Real Estate Pros and Cons

Today’s current real estate market can be quite challenging to maneuver.  Not only are we dealing with foreclosures and short sales, but a recession, frozen credit lines and uncertainty of the economy as a whole.  But to any situation, there are 2 sides: a pro and a con which we will go over.

Pro – Very Low Mortgage Rates

It seem surprising that even now, rates are continuing to stay at historical lows and for many borrowers with good credit, a mortgage can now be much more affordable at hundreds less a month, savings tens of thousands from the life of the mortgage.

Con – Frozen Credit Lines

Banks are no longer lending freely.  Even though they received quite a bit of money from the bank bailouts, they are holding on to much of the cash.  Many are looking for reasons not to lend.  Although, placing better restrictions on the lending process is still a good idea, some lenders are waiting for real estate prices to bottom out so that they do not end up in a situation where most of their assets/collateral are worth much less tomorrow.   Many are asking for more of a downpayment to cover this vulnerability.  You may also need to be prepared to pay an extra point when obtaining your new property.

Pro: Finally, some good housing deals!!

Real estate prices have fallen dramatically over the past 2 to 3 years.  Prices have flatten to property values equal to 2003 in some areas.  The real estate market is still falling down and there has been no appreciation for these past few years.  Thus, many desperate sellers and bank owned foreclosures are willing to sell for a lot less.

Con: Watch what you are purchasing!!

Values are “great” in many areas, but you still need to be watchful of what you are buying at an amazing deal.  Many problems can be found when purchasing a short sale or foreclosure.  Check out projects that are incomplete, a ruined carpet, missing appliances, and much more.

Pro: Plenty of time to check out the growing inventory of homes!

There are many homes to search through on the MLS sitting for many months (and some for over a year).  Shopping around for the perfect home is quite nice in this market to ensure you get the most home for your money.  Take your time and check out all the homes.  In most cases, you’ve got time.

Con: What if the real estate housing bottom is still far away?

Lenders or banks are looking for when the housing market will “bottom” out before lending more freely again.  The residential market appears to be correcting itself a bit.  The economy overall has everyone’s attention – who knows how long it will take to strengthen consumer confidence again but for sure, when things start to “recover” overall…housing will be climbing in price again.

Filing for Chapter 13 bankruptcy is only a temporary fix, unless it can get rid of all unsecured debt to leave them plenty of money to pay the regular monthly mortgage. If Chapter 13 fails, there is a time or opportunity for the seller to go back to the lender or court and request a short sale.

As always, check with a professional that you trust before acting.  This site offers quite a few options for those facing foreclosure to save yourself trouble with the foreclosing lender.  For only select states that apply due to legality, there appears to be a promise for those that can receive help from youwalkaway.com’s attorney referrals.

Foreclosure assistance should begin right away as recommended not only by this site but by many in the field.  Don’t wait too long.  The longer you wait, the less options are available to help you either save your home or your financial situation.  There are ways to keep things from getting worse, and quite a few companies will promise you the world – always make sure to do your research and trust your gut instinct.  Check with a friend, family or a professional.  Even if you opt for a mortgage loan modification via the site’s forensic review, make sure to explore all your opportunties before sticking with one right away.   But of course, still act quickly.  Time is quite important.

Youwalkaway.com appears to have the right idea, at least they have a 100% satisfaction guaranteed or your money back badge and are even BBB accredited.  Plenty of articles are listed on their site, written by top media companies covering this unique way of handling foreclosures.  The stories are available to read.  Scroll down, click the scrolling logos and you will get a list of news articles.

• Increasing foreclosures and pre-foreclosures (short sales) are leaving many households needing a place to live
• People want to buy but are unable to qualify for a mortgage
• People are moving into the area and want to see how the current economic condition plays out
• Divorce
• Many colleges continue need off-campus housing
• Temporary relocation

Terms you should be familiar with, if you choose to rent:

The owner is called the landlord

The person renting is called the tenant

When you apply, the lanlord may request for a rental application and ask for references.  With your authorization, a credit check will be completed.

If your application is accepted, a security deposit is retained which may end up being about 2 to 3 months of rent.

Double-check your lease terms, is it month-to-month or a minimum of a 1 year lease?

If you want to paint the walls, you should consult your landlord.

The landlord should provide you with some disclosures.  If the home was built prior to 1978, you could be exposed to lead.

Also, discuss the penalties of being late with rent, returned checks or what happens on the termination of the lease.

Before you move in, make sure to note problems of the property like ripped carpet or broken windows (you should take a photo).  It’s also good to obtain renter’s insurance as their personal property insurance will not cover you.

It can be hard to find a pet friendly rental, but many accept small pets.  Check with many rentals before moving in!

Before discussing with your bank on possible options, be prepared to have the following:

• A brief explanation of your hardship
• A detailed list of all your expenses, bill and loans.
• Proof of all household income (including most recent pay stub, tax return or profit and loss statement)

These are some of the repayment solutions available:

Repayment Plan

This option distributes your delinquent payments over a period of time, usually no more than 10 months.  The monthly amount is added to the usual mortgage payment.

Key Benefits: Brings your account up-to-date within a specified time frame and with a goal in sight, you can move forward knowing that your home is secure.

Loan Modification

Adds any past-due interest and escrow amounts to the unpaid principal balance, which then becomes re-amortized over a new term.

Key Benefits: Changes the mortgage note itself, giving your a fresh start on managing your home asset and brings your account up-to-date immediately.

Partial Claim (only for FHA loans)

The Department of Housing and Urban Development (HUD) advances a loan to repay the past-due interest and escrow amounts.

Key Benefits: HUD loan is interest-free and brings your account up-to-date immediately.

Short Sale

Allows you to sell your home and use the proceeds to pay off the mortgage if you are unable to maintain payments, even if the home’s market value is less than the total amount owed.

Key Benefits: Avoids the lengthy legal process involved in foreclosure and generally is less damaging to your credit rating than foreclosure.

Deed-in-Lieu of Foreclosure

Allows you to transfer your property voluntarily to Wells Fargo if you are unable to maintain payments and cannot sell the home at market value.

Key Benefits: Avoids the lengthy legal process involved in foreclosure and may be less damaging to your credit rating than foreclosure.

You can look for Las Vegas homes here to get an idea of foreclosure listings, Repos and other properties foreclosed upon by Fannie Mae and Freddie Mac.

HOMES FOR 1/2 PRICE
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There are quite a few homes for sale in Las Vegas. It’s reported that approximately 45 percent of the homes in this area are vacant and there is a dramatic increase in the number of properties in foreclosure. It is definitely a buyer’s market in Nevada, due to the high number of foreclosure properties entering and overwhelming the real estate market increasing the supply of homes to new levels.

The thing to remember before buying a foreclosure property, even if it is a new home in Las Vegas, is that not all of them are automatically a great deal. Price, location and the condition of the home are very important elements to estimating a good Las Vegas foreclosure purchase in this market, especially as the market continues to decline. Negotiating with the lender is very important and leaves you with a small window of opportunity to get the deal you want. It will take some research for you and real estate agent to research the comparable homes for sale in the Las Vegas market.

Although watch the real estate market in Las Vegas very closely. Although everyone is screaming to buy (especially the real estate agents), we may be experiencing a “dead cat bounce” which makes the market go up just a tad with the amount of people wanting to come in and buy properties. It is estimated that home prices will continue to fall for another 6 to 12 months. Coupled with the next ARM reset expected to happen in the next couple of years and interest rates possibly going up, there is going to be less buyers on the market compared to supply.

Short Sales and Foreclosure are quite different, but how different?

A short sale is when a bank or mortgage lender agrees to discount a loan balance due to the borrower’s hardship. The debtor sells the mortgage property for less than the outstanding debt on the mortgage and turns over the sale to the lender. The lender will typically be paying for realtor commissions and making the final decision on the sale of the home. The lender has the right to approve or disapprove the sale and also the “short sale” of the mortgage property.

A foreclosure is a forced sale of real estate property to pay off the loan that the debtor has defaulted on. The bank or lender will retain ownership or the real estate property will be auctioned at court or sherrif’s sale.