Wednesday, January 28, 2009

Foreclosure Buying Tips

Before buying a foreclosure you need to know what to look for. Do not just assume that because a house is a foreclosure that you are getting the home at a bargain. You will need to do just as much due diligence with your research as you would when you are buying any other property.

There are also some unique issues and risks that need to be considered when purchasing foreclosures. Below are some tips on what to look for to ensure you are making a sound investment in a foreclosure:

  • Some foreclosures accept bids and some are on the condition of sight unseen. Others you can go to the property but can not see the interior. In such cases you are gambling on the condition of the house. This can be a very risky move.

  • If you are able to inspect the house before making an offer, do so thoroughly. Some homeowners, when faced with foreclosure, sell off appliances or cabinets to get some extra money. Some are bitter and purposely destroy parts of the home. Others still have not had the money for proper care and maintenance and the home is uninhabitable.

  • If you want to bid on a foreclosure that is also a fixer upper, make sure you factor in labor, materials and contracting costs into the total sale of the property. Also, make sure you or someone reliable is available to make the repairs in a timely manner so you can either get it back on the market quickly or get it occupied.

  • Make sure you are aware of what current homes are selling for in the area. You want to get a foreclosure because you will make money from the deal so make sure what you are getting actually is below market value.

  • Find out if the house is vacant. In some cases the previous tenants are still in the home and if you buy the foreclosure you will be left with the arduous task of going through eviction proceedings. If you are prepared for this, make sure you know it is a possibility they will not leave the house in as good condition as how you bought it.

  • Have a known budget for buying foreclosure homes and stick with it. Get preapproved for financing so that is one less step you have to take when you want to make an offer on a foreclosure.

  • Stay unemotional about the purchase. There are other homes available. You want to make a savvy investment and you can not do that if you get too attached to a home before the final paperwork is put through.

  • Be aware and realistic about the risks and rewards of buying foreclosures. Take the necessary steps to research the area and the house or property before buying.

Saturday, January 24, 2009

$7500 Tax Credit for First-Time Home Buyers

For you first-time home buyers out there…

Don't forget about the $7500 tax credit when you file your taxes this year. Designed to help stimulate interest in the housing market, this temporary provision provides a first-time home buyer (someone who hasn't owned a home in the last three years) a tax credit of up to $7500 for homes purchased between April 8, 2008 and July 1, 2009. Basically the tax credit, which must be repaid over 15 years, is an interest-free loan from the government to help you offset the costs of home ownership.

But here's the best part. The law allows qualified taxpayers to take the credit against either their 2008 or 2009 taxes. This means, if you qualify, you can buy a house this year before July 1st and receive the credit on the 2008 tax returns you're filling out right now!

Imagine having an extra $7500 in cash to pay bills or credit cards or even pay for renovations on your new home. If you choose to utilize the credit on your 2009 returns, your tax professional can help you reduce income tax withholding up to the amount of the credit. This will help you to increase your take-home pay throughout the year to save money for a down payment for a qualified purchase before July 1st.

There are certain income restrictions and rules for repayment, but it’s not too late to take advantage of this valuable government program for first-time home buyers.

Friday, January 23, 2009

What is a Short Sale Anyway?

As foreclosure rates continue to grow, more and more sellers are turning to short sales as a way to avoid foreclosure.

Some of you may be thinking, "What is a short sale?" and "How does a short sale work?"

In a short sale, the seller negotiates with their mortgage lender to accept a price that's less than the amount they owe on the property. As part of this arrangement, the lender typically agrees to forgive the rest of the loan. As a result, the seller doesn't have to go though a foreclosure, the buyer picks up a property at a discount, and the lender avoids taking on the burden of unloading the property.

Sounds good right? Well, there are a few things that you should be aware of...

Sellers need to be aware of the fact that a short sale may still damage their credit, though probably not as much as a foreclosure. Also, lenders typically will only agree to a short sale if the seller is behind in their payments and has received a default notice. There is a lot of paperwork and negotiation that will take place. So be ready for information gathering and a process that may get dragged out quite a bit. But, just remember, in the long run it is better than foreclosure!

Buying a short sale can be a brilliant move, providing you have the patience to deal with the seller's lender. Buyers need to remember that the lender doesn't really want to receive less than what is owed against the property. But lenders don't want to go through the hassle and expense of foreclosure and taking the property back, either. Be prepared for many delays and weeks of not hearing a word from the lender. Shrewd negotiation can mean big profits to a savvy home buyer. So, hang in there!

Short Sales have become very popular in this market. So, don’t be afraid of them. Just make sure you work with a real estate agent that has had experience with short sales. Short sales offer a great opportunity for both buyers and sellers.

Tuesday, January 13, 2009

Is Now a Good Time to Buy Your First Home?

There are many factors to take into consideration when answering this question. One of course is interest rates, which have already reached historic lows (at least in the last 20-25 years) and continue to drop even lower. This won’t continue to happen forever!

The foreclosure inventory continues to grow, keeping the majority of the prices low. Prices on homes right now are the lowest they have been in years.

The programs that are available to first-time home buyers make it easier than ever to get a mortgage. Many of the programs offer low to no down payments, assistance with closing costs and options for the seller to contribute toward costs.

Combine these three factors with the new home owner tax credit that the government has bestowed on first time home buyers ($7500 in your pocket) and it creates a an ideal situation.

Put simply, there are a lot of good reason to buy right now!

Many people believe that this is the golden age for buying real estate because everything is in the buyer’s favor. Interest rates are low, prices are down (and are bound to go back up) and the tax advantages and mortgage packages make it just too good of opportunity to pass up.

Some first-time home buyers may be on the fence right now thinking that prices may even go lower. They can’t decide whether they should wait or if they should take advantage of the "ideal" situation now.

Well, the real estate slump is in it’s third year. How much lower are they likely to go? The procrastinators may miss the perfect opportunity to buy. Once the rates and the prices start going back up, there are going to be a lot of disappointed buyers that "missed the boat".

Find a property you like and begin enjoying the benefits of owning a home. Don’t be one of those people that look back on 2009 and kick themselves for not taking advantage of an ideal time to buy!