(Photo: thinkpanama)When the financial crisis dampened to market trends in the United States about two years ago, those who were greatly hit but the slump were the homeowners with mortgages. Hundreds of thousands lost their jobs and effectively diminished their capacities to keep up with the home monthly payments.
In reaction, the foreclosures rose to staggering numbers and millions of Americans ended up losing their homes. All across America, homes were being foreclosed and families were left on the street. However, the government was quick to take matters into their own hands, and today, real estate investing seems to be greatly improving and those who managed to keep their homes, now have a chance to lower their monthly amortizations.
But through the whole crisis, real estate investing never died and this is solely because of the new generation. There are always new buyers for homes because family life never stopped. The demand for homes never lowered because a newer generation was already in need of real estate and vehicles.
With new improvements in the loaning policies of financial institutions, more and more people could actually apply for loans which are easier to pay for. Interest rates have been greatly lowered, loan modifications that never existed are now an alternative in case something drastic occurs that will affect the paying capacity of the homeowners, and most of all, and programs to aid homeowners have been developed.
The aim of the government is to ensure that everyone could have a roof over their heads. Although foreclosures still and will continue to happen, the efforts to fight foreclosures are more actively sought by both the financial institutions and the homeowners. It is better for their homeowners not to be foreclosed as there are a lot of properties that had been left abandoned and a daily financial drain.
Permalink
(Photo: kaiscapes)Just recently, the tripling of the loan adjustments through the US government’s Home Affordable Modification Program (HAMP) is showing a great improvement in real estate investing. This is according to the Federal Housing Finance Agency data about the loans covered by Fanny Mae and Freddie Mac.
The betterment is due to the various efforts directed in preventing foreclosures like loan adjustments, short sales, and deeds-in-lieu had been vigorously adapted. The efforts to preventing foreclosures took up 75% of most of the activities as compared to previous years when little or no efforts were made.
For a homeowner to qualify for programs like permanent mortgage adjustments through the US HAMP, homeowners must be successful in completing a trial modification period before it could be made permanent. For those who applied, they would be seeing a reduction of monthly requitals of up to 20% or a savings of up to $500 a month. If a homeowner fails to complete the trial, however, there is always an alternative alteration with their loaning company.
For homeowners whose accounts payments are current with Freddie Mac and Fanny Mae, they could actually apply for a refinancing and reduce their monthly mortgage payments at loan-to-value ratios.
The current administrations’ vigorous activities to help the homeowners have lowered the mortgage interest rates. This has helped to stabilize and reduce the rates of foreclosures and has fixed bad loans which were a direct result of the financial crisis two years ago.
This is good news for those who are thinking of real estate investing. In the past, the foreclosures were quick to the draw and a lot of people, especially the Hispanic communities, were greatly affected. Hundreds of thousands of families lost their homes when the financial and real estate crisis first hit. The reactionary foreclosures only managed to increase the instability of the economy and continued to make the market trends keep falling.
The Obama administration’s efforts to dampen the real estate crisis are slowly but surely helping to improve the economy. It is predicted that in a matter of two years, real estate investing would be stabilized and home owners would have better chances in holding on to their homes.
Permalink
Is real estate investing only for the wealthy? Can you buy with no money down? Do you have to know the “right” people? Let’s answer by looking at some of the myths of real estate.
1. Real estate investing is for the wealthy. Money helps, but my first real estate investment was a $3,500 lot – which I sold for a profit two weeks after I bought it. Small deals, partners, low-down deals, or just putting aside $7 per day for a couple years until you have enough money for a downpayment – these are some of the ways to start with a little and invest in real estate.
2. “0 down” isn’t possible. I sold a rental property for $1,000 down because I trusted the buyer to make the payments, and I wanted the 9% interest and higher price. He could have gotten a cash-advance on a credit card for another $30 per month and made it a “0-down” deal. “No money down” means none of YOUR money down, and yes, it happens.
3. “0 down” is the best way. If you don’t invest some of your own money, you’ll have higher payments. You’ll also spend more time finding suitable properties, and pay more for them (generally cooperative sellers want more for their cooperation – I do). There are 0-down deals out there – they just aren’t always worth doing.
4. You need experience. Experience helps, but you get it by investing. Start with common sense, ask how you can lose money, be willing to learn the numbers, and you can start where you are.
5. Some investors have a “knack” for making money. Sort of. More accurately, some just took the time and risk to learn the market and continue their education.
6. You need to know the “right” people. It helps, so start the process. Talk to investors, real estate agents, landlords, etc.
7. You have to be great negotiator. If you learn to run the numbers and make the offers based on them, you can be the worst negotiator and still do okay.
8. You need insider knowledge. Understand one deal, and you are on your way. Read and read more, but the best “insider” knowledge comes from experience.
9. Fixer-uppers are safe. People have the idea that doing the work themselves is the safest way to assure a profit. Not true. Mis-planned “fix and flips” have bankrupted even experienced investors. Most poorly purchased rental properties will only eat a little money every month.
10. The key is lowball offers. The numbers have to work, and you need a plan. You can offer MORE than the market price and make money investing in real estate, if you understand creative financing – and how to do the math.
Permalink