Archive for November, 2002
Real Estate Investment Loan Rates
Real Estate Advice Needed… What to do with low interest loan?
Scenario is that we’re buying a bank owned $187k home, which sold for $189k in 2004. Good credit so rate isn’t a concern. We don’t have anything to put down so my parents offered to help out and want to give us 20% of the sales price as a loan, which we could use as a down payment or to fix up the house or a combination of the two. The house is livable and seems structually sound (inspections to be done) but we could easily spend $20k on the kitchen/baths/flooring. Its in a nice neighborhood and the house is one of the “less nice” houses in the neighborhood. Its a great investment home from my perspective. So if my parents loan us $40k my thought is that we should use half as a down payment and to secure a better rate and the other half to fix up the home. We will be in the house at least two years, probably more like four or five years.
Any advice on how much to spend on flipping the home (keep in mind we will be there for a few years) versus paying a down payment?
a word of advice on the two issues at hand. Forgive the math, as it is just an estimate, but the idea still comes across.
downpayment
It is best to put down as little as possible on the downpayment, unless you are putting down 20% (to avoid mortgage insurance). Every $1000 you put down only changes the mortgage payment by about $7 on a loan that size. The more unnecessary capital you tie up in the mortgage, the less you have to work with, and aren’t really gaining an advantage with the payment reduction.
Consider this. If you put down 10% or $18700, your payment would be roughly $1700 depending on your interest rate and taxes. If you put down 5% or $9350, your payment would be roughly $1763, but you would have an extra $9350 in your pocket. How long would you have to pay that extra $63 every month before it amounted to the money in hand? About 12 years. Since you aren’t going to be living there even half that long, the lower downpayment makes a lot more sense.
Remodeling
If you are remodeling to improve the quality of the home while you live there, then do it now. If you are doing it to increase the resale value, do it in the year you will sell. Most improvements offer the highest return on value if they are recent. Think about this. Would you rather buy a home that says “recently remodeled kitchen”, or “kitchen remodeled 5 years ago”?
Building Investor Clients and the OC Real Estate Market
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How to Use a Short Sale to Stop Home Foreclosure and Protect Your Finances $11.36 Don’t lose your ho me to foreclosure! Do a short sale! Robert Irwin, one of America’s most trusted real estate experts, provides the tools you need to avoid foreclosure—and protect your credit, your wealth, and your peace of mind. How to Use a Short Sale to Stop Home Foreclosure and Protect Your Finances removes the complications and stress often associated with shor… |
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Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis $27.95 An updated and revised look at the truth behind America’s housing and mortgage bubbles In the summer of 2007, the subprime empire that Wall Street had built all came crashing down. On average, fifty lenders a month were going bust-and the people responsible for the crisis included not just unregulated loan brokers and con artists, but also investment bankers and home loan institutions tradition… |
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Navigating the Mortgage Maze: The Simple Truth About Financing Your Home $1.55 Confused or overwhelmed by the “mortgage maze”? Industry pro Dale Vermillion explains the simple truth. Learn about wise mortgage financing, and how to avoid common traps that cost you thousands of dollars! Chapters include: • The Top 10 Mortgage Mistakes • Simple Truth about Interest Rates and APR’s • Mortgage Industry Dilemma • The Simple Truth About De… |
