Home > Blogs > Torang Nazmi's Blog
44,325 views

Torang Nazmi's Blog

By Torang | Save $10,000's | Broker in 75063
  • Seller-Financed Mortgage

    Posted Under: Home Buying in Denver, Property Q&A in Denver, Credit Score in Denver  |  April 5, 2013 12:09 PM  |  1,293 views  |  No comments

    Function

    Owner financing for a home sale is when the seller/owner will also carry the financing or mortgage on the home. Instead of going to a mortgage lender to borrow the money to pay for a home, the buyer enters an agreement with the home seller to make monthly mortgage payments to the seller as the mortgage holder on the home. The terms of the mortgage can be agreed on between the buyer and seller.

    Significance

    The financial crisis of 2007 and the drop in home values from 2006 until 2009 severely reduced, if not eliminated, the options for individuals with lower credit ratings to obtain a mortgage from traditional lending sources. The financial crisis eliminated the secondary market for subprime mortgages, so lenders were unable to continue offering these mortgage loans. Seller financing is one way someone with a lower credit score or unusual credit situation can buy a home and be financed.

    Considerations

    A home buyer who wants or needs seller financing to buy a home can expect to pay full market price for the home. Seller financing is a benefit more to the buyer than the seller. In a purchase financed with a bank mortgage, the seller gets the full sales price up front. With seller financing, the home seller will wait years to be fully paid for the home. According to the Mortgage Buyer website, the home buyer should expect to pay an interest rate that is 1 to 2 percent above the prevailing rate for home mortgages.

    Potential

    In any market, there will be a limited supply of homes with seller financing. The seller must own the home free and clear or have the cash to pay off the existing mortgage. Then the seller has to be willing to accept a mortgage payment plan rather than get the full price for the sale. The potential for the seller is the ability to earn a rate of interest that may be significantly above other investment options. A seller who provides seller financing should also be able to get better pricing for the home.

    Warning

    If a home purchase is going to be financed with a seller-financed mortgage, both sides should make sure their financial interests are protected. The seller may require a substantial down payment and a credit report from the buyer. The buyer should have proof of ownership rights in the home when the mortgage is paid off. A seller-financed home purchase has many areas of additional negotiation concerning insurance, taxes and title insurance. Both buyers and sellers should consult with an attorney before the sale is finalized.

    source : http://homeguides.sfgate.com/seller-financed-mortgage-3142.html

  • How to Know If You Qualify for an FHA Loan

    Posted Under: Home Buying in Denver, Foreclosure in Denver, Property Q&A in Denver  |  April 5, 2013 9:01 AM  |  812 views  |  No comments

    1

    Determine whether the home you are financing will serve as your primary residence. To get an FHA loan, you must be an occupant in the residence, and it must be your primary residence as well. No investment properties are allowed under the program.

    2

    Check the maximum mortgage amount for your area before applying. If the home exceeds that amount, you do not qualify for an FHA loan for that residence.

    3

    Order your credit report and examine it closely. There is no minimum credit score needed for an FHA loan, but you do need a demonstrated ability to pay bills in a timely fashion. Black marks on your credit report may disqualify you from the FHA loan program. Foreclosures must have taken place more than three years before application and bankruptcies two years, both with clean credit histories since the event.

    4

    Check your income and look at your employment history. You want to show lenders a consistent work history for two years before applying for the loan, as well as expected work for three years after loan approval. Your income should also be sufficient to pay the expected monthly payments without causing overdue strain. Gather two years' worth of tax returns and an up-to-date balance sheet to show a lender if you’re self-employed.

    5

    Reduce your debt-to-income ratio below 45 percent by paying off credit cards or loans before applying for the FHA loan. Also, be sure you have enough savings available to make the 3 1/2 percent down payment required by the FHA.

    SOURCE : http://homeguides.sfgate.com/qualify-fha-loan-3071.html

  • How Do They Verify a First Time Homebuyer?

    Posted Under: Home Buying in Denver, Home Selling in Denver, Property Q&A in Denver  |  April 3, 2013 12:06 PM  |  646 views  |  No comments

    Housing Authorities

    In California and other states, first time homebuyer programs are typically offered by city and state housing authorities. To apply for these programs, you may contact your local government authorities to inquire about them. You will also need to find lenders who participate in these programs.

    Homebuying Programs

    Localities in different states may offer first time homebuyer programs to individuals who buy homes within their cities or counties. These programs are often designed to assist individuals with incomes at or below the maximum limit in accordance with federal income requirements to qualify for the programs. The maximum income limits vary by the household size of your family. For instance, the maximum income limit for a household size of 2 people will be lower than the limits of a family household of 4 people. Many lenders that participate in these programs typically require a down payment as low as 3 percent of the purchase price of the home at fixed interest rates. Some programs include zero-interest loans with deferred payment plans.

    Verification

    An application submitted for approval will be underwritten to determine whether the applicant qualifies for a first time home buyer program. The loan officer will verify employment, income, assets and liabilities. To determine whether an applicant is within the status as a first time homebuyer, the loan officer will verify the credit history by reviewing a credit report. Some lenders may also obtain public property records, such as records for property taxes and property ownership, to discern whether the applicant has had an ownership interest in property. Local housing authorities also have guidelines for these programs, and applications are evaluated based upon specific standards for first time homebuyer programs.

    Eligibility

    If you have never purchased a primary residence or have not owned a home within three years, you may qualify as a first time homebuyer, depending on the requirements of the mortgage program. If you bought a property that you usee for purposes other than your primary residence, you may still qualify for most first time homebuyer programs offered in your area. In addition to qualifying as a first time homebuyer and meeting family income limits, you will only qualify for the program if you are purchasing a home to be used as your primary residence. These programs also have maximum limits for the purchase price of homes and types of homes, such as single family residences or condominiums. You may also need to complete first time homebuyer certification classes depending on the requirements in each


    source : http://homeguides.sfgate.com/verify-first-time-homebuyer-60724.html
  • Can I Sell My Home With a Second Mortgage on It?

    Posted Under: Home Buying in Denver, Home Selling in Denver, Property Q&A in Denver  |  April 3, 2013 11:50 AM  |  342 views  |  No comments

    Features

    While most second mortgages are designed differently than classic first mortgages, legally there is little difference. From a legal perspective, any mortgage recorded after another loan is a second mortgage. However, lenders construct second mortgages as either home equity lines-of-credit (HELOCs) or shorter term, higher interest rate, full disbursement mortgages for homes.

    Function

    When selling a home, a second mortgage, regardless of the homeowner's use of the funds, reduces the seller's cash received at the closing of the sale. A second mortgage, however, should not prevent or disrupt the sale. When the title company, escrow agent or attorney prepares the closing documents, they simply factor in the second mortgage payoff amount into the final distribution of funds to the seller.

    Effects

    A second mortgage should have little or no effect on a homeowner's ability to sell her home. While the effects on buyers are nonexistent, sellers must pay off second mortgages just as they must pay off first mortgages. Sellers must deliver their property free of encumbrances, including any outstanding loan balances, to qualified buyers. The closing agent (escrow company, attorney or title firm) must collect the first and second mortgage payoff amounts and ensure that the liens are removed from the sold property.

    Considerations

    Homeowners must consider two potential issues when selling a home with a second mortgage. First, you should reexamine your second mortgage loan terms to learn if there is a prepayment penalty associated with your note. Like many first mortgage loans, some second mortgages also have prepayment penalties that require extra fees should the loan be paid off during the first few years (typically up to 5 years) of its existence. If you have an active HELOC and you like your lender, you might want to discuss another similar loan with a new home. Second, be sure your home's value is sufficient to pay off both the first and second mortgages. During down economies, loss of real estate values can pose problems for sellers.

    Significance

    In most situations, having a second mortgage will not cause problems when you sell your home. However, the required payoff could be significant if you need to replace the loan after you purchase a new home and if interest rates have increased since you received your current second mortgage. Should you require another second mortgage and your financial condition (credit score or employment) has worsened, you may not qualify for a new loan. In this case, an otherwise insignificant issue, which should not hinder your sale, may become extremely important to you.

    source : http://homeguides.sfgate.com/can-sell-home-second-mortgage-it-9301.html

  • Why Do Homes Go Into Foreclosure?

    Posted Under: Home Buying in Denver, Foreclosure in Denver, Property Q&A in Denver  |  March 29, 2013 9:47 AM  |  328 views  |  No comments

    Negative Equity

    A key factor in foreclosure is negative equity, the Wall Street Journal reported. If a home's value has fallen so much that it's worth less than the mortgage, the homeowner can simply give up. He decides to cut his losses and stop making payments.

    Sub-Prime Mortgages

    HUD considers loans made to high-risk borrowers with little chance of keeping up the payments another contributor to the foreclosure crisis, according to Default Servicing News. Making risky loans generated big profits through origination fees and selling the mortgages to investors, even if the homes had to be foreclosed on later.

    Fraud

    As many as 9 percent of foreclosures may be associated with fraud by the lender or the borrower, according to a Default Servicing News article.

    Unemployment

    Losing a job and subsisting on unemployment benefits or savings may make it impossible or impractical to keep paying the mortgage. The website of foreclosure expert John Nazareno (theforeclosuresinfo.com) says this is one of the top reasons for foreclosure.

    Other Personal Reasons

    Illness can make it impossible for some homeowners to work, or drain their financial resources until they can't pay the mortgage. Divorce can be a factor. If one spouse keeps the house she may not be able to keep up payments with only one income. Homeowners with gambling or substance addictions may spend their money to satisfy their habit, rather than on the mortgage.

    source : http://homeguides.sfgate.com/homes-foreclosure-2157.html

  • Mineral Rights and Surface Rights

    Posted Under: Home Buying in Denver, Home Selling in Denver, Property Q&A in Denver  |  March 25, 2013 1:22 PM  |  344 views  |  No comments

    When you buy a piece of land, you may not be buying what's under it. United States law distinguishes surface rights--the right to farm or build on the land--from mineral rights that confer the right to mine the property. Mineral rights can be sold or leased separately from surface rights, which can create problems for surface owners.


    History

    The United States is one of the few nations that allow private ownership of underground mineral resources. Originally, mineral rights were part of the general ownership of the property, but as owners with no interest in mining began selling the rights separately, ownership diverged.

    Significance

    Mineral rights owners don't need your permission to mine or lease to a mining company: The law grants them "reasonable use" of the surface, though they have to accommodate your use as well.That can change, according to a geology website (geology.com), if the mineral rights owner's agreement specifically states that, for example, he can remove minerals at any time by any means, regardless of the effect on the surface.

    Considerations

    If a fight over rights goes to court, judges usually won't allow mineral-rights holders to demolish a building, the Houston Business Journal reported in 2007. On the other hand, if the holder of mineral rights wants to drill where you're planning to build on the surface and the land is currently empty, courts will likely to side with the mineral-rights owner.

    Warning

    Depending on where you buy property, the seller may not be required to disclose that you're not buying the mineral rights: As of 2010, it's not on California's list of required disclosures, and the Oklahoma real-estate industry fought back an effort to pass a disclosure law in that state. Mineral-rights sales will have to be filed at the county recorder's office like other land sales, however, so you should be able to find out with a title-insurance search, according to the California Land Title Association.

    Solutions

    If you don't own the mineral rights to your property, you can try to negotiate with the person who does. For example, you could try to work out a land-use agreement that's more restrictive than the "reasonable use" provisions, restricting mining to one part of your property. You could also try to buy an interest in the mineral rights, in which case any company that wanted to lease the property would have to secure your approval along with that of the other owners.

    read more : http://homeguides.sfgate.com/mineral-rights-surface-rights-2682.html

  • How Do I Get an FHA Pre-Foreclosure Counselor?

    Posted Under: Home Buying in Denver, Foreclosure in Denver, Credit Score in Denver  |  February 19, 2013 8:50 AM  |  369 views  |  No comments

    The Federal Housing Administration is an agency within the U.S. Department of Housing and Urban Development that insures residential mortgages. The FHA offers other services as well, including free pre-purchase advice and pre-foreclosure counseling, through various, nationwide HUD-approved agencies. Keep in mind that time is of the essence in taking advantage of FHA or other foreclosure avoidance programs, so don’t wait too long to meet with a pre-foreclosure counselor.


    1

    Go on the Internet and navigate to the HUD Foreclosure Avoidance Counseling website. Click on your state on the map of the United States. A new page will be generated.

    2

    Narrow your search for a counselor by adding your city or zip code in the boxes provided, and click “Search.” For the maximum number of results, avoid using the zip code and just search by city.

    3

    Choose a counseling agency from the list and call the agency for an appointment.

    SOURCE : http://homeguides.sfgate.com/fha-pre-foreclosure-counselor-9449.html

« Read older posts
Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer