There’s an old saying regarding buying real estate that goes “you make your money when you buy.”   Now, with many foreclosures happening in Austin and other cities, this may be a great time to buy;  one that’s both “for sale” as well as “on sale.”

 Why not buy some equity the day you close instead of buying at the highest possible price like when you buy from a production builder?  Many foreclosures are new homes, but the people who bought at the top price just a year ago but can no longer afford the home.  So not every foreclosure is a piece. 

 Sure it will take more time to find just the right house Read the rest of this entry »

The mortgage mess AKA credit crunch AKA sub-prime debacle is making it harder to avoid personal mortgage insurance.   But there are still ways to get a good loan (even to 100%) without having it.   Sure you need great credit scores but if you know you’re 3-6 months out from buying let’s use this time so we can get your credit scores where they need to be.  It’s worth it.

 Call us so we can show you specific ways to improve your scores.   512-996-8194

 Remember, loans over 80% are required to have mortgage insurance.    So if you put 5% down, and took out a 95% loan you’re loan will likley have PMI since your 95% loan is higher than 80%.   However, doing a 80/15 (still lending 95%) is a great way to get a lower payment without PMI.   

Call us today or visit us at www.mylendingplace.com  512-996-8194.  

We believe getting the right home loan is as important as getting the right home.

Cash out loans equity loans should be used strategically.    Here are some suggestions.

1) Want to buy a second home on Lake Travis?   Most second home programs require 5% down so if your current residence is only growing at 2%-3% a year consider taking you some equity out of your primary home to buy the second home by Lake Travis that’s growing between 7-10%.    Chances are prices will only increase for lake Travis so waiting to buy your second home may not be the wisest decision.  

2) Do you know your children will attend UT?   Buy their college home today-lease it out (and enjoy the appreciation) until they go to school.   For example, Let’s say you buy a $200,000 close to UT when your child is in the 8th grade. 

Assuming just a 2.5%

9th grade –$205K

10th grade–$210K

11th grade–$215K

12th grade–$220K

Freshman year–$226

Sophomore year–$231

Junior year–$237

Senior year–$243 

Then when your child graduates keep the property and continue to lease it out or sell it at a projected 43K profit.  Eliminate student loans and then some.  Your kids will need to live somewhere when they go to school it might as well be in a property you own.

3) Consolidate debt so you can reduce your average monthly expenses.   The best way to get out of debt is to have fewer bills.   Home equity loans allow you to reduce your monthly expenses so you can take the savings and focus what once went to 10 monthly bills to just one or two bills.   When you focus your money on one or two bills you reduce them much more effectively.

My personal record was helping a family save $1040/month.   Then advised them to (a)  put half of the savings in some interest-bearing account and (b) apply the other half to their new 30 year mortgage.    Now, they are on course to pay their 30 year fixed rate off in 9 years.     This is what I mean by using home equity loans strategically.   When used strategically home equity loans become the corner stone to improving your overall financial situation.

Please email me today so I can show you some options to reducing your monthly bills.    jon@mylendingplace.com

Check out this article in August’s Businessweek magazine: 

http://www.businessweek.com/magazine/content/07_33/b4046601.htm

My two cents:   The recent mortgage mess is a lot like  hurricane Katrina.   It was the perfect storm caused by lots of different factors.   While many people are still pointing fingers as who’s to blame–the same result has happened.  

Good people lost their homes.

This businesweek article addresses the mortgage mess in greater detail–but here’s the short version for you non-readers.  Don’t use the builder’s in-house mortgage company or any “in-house” service like appraisal or title.   Let the builder build the home then let other professionals do their jobs so you–the buyer–benefits in an open, honest market.

Since the in-house lender is working for the builder–not you–you are almost guaranteed to get the wrong mortgage.  Or if you happen to get lucky with the right loan program, you almost always pay too much. 

 Think about it:   What would you say to me if I were your doctor and I told you “if you don’t use my pharmacist brother to fill this prescription you’ll pay double for this office visit.”

You’d probably tell me to take a long walk off a short pier–but in the real estate world this type of “deal” happens all the time.   It’s called business as usual. 

Builders say “”If you don’t use our “preferred lender”–we’ll take away your incentives of 10K–you’ll pay more for this home.”   I mean, c’mon.   If the builder requires 10K down (earnest money) and then offers you 10K in “incentives” they are sorta just giving you your money back–and  requiring you to use their in-house people for everything:  

 I’m not anti-builder-there are lots of good builders our there.  But I am against the blackmail tactic many production builders use when they tell buyers “Use our mortgage and title company or pay more!”

 So here are my suggestions:  

Don’t pay a builder more in earnest money than you’d pay if you were buying a re-sale home.  Always use an outside lender and always order your own appraisal.  Ordering your own appraisal or review appraisal could easily be the best money you’ve ever spent. Not to mention title, you absolutely want to use an independent title company. 

(Regarding title: I won’t go into it too much here but just email me and ask me “what’s the difference between improved and unimproved taxes and how could this effect me at closing?”) 

The builder won’t let you use independent lenders, appraisers, title?  Find a better builder.   Shake hands. Leave. 

Like usual,  I learned this lesson the hard way.  If I had ordered my own appraisal on my first investment property it would have saved me $32,000.  $350 to save $32,000. 

I could have paid for my entire college education had I paid $350 for my own review appraisal. 

Lesson learned.  Ouch.