and dislike about each home that you visit by printing and using our Home Visits Worksheet.
Also consider the market value of the home, any special circumstances surrounding the sale of the home, how much you can afford to pay for the home, and the condition of the home when determining whether the home is right for you.
When you find a Wayne County home in your price range and you want to buy it, visit the Wayne County neighborhood at various times to get a more complete understanding of its activity. Talk with your prospective neighbors about what it's like to live in the area. Take a day and commute to your job from the area. And look at the home more critically -- you may discover flaws you hadn't noticed during your first visit.
Another aspect to consider is the financing you will use to purchase the home. For example, the seller may help pay closing costs such as transfer taxes or points on a mortgage. If this is the case, you may be more willing to accept the seller's asking price. Your local Wayne County real estate sales professional (Russ Ravary) can offer some assistance regarding how much you should offer, but the final decision is yours.
Monday, May 21, 2007
Mortgage fraud
Today was another tough day in the mortgage world. I had a loan approved at a major lender for a 100% loan on Friday. Today PMI insurers made a change in their guidelines. They will no longer insure 100% loans when the borrowers credit score is less than 575. Unfortunately my borrowers credit score is less than 575 and now they will only loan him 95% instead of the 100% they would on Friday.
It is just another sign of how much the banks are tightening up the credit guidelines.
On another front I had a real estate agent arguing with an appraiser. They had a purchase agreement for $250,000. The appraiser could not find a comp that would support a price of over $235,000. The real estate agent was upset with that answer. When my appraiser asked her what comps she used to set a price on the house, this is what she said. Well I sold a house in that sub over a year ago for $250,000. Do you think she might have been a little smarter and realized that the housing prices in Metro Detroit are falling. (and across the country) She didn't want to tell her seller's that the house was no longer worth the $250,000 they paid for it let alone the $50,000 they put into it. The agent wanted to know if my clients had $15,000 to come to the table with. What did she think that we were stupid. Why would we buy a home that would not comp out. She wanted to use comps from over a mile away and disregard the close ones. That agent wanted my appraiser to commit appraisal fraud or mortgage fraud so she could make a commission. Shame on her!!!!
Don't let an agent do that to you. If an appraiser tells your mortgage guy that the house won't comp out to the purchase price. Either the sales price has to come down or you need to move on and find another home. The buyer's agent was smart enough to do just that. And you can too. There is absolutely no reason to overpay for a home in this market.
For more mortgage information go to http://www.russravary.com
May you work with an honest agent that looks out for your interest.
Russ Ravary
It is just another sign of how much the banks are tightening up the credit guidelines.
On another front I had a real estate agent arguing with an appraiser. They had a purchase agreement for $250,000. The appraiser could not find a comp that would support a price of over $235,000. The real estate agent was upset with that answer. When my appraiser asked her what comps she used to set a price on the house, this is what she said. Well I sold a house in that sub over a year ago for $250,000. Do you think she might have been a little smarter and realized that the housing prices in Metro Detroit are falling. (and across the country) She didn't want to tell her seller's that the house was no longer worth the $250,000 they paid for it let alone the $50,000 they put into it. The agent wanted to know if my clients had $15,000 to come to the table with. What did she think that we were stupid. Why would we buy a home that would not comp out. She wanted to use comps from over a mile away and disregard the close ones. That agent wanted my appraiser to commit appraisal fraud or mortgage fraud so she could make a commission. Shame on her!!!!
Don't let an agent do that to you. If an appraiser tells your mortgage guy that the house won't comp out to the purchase price. Either the sales price has to come down or you need to move on and find another home. The buyer's agent was smart enough to do just that. And you can too. There is absolutely no reason to overpay for a home in this market.
For more mortgage information go to http://www.russravary.com
May you work with an honest agent that looks out for your interest.
Russ Ravary
Saturday, May 19, 2007
basic mortgage information
How to stop renting and buy a home of your own your
Are you looking to buy but have no money,
You can buy with no money down your
Looking to re-finance click here ,
Credit & Credit Reports- How do I improve my credit score,-
Have no idea how credit scores work find out how, -
did you know best credit is unused credit, -
tell me everything about a credit report that you can-
did you know that you can get a free credit report-
how to read your credit report - by doing doing these things can hurt your credit,
Different types of Mortgages-
Can you tell about the key elements of a mortgage?-
what is the difference between a home equity loan and line of credit?, -
here are 6 things you should know about mortgages-
here is a general over all view of the different types of mortgages -
What is an FHA , VA mortgage?-
what is the difference between a fixed rate loan and an adjustable rate mortgage?-
what is PMI? -
determine if an adjustable rate mortgage is right for you -
What types of mortgages does Global Mortgage do?
- here are different types of ARMS (adjustable rates loans) and definitions-
did you know that a forty year mortgage payment is about the same as an interest only payment,
Thinking of buying a home and need a mortgage- Do I need to get pre-approved to buy a home? -
What are the benefits or advantages to own versus renting?-
before you raid the 401K for your down payment read this-
what's the difference between pre-approved and pre-qualified?-
Should I should I buy points to lower my rate?-
Can you explain the bi-weekly programs or how to cut the years down, -
I am thinking about taking a home equity to buy stocks, should I?-
I have had a bankruptcy and I want to buy a home
I have been in the mortgage business for seven years now. I have worked in shops that have specialized in hard to do loans, and a shop that specialized in people with good credit (we beat the banks rates and fees day in and day out) So whether you are self employed, have financial difficulties, been in bankruptcy, or have great credit I can help you out with good rates and lower closing costs. My philosophy is to do more loans at a lower price and I will get more referrals. I will make up the money but getting more loans. It has worked for me over the years. I have done over a $100 million dollars of loans for my clients over the years. What that means to you is that I have a lot of experience in doing loans for people with great credit and for people who have had credit problems. So check out what I can do for you. I am the type of person that I will not do the loan just to make money if it does not make sense for you. There are a lot of mortgage guys that will put you into a bad loan just to make money. So if you are looking for a Michigan Mortgage give me a call at (313) 310-9855 or email me at ourmortgageguy@yahoo.com.
FHA Loans General FHA Loan Information
Are you looking to buy but have no money,
You can buy with no money down your
Looking to re-finance click here ,
Credit & Credit Reports- How do I improve my credit score,-
Have no idea how credit scores work find out how, -
did you know best credit is unused credit, -
tell me everything about a credit report that you can-
did you know that you can get a free credit report-
how to read your credit report - by doing doing these things can hurt your credit,
Different types of Mortgages-
Can you tell about the key elements of a mortgage?-
what is the difference between a home equity loan and line of credit?, -
here are 6 things you should know about mortgages-
here is a general over all view of the different types of mortgages -
What is an FHA , VA mortgage?-
what is the difference between a fixed rate loan and an adjustable rate mortgage?-
what is PMI? -
determine if an adjustable rate mortgage is right for you -
What types of mortgages does Global Mortgage do?
- here are different types of ARMS (adjustable rates loans) and definitions-
did you know that a forty year mortgage payment is about the same as an interest only payment,
Thinking of buying a home and need a mortgage- Do I need to get pre-approved to buy a home? -
What are the benefits or advantages to own versus renting?-
before you raid the 401K for your down payment read this-
what's the difference between pre-approved and pre-qualified?-
Should I should I buy points to lower my rate?-
Can you explain the bi-weekly programs or how to cut the years down, -
I am thinking about taking a home equity to buy stocks, should I?-
I have had a bankruptcy and I want to buy a home
I have been in the mortgage business for seven years now. I have worked in shops that have specialized in hard to do loans, and a shop that specialized in people with good credit (we beat the banks rates and fees day in and day out) So whether you are self employed, have financial difficulties, been in bankruptcy, or have great credit I can help you out with good rates and lower closing costs. My philosophy is to do more loans at a lower price and I will get more referrals. I will make up the money but getting more loans. It has worked for me over the years. I have done over a $100 million dollars of loans for my clients over the years. What that means to you is that I have a lot of experience in doing loans for people with great credit and for people who have had credit problems. So check out what I can do for you. I am the type of person that I will not do the loan just to make money if it does not make sense for you. There are a lot of mortgage guys that will put you into a bad loan just to make money. So if you are looking for a Michigan Mortgage give me a call at (313) 310-9855 or email me at ourmortgageguy@yahoo.com.
FHA Loans General FHA Loan Information
Sunday, May 13, 2007
Bankruptcy and buying a home
You have been through bankruptcy and you would like to buy a home. Here are the steps you need to take to get you on the right path of good credit.
When banks look at you for credit cards and home mortgage applications they look at your credit score. You credit score is determined by many factors. One is your credit history or payment history. This is one of the key factors in determining your credit score. They look at how many times you have been late on a payment, or how many accounts you have not paid at all or went to collection. Even if it is a small payment of $15 you still need to make the payment on time. They look at how many times you have been 30 days late, 60 days late, 90 days late, and 120 days late. The more often you are late and the longer you are late will lower your credit score. If you don’t pay at all or let the account go into collection then it is even worse.
If you have ten accounts and eight of them have been late and only two are paid on time your credit score is going to be low.
So the key is to get as many accounts paid on time each and every month. Be consistent. Strive to make every payment on time. If you have come out of bankruptcy you most likely have no open credit lines. You want to get at least 2 or 3 open credit lines. If you have to get a secured credit card. Go to http://www.russravary.com/ and go to the site map and see secured credit card in the credit section for more info on secured credit cards.
What do you mean get more credit after coming out of bankruptcy? You have to have credit in this world to get ahead. The secret is learning to live within your means and to use credit sparingly. You must have a credit history to buy a house. So you must learn must learn to use credit correctly. And you must have open credit lines. Learn to use credit cards to buy necessities such as gas or food and be sure to put the money aside and pay the bill on time each and every month.
That is number one to get at least one open line of credit open immediately. The longer you have the open line paid consistently on time the better the lender likes you. Over time you need to get 2 –3 open lines of credit.
The number two step is if you are renting is to pay your rent out of your checking account. If you do not have a checking account get one opened and pay your rent out the account every month. You need to be able to prove to the bank that you have paid it on time. Cashiers checks, money orders, and rent receipts mean nothing to the lender. They want to see a cashed check and nothing else. So remember the number one thing to do is to get at least one open line of credit started right away, make the payments on time each and every month. Pay the credit card off each month. This will get you started on the path to home ownership.
Remember live within your means, have some extra savings and that will help you buy a home and keep it with out going into foreclosure.
Russ Ravary
When banks look at you for credit cards and home mortgage applications they look at your credit score. You credit score is determined by many factors. One is your credit history or payment history. This is one of the key factors in determining your credit score. They look at how many times you have been late on a payment, or how many accounts you have not paid at all or went to collection. Even if it is a small payment of $15 you still need to make the payment on time. They look at how many times you have been 30 days late, 60 days late, 90 days late, and 120 days late. The more often you are late and the longer you are late will lower your credit score. If you don’t pay at all or let the account go into collection then it is even worse.
If you have ten accounts and eight of them have been late and only two are paid on time your credit score is going to be low.
So the key is to get as many accounts paid on time each and every month. Be consistent. Strive to make every payment on time. If you have come out of bankruptcy you most likely have no open credit lines. You want to get at least 2 or 3 open credit lines. If you have to get a secured credit card. Go to http://www.russravary.com/ and go to the site map and see secured credit card in the credit section for more info on secured credit cards.
What do you mean get more credit after coming out of bankruptcy? You have to have credit in this world to get ahead. The secret is learning to live within your means and to use credit sparingly. You must have a credit history to buy a house. So you must learn must learn to use credit correctly. And you must have open credit lines. Learn to use credit cards to buy necessities such as gas or food and be sure to put the money aside and pay the bill on time each and every month.
That is number one to get at least one open line of credit open immediately. The longer you have the open line paid consistently on time the better the lender likes you. Over time you need to get 2 –3 open lines of credit.
The number two step is if you are renting is to pay your rent out of your checking account. If you do not have a checking account get one opened and pay your rent out the account every month. You need to be able to prove to the bank that you have paid it on time. Cashiers checks, money orders, and rent receipts mean nothing to the lender. They want to see a cashed check and nothing else. So remember the number one thing to do is to get at least one open line of credit started right away, make the payments on time each and every month. Pay the credit card off each month. This will get you started on the path to home ownership.
Remember live within your means, have some extra savings and that will help you buy a home and keep it with out going into foreclosure.
Russ Ravary
Monday, April 30, 2007
Why so much interest?
Why is my payoff higher (what I owe to the bank) than my last months statement balance?
Did you know when you pay May's mortgage payment you are actually paying the interest for April. So when you send in your May payment it pays from April 1 to April 30th. It is one of the few things you buy in life where you are not paying up front.
But don't worry the bank always gets their full amount. When you sell or refinance, the bank gets all of their interest at the end. Let's say you are refinancing your mortgage and you are closing on May 9th. Let's assume you already made the May payment. You still owe 9 more days of interest on the loan. So they will prorate the interest for 9 days. So lets say the balance as of May 1 was $195,000 and your interest rate was 5 .375% (I must of gotten you that rate during the refi boom... it is such a good rate for a 30 year fixed)
So $195,000 X .05375 (interest rate) = $10,481.25 (interest you would pay this year)
S0 take the $10,481.25 divide it by 365 days in a year = $28.71 (interest you pay per day)
Then $28.71 X the 9 days(when you close on May 9) = $258.44
258.44 + (the balance on May 1) $195,000 = $195,258.44 That's what your payoff would be to the bank.
The lender always gets their money. There is no way around it if you are selling your home, or refinancing. They get every penny to the last day.
So remember when you make this months payment it is actually for last months interest.
Any questions go to my website www.russravary.com and email me. Or get my phone number from my website and give me a call. Lots of good mortgage and real estate information there.
I hope that if somebody in your family has cancer may it go in remission.
Russ Ravary
Did you know when you pay May's mortgage payment you are actually paying the interest for April. So when you send in your May payment it pays from April 1 to April 30th. It is one of the few things you buy in life where you are not paying up front.
But don't worry the bank always gets their full amount. When you sell or refinance, the bank gets all of their interest at the end. Let's say you are refinancing your mortgage and you are closing on May 9th. Let's assume you already made the May payment. You still owe 9 more days of interest on the loan. So they will prorate the interest for 9 days. So lets say the balance as of May 1 was $195,000 and your interest rate was 5 .375% (I must of gotten you that rate during the refi boom... it is such a good rate for a 30 year fixed)
So $195,000 X .05375 (interest rate) = $10,481.25 (interest you would pay this year)
S0 take the $10,481.25 divide it by 365 days in a year = $28.71 (interest you pay per day)
Then $28.71 X the 9 days(when you close on May 9) = $258.44
258.44 + (the balance on May 1) $195,000 = $195,258.44 That's what your payoff would be to the bank.
The lender always gets their money. There is no way around it if you are selling your home, or refinancing. They get every penny to the last day.
So remember when you make this months payment it is actually for last months interest.
Any questions go to my website www.russravary.com and email me. Or get my phone number from my website and give me a call. Lots of good mortgage and real estate information there.
I hope that if somebody in your family has cancer may it go in remission.
Russ Ravary
Saturday, April 28, 2007
Plan your mortgage
Well foreclosures were up 47% in March. Don't let that happen to you. If you are just planning to buy a home. Be one of the smart ones. Just because somebody will allow you to borrow 50% of your income doesn't mean you should.
50% of your income to go towards your house payment is too much. You are going to be house poor. You want to be in the 35% range. The only reason you should be stretched out that far is that you are going to get big raises in the next few years. Or you are a young professional like a doctor and you know for sure your income is going to rise dramatically.
28-38% used to be the range that banks would loan you. The banks like you to have reserves (savings). Do you have savings in the bank? Do you have 6 months to a year of savings to pay all your bills? For example do you have enough to pay all your credit card bills, car payments, cell phone bills, utility bills and house payments and taxes.
The good borrowers do, they have back up so they can pay their bills even in bad times. That's how they keep their good credit rating. I'm not saying you shouldn't buy a house if you don't have that much saved. What I am saying is that is what you want to strive for. Live within your means, feel relaxed, be able to take vacations, be able to help your kids through college, be ok if your have medical problems in life. You don't want to be that Walmart greeter. Sure it is ok to be the Walmart greeter at 70 years old because you want something to do, but it is a whole different thing to have to go to work so you can afford your house payment or be able to eat.
Too many people want the big beautiful house and the fancy cars. But think how embarrassed you would be to tell your family and friends that you lost your house in foreclosure. Be one of the smart ones in life. Once you start on this path you will be glad you did.
So when you are out shopping for a mortgage, don't ask how of a house can I buy. Instead figure out yourself what payment can you afford comfortably. Then ask your mortgage professional the interest rate and how big of a house that payment can buy.
May unexpected money come your way this week. For more mortgage information and Michigan real estate information go to www.russravary.com
Russ Ravary
"your real estate and mortgage specialist"
50% of your income to go towards your house payment is too much. You are going to be house poor. You want to be in the 35% range. The only reason you should be stretched out that far is that you are going to get big raises in the next few years. Or you are a young professional like a doctor and you know for sure your income is going to rise dramatically.
28-38% used to be the range that banks would loan you. The banks like you to have reserves (savings). Do you have savings in the bank? Do you have 6 months to a year of savings to pay all your bills? For example do you have enough to pay all your credit card bills, car payments, cell phone bills, utility bills and house payments and taxes.
The good borrowers do, they have back up so they can pay their bills even in bad times. That's how they keep their good credit rating. I'm not saying you shouldn't buy a house if you don't have that much saved. What I am saying is that is what you want to strive for. Live within your means, feel relaxed, be able to take vacations, be able to help your kids through college, be ok if your have medical problems in life. You don't want to be that Walmart greeter. Sure it is ok to be the Walmart greeter at 70 years old because you want something to do, but it is a whole different thing to have to go to work so you can afford your house payment or be able to eat.
Too many people want the big beautiful house and the fancy cars. But think how embarrassed you would be to tell your family and friends that you lost your house in foreclosure. Be one of the smart ones in life. Once you start on this path you will be glad you did.
So when you are out shopping for a mortgage, don't ask how of a house can I buy. Instead figure out yourself what payment can you afford comfortably. Then ask your mortgage professional the interest rate and how big of a house that payment can buy.
May unexpected money come your way this week. For more mortgage information and Michigan real estate information go to www.russravary.com
Russ Ravary
"your real estate and mortgage specialist"
Wednesday, April 25, 2007
PMI mortgage insurance
What is PMI and why do you have to have it?
PMI is Private Mortgage Insurance. It is insurance that a lender or bank makes you get when you borrow over 80% of the value of the home. The more you borrow over 80 % the bigger the risk you are. So the bank makes you take insurance out to cover their risk.
The more you borrow the higher the PMI. Different banks determine PMI differently based on the type of loan, the length of the loan, and the percentage of loan as compared to the purchase price of the home. This is called LTV ( loan to value). If you borrow 95% as compared to 85% the PMI is going to be higher on the 95% because you are a bigger risk.
The only way you can get rid of PMI after you get it is to refinance out of it or pay your principal balance down on the loan to 78%. You cannot get an appraisal showing that the value of the home went up. (Even if the amount you owe is only 78% of the market value of the home). The only exception to this is if you did capital improvements to the home such as an addition. Then you have to document the improvements and get an appraisal done. Many times the bank requires you to use their appraiser or an appraiser on their approved list. So you are going to have PMI for at least 5-10 years usually.
So before you get a loan with PMI look at all your options. Some banks and lenders offer a loan with a higher interest rate where the PMI is built into the price. (There is no actual PMI but you are paying a higher interest rate). Or you can split your loan into 2 parts. You can do an 80% loan and then do a 2nd mortgage for the rest.
Let’s say that you want to borrow 95% on a purchase price of a $200,000 home.
You would be borrowing $190,000 total. You would split the loan into an 80% 1st mortgage of $160,000 and a 2nd mortgage of $30,000. You are still borrowing the same amount but split into two loans. The first mortgage is usually at a good rate and the 2nd mortgage is at a slightly higher rate.
When you borrow over 80% of the value of the home (or purchase price). You have three choices.
1) One loan with PMI
2) One loan with a higher rate that basically has the PMI built into the rate
3) Two loans. A first mortgage and then a 2nd mortgage with a slightly higher rate.
PMI is usually not tax deductible but in 2007 it was. It will be up to the law makers on how long it will stay tax deductible.
The bottom line is that you need to have your mortgage person (i.e. Russ Ravary) run the scenarios for all three. The one with the least expensive payment is usually the way you want to go. That is if PMI is still tax deductible, the lengths of the loans are the same, and the rates are fixed. (sometimes the rates on the seconds can be variable, be sure it is a fixed rate)
If you want more information on mortgages go to my website Michigan mortgages www.russravary.com. To to search Michigan homes in the privacy of your home at your convenience go to www.russravary.com
May your work week fly by and your weekend seem to last forever.
Russ Ravary
"your one stop mortgage and real estate specialist"
PMI is Private Mortgage Insurance. It is insurance that a lender or bank makes you get when you borrow over 80% of the value of the home. The more you borrow over 80 % the bigger the risk you are. So the bank makes you take insurance out to cover their risk.
The more you borrow the higher the PMI. Different banks determine PMI differently based on the type of loan, the length of the loan, and the percentage of loan as compared to the purchase price of the home. This is called LTV ( loan to value). If you borrow 95% as compared to 85% the PMI is going to be higher on the 95% because you are a bigger risk.
The only way you can get rid of PMI after you get it is to refinance out of it or pay your principal balance down on the loan to 78%. You cannot get an appraisal showing that the value of the home went up. (Even if the amount you owe is only 78% of the market value of the home). The only exception to this is if you did capital improvements to the home such as an addition. Then you have to document the improvements and get an appraisal done. Many times the bank requires you to use their appraiser or an appraiser on their approved list. So you are going to have PMI for at least 5-10 years usually.
So before you get a loan with PMI look at all your options. Some banks and lenders offer a loan with a higher interest rate where the PMI is built into the price. (There is no actual PMI but you are paying a higher interest rate). Or you can split your loan into 2 parts. You can do an 80% loan and then do a 2nd mortgage for the rest.
Let’s say that you want to borrow 95% on a purchase price of a $200,000 home.
You would be borrowing $190,000 total. You would split the loan into an 80% 1st mortgage of $160,000 and a 2nd mortgage of $30,000. You are still borrowing the same amount but split into two loans. The first mortgage is usually at a good rate and the 2nd mortgage is at a slightly higher rate.
When you borrow over 80% of the value of the home (or purchase price). You have three choices.
1) One loan with PMI
2) One loan with a higher rate that basically has the PMI built into the rate
3) Two loans. A first mortgage and then a 2nd mortgage with a slightly higher rate.
PMI is usually not tax deductible but in 2007 it was. It will be up to the law makers on how long it will stay tax deductible.
The bottom line is that you need to have your mortgage person (i.e. Russ Ravary) run the scenarios for all three. The one with the least expensive payment is usually the way you want to go. That is if PMI is still tax deductible, the lengths of the loans are the same, and the rates are fixed. (sometimes the rates on the seconds can be variable, be sure it is a fixed rate)
If you want more information on mortgages go to my website Michigan mortgages www.russravary.com. To to search Michigan homes in the privacy of your home at your convenience go to www.russravary.com
May your work week fly by and your weekend seem to last forever.
Russ Ravary
"your one stop mortgage and real estate specialist"
Wednesday, April 18, 2007
Time to start saving
I'm a big cheerleader for new home buyers to try to save money before they buy a home. I want you to be able to afford the home. I want you not to go into foreclosure.
In the past few years to many people bought homes with no money down and no savings in the bank. Hello, home ownership takes money!!!!! What happens if the furnace breaks down, or the roof leaks. Where are you going to get the money? Homes cost a lot of money. Ask anybody. All homes are money pits. You can throw all the money in the world into a home and it will disappear.
Mulch the flower beds, put flowers in, change a light fixture, fix the running toilet, or the dripping faucet. All of these things are going to cost you $25.00 just to get you started. If you lived in an apartment or with Mom and Dad you complained to management and it was eventually fixed.(Maybe) Well now it is up to you to get it done. You may be able to fix it yourself, or with a friend's help, but you may have to pay to have it fixed. You need money, not the VISA card. You don't want to bury yourself in debt. You might even have to buy the tools to fix the problem.
Do yourself a favor. Save 2 or 3 months of your projected mortgage payment with taxes and insurance as a back up. They had a word for it "a rainy day fund" It's not new but many people in foreclosure never had one or bothered to think about it. There is no reason to lose your house if you plan ahead. (Unless you have health problems and or unable to work)
I would rather not have your business today if you have the ability and foresight to save your money for a safety net. There is lots of good homes out there at a reasonable price. Homes are not going up in price in the near future. Save your money, get a good deal on a home. You'll thank yourself later as some of your friends, family, or co-workers are losing their houses.
If you have questions on what a home payment will be contact me at my website www.russravary.com I will be glad to figure out your mortgage payment and what it will cost you to get into a home.
If your troubles seem insurmountable ask a friend or loved one to help you solve them.
Russ Ravary
In the past few years to many people bought homes with no money down and no savings in the bank. Hello, home ownership takes money!!!!! What happens if the furnace breaks down, or the roof leaks. Where are you going to get the money? Homes cost a lot of money. Ask anybody. All homes are money pits. You can throw all the money in the world into a home and it will disappear.
Mulch the flower beds, put flowers in, change a light fixture, fix the running toilet, or the dripping faucet. All of these things are going to cost you $25.00 just to get you started. If you lived in an apartment or with Mom and Dad you complained to management and it was eventually fixed.(Maybe) Well now it is up to you to get it done. You may be able to fix it yourself, or with a friend's help, but you may have to pay to have it fixed. You need money, not the VISA card. You don't want to bury yourself in debt. You might even have to buy the tools to fix the problem.
Do yourself a favor. Save 2 or 3 months of your projected mortgage payment with taxes and insurance as a back up. They had a word for it "a rainy day fund" It's not new but many people in foreclosure never had one or bothered to think about it. There is no reason to lose your house if you plan ahead. (Unless you have health problems and or unable to work)
I would rather not have your business today if you have the ability and foresight to save your money for a safety net. There is lots of good homes out there at a reasonable price. Homes are not going up in price in the near future. Save your money, get a good deal on a home. You'll thank yourself later as some of your friends, family, or co-workers are losing their houses.
If you have questions on what a home payment will be contact me at my website www.russravary.com I will be glad to figure out your mortgage payment and what it will cost you to get into a home.
If your troubles seem insurmountable ask a friend or loved one to help you solve them.
Russ Ravary
Monday, April 16, 2007
My rate is going up what do you do?
If you just received a letter in the last few months informing you that your interest rate is going up then you don't want to wait. Call your local mortgage person, or myself www.russravary.com and start checking into it. You should never give out your social security number to more than 2 or 3 lenders. Preferably you want to meet them in person.
If you have your credit run by more than 2 or 3 lenders you have a chance of your credit score dropping. Your credit score drops because there is too many inquiries. It signals that you are getting more credit. It drops because it is an unknown. How much credit do you apply for. If you applied to four different credit card companies for 4 different cards of $10,000 each and you ran them up. Then you are a credit risk. The credit bureaus have no way of telling what you are doing. So they lower your score until they know. They don't know if you have been turned down, if you are shopping for a good rate, are in trouble financially, or what.
Find out if you can refinance and fix your rate. Go over the different scenarios with the lender.
May this week bring you good news.
Russ Ravary "your friend and mortgage consultant for life"
If you have your credit run by more than 2 or 3 lenders you have a chance of your credit score dropping. Your credit score drops because there is too many inquiries. It signals that you are getting more credit. It drops because it is an unknown. How much credit do you apply for. If you applied to four different credit card companies for 4 different cards of $10,000 each and you ran them up. Then you are a credit risk. The credit bureaus have no way of telling what you are doing. So they lower your score until they know. They don't know if you have been turned down, if you are shopping for a good rate, are in trouble financially, or what.
Find out if you can refinance and fix your rate. Go over the different scenarios with the lender.
May this week bring you good news.
Russ Ravary "your friend and mortgage consultant for life"
Friday, April 13, 2007
Millage Rates in Michigan
Here is more on millage rates in Michigan.
The first year you are taxed on the SEV value and then from then on you are taxed on the taxable value. Taxable value can rise up to 5% or inflation which ever is less. But remember inflation on the house can be negative so sometimes taxable value and SEV can go down.
In a market where property values are rising SEV becomes less and less important to you after the first year because the taxable value should be less than the SEV. Usually when you are buying a house you will notice that if somebody has lived in the house a long time the taxable value is much lower than the SEV. That is because of Proposal A limits the increase in taxes per year. The estimated market value according to the state has risen faster than the taxable value. Proposal A saved us money!
However if values fall as they are now the assessor should lower the SEV. (they should but they don’t always do it because the city loses tax revenues). Let’s say you bought it for $300,000 in 2005, then the SEV is $150,000 in 2005. The assessor may say that the house is now worth 145,800 now so your taxes will go down in 2006. So let’s say you bought the home in 2005 at the peak of the housing market. Now two years later your house is worth less. It should reflect that in your SEV and taxable value. They both should have gone down.
The way you have to fight it is first get your facts. You need houses that have sold in the neighborhood and in the city that are comparable to yours. I.E. roughly same square footage, roughly same age, same style. They need to have sold for less than what your bought yours for and what your taxable value is. You need more than one house to support your claim. The more houses you have and the closer they are to your home the better chance you have of getting the assessor to agree with you and reduce your taxable value. Then you have to call the assessor’s office and find out the procedure to protest your taxes. Sometimes you can only do it once a year, sometimes you have to put it in writing, sometimes you have to go in front of a board.
It is worth the hassle! It will save you money for years to come when you get it corrected.
Want to figure out what your taxes are going to be? Here is the formula :
Value determined by assessor divided in half = SEV (State equalized value)
SEV X Millage rate = taxes
For example a you are buying a $400,000 house in Brighton. Let's say the SEV by coincidence corresponds to the purchase price. So the assessor estimated the house value at $400,000 too. So $400,000 X 50% = $200,000. So SEV is $200,000
$200,000 X .0361558 = $7,231.16 a year in taxes.
Two things to remember SEV can be less or more than the purchase price of the home or the offer that you are going to put in. But you are most likely going to pay based on the SEV unless you fight it with the tax board or assessor after you move in ( usually when you get your tax bill).
Remember this is only for homesteaded taxes. A homestead exemption, now known as a principal residence exemption may be used by a person who owns and occupies a home as their principal residence. If this is true, the person may claim an exemption from the 18 mills levied by local school districts for operating purposes. Again in English - Homesteaded taxes are a reduction in taxes based on that you use a home for your primary residence.
So Non-homesteaded taxes are on vacation homes, rental properties, and investment properties.
If you are not living there full time, you can not claim it. You cannot claim one house, and your wife, claim another. If you claim a homestead in another state you can not claim it here. If you try to cheat the state and they catch they can take away the homestead deduction on all your homes and make you pay back the taxes you should have been paying and penalty interest.
If you wish to search Michigan Homes or need more information on mortgages or real estate in Michigan go to my website http://www.russravary.com/
I hope this information on millage rates helped you. Russ Ravary
The first year you are taxed on the SEV value and then from then on you are taxed on the taxable value. Taxable value can rise up to 5% or inflation which ever is less. But remember inflation on the house can be negative so sometimes taxable value and SEV can go down.
In a market where property values are rising SEV becomes less and less important to you after the first year because the taxable value should be less than the SEV. Usually when you are buying a house you will notice that if somebody has lived in the house a long time the taxable value is much lower than the SEV. That is because of Proposal A limits the increase in taxes per year. The estimated market value according to the state has risen faster than the taxable value. Proposal A saved us money!
However if values fall as they are now the assessor should lower the SEV. (they should but they don’t always do it because the city loses tax revenues). Let’s say you bought it for $300,000 in 2005, then the SEV is $150,000 in 2005. The assessor may say that the house is now worth 145,800 now so your taxes will go down in 2006. So let’s say you bought the home in 2005 at the peak of the housing market. Now two years later your house is worth less. It should reflect that in your SEV and taxable value. They both should have gone down.
The way you have to fight it is first get your facts. You need houses that have sold in the neighborhood and in the city that are comparable to yours. I.E. roughly same square footage, roughly same age, same style. They need to have sold for less than what your bought yours for and what your taxable value is. You need more than one house to support your claim. The more houses you have and the closer they are to your home the better chance you have of getting the assessor to agree with you and reduce your taxable value. Then you have to call the assessor’s office and find out the procedure to protest your taxes. Sometimes you can only do it once a year, sometimes you have to put it in writing, sometimes you have to go in front of a board.
It is worth the hassle! It will save you money for years to come when you get it corrected.
Want to figure out what your taxes are going to be? Here is the formula :
Value determined by assessor divided in half = SEV (State equalized value)
SEV X Millage rate = taxes
For example a you are buying a $400,000 house in Brighton. Let's say the SEV by coincidence corresponds to the purchase price. So the assessor estimated the house value at $400,000 too. So $400,000 X 50% = $200,000. So SEV is $200,000
$200,000 X .0361558 = $7,231.16 a year in taxes.
Two things to remember SEV can be less or more than the purchase price of the home or the offer that you are going to put in. But you are most likely going to pay based on the SEV unless you fight it with the tax board or assessor after you move in ( usually when you get your tax bill).
Remember this is only for homesteaded taxes. A homestead exemption, now known as a principal residence exemption may be used by a person who owns and occupies a home as their principal residence. If this is true, the person may claim an exemption from the 18 mills levied by local school districts for operating purposes. Again in English - Homesteaded taxes are a reduction in taxes based on that you use a home for your primary residence.
So Non-homesteaded taxes are on vacation homes, rental properties, and investment properties.
If you are not living there full time, you can not claim it. You cannot claim one house, and your wife, claim another. If you claim a homestead in another state you can not claim it here. If you try to cheat the state and they catch they can take away the homestead deduction on all your homes and make you pay back the taxes you should have been paying and penalty interest.
If you wish to search Michigan Homes or need more information on mortgages or real estate in Michigan go to my website http://www.russravary.com/
I hope this information on millage rates helped you. Russ Ravary
Wednesday, April 11, 2007
Michigan millage rates
People are generally confused when they get their tax statements or trying to figure out millage rates. I even have to explain it to real estate agents in the office.
Millage rates are different for each city and even different within that city because of different school systems inside that city. For example Dearborn Heights has six different school systems inside the city. So according to what city you live in, where you live within that city, and what school system your kids will go to will determine your millage rate. Canton has one school system and one millage rate, Brighton Township has 3, Livonia has 2.
There is a winter millage rate and a summer millage rate. They usually call winter taxes city taxes and summer taxes county taxes. There are different assessments on your property that add up to your winter and summer rate. For example a portion goes to the county (for the different county projects and maintenance of county buildings and roads). A portion goes to the school system, some may go to the library, some may go to roads, some may go to different projects the city is funding, etc, etc…. Remember when you voted last time and you voted for or against a tax increase for the schools. Well that would have increased the millage rate. To impose a higher rate some of them are voted on, some do not have to be voted on.
There are 2 numbers you need to know when figuring out your taxes. One is SEV, which means state equalized value. The state estimates what your house is worth. SEV is normally determined by your city or township assessor. It is 50% of what they believe the house is worth. For example if the assessor thought your house is worth $250,000 then your SEV will be 125,000 ( I will get into how to fight a bad SEV)
The second is taxable value. Proposal A of 1994 changed the way taxes were determined. Instead of increasing taxes based on 50% of actual cash value, commonly referred as SEV (state equalized value) now after the first year you buy a property taxes are based on taxable value. If a property is not acquired during that tax year then the increases in taxable value are limited to the lesser of five percent or inflation. So boiling that down in English the first year you buy a home the taxes are based on SEV. The second year the taxable value is SEV plus the lesser of five percent or inflation. The first year you are taxed on the SEV value and then from then one you are taxed on the taxable value. More on Millage rates next time. To see what your Wayne county millage rates, Oakland county millage rates, Livingston county millage rates is go www.russravary.com
I will continue on about millage rates and determing them in my next blog.
If you just want to search Wayne county homes, or search Livingston county home, or search Oakland county homes then it is easy and free on my site with no log ins or information requested from you. Surf for homes when ever and where ever you want.
May lady luck be with you today!
Russ Ravary
Millage rates are different for each city and even different within that city because of different school systems inside that city. For example Dearborn Heights has six different school systems inside the city. So according to what city you live in, where you live within that city, and what school system your kids will go to will determine your millage rate. Canton has one school system and one millage rate, Brighton Township has 3, Livonia has 2.
There is a winter millage rate and a summer millage rate. They usually call winter taxes city taxes and summer taxes county taxes. There are different assessments on your property that add up to your winter and summer rate. For example a portion goes to the county (for the different county projects and maintenance of county buildings and roads). A portion goes to the school system, some may go to the library, some may go to roads, some may go to different projects the city is funding, etc, etc…. Remember when you voted last time and you voted for or against a tax increase for the schools. Well that would have increased the millage rate. To impose a higher rate some of them are voted on, some do not have to be voted on.
There are 2 numbers you need to know when figuring out your taxes. One is SEV, which means state equalized value. The state estimates what your house is worth. SEV is normally determined by your city or township assessor. It is 50% of what they believe the house is worth. For example if the assessor thought your house is worth $250,000 then your SEV will be 125,000 ( I will get into how to fight a bad SEV)
The second is taxable value. Proposal A of 1994 changed the way taxes were determined. Instead of increasing taxes based on 50% of actual cash value, commonly referred as SEV (state equalized value) now after the first year you buy a property taxes are based on taxable value. If a property is not acquired during that tax year then the increases in taxable value are limited to the lesser of five percent or inflation. So boiling that down in English the first year you buy a home the taxes are based on SEV. The second year the taxable value is SEV plus the lesser of five percent or inflation. The first year you are taxed on the SEV value and then from then one you are taxed on the taxable value. More on Millage rates next time. To see what your Wayne county millage rates, Oakland county millage rates, Livingston county millage rates is go www.russravary.com
I will continue on about millage rates and determing them in my next blog.
If you just want to search Wayne county homes, or search Livingston county home, or search Oakland county homes then it is easy and free on my site with no log ins or information requested from you. Surf for homes when ever and where ever you want.
May lady luck be with you today!
Russ Ravary
Saturday, April 7, 2007
FHA Mortgages
I believe a FHA Mortgage is great for most first time home buyers that do not have 5% or more to put down. The reason I say this is that they allow people with past bruised credit to buy a home. They allow people with limited credit history to buy a home. They allow you to buy a home with very little down and allow the seller to pay closing costs. And the best reason a FHA mortgage is great is that the rates are good. You are not usually going to pay an exorbitant rate!
FHA is home buyers program that allows you to get a good rate if you had bad credit in the past. FHA usually wants you to have good credit for the past year. FHA loans are sometimes the stepping stone between bad credit and excellent credit.
If you are thinking of buying a home whether it is the first time or you have bought homes before I would ask your mortgage person about them. It may be the way for you to go and get into a home at a great rate. Visit my Michigan mortgage information page for more information or email me at my website http://www.russravary.com/ to see if I can get you a great rate.
Hug your children just for no reason and tell them how much you love them.
Russ Ravary
FHA is home buyers program that allows you to get a good rate if you had bad credit in the past. FHA usually wants you to have good credit for the past year. FHA loans are sometimes the stepping stone between bad credit and excellent credit.
If you are thinking of buying a home whether it is the first time or you have bought homes before I would ask your mortgage person about them. It may be the way for you to go and get into a home at a great rate. Visit my Michigan mortgage information page for more information or email me at my website http://www.russravary.com/ to see if I can get you a great rate.
Hug your children just for no reason and tell them how much you love them.
Russ Ravary
Tuesday, April 3, 2007
No Money Down Purchase
Are you thinking of buying a home but you have no money to put down? There are still no money down mortgages. What that means to you is that you can actually still buy a home and not have any money in the bank or need money for closing. And it is perfectly legal!!! The banks will lend you the money at a higher interest rate (not much higher than normal).
The banks categorize you, the new home buyer as a higher risk since you do not have money, so they charge a little more. You will have to have good credit in this market to get a 100% financing loan.
Do you know what closing costs are? There are fees associated with closing on a home. You have to pay the seller of the home back for taxes he paid in advance, you have to pay for an appraisal, bank fees, and title costs. Depending what state you are closing in those costs can range from $1500 -$3000. But don't worry those costs can be covered too if you have a good real estate agent. Your real estate agent can put in the purchase agreement that the seller will pay 3% of the selling price towards your closing costs. You can actually buy a home with no money what so ever!!!
However it is better to put money down to buy a house. You will get a better rate, and most of all you will truly feel home ownership because you have something invested. You can get an FHA mortgage with only 3% down! I will go into that in my next blog.
If you are interested in finding out whether you qualify to buy a home, go to my web site on Oakland County Homes www.russravary.com You can email me from the site or fill out one of the many forms for information.
Also if you want to Search for Michigan homes free go to the site. Or click on search for Michigan homes free.
Drive safely and if you break a traffic law by accident may there be no policeman around to give you a ticket! Russ Ravary
The banks categorize you, the new home buyer as a higher risk since you do not have money, so they charge a little more. You will have to have good credit in this market to get a 100% financing loan.
Do you know what closing costs are? There are fees associated with closing on a home. You have to pay the seller of the home back for taxes he paid in advance, you have to pay for an appraisal, bank fees, and title costs. Depending what state you are closing in those costs can range from $1500 -$3000. But don't worry those costs can be covered too if you have a good real estate agent. Your real estate agent can put in the purchase agreement that the seller will pay 3% of the selling price towards your closing costs. You can actually buy a home with no money what so ever!!!
However it is better to put money down to buy a house. You will get a better rate, and most of all you will truly feel home ownership because you have something invested. You can get an FHA mortgage with only 3% down! I will go into that in my next blog.
If you are interested in finding out whether you qualify to buy a home, go to my web site on Oakland County Homes www.russravary.com You can email me from the site or fill out one of the many forms for information.
Also if you want to Search for Michigan homes free go to the site. Or click on search for Michigan homes free.
Drive safely and if you break a traffic law by accident may there be no policeman around to give you a ticket! Russ Ravary
Thursday, March 29, 2007
Buying floreclosures
I am picking up where I left off on my last post. To reiterate a point. Just because it was a foreclosure does not make it a deal.
Your real estate agent should be doing some leg work for you. If you like the house then they should be telling you what other homes in the area are selling for. He may be able to tell when it was last sold, how much of a mortgage is on it, and how long it has been on the market.
All this information should be helping you to determine how much to bid on the house.
Banks want to get it sold but they don't necessarily want to give it away. Remember you are buying it as is. The bank is not going to do anything or fix anything (most likely).
I always tell clients to put in a purchase offer in with a price you can live with. On one end. I have had agents tell me that their clients have told them. "why hasn't anybody put even a low ball bid in on my house?" Then when we did put in a low ball bid they only come back with a 4% lower counteroffer. In this market it is not that great. If you are shopping for a bargain then it should be 10% plus in this market.
On the other end we have put in a 12% below market bid and it is accepted without a counteroffer. The sellers had a bigger mortgage than that. They just wanted to get out of the house.
Signs to look for when looking for a deal: empty house, low mortgage on home, house on market a long time, people have relocated, people are getting divorced. Check the house value against what has sold in the six months (not a year). Good luck and happy hunting. Search Michigan Homes free on my website www.russravary.com Russ Ravary
Your real estate agent should be doing some leg work for you. If you like the house then they should be telling you what other homes in the area are selling for. He may be able to tell when it was last sold, how much of a mortgage is on it, and how long it has been on the market.
All this information should be helping you to determine how much to bid on the house.
Banks want to get it sold but they don't necessarily want to give it away. Remember you are buying it as is. The bank is not going to do anything or fix anything (most likely).
I always tell clients to put in a purchase offer in with a price you can live with. On one end. I have had agents tell me that their clients have told them. "why hasn't anybody put even a low ball bid in on my house?" Then when we did put in a low ball bid they only come back with a 4% lower counteroffer. In this market it is not that great. If you are shopping for a bargain then it should be 10% plus in this market.
On the other end we have put in a 12% below market bid and it is accepted without a counteroffer. The sellers had a bigger mortgage than that. They just wanted to get out of the house.
Signs to look for when looking for a deal: empty house, low mortgage on home, house on market a long time, people have relocated, people are getting divorced. Check the house value against what has sold in the six months (not a year). Good luck and happy hunting. Search Michigan Homes free on my website www.russravary.com Russ Ravary
Are you selling or aren't you?
My pet peeve of the week is sellers who won't let people in. Last weekend we set it up an appointment through another real estate office. We showed up at the house and the seller told us we could not come in. She wanted to know if 3 days from then would be okay!!! Duh. The seller just got the buyer mad and they are not coming back to look at that house. She supposedly does not empty her messages off the answering machine to know when the appointments are scheduled. Not the smartest seller in the world.
I have two more. Another one we called to see tomorrow they said how about next week towards the end of the week. This was a lease. The people need to move. They will be looking elsewhere.
Another one we called to see tomorrow (a different buyer and seller) the seller said not tommorrow but how about Sat between 12-1 or Sun 4-5. 3 days later again and to at thier convenience.
If you are going to sell your house make a committment to yourself and let it be shown whenever possible. It is a slow market you can't afford to let a buyer go by. There are some houses that are not getting lookers but once a month. I can understand if you have out of town guests, birthday party, a child sick, but let your agent show it as much as he can. Even if it short notice, even if it is not perfect.
I sold one house this way. Another agent was in front of my buyers house and called me. They wanted to get in right then. They liked the looks of the house. I called my buyer. He ranted and raved about no notice. I told him to quickly make the bed and apologize to the prospective buyer on how it was not totally cleaned up. That buyer bought the house. They put in a bid that night!!!
If you are thinking of selling your home. Don't let the buyer get away. Don't let the buyer get away. Don't let the buyer get away.
They are far and few between right now. They will put your house on the back burner like you did them. There are so many houses on the market to look at. Make it available. Make it easy to show all the time. I know it is work to keep it clean and pretty. But if you truly want to move and sell the house then you might have to pack up the kids, the dog and run out of the house. Go to my website and do one of the March things to do in Michigan. If you want to search for Michigan Homes go to my website www.russravary.com
I have two more. Another one we called to see tomorrow they said how about next week towards the end of the week. This was a lease. The people need to move. They will be looking elsewhere.
Another one we called to see tomorrow (a different buyer and seller) the seller said not tommorrow but how about Sat between 12-1 or Sun 4-5. 3 days later again and to at thier convenience.
If you are going to sell your house make a committment to yourself and let it be shown whenever possible. It is a slow market you can't afford to let a buyer go by. There are some houses that are not getting lookers but once a month. I can understand if you have out of town guests, birthday party, a child sick, but let your agent show it as much as he can. Even if it short notice, even if it is not perfect.
I sold one house this way. Another agent was in front of my buyers house and called me. They wanted to get in right then. They liked the looks of the house. I called my buyer. He ranted and raved about no notice. I told him to quickly make the bed and apologize to the prospective buyer on how it was not totally cleaned up. That buyer bought the house. They put in a bid that night!!!
If you are thinking of selling your home. Don't let the buyer get away. Don't let the buyer get away. Don't let the buyer get away.
They are far and few between right now. They will put your house on the back burner like you did them. There are so many houses on the market to look at. Make it available. Make it easy to show all the time. I know it is work to keep it clean and pretty. But if you truly want to move and sell the house then you might have to pack up the kids, the dog and run out of the house. Go to my website and do one of the March things to do in Michigan. If you want to search for Michigan Homes go to my website www.russravary.com
Tuesday, March 27, 2007
Foreclosures in Michigan
Good News Florida is number 1 in foreclosures. We are not the only state hurting with slow sales. One nationwide builder in Florida was 85% down from last year. That is a big number.
So you say, what about buying foreclosures. Is it a good time to buy a foreclosure? Let me explain the process of foreclosures in Michigan. First the homeowners miss 3 or more payments on their house. The bank may send them a letter right away stating they need to pay up or they are going to start foreclosure proceedings. Then it takes anywhere from 2 months to a year before the bank turns it over to attorneys and schedule a sheriff sale.
A sheriff sale is where the house is auctioned off to pay off the bank. It is usually held near the county building where the home is located. They send notices out and post it in the paper. When the house is auctioned off anybody can bid. The bottom line is that the bank will usually be the high bidder especially in this market. They have to buy the home back for at least at the price of the mortgage. So if the house was worth $200,000 and they had a mortgage of $190,000. The bank is not going to let it be sold for $100,000 or any low price. They will just buy it back.
In this market they may let you have it at $170,000 or $180,000. Maybe. But most of the time they will buy it back and then list it with real estate agents. The only time it is a good deal is if they have a low mortgage balance versus what the house is worth. But that does not happen very often because there are a few lenders that will loan 60 - 70% even if you are in foreclosure. They scoop up the house if you default again with only a 60% mortgage. They have done good.
So many of the houses have mortgages of over 70% on them. Lately many of them aren't worth the amount of mortgage on them. So it isn't a great deal to buy them at Sheriff sale. You must know what the house is worth for the condition it is in before you put in a bid. You are bidding blind because you can't get into the house to look around. The people who have defaulted on the mortgage are most likely living there. They have been living there rent free because the bank won't (most of the time) take any thing but the full past due amount. But there are times that there are deals at sheriff sale. You just have to be an educated buyer and know what is a good deal.
That comes to the next point. Even if you win the sheriff sale the people who have defaulted have six months to come up with the money to pay off the bank. That very seldom happens. If they haven't paid it up to this point they don't have the money. After six months you get to move in. They will be evicted at the end of the six month redemption period.
Now the bank has it back. I will tell you what they do next in my next post. If you want to search Michigan homes go to my website www.russravary.com and search homes free.
May tomorrows plans come off without a hitch for you. Russ Ravary
So you say, what about buying foreclosures. Is it a good time to buy a foreclosure? Let me explain the process of foreclosures in Michigan. First the homeowners miss 3 or more payments on their house. The bank may send them a letter right away stating they need to pay up or they are going to start foreclosure proceedings. Then it takes anywhere from 2 months to a year before the bank turns it over to attorneys and schedule a sheriff sale.
A sheriff sale is where the house is auctioned off to pay off the bank. It is usually held near the county building where the home is located. They send notices out and post it in the paper. When the house is auctioned off anybody can bid. The bottom line is that the bank will usually be the high bidder especially in this market. They have to buy the home back for at least at the price of the mortgage. So if the house was worth $200,000 and they had a mortgage of $190,000. The bank is not going to let it be sold for $100,000 or any low price. They will just buy it back.
In this market they may let you have it at $170,000 or $180,000. Maybe. But most of the time they will buy it back and then list it with real estate agents. The only time it is a good deal is if they have a low mortgage balance versus what the house is worth. But that does not happen very often because there are a few lenders that will loan 60 - 70% even if you are in foreclosure. They scoop up the house if you default again with only a 60% mortgage. They have done good.
So many of the houses have mortgages of over 70% on them. Lately many of them aren't worth the amount of mortgage on them. So it isn't a great deal to buy them at Sheriff sale. You must know what the house is worth for the condition it is in before you put in a bid. You are bidding blind because you can't get into the house to look around. The people who have defaulted on the mortgage are most likely living there. They have been living there rent free because the bank won't (most of the time) take any thing but the full past due amount. But there are times that there are deals at sheriff sale. You just have to be an educated buyer and know what is a good deal.
That comes to the next point. Even if you win the sheriff sale the people who have defaulted have six months to come up with the money to pay off the bank. That very seldom happens. If they haven't paid it up to this point they don't have the money. After six months you get to move in. They will be evicted at the end of the six month redemption period.
Now the bank has it back. I will tell you what they do next in my next post. If you want to search Michigan homes go to my website www.russravary.com and search homes free.
May tomorrows plans come off without a hitch for you. Russ Ravary
Sunday, March 25, 2007
Upside down in a Michigan home
What do you do if you are upside in a home?. What do I mean by being upside down?
With Michigan's economy and housing market we are seeing more and more people in this predicament. What has happen is that your house value has fallen below what you owe on the mortgage.
Upside down means that you owe more on the house than the house is worth. It does not mean anything if you are staying in the home and you can afford the mortgage payment. You just have to ride out our poor housing market and continue to pay down the mortgage.
The problem is if your payment is going to rise beyond what you can afford or you have to relocate. Or if you can't keep up and you are going into foreclosure. Then you have a problem. First you need to contact the bank and try to work something out with them. Either a lower payment or giving the home back to the bank(They call it deed in lieu of foreclosure) you are giving the house back to the bank and moving out right away. If you truly have financial problems the bank will try to work with you. However there are some banks out there that are hard noses.
If you can't work out something with the bank then you need to consult with a bankruptcy lawyer next.
The last choice if nothing else works out if that you may have walk away from the house. If you can't sell it, you can't afford the payment, you have to move to get a job, you can't work out a deal with the bank, you can't file bankruptcy, then you may have to walk away from the house. If you want to talk about your options go to my website and contact me. I'll try to help you on what to say to the bank. Or to see if you have any options. www.russravary.com
If you are upside down and are staying the house start paying a little extra each month to lower the mortgage balance. Do you know if you make one extra payment a year on a 30 year mortgage that you will cut it down to about 22 years. Even a little bit each month helps. Good luck and have a great week.
With Michigan's economy and housing market we are seeing more and more people in this predicament. What has happen is that your house value has fallen below what you owe on the mortgage.
Upside down means that you owe more on the house than the house is worth. It does not mean anything if you are staying in the home and you can afford the mortgage payment. You just have to ride out our poor housing market and continue to pay down the mortgage.
The problem is if your payment is going to rise beyond what you can afford or you have to relocate. Or if you can't keep up and you are going into foreclosure. Then you have a problem. First you need to contact the bank and try to work something out with them. Either a lower payment or giving the home back to the bank(They call it deed in lieu of foreclosure) you are giving the house back to the bank and moving out right away. If you truly have financial problems the bank will try to work with you. However there are some banks out there that are hard noses.
If you can't work out something with the bank then you need to consult with a bankruptcy lawyer next.
The last choice if nothing else works out if that you may have walk away from the house. If you can't sell it, you can't afford the payment, you have to move to get a job, you can't work out a deal with the bank, you can't file bankruptcy, then you may have to walk away from the house. If you want to talk about your options go to my website and contact me. I'll try to help you on what to say to the bank. Or to see if you have any options. www.russravary.com
If you are upside down and are staying the house start paying a little extra each month to lower the mortgage balance. Do you know if you make one extra payment a year on a 30 year mortgage that you will cut it down to about 22 years. Even a little bit each month helps. Good luck and have a great week.
Thursday, March 22, 2007
Rates holding steady
With Michigan economy slowed down, our interest rates are holding steady. For a thirty year fixed they are hovering around the 6% mark, which is an excellent rate considering 10 - 20 years ago they were are high as 8-10%.
I keep telling everybody if you don't have to sell don't. It is not a market that you can put your house out there and hope somebody will pay top dollar. It's a buyer's market here in Detroit. You can search Michigan Homes and find good deals out there.
The only reason you want to put your home up for sale is because you are relocating, you can't afford the payment, you are getting divorced, it is in estate. Or if you are moving up into a bigger house. You are not going to make as much as you would have on the sale of your house two years ago. But you will gain some much value on a bigger home.
Here is the big but - please do not stretch yourself into a variable rate or a negative amortization loan in order to buy a bigger home. If your loan is called an option arm, balloon mortgage, arm, smart choice loan, adjustable rate mortgage, pick a payment loan and you are pushing you monetary limits to get into the house....... You are doing the wrong thing to your self. What happens when the rate goes up, what happens when the balance of the loan goes up?
Houses in Michigan are not gaining in value. I am noticing even in the expired listings each day that about 25% of the home listed are owned by banks. I don't want you to get into that problem. I want you to buy a home, to be able to afford it, to be able to live a good life beyond being house poor. I want you to be able to say that was a good move 5-10 years from now while living in the house. I don't want to add stress in your life of you going into foreclosure.
For more mortgage information or Michigan real estate information go to my website www.russravary.com If have a great Michigan things to do section and a great Michigan things to do section by month.
"Life comes by you only once. Today will be gone forever soon. Enjoy it, thank a friend for their friendship and help, and forget about the little problems" Have a great day. Russ Ravary
I keep telling everybody if you don't have to sell don't. It is not a market that you can put your house out there and hope somebody will pay top dollar. It's a buyer's market here in Detroit. You can search Michigan Homes and find good deals out there.
The only reason you want to put your home up for sale is because you are relocating, you can't afford the payment, you are getting divorced, it is in estate. Or if you are moving up into a bigger house. You are not going to make as much as you would have on the sale of your house two years ago. But you will gain some much value on a bigger home.
Here is the big but - please do not stretch yourself into a variable rate or a negative amortization loan in order to buy a bigger home. If your loan is called an option arm, balloon mortgage, arm, smart choice loan, adjustable rate mortgage, pick a payment loan and you are pushing you monetary limits to get into the house....... You are doing the wrong thing to your self. What happens when the rate goes up, what happens when the balance of the loan goes up?
Houses in Michigan are not gaining in value. I am noticing even in the expired listings each day that about 25% of the home listed are owned by banks. I don't want you to get into that problem. I want you to buy a home, to be able to afford it, to be able to live a good life beyond being house poor. I want you to be able to say that was a good move 5-10 years from now while living in the house. I don't want to add stress in your life of you going into foreclosure.
For more mortgage information or Michigan real estate information go to my website www.russravary.com If have a great Michigan things to do section and a great Michigan things to do section by month.
"Life comes by you only once. Today will be gone forever soon. Enjoy it, thank a friend for their friendship and help, and forget about the little problems" Have a great day. Russ Ravary
Rates holding steady
With Michigan economy slowed down, our interest rates are holding steady. For a thirty year fixed they are hovering around the 6% mark, which is an excellent rate considering 10 - 20 years ago they were are high as 8-10%.
I keep telling everybody if you don't have to sell don't. It is not a market that you can put your house out there and hope somebody will pay top dollar. It's a buyer's market here in Detroit. You can search Michigan Homes and find good deals out there.
The only reason you want to put your home up for sale is because you are relocating, you can't afford the payment, you are getting divorced, it is in estate. Or if you are moving up into a bigger house. You are not going to make as much as you would have on the sale of your house two years ago. But you will gain some much value on a bigger home.
Here is the big but - please do not stretch yourself into a variable rate or a negative amortization loan in order to buy a bigger home. If your loan is called an option arm, balloon mortgage, arm, smart choice loan, adjustable rate mortgage, pick a payment loan and you are pushing you monetary limits to get into the house....... You are doing the wrong thing to your self. What happens when the rate goes up, what happens when the balance of the loan goes up?
Houses in Michigan are not gaining in value. I am noticing even in the expired listings each day that about 25% of the home listed are owned by banks. I don't want you to get into that problem. I want you to buy a home, to be able to afford it, to be able to live a good life beyond being house poor. I want you to be able to say that was a good move 5-10 years from now while living in the house. I don't want to add stress in your life of you going into foreclosure.
For more mortgage information or Michigan real estate information go to my website www.russravary.com If have a great Michigan things to do section and a great Michigan things to do section by month.
"Life comes by you only once. Today will be gone forever soon. Enjoy it, thank a friend for their friendship and help, and forget about the little problems" Have a great day. Russ Ravary
I keep telling everybody if you don't have to sell don't. It is not a market that you can put your house out there and hope somebody will pay top dollar. It's a buyer's market here in Detroit. You can search Michigan Homes and find good deals out there.
The only reason you want to put your home up for sale is because you are relocating, you can't afford the payment, you are getting divorced, it is in estate. Or if you are moving up into a bigger house. You are not going to make as much as you would have on the sale of your house two years ago. But you will gain some much value on a bigger home.
Here is the big but - please do not stretch yourself into a variable rate or a negative amortization loan in order to buy a bigger home. If your loan is called an option arm, balloon mortgage, arm, smart choice loan, adjustable rate mortgage, pick a payment loan and you are pushing you monetary limits to get into the house....... You are doing the wrong thing to your self. What happens when the rate goes up, what happens when the balance of the loan goes up?
Houses in Michigan are not gaining in value. I am noticing even in the expired listings each day that about 25% of the home listed are owned by banks. I don't want you to get into that problem. I want you to buy a home, to be able to afford it, to be able to live a good life beyond being house poor. I want you to be able to say that was a good move 5-10 years from now while living in the house. I don't want to add stress in your life of you going into foreclosure.
For more mortgage information or Michigan real estate information go to my website www.russravary.com If have a great Michigan things to do section and a great Michigan things to do section by month.
"Life comes by you only once. Today will be gone forever soon. Enjoy it, thank a friend for their friendship and help, and forget about the little problems" Have a great day. Russ Ravary
Monday, March 19, 2007
New home buyer
Are you a first time home buyer? Do you want to get pre-approved? Don't know if you can qualify for a home.
Lenders look at your credit score ( which means your credit history) How many open lines of credit do you have? Do you have a credit card? A car loan? A student loan? Those all show up on your credit report. Even if you are just an authorized user on somebody Else's credit card it shows up.
If you do not have any of those. Then FHA and some banks use rental history, cell phone bills, car insurance bills, utility bills. So if you are thinking of buying a home get the bills in your name if you are paying them. Be sure to pay by check and not money orders or cash.
Just because you never thought you could get a home, you may be pleasantly surprised. Sometimes it is very easy to get a loan even if you are self employed, just out of college, or don't have much money. I always tell young people to start saving money. It helps when you move into the house and you need to buy something. A safety cushion if something breaks or go wrong. If you think you can afford a certain payment, let say $1000 a month. If you only are paying $700 in rent then put the extra $300 away each month. Can you live comfortably? Save that money for a down payment or a rainy day fund.
Thinking of buying and want to see some listings of what you want. Go to my dream home finder and put in your wants. If you just want to surf the net and check out home listings and photos go to Search Michigan homes free. Or if you have to sell your home first go and find out your home's value. Go to www.russravary.com if you want to get pre-approved today.
Ready for a good burger go to Miller's Bar in Dearborn on Michigan ave just east of Telegraph, or try The Redcoat Tavern in Royal Oak at 3808 Woodward. Or for a brew pub go to Leopold Brothers Brewery in Ann Arbor or Thunder Bay Brewery in Auburn Hills. Have a great day.
Russ Ravary
Lenders look at your credit score ( which means your credit history) How many open lines of credit do you have? Do you have a credit card? A car loan? A student loan? Those all show up on your credit report. Even if you are just an authorized user on somebody Else's credit card it shows up.
If you do not have any of those. Then FHA and some banks use rental history, cell phone bills, car insurance bills, utility bills. So if you are thinking of buying a home get the bills in your name if you are paying them. Be sure to pay by check and not money orders or cash.
Just because you never thought you could get a home, you may be pleasantly surprised. Sometimes it is very easy to get a loan even if you are self employed, just out of college, or don't have much money. I always tell young people to start saving money. It helps when you move into the house and you need to buy something. A safety cushion if something breaks or go wrong. If you think you can afford a certain payment, let say $1000 a month. If you only are paying $700 in rent then put the extra $300 away each month. Can you live comfortably? Save that money for a down payment or a rainy day fund.
Thinking of buying and want to see some listings of what you want. Go to my dream home finder and put in your wants. If you just want to surf the net and check out home listings and photos go to Search Michigan homes free. Or if you have to sell your home first go and find out your home's value. Go to www.russravary.com if you want to get pre-approved today.
Ready for a good burger go to Miller's Bar in Dearborn on Michigan ave just east of Telegraph, or try The Redcoat Tavern in Royal Oak at 3808 Woodward. Or for a brew pub go to Leopold Brothers Brewery in Ann Arbor or Thunder Bay Brewery in Auburn Hills. Have a great day.
Russ Ravary
Saturday, March 17, 2007
Second Mortgage Rates
I'm a loan officer at a mortgage broker. We usually can get better deals than a bank can give you. But on second mortgages I tell people to shop the big banks and credit unions. They usually have the best rates and lowest closing costs for second mortgages. When you are shoping for a second mortgage you want to find out what the rate is, is it fixed or variable, is it a home equity line of credit, and how are the closing costs are. Usually you want to go with the lowest closing costs and the lowest rate. Also ask if you can lock the rate later on.
Second mortgage rates usually depend on how much you are borrowing (including the first and second loan amounts) compared to how much you house is worth. If you are only borrowing 70% of what your house is worth the rate will be cheaper than if you were borrowing 90% of what your house is worth. It is a bigger risk for the bank to loan you 90% of the house versus 70% loan. That is why they charge more for the higher risk.
If you want more information on mortgages or would like to apply for a mortgage go www.russravary.com We can help you get pre-approved for a mortgage and start searching for a home. Have a great St. Patricks Day.. May the luck of the Irish be with you all year Russ Ravary
Second mortgage rates usually depend on how much you are borrowing (including the first and second loan amounts) compared to how much you house is worth. If you are only borrowing 70% of what your house is worth the rate will be cheaper than if you were borrowing 90% of what your house is worth. It is a bigger risk for the bank to loan you 90% of the house versus 70% loan. That is why they charge more for the higher risk.
If you want more information on mortgages or would like to apply for a mortgage go www.russravary.com We can help you get pre-approved for a mortgage and start searching for a home. Have a great St. Patricks Day.. May the luck of the Irish be with you all year Russ Ravary
Thursday, March 15, 2007
Financial Risk
I had a fellow mortgage person tell me that a deal we did last year was in foreclosure.
The client worked at Ford Motor at one of the plants and got laid off. He had put on an addition. The client didn't know he was going to get laid off that I know of. I feel bad for this guy. I feel bad for his family. I know how tough it is out there. The construction industry is way down, friends of mine are working 1 and 2 days a week if that. The real estate industry is slow with houses being on the market sometimes over a year. Pfizer, GM, Ford, and Chrysler are all downsizing here in Detroit.
The bottom line is before you consolidate debt into a loan, fix the house up, or put an addition tread carefully. Find out what your house is worth. Is your house worth the money to add on or to update at this time? What would happen if you had to sell right now? Could you even sell your house for what it is worth? What would happen if you lost your job could you survive with the added payments?
The economy is Detroit is tough right now. It's time to make the right financial choice's for you and your family. Don't let some smooth talking loan officer talk you into a negative amortization loan unless you have no other choice and you have to lower the payment or loose the house. If you can't survive in these tough times, it buys you some time in the house.
I have seen some financial planners pitch this product to their clients because they make a lot of money off of it. (Some of their clients should have never even been asked, but the financial planner was looking out for himself more that the client) Some of the other names for a negative amortization loan is pick a payment loan, 4 choice loan, smart choice loan. It is a way of giving you 4 choices on which payment to make each month. Unfortunately the cheapest choice is actually adding principal onto your mortgage balance each month. All of us want the cheapest payment right. Unfortunately it becomes a nightmare for the homeowner later on because he owes so much more on the house.
If you hear 1%, or 2% or a rate so low it seems to good to be true. It is. Current rates are higher than 5 1/2 % for a 30 year fixed. (even with points) So if you hear 1, 2, or 3, 4% there is something hidden that they haven't completely told you. If the payment is different from what all the other loan officers are telling you then check into more. Feel free to pick up the phone and call me at (313) 310-9855 or go to my website www.russravary.com and email me about it, if there is a program you don't understand.
So the bottom line of this blog is don't take on any more debt, or update your house if you are worried about your job. Do the simple things like painting or updating the carpeting. Simple less expensive things that will make you feel good about your house yet not cost you a lot. For more mortgage information go to http://www.russravary.com/
The client worked at Ford Motor at one of the plants and got laid off. He had put on an addition. The client didn't know he was going to get laid off that I know of. I feel bad for this guy. I feel bad for his family. I know how tough it is out there. The construction industry is way down, friends of mine are working 1 and 2 days a week if that. The real estate industry is slow with houses being on the market sometimes over a year. Pfizer, GM, Ford, and Chrysler are all downsizing here in Detroit.
The bottom line is before you consolidate debt into a loan, fix the house up, or put an addition tread carefully. Find out what your house is worth. Is your house worth the money to add on or to update at this time? What would happen if you had to sell right now? Could you even sell your house for what it is worth? What would happen if you lost your job could you survive with the added payments?
The economy is Detroit is tough right now. It's time to make the right financial choice's for you and your family. Don't let some smooth talking loan officer talk you into a negative amortization loan unless you have no other choice and you have to lower the payment or loose the house. If you can't survive in these tough times, it buys you some time in the house.
I have seen some financial planners pitch this product to their clients because they make a lot of money off of it. (Some of their clients should have never even been asked, but the financial planner was looking out for himself more that the client) Some of the other names for a negative amortization loan is pick a payment loan, 4 choice loan, smart choice loan. It is a way of giving you 4 choices on which payment to make each month. Unfortunately the cheapest choice is actually adding principal onto your mortgage balance each month. All of us want the cheapest payment right. Unfortunately it becomes a nightmare for the homeowner later on because he owes so much more on the house.
If you hear 1%, or 2% or a rate so low it seems to good to be true. It is. Current rates are higher than 5 1/2 % for a 30 year fixed. (even with points) So if you hear 1, 2, or 3, 4% there is something hidden that they haven't completely told you. If the payment is different from what all the other loan officers are telling you then check into more. Feel free to pick up the phone and call me at (313) 310-9855 or go to my website www.russravary.com and email me about it, if there is a program you don't understand.
So the bottom line of this blog is don't take on any more debt, or update your house if you are worried about your job. Do the simple things like painting or updating the carpeting. Simple less expensive things that will make you feel good about your house yet not cost you a lot. For more mortgage information go to http://www.russravary.com/
Tuesday, March 13, 2007
Mortgage meltdown
If you have been reading the newspaper or watching Good Morning America this morning. You would have heard about the mortgage meltdown. What does the mortgage meltdown really mean to the average consumer?
Let's start with why it happened. Banks, and lenders began loosening lending guidelines about 6-7 years ago. They made it easier for almost anybody to get a loan. You did not have to show employment sometimes, sometimes you did not have to verify income, and sometimes you did not even need one dime to buy a house. It was easy to get a loan even if you were self-employed, had a recent bankruptcy, or even a prior foreclosure.
The gurus in the back room thought they had figured out the projected default rate. They factored that into the interest rate. So if 10 out of a 1000 people were going to default as they guessed then they charged a little higher rate to everybody. Just like they do with credit cards. The good payers subsidize the losses of the non-payers. That is the way of business.
Well unfortunately the gurus in the back room under figured the losses. So long as the real estate market is going up all was well. The foreclosures are huge right now. Especially Michigan foreclosures, we are near the top of the list. The banks, the lenders, and investment portfolios are taking losses. Yes investment portfolios, mortgages were being bundled up and sold on wall street. They are in various mutual funds and hedge funds now. So those funds are going to lose a little value here and there.
But the major consequence of what is happening is that lenders are going out of business, there is a tightening of loan criteria. No longer can anybody just sign and get a loan. There are less choices and less programs for loan officers. Less choices for consumers. So some people that could have bought a house last year with no money down, may need money or may not even be able to get a loan. Before lenders could sell those loans on wall street, now wall street wants nothing to do with them because of all the losses. It's not profitable.
Less people on Wall Street to sell to, less companies able to stay in business, less choices and fewer easy options for Mortgages for the average consumer.
Interest Rates are going to be higher for non-conforming people. People with bruised credit, self-employed people with no verifiable income, people with no reserves are non-conforming people.
Where the biggest danger is that some of adjustable rate mortgages may rise quickly. Good Morning America was saying that you needed to be in a 30 year fixed rate mortgage if you could be. I think that is a great idea. We are near the low point of mortgage rates. Rates may come down a little but the possibility of them going up is greater.
So if you are thinking of selling to get out from under your mortgage, or just thinking of moving out of state.... you can check your houses value at www.checkmyhousesvalue.com
I always thought people should have a little reserves when they buy a home. What happens if the furnace fails or the roof leaks. Sure it's nice to buy a home, but I would like my clients to be able to afford the home. So they can be in it 5 -10 years down the road and not lose it to foreclosure. If you want more information on mortgages, want a good rate feel free to call me at (313) 310-9855 or go to my website at www.russravary.com May life treat you and your family well today. Russ Ravary
Let's start with why it happened. Banks, and lenders began loosening lending guidelines about 6-7 years ago. They made it easier for almost anybody to get a loan. You did not have to show employment sometimes, sometimes you did not have to verify income, and sometimes you did not even need one dime to buy a house. It was easy to get a loan even if you were self-employed, had a recent bankruptcy, or even a prior foreclosure.
The gurus in the back room thought they had figured out the projected default rate. They factored that into the interest rate. So if 10 out of a 1000 people were going to default as they guessed then they charged a little higher rate to everybody. Just like they do with credit cards. The good payers subsidize the losses of the non-payers. That is the way of business.
Well unfortunately the gurus in the back room under figured the losses. So long as the real estate market is going up all was well. The foreclosures are huge right now. Especially Michigan foreclosures, we are near the top of the list. The banks, the lenders, and investment portfolios are taking losses. Yes investment portfolios, mortgages were being bundled up and sold on wall street. They are in various mutual funds and hedge funds now. So those funds are going to lose a little value here and there.
But the major consequence of what is happening is that lenders are going out of business, there is a tightening of loan criteria. No longer can anybody just sign and get a loan. There are less choices and less programs for loan officers. Less choices for consumers. So some people that could have bought a house last year with no money down, may need money or may not even be able to get a loan. Before lenders could sell those loans on wall street, now wall street wants nothing to do with them because of all the losses. It's not profitable.
Less people on Wall Street to sell to, less companies able to stay in business, less choices and fewer easy options for Mortgages for the average consumer.
Interest Rates are going to be higher for non-conforming people. People with bruised credit, self-employed people with no verifiable income, people with no reserves are non-conforming people.
Where the biggest danger is that some of adjustable rate mortgages may rise quickly. Good Morning America was saying that you needed to be in a 30 year fixed rate mortgage if you could be. I think that is a great idea. We are near the low point of mortgage rates. Rates may come down a little but the possibility of them going up is greater.
So if you are thinking of selling to get out from under your mortgage, or just thinking of moving out of state.... you can check your houses value at www.checkmyhousesvalue.com
I always thought people should have a little reserves when they buy a home. What happens if the furnace fails or the roof leaks. Sure it's nice to buy a home, but I would like my clients to be able to afford the home. So they can be in it 5 -10 years down the road and not lose it to foreclosure. If you want more information on mortgages, want a good rate feel free to call me at (313) 310-9855 or go to my website at www.russravary.com May life treat you and your family well today. Russ Ravary
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