Welcome to Agents 4 Us your Real Estate Network. I’m Natalie Suarez and this is a podcast dedicated to giving buyers, sellers and investors the latest updates on the Real Estate market. Today we’ll be answering some of the questions we’ve received from our fans in each of our categories.
Buyers:
Many of you would benefit from hearing the answer to this question from Leslie in Fair Bluff, North Carolina
She writes: My husband and I are looking to buy a home in the next couple of months and with all the news about predatory lending I’m a little nervous. What exactly is Predatory Lending and how do we avoid it?
Leslie, Nearly all predatory lending occurs in the “subprime market,” where loans are sold to people with less than ideal credit histories, such as a short work history, high debt, and a record of late payments on credit cards or other debt. Subprime loans have played an important role in helping millions of consumers achieve homeownership, but, unfortunately, some lenders abuse their role and take unfair advantage of vulnerable borrowers.
Leslie here are five possible warning signs to watch our for:
1. Sounds too easy. Remember the old saying: “If it sounds too good to be true, it probably is!” You might see advertisements that read: “Guaranteed approval” or “no income verification” regardless of borrower’s current employment, credit history, and assets. These claims indicate the lender doesn’t care about whether you can afford to make the payments over the long haul.
2. Excessive fees. Watch for higher lender or mortgage broker fees than are typical in your market. Because these costs can be financed as part of the loan, they are easy to disguise or downplay. On competitive loans, fees are negotiable. It is common for home buyers to pay only one percent of the loan amount for prime loans. By contrast, a typical predatory loan may cost five percent or more.
3. Large future costs. High-risk adjustable rate mortgages where the payment rises a lot after a short introductory period are seldom appropriate for families who’ve already had problems repaying other loans. Home buyers also should avoid a large single “balloon” payment (which is a lump sum due at the end of the loan’s term).
4. Barriers to refinancing. Like prepayment penalties that make it hard for a borrower to refinance in order to pay off a high-cost loan by taking advantage of a low-cost loan.
5. Unethical document management. An ethical lender or broker will always require you to sign key loan papers, and they will never, ask you to sign a document dated before the date you sign it.
Sellers:
Here’s a great question from one of our fans in Chicago.
Cindy writes: I interviewed 3 listing agents to help me sell my home. All of them insisted we price the house as low as possible and not wait to lower the price later. Are they really looking to get me the best price or are they short changing me?
Yes, Cindy they are definitely giving you the best advice. Most seller’s have the idea that they should start out at a higher price and lower it progressively as they get more anxious to sell. Here are three reasons why that will result in a lower selling price than if you had started lower.
1.) The first ones to see your house when it comes on the market are other agents. They will analyze the property as soon as it hits the MLS and decide whether it’s a good deal or not. If it’s considered to be over priced it will be ignored and as time passes even if you dropped your price it will be considered stale, therefore taking much longer to sell.
2.) As buyers and agents watch you drop your price the initial excitement over your home is lost. Any interested buyers will now decide to sit back and see how far down you will go.
3.) The longer it sits on the market the more you are likely to feel anxious. Buyers and agents know that, and that’s when the low ball offers come in-- often forcing you to sell for considerably less than you planned on initially.
On the other hand if you price it right to begin with, Buyers and Agents will see it as good deal and they’ll want to move on it quickly before somebody else buys it.
Investors
Jaime from Topeka, Kansas writes?
I heard I can buy Real Estate with my self directed IRA, can I buy a vacation home with it or does it have to be an investment property?
Unfortunately Jamie, IRS regulations will not let you use the real estate owned by your IRA as your residence or vacation home. Nor can your business lease space in your IRA-held property. The underlying premise, for any real estate investment purchased with IRA funds, is that you can’t have any personal use or benefit of the property. To do so may cost you plenty in taxes and penalties.
There are a few other IRS limitations to watch out for as well. For example: You cannot place a real estate property that you already own into your IRA. Your spouse, your parents, or your children also couldn’t have owned the property before it was purchased by your IRA. But, Property owned by siblings may be allowed, since the Internal Revenue Code specifies that only “lineal descendents” be disqualified.
You could purchase a beach house outright later in life, let it generate rental income for five or 10 years, only incurring costs when you need to make up for lost revenue from vacancies. When you reach the age to take disbursements from your IRA, have the house turned over to you as a distribution. If you’re younger, leverage your IRA and pad your retirement fund with years of rental income from a multifamily dwelling. If set up properly, the debt likely will be paid off long before you retire.
We’d like to thank all of you that have written to us showing your support. We love hearing from you. If you have a question you would like answered on the podcast send it to Natalie@agents4us.com.
Whether you’re Buying, Selling or investing the right Real Estate Advisor makes all the difference. Call me Toll Free at 1-877-649-1859 and I will connect you with a top local agent in your area any where in the world. Or go to NatalieSuarez.com to get valuable information for all your real estate needs.
Realtors
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