Mar 21, 2023 | Real Estate
Are you having a difficult time qualifying for a traditional mortgage in the current market? If so, there are other options available, and a lack of financing can frustrate not only the buyer but the seller as well. For example, one option that you may have heard about is called a wrap-around mortgage. The entire goal of this mortgage is to help the buyer get financing to purchase the house while making sure the seller still turns a profit. What do you need to know about a wrap-around mortgage?
What is A Wrap-Around Mortgage?
A wrap-around mortgage is a specific type of home loan that allows the seller to hang on to the mortgage they have in place as the buyer takes out a new mortgage to wrap around the loan that is already owed.
Using this type of mortgage, the buyer will make payments to the seller every month instead of the lender. While this secondary option usually means the interest rate is a bit higher, it also makes it easier for the buyer to finance the home while taking care of the seller at the same time.
How Does The Approval Process Work?
Because there isn’t a traditional mortgage mediated by a lender, the buyer and the seller have to come to a mutual agreement on their own. The seller is responsible for maintaining the existing mortgage, but they offer secondary financing to the buyer, wrapping the new loan into the loan that the seller already has. The buyer and seller have to agree on the down payment, the total amount of the loan, and draw up a contract that outlines the terms of the loan. Then, the title passes from the seller to the buyer.
Consider The Benefits And Risks Carefully
Even though it can help the seller sell his or her house, it is important to understand that there are some risks. There is still a primary mortgage on the home, which means that the seller still has to pay the primary lender. Furthermore, the seller is assuming a significant amount of risk, as they will be responsible for the mortgage if the buyer is unable to keep up with the payments.
Mar 17, 2023 | Real Estate
Rules and covenants of a homeowners association can be a bit overwhelming, especially for a first time homeowner. Understanding that the regulations are designed to protect the value of your home helps make some restrictions easier to live with.
Homeowners Association CC&Rs, which stands for “covenants, conditions and restrictions,” can be intimidating. But, with the growing number of communities and subdivisions that have existing HOAs, it’s important to know what you’re getting into before you buy a home.
Associations Come In All Forms
An association’s goal is to maintain the ambience of the community and assure that home values are upheld. Associations are typically responsible for the maintenance and upkeep of common areas, including streets and green spaces, playgrounds and community pools, if they exist.
Some associations, often in retirement communities, include front yard upkeep; Condominium associations commonly include exterior building maintenance as well.
Homeowners Association CC&Rs may be quite restrictive, requiring vehicles to be garaged or disallowing privacy fences, for instance. Alternatively, they may be loosely organized and act primarily as social organizations designed to foster the sense of community and promote safety for resident families.
Only occasionally is HOA membership offered on a voluntary basis; in those cases, the HOA is apt to be a group with little power.
CCRs Are A Legal Obligation
Subdivisions with functioning homeowners associations must supply prospective buyers with a copy of current CC&Rs prior to closing. If you plan to buy a home that has an existing association, it is important to familiarize yourself with the rules and regulations prior to agreeing to abide by them. Read them thoroughly and understand them completely, because they constitute a legal obligation for compliance as well as for payment of dues and special assessments.
Legal Requirements Of An HOA
Whether the dues are a lot or a little, and whether the association’s affairs are professionally managed or not, the majority of associations are governed and controlled by a volunteer board and elected officers who volunteer their time for the benefit of the community. If you choose to become involved in governance, you might have a great influence over the way rights and responsibilities are defined in your neighborhood.
However, don’t count on being able to make changes to your own property easily if there are clauses in the HOA CC&Rs that initially rub you the wrong way. In some cases, owners require association approval prior to making any changes to the property, whether that be planting a new tree, adding a skylight or changing the color of the front door.
As you consider making an offer on a home, it’s important to decide whether or not you object to any of the existing regulations. If you feel that the regulations will negatively impact your livability in your new home, it might be better option to look for another house. It can be difficult to be at odds with your HOA and can cause significant ongoing stress. Withholding dues or flaunting existing regulations can have unpleasant legal consequences, even resulting in a lien against your property.
Talk to your trusted real estate professional about any concerns you have about HOAs and what you are looking for in a neighborhood. Your agent can help you navigate the area and offer information about individual neighborhoods to make sure that you find just the right home for you.
Mar 16, 2023 | Real Estate
Mortgage lenders weigh the risk of getting their principal and interest paid back by looking at the qualities of the prospective borrower. And due to the amount of money being requested and lent to purchase homes, those requirements can become daunting. Working with a trusted and qualified mortgage professional makes this sometimes confusing process a little clearer.
To this end, there are three things that a potential homebuyer can do to prepare for the mortgage approval process:
Manage Debt And Credit Levels
For many homebuyers, managing their credit score is the biggest challenge. Mortgage lenders like buyers with strong credit. While getting strong credit usually isn’t something that can be done overnight, paying bills on time, all of the time can help to build a positive profile.
Using as little credit as possible is also helpful, since high utilization of existing credit lines can harm a borrower’s score. Having less debt can also reduce monthly payments, making it easier to qualify for a larger mortgage.
Manage Income And Qualifying Ratios
Lenders look for two things when it comes to a borrower’s income:
- Stable incomes are preferred, so being able to prove the income with a W-2 form or other documentation is usually required. Self-employed people will typically need to prove their income with their tax returns, so taking high write-offs can make it harder to qualify.
- A borrower’s income should be significantly higher than his total monthly debt payments. Lenders divide a borrower’s monthly payments — including their proposed mortgage — into the gross monthly income. If the payments exceed a set percentage, the lender will shrink the mortgage until it considers the payment affordable.
Collect Required Paperwork Early
To qualify for a mortgage, borrowers typically need to submit a comprehensive file of supporting documentation. This can include tax returns, pay stubs and bank and investment account statements.
Since lenders frequently want some historical data, it can be a good idea for people considering applying for a mortgage to start collecting documentation before they actually begin the mortgage application process. Once again, working with a qualified finance professional will make this process a lot more comfortable.
Mar 15, 2023 | Real Estate
If you are interested in purchasing a rental property, you might want a short-term rental that you can use as a vacation home. This can be a great way to generate some additional income, and you might be able to make thousands of dollars every week if you purchase a property in the right location. On the other hand, there are several important factors you need to consider before you purchase a rental property.
The Marketing Process
You are only going to make money on your rental property if you can convince people to stay there. Why would someone decide to stay at your rental property instead of a traditional hotel? You must be willing to put in the time and effort to develop a enticing marketing strategy that includes some beautiful photos and videos that will highlight the benefits of your rental property.
The Pricing
Of course, you want to make as much money as possible if you have a rental property, but keep in mind that you don’t want to price the property so high that you end up scaring people away. You might even want to change the price of your rental property depending on the length of their stay, time of year, or special events that might be happening in the local area. You will also want to take a closer look at the competition to see how much they are charging.
Protect Yourself And Your Property
You need to take steps to protect yourself and your property. It can be difficult to predict how your guests are going to treat your space, and you don’t want to rent to guess who could damage your property. Keep in mind that you could also be held responsible if someone is injured while renting your house. That is why you should consider purchasing additional liability protection.
Find The Right Rental Property
There are many advantages you may enjoy if you decide to purchase a short-term vacation home, but you need to make sure you are willing to put in the time and effort to make it profitable. You will want to work with a professional who can help you find the best option in the area.
Mar 14, 2023 | Real Estate
If you are in the process of buying a new home, you know that there are a lot of moving parts involved. You need to know everything you can about a potential house before you decide to purchase it, and that includes the property lines. What do you need to know about property lines, and why are they so important?
How Are Property Lines Drawn?
While property lines are the borders that separate one property from another, they are also legal boundaries. Essentially, property lines determine what you do and do not own. There is a chance that someone may place a fence directly on top of the property line, but there is no guarantee that the fence is in the right place. Usually, property lines are determined and drawn by a surveyor who takes a look at the land, refers to any deeds or records related to the properties involved, and lets you know exactly where the boundaries are located.
How Can You Find Your Property Lines?
When you are looking at a potential property, finding your property lines should be close to the top of your list. You are purchasing not only the building but the land around it, and you need to know where your land will end. This could determine potential projects you have in mind for the property. If you are building a house, there might be stakes in the ground clearly showing your property lines. If you are purchasing an existing property, you may have to pull legal records to figure out where the boundaries are located.
How Property Lines Play A Role After The Purchase
There are several situations where property lines could play a role after you purchase the property. For example, if you need to trim a tree, or if a tree falls on the property line, you may need to know who is responsible for getting rid of it. Furthermore, if there is a home improvement project coming up, you need to know the limits of that construction project.
Know Your Property Lines
You need to know the boundaries of any property you are thinking of purchasing. An experienced real estate professional understands how to look up documentation and let you know exactly where the property lines are before you move forward with the purchase.
Mar 10, 2023 | Real Estate
If you are thinking about building your own home, you might be wondering how construction loans work. There are plenty of options available, but one of the most popular choices is a single-close construction loan. This type of loan allows you to close on not only the construction expenses but also your financing costs at the same time. Essentially, a single-close construction loan will convert into your mortgage after the construction on your home is finished. What are some of the top benefits of this type of loan?
Save Time
One of the first benefits of a single-close construction loan is that you can save a significant amount of time. If you need to get a separate loan for the construction and financing processes, you will have to submit all of your required documents twice. Then, you will need to wait for the lender to review them both times. You can avoid this process if you combine the loans together in a single-close construction loan.
Save Money
Of course, you could also save a significant amount of money by going with a single-close construction loan. Keep in mind that each loan is going to have some origination and closing expenses. If you have to go through the process twice, you will have to pay these expenses twice. With a single-close construction loan, you only have to pay potential origination and closing expenses once, which can help you save money.
Fix Your Interest Rate
What happens if the average interest rate goes up during the construction of your house? This means that your mortgage may have a higher interest rate, and it could make your house unaffordable. You can avoid this risk by getting a single-close construction loan with a fixed interest rate. Then, if the interest rate drops down the road, you may be able to refinance.
Consider A Single Close Construction Loan
In the end, these are just a few of the top benefits of a single-close construction loan. While these loans are not necessarily for everyone, they could be right for you. Do not hesitate to reach out to an expert who can help you figure out if a single-close construction loan is right for your needs.
