All posts by Elite Properties

A Guide to Buying a House in Foreclosure

A Guide to Buying a House in Foreclosure

with:

Buying a house in foreclosure may save you a lot of money, but it’s not the only thing that these properties offer. Foreclosures can be an ideal option for investors who are looking to fix properties and sell them for better profits. Although, it’s vital to know that foreclosures come with drawbacks. If you’re considering buying a foreclosed property make sure to do thorough research. Scroll down to read our blog on ‘A Guide to Buying a House in Foreclosure.’

Types of Foreclosure Sale

There are five types of Foreclosure sales: 

1. Pre-Foreclosure

Property is in pre-foreclosure when the mortgage lender has notified the borrowers they are in default, but before the property is offered for sale at auction. If a homeowner can sell during this time, they may be able to avoid an actual foreclosure proceeding and its negative effect on their credit history and future prospects.

Pre-foreclosures are typically listed in county and city courthouse buildings. In addition, many online resources list properties that are in the pre-foreclosure phase.

2. Short Sales

A short sale happens when a lender agrees to accept less money for a property than what is still owed on its mortgage. Borrowers don’t necessarily have to be in default for a lender to agree to a short sale, but usually, the borrower does need to show some kind of financial hardship that would likely lead to default, like the loss of a job.

3. Sheriff’s Sale Auctions

A sheriff’s sale auction is held after the lender has given the borrower notice of default and a grace period to catch up on mortgage payments has passed. The purpose of the auction is to help lender recoup their losses quickly from a loan that is in default.

4. Bank-Owned Properties

If a property doesn’t sell at auction, it goes back to the bank and becomes an REO. Banks usually have a department that manages these properties. You can find these properties online on websites like Elite Properties.

5. Government-Owned Properties

If a home is purchased with a loan that is backed by the federal government, such as an FHA or VA loan, and then goes into foreclosure, the government will seize the property and hire a broker to sell it.

Buyers interested in purchasing a government-owned property must work with a registered broker. The U.S. Department of Housing and Urban Development (HUD) has a list of registered brokers on its website.

Causes for a Foreclosure

There are multiple reasons why homeowners fall into foreclosure. One of the most common reasons for foreclosure is a job loss or unemployment. Other reasons why people fall behind on mortgage payments include debts, marital issues, or illnesses. Also, homeowners during a foreclosure may fall into a low-to-moderate-income category that may cause trouble within the job.

As everything has its pros and cons, buying a foreclosure home is not left behind. Below are some pros and cons to consider when it comes to buying a foreclosed property.

Pros of Buying A Foreclosure House

1. Low Prices

The most prominent pro of buying a foreclosure home is its price. As the homes are priced below their market value they can be an easy catch for investors or buyers. Furthermore, foreclosures can offer a ton of savings. Sourced from the balance, according to the real estate data aggregator ATTOM Data Solutions the worth of a foreclosed property over the past five years has ranged from $93,000 to $166,000. 

2. Quick Closing Process

Comparatively, the average foreclosure process typically closes in 30 days as it’s a quick process. Although, till October 2020 the process took an average amount of 54 days from start to finish.

3. Investment Opportunities

A foreclosed property is a way to earn a good profit. Rehabilitating a house by doing a few adjustments can help in establishing a lot of value and gaining immediate equity. If you’re an investor who wants to flip the property for bigger returns then buying a foreclosure house is an ideal investment choice. With the right upgrades and improvements, you can gain a lot of value for an average home.

 

Cons of Buying A Foreclosure House

1. Multiple Repairs

As a foreclosure property requires selling as-is, this often relates to the that the property will need serious improvements. These houses need a lot of upgrades as the previous owner fails to maintain the house due to pricey repairs. Hence, if you are someone moving into a foreclosure property you will probably need to spend a lot of money on basic fixture improvements.

2. You May Not Get To View Or Inspect The House Before Buying The House

Foreclosure houses are sold on an as-is basis hence, there is hardly any chance for buyers to view the property. Additionally, you may not even get the chance to professionally inspect the property before submitting your bid. As these are some important points they can be deal breakers for many potential buyers. Also, you don’t have any access to the property before buying it. This means you can’t enter the property, and only look at the exteriors which are the windows and walls.

3. Competitive Market

Buying a foreclosure property comes with vying, there are several people looking to buy a property for cheap. The inventory can go out quickly as soon as the property is listed. Also, due to the pandemic where everything is online and people willingly avoid human interaction, the inventory goes out faster. The mortgage relief efforts during 2020 limited the amount of foreclosed homes hitting the market which created more competition.

4. It May Require a Huge Amount Of Cash

Keeping rehab costs aside, a buyer may require some upfront cash while buying a foreclosure home at an auction. Usually, at such events, buyers may have to bid in cash. Although, if you’re not bidding at such events for a foreclosure property and have good credit you may still bag financing.  

Monetary assistance for homebuyers

USDA Loan Program – 

There are two programs that the United States Department of Agriculture offers in order to help those with low or very low income who live in rural areas. The first program is called the Section 502 Direct Loan Program and the second is known as the 504. Both programs work to help these individuals obtain safe and decent homes.

The Section 502 program helps low-income or very low-income citizens pay for loans used to buy a modest residence in a rural area.

The Section 504 Single Family Repair program offers loans to very low-income people in rural areas who cannot get bank financing. Elderly people may be eligible for outright grants.

Veterans Administration Loan Program

The federal Veterans Administration has a mortgage guarantee program that is open to current service members, veterans, and surviving spouses. According to Military.com, the loans can be used to buy repossessed properties, although a bit of advance preparation is needed.

This program provides benefits that include zero down-payment loans, reduced closing costs, and a waiver of the mortgage insurance requirement to those who qualify.

Purchasing a Foreclosed Home

If you’re looking to purchase a property from a bank, it’s important to remember that you’ll need to be firm when it comes to negotiating prices. It never hurts to start low, especially if the bank has had the property for an extended period of time. In general, it’s a good idea to make an initial offer that’s at least 20% lower than the market price. However, this number could be higher depending on the location of the property, as areas with a high number of foreclosures often result in more favorable prices for buyers.

If you’re able to pay for the property and any necessary renovations completely with cash, you’re lucky. That’s why some buyers choose to team up with investors who can help finance the purchase and renovation, and in return, take a share of any profits when the home is eventually sold.

Bottom Line

When you consider buying a house in foreclosure it can result in potential savings. Although, it surely comes with a bunch of risks to deal with. Furthermore, if you think the home selling process will take a toll on your head, you may sell your house for cash. You can get in touch with Elite Properties. We are a cash buying company helping people to buy or sell houses. We buy houses as-is and offer hard cash in return. Call us today at 718-977-5462 to know more.

Leave a comment
What Is An Open House?

What Is An Open House?

with:

An open house or a walkthrough is a time when potential buyers can visit the property for a viewing. This usually occurs when a broker asks the owners or renters to vacate the property in order to keep it vacant for others to see and evaluate the space. An open house can also be seen as a way of advertising the property to attract more buyers. If you are a homeowner and considering keeping a walkthrough, keep reading about what is an open house.

How Does An Open House Work?

In real estate, trading properties is an example of a relatively illiquid market consisting of diverse products. Each property will be different from another even if they co-exist in the same neighborhood. The process starts by vacating the property post which the seller or the seller’s agent allows the buyers to enter and have a walk through the place. The house tour proceeds with the real estate agent’s assistance or the seller’s if it’s an FSBO.

The motive of a walkthrough is to offer an ample amount of time to buyers and secure their interest. They additionally get a chance to evaluate the home as well as the surrounding area. Also, it’s always a better idea to attend an open house instead of booking a brief appointment with a broker. Open houses are often set up on the weekends. Sundays in particular, the reason being the availability of maximum people. Furthermore, some owners or agents make it fun by serving coffee, drinks, or hors d’oeuvres at a walkthrough event.

Pros and Cons of Open Houses

For people who want to sell houses fast, an open house provides the opportunity to attract buyers. A good set-up event can interest more buyers leading to a profitable offer. Real estate agents often suggest that homeowners keep an open house on the first-weekend post after the property goes up for sale. As beneficial as it sounds, a walkthrough has certain pros and cons. Some sellers say open houses are too much work, sometimes even more than the house’s worth.

Here are some pros and cons of an open house that you may comprehend

Pros

  • Entices curious buyers
  • Alerts the real estate agents about the issues with the house through visitor feedback
  • May steer to an immediate offer

Cons

  • Can involve more effort in organizing than the house’s worth
  • Online listings can get more potential buyers in less time
  • Homeowners need to leave their homes during all open houses

As a homeowner, you must leave the property for other people to view it. This means you’ll have to make arrangements for pets and children if any that will cost you a lot. Owners also need to remove personal belongings to deter buyers from imagining themselves in the house. Additionally, it also means safeguarding your personal stuff that can be on the verge of theft.

A Broker’s Open House

Unlike the traditional open house, a broker’s open house is only meant for real estate professionals and not the public. A broker’s open house intention is to allow realtors to view the property, and solicit professional opinions and its price. It is also an opportunity for agents to spread the word about a good property and gain clients.

A broker’s open house is often kept on weekdays or midweek when the availability of agents is more. The availability of agents is usually less on weekends as they are busy with clients in walkthroughs.

Bottom Line

Walkthroughs or open houses irrespective of the term, it’s a good way to advertise and sell your house fast. Although, it can take a toll on your head with people constantly visiting your place. Furthermore, managing stays and improvements will definitely cost you hundreds of dollars. If you’re looking for a swift solution and don’t want to compromise on your home’s worth you can get in touch with Elite Properties. We are a cash buying company that offers a fair all-cash offer in any location and under any condition. Give us a call at 718-977-5462 and learn more about the home selling process.

Leave a comment
Do these 5 Things Before Calling a Real Estate Agent

Do these 5 Things Before Calling a Real Estate Agent

with:

Before calling a Real Estate Agent there are a few things you may want to consider. Having financial documents will enable you to sell your house fast. Although, selling your house relies on multiple factors like the condition of your house and your financial situation. Make sure your first impression isn’t a weak one as a poor appearance will draw potential buyers away. Hence, do these 5 things before calling a real estate agent.

Acquire Pre-Approved for a Mortgage

The first step before you contact a real estate agent is to look for available mortgage options. Several factors like price, interest rates, term, etc. decide the type of mortgage you may afford. Additionally, being pre-qualified for a mortgage is different from getting a mortgage pre-approved. As both processes involve evaluating income, assets, and debts, only pre-approval needs an official mortgage application.

Examine the Market

A pre-approved mortgage is the only component on which you can research potential houses in a specific price range. In case you’re selling the house you will need to examine the market for homes that are similar to yours. Furthermore, when you research real estate ads both online and in print, you’ll only know about the asking prices. Here, a real estate agent will tell you about how long the houses have been sitting in the market, their prices, and closing costs. Keep in mind to not fall in love with any property yet. By the time you are ready to buy that property, it might have been already sold.

Declutter The Space

All home sellers by now know how important it is to showcase the potential space in your house. Although, it is also important to declutter your house before showing it to the real estate agent as well. Preparing your home for real estate agents before walkthroughs is vital as it helps them to see the full capacity of your property. This will make your property appear more attractive to buyers.

Keep Your House Spotless

A clean and tidy house shows how much you care about and maintain it. Also, a clean home can result in a faster sale. Little things like sorting your mailbox, cleaning doormats, mowing the lawn, cleaning windows, and properly lighting our day-to-day chores. Doing them at once can work in favor of your home selling process. Furthermore, these things are highly noticeable by buyers so, it’s best to do it beforehand than do it later. Additionally, a clean bathroom is a factor that speaks a lot about the homeowner. Spotless shower cubicles, tubs, and tiles are essential bathroom etiquettes that one must follow whether you’re selling your house or not. 

Explore Potential Agents

Going with the first real estate agent that pops up on a Google search can be a bad idea. Doing thorough research and finding an agent that suits your needs is ideal. Commence the search by asking for referrals from people who recently shifted to the neighborhood. You can also bounce on several online resources for the same.

You may have to look for a real estate agent with experience and who has a large contact base. Remember, real estate agents usually charge around 7% of the closing price on the sale, so make sure to do research beforehand.

Bottom Line

You may always feel a need to hire a real estate agent for selling or buying properties. If you are someone who cannot afford to pay the heavy prices of hiring one then, you can contact Elite Properties. We buy houses in any condition and provide a no-obligation offer. We buy houses as-is which means you naturally avoid the extra costs associated with home improvements. Call us today at 917-722-1272 to know more about a fair cash offer.

Leave a comment
The Dangers of Buying A Home Without A Real Estate Agent

The Dangers of Buying A Home Without A Real Estate Agent

with:

A real estate agent plays a crucial role when buying or selling a home. Buying a home is a big deal hence, paying attention to every detail matters. Additionally, having a real estate agent on your side will help you in eluding multiple issues that come along with the home-buying process. If you’re new to the process then read our blog ‘The Dangers of Buying A Home Without a Real Estate Agent’

Paying Exorbitant Amounts of Money

Unless you don’t belong to the real estate industry you’d hardly know about the accurate prices of homes. Furthermore, if it’s an FSBO home (For-Sale-By-Owner) then, it’s likely that the owner is unaware of the pricing. In most FSBO cases, homeowners overprice the house. Reason being, a lack of knowledge and guidance.

When you hire a real estate agent, they offer you accurate information and provide you with a precise house price. They can give you a fair idea post-first viewing and rest after the completion of CMA(Comparative Market Analysis) or comparables(real estate appraisal term referring to properties with characteristics that are similar to a subject property whose value is being sought.). Additionally, they’ll offer you a suitable bidding price for your house that may take months to establish.

Issues with Disclosures

As a mandatory rule, disclosing problems related to a property is crucial whether it’s for an agent or a buyer. Although, in some places the rules may differ for instance in New York there is a rule known as Caveat Emptor. Caveat Emptor or buyer beware translates that a seller is not entitled to disclose known problems, if there’s an issue then it’ll be on you (seller). Although, major problems like structural issues still need disclosure. 

Being Unaware Of The Neighborhood

A good real estate agent will know and understand your needs and the neighborhood that interests you. They will suggest the best neighborhood according to your requirements and value. Furthermore, they will also enlighten you about the market if it’s steep, low, or stable. If you research alone it’s almost impossible to be precise about prices in a city that you’re unfamiliar with. Moving to a new neighborhood is a big deal as you may spend most of your life residing there. Having a real estate agent at your side can identify potential problems in the neighborhood.

Problems while Appraisal

Paying an extravagant amount for a home can be bad, and seeking financing for the purchase is even worse. The case can worsen if you are buying an FSBO home. As none of the sides are represented the buyer eventually ends up paying more. Furthermore, when the home appraisal is run, the bank refuses to approve or sign off as the appraisal value is low and the amount is high. It’s a scary situation as the final price is settled and the seller doesn’t negotiate on the prices further.

Additional Problems

The situations above are some of the nightmares you would want to avoid by not hiring a real estate agent. Adding to the rest there are numerous other risks that you may fall prey to when you try to trade properties.

  • Loss Of Time

Researching homes, potential buyers, neighborhoods, and buildings can take a toll on your head. Unless you’re a retired person or are currently unemployed you cannot afford to lose time and property.

  • Too Much Paperwork

Real estate agents can be extremely complex with multiple verification processes and paperwork it can get tedious. Laws and regulations can differ from state, city, and region although, it comes inclusive of several documents that require signatures. Every detail counts and if you make any mistake it can cost you a fallthrough or delay.

  • Numerous Lost Deals

The real estate market is highly competitive and constantly changing. Failing to make the right move on time can lose you out to other buyers that prepare beforehand. An agent’s job here is to make sure you’re ready to finalize deals and even win buyers/sellers respectively.

Bottom Line

No matter how much you may deny it, hiring a real estate agent will only help you ease the home-buying process. If you don’t have time to deal with a real estate agent you can get in touch with Elite Properties. We are a cash buying company and buy home as-is, we can close a deal in less than a week. This means you can move with the alignment of your timeline without having the need to disturb your schedule. Call us at 718-977-5462 and get to know more.

Leave a comment
Are You Embarrassed To Ask These Mortgage Home Loan Questions?

Are You Embarrassed To Ask These Mortgage Home Loan Questions?

with:

Let us be honest, we all have some itchy mortgage home loan questions that are difficult to ask. Opening up your personal life and finances can be uneasy. Borrowers may hesitate to talk on certain topics that can eventually lead to a troublesome mortgage home loan process. Read our blog ‘Are you embarrassed to ask these mortgage home loan questions?’, and elude yourself from being in an uncomfortable situation.

If you are hesitant to ask questions that you feel may put you in a compromising state, think again. Loan officers hear it all the time and they have answers to all your questions. Some of the questions are given below. 

Is It Possible To Get A Mortgage Home Loan Without A Job?

The first step to qualifying for a mortgage home loan is employment verification. Your lending institution will look at your debt-to-income ratio, W2s for the past 2 years, etch, to understand your finances. Now, the question is what happens if you lose your job during the home-buying process? Firstly, it’s important for a buyer to be honest with the loan officer and disclose every little detail. Hiding the situation will only get you in trouble and increase the risk of loan default. The loan officer, in this case, will recalculate your savings/earnings and submit a new mortgage application.

Although, you may still qualify for a smaller loan and get a house in that price range.   

How Do I Take An Ex-Off My Mortgage Post Separation?

There are usually two options available in this case

  • Sell your house
  • Let one spouse buy out other

Selling your house and dividing the yields is the most suitable option to resolve the issue of homeownership. Here, the spouses need to settle on a buyout figure (i.e. the home’s appraised value minus the selling price). The remaining amount will be split between the spouses. Furthermore, the spouse keeping the house may decide to employ a mortgage refinance to pay the buyout. So when you purchase back home with this option it will eventually remove the other partner from the property’s title.

What Happens To The Mortgage Loan If I File For Bankruptcy?

Keeping your home while facing bankruptcy is probably one of the biggest concerns for homeowners. Legally, a mortgage lender cannot punish you for filing a bankruptcy either way by changing your loan terms or raising your rate. Although, the cases are different keep in mind several factors and circumstances. Homeowners filing for chapter 7 bankruptcy may risk losing their homes. Whereas, homeowners filing for chapter 13 bankruptcy may keep their home and continue paying their mortgage home loan. 

Does It Matter In Case I Owe Back Child Support?

A child support arrear can be a negative sign on your credit that may lead to failure of mortgage prequalification. Additionally, back child support that has reached the judgment phase may make you appear as a risk to the lender. You may want to consider talking openly to your loan officer about the ways you’re trying to pay the debt. It may also possibly improve the odds of qualifying for loan eligibility. 

The loan officer may also ask you for a court-approved repayment plan to know how you’re managing your debt. Furthermore, paying the debt in full can also ease the toll of credit and qualify you for mortgage programs.

  • I Didn’t Pay My Property Taxes And Got A Letter From The Lender. What Do I Do?

The reason homeowners pay taxes is to fund the municipal services and county. If you fail to pay the property tax bill, the local tax office will commence charging monthly interest. Additionally, you may also have to pay penalty charges for overdue payments. If this becomes a continuous thing a tax lien will be put on your property. The lien indicates you can’t sell the property until the tax bill is paid. 

If you receive a tax notice from your lender, then it’s crucial to contact the tax attorney and your loan officer. Failure of property tax payment translates into the ‘event of default’ that will put you at risk of foreclosure.

There are some options that your loan officer may guide you through

  • Allowing late payments
  • Seeking a tax deferral
  • Creating a payment plan
  • Taking out a property tax loan to pay a debt in monthly installments
  • Why Is It Important To Know Where The Money Deposited In My Account Comes From?

While the mortgage approval process, large deposits of money that are apart from your earnings need an explanation. An underwriter will ask for verification of the large money deposit, to ensure it comes from an admissible source. Confirmation of the deposit also ensures if you’ve taken a new loan that potentially affects your debt-to-income ratio.

  • I Am Unable To Make My Mortgage Payment, What Do I Do?

If you think foreclosure is the only way out if you default on mortgage payments, think again. There are several options available, one of which is to contact your loan officer. Your officer will ask you about the financial crisis and why you won’t be able to make payments moving forward. The objective of the officer here is to help you to keep your house and explore the possibilities. There are options like loan modification, mortgage refinance, repayment plans, forbearance, mortgage assistance programs, or short sale. These options can be a big consideration before the homeowner faces bankruptcy.

Additionally, the Consumer Financial Protection Bureau recommends a free HUD-approved housing counselor. Having a counselor by your side can aid in receiving professional guidance and saving you from foreclosure. 

Bottom Line

Having awkward questions is okay as far as you have solutions for them. Although, if you want to avoid such situations you can sell your house to Elite Properties. We buy houses as-is and offer you the authentic fair market value of your house. Call us today at 718-977-5462 and sell your house fast for cash.

Leave a comment
Everything To Know About A Private Mortgage Insurance

Everything To Know About A Private Mortgage Insurance

with:

Private Mortgage Insurance (PMI) is a policy that protects the lender or the lending institution if you fail to repay the loan. PMI covers a part or all of the remaining mortgage, the borrower pays for the policy while the lender benefits. Like other insurance policies, private mortgage insurance comes with an annual premium, and sometimes it also has an upfront premium too. If you want to dive in deep about knowing PMIs, then read our blog ‘Everything To Know About A Private Mortgage Insurance ‘.

 

What is Private Mortgage Insurance?

Private Mortgage Insurance assures the lender that the loan will be paid, having such a policy helps borrowers to qualify for a loan that they eventually wouldn’t have qualified for. This insurance is mandatory if you pay less than a 20% down payment on a purchase.

In some cases, lenders may allow you to make a down payment of less than 20% without PMI although these loans may have steeper interest rates.

 

1. How Does Private Mortgage Insurance Work?

Similar to other insurance policies, you pay premiums to cover any unforeseen damages due to unfortunate situations. In such instances, the insurance company is liable for paying the outstanding loan if you find yourself incapable of doing it. Lenders contemplate that it is more likely to happen if you have less of an ownership stake in the property.

 

2. Private Mortgage Insurance vs. Mortgage Protection Insurance

Private mortgage insurance (PMI) is different from Mortgage Protection Insurance (MPI).  Mortgage Protection Insurance won’t pay off the whole outstanding balance of your loan if you default. Although it may still make some payments if you fall victim to uncertain situations like job loss, accidents that led to disability, or any kind of serious illness.

Here are some more insights into both PMI and MPI to help you understand better –

Private Mortgage Insurance

  • A PMI insures against a complete default on the loan
  • It protects the lender in unforeseen circumstances
  • It pays in the event of foreclosure

Mortgage Protection Insurance

  • An MPI only covers a chunk or some missed mortgage payments
  • An MPI protects the borrower in catastrophic events
  • May pay in the event of the borrower’s death

PMI Example

Private mortgage insurance (PMI) is an additional cost that homebuyers may need to pay if they have a down payment of less than 20% of the home’s value. For instance, if you purchase a $300,000 home with a 10% down payment, you could be paying between $1,500 to $3,000 per year in PMI. 

To make it more manageable, this cost is typically divided into monthly payments, which could range from $125 to $250 per month in this example. It’s important to factor in PMI when budgeting for your monthly mortgage payments.

 

Factors Influencing PMI

 

Amount of Down Payment

When buying a home, the amount of your down payment can have a big impact on your mortgage payments and PMI (private mortgage insurance) costs. If you make a smaller down payment, your lender may see you as a higher risk and charge you more for PMI. This can also lead to higher monthly mortgage payments and a longer time before you can cancel PMI. However, even if you can’t afford a 20% down payment, putting down more money upfront can help lower your PMI costs and save you money in the long run.

Credit Score History

When applying for a loan, your credit history is an important factor that lenders consider. They will review your credit score to determine how reliable you have been in repaying borrowed money in the past. 

A higher credit score indicates that you regularly make payments above the minimum amount, borrow within your means, pay bills on time, and avoid maxing out your credit limit. This demonstrates that you are a responsible borrower and may result in lower PMI premiums. 

However, if your credit score is lower, lenders may view you as a higher risk borrower and charge higher PMI premiums. It’s important to maintain a solid credit history to increase your chances of being approved for a loan and receiving favorable terms.

Type of Loan

The type of loan you choose can impact the amount of private mortgage insurance (PMI) you’ll have to pay. 

Fixed-rate loans offer less risk because the interest rate remains the same, resulting in consistent mortgage payments. This lower risk can lead to a lower PMI rate, potentially reducing the amount you need to pay. 

On the other hand, adjustable-rate mortgages (ARMs) can bring more risk because the interest rate can fluctuate based on the market, making it harder to predict future mortgage payments. This could result in a higher PMI rate. 

However, ARMs often have lower initial interest rates, allowing you to pay more toward your principal and build equity faster, potentially reducing the amount of PMI you need to pay. 

Your lender can guide you through different loan options and help you determine how much PMI you should expect to pay.

 

How to Avoid Borrower Paid-PMI?

If you’re a home buyer looking to avoid paying borrower-paid PMI (BPMI), there are a few strategies you can consider. 

One option is to make a larger down payment, as PMI is typically required for loans with a down payment of less than 20%. 

Another option is to look into lender-paid PMI (LPMI), where the lender pays the PMI premium but may charge a slightly higher interest rate. 

Finally, you could consider a piggyback loan, where you take out a second loan to cover the down payment and avoid PMI altogether.

 

1. Make a Large Down Payment

If you’re looking to avoid paying Borrower-Paid Mortgage Insurance (BPMI) on your home, consider making a large down payment of at least 20%. This will not only help you avoid BPMI altogether, but it will also give you more equity in your home from the start. Alternatively, if you already have BPMI and have reached 20% equity in your home, you can request to have it removed. And once you reach 22% equity, BPMI is often removed automatically.

 

2.  Apply for FHA & USDA Loan

If you’re looking to avoid private mortgage insurance (PMI), you may want to consider taking out an FHA or USDA loan. 

However, it’s important to note that these loans come with their own form of mortgage insurance. For FHA loans, this is known as mortgage insurance premiums (MIP), and for USDA loans, it’s guarantee fees. These fees typically last for the life of the loan, unless you have an FHA loan with a down payment or equity of 10% or more, in which case you’ll only pay MIP for 11 years. Ultimately, these fees will be in place until you pay off the house, sell it, or refinance.

 

3. VA Loan can help you

If you’re a veteran or active-duty service member looking to buy a home, taking out a VA loan may be a great option for you. Unlike other loans, VA loans don’t require mortgage insurance. Instead, they have a one-time funding fee that can be paid at closing or added to the loan amount. 

The size of the funding fee depends on factors such as your down payment or equity and whether it’s your first or subsequent use of the loan. It can range from 1.25% to 3.3% of the loan amount. 

However, if you’re a qualified surviving spouse or receive VA disability, you may be exempt from paying the funding fee. Additionally, if you’re refinancing with a VA Streamline loan, the funding fee is always 0.5%.

 

4. Piggyback Loan

If you’re looking to avoid paying private mortgage insurance (PMI) on a conventional loan, a piggyback loan may be an option to consider. With this approach, you make a down payment of at least 10% and take out a second mortgage, such as a home equity loan or line of credit, to cover the remaining amount needed to reach 20% equity on your primary loan. 

If you take a second mortgage, you will have to pay it back with a higher interest rate. This is because if you can’t pay back your loans, your first mortgage will be paid first. Make sure to check if this will save you money or if it’s better to just pay the PMI.

 

How to Avoid Lender Paid PMI

If you’re looking to avoid lender-paid private mortgage insurance (LPMI), there are a few options available. 

One option is to pay your entire PMI upfront at closing, which won’t require a higher interest rate. However, keep in mind that with LPMI, your payments are made as a lump sum upfront, so it’s impossible to cancel it. 

Another option is to go with borrower-paid PMI (BPMI), which may be cheaper depending on the mortgage insurance rates at the time. With BPMI, you’ll pay a monthly premium until you reach at least 20% equity. While you can’t completely avoid paying for PMI with less than a 20% down payment, these options can help you save money in the long run.

 

The Pros and Cons of Private Mortgage Insurance

To begin with, there are both advantages and disadvantages of PMIs. Although, it can make it easier for you to qualify for a loan. PMI lowers the risk you present to the lender. A PMI gives you more buying power as it lowers the down payment that you are required to make every time. It can also act as an aid when you’re short of funds.

A primary drawback of PMI is that it increases the monthly mortgage payments and sometimes the closing costs too. Furthermore, PMI payments are no longer tax deductible. Although, you may be able to write off premiums on a loan taken out before 2017 (based on your income and the terms of the mortgage). Additionally, mortgage insurance has one more downside. It only protects the lender in case you default. It absolutely offers no protection to you (the borrower) if you lag behind in repayments.

 

1. Pros of PMI

  • It enables you to qualify for a mortgage loan
  • Allows you to make a smaller down payment

2. Cons of PMI

  • It may increase the monthly payments
  • Can increase the closing costs
  • It provides no protection to the borrower
  • The premiums are not tax-deductible

 

Reasons for Cancelling PMI (If you already have it)

There are several reasons why you may want to cancel your private mortgage insurance (PMI) if you already have it. 

  • One reason is if you have reached 20% equity in your home, regardless of whether you made extra payments towards your principal. 
  • Another reason is if you have made significant improvements to your home that have substantially increased its value. If your loan is owned by Fannie Mae, you must have 25% equity or more, while the Freddie Mac requirement is still 20%. 
  • You can also request removal of your mortgage insurance based on natural increases in your property value due to market conditions. But Fannie Mae and Freddie Mac require you to have 25% equity if the request is made 2-5 years after you close on your loan. 
  • After 5 years, you only need to have 20% equity. However, you must be current on your mortgage payments. For this, an appraisal must be done to verify property value for your request to be honored. 

If you have a single-unit primary property or second home and don’t request cancellation. PMI is automatically canceled when you reach 22% equity. This is based on the original loan amortization schedule, assuming you’re current on your loan payments.

 

Canceling PMI On A Multi-Unit Property

The rules for canceling PMI on a property with many units are different. It depends on if you live there or if it’s an investment. For Fannie Mae loans, you can ask to cancel PMI when you have 30% equity. For Freddie Mac, you need 35% equity.

If you have a property with many units or an investment property with Freddie Mac, you need to ask to cancel the mortgage insurance. It won’t cancel by itself. But with Fannie Mae, the mortgage insurance cancels by itself halfway through the loan term.

 

Is There A Need to Pay for Private Mortgage Insurance?

A PMI typically costs around 0.5% -1% of your loan value on an annual basis. Although, it is subject to vary. The lender will look at your PMI premiums in detail on your initial loan estimate inclusively of the final closing disclosure form. Here, you choose to pay the premium upfront while closing or as a part of your monthly payments.  

Bottom Line

Now that you know everything about private mortgage insurance you may pick and choose wisely. If you think you’re running out of time and can’t make outstanding mortgage payments. It’s probably time to sell your house fast for cash. Elite Properties can help you sell your house as we are a cash buying company and we assure to make the home selling process easy for you. For further information call us at 718-977-5462 and we will guide you through the selling process.

Leave a comment
This Is How You Can Challenge A Low Home Appraisal

This Is How You Can Challenge A Low Home Appraisal

with:

In order to assess property taxes, localities usually have a home appraisal. When you sell your house or refinance it, the bank is liable to order an independent appraisal. This is done to assure it is lending against the property’s true value. The satisfaction of a home appraisal relies on if you are a seller, a prospective buyer, or a taxpayer. If you’re someone who is unhappy with their home appraisal, scroll down to read our blog ‘This Is How You Can Challenge A Low Home Appraisal’.

A thing to keep in mind is that not all homes are up for appraisals if you are a cash buyer you can opt-out. Although, this only happens when the price inclines on the steeper end of the market and the inventory is low. However, if you are planning to finance your new home appraisal is mandatory. On the other hand, according to most housing experts, if you are paying for your house in cash, it is always better to know its worth.

The Multiple Kind of Appraisals

To understand better make sure you are aware of the multiple types of appraisals.

  • Online Appraisal

Many companies nowadays have started performing electronic appraisals to cut costs. Here, they do internet research on comps (comparable homes) to fix the value of your home based on comps and other factors inclusively. Although, in an online appraisal there is a high chance that information on newly renovated rooms or items can be skipped. If something like this occurs, it might impact the assessment of your house as these things are not visible online.

  • County Appraisals

Drive-by appraisals are another kind of appraisal that usually takes place for counties. In drive-by appraisals, a person may take the current picture of their home and comparables, again without the need to visit the house.

  • Traditional Appraisal

Lastly, the traditional appraisal occurs when the appraiser visits the house and gathers information. The appraiser further asks questions regarding improvements. Post which he/she will make a comparison to other similar houses in the area or town. Furthermore, a traditional appraisal may cost several dollars and takes place when a home is sold to the new owner.

Here’s How To Challenge A County Appraisal

The reason for conducting a county appraisal is to assess property taxes based on the current value of your home. If you aren’t thinking of moving any time soon, and when the assessment comes in lower than your expectations. A thing to consider is that your property tax bill will also be less. Additionally, if you want to sell your house in the future you can call the county auditor. There are many localities that allow you to appeal the assessment by providing proof of upgrades or improvements.

Furthermore, while evaluating the property a real estate agent researches the comps in the area. This means using the county’s assessed value may not hold as much importance.

Here’s How You Can Challenge Other Appraisals

If you’re buying a house and the appraisal comes in too low, it will result in declining your mortgage loan approval from the lender. Although, you still have multiple options to try before giving up.

First off, as the purchaser of the appraisal, you are entitled to view the appraisal. Make sure to work closely with the seller’s real estate agent and ensure all major upgrades are taken care off while the assessment. Additionally, ask the seller’s real estate agent to talk to the appraiser about the comps they examined while finalizing the selling price.

You can also request the appraiser to re-examine their results based on comparables. If there are a handful of recent sales in the neighborhood. The appraiser may have found similar homes in other neighborhoods that weren’t comparable as initially thought. If you can provide authentic information to the appraiser there is a possibility they might reconsider the assessment.

Lastly, remember to always be polite while challenging an appraisal. The appraiser may not want to admit that they’re wrong while putting in a place of defense. Make sure you challenge the assessment with absolute respect and talk it through.

Conclusion

There might be times when a low appraisal may work in your favor regardless of your status. Remember, an appraisal relies on multiple factors starting from the home’s condition, its market value, and comparables.

Furthermore, if you have strict time constraints and are planning to sell your house fast you can get in touch with Elite Properties. We buy houses for cash and make an offer based on the fair market value. Also, we offer fast closings so that you can work according to your timeline. Call us today at 718-977-5462 to know more.

Leave a comment
Why Avoid Using Your Home Equity Line of Credit?

Why Avoid Using Your Home Equity Line of Credit?

with:

The biggest perk of being a homeowner is you can build home equity over the period of repayment. As you pay the mortgage your equity in a home increases simultaneously. Additionally, a Home Equity Line Of Credit (HELOC) is a financial product enabling homeowners to borrow a chunk of that equity against their homes. If you are someone who is thinking of using HELOC apart from securing a second mortgage loan; read our blog about why avoid using your home equity line of credit. And make a decision later.

What Is Home Equity?

Home equity or also known as real property value is the unencumbered interest of a property. It is the difference between your home’s worth and the outstanding balance of all credits on the property.

Example – Your home’s worth is $300,000 and you’ve paid $25,000 of the mortgage. Additionally, you’ve put down 20% ($60,000) which signifies you have $85000 equity in the home.

What Is A Home Equity Line Of Credit?

A HELOC (Home Equity Line Of Credit) is similar to a credit card. Although the limit is purely based on the equity you have in your home, most banks offer about 80% of your equity. HELOCs often have a lower interest rate in comparison to other loans and the interest may be tax-deductible. 

As HELOCs have a lot to offer, using them for leisure and entertainment can be an indicator that you are misusing the allowance. Even if the HELOC is cheaper than a credit card, it is still a debt that must be avoided for funding a luxurious lifestyle. Given are some of the activities you must avoid while using your home equity line of credit.

Paying For A Vacation

Adding to other activities, spending your home equity line of credit on a vacation can be a bad decision. HELOCs are a source of cheaper debt in comparison to other kinds of credits, people use them for sponsoring trips. Also, the HELOC offers interest rates below 6% whereas credit cards may be on the steeper end offering 14%-25% interest rates. When you borrow from the home equity you are only aggravating the issue, as you may be risking your home while using HELOCs.

Buying A Car

There was a time where HELOC rates were reasonably cheaper than auto loans. Eventually, the cheaper rates enticed people, enabling them to use HELOCs although it’s not the case anymore. Furthermore, buying a vehicle or car, in this case, is a bad idea for many reasons. When you take an auto loan with a HELOC your loan is secured by the car you purchased. If your financial condition worsens you may end up losing the car. Additionally, if you’re unable to make repayments you may also lose your house. Adding to the rest, an automobile is a depreciating asset.

Paying Off Credit Card Debt

When calculating your repayments paying off expensive debt with cheaper debt may make a lot of sense. However, in some cases, this debt transfer can skip the underlying issue, which is a lack/shortage of income or inadequacy to control spending. It is vital to understand what led you to create credit card debt in the first place. You can only pay a credit card debt if you have the discipline to pay the principal of the loan initially.

Paying For College Education

The primary reason for people using HELOCs as mentioned above is because it’s cheaper than other credits. This makes it a big reason for using it for your child’s college education, however, using HELOCs may put your house at risk. You may have to think twice before using the home equity line of credit as it may risk losing your house. Additionally, if the amount is significant and you’re unable to pay the principal within 10 years. You may carry the added burden of mortgage debt into retirement.  

Investing In Real Estate

Should I invest in real estate with HELOCs? The ultimate answer to this question is that it’s a risky proposition. There are many uncertain circumstances that may affect this decision. Reasons like sudden renovation, or a downturn in the real estate market, etc. can be a pitfall. Due to the same reason, many people have been trapped in debt, which makes repaying a tough task. 

Bottom Line

There are many other ways to fund your requisites apart from HELOCs may it be for education, getting a car, or planning a trip. It is best to avoid using the home equity line of credit and use your savings or other available credit options. Furthermore, if you want to sell your house fast you can get in touch with Elite Properties. We are a cash buying company offering fast closings and no-obligation offers. Call us today at 718-977-5462 to know more.  

Leave a comment
Bad Neighbors

Can’t Sell House Due To Bad Neighbors? Here’s What To Do

with:

You might be doing all things right to sell your house starting from decluttering extra stuff to carrying out improvements. Although, all your pain and time may go to waste and won’t make a difference to a potential buyer, reason, or bad neighbors. Buyers these days do not miss a single point whether it’s asking about the history of the house or negotiating terms with home sellers. One of the points that a smart buyer won’t miss is checking the neighborhood and the neighbors. Sometimes living in a good area is not enough if you have loud, disrespectful, and rude neighbors that bring down the impression of the neighborhood. If you are facing the same issue and can’t sell the house due to bad neighbors? Here’s what to do.  

Talking To Your Neighbors

Communicating can solve any bitter relationship and it may also solve the problem from the root cause. Talking politely about any issue to your neighbor can avoid retaliation situations. You can bring up the topic of selling your house and explain to them your situation. This might diffuse the old problems and smoothen the tiring home sale process. Make sure to be reasonable with your request and assure yourself that reaching out to them in the first place is probably for the best.   

Offer To Help If Required  

Very often your neighbors may have an unsightly lawn that probably is not mowed for more than 6 months. This is just one scenario, they might have junk outside their house or garbage lying all over. In such circumstances, you can offer them help in moving the junk, helping to mow the lawn, or cleaning the garbage. Offering help may take up a lot of your time and money, whether it’s calling for lawn maintenance or a junk removal service. By doing this you are not only helping your neighbors but, also making way for a profitable home sale.

Seeking Outside Help

Let us agree that we all can be a little noisy sometimes but, if you have a loud neighbor who is consistently noisy, it can be a problem. If this is the case, and your neighbor resides in a rental property you can find out the owner of the property and inform them about their tenant/s. On the other hand, you can contact the homeowners association and find out the noise ordinances.  You can check if the neighbor is violating any ordinances by yourself before contacting any agency outside. There are certain guidelines set by the homeowner association regarding the maintenance of homes in certain neighborhoods. 

Raising Concern To City Or County

At times, people face bad circumstances where the neighbor can trespass on their property directly or indirectly. In such a case, you’d want to raise the concerns and take it up with the authorities. However, you may want to check your municipality’s code enforcement and noise statutes. Post which you can report to the police or concerned officials if there are any violations.

Sell Your House To Cash-Buying Companies

We understand that selling your house comes with a lot of responsibilities. Your hands may already be full of staging and decluttering stuff. Although, you may want to check the area where you reside too. Identify the problem areas and start working towards them for a better sale. It’s not just neighbors that can be a potential problem but also the neighborhoods.

If you are still unable to sell your house fast due to the constraint of strict deadlines you can consider selling your house to Elite Properties. We are a cash-buying company, which means we buy houses as-is without the concerns of bad neighbors in any location and condition. Sell your house to us and rest assured we offer the best cash offers based on a fair market price. Call us today at 718-977-5462 and sell properties with us.

Leave a comment