Top 10 Critical Mistakes Homebuyers Make and How to Avoid Them (Part two)

6.Waiting for the ?bubble? to burst. Hot markets come and go. Cold markets come and go. Markets become over-priced, then over-time become under-valued. If you are waiting for a severe correction in real estate prices, pull up a seat, because you might be waiting a long time.

Homes, unlike other investments (the stock market for example) are valuable in two ways: 1) Psychological value - homes have value because everyone thinks they should, and 2) ?real? value (people, homeowners and renters, need shelter).

Because homes are valuable in both respects, home values historically will usually only level out after a hot market. Sometimes homes will lose some value but not very much. St. George homes lost about 5% of their value after the last hot market in 1995?sort of like a balloon deflating because it took several years for this to happen.

If I were looking to buy a home I would be more concerned with interest rates and less concerned with playing with bubbles.

7.Not choosing a real estate agent carefully. In our town about 75% of real estate agents have been in the business one year or less. I suspect that this is true nationwide. The hot market of 2005 caused everybody and their brother to want to get their real estate license. When you contact a local agent, you probably have a 3 out of 4 chance of getting an agent who is severely under-qualified to represent you in the purchase of $250,000+ investment?your home.

You?ll want to contact at least four agents to make sure you are getting the best one you can find. Ask questions and then trust your instincts as to which agent is the best one for you.

8.Not having a home inspection done by a Professional Home Inspector. A good, experienced Home Inspector will catch problems in a home that most homebuyers would miss.

I have seen all of these items missed by a potential homebuyer, but caught by a home inspector:
a.A dryer vent, venting into the attic
b.A ground fault interrupt breaker not working (this can kill you!).
c.Evidence of termites
d.Aluminum wiring
e.A roof leaking into the attic, but not into the main part of the home (yet!).

Several years ago I became aware of a transaction in our real estate office where the buyers decided not to have a professional inspection on an almost new home they were buying. They ?inspected it themselves? to save the $300. Too bad they didn?t catch the fact that some of the basement windows leaked badly when it rained. The water stains were clearly visible had they known to look. That turned out to be a huge mess involving lawyers, threats and grief. This could have been avoided by paying the $300 to have a Professional Home Inspection.

9.Not receiving a home warranty at closing. It?s 3:00 AM. You wake up hearing water running in your newly purchased home. It keeps running. And running. You get up to check it out and find your basement floor covered with water from the broken water heater. Luckily the damage from the water is minimal. You go to look for the Home Warranty confirmation in the documents you received when you bought your home the previous month. You know that the home warranty company will replace your broken water heater for only $55. Suddenly, you slap your hand to your forehead and make the Homer Simpson ?Douhhh? sound as you realize that you didn?t get a home warranty because the seller wouldn?t pay for it and you certainly didn?t want to pay for it.

Lesson learned, always get a home warranty you buy a new home, even if you have to pay for it. It is money well spent. I would never buy a home without purchasing a home warranty. I never sell my own properties without a warranty for the buyer. It just makes good sense.

10.Not meeting the neighbors before you make an offer. Don?t you really hate it when your neighbors suck? Don?t you think it would be a good idea to do a little door knocking before you buy your new home? How about going online to look at your state?s website for registered sex offenders?

I did a little door knocking before I bought a foreclosed home in St. George. I was buying the home for my personal use and as part of the ?due-diligence? I decide to meet the neighbors. I asked which house was the ?bad house? on the street. I came to find out it was the home I was buying because the previous owners were noisy, rude, dirty, and didn?t care for their home. I changed that by buying the home and moving into it.

There you go; 10 simple steps to keep yourself, as a homebuyer, out of hot water. Violate any of these steps and you may end up losing a little or a lot of your hard earned money. Now go out and find the home of your dreams!

About Me:
I have lived in beautiful St. George, Utah since 1998. I have been a real estate agent here (Washington County, Utah) since 1999. I have survived terrible housing markets and thrived in amazing markets (38% home appreciation in St. George in 2005). For more interesting articles, or to sign up for receiving my weekly St. George foreclosures email please visit my website: DonGlasgow.net. I also provide homebuyers with instant access to the Washington County MLS. I have gotten tons of compliments on my website, so make sure and check it out!

The Dangers Of Overvaluing Real Estate

We all have done it at one time or another.

When short of listings, the Realtor goes out and ?buys' one. The process of buying a listing is as old as Real Estate itself. The agent shows up at someone's doorsteps and inflates the value of the property by more than $30,000, $40,000 or even $50,000 over and above the actual market value. I know of agents who have actually listed properties for $200,000 more than what those properties were in fact worth. The owner happily signs the listing agreement with those dollar signs sparking right in the eyes, and the Realtor happily sticks up a sign right in the front lawn. Of course the house subsequently does not sell because it is overpriced, but it doesn't really matter.

Or does it?

All the way back in 1988, in a legal case entitled Basic Inc. v. Levinson, the United States Supreme Court endorsed a theory known as ?fraud on the market', which in turn relies on another theory known in Economics as the Efficient Market Hypothesis. The Efficient Market Hypothesis postulates that prices of traded assets like stocks, bonds, or real property, already reflect all known information and therefore are unbiased in the sense that they reflect the collective beliefs of all investors about the value of the underlying asset and enable investors, therefore, to assess future prospects.

In essence the Efficient Market Hypothesis, which was developed in the 1950's and 1960's, states that subject to certain conditions the market price of a traded asset fully and accurately reflects all the available information relevant to its value. Under this Hypothesis, in an efficient market the only reason as to why a price changes is that new information comes to light.

Because market prices reflect all available information about an asset, reasoned the Supreme Court, misleading statements as to the integrity of price will affect and negatively impact the decision-making process of investors, who rely on those statements as the primary guide to finalize a purchase. Which is tantamount to ?intentional deceit', more vulgarly known as ... fraud.

That ruling has proven a goldmine for American trial lawyers, who have won fortunes by suing firms for damages when new financial information, often in practice a restatement of their balance sheets, is followed by a sharp fall in stock prices of the same firms. The fall is treated as proof of overvaluation due to the initial, wrong statements.

This decision of America's highest Court has now crossed the border with Canada and has spilled into Real Estate. A case involving a Seller, a Buyer and a Real Estate Agent acting in a position of dual agency is now pending in front of the Supreme Court of Ontario. The Agent first grossly overvalued the subject property at the time he took the listing, then actually found a Purchaser ready, willing and able to buy at a price close the grossly inflated asking price. As the transaction was being financed through an institutional lender, the underlying case initially also involved an appraisal firm, which subsequently has settled out of Court with the disgruntled Purchaser.

The decision of the Supreme Court will have an enormous impact on how real estate is practiced in Ontario and possibly throughout the whole country, and it will be interesting to see what the outcome will be. The Buyer bases his case on the Efficient Market Hypothesis arguing that he reached the decision to purchase on the integrity of the asking price and claims, furthermore, that the dual Agent knew or should have know that the asking price was grossly over and above the market value of the subject property. The Buyer is claiming damages both as against the Agent and the Seller.

The line of defence is that the true meaningful value of an interest in land is given by its ?objective value', defined as the price that the property will fetch in an open and fair market, given sufficient time to find a Purchaser, the amount of advertising involved in the marketing of the property, the relationship between the parties and the terms of financing. The additional argument of the defence is that the truthfulness of the Efficient Market Hypothesis is actually being disputed by Economists even in its original field of application: the Stock Market. More specifically, the defence argues that even highly developed financial markets such as the New York Stock Exchange are not efficient enough to allow Courts to calculate the financial damages caused by fraud, and that estimates of damages based on the Hypothesis will be necessarily overstated.

The Realtor in particular contends, furthermore, that at no time the thought of earning a double commission ever crossed his innocent mind (he was walking the dog one day and ...).

All of which goes to prove once again the point I have been making for years - that is sellers, buyers, realtors, lawyers and judges invariably make an explosive mix.

Luigi Frascati

Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://wwwrealestatechronicle.blogspot.com where you can find the full collection of his articles on Real Estate Economics and Finance. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton-Centre Realty in Burnaby, BC.

Luigi is very proud to be an EzineArticles Platinum Expert Author. Your rating at the footer of this Article is very much appreciated. Thank you.

Real Estate for Sale in Arizona

If you are looking for real estate for sale in Arizona, you may want to check the Internet for listings or consult with a real estate broker.

If you are looking for a top custom builder of homes, the Dalton Ross Homes may just be what you?re looking for. On the other hand, La Costa Homes is a premium property found in Kingsman, Arizona. Its builders put a premium on quality. Additionally, Esmay Construction showcases quality properties. They has open floor plans and customized features with a flair for architecture. They have new homes in Kingsman, Arizona, and in Lake Havasu City along with the popular Valley Vista Gold Course.

If you are interested in a family-focused Scottsdale community, there is a modern and luxurious estate in Paradise Valley. Perhaps you are looking for a quaint ranch in Carefree or a custom house with a creatively designed golf course or even a downtown loft. You can search for these homes online with the help of agents.

Some online real estate firms offer first timers and veteran home purchasers valuable knowledge to guide them in their decision-making process. They provide real estate reports online, articles on available properties and a monthly newsletter with informative features on the Arizona real estate environment.

If you are the seller, remember not to utilize traditional methods of selling properties such as open houses and advertisements in magazines. Make sure that the agent maximizes exposure of your home to command a good price.

Since the selling strategies of properties have undergone dramatic changes, a proactive approach is necessary. These include agent-to-agent selling, marketing through the Internet, and other new techniques so your property will fetch a handsome amount.

So keep these things in mind to guide you in your search for estates in Arizona.

Arizona Real Estate provides detailed information on Arizona Real Estate, Tucson Arizona Real Estate, Phoenix Arizona Real Estate, Arizona Real Estate Agents and more. Arizona Real Estate is affiliated with Arizona Vacation Rentals.

Short Sales: How to Deal with Rejection

Buying houses by means of a short sale can be a great way to make significant amounts of money, but they're not for everyone. You have to find a seller who will work with you to persuade the lender to sell the home rather than allowing the foreclosure process to continue. Then you have to submit an offer that's low enough to make a profit, yet not so low as to be rejected altogether.

If a lender does reject your offer, all isn't lost. The first thing to do is to try to determine why your offer was rejected. There are many possible reasons, and if you want the sale to go through, you must job find out exactly what the lender wants in order to make the sale happen. Here are possible reasons.

First, your offer may simply have been too low, which meant the lender would be taking too big of a hit by accepting it. They also may believe they can do better once the foreclosure has been completed, or since loans are often sold to investors, it's also possible that the holder of the note wouldn't accept the loss.

Perhaps the borrower's financial difficulty wasn't stated strongly enough to make a persuasive case for a short sale. If that's the case, the lender might want to work out an alternative payment schedule with the homeowners rather than entering into a short sale.

Since most lenders will require a broker's price opinion (BPO), make sure your offer is somewhere near that figure. Otherwise, a lender will be convinced that they can do better on the open market once the foreclosure is complete.

There may be other reasons, but the number one reason short sale offers are rejected is simply because they're too low. After all, lenders are in business to make a profit, and even when appears there's no profit to be made in a particular home; they want to cut their losses as much as possible. So don't get greedy. You'll rarely be able to steal a home, but you can often get a substantially lower price than you would on the open market.

One of the best ways to avoid coming in too low is simply to ask the lender how much they hope to net from a short sale. They may not tell you, but you'll never know if you don't ask. Even if you don't get an answer in the beginning, you'll have another chance to ask before they make a counteroffer. Be courteous, but emphasize that you're really hoping to make the sale happen. Again, you may be surprised by the figure you receive, and if it's acceptable, jump on it. Don't kill your sale by being too greedy.

If your short sale offer is rejected, don't give up. Probe for more information about why your offer didn't fly and then try to satisfy whatever they ask for before making your counteroffer. You won't be stealing the home, but there's often plenty of profit to be made.

Copyright ? 2006 Jeanette J. Fisher

Learn how to fix houses for flipping or higher rent with the Design Psychology edge.

Author Jeanette Fisher teaches interior design psychology, home staging, and real estate investing.

http://www.doghousetodollhouse.com

Tennessee Home Buying

Maybe you?re buying your first home in Tennessee, or perhaps you?re relocating to Tennessee from another state. Either way, it?s important that you educate yourself on Tennessee home loans before shopping for a home and mortgage. This article explains what you?ll need to know before buying a home in Tennessee:

The price of homes in Tennessee varies widely between zip codes. For example, in Nashville, Tennessee, the median price of a home in the summer of 2005 was $209,000; however, the median price of a home in Knoxville, Tennessee, was $175,000. Overall, the median price of a home in Tennessee in between July 2004 and July 2005 was $166,400.

Tennessee has a very active housing market, and home prices in Tennessee appreciate at a rate comparable to the national average. Between July 2004 and July 2005, home prices in Nashville, Tennessee, rose by 9.5% from the previous year. However, the rate of job growth in Tennessee during the same year was only half of the average national job growth rate.

Many Tennessee organizations banded together to create the Tennessee Home of Your Own Program -- a program to help people with disabilities purchase their own home. Through this program, Tennessee residents with disabilities can get technical assistance with the home-buying process and assistance with down payment and closing costs. Additionally, this program offers home-ownership classes to people with disabilities.

Before closing on the purchase or sale of a home in Tennessee, buyers and sellers need to be aware of a Tennessee law that prohibits the use of personal checks in amounts greater than $1000 for costs associated with loan closing. If loan-closing costs are going to be greater than $1000, the buyer or seller will have to pay by a cashier?s check, wire transfer, or cash.

Jessica Elliott recommends that you visit Mortgage Lenders Plus.com for more information about Tennessee Mortgage Rates and Loans.

How Much Equity Does Your Home Have?

When it comes to real estate, there are few things more important than equity. All of the advice given to first-time homebuyers centers on how much equity they are likely to build in the time they will be living in the home. Additionally, when it comes to getting a home equity loan or selling the house, knowing how much equity you have built up is quite important. It will determine how much cash you end up with. And that is no small consideration.

A Definition of Equity

Most of the time, equity refers to the amount of ?ownership? you have in a particular piece of real estate. A set amount of cash is the main expression of the equity in your property. Equity is usually built by a combination of two things:

1. Making mortgage payments
2. Increases in the property?s value

The longer you have the real estate, and make payments on it, the more equity you are going to build up in the property. And if you live in an area where the home values are increasing, you will find that helps with your equity as well. This is the reason that the general advice is to buy only if you plan to stay in a home for at least five years. This gives the property time to appreciate, and it allows you the time to pay down some of your property loan?s principal.

Determining Your Real Estate?s Equity

It is usually very simple to figure out how much equity you have built in your real estate. First, you need to find out what the current market value of your home is. You can do this by talking to a variety of real estate agents, mortgage loan officers, and appraisers. Next, you subtract the amount that you still owe from the market value of your home. The result is your equity. Here?s an example:

You bought your home 11 years ago with a loan for $115,000. Now, however, the property at current market value is worth $135,000. And you have paid down some of your loan, still owing about $75,000. To figure your equity, you subtract the $75,000 from the $135,000 for a total of $60,000. This is about how much you could expect to pocket if you sold the home at current market value, or the amount of money you would have access to with a home equity line.

Visit Home Equity Wise to view our Recommended Home Equity Lenders online. Also, visit Home Equity Wise to find information about obtaining a Home Equity Loan Online.

Home Staging Can Help You Sell Your House Quickly

Real estate prices have hit record levels in the United States during the last five years. In some parts of the country, prices have tripled. For those selling houses in the first half of the decade, business was very good, indeed. Rising interest rates and sticker shock have slowed the market down, however. In some parts of the country that used to be hot, sales have slowed to a crawl. In those markets, people who want to sell houses are now waiting months when homes used to sell in days or weeks. What can a homeowner who wishes to sell as quickly as possible do to accelerate the process?

A relatively new service called home staging may be the answer. Staging a home essentially means setting it up so that it makes its best possible presentation to the market. Professional home stagers will, for a fee, come to your house, examine your property, and make recommendations as to what you might do in order to make the house as sale-friendly as possible. In some cases, they will simply recommend a coat of paint, a bit of landscaping, or some new drapes. In other cases, more dramatic help may be needed.

It is often difficult to sell a home that has been vacant for a while. Buyers have a hard time imagining what their belongings might look like in an empty house. A good staging company will have in their inventory a selection of different types of furniture, lamps, decorative accessories and more so that a vacant home can look like a showcase. A fully and tastefully decorated home is much easier to sell than a vacant one.

The service isn?t necessarily inexpensive. Homeowners might expect to pay several hundred dollars for an initial consultation as well as a fee of several times that amount for the first month of a fully furnished, professionally decorated home. Rates for subsequent months tend to be lower than for the initial month, but many homes that have been professionally staged aren?t on the market much longer than a month. In fact, studies have shown that staged homes often sell in half of the time of other comparable properties.

Having your home professionally decorated in order to sell it isn?t something that everyone needs to do. But in markets with slowing real estate sales, staging a home may be the difference between selling the house this week and selling it three months from now. For many sellers, the investment is more than worthwhile.

?Copyright 2006 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.HomeEquityHelp.net, a site devoted to information regarding home equity loans, mortgages and lines of credit.

Financing With A Home Equity Loan

by: Joseph Kenny

If you have good credit, a homeowner, your mortgage is paid on time every month and you are thinking about borrowing money, the home equity route may be the way to go. What this allows is suppose your home is worth substantially more than your current mortgage, for example, your mortgage is for £100,000 but your home is worth £200,000, you will have an equity of £100,000 in the value of your home that you can borrow against.

A home equity loan can be used for many purposes:

-Paying off other debts;

-Taking a holiday;

-Paying for university;

The loan is secured over your home, and therefore, the interest rate will generally be lower than for other types of credit that may be available. This makes them a good option for paying off higher interest debts, so long as you don’t rack them up again, or taking on a larger project such as a house extension. It is often a good idea to use a home equity loan to renovate your house, as the house value increases as a result, and often by more than what you pay to renovate it. You can also receive a tax credit on the interest paid on the loan.

However, it must be remembered that such loans are not appropriate for everybody in every situation. They should generally only be used for large projects of long term needs. For smaller loans, it may be better to look at other options such as personal loans. The rate and terms, as with all loans, will vary depending on your payment history and the amount and length of the loan.

The loan can be offered as a lump sum or as a credit line. The lump sum gives you the whole amount of the loan all at once and interest is payable on it immediately. With a credit line, you only use the money as needed, up to an agreed maximum, and interest only accrues on the amount you use.

You should always carefully review your finances before taking on more debt, especially if it is to be secured on your home. Using your home as security means that if repayments aren’t made on the loan, you could lose your house. It is therefore important that you are comfortable with the amount you are borrowing. You should also look at the differences in costs between a lump sum and a line of credit and decide carefully which one better suits your needs.

About The Author


Joseph Kenny writes for the loan comparison sites, http://www.ukpersonalloanstore.co.uk and also http://www.selectloans.co.uk. The latest loans are reviewed in detail at the Loan Store.

Home Equity Loans: Abusive Lending And How To Avoid It

by: Dan Johnson

Home Equity loans were initially designed to allow individuals who had not yet paid off the full amount of their home, the ability to borrow against what portion of the home they had paid for. So for example, a couple who had been making monthly payments for many years on their 30 year lease, could use the money they had already put into their home as collateral when they needed a loan to send their child to college. So, while the initial intent of the loan is regarded by some as noble, in practice it has served as a free-for-all for unscrupulous lenders and other scam artists.

Explaining Sub-Prime Lending

Home Equity Loans fall into a broad category known as sub-prime lending. Unlike prime lending, which is heavily regulated and offered to those living in good neighborhoods with fair to good credit, sub-prime lenders target those in bad neighborhoods with worse credit ratings. Because they offer loans to individuals who otherwise might have difficulty finding a loan, they were and are able to justify to the government the need to have greater free reign when it comes to setting the interest rates and finance charges associated with their loans.

This window, combined with the deep pockets of Home Equity Loan firms able to grease the campaigns of politicians, has prevented the industry from coming under the heavy scrutiny and regulation of prime lending. Consequently, what is seen in this industry is widely varying interest rates, and charges that are completely disproportionate with the risk incurred by the lending institution.

How to Protect Yourself

For the investor interested in taking on a Home Equity Loan, there are a few measures which can be taken to radically diminish the chances of being taken advantage of. The first precautionary step is to request a copy of the loan a full week before you sign it. The lending institution is required by law, to provide you with a copy of the loan many days in advance of you signing it. It is a rather simple task to ask for the loan, and the lending institutions response often reveals much about the quality and legality of the loan. If the lending institution says, that either the loan paperwork is not yet ready, or otherwise fails to produce the paperwork inside of a week prior to the signing, you should walk on the loan.

The catch-22, and consequently the reason why Home Equity Lenders are able to take such advantage of borrowers, is that often they are facing foreclosure and desperately need the loan. While your need may be very real, signing a sub-standard loan will ultimately put you in far worse shape than you ever were before.

Recognizing the Hidden Charges

The second, and potentially most important technique to prevent predatory lending, is to demand that all loan costs not be rolled into the APR, but be listed and paid by you up front. What predatory lenders do to entice individuals into taking a loan, is to soak up the equity in a home and offer you a small kickback on the side. So, taking the example of our couple above, let us imagine that they have $50,000 in equity in their $100,000 home and have a fixed mortgage rate of $650 a month. They then go to a Home Equity Lender who tells them that upon signing the loan they will get $20,000 in cash and their new interest rate will be $580 per month. What they do not tell the borrower is that they have also cashed out the other $30,000 dollars in equity and paid it to themselves in "refinancing fees." In addition, the new mortgage they receive may either be variable, meaning that as interest rates climb so will their new payment, or be back loaded, meaning that by the end of the loan the payments may reach $1,200 a month.

Can Home Equity Loans be useful? Yes, but only under ideal circumstances. By and large, they are a product designed by unethical lending companies to take advantage of those desperate for a little cash now. If you plan on applying for a Home Equity Loan, it is vital that you take the two steps outlined above as well as have an experienced independent third party go over the loan and its convoluted terms with you.

About The Author


Dan Johnson enjoys writing about home equity loans. Visit http://www.homeequityloanlowdown.com/ to learn more.

The Basics Of A Home Equity Loan

by: Adam Jackson

In general, the basics of a home equity loan are quite simple. A home equity loan is a loan secured against the equity of your home. The lenders will measure the equity amount of your home, by looking at how much of the mortgage remains (if any) and what the current value of the property is. Most high street lenders are happy to lend money of up to 75% of your home’s equity. Similar to a mortgage, the loan will usually run for 10 to 25 years and have a rate of interest applied.

In most cases, a home equity loan is seen as a second mortgage. It will run along side your original mortgage and be paid in the same way. The more common reasons for taking out a home equity loan include home improvements, purchasing a second home or debt consolidation.

In fact, most lenders are now aggressively pushing their debt consolidation products. This has become a growth area in recent years, mainly due to people over spending on their credit cards. A home equity loan will allow the borrower to pay off all existing debts and loans and spread the low monthly payment across a number of years. Most banks are very happy with this situation as they are exchanging unsecured debt for secured debt. The security of course is the equity in your home.

If you’re considering a home equity loan, there is one very important point that you should be aware of. The loan is secured against your property, if you fail to make repayments there is a very real chance of you losing your property.

About The Author


Adam Jackson of http://www.besthomeequity.net is a home repair expert striving to bring you the best free home repair and improvement information on the web.

info@besthomeequity.net

No Closing Home Equity Loan

by: Adam Jackson

One new innovative product in the home equity loan market is the “No Closing” home equity loan. These loans are a little different from traditional home equity loans, in the fact that they allow you to draw funds against the equity amount of your home. For example, you may be provided with a credit card or check book. The way to look at them is as a line of credit, you can use the line of credit when ever you need to, and in return for this the banks will charge you a little more interest than a traditional home equity loan.

One of the great things about a no closing home equity loan is that you only pay interest on the funds that you have used. So if you never use the line of credit, there is nothing to pay. Should you make a payment, you can decide to pay this back monthly (plus interest) or in one lump sum, similar to a credit card.

No closing home equity loans are becoming very popular loan products, mostly because of the flexibility they offer. There’s also the added piece of mind, that should there be an emergency, that cash is available quickly to cover most eventualities.

Other popular reasons for a no closing home equity loan are for things that may involve random or unexpected costs such as home improvement projects or a student loan. Both of these activities require different levels of investment at different times, by being able to draw down the exact amount at exactly the time you need it, you will save money over the more traditional way of having all cash up front.

About The Author


Adam Jackson of http://www.besthomeequity.net is a home repair expert striving to bring you the best free home repair and improvement information on the web.

info@besthomeequity.net

Is a Home Equity Loan Right For You?

by: Louie Latour

Home equity loans are an extremely popular source of credit. Lenders offer dozens of varieties of loans making it very easy to tap the equity in your home. If you browse the marketplace online, you will find most of these loans come with variable interest rates. Some loans are marketed with very low introductory interest rate. There are not many home equity lines that come with fixed interest rates. Many lenders charge upfront fees and large amounts at closing. Some equity loans charge annual fees and may have a large balloon payment due at the end of the loan. Equity loans that do not carry balloon payments typically come with much higher monthly payments.

As a homeowner you need to shop around for the best home equity loan that is right for you. The challenge is finding a lender that will match your needs for the best interest rate, fees, and terms. Fortunately, the marketplace is extremely competitive, and a shrewd shopper can find excellent deals. To do this you need to contact as many lenders as possible. Compare offers not just based on interest rates, but compare the fees and terms as well. Make sure you read and understand all the fine print contained in your loan contract. Don’t be afraid to ask questions or haggle over terms and stipulations. Mortgage lenders need your business more than you need theirs. Demand more from your mortgage lender and you’ll be amazed how far it will get you.

Before shopping for a home equity loan there are several questions you need to have answers for.

First, is a home equity line of credit right for you?

If you are in a situation where you have to borrow money in a hurry, home equity lines are a great source of credit. Home equity lines of credit offer easy access to your home equity and even tax advantages you won’t find with other loans. The downside of tapping the equity in your home is that you are using you home as collateral on the loan. If the equity loan you choose comes with a large balloon payment at the end of the loan, you could place your home at risk if you are unable to make the balloon payment. If you move and need to sell the home most equity loans require full payment at the time of sale. Many home equity lines allow you to write checks against your equity; this ease of access to your money could lead to spending when you don’t need to. If you are not careful you could piddle away the equity in your home with frivolous spending.

There are options available to you other than home equity loans. If you take out a second mortgage on your home you are paid in a lump sum. Second mortgages usually come with fixed interest rates making them less risky than home equity loans.

Second, consider how much you really need versus how much you can borrow.

Your home equity lender will evaluate your credit history along with your income and debt ratio. Depending on the outcome of this you may be allowed to borrow as much as 85 percent of the value of your home. Make sure you fully understand the loan terms and how the loan works.

Interest rates from home equity lines vary widely between lenders. You can save a lot of money by doing your homework and shopping from a wide variety of equity lenders. Make sure you are comparing the annual interest rate for the loans. The interest rates lenders advertise are based on interest paid. To make an accurate comparison compare all fees, including closing costs, points paid up front, and any annual fees you must pay. This will allow you to make an informed decision on a home equity line of credit or a second mortgage loan. Remember loans with variable interest rates typically come with a low introductory period. When this period is over your interest rate and payment amount could increase dramatically. Taking out a second mortgage with a fixed interest rate could shield you from surprises in your monthly payment amount.

If you decide on an adjustable rate loan, make sure you understand the periodic cap. This cap limits the amount your interest rate can change at once. Look for loans that come with lifetime caps as this will limit the amount your interest rate can change over the life of the loan. Ask your lender which index your interest rate is tied to. Indexes such as the prime interest rate are used to set your adjustable interest rate amount. Your lender will charge a margin on top of this index when setting your monthly payment amount. Finally, ask your lender if you have the option of converting to a fixed interest rate at a later time. If you do your homework up front and shop around, you can certainly find an excellent home equity or second mortgage for your financial needs.

About The Author


Louie Latour has twenty years of experience in the mortgage industry as a mortgage broker. He is the owner of http://www.refiadvisor.com/pblog/ Mortgage Refinance Advisor, a mortgage resource site devoted to saving homeowners money with a free guidebook “Five Things You Need to Know Before Refinancing a Mortgage.” http://www.refiadvisor.com.

Do You Need a Home Equity Loan or Line of Credit?

by: Jakob Jelling

A home equity line of credit is very closely related to a home equity loan but the subtle differences can mean a lot. Determining which option is the best for you relies upon you knowing your current situation and having a clear plan for what you wish to accomplish with the money.

A home equity loan is a lot like a mortgage. With a home equity loan you are able to borrow the amount of your homes value that you have already paid off. The benefits of this type of loan is that it is almost always guaranteed since it is based upon the amount of your home that you already own, the terms are almost identical to a mortgage and you receive the entire amount of the loan up front after closing.

While a home equity loan is also based upon the amount of your home that you currently own, the terms of the loan are very different. A home equity loan is basically a credit card where the limit is the amount of equity that you have in our home. Instead of receiving one large lump sum of cash, you will receive an overdraft type of service on your account that will allow you to withdraw as much or as little of the equity that you wish to use.

Which choice is better for you? The answer depends upon what you need the money for. With a home equity loan the monthly repayment schedule is known and the interest on your loan will be lower than most other types of loans. However, with a home equity line of credit, you have instant access to cash and the payments will vary depending but the interest will vary. With this in mind the question really becomes do you need access to a varying amount of money or one known lump sum of cash?

A lump sum of cash with a set repayment schedule is great for specific things such as debt consolidation or the funding of specific projects with a predetermined cost. If you are considering debt consolidation for credit cards or any other high interest loans a home equity loan is most likely a very good idea. You will be able to repay all of your debt and will only have to make one monthly payment at a lower rate of interest that you are currently paying on your cards and other unsecured loans.

Home equity loans also make perfect sense if you know the exact amount that you need to borrow. While it is always nice to have cash on hand it is often better to have more credit available to you. The more of your credit limit that you use up the higher the interest rates will be for you and the tougher it will be to borrow more money in the event of an emergency. It is definitely to your advantage to only be in debt for a specific amount to complete one project.

A line of credit option may be better depending upon what you wish to do with your money. While you will still use up a portion of your credit limit, the payments and impacts on your available credit may be lower. With a line of credit you always have the same amount of money available to you. As you pay off the amount of credit used, you can reuse that portion if needed without having to apply for another loan. Also your payments may be considerably lower since you are only paying on the amount of money that you have actually used, not the total amount borrowed.

As you can see there are some big differences between a home equity loan and line of credit. If you are looking at a single project, such as a new car or adding a pool to your home, a home equity loan is the better choice for you. However, if you are looking at starting up a new business, wish to travel or can not settle on predetermined amount money, then a line of credit is the better option for you. With a line of credit you can use as much of your credit as you wish whenever you wish and, much like a credit card, you can reuse the amount of the line of credit that you have repaid with out having to re-apply for a loan.

About The Author


Jakob Jelling is the founder of http://www.cashbazar.com. Visit his website for the latest on personal finance, debt elimination, budgeting, credit cards and real estate.

Refinancing with a Home Equity Loan

by: Jennifer Hershey

If you have lived in your home for a reasonable amount of time, you may be considering refinancing.

Refinancing can be done in a few different ways. One of the most popular recently has been the home equity loan.

A home equity loan is a loan used to pay off your existing mortgage at a lower rate.

Also, when refinancing with a home equity loan, you have the option of liquidating some of the equity you have established in your home through monthly mortgage payments and appreciation.

Lets suppose you owe $125,000.00 on the mortgage to your home, but your home is worth $200,000.00. This means you have $75,000.00 worth of equity that you can liquidate.

Realistically, you could get a home equity loan for $150,000.00, pay off your existing mortgage, and have $25,000.00 left for home improvement, a new car, college tuition, etc.

Home equity loans also come in the form of a line of credit, better known as a home equity line of credit.

The difference between a home equity loan and line is that the line comes with a variable rate, which means it will adjust with the prime rate, so be careful when deciding.

The home equity credit line can also be re-tapped once it has been partially paid off, or paid off in full, which makes for much convenience.

Before deciding on how you want to go about doing your refinancing, be sure to educate yourself as much as possible about the mortgage industry.

Also, shop around for the best rate and program that fits your needs and budget. The mortgage industry is a competitive one, so let them fight for your business. Good luck.


About The Author
Jennifer Hershey has more than twenty years of experience in the Mortgage Industry as a loan officer. She is the owner of http://www.explainingmortgages.com/, a mortgage resource site devoted to making mortgage terms and products easy to understand.

Home Equity Loan Refinancing

by: Carrie Reeder

If you have lived in your home for more than two years, it has probably appreciated which means that you have built up equity. What is home equity? Home equity is the difference between the value of your home and the amount of all that you owe on your home. If your home has an appraised value of $200,000 and all of the outstanding liens against it total $150,000 then your home equity equals $50,000. Often times when a home has accumulated value, the homeowner decides to take some of that value out in cash. Sometimes the cash is used to pay off bills, for home improvements or for a child’s education. One of the best ways to tap the money available from your property is to refinance it with a home equity loan.

When considering a home equity loan, there are several steps you should take to ensure you choose the refinancing package that is right for you.

· The current market for home equity loan refinancing is crowded and very competitive. As a homeowner you probably receive solicitations for loans almost daily via the telephone or the mail or the Internet. Be wary of accepting any of these solicitations without thoroughly investigating them. The best course of action might be to initiate your own independent search for a financial institution or mortgage broker. Also be aware of the fact that a mortgage broker in any loan situation is not automatically working to get you the best deal. You are the person who should take responsibility for making sure that the final loan product is the one you need. The Better Business Bureau, the yellow pages, the Internet and references from friends are all good places to start your search for refinancing your loan.

· You will need a certified appraisal for the actual loan. However, it is wise to have an idea of the value of your home before you begin the process of refinancing. There are many online services that will give you an estimate of your home’s value. Many times home sales are listed in the newspaper. Watch these listings for homes in your neighborhood that are similar to yours in size and condition. Note their prices.

· Know your credit score. By law you are allowed one free credit report a year. The credit reporting agencies that supply the report generally will also offer your FICO score for a small additional fee. There are other factors that influence your ability to obtain a home equity loan but your credit report and FICO score are good places to start.

· Once you have identified several possible sources for refinancing your loan, have the lenders explain the different loan products they offer. Don’t be afraid to ask specific questions and don’t be hypnotized by a low interest rate. A low interest rate alone is not sufficient reason to accept a loan proposal. Ask about the term of the loan and the closing costs. Make sure the lender explains any terms you may not fully understand such as points.

· Let the lenders know they are competing for your refinancing business. Sometimes a lender will sweeten your deal if there is the possibility the it might be lost otherwise.

· Have all proposals submitted in writing. Take the time to compare them and always make sure you are comparing the same types of things. For instance, don’t just look at the bottom line number on the closing costs see what each lender is including in the closing costs.

· Be alert to potential scams. Don’t be intimidated by your refinancing lender into signing anything that isn’t absolutely true. Don’t sign anything that has blanks or that you haven’t read.

· Know your rights. There is generally a three day penalty free right to cancel when you refinance your loan. If something doesn’t seem correct to you, don’t shy from invoking that right.

Refinancing your loan in order to access your home equity can be a wise financial move. Your home, however, is probably the largest portion of your net worth so proceed with caution and knowledge.


About The Author
Carrie Reeder is the owner of http://www.abcloanguide.com, an informational website about various types of loans.
View her recommended http://www.abcloanguide.com/refinancehomeequityloan.shtml lenders.

Home Equity Loans - Are They Right For You?

by: Dean Shainin

The bills are out of control and you need a new car. “Maybe we can get a new carpet and paint the house”, you say to yourself. These are just a few reasons why home equity loans can seem like the solution to all your problems and are so popular.

Home equity loans can be a fantastic way to start your own business or to take advantage of an investment opportunity. They can also make your situation worse than it was before you got the home equity loan.

The reason’s for taking advantage of home equity loans are the most important part of the process. Take the time to sit down and ask yourself, “Do I really need a home equity loan? Do I want to go on a spending spree or am I really trying to improve my life?”

A home equity loan is like having a second mortgage on your home. Suppose your home is worth $200,000 and you have a mortgage against it at $150,000, you will have $50,000 of equity available. Home equity loans allow you to borrow up to 80%, and sometimes more in certain situations, of your home value. In this situation you could borrow $80,000 as a home equity loan and still have only borrowed 80%.

This is why it is so important to take a good look at your situation before making a decision. You can see how easy it could be to get carried away with home equity loans.

Let’s say you only need $20,000 for that new car and some home improvements. You decide to borrow another $15,000 of equity for that vacation to Hawaii you have been dreaming about. First of all, a vacation to Hawaii would not cost $15,000 unless you went on a first class, spare no expense vacation.

Using a home equity loan to buy a car may not be a great idea with today’s 0% interest rates and no money down loans. There is no sense in risking losing your home to buy a new car with these type of loan programs that are available in todays market.

On the other hand, a home equity loan for home improvements may be a great idea. This will add value to your home as long as you can afford the higher loan payments.

A business that’s doing great that you want to expand may be another good use of a home equity loan. As long as the business is already in profit and is not losing money.

Some solid investments can be a good idea if you have done your research before hand. The latest IPO may or may not be a great idea.

Consolidating high interest credit cards may be a great idea as long as you close the accounts and don’t run them back up. You really only need one or two credit cards in case of an emergency.

Educational expenses may be a good reason to take a home equity loan to get your children started in the right direction. Someday this type of an investment can pay off.

These are just a few things you can do with home equity loans. It’s very easy to borrow too much, only to find yourself having a tough time making the new payments.

The important thing to remember with home equity loans is to be logical and don’t let your emotions get the best of you. Again, take the time to sit down and research all your options. This way you can rest well at night and not have to be concerned about losing your home. You can enjoy the things you do with your home equity loan knowing you’ve made a wise decision.


About The Author
Dean Shainin is a consultant specializing in home equity loan strategies and home mortgage loan information. To see a list of recommended home equity loans, advice and information, visit this site: http://www.homemortgageloantips.com.

Home Equity Loans - Friend Or Foe?

by: Max Hunter

Home equity loans are advertised on the airways, newspapers, magazines and just about anywhere else a homeowner may see or hear the advertisement. Some people feel that home equity loans are trouble waiting to happen. Others feel that home equity loans are a key to opening a stronger financial picture and better home.

There is no simple answer to this question. The truth of the matter is that it will depend on you specifically. There are many financial advisors who believe having equity built in your home is equivalent to keeping your money under a mattress. The mattress, however, is non-liquid which means you cannot necessarily get at the money as soon as you need it. They believe that keeping money under a mattress results in your inability to make your money work for you, though they do acknowledge the minimal risk in keeping your equity in such a safe place.

These same advisors would have you consider taking out a home equity loan in order to invest the income. If, for example, you can find a relatively safe investment at a greater interest rate than you are paying on your loan than you will have your money working for you. If, obviously, the interest rate you are paying on your home equity loan is greater than the interest you are earning on the money in the investment than it does not make financial sense.

Another time financial advisors would consider it smart business sense to take out a home equity loan is to pay off higher interest rate loans and credit cards. If your home equity loan is at 8% and you are paying off credit cards at 18% and other loans at 10% or more than clearly it makes economic sense to consolidate your debt through a home equity loan. It is important, however, to factor in closing costs in the decision making process. The closing costs may eat up a great deal of the savings, if not all of it.

There is a risk, however, for some homeowners. For example, there are some home equity loans that give you a checkbook. As you write checks the money is a loan against the equity in your home. This may cause people to overextend themselves unknowingly. Without a definitive plan in mind, a home owner with this type of loan may use the funds for items that do not necessarily make the best financial sense. They may exhaust all of the equity in their home and not have the ability to use the funds for consolidating their debts or making financial investments.

The personality of the home owner is key to making the right decision when it comes to home equity loans. It is also a good idea to speak to a financial professional in order to get a full understanding of your overall financial goals prior to making this important decision.

The structure of the home equity loan is important to. Make sure you pay careful attention to the interest rates and the closing costs. When applying for the loan request a full breakdown of any and all costs associated with the loan. Depending on how old your documentation is (title search, appraisal, etc) you may save money by using them again for the home equity loan. A title search needs to only be updated rather than started from scratch. If, however, a considerable period of time has passed since you first received your home loan than all documentation may have to be obtained from scratch.

It is also advisable to give your home loan officer a strong understanding of what your intent is with the funds. If you want to pay off other debts you can request that the bank prepares checks directly to the lenders you wish to pay off. This will minimize any temptation to then use the funds for other purposes. Some loan packages will require you to do precisely this.

As you enter the wonderful world of home equity loans it is important to have a clear understanding of what you want and expect out of the loan. It is important to do your homework and select the right loan package and understand how it works and its costs and obligations, then you can decide if you wish to home equity or not to home equity.

About The Author
Max Hunter is the author of many credit related articles. If you are looking for help with Home Loans or any type of credit issue please visit us at http://www.homeloanave.com.

Home Equity Loan – Home Theater Adds Fun and Value

by: Charlie Essmeier

In days gone by, the family typically spent their evenings watching television in the den or living room, crowded around a black and white television set that may have measured no more than nineteen inches in diagonal size. For decades, this scenario was pretty much the same in most American homes, with the only change being the replacement of black and white televisions with color models. This worked fine for many years, when most cities only had two or three stations, and most homes didn’t have cable television. With the introduction of high definition television (HDTV), DVD movies, high performance surround sound systems, and affordable video projectors and flat-screen plasma displays, many homeowners would like to have a dedicated room, or home theater, for audio-video use. In today’s housing climate, adding a home theater to your home is a smart move.

Few homes have a room that is naturally suited to use as a home theater. Most rooms that might be used for such purposes either have a fireplace or inappropriately located windows. By building a dedicated home theater, the homeowner can build a room that suits the specific needs of audio video systems – limited outside light, darker-colored walls, a mounted screen or plasma TV, and special wiring inside the walls, where it cannot be seen.

Adding space to your home is a bullish move, and the extra square footage will add value to your property. You can finance the construction with a home equity loan or line of credit, which allows you to deduct the interest from your tax return. And the inclusion of a theater in your house may make the home easier to sell in the future, as more and more families are finding a theater to be a useful feature to have in a home. If you are not sure about how to go about designing such a room, you might check the Yellow Pages for stores that sell audio and video equipment. They can provide you with information regarding what kind of equipment you might need, wiring requirements and so on. They might also be able to recommend a contractor who can do the work for you.

The introduction of affordable big-screen televisions and HDTV has made a home theater THE must-have home accessory. With interest rates still at affordable rates, now is a great time to add that dedicated viewing room that will make you the envy of your neighborhood when the next Super Bowl comes around.

About The Author
Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.homeequityhelp.net, a site devoted to information regarding home equity lending.
equity@homeequityhelp.net

Home Equity Loan: What You Need to Know

by: Jay Moncliff

The idea of getting a home equity loan while interest rates are low to help you pay off your bills, buy a car, or even pay for your child’s education may seem like a great idea. However, you should educate yourself first so you know exactly what a home equity loan is and if it is really right for you.

The basic idea of a home equity loan is that you can borrow against the current equity in your home, so the more equity you have the larger home equity loan you can receive. In essence, to receive a home equity loan you are using your home as collateral, or the basis, for the home equity loan. If you do not pay the home equity loan back, then your home is at stake and may be foreclosed upon. This is sobering news many people are not aware of, so getting a home equity loan requires some thought and the ability to repay the home equity loan as well.

However, you might be reading this and actually interested in a home equity loan, but have no idea what equity is or if you have any. Equity is how much of your home you have paid for. So, you take the home’s current value and subtract it from the amount you still owe, and that is how much equity you have in your home and what will ultimately be used to approve or deny your home equity loan application. For example, your home is currently worth $400,000 and you have $280,000 left to pay on your mortgage. Your current equity is $120,000.

You will need to know all of this information before you apply for a home equity loan to know if you have enough equity to even apply for a home equity loan. Plus, the more you know about applying for and negotiating rates for a home equity loan the better deal you will receive. Remember, knowledge is power and the more home equity loan knowledge you have the more powerful you will be able to negotiate.


About The Author
Jay Moncliff is the founder of http://www.loansreviews.info a website specialized on Loan, resources and articles. This site provides updated information on Loan. For more info on Loan visit: http://www.loansreviews.info.

The Power of a Home Equity Loan to Pay Down Debt

by: Jakob Jelling

Households across the country are finding themselves in a similar situation. They lack the financial funds to make the necessary changes to their home and need to find a way to fund upgrades and eliminate debt. A popular way of financing these changes without killing themselves is by taking a home equity loan to pay down their debt.

The Home Equity Loan has become a fast-track way of paying down large credit card debt, financing college education and even taking a vacation. Since the stock market has lost quite a bit of appreciation, people have been purchasing homes as a means of investment, thus sending housing prices through the roof. With higher prices comes a great deal of appreciation in the home. People who have found themselves in 20 – 30 thousand dollars in debt can pay it down by taking a home equity loan. Home Equity Loans have been a source of relief and flexibility to get the homeowner out of debt and moving forward in life.

The home equity tax shelter

The greatest benefit from taking a Home Equity Loan is being able to crush debt, but also reduce the amount you owe the government every year. Most loans by design do not provide any tax relief, whereas a Home Equity Loan provides a direct line item to reduce your debt. To figure out your home equity value you can hire a professional appraiser to come out and tell you how much it is worth to a bank or financial institution. Once you have that figure you can easily find out how much equity you have in your home. For example, should your home appraise for $150,000 and you owe $ 60,000 you have $90,000 in equity. This equity will not become a taxable event should you buy a bigger home and spend more money. Should you step down in your home, you can be penalized for the difference, provided that you have not already taken the one-time exemption allowed by the government.

Debt relief

Once you have found out how much your home is now worth, it is time to apply for the loan. During the loan process you can bring your credit card statements as well as any other debts you may owe to the table. Explain to the loan officer your situation and ask that these debts also be included in the Home Equity Loan. If your home has at least 40% equity in your property you should have no problem getting them dissolved into the loan. There are many reputable lenders who will help you find the right loan for you. The Home Equity Loan will restart the 15 or 30-year clock from day one. Your payment may increase or decrease depending on how much debt you add or cash you take out of the property.

By Jakob Jelling
http://www.cashbazar.com


About The Author
Jakob Jelling is the founder of http://www.cashbazar.com. Visit his website for the latest on personal finance, debt elimination, budgeting, credit cards and real estate.