Source: TREND MLS

www.BucksCountyMoves.com

By Keith Reilly

If you have recently decided to move from renter to homeowner, you are not alone. First-time homebuyers made up 41 percent of the market, according the National Association of REALTORS®’ 2008 Profile of Home Buyers and Sellers. And price declines in many markets around the country have created unique opportunities for those considering home ownership for the first time.

As a homeowner, you have security and stability, the freedom to decorate and remodel, potential to build equity and tax benefits. And with interest rates still at historically low levels – 5.22% for the typical, 30-year fixed-rate mortgage (as of early August 2009), combined with ample inventory, now is a great time to buy.
Plus, there are several incentives and programs available specifically for first-time homebuyers.

First-Time Homebuyer Credit
One program that is a great financial opportunity is the highly publicized First-time Homebuyer Credit, which was part of the Housing and Economic Recovery Act of 2008. This federal initiative allows first-time homebuyers to take up to an $8,000 tax credit, which doesn’t have to be repaid, toward a new or resale property purchased prior to Dec. 1, 2009. For new construction, the purchase date is considered to be the date you first occupy the home.

Under this program, a first-time homebuyer is considered to be anyone who has not owned a principal home within the last three years. If you are married, both spouses must meet this criterion. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer. In addition, ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer. You are also eligible to claim first-time buyer status if you owned a principal residence outside of the United States within the last three years.

The actual tax credit may vary depending on the purchase price and your income. The credit is generally equal to 10 percent of the home’s purchase price, not to exceed $8,000. In addition, the income limit to receive full credit is $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return.

For complete details, visit www.irs.gov and www.federalhousingtaxcredit.com. As always, consult with your tax advisor on how this tax credit may affect you.

Mortgage Loans
As a first-time homebuyer, you don’t have the advantage of using the equity in a previous property to help bridge costs associated with down payment, closing and other fees. Many financial institutions have mortgage products with you in mind. In addition, the Federal Housing Administration (FHA) offers mortgage programs in which your down payment can be as low as 3.5% of the purchase price, and allows most of your closing costs and fees to be included in the loan. Although FHA does not directly loan to consumers, you can work with a FHA-approved lender. For more information, visit www.hud.gov.

The transition from renter to homebuyer is a large step and is arguably one of the largest investments you’ll make, so make sure you take advantage of all the assistance available to make the road to homeownership that much easier.

http://www.BucksCountyMoves.com

By Keith Reilly

 The last step in the home buying process is what real estate professionals commonly refer to as “the closing.” The closing, or settlement or close of escrow, is when all the progressive steps in buying a home from the acceptance of the offer, title search, home inspection, mortgage approval, and so on, come together in a final transaction. The documents are ready to sign, the buyer is ready to hand over the purchase price and the seller is ready to transfer title—and most importantly the keys!

 Usually held in an office setting, most require about an hour and may be attended by some or all of the various parties in the process: the buyer, seller, real estate sales professionals or attorney, and title-company representative.

 What goes on during the closing? The buyer reviews and signs loan and real estate documents, as well as pays for the property, closing and other costs. One such loan document is the federal Truth-in-Lending disclosure form which describes the annual rate of financing (APR), finance charges, amount financed, total of payments and the payment schedule. There will also be a form itemizing what your monthly payment consists of including the principal, interest, taxes, insurance and other monthly charges. If everything is in order, the buyer signs the loan papers.

 Real estate documents are just as important. There’s the HUD-1 form, which you have the right to inspect at least one day before the closing. This statement itemizes services provided and the fees charged for the entire real estate transactions. There will be a breakdown of the seller’s and buyer’s (borrower) financial obligations. Some of the charges include appraisal fee, credit report fee, loan origination fee, loan discount (points), title insurance fee, government recording fees, PMI Premium, inspections and attorney fee.

 Other real estate documents that may be reviewed and/or signed include title documents, warranty deed (which transfers the title of the property) and other acknowledgment of reports.

 Assuming that the funds are in order, the deed is correct and the title is clear, the final step is the disbursement of funds to the seller for the purchase price of the home. The title company should already have the loan funds in its possession, but the buyer will need to bring a cashier’s or certified check for the down payment and the closing costs if it was not included in the mortgage loan. If the buyer’s annual real estate taxes and homeowner’s insurance will be paid through the lender, an escrow account will also be established.

 Once all the papers are signed and funds are disbursed, the buyer will receive the keys and is now a homeowner.

5 Tips to Help You Sell Your Home Fast

There is no question that in many parts of the country, houses are currently on the market longer. As a seller, this slow-down means there is more competition for a limited pool of potential buyers. Consider the following five tips to place your home on the fast track to sale:

Price It Right

The first 30 days are the most critical. If your home is priced too high, interested buyers may never even tour your listing. The longer the property is on the market, the fewer the prospects.

Deciding the value of a home isn’t an exact science. Yet, there is data to help you determine a fair asking price that is right on target. You may want to hire a real estate appraiser for an objective, unbiased estimate. Then consult with a real estate professional who can help you determine true market value based on a comparable market analysis, which will include recent home sale transactions as well as homes currently on the market. From your analysis, you may want to price your home conservatively to give it a competitive edge.

Make Your Home Irresistible

Unless they are looking for a fixer-upper, most homesellers are more likely to make a bid on a home that they can enjoy immediately. Therefore, you need to create an environment the buyer can’t resist. In other words, do everything you can to make the home so attractive, charming, cozy, inviting, comfortable and exciting that a buyer will want to buy that lifestyle for himself.

Evaluate the home from a buyer’s point of view. An experienced real estate professional will be able to offer an objective view and will also know what buyers are asking for. Get your home in tip-top shape by making repairs and cosmetic improvements, and removing clutter. This may mean investing in a few upgrades to modernize your home’s look such as installing newer carpet and light fixtures and painting the walls a neutral shade.

Create Traffic

If you want buyers to see your home, you must first find the buyers. Work with your real estate professional to design a marketing plan that is flexible and capitalizes on your property’s most desirable features. Your strategy should include ways to reach buyers online and offline – such as word of mouth, the Internet, yard signs, direct mail, open houses and so on.

Go with a Professional

Selling a home is more than just putting a sign in your yard and having a listing on the Internet. And in a competitive market, you don’t really want to take the chance of making novice mistakes that can slow the selling of your home. By hiring a real estate professional, you get the benefit of an experienced marketer and negotiator who is familiar with real estate issues in your community. A real estate professional can offer worthy advice on pricing and staging your home based on their vast experience.

Plus, there’s the added value of the peer-to-peer networking among real estate professionals, which can bring buyers and sellers together – sometimes even before the property goes on the market.

Offer Incentives

Offering incentives can be just the impetus a potential buyer needs to select your property over others. You may want to consider offering a carpet or paint allowance. Or, pay for a professional home inspection or a home warranty – and, depending on your market and budget, offer to pay some of the closing costs.

Don’t be discouraged if there are competing homes for sale in your neighborhood. With just a few smart moves, you can turn a buyers’ market in your favor.

-Keith Reilly

Duplex’s Triplex’s and Quad’s

It starts out with getting a pre-approval.  Contact your mortgage rep and find out how much money you can borrow.  This is called a pre-approval.  Once you have been pre-approved you will know how much house you can afford.  If you cannot get approved for a loan then now is not the time for you to be investing in real estate.  If you ARE approved for a loan, then congratulations you now have the tools to get started. 

In my opinion, the safest and easiest way to build real estate wealth is by purchasing and LIVING IN multi-unit properties for as little cash down as possible.  You will be living in one unit of the house and renting out the other units.  These “other” units will be paying your mortgage for you, allowing you to build up equity without paying for it.  You will want to purchase duplex’s, triplex’s or quad’s.  These are obviously houses with 2, 3 and 4 units in them respectively.  Once you have been pre-approved for a loan amount, tell you Realtor you want to look at these three types of properties within the loan amount that you have been pre-approved for.  The reason that you want to purchase houses from 2-4 units is because lenders will typically allow you to move into homes with up to 4 units for as little as a 3% down payment.  Now of course lending rules are constantly changing but let me show you the basic math here.

Quadplex Example

Purchase price:  250,000

Down payment:  -7,500 (3%)

Mortgage (5%):  -1,300 /m

Rents: (750/m per unit)  2,250 /m

Cash flow:  +950/m

That was a pretty basic example but it illustrates some very important principles.  It shows how for very little money down you can live in a house that is not only paying for itself but giving you a return every month.  Now of course there are expenses that have to be paid like insurance, taxes, mortgage insurance, utilities etc but you can see my point.  Instead of you shelling out your hard earned money to pay for your mortgage or rent, you are now being PAID to live in your home.  I would suggest taking the extra cash from rent and putting it into an account to be used for vacancies and home repairs.  Additionally, you should also take the extra rent and put it back into your house for repairs and upgrades.  This will let you raise rent and increase the resale value.  This is called “forced appreciation“.

Part 2

You are now living in your quadplex and you are not only saving a tremendous amount of money but maybe also making a little profit on your multi-family home.  A year has now gone by and you should have been saving up cash for your next house cause guess what?  You are going to be buying your next multi-family property!  Go talk to you mortgage rep and get pre-approved for your next mortgage.  If you don’t get approved then keep saving and try again later.  If you DO get approved then purchase  and MOVE IN to your next multi and repeat the process. 

Quad  1

Purchase Price:  250,000

mortgage and expenses:  -2,000

rents from 4 units (750/unit:  3,000

Cash flow:  +1,000

Quad 2

mortgage and expenses:  2,000

rents from 3 units:  2,250

Cash flow:  +250

Quad 1&2

Combined Cash flow:  +1,250

Combined home value:  500,000

Lets pretend you don’t buy anymore properties and you hold these two homes for 5 years.  Lets also say that they don’t appreciate or increase in value due to demand.

Five years later:

Quad 1

Equity built up:  +25,162

Quad 2

Equity built up:  +20,429

From just an equity standpoint, using 15,000 cash you built up $45,591 in equity in five years.  Not to mention the extra cash flow on top of that.  Now, lets say that your houses appreciated at a modest 3% appreciation rate a year.  Those two properties would be worth $298,513 and $289,818 respectively.  That’s $88,331 worth of appreciation.

Lets look at those numbers again.

Quad 1

purchased in 2009 at 250,000

Quad 2

purchased in 2010 at 250,000

2015:

Total Equity built up: $45,591

Total Appreciation built up:  $88,331

Total Profit:  +133,922

Initial investment:  -$15,000

So what exactly does that mean?  It means you purchased 2 quads in five years that not only paid for themselves, but also gave you a profit of $133,922 on your initial investment of $15,000.  That’s is quite a nice return wouldn’t you agree?  Of course it is easier said then done but just by going through this simple example you can see how you can easily built wealth with very little money.  Just think if you had kept purchasing multi-unit properties that paid for themselves your entire life?  The return would be tremendous.  Of course to pull this off you would have to lean heavily on your team.  Your contractor would be needed to keep those properties is good shape and continuously improving them.  Your Realtor would have to be finding you the best deals and closing them.  Your mortgage rep would be busy finding ways for you to finance them and your lawyer would be busy keeping you out of trouble.  Once again I know this was a very basic example but knowing the fundamentals is half the battle.

All that’s left is a commitment.

-Keith

Search for multi-unit homes on my site

www.BucksCountyMoves.com

Since beginning my real estate career in May of this year, I have had the privilege of experiencing many different aspects of the business and I have to say…I love it!  I just wanted to share with you some of the things that I’ve been blessed with doing this year:

· I have attended countless training courses in subjects such as ethics, buyer/seller representation, real estate investing, commercial transactions, foreclosures and many other topics in order to get up to speed with my peers within the industry. 

· I have shown over 150 homes to clients throughout Bucks County, Montgomery County, Philadelphia County, Chester County and Delaware County resulting in successful sales and satisfied customers.

· I have connected out of state clients with trustworthy, local real estate professionals in South Carolina and Delaware that have resulted in closed transactions and satisfied customers.

I am hoping that with a can-do attitude and strong work ethic my business will continue to grow in 2009 in the face of a challenging market. 

I would like to personally thank those of you who have supported my transition from the US Marine Corps into real estate this year.  I continue to find this career an exciting challenge and am optimistically looking forward to serving you in 2009!

 Happy Holidays to you all and many blessings in the New Year!

There are several online tools to calculate a monthly mortgage you can afford using factors such as your current monthly expenses, down payment and the interest rate. You can also work with a lender to get pre-qualified for a loan. This estimate will help you gauge how much money you may be able to borrow and the monthly mortgage payments.

However, the amount you are able to afford for a home loan should not be your only consideration for determining your price range. With homeownership come other housing expenses.

 Utilities

The most obvious of additional housing expenses are utilities—gas, electricity and water. But don’t forget about telephone, trash collection, and cable or satellite bills.

Taxes

As a property owner, you are responsible for property taxes. The rate will vary from city to city. In our community, the tax rate is (insert %) percent. That means for a home with a market value of $200,000, yearly taxes will run (insert dollar amount). To get a general idea on how much the tax bill will be for a property, ask the seller for a copy of the previous year’s tax assessment. Your real estate professional can help you refine these figures.

Association Dues

Another cost you may incur is homeowner association (HOA) dues. Most condominiums and some (residential developments/subdivisions/neighborhoods) have HOAs, which are legal entities, created to maintain common areas and enforce deed restrictions. As a property owner, you are required to pay the established monthly or annual homeowner association dues. Be sure you factor this cost into your budget.

Maintenance

You also need to consider the upkeep of your home. You should budget for seasonal maintenance such as lawn care, pest inspections and carpet cleaning, as well as unexpected repairs. The amount you budget will depend on the age of the home, as older homes tend to require more repairs such as installing a new roof, painting and replacing older appliances.

Insurance

Depending on the type of coverage and your area, the costs for homeowners insurance each year can be anywhere from a few hundred to thousands of dollars.  And, if you live in an area that has high risks for flooding, earthquakes, hurricanes, etc., you may need supplemental insurance.

Remodeling/Upgrades

Unless the home you purchase is picture perfect, you’ll more than likely be adding your personal touch. Therefore, you need add to your housing budget the costs for remodeling and upgrades. According to “Remodeling Magazine’s” 2007 Cost vs. Value Report, the national average for a midrange minor kitchen remodel is $21,185; a bathroom remodel averages $15,789.

Even minor cosmetic fix-ups such as light fixtures, window treatments, carpeting and decorative cabinet knobs can begin to add up.

By determining all the costs associated with homeownership, you can go into your home search with a reasonable price range that will allow you stay within your budget.

Freddie Mac reports a decline in the 30-year fixed mortgage rate to 5.47 percent during the week ended Dec. 11 from 5.53 percent last week and 6.11 percent a year ago.

Some lenders are locking in even lower rates as they build on momentum started when the Federal Reserve announced plans last month to purchase a substantial number of mortgage-backed securities. HSH Associates and Inside Mortgage Finance are reporting interest on 30-year fixed loans at 5.33 percent and 5.09 percent, respectively.

Freddie Mac chief economist Frank Nothaft says mortgage rates also were driven downward by the recession and rising unemployment.

Source: The Washington Post, Dina ElBoghdady (12/12/08)

Don’t let all of the negative media attention about the “mortgage meltdown” keep you from pursuing your homeownership dream. Mortgage industry woes are primarily limited to subprime loans and other types of creative and comparatively risky financing products. While the mortgage industry stalled briefly to reconsider its more exotic loans, there is plenty of conventional financing available for qualified homebuyers. Interest rates remain at historically low levels – still less than 7% for the typical, 30-year fixed-rate mortgage.

Indeed, the market has changed. It’s gone from a frenzied seller’s market to calmer buyer’s market. In fact, buyers haven’t seen a market this strong in years. When the national median home price dropped for the first time on record, the decline made huge albeit misleading headlines. For starters, there is no such thing as a national real estate market. All real estate markets are local and driven by local factors that include the local economy, housing supply and demand factors and other attributes like geography.

The slight decline followed years of unprecedented steep home price appreciation and the reality is that only a handful of markets experienced price declines. Corrections in markets that experienced exorbitant home price appreciation were expected and signal good news for buyers. According to 2007 third-quarter National Association of REALTORS® (NAR) statistics, the vast majority of the nation’s metropolitan areas showed rising or stable home prices with most areas experiencing modest gains.

Right now there are many homes from which to choose and in most areas buyers don’t have to deal with the harried and hurried competition of multiple bids. The changing market has also changed the inventory landscape to include fewer speculative sellers and a larger share of serious and motivated sellers.

Prospective homebuyers have some time to shop inventory and thoroughly compare home types and prices, amenities, neighborhoods, commutes and other important real estate-related features. And buyers have stronger price negotiation power as sellers compete for their attention by offering concessions or other incentives.

While all real estate markets have ups and downs, Americans continue to consistently build wealth through homeownership. According to the NAR:

One average, the value of a home doubles every 10 years. During the past three decades, home values have increased an average of 6.6% per year.

The average homeowner today has 36 times the wealth of the average renter. Homeowners are essentially paying themselves when they pay their mortgages and this means they’re building equity. Homeowners also benefit from some real estate-related tax write-offs like mortgage interest.

Sixty percent of the average homeowner’s wealth is their home’s equity. For homeowners who’re in their homes for the long-term, home equity typically is their single largest source of wealth.

Because every market is different, it’s a good idea for potential homebuyers to contact a local real estate specialist to learn more about what’s happening in his or her community and real estate market. The bottom line in real estate doesn’t change – if you’re ready to buy and can afford to make a long-term homeownership commitment, it’s always a good time to buy!

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Source:  www.TrendMLS.com