Financing - Karen's Perspective

Guest Post

Eddie Kearns wrote to ask if he could put this guest post on Karen’s Perspective. I appreciate his initiative!

As a disclaimer, Eddie has never handled a short sale for me. Nevertheless, here is what he has to say. Please comment to let me know what you think about the article.

Short sale questions addressed

There are a lot of real estate professionals who are unsure about how to respond to homeowners and their concerns about short sales. Understandably, many homeowners are nervous about the idea of a short sale. The thought of going through one can be scary and unpleasant to go through with the amount of paperwork and disclosure involved. Here are a few responses you can use the next time a client expresses these concerns:

1. They want to review their options. Tell them you, as their agent (depending on your state and how involved you want to be) will help them check out other alternatives. In many cases the homeowner already knows they will not qualify for a loan modification because of unemployment, sickness or other unresolved hardship, and income levels that don’t meet the minimum requirements for a loan mod. In some cases their credit rating has already been too damaged to qualify. If these factors have not been reviewed before you sit down with the homeowner, do your client a favor, and make certain there are not other options. They’ll remember the kindness and come back to you should those other options fall through. It will also help boost your reputation as an honest, ethical agent who is looking to help people, not just profit off of them.

02 / 23 / 2010
2 Comments

How Many Ways can Lenders Prevent a Closing?

It’s a rhetorical question. I do not want to know. I am certain that the answer is a number way larger than I care to think about.

However, I did just find one more answer to add to my list of personal experiences.

We have a buyer for a flip who is very qualified; high credit scores, plenty to put down, good job.

Well, the closing took longer than promised (no real surprise today) and our buyer had to be out of the rental he was in. As we were scheduled to close any day (we had passed the first date because of “lender error”) we let the buyer move in and he is paying us a daily amount until we close.

The property itself also passed qualification with flying colors; passed inspection, appraisal came in high (we always sell below market value to keep our properties moving).

So here’s the rub, the warning and the frustration.

02 / 15 / 2010
6 Comments

Mortgage Resets – Here comes the next wave

I know everyone really wants to believe the housing market is going to get better in 2010. I know we’ve all had enough of the gloom and doom, but it appears we have to brace ourselves for more of the same, at best.

We’re so used to turning the channel when we get bored with what’s on. We expect to drive up to the window and have our food ready. We swallow a pill in anticipation of instant headache relief.

But, from the looks of this graph, we’re going to be in this one for a while. It’s better to know ahead of time to be prepared. Stop spending. Save what you can, when you can. Scale back, downsize, reuse, recycle.

The real estate market will come back strong. It always does. We’ll just have to be patient a while longer.

So, what’s the good news? There’s never been a better time to invest in real estate.

If you live in the Triad area of North Carolina, we’d love to help you with your investing. Check out our Triad Master Mind. It’s a great group of local investors and we’re all working together to help each other profit through real estate.

Don’t wait to invest, invest and wait! Huge returns will be there to reap in your future.

Happy investing!

02 / 05 / 2010
2 Comments

Mortgage Escrow – What is it? How does it work?

Investopedia defines escrow as: A financial instrument held by a third party on behalf of the other two parties in a transaction. The funds are held by the escrow service until it receives the appropriate written or oral instructions or until obligations have been fulfilled.

In the case of a home purchase, the lender or mortgage holder, takes funds from the buyer to pay taxes and insurance. The funds are “escrowed” until the time they are due when the lender sends payments from the escrow account to the appropriate tax department and/or insurance provider.

Lenders usually require that borrowers pay money monthly into “escrow” so that the lender can pay the real estate tax and property insurance as due.

If you decide to “escrow” your taxes and insurance, at closing you will see on the HUD1 statement that monies have been taken from you to cover the next 12 month’s worth of property insurance and property taxes. That is so the escrow company will have enough money set aside by you to cover the first payment you need to make for your taxes and insurance on the property you are purchasing.

01 / 25 / 2010
No Comments

What Does It Mean to You, the Buyer, that You Have to Go “Full Doc”

Following is another Guest Post. This one was written by Lisa Delzompo. Lisa sells real estate in Temecula, CA. I appreciate her allowing me to re-post her article here.

What Does It Mean to You, the Buyer, that You Have to Go “Full Doc”

Over the past year, lending guidelines have tightened so much that, if you’re paying attention at all you know, buyers have to qualify “full doc” for loans. That means, full documentation of the buyer’s income, debts, and assets.

It is to the point that I provide my clients an overview letter, explaining the buying process in detail, including the fact that you’re going to be asked for information up front, during, and at the end of the loan process.

That sounds straightforward, but let’s take a look at what that means. First, keep in mind that if you provide an item of information, it needs to be Legible. I capitalize the word to point to its importance. The item you provide will be faxed or scanned another time after you send it to your loan officer; the people receiving that last copy are the underwriters, the ones whose job it is to sign off on every item of the checklist for your loan, saying you fulfilled that condition. Their job is on the line; they don’t know you from anyone; they don’t trust you; and they don’t distrust you. It simply is their job on the line to make sure that the loan they approve contained each item required on their checklist. If an item is blurry enough that they can’t read enough of the important details there, they will not sign off on that condition. If you have provided the same copy several times, and they are still saying they cannot read it, then you should go get a new, clean copy and send it in, asap. If you take several days to provide items you’ve been asked for, the process will take that much longer. In this age of internet and fax, it is common for clients to be able to provide items within minutes of being asked for them.

Let’s get to more details: