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4 Ways to Buy a Home

December 29, 2010 No Comments

 Newly Built Home – There are still newly built homes on the market.  In the Sunday section of the paper these are highlighted with a map.  Sometimes there is special financing available through the builder.

  1. Resale Home – These are homes for resale by the owner.  Sometimes the owner still lives in them and sometimes they are empty.  Financing is available through the Federal Housing Administration (FHA), Fannie Mae and Freddie Mac.  All three agencies require proof of income, a down payment and will examine your credit.  30 year fixed mortgages are available.
  2. Short Sale – These are homes for sale that require homeowner/seller approval and lender approval.  The seller owes more than the property is now worth.  As an example, the mortgage owed is for $400,000, but the house is only worth $250,000 right now.  The seller and their mortgage holder have to approve the contract for sale.  The loan you get will be a typical FHA, Fannie Mae or Freddie Mac 30 year fixed.  But you might have to wait – even up to 6 months – for the mortgage holder to approve a lesser pay-off.
  3. Foreclosure – For some reason a lot of people think buying a foreclosure requires a strange and different loan.  It does not.  BUT FHA, Fannie Mae and Freddie Mac do require an appraisal.  The appraisal cannot say the house is an extreme “fixer” and needs lots of lots of work, or you won’t get a typical 30 year fixed rate loan. If the foreclosure you are looking to buy is tired and dirty – which a lot of them are – you generally can get a typical loan.  If the property is an extreme “fixer” and it is obvious, the appraiser will note this and the lender will not approve your loan.  Other than that, buying a foreclosure is like buying a regular resale.

Owner is a CA DRE Broker with over 20 years experience in real estate and lending.  His number is (707) 523-2099.  See website at: sunpacmortgage.com.

WHAT IS A “HARD” MONEY OR “PRIVATE” MONEY LOAN

December 15, 2010 No Comments

There are several types of loans you can use to purchase or refinance. This applies whether you are buying a home to live in; a home to rent out; or a commercial building. They include the standard 30 year fixed rate mortgage; the government FHA/VA loans; a commercial property SBA loan; or a private money loan.

Private money is money borrowed from private individuals. I bet you’ve borrowed money from a relative. That was a private money loan. It wasn’t from the bank or some other institution. Most private money lenders/investors lend money through a mortgage company (there are laws that require this).

Why would anyone borrow private money? There are some great advantages. The property you want to borrow against may not be something a bank will lend on. Banks require a property be in good shape. What if you are looking for speed? Hard money loans are generally much faster than a bank loan. What if your credit isn’t bank worthy? A private money lender will lend you money even with bad credit!

Private money loans are based largely on equity. The most you will get is 70% of the value of the property. If it’s worth $300,000.00 you will be able to get $210,000.00 If you want a 100% loan, hard money will not work.

An example of a hard money loan just happened. The borrower had almost all of the money to purchase a house. She needed only $75,000.00 more – but didn’t qualify for a bank loan. The purchase price was $231,000.00. She only wanted to borrower 32% of the value. That loan got done within 4 days for a quick close. She beat out other’s that put in offers for the house. She could and did quickly close and her house payment is the payment on $75,000.00.

Another example, a contractor wanted to buy a dump house. No bank would lend on it because it was so dilapidated. The contractor had enough for a decent down payment and proved he had enough to fix it up for resell. He got a hard money loan was able to fix up the house and pay off the loan within 4 months.

Maybe you need a hard money loan!

[youtube=http://www.youtube.com/watch?v=V2ebzlL4360]

Owner is a CA DRE Broker with over 22 years experience in real estate and lending. His number is (707) 523-2099. See website @ sunpacmortgage.com.