Can't qualify for a mortgage = can't buy a home? Maybe or maybe not.
Consider how the changing real estate market place has been trending back to 20 years ago in many of the "new ideas". I think that Contract for deeds will become another driving force in home sales for the next few years or more.
In order for a contract for deed to be an option, typically the seller has to own the home free and clear. If there is a mortgage that is currently on the home the buyer and seller must be aware if there is a "due on sale" clause in that current mortgage. Because a contract for deed is considered a sale, that can trigger the due on sale clause. In this case the bank will demand full payment of the mortgage at the time of sale. In a situation like that a contract for deed would not work. This should not be confused with an assumable loan.
The possibility of the contract for deed becoming yet another way to buy and sell real estate has a lot to do with the current market as well as all of the baby boomers that are now heading into retirement.
On the sellers side, they would get an amount as a down payment which would free up some cash and in essence they the seller becomes the bank. They are making interest on the payments the buyers make and still hold a stake in the home until the contract for deed is paid off. You can even agree that the contract for deed will last for 5 years and at that time, the buyer will re-finance and pay off the balance to the seller. So there is a lot of freedom for both sides.
On the buyers side, there is no qualification for a mortgage, no origination fee and the interest rate is negotiable between the sellers and the buyers. It will help buyers who have good steady jobs, a good down payment but also might have a few dings on their credit. They can get into a home sometimes years before they could with a traditional mortgage.
So before you give up trying to buy a home because of credit issues or list a home for sale without having all the options, speak to a professional agent who can help you. As always make sure to consult an attorney to answer all of your legal questions as well as your tax professional regarding the impact of any financial decision you make.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
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www.allmnhomes.com
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Monday, December 7, 2009
Friday, December 4, 2009
Why a marked up title commitment can save you when buying a home.
A marked up title commitment or (marked up title binder) is something most people have never heard of. If you are a buyer it is something you want to know about especially when buying a foreclosure or short sale.
This document is something the buyers closer does before the closing that tells the title company what items in the title search will remain on the owners policy and be covered as well as the items that will be removed and not covered. If you take anything away from reading this it should be that in the state of Minnesota you as a buyer have a right to choose your own title company. Do not think you have to use the sellers or banks title company. You want someone who is in your corner protecting your interests.
By asking for this document at closing you will know what is going to be covered such as easements and other things. Gap coverage is probably the most important thing you want. When the title work is pulled before the sale that is the 1st date on the policy so you as the buyer are covered until the county records the deed in your name. The period between those two dates is the gap. On average most counties are running about 6 months behind in their recording, some more some less. If you call them they will tell you they are up to date but most are not. You want coverage during this time as well because this is when most problems can arise. An example would be lets say the seller took out a loan on the home two days before closing and it didn't show up in the title search. Without that coverage you would have to deal with that bank because it would not be covered by the policy. With gap coverage it would be covered and the title insurance would have to deal with it.
This is why a good real estate agent will help to get this for you when you are being forced to use a title company not of your choosing. It is also another piece of information to help you in the event that a problem does come up. If that title company closes its doors the only way to know who the policy is insured by is to have this kind of information. It should be provided to you free of charge at your request.
Moral of the story use a reputable title and closing company that will look out for your best interests.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
This document is something the buyers closer does before the closing that tells the title company what items in the title search will remain on the owners policy and be covered as well as the items that will be removed and not covered. If you take anything away from reading this it should be that in the state of Minnesota you as a buyer have a right to choose your own title company. Do not think you have to use the sellers or banks title company. You want someone who is in your corner protecting your interests.
By asking for this document at closing you will know what is going to be covered such as easements and other things. Gap coverage is probably the most important thing you want. When the title work is pulled before the sale that is the 1st date on the policy so you as the buyer are covered until the county records the deed in your name. The period between those two dates is the gap. On average most counties are running about 6 months behind in their recording, some more some less. If you call them they will tell you they are up to date but most are not. You want coverage during this time as well because this is when most problems can arise. An example would be lets say the seller took out a loan on the home two days before closing and it didn't show up in the title search. Without that coverage you would have to deal with that bank because it would not be covered by the policy. With gap coverage it would be covered and the title insurance would have to deal with it.
This is why a good real estate agent will help to get this for you when you are being forced to use a title company not of your choosing. It is also another piece of information to help you in the event that a problem does come up. If that title company closes its doors the only way to know who the policy is insured by is to have this kind of information. It should be provided to you free of charge at your request.
Moral of the story use a reputable title and closing company that will look out for your best interests.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
Tuesday, December 1, 2009
Short sales and the mess being created by divorce
As if short sales are not already hard enough for the buyers and sellers, why not make it harder? Divorce is hard on everyone including the buyers of a home in this situation. Many questions should be asked by your agent regardless of which side of the transaction you are on.
In the state of Minnesota it takes 1 to buy but 2 to sell. Meaning a person can be married and buy as many properties as they want without involving their partner. However when it comes to selling any of them, that spouse has "marital interest" and must sign off on the sale of the home.
The question that needs to be asked from the list side is what is in the divorce decree? What does it say will happen upon the sale of the home? On the buy side your agent should ask the same question of the listing agent.
The impact of this information could help to avoid a deal from falling apart at the closing table. It would give everyone involved in the transaction an opportunity to negotiate any issues ahead of time, as well as the title company along with it's closers to have all of the proper paperwork drawn up.
Example- Mr. & Mrs. seller got divorced 5 years ago and in the divorce decree it states when Mrs. seller decides to sell the home in the future, $5,000 of the the remaining equity shall be paid to Mr. seller. Sounds simple enough right? Not really because when the divorce was drafted the home at the time was worth about 20% more. Now 5 years later Mrs. seller has lost her job and can no longer make the payments. On top of that she owes more than the home is worth. When the short sale is final there is no money left to pay the $5,000 to Mr. seller as agreed to in the divorce decree. So now at the last minute Mr. seller refuses to sign because he wants the percentage of equity that he is entitled to according to the divorce decree. Without his signature the sellers can not give clear title to the buyers. Now the deal falls apart and the seller has to start all over if the buyer walks. Not to mention all the time and money lost by the buyer preparing to purchase the home.
This situation can possibly be avoided by having all of this information ahead of time. So when considering the purchase of a home you want the agent that is representing you to ask as many questions as they can on your behalf, as well as have a good understanding of many different situations and the impact they can have on a transaction. Do yourself a favor and always hire a full time professional Realtor.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
In the state of Minnesota it takes 1 to buy but 2 to sell. Meaning a person can be married and buy as many properties as they want without involving their partner. However when it comes to selling any of them, that spouse has "marital interest" and must sign off on the sale of the home.
The question that needs to be asked from the list side is what is in the divorce decree? What does it say will happen upon the sale of the home? On the buy side your agent should ask the same question of the listing agent.
The impact of this information could help to avoid a deal from falling apart at the closing table. It would give everyone involved in the transaction an opportunity to negotiate any issues ahead of time, as well as the title company along with it's closers to have all of the proper paperwork drawn up.
Example- Mr. & Mrs. seller got divorced 5 years ago and in the divorce decree it states when Mrs. seller decides to sell the home in the future, $5,000 of the the remaining equity shall be paid to Mr. seller. Sounds simple enough right? Not really because when the divorce was drafted the home at the time was worth about 20% more. Now 5 years later Mrs. seller has lost her job and can no longer make the payments. On top of that she owes more than the home is worth. When the short sale is final there is no money left to pay the $5,000 to Mr. seller as agreed to in the divorce decree. So now at the last minute Mr. seller refuses to sign because he wants the percentage of equity that he is entitled to according to the divorce decree. Without his signature the sellers can not give clear title to the buyers. Now the deal falls apart and the seller has to start all over if the buyer walks. Not to mention all the time and money lost by the buyer preparing to purchase the home.
This situation can possibly be avoided by having all of this information ahead of time. So when considering the purchase of a home you want the agent that is representing you to ask as many questions as they can on your behalf, as well as have a good understanding of many different situations and the impact they can have on a transaction. Do yourself a favor and always hire a full time professional Realtor.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
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