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Lease Option

Copyright 2010 Cain Publications, Inc., used by permission.

The lease option offers two benefits to real estate investors: a way to control property for little or no money and to rent out or sell a property that might not otherwise be rentable or saleable.

An option is an option to buy. A buyer makes an agreement with the owner of a property to buy that property within a specified length of time for a specified amount of money at specified terms; in return he pays the seller of the property an option fee. The option fee is compensation of the seller for keeping the property off the market for the period of time of the option agreement.

The steps in an creating an option are as follows:

1. Buyer and seller agree on the price and terms under which the buyer will buy the property in the Agreement of Sale (the contract). They write it up just as if the property were being sold now; but instead of the actual sale and closing dates, those are either blank or the space contains the words “upon exercise of the attached option” in place of a date.

2. Buyer and seller attach an option agreement to the Agreement of Sale saying that the buyer has the right to go ahead with the purchase under the terms of the Agreement of Sale until the specified date. Read the rest of this entry »

Recent home buying trends are showing that there are more home loan applications right now than there have been in the past few months. Along with that rise in home loan applications, interest rates on home loans have dropped below 5 percent on a 30-year fixed mortgage, according to one industry group.

The increase over the past few weeks marks approximately an 8 percent increase in mortgage applications since the previous year. This is good news, as the housing market around the country has been hit pretty hard during the current economic crisis. This increase suggests that the housing market is starting to stabilize, after having been in a slump for the past three years.

Still, there is always the possibility that we may not be entirely out of the woods. Some argue that the government programs, such as the new home buyer credit, have propped up the market, and that the market will turn sour again once the program expires at the end of November. There is talk in Washington of trying to extend the program well into 2010.

The rise in the past few weeks comes on the heels of an unexpected rise in the sale of previously owned homes in September, according to statistics provided by the National Association of retailers. Previously owned home sales were at their highest levels Read the rest of this entry »

One of the unfortunate facts about the home buying market is that there are scam artists and frauds who seek to prey on folks just trying to buy a new home. While not all forms of mortgage fraud affect home buyers, there are some that do. In addition, there are some cases where a home buyer has to be careful they don’t accidentally break some of the mortgage rules, thereby breaking the law themselves.

During 2009, mortgage frauds have been on the rise. In April 2009, for example, there was double the amount of mortgage frauds that there were in April 2008.

Here are some examples of mortgage fraud cases that have come out over the past year or so:

• Many cases involve mortgage brokers one broker in California originated more than a billion dollars in fraudulent home loans in six states, including Colorado. The man tried to flee to Canada, and was stopped at the border with $70,000 cash stuffed in his boots.
• Some brokers have stolen identities to originate mortgage fraud. Another broker in California used the social security numbers of 25 children to originate loans.
• One woman in Maryland originated $30 million in fraudulent mortgages. She used the money to pay for her wedding, which cost nearly $800,000, and featured music by Patti LaBelle.
• There were smaller cases of mortgage fraud, too. A bank vice president from Minnesota forged her husband’s name on a $200,000 home loan, for example. Read the rest of this entry »

If you’re looking for a new home, chances are you have some idea of what you want. You might want a certain neighborhood with access to a certain school district, or you might need a certain amount of space. Whatever your situation, there are several factors that will go into determining if a particular home is the right one for you. Here are some of the major factors to consider and weigh against one another when you’re house hunting:

• Price. If you’re smart about it, you’ll get pre-approved for a home loan and know how much you have to spend. Of course, don’t just accept the number that the lender gives you. Make sure you can plug that number into a realistic budget for yourself or your family and that you really can afford it.

• Condition. This should be one of the top considerations when you’re looking at a new home. If the home needs extensive upgrades to the wiring, or if it needs a new roof, you could be shelling out quite a bit of money just to make it livable A fixer-upper can be a great opportunity, or it can be a money pit. Try to have the house inspected by an expert contractor you trust.

• Configuration and Size. This is the area most folks think about first. How many bedrooms and bathrooms is key, especially if you have several people that will be living in the home. You should also think about cupboard and counter space in the kitchen, closet space in the bedrooms and even the size of the garage. Read the rest of this entry »

Loan Rates, Points and Fees

Before you choose a home mortgage loan, you need to understand the rates, points and fees that are associated with your loan.  All these costs can add up to a substantial amount of money so you shop around and compare loan products.

Purchase Points

Points are also called discount points or buy downs. You pay upfront fees to the lender in order to buy down your interest rate over the entire life of your loan. One point is equal to 1% of your loan. So if your loan is $100,000, 1 point is $1,000. If you are going to keep your home more than five years, you may want to buy points to get a lower interest rate.

Interest Rate

Interest rates changes on a daily basis. The lower your interest rate, the lower your monthly mortgage.  Lenders determine your interest rate by Read the rest of this entry »