Real Estate

How Will Mortgage Help You To Fulfill Your American Dream?

Author: Peter Gomes

The term American Dream is often associated with home ownership. In fact, to increase the number of people owning a shelter of their own, in 2003, President George W. Bush introduced the American Dream Down Payment Act, a federal program in which the US Government offered grants to mortgage borrowers so that they could afford the down payment and the closing costs. It was a big question: How will mortgage help you to fulfill your American Dream? To fulfill the dream, the below given steps can be followed:

Assess your repayment capacity:

Taking out a mortgage is a big financial responsibility and that is why you should be prepared to fulfill this responsibility till the time you don’t pay off your mortgage fully. There are various factors that will determine your repayment capacity. It is very important to assess your financial condition prior to taking out a mortgage. This is because unless you are able to make regular payments to your lender, you will not be able to enjoy your new home. Sooner or later you will lose the home in foreclosure thereby shattering your American Dream.

You cannot let this happen to you. So, you need to find out how much financial responsibility you can actually take on. Some of the factors that will affect your repayment capacity include the following –

• Income
• Rate of interest (FRM or ARM)
• Term of your mortgage
• Debt-to-income ratio
• Credit score
• Principal amount etc

There is another very important factor that will affect your affordability. And that is the mortgage APR or the Annual Percentage Rate. Although it won’t affect your monthly mortgage payments, it will affect the total cost of the loan. So, you have to shop around for the lender who gives you a favorable rate.

Use mortgage calculators:

There are many mortgage calculators you can opt for if you want to find how each of the above factors will affect your home affordability.

Mortgage lending has become stringent:

It is a well known fact that subprime lending is one of the factors that led to the subprime mortgage crisis. Following recession, mortgage lenders have become stringent and selective in their lending activities. So, you need to have a good credit score that will reflect your financial habits and can make you eligible for a mortgage on favorable terms.

If you are looking for affordable mortgage rates, you can shop online or visit a brick and mortar office of a mortgage lender. Remember online mortgage lenders give you better rates. This is because the operating costs are much lower for online mortgage lenders. As such they can allow you to enjoy better rates.

Once you have found out your repayment capacity, you can look for the house that is within your budget. However, make sure you remain current with your mortgage payments so that you don’t have to lose your home in foreclosure.

Events Leading to the Real Estate Market Crash

While many predicted the current collapse of the real estate market, others were taken by surprise when the market that had left plenty of opportunity in the last few years for profit began to tumble.

Certainly, one of the leading events that eventually resulted in the crash of the real estate market was the crumble of the subprime market. As a result an unfathomable amount of companies suddenly were suddenly facing foreclosure. Even those companies that were not forced to declare foreclosure found they had suddenly lost billions of dollars.

The news has been filled with reports regarding the subprime market crash; however, while it has affected most property owners to some degree there remain many of remain uncertain exactly how this came to be.

Just a few years ago subprime mortgages were a great advantage to many property buyers. Buyers who were interested in taking advantage of the hot real estate market but who lacked good credit histories were able to take advantage of subprime mortgages in order to obtain loans. The underwriting guidelines for these loans were generally more lax than traditional mortgages. This allowed even buyers with poor credit to obtain a loan. In exchange for making a loan to buyer with less than stellar credit, lenders were able to charge a higher rate of interest. In addition, so the theory went, lenders relied on the belief that they would be able to foreclose on property and sell it for a profit in the event the borrower defaulted on the loan.

The money which funded these loans came from a variety of sources. Low interest rates made it possible in many instances for lenders to actually borrow money and then loan out those funds to home buyers. In other cases, the money was obtained from more complicated sources. As you may or may not be aware, it is not uncommon for governments to borrow money from central banks. This practice is particularly common in the United States.

At the time the housing market was stable. In fact, the housing market was experiencing a high that had not been seen in quite some time. Beyond the fact that many homebuyers were taking on massive amounts of debt there also existed another problem. Due to the health of the real estate market at the time, in many cases there were expectations regarding future growth that in hindsight now appear to have been unrealistic.

The last two years of the real estate boom occurred in 2005 and 2006. During that time period lenders did not hesitate in the least to lend money to borrowers regardless of their credit profile. These loans represented a tremendous money-making opportunity for lenders. Problems really began to occur; however, when interest rates began to rise from their previous lows. Historically, rising interest rates have always had a negative effect on the real estate market. When rates are low they help to produce demand; however, when they are high they ultimately cause prices to fall. Until mid-2006 home builders could not build new homes fast enough to meet the growing demand. During mid-year; however, the demand began to slow. It was also about this time that the rate of defaults on loans began to increase.

Before long many mortgage lenders began to find it difficult to obtain money from their previous sources of funding. As a result, would-be buyers discovered that loans were no longer as easy to obtain due to the fact that money was no longer as widely available. Additionally, investors suddenly became wary of taking on risk and underwriting guidelines grew stricter. Homeowners who had taken out loans with adjustable rates began to find it difficult to meet their mortgage payments as interest rates continued to rise. More stringent underwriting guidelines meant they were unable to refinance to fixed rate mortgages in some cases. As a result, defaults continued to rise; fueling the massive rash of foreclosures.

Buying Your Home With Your Budget

Even though it’s not easy for everyone to buy a home, it is in fact easier than ever to get a home these days with most lending agencies and banks being more liberal than ever with providing home loans and mortgages. Even if you don’t have a lot of capital or a lot of money to put down, you can still get the home of your dreams at a very affordable price.

A lot of us think that buying a home is a tough process, needing a large down payment, although this isn’t always the case. Buying a home largely depends on your budget. If you put a down payment on your home purchase, it will go towards your overall purchase. The more money you put down on a home when you purchase, the lower your monthly payments will be.

Those of us who don’t own a home live in rental houses and apartments. This can be a worthwhile solution, although your still paying money towards your housing that you could instead be putting towards a home of your own. Owning a home is a dream for many of us, especially when it comes to that dream home that we all hope to own one day. Apartments and homes are great to rent – although most these days will cost you just as much as a mortgage payment – which doesn’t make any sense at all.

Instead, you can easily convert your rental payments into monthly installments towards your own home. All across the United States, you can find of lot of banks and lenders that offer easy to get loans for purchasing your own home or real estate property at low interest rates. With a lot interest rate, you can get the home of your dreams and enjoy low monthly payments.

Keep in mind, you need to choose a loan plan that’s best for you. You can go through bank, through a lender, or use a service online. There are many different ways that you can go, although real estate agents seem to be the most common now days. Good real estate agents will be more than willing to help you get a great deal on the home, at prices that are right for you. Anytime you buy a house, you should always plan ahead, get yourself a real estate agent, and then pursue your dream home.

If you plan your budget and take things one step at a time, you’ll be closer than you think to the home of your dreams. If you choose to keep renting and pay money toward something you don’t own – the home of your dreams will continue to slip away. Take action now and stop renting – find the home of your dreams and put your money towards owning it instead.

Choosing Your Real Estate Appraiser

If you have been thinking about purchasing a real estate property for personal use or as an investment, you’ll need to hire the services of a real estate investor. If you play to finance your home through a bank or other lender, you’ll more than likely need to get the property appraised first. Banks and most lenders want to know the value of the home for your protection, as well as make sure that the home they are financing is worth the total amount that you take on the loan.

In most cases, the appraisal indicates that the home does indeed meet or exceed the asking price. In some cases however, the appraisal will come back saying that the home is worth less than the selling price. If this is the case, the buyer normally has to either drop the deal or try to negotiate with the seller to get a price that meets the appraisal.

For those very reasons, a real estate appraiser is very important. When you are dealing with a home, one appraisal can make a deal or break it. Even though you may not be financing your purchase through a lender or the bank, you should still make an effort to get the home appraised and find out the true value. You should also make a point to find the best appraiser that you can afford. If you hire an appraiser who isn’t that experienced, you’ll pay for it later when you discover that the property isn’t worth what you paid for it.

A real estate appraiser will go through the home performing an evaluation, and then provide you with a written evaluation after he has gathered all necessary information. Appraisers will also taken into consideration the replacement costs as well. Also, they will have to very land descriptions as well. There is a lot of work involved with appraisals, which is why it’s so very important that each step of the process is performed correctly by a qualified real estate appraiser.

If you have a real estate agent, he or she will more than likely be able to make a recommendation. Keep in mind that this doesn’t mean the recommendation is the best; it’s just someone who your agent works with. To ensure that you get the right appraisal on your home you’ll need to find yourself an appraiser who is capable of completing the job.

When you look for your real estate appraiser, you should look for someone who comes highly recommended. You can ask family and friends for their opinions, or search local papers, even the Internet. If you take your time and search for the best real estate appraiser that you can find – you’ll normally get an appraisal that is right on target.

Falling Home Prices Have Little Effect on Property Taxes

Many homeowners have been taken by surprise when the value of their home suddenly seemed to hit freefall. It would certainly seem as though there should be one advantage to dropping home prices. Many homeowners assumed that when the value of their homes fell, their property taxes would as well. This has not been the case in many areas.

In some cases; homeowners have been shocked to discover that not only have their property tax bills not decreased, they have actually increased in some cases. This has been quite a surprise for homeowners as they struggle to understand why they are paying more in taxes on homes that are not worth as much as they were just a year ago.

The reason for this relates to the complex manner in which property taxes are calculated in many areas. One of the biggest problems, especially in Nevada, is the fact that property tax increases were capped during the housing boom. During this time home values skyrocketed rapidly. Today, the values of homes in these same areas are falling; however, the decreases have not actually been enough to compensate for the increases of just a few years ago. Consequently, the values of homes would need to decrease sharply over a short period of time in order for property tax bills to decrease. While declining property values have certainly been a problem, they simply have not decreased enough in many areas to provide any relief from property tax bills.

As the rate of defaulted loans and foreclosures continue to soar in many locations, numerous counties have discovered that the rate of unpaid properties taxes is also on the rise. The metro Detroit area, in particular, is experiencing a record high rate of unpaid property taxes. Detroit is currently considered to be one of the worst housing markets in the United States based on the decline of housing prices and increase of foreclosures. The lack of jobs and weak economy in the greater Detroit area are considered to be the primary factors contributing to the housing crash in the area.

Even if property owners are paying their monthly mortgage payments on time they could still be at risk for losing their properties through foreclosure if they fail to pay their property taxes for three years in a row. In such situations, the county would then take control of the home and auction it off to pay the balance of taxes owed. Counties in the Detroit area are currently struggling to recoup hundreds of millions of dollars in unpaid property taxes. The issue has had significant repercussions on counties in the greater Detroit area.

Property owners who find they are behind on the property taxes can take some steps to stave off foreclosure. The first step is to begin making payments on their taxes. Many homeowners make the mistake of thinking they are doomed if they cannot pay off all of the taxes owed and thus pay nothing at all. Keep in mind that making any payment, even if you cannot pay all of the taxes, is better than paying nothing at all. If you are not able to pay all of the taxes; at least try to pay off your oldest taxes first. Remember that taxes which remain unpaid for three years consecutively places you at risk for foreclosure. Pay off the oldest taxes first to combat this risk.

You might also check with your county to determine whether you may be eligible for an extension for property taxes which are unpaid. In some situations, the county treasurer may be able to grant you an exemption for your taxes if you are able to demonstrate extreme hardship. It is best to do this as early as possible; however, as there are commonly deadlines for the exemption applications.

In addition, check with your mortgage company or bank to find out whether they offer any type of program or loan that can provide you with the money needed to cover your taxes. It is never in the best interest of the bank to have the county take over the property, so they are often willing to work with the homeowner to avoid having this happen. Keep in mind; however, that when you do this will you will be taking on an increased debt burden.

Home Building Decline With Financial Crisis

The financial crisis is affecting everyone. People are losing their jobs and some have to foreclose their homes. As a result, there is a decline in home building making some doubt that now is not the right time to build a home.

But what if there was no financial crisis? What if you can borrow money from the bank? What if you have the cash on hand? If there were no problems, then yes why not build your home.

First, get in touch with the local builders that have constructed houses similar to the size, quality and features that you want. By talking to them, you get a straight answer as to how much it is going to cost for the entire project plus what materials they will use.

The rooms which will be the most expensive to make will be the bathroom and kitchen. The number of windows and their size is another factor as well as the vaulted ceilings and high roof pitches.

You will also have to include inflation because building a home increase from 3% to 6% annually. With this information, only look at homes that were built within the last 6 months, to get an idea of costs.

Don’t forget to put a 10% additional allowance to your budget when you make your estimate because plans change and in most cases, you and you contract will encounter unforeseen circumstances. Naturally you have to deal with the situation otherwise there will be delays when everything will be finished.

The cost per square foot is higher for a single story home than a two story one. Why? Because the cost of items such as roof and foundation is spread over the total cost. The same goes for plumbing and ventilation.

Another thing that could reduce cost is the shape of the home. Houses that are shaped like a rectangle, square or dome shaped are more affordable to build since there are not that many angles or corners which increases the amount of labor and the materials that will be needed.

It will be much easier to select the final blueprints, which is the basis of the project once you have estimated the construction expenses.

As much as possible, work with even numbers because this reduces wasted materials. The ideal home to make should be not less than 32 feet deep otherwise your roof trusses will have to be custom made which will cost more.

If you had this property for a long time, then chances are the neighborhood around you is already well developed. You don’t have to haul a lot of dirt, do grading, clear trees or blast through large rocks if your property happens to be somewhat secluded.

If you construct a house when there is a decline in home building due to the financial crisis, you may find there are more builders to work with. Just check all your costs before going ahead so you can plan for any unforeseen changes.

Mississauga Real Estate Offers Global Appeal

If you’ve ever considered moving to Mississauga or buying real estate in Mississauga you can be confident in Mississauga’s global appeal.

Mississauga real estate is a particular attraction being that Mississauga is in fact Canada’s sixth largest city and one of Canada’s fastest growing hubs. Formed in 1974, Mississauga’s current population is approximately 695,000 residents and offers diversity in culture from around the world.

With 50 of Canada’s Fortune 500 offices located in Mississauga, it’s a popular choice for commercial and business activity. In total there are approximately 18,000 businesses in the city, thus owning real estate in Mississauga can provide an opportunity for many to work close to home.

As a globally competitive city, Serving national and international visitors, the main International Airport is located in Mississauga. Toronto and it’s surrounding communities all link to Mississauga via the vast network of public transit, including buses, go trains and subways.

Rated as one of Canada’s safest cities, is yet another reason Mississauga remains a popular place to live. This fact combined with a city rich in the arts, parks, culture, recreation, sports and entertainment draws visitors from around the world.

Mississauga’s quaint historic villages, it’s bustling waterfront and it’s art and theatre are enjoyed by visitors and residents alike. For the avid shopper, there’s “Square One”, Ontario’s largest shopping mall and for those seeking solitude a visit to the magnificent Rhododendron Gardens is a must. Visitors or those interested in Mississauga Real Estate will find plenty to be impressed with.

Not just a well planned community, Mississauga is also a forward thinking city. The eventual shift of demographics to an aging population has Mississauga preparing itself to accommodate this growth. To help Mississauga prepare, the community services department has implemented an “Older Adult Plan”. Enabling people to age actively in the City of Mississauga is an integral part of this plan. Facilities and services are being planned for on the basis of assisting an eventual older adult population.

Whether to visit, or to live, Mississauga remains a popular choice.

Mississauga Real Estate and GTA Market Statistics

If you’ve been watching the news and following the pundits and commentary, essentially the message has been that real estate prices have declined in the 905 region, including Mississauga of course, by about 8% from October of 2007. Keeping factors in perspective, there are bright spots. Mississauga and the surrounding 905 area have had prices decline by 8%, however they’re still 1% higher than October of 2006. The average price of a home in October 2006 was $332,822, and October 2008 is $336,049. As opposed to any kind of market downward trend, many analysts believe we are simply witnessing a market adjustment.

Mississauga Real Estate statistics summarized in the totals of all sales in the 905 region, also known to most as the GTA (Greater Toronto Area), indicate sales figures from January 1, 2008 to Mid November 2008 to be 70,474. During that same period for 2007 sales totaled 84,994.

Real Estate in Mississauga showed a total of 1791 new residential listings added to the local multiple listing service in the month of October 2008 increasing by 16% over October 2007. The total number of residential properties listed for sale in Mississauga at the end of October 2008 was 3,101. Real estate buyers will have a larger inventory to choose from along with lower pricing. Purchasers will have a larger inventory of real estate to choose from.

In the first two weeks of November 2008 the average price in the 905 region was $358,130 from $358,610 recorded a year ago. During the first half of November 2006 the average price was recorded at $336,576.

In summation, a study by the International Monetary Fund based upon housing markets in seventeen countries determined that Canada was only one of two nations where house prices are supported by the economy. Canada is positioned very well to ride the economic downturn due to many factors, including more stringent regulation within the banking system. Canadian regulations have assisted in averting the kind of massive upheaval being experienced in the US real estate market.

The above real estate statistics can be found discussed in greater detail at either the Toronto Real Estate Board or The Canadian Real Estate Association.

Do Your Due Diligence When Buying Property in Costa Rica

As with any major investment, when buying real estate in Costa Rica, it is important to do your due diligence.

Focus on getting facts and information about all the steps of your transaction. This means you need to understand what exactly you are buying, what the purchase includes and what the limitations (if any) are. In many areas, there are limits to building heights, depth of setbacks, and other details which you need to be aware of before purchasing there.

While the Internet has made real estate investing and land purchasing easier, it is wise to approach any large transactions from a perspective of information gathering and fact-finding. Do not try to buy land or homes without visiting them in person.

It can be tempting to try and purchase a beautiful piece of land from the Internet pictures, but you can make a grave mistake if you end up paying for land, or a home, or some property which is not what you actually take ownership of at the completion of the sale.

Some areas in Costa Rica can not be built upon, but since there are few regulations on who can sell land; the unwary buyer may end up purchasing land which can never be built on. This is why doing your due diligence is vitally important when investing in Costa Rica.

You must work with seasoned professionals who know the details of investing in this country. Select a company or individual who has experience in this area, who has successfully sold to other happy customers, and, who, ideally, has purchased property in the country him or herself. Keep looking until you find someone with whom you work well, and don’t hesitate to get expert advice and ask a lot of questions.

The more you know, the better prepared you will be to make a good decision.

Costa Rica Property: What To Know Before You Buy

Real estate investors will often say there are only three things that matter in real estate, they are location, location and location. We all understand that a ten bedroom, eight bath home with cathedral ceilings and a swimming pool that is sitting next to a garbage dump has no value.

On the other hand a little one bedroom, one bath shack sitting in the middle of downtown Boston might be worth a small fortune. So you can see that the location is of the utmost importance when you are considering a piece of real estate to invest in.

The same thought process holds true when you are considering investing in Costa Rica. Costa Rica property has been returning at very high levels, since investment first began there.

Like in any other situation, you should ask yourself, “what makes the location of a piece of real estate a must have? The answer is fairly simply really. The value is based on nothing more than the desirability factor. Desirability is in the eye of the beholder.

Property that is totally undesirable to one person might be just the next person’s dream-come-true. And this phenomenon is true for real estate investors and for home buyers and for renters. It is true for all aspects of the real estate market.

The main point for any real estate investor to consider first is what their strategy will be for making money from the investment. Buying is only part of the picture and determining a good location from a bad one relies on how you plan to profit.

For example: If you are planning to purchase a property with the intention of just waiting for the market to go up, prime real estate is probably the very best choice. Locations that are near entertainment centers or newly developing areas would be best because the likelihood is pretty good that that the property will increase in value with little other effort.

On the other hand, if you are planning to invest in a property with the intention of renting it and making a monthly income from it, you might be better off to look into urban properties. Urban properties wouldnt always be considered prime real estate but they are prime rental properties. What these properties may lack in space or amenities, they make up for by being very close to the action.

And we can’t forget the real estate investors who are handy with their hands. These kinds of investors enjoy renovating, and will buy properties below market value. They can make repairs and renovations to rundown properties themselves, sell it for a great deal more than their purchase price and make a very nice profit. Working neighborhoods with mid-priced homes make up the best location for these kinds of investors.

There are many factors that real estate investors consider when they are deciding which property to invest in. Knowing what kind of investor you are, and what your profit strategy is for the investment will help you decide where and how to find the perfect property in the perfect Costa Rican location.