Archives for July 2018

Hard Money Basics: What Everyone Should Know About These Loans

Hard Money Basics: What Everyone Should Know About These Loans

When it comes to real estate lending options, there is no shortage of different types of loan products available in the market today. However, one of the most common, and often most misunderstood, are hard money loans. If you aren’t familiar with these loans they are a unique type of lending opportunity that can help both buyers and investors get the financing they need.

These transactions are most commonly used in fix-and-flips, rent-stabilize-refinancing deals, cash-out refinancing, land scenarios, construction deals, bankruptcy or foreclosure payoffs or transactions when the deal is particularly time-sensitive. In fact, one of the biggest perks of using hard money loans is how quick they are when compared to traditional banks.

So, What Exactly Are Hard Money Loans?

Hard money loans are fast—but there is more than that to these lending options. Simply put, hard money loans are an alternative to a mortgage and are designed for borrowers who need money quickly and who only wish to hold on to a property for a short period of time. Hard money loans can be used in a variety of settings, but are perhaps most common for those taking on fix and flip projects and who want to invest in real estate in an effort to make some quick cash.

Typically, these loans are meant for short-term only (most commonly 12 months), but that doesn’t always have to be the case.

These loans are also becoming a popular option for borrowers who are unable to get a conventional real estate loan. Lenders do not use a traditional underwriting process, and instead look at every situation individually. For borrowers who have had foreclosures or issues in the past, this can be great news as many hard money lenders won’t even look at the borrower’s credit history—they only concentrate on the property that is being invested in.

Hard money loans are financed by private hard money lenders. Typically, they are private individuals or small groups that lend money to those who need it. Since these loans aren’t funded by a bank, they are typically much more flexible.

The Loan-to-Value Ratio

When you apply for a hard money loan, chances are you will hear a great deal about the loan-to-value ratio. Hard money lenders will lend money based on the property you are buying, instead of your credit score and background. Instead of looking at assets or equity alone, the primary thing the lender will look at is the property being purchased. This is the main collateral that the lenders will use. This does make it riskier for lenders so they will typically look for a loan-to-value ratio of around 50-75%.

The term “value” in the loan-to-value amount is actually based on what the lender could expect to get for the property in a one to four month selling time. This is why these loans are so popular for fix and flip properties.

Important Facts About Getting a Hard Money Loan

If you think that a hard money loan may be the right option or you, there are a few things you should know about the application process and what goes into securing one of these loans.

The first is that the applications are simpler. Everyone who has ever gotten a mortgage before knows how complex a mortgage application can be. The good news is, hard money loan applications are much simpler. This also means they can be approved much faster. In fact, many of them are approved in just 24 hours. Closing can typically happen within 10 days.

However, while hard money loans are significantly easier to get than mortgages, lenders are still going to need some basic information. This includes:

–    The location of the property
–    Recent appraisals
–    Inspection data
–    Purchase price of the property
–    Planned resale price of the property
–    Estimated remodeling costs—if applicable
–    Borrower’s credit score
–    Total assets and income of the borrower
–    Level of real estate experience from the borrower

Once you are fully aware of what goes into a hard money loan and how it may be able to help you secure the finances you need—it is time to find a hard money lender. The good news is, there are many hard money lenders out there that are available to provide those who need it with the financing they are looking for.

Hard money loans aren’t for every situation, but they are a very popular and very reliable form of financial backing for those who need to quickly and easily get a large sum of cash.

Source: Buying Tips

What Do New Home Buyers Want? The Surprising Results

What Do New Home Buyers Want? The Surprising Results

When it comes to new home design, are current floorplans and features meeting or anticipating buyers’ needs? A recent survey of future homebuyers – those who intend to purchase within 10 years – from Florida, Texas, Arizona, North Carolina, South Carolina and Georgia builder Ashton Woods produced some interesting responses that could influence how new home builders approach home design and how buyers respond to them.

While we can review the survey results with a liberal grain of salt, knowing that different buyer segments in different areas may have varying wants and needs – and also knowing that what people say they want prior to buying, and what they end of choosing when factors including budget and practicality are woven in at the time of purchase – the Ashton Woods survey is still useful in examining what may be shifting buyer preferences.

Here are some of the, perhaps surprising, results of the survey.

Buyers are over white kitchens. Or, at least, they don’t top their must-have list. “All-white kitchens are now second choice,” said the Washington Post. “The survey found an overwhelming majority of buyers prefer natural wood cabinets for their kitchen, pushing white cabinets to second place followed by distressed wood cabinets.”

Buyers would trade bedroom space for more living space. Sixty-one percent of those surveyed had this preference!

Bye bye, bonus rooms. Buyers still want bonus space, but they want it to match their lifestyle pursuits, and they’re willing to pay for it. Think hobby rooms personalized for yoga, crafting, or wine tasting. “76 percent of the homeowners surveyed said they would spend extra to incorporate a hobby room in their next house,” said the Washington Post.

Home offices remain a priority across all age groups. Almost 70 percent of those surveyed want a designated space, not just wireless capabilities that allow them to work on the couch or at the kitchen table.

Additionally, “Personalization is a priority. When choosing a builder, 75 percent of those surveyed said they are more likely to select a builder that offers design options, and 67 percent said they are willing to pay more for those options,” said Professional Builder.

Source: Buying Tips

Hey, First-Time Buyer: This Is Where You Should (And Shouldn't) Buy A Home

Hey, First-Time Buyer: This Is Where You Should (And Shouldn't) Buy A Home

If you’re looking for the perfect place to buy your first home, you’re likely overwhelmed with the “what,” “where,” and “when.” Many places across the country have seen growth that has pushed prices far beyond what a typical first-time buyer can handle. But that hasn’t stopped them from getting into the market.

“Buying a home for the first time is an exciting and important milestone for many Americans,” said WalletHub. “Their purchases make up a sizable chunk of the market, too. In 2017, 38% of all U.S. single-family home purchases were made by first-time buyers.”

So where should you be looking if it’s time for you to put an end to rent? WalletHub’s new list of “Best & Worst Cities for First-Time Home Buyers” can help.

“WalletHub compared 300 cities of varying sizes across 27 key indicators of market attractiveness, affordability and quality of life,” they said. “Our data set ranges from cost of living to real-estate taxes to property-crime rate.”

Beyond their overall score based on an affordability rank, a real estate market rank, and a quality of life rank, we’re looking at their top five and further breaking down the pros and cons of living there.

No. 1: Broken Arrow, OK

Pros: “Broken Arrow offers both small-town charm and big-city amenities” since it’s close to Tulsa, said Livability. “Some of Oklahoma’s most scenic natural areas surround the community, making it a top spot for outdoor activities, while its cultural attractions draw people seeking arts and entertainment, especially in downtown’s Rose District. Broken Arrow also includes a thriving business climate, three renowned hospitals, and excellent public and private schools.

Cons: Potential for tornados and earthquakes, the latter attributed to aggressive fracking. High sales tax – Oklahoma’s average tax rate of 8.72 percent is the fifth-highest in the nation, according to the Tax Foundation. It’s 8.417 percent in Broken Arrow.

No. 2: Tampa, FL

Pros: Tampa oozes charm with historic neighborhoods you might not find in other first-time buyer cities. Their overall real estate market rank by WalletHub is No. 4. There is always something to do, with tons of ongoing activities, festivals, and special events. There’s no state income tax and property tax is also incredibly low, at two percent. If you’re a sports fan, you’ll also love the fact that there are four professional sports teams in Tampa.

Cons: “Common complaints include a relatively flat landscape and streets that are lined with a multitude of chain retail plazas,” said Life Storage. “Traffic can also be a nightmare. As the lightning capital, you can expect daily thunderstorms throughout the summer, and you’ll most certainly want a hurricane emergency plan.”

No. 3: Centennial, CO

Pros: Mountains! A lovey downtown! Arts, culture, and recreation! And friendly people to boot.

Cons: “Compared to the rest of the country, Centennial’s cost of living is 35 percent higher than the U.S. average,” said Best Places. And while homes are still more affordable than in many places in the country, the growth of the area continues to push them up. That growth also means more and more people discovering the area, and more traffic on the roads. If you’re looking for a private, serene retreat near the mountains, this isn’t it.

No. 4: Boise, ID

Pros: If you’re looking for open space and beautiful scenery, with great access to recreation (Hello, Greenbelt!), you’ll find it here – despite the ongoing growth.

Cons: Winter weather. Lack of a professional sports team (Get used to rooting for Boise State University!). Slower pace – a “pro” for many, but a fact of life that might be harder to embrace for someone craving the vibrancy of big-city life. And a low real estate market rank of 169 by WalletHub.

No. 5: Grand Rapids, MI

Pros: Access to water. If the idea of being landlocked in some of the other cities on the WalletHub list has you in a panic, Grand Rapids could be a possibility since it’s under an hour from Lake Michigan. Low traffic. The list ranks quality of life at No. 142, but if you love beer, you’re in luck because there are great breweries in town (The city even won USA Today’s Best Beer Town poll.).

Cons: If you don’t love cold weather, don’t even think about it. Winters can be brutal. There’s also a notable lack of walkability unless you’re in downtown.

Source: Buying Tips

Newly Listed: Would You Buy The Brady Bunch House?

Newly Listed: Would You Buy The Brady Bunch House?

The Brady Bunch house hit the MLS last week, sending generations of TV watchers into a tizzy. While there will likely one be one buyer – unless hordes of fans join together to pony up the $1.885 million asking price – hundreds, or more likely thousands, will be making their way to the home just to have a peek.

They probably won’t get in unless they’re legitimate buyers; there will be no open house. But that won’t stop many from making the trek to L.A.’s Studio City to at least snap a pic. And, we can’t say we blame them. The Brady Bunch house is beyond iconic. For many of us, it’s where our childhood dreams and memories live, right there in that orange and avocado green kitchen.

Except that the house bears little resemblance to what we saw on TV from 1969 to 1974 (and in reruns that continue today). It’s not that the current owners, who purchased the home at 11222 Dilling Street in 1973 for $61,000, according to reports, overhauled it; there are still mid-century touches throughout.

“The Brady Bunch house comes with its fair share of preserved ’70s style, according to its real estate listing,” said TIME: Money. “Photos show wood-paneled walls, beamed ceilings and lively wallpaper throughout the split-level home. And, save for a fence, the home’s facade looks nearly identical to its on-air appearances.” Take a look at the current interiors and let us know what you think!

What may come as a disappointed surprise to Brady Bunch fans and prospective buyers is that interiors for the show weren’t even filmed here. No, Mike, Carol and thegang never sat around the dining room table in this house. All interiors were shot at a studio.

Will that matter to buyers? It’s hard to know at this point whether someone will be seduced by the nostalgia factor or by the home itself, which does have its issues:

Size: The home definitely isn’t configured for a blended family with six kids, plus Alice. It only has two bedrooms and three bathrooms in 2,477 square feet, plus a converted garage that is now a recreation room. It is on a 12,500-square-foot lot, though. Hey, just add on!

Price: Some are musing that the home is overpriced by about $500,000. Of course, there’s no guarantee that the house will get its listing price.

“For all the fan attention they draw, famous Hollywood homes don’t always command a premium on the market,” said the Los Angeles Times. “When the ‘American Horror Story’ house, a Gothic Tudor-style home in L.A.’s Arlington Heights area, sold three years ago, it did so after years on the market and roughly $14 million below the $17-million original asking price. But for every horror story, there is a happy ending: Two years ago, a much-publicized Alhambra home featured in the movie ‘Father of the Bride’ sold for the asking price. Last year, a Venice compound made famous on the show ‘Californication’ sold for $14.6 million, setting a record for the area.”

Condition: While listing agent Ernie Carswell from Douglas Elliman described the property as, “a postcard of exactly what homes looked like in the 1970s,” not everyone is going to be keen on living in a time capsule. In fact, much interest in the home has been from developers looking to tear it down and rebuild – something the area is known for. “But the owners will give first consideration to bidders who want to keep the home intact, Carswell said to the L.A. Times. “We’re not going to accept the first big offer from a developer who wants to tear it down. We’re going to wait a few days, in case there are others who want to purchase it as an investment to preserve it.”

Fame: Listing agent Carswell expects the home to generate an “avalanche” of interest – “upwards of 500 calls a day.” And once the home is sold, there’s no guarantee that interest will die down. “The buyers of the Brady house will inherit more than just television history. They’ll also own a major neighborhood tourist attraction,” said Yahoo.

The Brady Bunch house is reportedly the second-most photographed home in the country – The White House is No. 1. Sitting in third: “The San Francisco home used for exterior shots in the TV series Full House and spin-off Fuller House, said CNN. Neighbors have complained about the large number of vehicles – including tour buses – that clog the street, creating chaos, traffic, and dangerous conditions.

“Neighbors reportedly came to a meeting with the San Francisco Municipal Transportation Agency…armed with a timelapse video that showed the congestion on the street, estimating that 1,000 to 1,500 people per day come through the area on busy days,” said CNN. They are now “hoping a new city measure banning commercial vehicles with nine or more seats from the street on which the home is located will curb the number of tourists making their way to the location.”

Source: Buying Tips

Goodbye, Saving. Why Not Crowdfund Your Down Payment Instead?

Goodbye, Saving. Why Not Crowdfund Your Down Payment Instead?

You can crowdfund your medical expenses. You can crowdfund your honeymoon. And now you can crowdfund your down payment. Savings, shmavings.

Seriously, though. For people who are having trouble coming up with a down payment or just need a boost, HomeFundMe is a Godsend. Provided through California mortgage bank CMG Financial, HomeFundMe is helping people realize the dream of homeownership by eliminating what, for many, is the biggest barrier.

The idea of crowdfunding a down payment is not totally new, but cooperation with Fannie Mae and Freddie Mac, which signed off on the program, has smoothed out potential wrinkles for both buyers and donors. “HomeFundMe is approved by Fannie Mae and Freddie Mac as a down payment crowdfunding platform because it allows for a fully transparent and verifiable crowdfunding effort,” said Mortgage Orb.

How it works is:

Buyers first get prequalified, as they would to kick off any homebuying process. This will give them an idea of how much they need for a down payment. “Borrowers typically aim to raise 3 percent of the purchase price, which is the minimum down payment for conventional mortgages bought by Fannie Mae and Freddie Mac,” said Benzinga. “Donors can give as much as $7,500. For contributions of $500 or more, donors must sign a gift letter.” DocuSign can be used to make that process easier.

Crowdfunding works on the power of social networking, as we’ve seen with popular platforms like GoFundMe and Kickstarter, so the program recommends connecting user accounts to Facebook and actively sharing. “Write a summary of your goals and publish updates to share your story,” said HomeFundMe. “Upload images that help others get to know you or even showcase your dream home. You also have the option to film and share an ‘Intro’ video. We recommend adding visual content like images and video to give potential contributors a better idea of who you are and what you are trying to do.” HomeFundMe also assigns each buyer a fundraising coach who can help maximize their social outreach.

Once a HomeFundMe campaign is active, the clock starts ticking. Once buyers receive their first gift, they have 12 months to close on their home and use their funds. Gifts can come from anyone – friends, family, strangers, even Realtors. “HomeFundMe has partnered with wedding registries so couples can ask for down payment assistance rather than flatware and dishes,” said Benzinga. “The site also opens the door to Realtors rebating some of their commission for down payments, a practice that’s normally prohibited. A “variance” from Fannie and Freddie “allows Realtors to divert part of their fee to the buyer’s down payment.”

In addition, HomeFundMe has launched Affinity Portal, “a new program allowing employers to add HomeFundMe to their benefit packages to assist employees in overcoming the down payment obstacle,” said Mortgage Orb. “The HomeFundMe Affinity Portal allows employers to add HomeFundMe to their benefit packages, with the option to elect to match donations in any amount.”

Borrowers taking part in the HomeFundMe program can earn more than their goal amount, and donors can also make their gifts “conditional,” so their funds are returned should the home purchase not occur within the 12 months. Also, there are no fees on contributions and no charges for payment processing; by comparison; GoFundMe charges a 2.9 percent payment processing fee.

Source: Buying Tips

Building Your Home Equity Now

Building Your Home Equity Now

There are three ways to build equity, or ownership, when you buy a home. One is to put money down in a down payment. The second is to pay your lender back, and the third is to take advantage of market upswings.

It’s no secret that market momentum has been helping homeowners for a few years. Sales volume is still climbing, says the National Association of REALTORS®. You can still take advantage of low housing supplies and low interest rates to invest in a home.

One way to build equity is to put more money down on the home you want to buy. Lenders have returned to tried and true models of income to debt ratios and requiring that borrowers put more money down when they purchase a home. The more you put down, the more instant equity you have. Putting more money down also helps lower borrowing costs because it lowers risk for the lender.

As you make your house payments, you build equity slowly because interest payments at the beginning of a loan are much heavier than the money paid toward principal. The longer you own your home, the less you’ll pay in interest and a greater share will go toward ownership, or building equity.

For example, if you borrow $250,000 at 5%, your monthly payment is $1,342.05. The first month you’ll pay $1041.67 in interest, and only $300.39 toward reducing your principal. At that rate, building equity may seem like it takes forever. But only two years later, your interest rate lowers by $30 a month allowing $30 more to go toward reducing what you owe your lender.

You can build equity faster by adding a little more to your payment, which removes hundreds of dollars in interest and allows you to own your home in full much faster.

The other way to build equity is to allow the market to do it for you. Home values historically beat inflation by one to two percentage points, but the last decade has been anything but typical. However, all markets return to the norm, so assuming a normal market is on the way, on the modest side, your home should appreciate approximately one percent annually.

In theory, if you purchased your home for $300,000, your home should gain $3000 in value in one year. Home values are expected to rise about seven percent in 2015, so if you buy a home now, you could still do well.

Market variables from the weather to the Fed can all play a part in how quickly your home builds market equity. But one thing is certain, you can’t build equity unless you’re invested.

Source: Buying Tips