best places to invest in real estate

9 Proven Tips for Securing Investment Property Loans

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Investment properties are a hot ticket for people who are looking to make safe investments and get tremendous returns.

Don’t believe us?

More than 5.6 million new homes are going to change hands in 2019. That’s the most new home buys of any year in over a decade.

There are more renters today than at any other point in the last half-century. That means if you’re buying to rent, you have no shortage of competitive tenants to fill your property with.

In today’s market, the problem isn’t how you’re going to make money from your real estate investments, the problem is how you can secure investment property loans so you can purchase those investments.

Therein lies the focus of this article.

No matter if you’re looking at applying for mortgage loans, fix and flip loans, or the like, here are 9 proven tips to raise your odds of getting approved for financing.

1. Save Up a Big Down Payment

The more money you put down on an investment property, the less money you’ll need to ask a lender to loan you. That means that you can vastly improve your odds of securing investment property loans by saving a little bit of money before seeking them out.

You’ll want to have at least 5% to put down on your home or 3.5% if you qualify for an FHA loan. Still, 3.5-5% of a home’s purchase price isn’t an attractive down payment to most lenders.

If you can come up with 20% you can avoid PMI and get funded with confidence.

2. Maintain Awesome Credit

Your credit score is one of the first things investment property loans will look at when deducing your eligibility.

Do you know what your credit score is? If not, you can leverage free services like Mint or Credit Karma to look yours up. You can also request a free credit report from major credit bureaus.

Learn more about requesting your credit report on the Federal Trade Commission website.

3. Take Care of Your Debts

If your income to debt ratio is bad, you’re going to have a lot of trouble getting investment property loans. To aid that ratio, all you have to do is start paying down your existing debt.

Remember, no lender wants to have to compete with other lenders when it comes to who you’re going to pay back first. The fewer people you’re indebted to, the more likely you’ll be able to secure the loan products you’re looking for.

4. Think Outside of the Big Bank Box

When people think about property investment loans, they think about walking into Wells Fargo and Bank of America. While you can certainly get loans from big banks, limiting yourself to them can reduce your chances of getting the loan product you’re looking for.

Check online to find online lenders who may be willing to fund your real estate investment. There are many small and large loan providers who operate strictly online and fund investments every day!

Just be wary of predatory terms and conditions.

5. Ask About Owner Financing

Given that banks have gotten more prudent about when to and when not to award loans, owner financing has become more popular. With owner financing, the person who is selling the home finances it directly to a buyer.

That means sellers get to collect any interest from the loan but they also retain liability if you were to default on payments.

Owner financing agreements are what you and a seller make of them so don’t be afraid to strike up a conversation and see what you can negotiate.

6. See if Credit Cards can Help

When conventional investment property loans fail, some turn to credit cards to help them bridge the gap in their funding needs. Some personal or even business credit cards offer high limits which can give you the extra 30K+ that you need to close a real estate deal.

Credit cards typically carry high-interest rates so be conscious of what you’ll owe on your card and the implications of that debt.

7. Opt for Peer-to-Peer Financing

There are online investment pools available where people like you can pitch real estate opportunities and get multiple investors to pool their resources in order to purchase a property.

Examples of these sites include Prosoper.com and Lendingclub.com.

Check out both of those sites to see if either feels like a good fit you and your investment ambitions.

8. Focus on Distressed Sales

Are you having trouble securing the financing you need to purchase a more expensive investment opportunity? If you are, consider looking at foreclosure or pre-foreclosure homes.

These properties are typically open to negotiation as banks are trying to get them off of their books as quickly as possible.

If you find the right distressed property, you could nab it at a low price which means easier financing and more return on your investment.

9. Try a 203K Loan

203K loans make for decent investment property loans for a few reasons. First, they’re backed by the FHA. Second, they include not only the amount of money you need to buy a home, but money to renovate it.

That makes it a favorite amongst fix and flippers.

Note that 203K loans come with a bevy of conditions. Some of those conditions require you to hold your property for a certain amount of time and reside in your property while you own it.

Be sure that conditions fit your investment strategy prior to funding your purchase with a 203K loan.

Tips for Securing Investment Property Loans – Wrap Up

There you have it! 9 proven tips that can help you secure investment property loans.

If you’re interested in leveraging short sale homes to bolster your investment portfolio, look no further than our content on Short Sale Blog to get the insight you need!

From information on identifying investment opportunities to funding your ambitions, our team of experts have the answers to all of your biggest questions!

stop foreclosure

A Strategic Guide on How to Stop Foreclosure

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On average, one out of every 200 homes faces foreclosure. And every three months, 250,000 new families enter into the foreclosure process.

Don’t become a part of the statistic. A foreclosure isn’t only the loss of your home. It also affects your financial future. If you’re going through a foreclosure it can seem like you have no options, but luckily that’s not always the case.

Read below to discover eight strategies to stop foreclosure.

Talk With Your Lender

Talking with your lender or bank is the first step to stop foreclosure.

Most people think their lender doesn’t care if you lose your house or not. But this isn’t the truth. On average, lenders lose around $50,000 on each foreclosure. They are willing to work with you, but you need to start the communication.

Reach out and let them know you are struggling to make your monthly payments. Together, you can come up with a viable payment plan to get you back on track with your mortgage payments.

Try A Short Sale

A short sale is an often overlooked solution to stop foreclosure on your home.

Is your home worth less than you owe on your mortgage? A short sale allows you to sell your home at an amount below the mortgage balance. All you need is a qualified offer from a buyer.

To qualify for a short sale, you must meet the following requirements:

  • Unable to sell your home at a price that covers your remaining mortgage balance.
  • Your mortgage is near or at the default stage.
  • Unable to refinance your existing mortgage.
  • Submit a letter of hardship explaining why you can’t make mortgage payments.
  • You have no assets that could help with your situation, such as other real estates.

When your short sale is complete, your lender forgives the remaining mortgage balance.

Look For Refinance Options

Look at refinancing your current loan if you are facing foreclosure.

By refinancing, you will replace your current mortgage with a new mortgage. The new mortgage will come with a new lower interest rate. This could lead to a lower monthly payment.

To qualify for refinancing, lenders will look at the following:

  • A good credit score.
  • Equity in your home.
  • A good debt to income ratio. You should aim for your mortgage payment to be less than 28 percent of your income.

Refinancing works best if you look for options as soon as you have trouble making payments. A lender will be less likely to offer a new mortgage if they see a long history of missed payments.

Enter A Forbearance Agreement

A forbearance agreement is a temporary arrangement to delay foreclosure.

These are often granted if you are experiencing short-term financial difficulty. Some things that could qualify for a forbearance agreement include:

  • Sudden loss of a job.
  • A temporary illness that made it difficult to work.
  • Recovering from an injury.

The granting of a forbearance agreement and its terms depend on your lender. Often, the agreement will reduce or suspend your mortgage payments. You and your lender will agree upon a set amount of time for the reduction or suspension.

During this time, the lender agrees not to start the foreclosure process. At the end of the agreement, you return to paying your full mortgage payments. You are also responsible for paying any missed payments, interest, or taxes.

Bridge Your Income Gap

If you find yourself facing foreclosure, it’s time to increase your income. Bridging your income gap is challenging, but it helps you afford monthly payments.

Consider accepting a new job, or even a second job. Many people use side hustles to bring in extra income to their families. Wait tables on the weekends or drive for a ride-sharing company. If you’re determined to make more money there are countless opportunities.

If another job isn’t an option, try curring down on your expenses. Take a look at your budget and decided what is necessary and what you can live without. Cut your cable bill, stop eating out, carpool to work. There are many ways you can cut down your budget.

And if that still isn’t enough, you can sell some assets to help get ahead. Maybe you have an extra car, boat, or jewelry you can part with.

It may not be easy, but neither is losing your home to foreclosure.

Receive Professional Help

It’s important to remember that you’re not alone in this process. There are professionals trained in how to stop foreclosures.

There are HUD-approved housing counselors to help you avoid foreclosure. These trained professionals help you organize your finances and understand the law. They will also help you negotiate with your lender.

If you are facing foreclosure, look into the Making Home Affordable Program. This government program works to help you keep your home. They can help lower your interest rate, lower your loan principal, or extend the life of your loan.

The main goal of this program is to help you become financially stable.

Use a Deed in Lieu

Using a deed in lieu is another method that stops foreclosure. A deed in lieu is when you sign your home’s deed back over to your bank or lender.

A bank will agree to a deed in lieu in the following circumstances:

  • Your home has been on the market but you’re unable to secure a buyer.
  • You’ve tried all other options and foreclosure is imminent.
  • You can prove financial hardship.
  • You start the process and voluntarily sign the deed over.

While it releases you from financial obligations, it still impacts your credit history. It can stay on your credit report for seven years, making it hard to secure housing in the future.

Consider Filing For Bankruptcy

Still asking yourself how to stop a foreclosure at the last minute? If you’ve run out of other options, you can file for bankruptcy.

When you file for bankruptcy, it’s illegal for your lender to try to collect on outstanding debts. This allows you time to get your financials in order.

Your mortgage lender is then obligated to negotiate loan terms with you. Together you will come up with a repayment plan. You are still held responsible for your debts.

A bankruptcy will appear on your credit report for ten years. Bankruptcy is a last resort because it has long-lasting effects on your credit.

Need Help To Stop Foreclosure?

Now that you know more about the ways to stop foreclosure, you can move towards financial peace.

A short sale can be confusing but it is often the best solution. This allows you to sell your home and move on with your future.

Still unsure about your decision? Learn more about the differences between foreclosure and a short sale.

avoid foreclosure

8 Must-Know Tips for Homeowners to Avoid Foreclosure

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If you find yourself in the unfortunate circumstance of facing a foreclosure, you’re scared right now.

You probably purchased a home with a variable interest rate a couple years ago or needed to refinance to take care of expenses, and now you’re afraid that you won’t be able to make your payments anymore.

Unfortunately, many homeowners are suffering from the same burden. They fell victim to variable subprime mortgages that had interest rates that keep rising.

The good news is, we have been recovering from those loans collectively as a nation and there are now many different supports in place to help keep you in your home.

But unfortunately, there are also some scam artists out there that take advantage of people like yourself. Learn how to avoid foreclosure with this helpful article and how to recognize scams when you come across them.

1. Don’t Bury Your Head in the Sand

With so many people out there looking desperately for mortgage relief, many solutions are now available. The government offers options and lenders also have plans in place to help their customers stay in their homes.

Don’t just ignore the problem, there are options out there. You should open and respond to everything you get in the main from your lender. If you just let things get worse, then it will be more difficult for your lender to work with you.

2. Contact Your Lender and Let Them Know What’s Going On

Your lender does not want to have your house. They want your money. That means that if you contact them early enough, they will do what they can to help you through a financially trying time.

Before you try anything else, give your bank a call and find out what kind of assistance they have available. Be honest with them about your situation and try to reach a resolution that can keep your family in its home.

When you call your lender, be prepared with all of your account information and transaction history. You want to have your facts together so you can present your case well.

It’s a good idea to write a short summary of the financial hardships you are facing before you place your phone call, that way you won’t get flustered on the phone dealing with such an emotional process.

3. Know Your Rights

Depending on what state you live in, and what your original loan says, there are a variety of different things that can happen if you fail to make your mortgage payments on time. Check out your state’s government housing website for more details.

There you will find information like how much notification your lender has to give you before they can foreclose on your property or evict you. With this knowledge, you will know exactly what path lies ahead and can plan how to avoid going down it.

4. Consider a Short Sale

If you’ve never heard of a short sale, its the term for selling your house for an amount that is less than the amount that you owe on it. That means that you would have to eat the difference.

A short sale is a good idea because you won’t have to make your mortgage payments during the process, which can allow you to get to work on repairing your finances more quickly.

It also means that you will be in a better place to get a house the next time you try. After a short sale, you can buy a house in two years, where with a foreclosure, it takes five to seven years.

5. Contact a Counselor

Predatory lending practices have been such an issue for so many people that the Housing and Urban Development department of the United States government set up a free hotline for advice. It’s called the Hope Hotline – (888)995-HOPE.

6. Reprioritize Your Spending

Having a household budget will help you figure out where you can find more money to put towards your mortgage.

Take the time to break down your spending to a weekly basis so that you can see exactly where it’s going and redirect any available funds.

7. Avoid Foreclosure Prevention Companies

Since so many people are affected by predatory lending processes, there are some businesses that have sprung up out there hoping to take advantage of people in their hour of desperation.

You’ll know these companies because they will make it seem like they can solve your problem overnight. Make sure you do your due diligence and realize if it sounds too good to be true, it probably is.

8. Get Proper Legal Advice

Many people were drawn into the housing market by attractive interest rates that would go up over time. Advocates for fair housing believe that many of these homeowners ended up with loans they wouldn’t be able to afford in the future.

Although it may have been nice to live in your home for the past few years, someone should have advised you to take out a smaller loan, knowing that eventually, the interest rates would rise.

Now that you have fallen victim, you need to be careful not to make any more mistakes. Get all the facts and information out there so that you can make the most informed decision for your family.

This article is a great place to start, but you should also consult the FDIC’s resources. They have information available on how distressed homeowners can take the next step for getting into a better payment situation using government programs.

How to Avoid Foreclosure

Now that you know how to avoid foreclosure, you know how to make the best choice for your family.

To learn more about short sales and how to take control of your mortgage, check out our blog today.

real estate investment mistakes

Common Real Estate Investment Mistakes That Lead to Foreclosure

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U.S. foreclosure filings hit a 12 year low in 2017. Nevertheless, 676,535 homeowners lost their homes due to foreclosure: a painful experience to be sure.

But what if you could avoid going down the road towards foreclosure? Who wouldn’t want to avoid that scenario?

It’s not possible to avoid life-changing events that could alter your financial situation. But it is possible to significantly reduce the likelihood you’ll ever be faced with such dire consequences.

How do you do that?

You simply need to avoid making common real estate investment mistakes that often derail homeowners.

Read on as we examine the most important mortgage mistakes to be aware of before you buy and during your repayment period.

Steer Clear of These Home Loan Mistakes Before You Buy

The best way to avoid foreclosure is to prevent yourself from ending up in such an unenviable position.

Be careful not to commit these mistakes before signing any loan documents.

1. Buying Too Much House

One of the biggest mistakes you can make is to purchase a home you can not comfortably afford.

It is an easy mistake to make. Contrary to what you may think, most banks will lend you more than you need.

Banks determine your loan amount based on your gross income before taxes. They don’t consider your monthly expenses such as insurance and utilities.

Signing a loan for more than you can afford sets you up to be “house poor.” You’ll have no wiggle room in the event of an emergency, such as the loss of a job.

Simply put, it will be too easy to fall behind and risk foreclosure.

What to do instead:

Experts recommend spending no more than 28% of your income on your home. This figure includes the principal and interest on your loan payment plus property taxes and insurance coverage.

Create a realistic budget for life in your new home, making sure you can be comfortable even if you encounter a significant change.

2. Not Getting a Fixed Loan

With the interest rate of fixed-rate loans on the rise, the attraction to adjustable-rate mortgages (ARMs) is understandable.

An ARM may be tempting now, but it will eventually reset. And when it does, the interest rate will likely be higher and you may not be able to refinance at that time.

The new payment may be too expensive and, depending on the housing market, it could be tough to sell your home.

It’s easy to see how this situation can quickly escalate to missed payments and even foreclosure.

What to do instead:

Don’t be penny wise and pound foolish. Stick to a fixed-rate loan and sleep well at night.

The only time an ARM makes sense is if you plan on moving within 5 years or so.

There are many loan structures for real estate financing, but your best bet is almost always to seek the security of a fixed loan.

3. Underestimating Home Ownership Costs

Don’t make the mistake of only factoring your mortgage into your budget.

You’re going to incur a number of home-related expenses such as:

  • Property tax – The tax man always cometh, and home taxes can cost you thousands of dollars each year.
  • Homeowners association (HOA) – If your new neighborhood has an HOA, you’ll be required to pay dues. These monthly fees can range from $50 to several hundred dollars.
  • Insurance – You will need to purchase home insurance, and you may be required to carry mortgage insurance and even possibly hazard insurance.
  • Home costs – You won’t be renting anymore, so you will have to pay the utilities and the inherent costs of maintaining your new home.

What to do instead:

Before you sign on the dotted line, know what your mortgage payment will be, including the interest. Factor in all the costs of home ownership in your monthly budget and make sure you can be financially comfortable.

Mortgage Mistakes to Avoid During the Repayment Period

If you’re already living in the home and you still owe your lender, steer clear of these common errors to avoid foreclosure.

1. Ignoring Your Lender

If you’ve missed a payment, it’s easy to avoid communication with your lender.

But that’s the biggest mistake you can make, and it often leads to foreclosure.

What to do instead:

Remember, you have 120 days after your first missed payment before a bank can foreclose on you.

Maximize that time by contacting your lender and seeking options, such as payment arrangments or loan modification programs.

You may even be able to avoid foreclosure through a short sale of your home.

The sooner you act, the better.

2. Not Taking Advantage of Government Options

When you ignore your lender, you don’t have the option of enrolling in loan modification programs.

These programs modify the terms of your deed of trust contract, resulting in lower monthly payments.

For example, the Home Affordable Modification Program (HAMP) gives relief to struggling homeowners.

Many states have their own modification programs designed to keep you in your homes with lower monthly programs.

What to do instead:

Remember this: Your lender is prohibited by law from foreclosing on your home if you are enrolled in a government-sponsored loan modification program.

Consult a U.S. Department of Housing and Urban Development (HUD) approved counselor to examine your options and create a plan-of-action.

3. Falling Prey to Scams

Your loss can be a scammer’s gain if you’re not careful. Unfortunately, many people will line up to take advantage of you if you face the possibility of foreclosure.

Be mindful and avoid the following scams:

1. Never Sign Over Your Deed

Some scammers will state they can take care of the problem if the deed is in their name.

This is a good way to lose your home. Don’t fall for it.

Signing over the deed will not eliminate your loan debt. It simply removes your legal right to your house.

2. Beware of Exorbitant or Upfront Fees

Don’t listen to anyone who wants to charge you to explain your options.

You can always get free help from HUD-approved housing counselors.

3. Stop When You Hear the Word “Guaranteed”

No one can guarantee you they can resolve your foreclosure. Any resolution is most likely predicated on your lender’s approval.

Be very skeptical of anyone guaranteeing to get your loan modified or resolve your foreclosure.

The Bottom Line About Real Estate Investment Mistakes

You can significantly increase your odds of avoiding foreclosure simply by steering clear of common real estate investment mistakes.

Before you buy your home, make a realistic budget allowing for every expense you will incur in your new home.

And if you are facing foreclosure, seek help from qualified and legitimate sources.

If you like our content, please follow our blog.

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7 Tips For Funding Your First Real Estate Investment

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I’m not going to pretend that the average person reading this is a millionaire, or is Donald Trump himself. The reality is that real estate investment is an expensive endeavor.

There are so many different types of funding available, it can be tricky to know where to even start.

Despite the benefits that investing can have, some people are still a little cautious about taking that dive.

That’s why I’m going to give you seven useful funding tips on real estate investment financing for your first property. That way, you’ll be able to take the plunge with a little more confidence.

1) FHA Loans

Otherwise known as the Federal Housing Administration, this is a loan that is insured by the FHA and backed by the US government.

Because of this, FHA loans usually have lower interest rates and are more attractive to first-time buyers.

Not only that, but down payments are only 3.5% as opposed to 20%. This means a property that’s worth $250,000 would only require a deposit of around $8,750 (which is not a lot when you think about it).

This definitely makes FHA loans a lot more appealing.

2) Hard Money Lending

As there are different types of loans for real estate investment, I’m going to try and look at a couple of different ones.

If FHA is not what you’re looking for, then a hard money loan could be what you need.

This is a loan that is determined by the value of the property itself. They are funded by private businesses and are often used by investors looking to renovate a property.

It’s worth noting that hard money loans are usually short-term (6-36 months) and are set at a higher rate (8% minimum), so it’s wise to do a bit of research beforehand.

3) Private Investment

When it comes to real estate funding, sometimes you don’t want to go through a loan scheme or a bank. In which case, private investment may be what’s right for you.

These work similar to other lending programs in that you are still borrowing money at a specific interest rate.

The difference here is that a private investor is an individual rather than a professional lender.

They are helping you to invest in your property on the understanding that they can foreclose and seize it if the mortgage isn’t paid.

The good thing about private investment is that there are no hard and fast rules about borrowing and terms can be anywhere from six months to thirty years.

This gives you a good amount of leeway.

4) Owner Financing

You may also hear this being referred to as seller financing.

Essentially, the property owner and the investor looking to purchase (i.e. you) strike up a mutual agreement.

This is where the owner of said property agrees to help with funding. The new buyer will then make payments to the owner instead of a bank.

This is a fantastic route to go down to cut down on fees and upfront costs.

The only complication to this type of real estate investment is the owner needs to actually own the property itself and cannot already have an outstanding mortgage.

Other than that, owner financing can help speed up the overall transaction and also create a professional one-on-one relationship between seller and buyer.

5) Conventional Mortgage

This one needs to be mentioned as it’s still a useful path to real estate funding.

A conventional mortgage is probably the most obvious type of financing that most would think of.

By going down this route, first-time buyers will have to put a down payment on a property (usually 20%) before they can borrow.

It can often be the most expensive form of financing. However, because of its popularity, interest rates are usually quite low.

Buyers will also need to undergo a credit score check (with a minimum of 680) and have proof of income.

The US Bank website does have a handy mortgage calculator to help you get started.

6) Family and Friends

Of course, you don’t have to look into any type of conventional loan or private investment scheme. You can always ask friends and family for help.

This doesn’t necessarily mean badgering the people you know for money.

You can actually combine this with another financing option, such as an FHA loan.

By doing so, you can pool resources together from multiple people to help reduce the initial investment fee. This helps keep costs down at the beginning, but doesn’t pressure one family member or friend into lending a large sum of their own money.

Having said that, if you do happen to know someone who you think can lend you what you need, there’s no harm in striking up a conversation with them about it.

No one said it was an impossible route!

7) Your Own Money

Even in tough economies, you’d be surprised how many people can actually save up enough money for a real estate purchase.

In fact, in 2012, around a quarter of all investors were able to fund using their own money.

For many people, this may seem like the most difficult option as it can require years of financial saving beforehand. However, it is by far the easiest way to invest in property.

You may hear people refer to this as using ‘all cash’. The reality is – especially in this day and age – a transaction of this magnitude is unlikely to be done with real, cold, hard cash.

However, you should still consider other options if you wish. Just because you have the cash doesn’t mean you have to use it.

Final Thoughts on Real Estate Investment

I’ve shown you various real estate investment paths that I think are the best. But there are probably more that you can explore yourself.

The best piece of advice I can give is to make sure you do a lot of homework before you decide.

This is a huge commitment, especially if you’re a first-time buyer. One thing you should have on your side is knowledge; knowledge of which method is going to be the best for you.

If you would like more information on real estate investor funding, you can check out more blog posts here.

buying a short sale home

Pros and Cons of Buying a Short Sale Home

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Short sales are becoming more and more common. Why is this fact true?

Many people bought homes at the height of the housing market. They leaped at the chance to have a zero-down policy and a beautiful home, too. So when the prices of houses went down faster than they came up, people were stuck with a home they couldn’t afford.

Short sales happen if both the homeowner and the bank agree that it would be best. To avoid foreclosure, many look to a short sale instead. This is a “cut your losses” compromise that allows both parties to get away as free as possible.

The upside? More people are considering buying a short sale home at a major discount.

Like anything, there are pros and cons to this method of obtaining a house. This article will lay out both sides so you can make an informed decision.

Advantages and Disadvantages of Buying a Short Sale Home

Buying a short sale home may not be for you.

But maybe it is!

Let’s review what purchasing this type of home entails. Then we’ll get the pros and cons in order.

What Is a Short Sale Home?

A short sale is when a property is sold for less than the balance that remains on the mortgage. This occurs to avoid foreclosure, which is costly for the bank and your credit report. Foreclosed homes get bought by the bank, and it’s not an inexpensive process.

Buying a short sale is very similar to buying a regular home for sale. The main difference between the two is the addition of a third party or escrow. This third-party lender has to approve or disapprove of any offers and negotiations.

Short sales typically occur when the homeowner can no longer afford to make payments. This can be due to personal or financial reasons. Many people saw this coming after the 2008 housing market crash. It turned 5% more of the population into renters.

2008 is in the past, and the market has been looking good for a solid decade with no hints of crashing.

Are you still in the buying market? Here’s what you need to consider with a short sale.

What Are the Pros of a Short Sale?

There are many advantages to this process:

  • Potential to get a great deal on price
  • Fewer people are looking into short sales, meaning more opportunity for you
  • You avoid the pitfalls of buying a foreclosure
  • Tenets usually maintain the space until moving time. This doesn’t happen as often with foreclosures

If you see a home that you love, don’t you want to live in it? Short sale homes should be no different. Find a home you love and go after it.

After all, it’s much better than considering a foreclosure. Foreclosures come with a laundry list of disadvantages:

  • They’re not usually located in a prime neighborhood or area
  • You have to buy the home “as is,” which means that once you’ve purchased it, the problems are yours, too
  • The prices of foreclosed homes are harder to negotiate. You’re working with a bank that needs to make its money back

Go look at a short sale today, and chances are it’s in a nicer area than a foreclosure would be. Most people who sell their homes on short sale bought them with good intentions.

What Are the Cons of a Short Sale?

There are some unfortunate aspects involved in purchasing a short sale home. We emphasize that the biggest issue with short sales is the time it takes for approval. And even then, approval is not always a guarantee.

Are you willing to take the risk? Here are other things you’ll have to gamble:

  • A lender has to approve of the short sale. Without their approval, there’s no done deal
  • It may come at a competitive price if the owners are trying to squeeze out as much as possible
  • Once again, the wait time can be longer than that of a regular home sale
  • There may be extra costs in the repair of the home

The best way to avoid some of these pitfalls is to get a look at the home. Does it need extensive repairs? If you don’t have the extra cash for renovation, you may need to look elsewhere.

If you’re able to look inside and determine the cost is worth the effort, then you’ve got an easier decision to make. This isn’t always possible. Once again, risk comes down to a key player in this decision.

Is This the Right Decision for You?

We hope this guide led you to that answer.

If you’re not in the market for an immediate move, then a short sale may be right for you. Got a place to stay while you wait for the process to wrap up? Then you’re good.

If you’re not afraid of a little work and time, then buying a short sale home is right up your alley.

Do you need to move right away? Then you might want to consider something else. A short sale has the potential to be a long process.

If you don’t have the time or the patience to wait, then it’s not for you.

A short sale comes with many benefits if you’re willing to put in the effort. It requires the same love as your average home up for sale.

Are you in the market? Check out our short sale blog for great information!

how to avoid foreclosure

10 Tips for How to Avoid Foreclosure

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Right now in the United States, there are over 600,000 properties that are in a state of foreclosure.

Foreclosures can mean much more than a loss of property. They can have lingering effects on your future, your credit history, and your daily life.

Even though your phone won’t stop ringing and the bills won’t stop coming, it doesn’t mean this is the end.

Here are ten tips on how to avoid foreclosure.

1. Consider a Short Sale

A short sale is a way to recoup the financial loss by selling your home below market value. Securing a buyer relieves some of the financial burdens and helps to save your credit.

This is the option for homeowners facing the near threat of foreclosure. In order to complete a short sale, you must be unable to refinance your mortgage and unable to sell your house at a price that would cover the mortgage.

Once a short sale is complete, your mortgage dealer forgives any remaining debt. Not all properties qualify for a short sale, so it’s important to talk with your lender.

2. Take Advantage of the Making Home Affordable Program

The Making Home Affordable program offers mortgage relief to help those avoiding foreclosure.

This federal program allows eligible homeowners the opportunity to reduce your monthly mortgage payments and explore any other available options. Options can include:

  • Lowering your interest rate
  • Extending the life of your loan
  • Lowering the loan principal

The end goal is to reach a solution that can be sustainable for you in the long-run.

3. Refinance Your Loan for Lower Payments

Refinancing your loans is one of the many ways to prevent foreclosure. The earlier you act, the better chance you have of refinancing.

Refinancing replaces your current mortgage with a new mortgage. The new mortgage will come with new terms, interest rates, and monthly payments. Your lender will look at your credit score and the ability to meet your new payments when granting a new loan.

Each loan is different, so it’s important you find the one that’s right for you.

4. Get in Contact With Your Lender

Contacting your lender can be a viable option for stopping foreclosure.

Opening the doors of communication lets your lender know you are willing to put in the effort to stop the foreclosure process. If you have trouble getting in contact with your lender, there are resources to help.

During this process, it’s important to keep track of all correspondence sent to you by your lender and document any phone calls. This will help you stay organized and be ready to take advantage of any opportunities that come your way.

5. Talk With a HUD-Approved Housing Counselor

Get in touch with a housing counselor to help you navigate all your options. These trained professionals work with people like you every day and understand the ins and outs of foreclosure.

Foreclosure prevention services are available in every state and are available free of charge. The counselor can help you understand the law, organize your finances, and represent you in any negotiations with your lender.

6. Sell Your Assets

Selling your assets can be used to help get caught up with mortgage payments. This could include selling the second car, parting ways with a few family heirlooms, or cashing out a retirement plan.

Saying goodbye to these assets can be hard, but if used appropriately may be a great way to avoid foreclosure. You can always buy back possessions after your finances are back in order.

7. Create a Forbearance Agreement

Have you experienced a job loss or a sudden illness? Are your financial struggles a temporary situation? If so, forbearance might be the right option for you.

A forbearance agreement involves your lender agreeing to lower or stop mortgage payments for a short period of time. This allows you some time to get back on your feet to help with stopping foreclosure.

You must resume full payment at the end of the forbearance period. You also must pay any additional amount needed to be current on missed payments, which includes principal, interest, taxes, and insurance.

8. Consider a Deed in Lieu

A deed in lieu transfers ownership of the home in exchange for a release of your mortgage obligation. This immediately releases you of any obligations associated with the loan.

There are different options available with a deed in lieu that involve you leaving the home immediately, staying in the home for a few months without paying rent, or leasing the home for up to a year.

A deed in lieu can appear on your credit history for up to seven years.

9. Bridge Your Income Gap

While finding a new, high-earning career may not be the answer, now is a good time to tighten the purse strings.

Cut back on things around the house you don’t need. Try getting rid of cable, shopping at discount stores, packing your lunches, or picking up odd jobs around your neighborhood. Any extra money can be spent to help get you back on track with your mortgage payments.

10. File For Bankruptcy

Considering bankruptcy as a way to avoid foreclosure should be treated as a last resort. Bankruptcy can lead to the loss of other assets besides your home and will appear on your credit history for up to 10 years.

When you file bankruptcy, collectors are forbidden by law from collecting on outstanding debts including your mortgage. Bankruptcy will allow you more time to get your finances together. Your mortgage company will be required to create a reasonable repayment solution with you, which could help you save your home.

Need More Information On How To Avoid Foreclosure?

Make sure you do the research to figure out what option works best with your situation. Our team at Short Sell Blog will help provide you with up to date, well-researched information on how to avoid foreclosure and get on with your life.

Never hesitate to contact us for help when it comes to your home and foreclosure.

foreclosure homes

How to Fix up Foreclosure Homes and Turn a Profit

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Are you considering buying a foreclosed home?

Foreclosure homes often require extensive tender love and care. After all, if the owners were unable to continue their mortgage payments, it’s unlikely they were keeping the home in good repair.

According to national statistics, one in every 1,835 homes results in foreclosure.

While a foreclosure may be every owner’s worst nightmare, they can present a unique opportunity for buyers. Although these properties often require substantial work, they can prove to be extremely profitable for buyers.

In this post, we’ll reveal six must-know strategies for maximizing your profits on a foreclosed home. With these tricks of the trade, you can be well on your way to buying your first foreclosure home.

1. Enlist Professional Help

First things first–it’s essential to enlist the help of professionals. This is especially the case if this is your first time purchasing a foreclosure.

Hiring accredited professionals not only ensures a quality-grade job is accomplished but also helps to avoid any legal stipulations.

Be sure to utilize a real estate professional who has specific experience in purchasing foreclosures. These professionals will be aware of which neighborhoods are best to invest in and which properties are beyond-renovation.

Next, you’re going to want to hire accredited electricians, plumbers, and contractors. While hiring a professional may prove to be expensive, it’s always worth it in the end.

2. Location, Location, Location

We hear it all the time–location is key when it comes to the perfect property! The same rule applies to foreclosures.

Be sure to research the area properly before committing to a purchase. This will be a significant consideration down the line for buyers.

An important factor to note is whether or not the home is close to a public/private school. This can be a “make it” or “break it” condition for a serious buyer with a family. You also want to consider how many shops, restaurants, and grocery stores are nearby and how accessible they are.

Public transportation is also significant when it comes to a property–especially if the home is outside the inner city. Make sure transit is easily accessible, otherwise your home may not be as valuable.

Taking note of these important aspects can really affect the sale of your home down the road.

3. Focus on the Most Important Rooms

One of the most challenging aspects of renovating a home is deciding where to spend your money.

That being said, it’s crucial to decipher which renovated rooms result in the utmost profit. According to Architecture Lab, the most important rooms to focus on in a renovation are the kitchen and the bathroom(s).

When choosing your finishes, be sure to select a style that has broad appeal. Have a real estate or design professional provide you with advice as to what styles are currently trending.

This is where the bulk of your money will be spent, so it’s crucial to invest it wisely.

4. Upgrade the Interior Systems

While it may be tempting to focus on the elements of the home that are only visible to buyers, it’s equally important to focus on the interior systems.

Remember, buyers expect the home’s mechanical and electrical systems to be in good working order. Generally speaking, these are not items buyers are willing to upgrade after purchasing a turkey home.

As a general rule, be sure to focus on:

  • Heating and air conditioning
  • Water heating
  • Plumbing
  • Wiring

When it comes to upgrading these systems, save yourself a headache and enlist the help of a licensed professional. Consider that some states have legal rules and regulations stating that a professional must be used for these services.

While these upgrades may prove to be expensive up front, they’re vital to maximizing the eventual profit of the home.

5. Paint and Flooring

First impressions are everything. That’s why when you open the front door to your home, you want to feel instantly welcomed.

There are two very important factors that will aid in this: paint and flooring.

Paint can be one of the most cost-effective ways to improve not only the interior of a home but also the exterior. A fresh coat of paint can instantly brighten up your home and do wonders for the eye.

A bright, light color for the interior can immediately change the mood and feel of your home. It will update it drastically without a tremendous amount of effort or cost.

This same rule applies to the exterior. Curb appeal is everything, so make sure to freshen up the house, shutters, and deck with a complementary color.

Second is flooring. Whether it’s updating the current with a quick stain or replacing it altogether, your flooring creates a flow that should complement the other elements of your home.

Special designs or tiling can help draw the eye to key areas, such as the kitchen or entryway. This helps to add that special uniqueness for a potential buyer down the road.

6. Don’t Overinvest

While it may be enticing to pour your heart, soul, and wallet into your first foreclosure renovation, it’s crucial to limit yourself.

Yes, it may be tempting to renovate every nook and cranny of the home. But it’s important to resist this temptation for the sake of time and money.

That being said, have your real estate professional keep you updated with the property values of your neighborhood. Always ensure that you are not renovating the property above the value of neighboring properties.

While it may be nice to have the most beautiful home on the street, this often has an adverse effect on your future property value.

The Perks of Purchasing Foreclosure Homes

If you’re contemplating the pros and cons of purchasing a foreclosure, it’s vital to understand how to best profit from such a purchase. While purchasing foreclosure homes may require extensive time and money, the profit can be exceptional.

But, it’s also safe to say that not all foreclosed home are created equal. From choosing the right foreclosure in the right neighborhood to selecting which rooms to focus your restoration on, there certainly is a right way to renovate.

Looking for more tips on purchasing a foreclosure? Visit our website for our expert tips and tricks of the trade.

what is foreclosure

What is Forclosure: The Ultimate Buyers Guide

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Are you looking to buy your next home at the best price possible?

You may want to consider purchasing a foreclosed property.

Often, you can buy a foreclosure at a price that’s well below its’ actual value.

According to Home Buying Institute, studies show that buyers of foreclosed properties save an average of 27%. A 27% discount on a $300,000 home equals savings of over $80,000.

Unfortunately, many people miss out on the opportunity to buy this reduced-rate real estate because they are not familiar with how foreclosure works.

If you might be wondering “What is foreclosure?”, then you are in the right place.

Want to know “How does buying a foreclosure work?”

We’ve got the answers you need.

Read on to find out what you should know if you are considering investing in foreclosed real estate!

What is Foreclosure?

Foreclosure is what happens when the buyer (or buyers) cannot or will not pay the required mortgage payment on their real estate loan.

Often, the term homeowner is used when discussing the foreclosure definition. However, the person or people who are living in the home are not actually the homeowners because they still owe on the balance of the house.

Usually, buyers will take out a loan from a bank or other lending institution to purchase a property. Then, they will have to adhere to the terms of the mortgage loan until the house is paid for in full. While payments are being made on the property, they do not own the property outright.

Should the buyers fail to make the arranged payments, the property enters foreclosure. At this point, the house may go to an auction. At an auction, buyers will bid on the property, and the winner pays the amount offered on the spot.

If the house doesn’t sell at an auction, then the lending institution will assume ownership. This may cost the lender several thousand dollars.

The foreclosed home then is sold by the lending institution. They will attempt to sell the house at a price that will cover whatever it has cost them, but the price is usually much less than if you purchased the home off the market in the traditional way.

Why Do Foreclosures Occur?

According to statistics published by Realtor.com, one in 13,000 homes will end up in foreclosure.

There is a wide range of reasons why a house ends up in foreclosure. These include:

  • The owner lost their job and cannot afford the mortgage payment
  • The property owners abandoned the house, and they are no longer paying their loan payments
  • The owner encountered a variety of unforeseen financial hardships, such as caring for a sick family member and can no longer afford to make payments
  • When the homebuyers purchased the property, their payments were out of their realistic price range, so they are unable to keep their mortgage payments up to date
  • Someone in the family got transferred to a new area (for their job or other reasons), and the dwellers could not afford to make two house payments

Whatever the reason, when a foreclosure occurs, the mortgage payments have gone into default.

Often, when this happens, the lender will attempt to work out a solution with the homeowners prior to entering into foreclosure proceedings. If they are unable to reach a reasonable solution to avoid foreclosure, then the lending institution will move forward with foreclosing on the property.

Smart Tips for Buying Foreclosed Real Estate

Buying a foreclosed home for a great deal is possible. But, it’s not guaranteed. If you are interested in purchasing a foreclosure, there are a few things that will help ensure you’re making a wise purchase.

Don’t Expect Price Negotiations

Unlike other houses on the market, the price of a foreclosed home typically leaves little room for negotiation.

Since you are most likely buying the property from the lender, you can expect an impersonal experience. And, the price that is offered is often the price that is required so that the lender does not go into further debt themselves.

Foreclosed Properties Are Typically Sold As-Is

Although you might be scoring a great deal on the price of a foreclosed home compared with similar properties, foreclosed homes may not be in “move-in ready” condition. Often, the owners have not maintained the property’s upkeep.

You might have to deal with repairs and improvements that you would not find if you were buying another house on the market.

Find Out the Owner’s Specific Requirements for Closing

When you purchase a foreclosure, you are entering a non-standard agreement. This means that the owner may have unique, specific requirements and procedures for closing the deal.

Prior to entering into an agreement, you should find out what the owner’s requirements are for closing and be sure that their requirements are acceptable to you.

Consider Potential Baggage

Foreclosed homes may come with unforeseen baggage, such as liens against the property or extensive repairs. Avoid making the common mistake of overlooking circumstances that may influence your purchasing decision.

If you choose to go through with purchasing a foreclosure, make sure that you have carefully weighed the pros and cons and that you are comfortable with the big picture. If you intend to buy, don’t commit until you are sure that you can live with whatever unusual terms apply to the sale of the property.

Contact Professionals Who Are Familiar With the Foreclosure Process

For buyers seriously considering purchasing a foreclosed home, it’s wise to consult the pros. Short-sale and foreclosure experts can answer all of your questions, including “What is foreclosure?”, and any other questions that you may have.

Before you buy, ask for advice from the experts.

Think you may be interested in purchasing a foreclosed home?

Check out our blog to find out more about buying a foreclosure!

consequences of foreclosure

Consequences of Foreclosure: 6 Ways Your Future Could Be Affected

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Losing a home to foreclosure can be devastating. Buying a home is a part of the American dream. When the dream ends in shambles you have to pick-up the pieces and rebuild.

Foreclosure can have long-lasting effects. Being trapped in debt is a negative emotional experience that can take a toll. Unfortunately, for most people it is the last and only option when facing significant financial hardship.

Some people, once all hope is lost, will simply abandon the property. Others will decide to stay until the bank takes possessions. Either choice can be humiliating and take years to recover from.

For those going through the process now, you’re probably wondering how long foreclosure will follow you. Continue reading to learn the consequences of foreclosure on your credit.

1. Uncertainty About the Future

Ten years ago when the country was facing a recession, many homeowners lost their homes. Unemployment was at an all-time high and families faced huge financial challenges.

As the country recovered, bankruptcy courts experienced a huge backlog. Days of homeowners remaining in their homes for years after the bank filed for foreclosure, have now ended.

Today, the impact of foreclosure is felt sooner. Now families have less time to come up with a plan for new housing.

If you have limited funds or can’t qualify for an apartment or rental unit, you could find yourself homeless.

Without adequate planning, an eviction is eminent. Not only could families lose their home, but possessions could be removed from the home and placed on the front lawn.

Once you decide you do not want to fight for your home, it is best to move before the information hits your credit report.

2. Ruined Credit Tops the List of Consequences of Foreclosure

Having a foreclosure on your credit is a big deal. If you are facing foreclosure, chances are your credit has already taken a hit. Once a judgement is entered against you, expect another drop of 200 – 280 points.

Credit scores run between 300 and 850 points, with 850 considered a superior rating. Most people experiencing financial problems typically have scores in the low 600’s and below.

The impact of a foreclosure on credit scores can drop your score to the lowest point on the scale. With a score below 500, it will be almost impossible to have credit extended to you.

Lawyers believe that people facing foreclosure should consider bankruptcy, which is easier to recover from, and also quicker.

3. Foreclosures Could Impact Your Employability

More and more employers are performing background checks on perspective employees as part of the hiring process. If your credit score falls below 600, you may be disqualified.

This may not be a problem for some positions. However, it could impact your chances of getting a call back for jobs in the finance industry.

The impact of foreclosure can arise later, even if you already have a position. Sometimes employers run random background and credit checks on existing employees. You could also have issues when seeking a promotion to a finance related position.

Under the Fair Credit Reporting Act, companies are required to give applicants a pre-adverse action disclosure. This is given whenever someone is not hired for a position due to information from a background check.

4. Restrictions on Fannie Mae Loans Could Apply

Following a foreclosure, the last thing on your mind may be purchasing another home. As time passes and your financial circumstances improve, you may have a change of heart.

You will want to know how foreclosure affects your credit when it comes to getting a home loan. Regardless of the type of foreclosure or if you had a short sale, you can expect a wait of 2 to 7 years.

There may be circumstances in which a lender may be willing to offer you a second chance, sooner rather than later. Not all foreclosures are a result of poor money management. Death of a spouse, a relocation or extended illness can lead to foreclosure.

Don’t be afraid to explain your situation to lenders. Just be prepared to present supporting documentation if asked.

5. You May Still Owe the Bank After Foreclosure

The consequences of foreclosures can last well beyond the point of losing your home. If your house is valued at less than what you owed the bank, you may be liable for the difference.

On top of all you’re going through, this is the last thing you need to deal with.

It is important to know if you live in a non-recourse state when facing foreclosure. Certain states do not allow lenders to seek relief for losses on foreclosure sales. Others have specific rules on what types of loans qualify.

A deficiency judgment is an option banks have to recoup losses on the sale of your foreclosed property. This means, if you owed the bank $100,000, but they could only get $75,000, a judgment for the difference could be entered against you.

Keep in mind, it could take a while for a property to sell. So you could get the bill years later.

6. Their May be Tax Implications

You will need to report your foreclosure when you file your tax return. This may be unforeseen consequences of foreclosures.

The lender will send you a tax form 1099-A to be used to record your foreclosure on your taxes. Like other 1099 forms you may receive, the information must be entered on the return.

Depending on how many liens was on the foreclosed property, you may receive multiple forms.

The average person who has gone through a foreclosure will not face tax penalties. However, you still must record the information and go through the steps to ensure this is the case.

You Can Survive Foreclosure

Going through foreclosure is stressful, but once it’s over you can breathe a sigh of relief. The sooner you can rebuild your credit the better.

The consequences of foreclosure may seem like huge obstacles that will plague you for years to come. Shake it off and create a plan to move forward.

If you feel foreclosure may be in your future, check-out our blog explaining what happens when you are facing foreclosure.