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Raymond Garcia's Blog

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  • Evolving Markets: Rent To Own

    Posted Under: Home Buying in 02050, Home Selling in 02050, For Rent in 02050  |  December 16, 2010 1:37 PM  |  342 views  |  1 comment

    Renting to own, also called a lease option, represents an opportunity for buyers who aren't quite ready to buy a home,  to get started on the process. The potential buyer signs an agreement with the property's owner to rent it at a rate slightly above market rate and has the option to buy the property at a predetermined price at any point during the rental period (usually a couple of years). If the potential buyer decides to complete the sale, a portion of the above-market rent is credited back to her or him to be used as the buyer wishes, which is often as a down payment. If the potential buyer decides not to complete the sale, the only consequence is that she or he has paid above-market rent. The potential buyer, however, has had an extensive opportunity to test-drive a home before buying it, as well as plenty of time to consider a major purchase decision with a locked-in price and no competing offers.

     

    What's in it for the seller? For someone who is having trouble selling his or her home, a lease option lets the owner make money on the home while it remains unsold instead of just having the home sit vacant. Because vacant homes are often vandalized, having the home occupied also helps protect its value (assuming the renters do not destroy it). This rental income can help cover the cost of the mortgage , property taxes, insurance and maintenance. This way, even if the renter does not choose to complete the sale, the seller hasn't lost much ground.

     

    Because this method of purchasing a home is not common, buyers should thoroughly educate themselves about the process beforehand and beware of potential pitfalls. Unscrupulous property owners may let you sign a rent-to-own contract when they have no intention of ever selling you the home as a means to charge above-market rent. If the homeowner is in financial distress and loses the home while you are still renting it, you will probably lose not only your opportunity to buy the home, but also the excess rent you've paid. You'll also have to find a new place to live. It is also important to make sure you are signing a lease-option agreement, which gives you a choice to buy the home, and not a lease-purchase agreement, which requires you to buy the home. Hiring a lawyer before entering into this type of transaction is a smart idea.

    As always, do your Due Diligence before investing in real estate.  Watch for a future blog on this wonderful word!

  • The Value of Homeownership

    Posted Under: Home Buying in Marshfield, Home Selling in Marshfield, Financing in Marshfield  |  December 11, 2010 6:23 AM  |  297 views  |  No comments

     I just went to a seminar where the Massachusetts Association of Realtors put into perspective what we all, already knew about homeownership but sometimes forget.
    Our American dream is still alive and we are all making it happen as a society, we're all involved and we all depend on each other to make it happen.  The following is a quote:
     
    The Value of Homeownership


    Homeownership provides shelter and security to families, and fosters involvement in community life as well as participation in democratic institutions. Homeownership also provides important social and economic benefits.

    A long-term investment
    A home appreciates at a typical annual rate of five percent and the homeowner who made a cash down payment of 10 percent generally will receive a 94 percent return on that cash after owning the home only three years, 225 percent after five years and 623 percent after 10 years. (Harvard University’s Joint Center for Housing Studies)

    Builds wealth
    The median net worth of a renter household is $4,800, while the median net worth of a homeowner household is $171,700.  (Federal Reserve Survey of Consumer Finances)

    Tax breaks
    Tax advantages to homeownership include: interest payments on mortgages and property taxes in most cases; home equity loans which may also be used to consolidate debt, thereby making all the debt interest tax deductible. (Get more information on the tax benefits of being a homeowner from your tax preparer or the IRS)
  • The Value of Homeownership

    Posted Under: Home Buying in Marshfield, Home Selling in Marshfield, Financing in Marshfield  |  December 11, 2010 6:23 AM  |  287 views  |  No comments

     I just went to a seminar where the Massachusetts Association of Realtors put into perspective what we all, already knew about homeownership but sometimes forget.
    Our American dream is still alive and we are all making it happen as a society, we're all involved and we all depend on each other to make it happen.  The following is a quote:
     
    The Value of Homeownership


    Homeownership provides shelter and security to families, and fosters involvement in community life as well as participation in democratic institutions. Homeownership also provides important social and economic benefits.

    A long-term investment
    A home appreciates at a typical annual rate of five percent and the homeowner who made a cash down payment of 10 percent generally will receive a 94 percent return on that cash after owning the home only three years, 225 percent after five years and 623 percent after 10 years. (Harvard University’s Joint Center for Housing Studies)

    Builds wealth
    The median net worth of a renter household is $4,800, while the median net worth of a homeowner household is $171,700.  (Federal Reserve Survey of Consumer Finances)

    Tax breaks
    Tax advantages to homeownership include: interest payments on mortgages and property taxes in most cases; home equity loans which may also be used to consolidate debt, thereby making all the debt interest tax deductible. (Get more information on the tax benefits of being a homeowner from your tax preparer or the IRS)
  • Call To Action

    Posted Under: Home Buying in Marshfield, Home Selling in Marshfield, Agent2Agent in Marshfield  |  December 7, 2010 7:10 AM  |  313 views  |  No comments
    I receved this from the National Association of Realtors in my e-mail, and I hope most of you did as well. As a homeowner, I would be devastated if this deduction were to be eliminated. This deduction is the other reason we choose to buy rather than rent.

    Please do your part and call to preserve this very important piece to our American Dream.
     

    Dear Raymond,

    Call for Action: Defend MID

    Won't you please call your Representative to ask their help
    in defending home ownership
    and the Mortgage Interest Deduction? They need to hear from YOU today.

    Click to Call

    The Mortgage Interest Deduction (MID) is vital to both home ownership and our economy.

    I'm disappointed that anyone in Congress — or on a Presidential Commission — would even suggest limits to the Mortgage Interest Deduction. Mortgage interest has been deductible for nearly 100 years, and the proposed changes will affect all 75 million home owners in the United States. We must act now to make sure the MID is not changed.

    Ever since the Deficit Commission announced its conclusions, the news media have been buzzing about the report. And what do they emphasize? Proposals to limit or even eliminate the Mortgage Interest Deduction. I'm concerned because all this does is scare the public — and potential buyers — away from the housing market. The last thing the housing industry needs right now (and for the foreseeable future) is another bucket of ice water to be thrown on the market. People who hear these news reports don't differentiate between a proposal and a done deal. They just know that a tax provision they actually understand and rely on is under siege. This is just unacceptable.

    I am asking you to call to your representative's office today to ask him or her to defend the Mortgage Interest Deduction from any cuts or reduction as outlined in the Deficit Commission Report.

    This Call for Action requires you to do something a little different. In order to track the calls we are making to Congress, we need you to follow the link and enter your phone number and zip code to be connected to your representative's office. You can make this call now, or later today at a more convenient time. But we need you to make this call.

    After you enter the information, you will receive a phone call with instructions before being patched through to Capitol Hill.

    nav_red_arrow.gif Count me in Ron, I am ready to make my call*.

    This call is important. We need to be clear and draw a line in the sand. While we all support efforts to reduce the deficit, further undermining the critical housing recovery cannot be the price that is paid. Here are some suggested talking points for you to use when you call:

     I am a constituent and a REALTOR®. 
     I have been on the front lines of the housing crisis. I can assure you that even talk of changing MID harms an already fragile market.
     I am strongly opposed to the Deficit Commission's proposal to either limit or eliminate the Mortgage Interest Deduction.
     News reports saying that Congress threatens to repeal or limit MID will keep potential buyers on the sidelines and further delay the housing recovery.

    We must speak loudly and clearly with one voice to ensure the further recovery of our economy and the housing market and educate every legislator about how much Home Ownership Matters. We can't do that with the few REALTORS® who take action consistently. We need every REALTOR® to respond. Please call NOW and tell your representative to help defend home ownership and the MID*.

    On behalf of the NAR Leadership team, thank you for your support and time,

    Ron Phipps Signature 

    Ron Phipps
    2011 NAR President

     

     

  • Where to find the money

    Posted Under: Home Selling in Marshfield, Financing in Marshfield, Curb Appeal in Marshfield  |  December 7, 2010 6:37 AM  |  313 views  |  No comments

    Most often, a buyer, home owner or even a contractor looking to renovate a property in these  intense economic times, feels it to be an uphill battle!

    However, simply knowing where to look is the biggest road block. HUD has a rehab loan program that may just solve some of those issues.

    The Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD), administers various single family mortgage insurance programs. These programs operate through FHA-approved lending institutions which submit applications to have the property appraised and have the buyer's credit approved. These lenders fund the mortgage loans which the Department insures. HUD does not make direct loans to help people buy homes.

    The FHA 203k loan program is the Department's primary program for the rehabilitation and repair of single family properties. Basically a home improvement loan. As such, it is an important tool for community and neighborhood revitalization and for expanding homeownership opportunities. Since these are the primary goals of HUD, the Department believes that FHA 203k loan is an important program and they intend to continue to strongly support the program and the lenders that participate in it.

    Lenders have successfully used the FHA 203k loan program in partnership with state and local housing agencies and nonprofit organizations to rehabilitate properties. These lenders, along with state and local government agencies, have found ways to combine the FHA 203k loan with other financial resources, such as HUD's HOME, HOPE, and Community Development Block Grant Programs, to assist borrowers. Several state housing finance agencies have designed programs, specifically for use with FHA 203k loan and some lenders have also used the expertise of local housing agencies and nonprofit organizations to help manage the rehabilitation processing.

    HUD also believes that the FHA 203k loan program is an excellent means for lenders to demonstrate their commitment to lending in lower income communities and to help meet their responsibilities under the Community Reinvestment Act (CRA). HUD is committed to increasing homeownership opportunities for families in these communities and Section 203(k) is an excellent product for use with CRA-type lending programs.

    FHA 203K Loan - How the Program Can Be Used:

    This program can be used to accomplish rehabilitation and/or improvement of an existing one-to-four unit dwelling in one of three ways:

    · To purchase a dwelling and the land on which the dwelling is located and rehabilitate it.

    · To purchase a dwelling on another site, move it onto a new foundation on the mortgaged property and rehabilitate it.

    · To refinance existing indebtedness and rehabilitate a dwelling;

    To purchase a dwelling and the land on which the dwelling is located and rehabilitate it, and to refinance existing indebtedness and rehabilitate such a dwelling, the mortgage must be a first lien on the property and the loan proceeds (other than rehabilitation funds) must be available before the rehabilitation begins.

    To purchase a dwelling on another site, move it onto a new foundation and rehabilitate it, the mortgage must be a first lien on the property; however, loan proceeds for the moving of the house cannot be made available until the unit is attached to the new foundation.

 
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