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How to Finance Foreclosure Properties By Bargain network

Foreclosure properties, REO (Real Estate Owned) property owned by banks and other lenders, and properties threatened with imminent foreclosure all represent great investment opportunities for property buyers. They are the most popular source of affordable deals for those seeking bargain homes, because foreclosures often sell at or below wholesale prices.

Anybody can buy this kind of property. Basically all you need is some money and willingness to bid. But be aware that if you attend a property auction, you may wind up bidding against professional forclosure investment specialists who are also looking for cheap houses. If you are unsure about how the foreclosure real estate game is played, learn as much as possible ahead of time in the Learn Section of Bargain Homes, so that you are not at a disadvantage when making your purchase offer.

Before stepping into the foreclosure property arena, it is important to educate yourself. You'll want to know as much as possible about such things as the pitfall of hidden costs. For example, when purchasing a house that has a lien against it, the buyer may be responsible to pay back the debt. Such strings-attached baggage can include huge amounts of money owed to the IRS.

And you will want to explore ways to come up with the money necessary to finance your purchase of a foreclosure. Some lenders don't lend money for foreclosure property mortgages, while other lenders are eager to make loans to help you buy. To find out more, do some homework ahead of time, so that you can approach the foreclosure auction with confidence and adequate and financial backing

Use knowledgeable resources like Bargain Homes to find answers to your foreclosure questions. Be patient, and don't rush into the first opportunity that comes your way. Foreclosure properties are everywhere and more to come onto the market each day. As you study how the process works, continue your hunt for the right investment to suit your needs, by dedicating some time each day to searching through real estate foreclosure listings in your area.

While you peruse the listings on sites like Bargain Network, also look for information, leads, and advice on financing.

Here are five powerful tips to help you finance foreclosure property:

Pre-qualify for a bank loan

Money talks. If you want to walk away with the property, show cash up front. Sellers respond when they have confidence that you can support your offer with prompt financing, so pay a visit to your mortgage lender before you shop for houses.

You can get pre-qualified in a matter of minutes, by showing a few documents and submitting to a credit check. And if you  want to really up the ante, go ahead and get pre-approved for the loan, up to a certain amount. With a pre-approval letter in hand, you can open doors and have a distinct advantage over other competing bidders.

Assume the seller's loan

If the terms of the loan allow it, you can take over the existing payments and solve two problems at the same time. 1. The strategy is good for the seller, who avoids foreclosure. 2. And as the buyer, you are able to simply cure the default and take over the existing loan without significant loan processing fees or delays. Veteran's Administration (VA) are great in this respect-if you find assumable VA loan you should definitely take advantage of the flexible option it represents.

Owner/Seller financing options

Owners who are faced with the dreadful possibility of foreclosure are usually happy to work with you, if it means it can save their credit from ruination. If you are able to take over their loan, it is a big help to them. In return for being rescued from a sea of debt, sellers will often accept terms that are very attractive to buyers. 

For example, if you don't have cash for a down payment, you can work out a deal with the seller so that they can stay in the house, rent free, for a certain period of time, in lieu of a down payment. Or you could offer them reduced rent, in exchange for labor to help you fix up the place before you sell it, which reduces your remodeling costs.

Home Equity Loans

Sometime the financial capital you need is right beneath your feet. If you own a home with accumulated equity, you might be able to find a great source of investment money without ever leaving home. Lenders will usually charge a slightly higher rate of interest for a second mortgage or home equity loan, but the interest and many of the closing costs are tax dedcutable, which offers extra savings over time. And once you secure the loan and buy your forclosure property, you can always leverage the new price of real estate as collateral and refinance to a lower interest rate.

Private lenders or investments partners

One of the most common arrangements in the real estate foreclosure business is partnership with lenders who have money to investment, but are not interested in doing the day-to-day work required to buy and sell property. You may have a colleague, friend, or family member with investment capital, and you can  sit down and iron out an agreement to share the profits of your joint venture. They put up the money so that you can bid on foreclosures,and then you pay them back with a share of the proceeds when you sell the property and reap a capital gain.   

You can also get funds frio professional investors who lend money for a cut of the action. And if you have trouble getting a traditional loan from a bank, there are plenty of legitimate lenders who specialize in providing "hard money" loans, or loans with higher interest rates made to people who would otherwise be turned down.

Find a reputable lender through resources like Bargain Network, and you may discover that professional partnership can double your potential for success.

Understanding Points, Rates and Fees

Not only do you have to understand what type of mortgage you should choose, you have to understand thew costs associated with your mortgage. All of these costs will be paid upon closing your mortgage.

Purchase Points

Purchase points, also known as "buy-down" or "discount points" are an up front fee paid to the lender at closing to buy-down or lower your interest rate over the life of the loan. Each point is equal to one percent of your total loan amount. If you have a $100,000 loan, one point would equal $1,000. The more points you buy, the lower you interest rate, but the more money you'll need at closing.

How do you decide whether you should buy points and if so, how many? Well, the decision should be based on how long you plan on living in your home and what you can afford to pay each month towards your mortgage. If you plan on living in your home for more than five years, it's probadly a good idea to purchase points. The longer you live in your home, the more you can save on interest over the life of the loan.

Interest Rate

When you get a mortgage, you are charged an interest rate, this is the rate which the lender charges you for using their money to buy a home. It determines how much your monthly payments will be. Generally speaking, the higher the interest rate, the higher your monthly payment.

Mortgage interest rates change constantly, daily, even hourly. If you speak to a lender and are quoted a specific interest rate, that's not to say you'll necessarily get that rate when you close on your loan. Not unless you formally lock-in that rate with the lender. Locking in an interest rate will guarantee you get your loan with a particular interest rate. Lenders will allow you to lock in for 15, 45 or 60 days. But the longer you lock in, the more expensive it will be, since it's more of a risk to lenders.

Fees

There are always fees associated with getting a mortgage, these fees cover the cost of processing and underwriting the loan. These fees can include charges for ensuring the title to the home is free and clear; paying for a land survey; or paying for a home appraisal which gives you the estimated value of the property (lenders require an appraisal to close on your mortgage).

Deciding which mortgage to get may depend on what each lender does because different lenders may charge different amounts. Some may charge lesser closing fees to lure you in, but may charge you a higher interest rate, which means you may pay more in the long run. But everyone has different needs. You may or may not be able to afford to pay more at closing and are willing to pay more over the long term.   

Before it comes time to close, do your homework, make sure there are no hidden fees, ask your lender lots of questions so that you understand all the cost involved with your mortgage.

*Please consult your tax advisor.

Buying Your First Home

Finding the right home starts with a price range and a short list of desirable neighborhoods. But there are many other factors you'll need to consider before investing in what may be your biggest asset.

Before You Start:

* Grab your current household budget so you can consider your financial situation and your ability to make  mortgage payments.

* Ask family and friends if they can recommand experts, like a lawyer and an inspector, who can help with  the home buying process. 

* Think about your lifstyle and know it might affect your choice of home and neighborhood

* Do a little research on current home prices in the neighborhoods you plan to target

Buying Your First Home

Home ownership is the cornerstone of the American Dream. But before you start looking, there are a number of things you need to consider. First, you should determine what your needs are and whether owning your own home will meet those needs. Do you picture yourself mowing the lawn on Saturday, or leaving your urban condo for the beach? The best advise is to look at buying a home as s lifestyle investment, and only secondly as a financial investment.  

Even if housing prices don't continue to increase at the torrid pace seen in recent years in many areas, buying a house can be a good fionancial investment. Making mortgage payments forces you to save, and after 15 to 30 years you will own a substantial asset that can be converted into cash to help fund retirement or a child's education. There are also tax benefits.

Like many other investments, however, real estate prices can fluctuate considerably. If you aren't ready to settle down in one spot for a few years, you probadly should defer buying a home until you are. If you are ready to take the plunge, you'll need to determine how much you can spend and where you want to live.

How Much Mortgage Can You Afford?

Many mortgages today are being resold in the secondary markets. The Federal National Mortgage Association (Fannie Mae) is a government-sponsored organization that purchases mortgages from lenders and sells them to investors. Mortgages that conform to Fannie Mae's standards may carry lower interest rates or smaller down payments. To qualify, the mortgage borrower needs to meet two ratio requirements that are industry standards.

The housing expense ratio compares basic monthly housing costs to buyer's gross (before taxes and other deductions) monthly income. Basic cost include monthly mortgage, insurance and property tax. Income includes any steady cash flow, including salary, self-employment income, pensions, child support, or alimony payments. for a conventional loan, your monthly housing cost sholud not exceed 28 percent of your monthly gross income.

The total obligations to income ratio is the percentage of all income required to service your total monthly payments. Monthly payments on student loans, installment loans, and credit card balance older than 10 months are added to basic housing costs and then divided by gross income. Your total monthly debt payments, including basic housing costs, should not exceed 36 percents.

Many home buyers choose to arrange financing before shopping for a home and most lenders will "pre-qualify" for a certain amount. Prequailification helps you focus on homes you can afford. It also makes you a more attractive buyer and can help you negotiate a lower purchase price. Nothing is more disheartening for buyers or sellers than a deal that falls through due to a lack of financing.

In addition to qualifying for a mortgage, you will probadly need a down payment. The 28 percent to 36 percent debt ratios assume a 10 percent down payment. In practice, down payment requirements vary from more than 20 percent to as low as 0 percent for some Veterans Administration (VA) loans. Down payments greater than 20 percent generally buy a better rate. Lowering the down payment increases leverage (the opportunity to make a profit using borrowed money) but also increases monthly payments. 

How Much Home Can You Afford?

Bob and Janet's combined income is $50,000 a year, or $4,166 a month. Theur housing expense ratio of 28 percent yeilds a monthly maximum of $1,166 for mortgage, insurance and taxes ($4,166 x 0.28 = $1,166).

Their total debt ceiling of 36 percent is $1,583 (4,166 x 0.36 = $1,500). Their monthly debt payments include a $200 car payment, credit card payments of $100, and a student loan payments of $200. Subtracting this total of $500 from the $1,500 permitted leaves $1,000 in monthly housing payments.

Costs of Buying A Home

Many home buyers are surprised (shocked might be a better word) to find that a down payment is not the only cash requirement. A home inspection can cost $200 or more. Closing costs may include loan origination fees, up-front "points" (prepaid interest), application fees, appraisal fee, survey, title search and title insurance, first months homeowners insurance, recording fees and attorney's fees. In many locales, transfer taxes are assessed. Finally, adjustments for heating oil or property taxes already  paid by the sellers will be included in your final costs. All this will probadly add up to be between 3 percent and 8 percent of your purchase price.

Ongoing Costs

In addition to mortgage payments, there are other costs associated with homeownership. Utilities, heat, property taxes, repairs, insurance, services such as trash or snow removal, landscaping, assessments and replacement of appliances are the major costs incurred. Make sure you understand how much you are willing and able to spend on such items.

Coddominiums may not have the same costs as a house, but they do have association fees. Older homes are often less expensive to buy, but repairs may be greater than those in a newer home. When looking for a home, be sure to check the actual expenses of the previous owners, or expenses for a comparable home in the neighborhood.

Choosing A Neighborhood

Befioe you start looking at homes, look at neighborhoods. Schools and other services play a large part in making a neighborhood attractive. Even if you don't have children, your future buyer may. Crime rates, taxes, transportationn and town services are other things to look at. Finally, learn the local zoning laws. A new pizza shop next door might alter your property's future value. On the other hand, you may want to run a business out of your home.

Look for a neighborhood where prices are increasing. As the prices of the better homes increase, values of the lesser homes may rise as well. If you find a less expensive home in a good neighborhood, make sure you factor in the cost of repirs or upgrades that such a home may need.

Finding a Broker

If you are a first-time home buyer, you will probadly want to work with a broker. Brokers know the market and can be a valuable source of information concerning the home buying process. Ask lots of questions, remember that most brokers are working for the sellers, and in the end, their primary obligation is to the seller and not you. An alternative is a so-called buyer's broker. This individual works for you, and therefore is paid by you. Seller's brokers are paid by the seller.

Make sure that the broker has access to the Multiple Listing Service (MLS). This service lists all the properties for sale by most major brokers across the country. Brokerage commissions average 5 percent to 7 percent and are split between the listing roker and the broker that eventually sells the home. Don't be surprised if your broker is eager to sell you their own listing since they would then earn the entire commission.

Home Buying Costs

Down Payment              0% - 20% of purchase price

Home Inspection            $200 - $500

Points                           $1,000 and for up 1% - 3%

Adjustments                  3% - 8% of purchase price

Once you've determined a price range and location, you're ready to look at individual homes. Remember that much of a home's value is derived from the values of those surrounding it. Since the average residency in a house in seven years, consider the qualities that will be attractive to future buyers as well as those attractive to you.  

Although it can be difficult, try to remember that you will probadly want to sell this home someday. The more research you do today, the better your decision will look in the years to come.

Summary:

* Buying a home can mean building significant value through the years

* Think carefully about how much you can afford to spend and consider borrowing guidelines like those used by Fannie Mae.

* Pre-qualifying with your lender is a good way to determine how much house you can afford.

* You will need cash for a down payment and closing costs. Generally speaking, the higher the down payment, the lower the interest rate and monthly mortgage payment.

* In addition to your mortgage payments, you will also need to consider the other costs of home ownership

* Schools, taxes, services,crime rates, transportation, and zoning are important considerations when selecting a neighborhood

* Broker usually represent the seller, but they can be valuable sources of information for buyers as well. A broker that belongs to the Multiple Listing Service will be able to offer a wider variety of homes to choose from.

* Remember to consider resale value when buying your home.

Increasing Seller's Property Value

Understand first of all that there IS a difference between price and value. Price is the amount you are asking for the property. Value is buyer perceived, and this perception of value is influenced by many factors such as location, features, condition, comparison to other purchase option,etc. By attending to details that can have a postive impact on the value, sellers can significantly increase their chance of attracting qualified buyers willing to pay the asking price.

Some tips to acheive a postive impact on value are:

1.  Perceived size impacts value, even more so than actual square footage. Open floor plans make a room   feel bigger than larger spaces with smaller rooms. Showing property that is furniture free, or at reduced clutter, helps to make the space feel bigger.

2.  Vacancy increases sale-ability. Property is easier to show and easier to sell, and quicker to take possession of when it is vacant at the time it is offered for sale. Evidence of problems to take possession of the property--such as encroachments, or tenants who won't allow buyer tours--negatively impact value. Vacancy also helps the buyer walk through the property imagining ownership. Sellers should remove personal trinkets and family pictures as well as being conveniently absent during a buyer tour.

3.  Cosmetics are important.

     * Fresh paint will always add value than it costs.

     * Clean or new carpet/flooring adds more value than it costs.

     * Landscaping adds more value than it costs. At the very minimum, make the entrance area neat.

     * If you can, add some colorful flowers and new sod.

4.  Take care of the obvious! The spot on the ceiling from the roof leak takes thousands of dollars from the perceived value and the offer price.

5.  Condition affects value. Do a seller's home inspection to identify and fix the problem BEFORE closing. No point holding up your check a few extra days; plus a failed buyer's inspection could cost you the sale. Buyers will often bargain down your asking price to accomodate for property condition and repairs.

6. If you can, remodel/update the kitchen and master bedroom. These two areas have a big impact on home buying decisions. 

7. Strategic renovations impact value and your bottom line. Don't spend more money to renovate the place than you can recapture in value on the sale price.

Choosing The Best Lender

You're shopping for a mortgage and you've received four offers from four lenders. How do you choose? The first factor that most people consider is the interest rate and other costs, but that's only the beginning. You'll also want to think about the lenders themselves, not simply the numbers they're tossing your way.

Here are five steps to follow when determining which lender is right for you:

1. Compare fees as well as interest rates

Comparing loans based on their annual percentage rate (APR) is a good place to start, but it's not enough. In the case of the mortgage, to get a more accurate breakdown of costs, ask the various lenders for a formal "good faith estimate" of all the fees you'll incur with your loan--this is a standard form lenders must provide you that is more detailed than the overview you'll get with an offer. Also, ask about potential charges that may not appear on that list; such as prepayment penalties. You're just not comparing numbers here; determine how honest and upfront you feel the lender is being, and don't use a lender that you feel is evading your questions.

2. Consider your individual circumstances

Bigger lenders aren't necessarily better than the smaller ones, if you have unusual circumstances. For example, some lenders specialize in loans for people with poor credit, while others may have more options for those with small downpayments. If you have special borrowing needs, look for a lender with experience working with people in similar situations.

3. Look at the range of loan types available

There are more loan options available then ever before, so take advantage of all that choice. Look for a lender who offers a wide variety of loan types, from conventional fixed-rate and adjustable-rate to newer ones such as hybrid ARMs and option ARMs. Your lender should be able to match you with a mortgage that's right for your financial situation and risk tolerance.

4. Evaluate the level of customer service

When you're comparing offers, ask each lender about their policy regarding locking in their quoted rates and see whether there is a fee. Also, ask them to amend one of the terms (such as a payment cap) and see how willingly they agree. You're looking for flexibility and responsiveness. And also note how well they listen to you. If you ask for a 30-year fixed-rate mortgage, they ought to present that as an option, not push you towards something different, such as an interest-only loan. If you're not getting good service from a lender who is competing for your business, you're not likely to get it after you've agreed to work with them.

5. Check out the lender's reputation

Word of mouth is important in every business, including the loan market. If you've never worked with a particular lender, you'll want to find out the opinion of people who have.  

Getting Into Real Estate Investing

The recent collapes of U.S. home sales ripped a magnificent bloom off the rose of real-estate investing--yet buying rental properties remains one of the best ways for middle-income Americans to build wealth.

While the rich have a phalanx of investments advisors to help enrich them further everyday, middle-class Americans struggle to just set aside enough money in their 401(k)s to ensure their retirement. Real estate offers people of modest means an opportunity to build wealth in an investment they understand as homeowners and renters themselves.

Studies show residential real-estate investing returns an average 10 percent a year ? equal to the historic return for stocks. While it requires active management of the asset on the investor?s part vs. more passive stock investing, it can be awarding part-time endeavor with a long-term horizon.

Leveraged investing

The beauty of real-estate investing is the ability to leverage othe peoples money, namely, a mortgage lender and renters to make money for yourself.

Take, for example, a $200,000 home bought with 10 percent down and $8,000 in closing costs. If that property appreciates just 4 percent a year over 20 years, its owner turns a $28,000 investment into a $238,000 gain.

That scenario assumes the rental income covers annual mortgage, insurance, property-tax and maintenance costs, which it may not fully in the early years. But it also doesn't factor in the likely surplus annual income in future years when rising rents more than covers fixed-mortgage costs.

Tangible asset

Unlike stocks, whose value is a matter of perception and psychology, real estate is a tangible asset and not just a paper stock certificate (which shareholders don't even get in hand anymore!). 

The steadily rising cost of constructing new homes protects and ultimately enhances the value of existing properties.That underlying strength is even greater in metro areas with a limited supply of developable land within easy commuting distance to the center city, or well located properties in desirable coastal and resort communities.

Direct control

Unlike the crapshoot inherent in the stock market, real-estate investors have direct control over their investments. They set the rents, choose tenants and decide what improvements to make and when.

Rather than staking their fortunes with coporate executives who can fail to grow their companies for any number of competitive reasons, real-estate investors manage their own assets based on local market conditions.

Limited risk

Real estate values can do and fall as homeowners discovered in Texas in the 1980s, southern California in the early 1990s and various regional markets throughout the U.S. more recently.

Still, long-term investors seeking to build wealth for their retirement years face little downside risk with real estate. Americas rising population, shrinking household sizes and unfortunately high divorce rate are expected to fuel increasing demands for places to live for decades to come.

Diversification

Real-estate values generally don't rise and fall in tandem with stocks and sometimes are countercyclical, moving in the opposite directions. It's whats called in the investment world a non-correlated asset.

Diversifying investment holdings into rental properties provides a solid counterbalance to stock-laden 401(k) and IRA accounts. A modestly priced, three-bedroom rental home won't ever produce the explosive returns of a sensational stock like Google, but its owner can sleep easier knowing his or her future wealth isn't wholly dependent on the whims of the stock market.

Immediate returns

Self-anointed real estate gurus trumpet the fortunes to be made in buying and flipping distressed and foreclosed properties, a fasted-buck stragey that's especially difficult to pull off in a weak housing market where properties languish for sale for months on end.

Still, smart shoppers can reap immediate paper gains on may properties. At even given time and especially in todays market with mounting supplies of unsold homes individual home sellers forced to sell quickly due to job relocation, divorce, or unemployment may accept below-market prices to facilitate a sale.

Improvement potential

Just as with the purchase of a first home, it's wise when shopping for rental properties to buy the least expensive home in the nicest possible neighborhood. The benefit for the owner is threefold: The better the neighborhood, the less likely the number of rental properties available within it .Improvements made to modest homes in nicer areas will yield higher rents. And an owner could simply maintain the property during the rental period and improve it to sale to bring it up to the neighborhood standard and command a higher asking price.

The benefit of infaltion

As Americans has seen in the last year, rising mortgage rates hurt home sales and property values. Yet rising rates can have a positive impact on owners of investment properties.

The fewer the number of people buying homes, the greater the number of renters, which heightens the demands for rental properties. Since real-estate investment tends to slow as mortgage rates rise, that also means a tighter supply of rental homes in the near term. 

Interest rate hikes are the Federal Reserve Bank means to curtail inflation by making borrowing money more expensive. Inflation benefit real-estate investors who can raise rents accordingly. So while long-term appreciation suffers from mortgage-rate spikes, the immediate rental income picture improves.

Tax-deffered gains

Real-estate investing provides the same type of tax-deferred advantage of 401(k)s and IRAs. Owners aren't taxed on the appreciation in a homes value until the time of the sale and even then, they can forestall paying taxes by rolling their gains into another property.

Add to that another major tax advantage: The ability under present tax law for owners of rental properties to move into the home for a total of two years in any five year period and pay no tax on up to $500,000 in capital gains. That opportunity argues for buying rental properties you can comfortably inhabit yoursely for a spell.

Of course, real-estate investing is not without its downsides, which should all be heavily weighed:

Illiquid investments

Unlike stocks, which can be sold with the push of a computer keystroke, selling a home can take months and entails consirderable costs. If you are not prepared to tie up your money for years to come, best that you don't.

The difficulity in quickly selling a property, however can work in investors favor by discouraging them from running scared in a market downturn and dumping properties. The relative liquidity of stock investing is actually one of its greatest drawbacks, since countless investors sell in a panic, often at a loss, when an individual stock or overall market drops.

Cash-flow constraints

The idea situation is to buy properties whose rental income covers the monthly carrying cost, i.e. mortgage and  insurance payments, property taxes and maintenance costs. The run up in U.S. home values in recent years has made that scenario difficult to attain in many regional markets.

New investors today may find themselves in a negative cash-flow situation, meaning the rent doesn't cover their costs. Investors must be prepared financially to cover any such shortfall or risk losing the property if they can't foot the bill. A crushing problem now facing many recent investors saddled with properties they expected to flip for a fast profit.

Sporadic income and unforeseen costs

However good the cash-flow numbers may look going in, rental-property owners risk being squeezed on several unforeseeable fronts.

The first is tenants who fail to pay their rent in timely manner or not at all leaving it to the owner to cover their mortgage payments out-of-pocket until they collect the back rent  or evict a deadbeat. Neaxt, is tenant turnover, which can leave a property unrented for several months a year, during which time the ownet must also cover the nut. Lastly, there are major repairs that must be done--such as a new roof, furnace or septic systemthat can cost well into the thousands of dollars that must be ponied up on the spot.

Landlording

Finally, there's the angst of trying to do right by tenants who don't reciprocate in kind. Some may destroy the home you're improving for them without any intention of raising the rent. All catch on fast to when you're paying them.

Tenant selection is a skill rental-property owners need to master since it has as immeasurable influence on success. If you're suspicious by nature and have a short fuse, this is no business for you. If you can learn to recognize great tenants who'll carry your mortgae for years and care for your property as if it were their own, you my be wise to never raise their rent and reap tremendous long-term benefit.

The Good Faith Estimate By Lending Tree

Don't commit before seeing this list of costs associated with the loan

When you apply for a mortgage, the government requires your lender to give you a "Good Faith Estimate" (GFE) within three days of your application. This documents sets out all the costs associated with the mortgage, and most experts recommend against committing to a loan before seeing it.

A GFE is also helpful because it allows you to compare the real costs of competing mortgage offers. However, it can be tricky to understand--especially if different lenders don't list the same costs in the same way, or if the costs are incomplete or inaccurate. So, it pays to take a close look at your Good Faith Estimate when it arrives. Here are some of the things to look out for.

Interest rates and points

A GFE shows your interest rate and any discount points you can pay at closing. Make sure you understand that paying discount points will buy you a lower interest rate and lower payments, but it will take months before the savings make up for the fee.

Lender's fees

The long list includes the appraisal fee, credit report fee, application fee, mortgage broker's fee, and interest rate lock-in fee. if any. Watch for big differences between lenders - no fees should vary widely. Also, watch for extra fees applied only by certain lenders, or missing fees that may not have been included but are sure to appear later. Ask a lender about any fee that seems out of line.

Title and transfer charges

The closing or escrow fee, title search and title insurances fee, and government taxes are pretty much standard. However, you might get a better rate (called a reissue rate) on the title insurance if it has been less than five years since the previous owner took out a policy on the property. And you don't have to accept the lender's title insurance company or attorney; you may try to find one who offers a lower price. Some states set the price of title insurance.

Prepaid interest

One item paid in advance is the interest on the load for the period before the first payment date. Putting your closing date cost to the end of the month can minimize the charge.

Insurance

A GFE may specify a firgure for a home or hazard insurance but it may less expensive to arrange your own. Also, if you are being charged for mortgage insurance or flood insurance make sure you know why.

 Fees may rise

It's important to remember that a GFE is only an estimate. The figures quoted could rise by 10 percent to 15 percent, or even more, by closing day.

Fee lock-in

You can protect yourself from nasty surprises by asking your lender to quote you the exact final costs or to "lock in" its fees.

Truth in Lending Statement

Along with the Good Faith Estimate, a lender will also give you a Truth in Lending disclosure form. This gives you the annual percentage rate (APR) on your mortgage, which takes into account discount points, mortgage  insurance an other fees on top of the basic interesr rate.

The Truth in Lending form also lists the finance fees, the amount financed, the total amount you'll pay over the life of the loan, the total number and amount of your payments, and when they're due each month. And it contains other important details, such as whether the mortgage assumable if you sell the home and whether there is a pentaly for prepaying the mortgage; if the form says you "may have to pay a penalty, it means you probadly will.

Most important understand that the figures in the TIL can also change. If your interest rate or any of the fees go up by closing day, so will you APR and the overall cost of your loan  

101 Reasons to Consdier a Real Estate Agent

Appreciating the Numerous Steps an Agent Takes for Homeowners

With more real estate resources available on the Internet, it may seem as if buying and selling a home is an easy task. These 101 reasons will show you the extent of knowledge and experience that an agent provides to help you through a real estate transaction. This list reflects actions, procedures that a real estate agent may typically perform during a residential real estate transaction-and are all things that you could avoid doing yourself.

Typical Pre-Listing Activities

1. Researh Current Properties

2. Research Sales Activity from MLS and Public Records Database

3. Provide Average Days on Market Assessment

4. Reveiw Property Tax Roll

5. Prepare a Comparable Market Analysis (CMA)

6. Verify Ownership and Deed Type

7. Verify County Public Property Records

8. Perform Curb Appeal Assessment

9. Provide Public School Value

10. Provide a Listing Presentation

11. Analyze  Current Market Conditions

12. Present Credentials

13. Deliver CMA Results

14. Discuss Planning and Strategy

15. Explain Listing Contracts, Disclosure & Addendum

16. Screen calls from Buyers or Agents

17. Explain Homeowner Warranty

Selling the Property Activities

18. Reveiw the Details

19. Order Plat Map

20. Create Showing Instructions

21. Obtain Mortgage Loan Information

22. Review Homeowner Association Fees and Bylaws

23. Submit Homeowner Warranty Application

24. Add Homeowner Warranty in MLS

25. Reveiw Electricity Details

26. Arrange Inspections for City Sewer/Septic Tank Systems

27. Collect Natural Gas Information

28. Provide Security System Status

29. Determine Termite Bond Status

30. Analyze Lead-base Paint Status

31. Distribute Disclosure Packages

32. Prepare Property Amenities

33. Detail Inclusions & Conveyances with Sale

34. Compile Repairs Needed List

35. Send Seller Vacany Checklist

36. Install Lockbox

37. Make Copies of Leases for Rental Property

38. Verify Rents, Utilities, Water and Deposits for Rentals

39. Inform Tenants of Listing for Rentals

40. Install Yard Sign

41. Perform Interior Assessment

42. Perform Exterior Assessment

Advertising and Marketing a Listing

43. Enter a Profile Sheet into the MLS Listing Database

44. Provide Copies of MLS Agreement

45. Take Additional Photos for MLS and Marketing

46. Create and Advertise Property Listing

47. Coordinate Showing Times

48. Create and Mail Flyers

49. Compare MLS Listings

50. Develop Marketing Brochure

51. Notify the Network Referral Program

52. Create Special Feature Cards

53. Analyze Feedback Emails and Faxes

Handling Offers and Contracts

54. Receive Offer(s) to Purchase

55. Evaluate Net Sheet

56. Counsel and Mediate Offer(s)

57. Deliver Seller's Disclosure

58. Obtain Pre-qualification Letter

59. Negotiate Offers on the Seller's Behalf

60. Mediate Counteroffers or Amendments

61. Fax Contract Copies

62. Deliver "Offer to Purchase" Copies

63. Assist with Escrow Account

64. Distribute Under-Contract Showing Restrictions

65. Update MLS to "Sale Pending"

66. Reveiw Credit Report

67. Deliver Unrecorded Property Information

68. Order Well Flow Test Reports (if applicable)

69. Order Termite Inspection (if applicable)

70. Order Mold Inspection (if applicable)

71. Confirm Deposit and Buyer's Employment

72. Follow-Up with Loan Processing

73. Communicate with Lender

74. Confirm Approval of Loan

75. Remove Loan Contingency

Home Inspection and Home Appraisal Activities

76. Coordinate Buyer's Home Inspection

77. Reveiw Home Inspection Report

78. Interpret Loan Limits

79. Verify Home Inspection Clauses

80. Contractor Preparation

81. Confirm Repair Completion

82. Attend Appraiser Appointment

83. Provide Appraiser Information and Remove Contingecy

Closing Preparations and Actions

84. Ensure Contract is Sealed

85. Coordinate Closing Process

86. Coordinate Closing Formal Procedure

87. Assist with Title Issues

88. Perform Final Walk-Through

89. Verify Tax and Utility Preparations

90. Review and Distribute Final Closing Firgures

91. Request Closing Document Copies

92. Confirm Receipt of Title Insurance

93. Make Homeowners Warranty Available

94. Reveiw Closing Documents

95. Confirm and Assist with Final Deposist

96. Coordinate with Next Purchase

97. Ensure "No Surprises" Closing

98. Final MLS Update

99. Follow Up and Resolve Repairs

100. Documentation Follow Up

101. Hand The Owner The Keys

Don't bite off to much house by Liz Pulliam Weston

The classic formulas for martgage afforability could lead you to disaster. Here'e how to get a better handle on what you really can afford.

Thirty years ago, first time home buyers were often encouraged to stretch as far as they possibly could to buy a house. Back then, that advice made some sense.

Today, it can be a recipe for disaster.

A too-big house payment can, at the very least, leave you with very little money for other goals: retirement, vacations, college funds for kids. At worst, it can leave you vulnerable to foreclosure and bankruptcy.

What's more, you can't count on your real estate agent, a mortgage loan officer, your friends and family or an Internet calculator to know what you can afford. That's a decision you have to make yourself after reviewing your finances, your future obligations, your goals and your gut.

Yet many first time buyers are still being pushed into mortgages that are bigger than they can handle, based on old fashion advise.

Here's what changed in the 30 years (or more) since your parents bought their first house:

Inflation. Rapidly rising prices in the 1970s and early 1980s meant you could count on hefty annual raises. Today, you can't rely on double-digit income boosts to make your mortgage payments less of a burden each year.

Two income couples. A generation ago, single-income families were more common. If the breadwinner lost a job, the other spouse could go to work and save the house. With more two-income families needing both paychecks to make the mortgage payment, there's no one on the sidelines to take up the slack---unless you put the kids to work.

The leading industry. Thirty years ago, it was pretty tough to get a mortgage for more than you can afford. Today, it's fairly commonplace. More lenders have loosened their criteria, knowing that the vast majority of their borrowers will do whatever it takes to pay their mortgage--even if it means trashing the rest of their financial lives.

Retirement. A much bigger propotion of the workforce was covered by traditional, defined-benfit pensions 30 years ago--which means they didn't have to save massive amounts of money own their own to have a decent retirement. Today, the onus is typically on you to carve enough out of your budget to fund 401(k) and IRAs.

Lets get real

So how much should you spend on a house? The traditional way to calculate that is to add up all your income and make sure that you're housing expenses--mortgage payments, homeowners insurance and property tax--don't exceed a certain amount of that total. The traditional limit, still used by many lenders, is 28% of gross monthly income. Some financial advisers recommend capping your outlay at 25%; others suggest stretching to 33% or more.

These limits, by the way, apply only if you don't have a lot of other debt. Most lenders don't want more than 36% of your total income to go toward mortgage and other debt payments. If your total debt would push you over that figure, most lenders will reduce the size of the mortgage for which you qualify.

Here's how the varying limits translate. The firgures assume you earn $45,000 a year and that you would pay $480 in homeowners insurance and $2,000 in property taxes annually. (In reality, those figures would fluctuate with the value of the home you buy.) This also assumes a 30-year loan at 5.5% interest and a big enough down payment that you'll avoid private mortgage insurance, or PMI.

Ignore the Headlines

Famed money manager Peter Lynch is perhaps best known for his timeless wisdom that you can beat the pros by focusing on stocks of companies where you either work or shop or have some other edge. But a more relevant Lynchism today is this gem: Ignore the headlines.

That's no easy thing. How do you tune out all the chatter and ink on recession, housing, subprime woes, the credit crunch, rogue traders, insolvent bond insurers, $roo oil and nukes in Iran? It's enough to make you sit on your thumbs and wait before making any big moves. But what, exactly are you waiting for?

There has rarely been a moment in history when you couldn't scare yourself into doing nothing. And yet, as Lynch observed nearly  20 years ago, "in spite of all the great and minor calamities that have occured...all the thousands of reasons that the world might be coming to an end-owning stocks as continued to be twice as rewarding as owning bonds."

Atop reason not to but stocks, in Lynch's view, is if you don't already own a home-in which case, that should be your first investment, since an owner-occupied home is nearly always profitable. Through a spokesman, Lynch reaffirmed these views to me housing debacle and all.

Georgia Association of Realtors

When prices are falling, few people have the discipline to buy stock, a house, gold art or any other asset. But those who do pull the trigger excel in the long run. As John D. Rockefeller famously said,"The way to make money is to buy when blood is running in the streets." And the streets are stained crimson. Start with stocks. They have been pummeled this year. GPD braked sharply last quarter, and there has been plenty of panic about a recession. The Federal Reserve is slashing short-term interest rates, at the fastest clip in decades. But if you stick to your steady, diversified plan while everyone else is retreating, you will be happy years from now. For one thing, Fed rate cuts always lift the economy eventally, and the stock market typically starts responding just as headlines get gloomiest. Sure, the market could fall again before recovering. But the recession may be half over already-or we may avoid one altogether. You just never know.

As for housing, certainly some skeptism is in order. Formerly sizzling markets in Flordia, Neveda, Arizona and California probadly haven't seen the worst headlines just yet, though they may be close.

And "jumbo" mortgages, those more than $417,000, are likley to remain artifically high for a few more months while banks work through their credit issues. But let's say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It's time to get serious-before an inevitable rise in interest rates wipes out your advantage. "The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher," says Jim Svinth, cheif economist at mortgage firm Lending Tree. So anything you gain by a further drop in prices might be offset by rising financing costs.

Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed rate mortgage at today's rate of 5.5%.  Monthly principal and interest come to $994.31. Let's say that 12 months from now the same house goes for 10% less or $197,010. But by then the recession is history and the Fed is jacking up rates to stem the inflation. If mortgage costs rise just half a point, to 6%, your monthly payments would be $994.94  and you'd saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you'd rather not be.

It's more complicated if you must sell before you can buy. But that log jam won't persist forever-and if it appears you'll be trapped for a few years, try to refinance at today's lower rates. Risks always seem most acute when the headlines give you ulcers. But that's exactly when you should think long term and get off your thumbs.