Americans can save billions of dollars annually on credit card and other interest payments by raising their credit scores, but many consumers still don’t know enough about the complex numerical values that represent their credit risk.
Although awareness of credit scores has increased in the past year, it remains poor, the Consumer Federation of America and Seattle-based bank Washington Mutual Inc. found in an annual survey released Thursday.
The scores, which generally range from 200 to 800, play an increasingly important role in consumers’ finances.
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They are used by banks and insurance companies to determine rates for mortgage loans, credit cards, auto loans and other financing. Utilities, landlords and employers also are increasingly checking credit scores.
Washington Mutual estimates that consumers could reduce credit card finance charges by $105 annually if they boosted their credit scores by 30 points. If all consumers did so, total annual savings would reach $28 billion since financial institutions offer lower interest rates to consumers with better scores.
One way to raise a credit score is to avoid charging above the maximum limit on a credit card, or coming close to the limit, the study said.
But credit card issuers, including banks such as WaMu, have recently cut limits on many cards as financial institutions seek to reduce their credit risks. That can hurt credit scores because they are based partly on the amount a consumer has on a card compared to its overall limit.
If a consumer has charged $4,000 on a card with a $10,000 limit, their so-called “utilization rate” is 40 percent. But if a card issuer reduces the limit to $5,000, that bumps a consumer’s utilization rate up to 80 percent.
The Consumer Federation recommends credit card users keep their utilization rates below 50 percent, said Stephen Brobeck, executive director of the group.
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Anthony Vuoto, president of WaMu’s card services unit, downplayed the impact of banks’ reduction of credit limits, saying it likely affects only a “small minority” of consumers who already have a “credit blemish” that caused the bank to lower the limits.
To improve their credit scores, consumers should also avoid opening multiple new accounts quickly, and pay off debt rather than moving it around, the study said.
Brobeck said the good news is that “most Americans know why credit scores rise and fall.”
Two-thirds of consumers know that paying off a large credit card balance improves credit scores, up from 62 percent in 2007, and almost 80 percent know that missing a monthly credit card payment reduces their score, compared with 71 percent, the survey found.
But less than a third of Americans understand that a credit score reflects the risk that a consumer won’t pay back a loan, the report said. Many Americans believe it reflects other factors, such as overall financial resources, and most also wrongly believe that demographic factors like income, age and education affect their score, Brobeck said.
Another positive sign is that 49 percent of Americans have obtained their credit score in the past two years, up from 42 percent in 2007, according to the survey of 1,000 adults nationwide.
The scores are compiled by three credit reporting bureaus – Equifax Inc., TransUnion LLC and Experian Group – and consumers can obtain a free copy of their credit report from all three once a year. But Americans must pay about $15 to see the actual scores.
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]]>WASHINGTON – Rates on 30-year mortgages edged up this week, while rates on other home loans were a mixed bag.
Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.37 percent this week. That was up from 6.35 percent last week.
Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, dipped to 5.91 percent this week, compared with 5.92 percent last week.
Meanwhile, five-year adjustable-rate mortgages rose to 5.82 percent this week, up from 5.78 percent last week. Rates on one-year adjustable-rate mortgages held steady at 5.17 percent, unchanged from the previous week.
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Earlier this week, there were fresh signs that the painful housing slump was likely to drag on. The National Association of Realtors’ pending home sales index slipped 4.7 percent in May to the third-lowest reading on record.
“Pending home sales fell more than expected,” said Freddie Mac’s chief economist Frank Nothaft.
Home foreclosures have hit record highs as sagging home values have left some borrowers owning more on their mortgages than their homes are worth. With more empty homes being dumped on an already glutted market, prices are being pulled lower. Buyers, however, have become harder to find as credit has gotten harder to secure.
Congress is moving ahead on a package to help distressed homeowners. It would allow the Federal Housing Administration to provide them with more affordable, fixed-rate mortgages.
The mortgage rates do not include add-on fees known as points. The nationwide fee for 30-year, 15-year and five-year mortgages all averaged 0.6 point this week. The fee on one-year mortgages averaged 0.5 point.
A year ago, rates on 30-year mortgages stood at 6.73 percent, 15-year mortgage rates averaged 6.39 percent, five-year adjustable-rate mortgages were at 6.35 percent and one-year adjustable-rate mortgages averaged 5.71 percent.
On the Net: Freddie Mac: http://Freddiemac.com
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“I was watching her thumbs moving at this incredible pace; it looked like she was writing a story,” said Nunzieta, 36, the president of FBC Mortgage in Orlando. “I remember thinking, ‘Wow, that must be cumbersome.’ “
Now, Nunzieta is one of an increasing number of adults text messaging for business. Like the teenagers who preceded them, corporate users favor texting for its immediacy and ease.
“It’s definitely habit-forming,” said Nunzieta, who sends about 20 text messages a day. “For an immediate quick answer, it seems to be better than e-mail.”
Adults have an additional reason for turning to texting: e-mail burnout.
Heavy corporate texters say even though they can send and receive e-mails on their cell phones, they’re so overloaded with e-mail that a new message no longer catches their attention the way it used to.
“The e-mail goes off all day long – it’s a noise I am used to hearing,” said Chris Gent, 44, the spokesman for the Kissimmee Utility Authority, who carries a Palm Treo. “So when a text comes in and it has a different sound, it gets my attention every time. I treat it more immediately than when I get an e-mail.”
Texting in Florida has more than doubled since last year, according to Verizon Wireless, the nation’s second-largest cell-phone carrier. Each month, about 1 billion texts are sent on the company’s network statewide.
A recent study from marketing and communications company Universal McCann found that 78 percent of adults ages 18 to 34 reported sending a text message in the past week, up from 62 percent in 2007.
2 txt or not 2 txt?
Michael Slone, co-owner of Slone Brothers Furniture Store in Longwood, started texting about a year ago when he got a new BlackBerry Curve. He sends about four or five texts a day, mainly to his brother, who is also his business partner.
Slone, 40, and other text-messaging adults said the new medium means they must navigate a new realm of etiquette issues. For instance, sending someone a text message to a receiver who doesn’t have text messages built into their cell plan might cause them to incur a fee.
Others worry about overstepping the personal/professional boundary when sending a text to someone for the first time.
“It’s a little more personal [than other forms of communication] and, quite honestly, there are still enough people who don’t use it, so if I send them a text message, all of a sudden I am costing them money because I assume they are on the same technology level as I am,” said Wendy Kurtz, 42, president of a Central Florida marketing and communications company.
Kurtz recently upped her plan to unlimited text messaging after she had to pay a $11 fee for exceeding her 300 allotted text messages.
Speeding things up
Kurtz has picked up some pointers on texting from her kids, and she often decides to text even when she’s sitting at her computer and could send an e-mail. For instance, she was recently on a conference call with one of her clients and an organization that wanted to hire the client. An idea popped into Kurtz’s head, and she wanted to run it by her client before bringing it up in the conference call, so she sent a text.
“Text messaging is just so much quicker because sometimes the e-mails don’t go through right away because of her server or my server,” Kurtz said.
Nunzieta, president of FBC Mortgage in Orlando, relies on texting so much that he once text-messaged someone who was standing in front of him giving a sales pitch. Nunzieta and his associates had already decided they were going to do business with the company.
So Nunzieta sent her a text message that said, “Hey, go ahead and close the deal, we are ready to sign.” The woman checked the message, laughed and closed the deal.
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These are markets “where you have high inventories but pliable borrowers, with lenders willing to deal,” says Anthony Sanders, a professor of finance at Arizona State University.
Forbes magazine went looking for markets where the damage from risky lending hasn’t been as dramatic as in some parts of the country and where employment growth will burn off an over-abundance of inventory quickly.
Here are the magazine’s 10 best cities for bargain house hunters.
1. Salt Lake City, Utah. Developers have gotten ahead of the demand, but the city is adding jobs more quickly than practically any place else in the country.
2. Raleigh, N.C. Another place where building got ahead of the curve, but the economy is expanding quickly.
3. Orlando, Fla. This part of the state had fewer speculators than Miami and Tampa, and it’s adding jobs faster than those cities as well.
4. Charlotte, N.C. The financial industry is moving here, adding jobs, but the inventory of unsold homes is still significant.
5. Phoenix. This city had a high foreclosure rate, but the economy is growing and people are still moving here in large numbers.
6. Seattle. The city’s port has profited from the weak dollar, but the housing price growth has slowed.
7. Las Vegas. This market was hit hard by foreclosures, but the growing economy makes the huge inventory less toxic than it is many places.
8. Jacksonville, Fla. The foreclosure rate is slower than the rest of the Florida cities, making the large inventory likely to improve.
9. Richmond, Va. There is only one foreclosure per 1,103 households here (compared to 1 in 33 in Detroit). Still, there are plenty of homes on the market.
10. Houston. Homes in Houston have long been a bargain. While there have been plenty of foreclosures, the population and the economy are expanding.
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ORLANDO, Fla. -- Jan. 24, 2008 -- Florida’s housing market followed the national trend in 2007, as mortgage industry issues and a sluggish economy impacted sales and prices. By year’s end, a total of 130,241 homes sold statewide for a 29 percent decrease compared to the 183,988 homes sold in 2006, according to the Florida Association of Realtors® (FAR). However, 2007 is expected to be the fifth highest sales year on record for existing-home sales, according to the National Association of Realtors® (NAR).
“What we experienced during the five-year boom cycle (2001-2005) was not a normal housing market,” notes 2008 FAR President Chuck Bonfiglio. “It was a market like we have never seen before. Existing-home median prices went up statewide over the past five years by some 60 percent; prices only declined in 2007 from 2006 by 5 percent. People are still experiencing a sizable return on their investment if they have owned their home over the past six years. The outlook for 2008 is that the housing market should start to normalize, that we should see some gains by the end of the year. Continued efforts to resolve Florida’s property insurance and property tax issues will also help revitalize our state’s housing market.”
The latest market outlook from NAR predicts that, as conditions for the mortgage industry continue to improve, existing-home sales should hold fairly steady over the next few months, rise later in the year and continue to improve in 2009. “A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008,” says NAR Senior Economist Lawrence Yun. “Our consumer survey shows buyers today are in it for the long haul, planning to stay in their home for a median of 10 years. This is a wise approach to housing because the data shows the longer you own, the better your investment.”
Florida’s median sales price for existing single-family homes for year-end 2007 was $233,600; a year ago, it was $247,100 for a 5 percent decrease. The median is the midpoint; half the homes sold for more, half for less. At the end of 2002, the statewide median sales price for single-family homes was $137,800, for an increase of 69.5 percent over the five-year-period, according to FAR records.
Sales of existing condominiums in Florida also decreased last year, with a total of 41,478 condos sold statewide compared to 56,877 in 2006 for a 27 percent decline, according to FAR. The statewide median sales price for condos at year-end was $205,100, down 3 percent from the 2006 year-end condo median price of $211,500. NAR reported the national median existing condo price was $223,500 in October 2007.
Interest rates for a 30-year fixed-rate mortgage at the end of 2007 averaged 6.34 percent, according to Freddie Mac, down from the average rate of 6.41 percent at the end of 2006. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s larger markets, the West Palm Beach-Boca Raton Metropolitan Statistical Area (MSA) reported 6,971 existing homes sold last year compared to 8,640 homes sold in 2006 for a 19 percent decrease. The market's median sales price for homes was $369,400; in 2006, it was $384,700 for a 4 percent decrease. A total of 5,674 existing condos changed hands in the MSA last year, down 8 percent from the 6,139 condos sold in 2006. The existing condo median sales price in 2007 was $198,000; in 2006, it was $220,400 for a 10 percent decrease.
“It’s absolutely critical now for people to work with a knowledgeable local Realtor who can help guide them through the process of buying or selling a home,” says John Mike, president of the Realtors Association of the Palm Beaches and a Realtor-sales associate with Prudential Florida WCI Realty. “We’re more than just a technological resource for a real estate transaction: A professional Realtor is a fountain of information and knowledge to have on your side when making one of the biggest financial investments most people will ever make. Just like in the military, you need the right intelligence to make the right decisions. When you go out to do battle in the real estate market, you ought to be armed with the best intelligence on the local housing market and community. That’s what a local Realtor will provide.”
Among the state’s smaller markets, the Gainesville MSA reported a total of 2,644 homes sold in 2007 compared to 3,174 homes the previous year for a 17 percent decrease. The existing home median sales price was $210,400; in 2006, it was $213,200 for a 1 percent decline. A total of 939 existing condos sold in the MSA last year compared to 1,284 condos sold in 2006 for a 27 percent decrease. The market’s existing condo median price was $154,900; in 2006, it was $153,400 for an increase of 1 percent.
J. Parrish, president of the Gainesville Alachua County Association of Realtors and president of Coldwell Banker M.M. Parrish, Realtors, says retirement trends for baby boomers likely will benefit the area. “You hear the research on how boomers are retiring earlier than their parents did, and that they want a more active lifestyle,” he says. “Therefore, they’re retiring to places where they can find the amenities of continued education, sports and cultural activities associated with university towns like Gainesville.”
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]]>Many answers are available in "Top 10 Vacation Home Features Travelers' Seek" offered by TripHomes.com, a new vacation home rentals website. Still more insight is available from vacation home market experts RealtyTimes.com has interviewed to help you further improve the bottom line of your vacation home rental.
"Travelers increasingly turn to vacation rental homes as a home away from home for their vacation accommodations," says Justin Halloran, general manager of TripHomes, a new vacation rental website under the former WVR Group umbrella of vacation rental listing websites, also known as HomeAway.com.
"Unlike hotels, vacation rental homes offer so many other advantages -- from fully equipped kitchens and plenty of bedrooms to private pools and media rooms," Halloran added.
Along with additional commentary from the experts, here is TripHomes.com's list of most sought after vacation home features.
Location, Location, Caution: Beach front, hillside, ski resort and lake front homes all have appeal. So does everything from urban living "like a local" to rural seclusion. The key is to purchase in a safe and secure location that is also appealing to visitors.
"It must be beautiful and relaxing, but it also needs to be safe -- from man-made or natural disasters. Trying to create an attractive rental from the property you buy that is sitting on an eroding cliff overlooking the ocean just won't fly, no matter how beautiful the view. Ditto if the potential for flooding from high tides or rivers is present," said Amanda Sturges, director of operations at Escape Homes, a San Francisco Bay Area online clearinghouse of vacation rentals and industry services.
"Also, the location needs to be popular, but not that popular. Most people don't want to be inundated with other vacationers, if they can help it," she added.
Rooms With A View: Give visitors a stunning sun setting into the ocean or a bedroom high above the trees. Think "big sky."
"People love to step out on a deck and not see anyone or anything except a great view. Even if the only view is the vast sky, the feeling people get is expansion and relaxation," said Sturges.
Family, Kid Friendliness: Swimming pools, video games, pool tables and big-screen televisions. Pack it in for families on the go. Bunk beds are in for snoozing kids, breakables are out for kids who are wide awake.
"Furnish the property to accommodate kids with not a lot of breakable knickknacks. Buy a property in a community that caters to families, meaning there are swimming pools with lifeguards, (even at ocean sites, because the ocean is often too rough for little ones), playgrounds and an abundant supply of babysitters," said Sturges.
Watch for, say, retirement properties that restrict younger visitors. Conversely, if you seek to rent to couples, play up quiet, seclusion and the romantic aspects of the property and location itself, Sturges added.
"The next thing to look at is the demographics of the local visitors. Check out the Chamber of Commerce website to see who they are targeting. If it is primarily conventions, then a 1-bedroom property might be a good rental. If they are targeting families, you want two or more bedrooms," said Christine Karpinski, a real estate investor, author and director of Owner Advocacy for HomeAway.com, formerly WVR Group, a network of vacation rental listing websites.
Budget Travel: Sometimes travelers just need a getaway with a roof over their heads and choose a vacation rental instead of a hotel or motel to save cash on eating out or even going out.
"Sometimes, this takes a bit more digging to determine what vacationers want. For instance, I have found that cabins in the Smoky Mountains have a difficult time renting if they do not have a pool table. Colorado visitors like a hot tub and like to be on the trolley line for the ski slopes. Some vacationers want off-street parking where parking is tough," said Karpinski.
"Knowing who will want to rent your vacation home and then buying based on their demands, rather than just your own family's demands, will make it much easier in the long haul when you want to rent that property out," Karpinski added.
Dining In: Eating out can break a vacationer's budget and disrupt their gastrointestinal tract. Gathering in the kitchen and around the table for a family dinner while on vacation provides a warm fuzzy feeling for the heart and for the stomach. Eating what and how you are accustomed while away helps eliminate the "nervous stomach" feeling some travelers experience. Cater to travelers who like eating-in as a romantic experience or as a family event. Adding restaurant quality cooking appliances, equipment, swank dining furnishings, cozy decor and adequate lighting can make for quite an eating-in experience.
Welcome Mat For Groups: Vacation homes are a great option for family reunions, wedding parties, and family vacations, provided the facilities are adequate, including lots of bedrooms and bathrooms.
"A nice option is to own a few closely connected condos where individual households can stay. Groups also usually need a gathering place of some sort, like a reception room or clubhouse that can be reserved for a function," said Sturges.
Tech Habitats: Many of today's travelers don't leave home without their electronic gear. For them, disconnection is not a good thing. Look for homes built with high-speed and wireless Internet connections, plenty of phone outlets and perhaps even computer stations for guests' use.
"Many people are working part of the time they are away. It allows them to extend their vacation without having to take as many vacation days. WiFi and broadband Internet is one of the hottest net trends for rentals" said Marvin Floyd, general manager of Vacation Rentals By Owner a do-it-yourself vacation rental website.
Activities: Many travelers leave home to partake in activities they enjoy but can't, don't or won't do when they are home.
"One of the important issues of renting a vacation home in a private golf, tennis or equestrian community is to know, beforehand, the additional club fees that renters need to pay for access to the club's facilities. Also, renters need to know the limitations of facility use, which typically is far less than for property owners," said Elisabeth Miller-Fox president of PrivateCommunities.com, a portal for renting and buying homes in private and gated communities.
Sturges says to buy a property with well-defined recreation activities and advertise it with your listing.
"It is a boon to include perks with the rental -- lift-tickets, golf fees, tennis rackets, snorkel equipment, etc.," she suggested.
Let The Dogs In: To be or not to be pet-friendly is a good question. Some visitors are allergic to pet hair, others can't leave home without them. Because many hotels and motels don't allow pets you can attract a big portion of the traveling pet owner crowd if you offer liberal pet policies. Cleaning up after the creatures, however, can be a different story.
"I think this is really an overrated 'want' as most people don't travel with their pets," said Floyd.
Sturges says when pets are permitted, part of the rental has to include a substantial cleaning allowance.
"A property that is pet-friendly is usually on the ground floor, not on a busy street, and perhaps with a good fenced yard. If you are planning on buying a pet-friendly property, it is a good idea to have wood floors rather than carpeting," said Sturges.
Special Touches: Chalets, mansions, villas and a beautifully designed and decorated home are all popular draws.
"Something I experienced for the first time was a vacation home with a car and guide available. I just returned from Beijing and the condo's owners provided a new Hyundai Elantra with driver and guide during the entire trip. I realize few owners will be interested in providing this, but it was fantastic and made the trip so simple and pleasurable. If you want to really set your place apart, do something like that. Upscale travelers will be willing to pay for it," said Floyd.
Floyd also said vacation rental owners should make available local travel guides, maps, discount coupons and information books about the vacation rental home or condo and the surrounding area.
"It's great to know the location of the Italian or Chinese restaurant. These guides are very cheap and easy to assemble and it goes a long way creating a positive impression with renters," said Floyd.
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]]>Equally important: Federal Reserve chairman Ben Bernanke has strongly hinted that the Fed will lower short-term rates by at least a half percentage point at the end of January, and might lower rates again at its next meeting if needed.
Mortgage rates last week hit 5.73 percent on average nationwide for 30 year fixed rate conforming loans and 5.21 percent for 15-year fixed, and about the same for 5-year hybrid adjustables, according to the Mortgage Bankers Association of America.
You may recall that rates topped 6.8 percent briefly late last summer, so the cost of money for real estate purchases and refinancings is now more than a full percentage point cheaper than it was barely five months ago!
Low mortgage rates like these normally are a powerful stimulus for home sales, but there's a sobering underside to the current declines: They are being caused in part by bond market investors' fears of a U.S. recession.
Investors are putting their money into ultra-safe Treasury bonds, lowering the benchmark 10-year Treasury rates that affect the pricing of long-term mortgage money.
Let's not pull any punches about this: There does appear to be a growing possibility of recession. Consumers have begun pulling back on purchases, borrowing less, even using their credit cards less. Unemployment is up.
The White House and Congress are rushing to put together economic stimulus packages -- and some of the details could be beneficial to residential real estate.
For example, one proposal would allow millions of homeowners who do not itemize on their federal tax filings to write off their mortgage interest payments for the first time ever. Look for job stimulation plans, more help for troubled homeowners, and a lot more to be floated publicly in the next couple of weeks.
The idea is to ward off any recession, or at least keep it short and shallow.
Nobody can tell you with certainty how this will play out, but we'll be monitoring it for you on a daily basis.
In the meantime, here's a smart strategy: Make the most of what we've got -- the lowest interest rates and home prices we've seen in years in most markets.
Recession or no recession, that should be a winning combination if you are serious about real estate.
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TALLAHASSEE, Fla. (AP) – Jan. 17, 2008 – Florida Insurance Commissioner Kevin McCarty on Wednesday suspended Allstate companies from writing new automobile insurance policies in Florida for refusing to comply fully with a subpoena from the state.
McCarty abruptly ended a scheduled two-day meeting Tuesday after just two hours. He was angered that Allstate officials failed to turn over some information the state requested on property coverage rates. Company officials had described the state’s request as “irrelevant.”
Allstate was to have provided documents relating to its reinsurance program and its relationship with risk modeling companies, insurance trade associations and insurance rating organizations, but instead returned a 51-page letter of objections to the state’s subpoena.
“In view of Allstate’s ongoing, blatant disregard of our subpoenas, I have little choice,” McCarty said Wednesday. “Suspending their certificate of authority to write new business in our state should make my point.”
He said the suspension would be lifted when the company complied with the state subpoena.
Messages left for Allstate executives to comment on the suspension were not immediately returned. The Florida Insurance Council, an industry trade association, referred calls to Allstate.
McCarty said existing policyholders will not be affected. Allstate must continue to service their clients and its companies must make all required statutory filings, including annual and quarterly financial statements and rate filings.
The suspension applies to Allstate Insurance Co., Allstate Indemnity Co. and Allstate Property and Casualty Co., and it only suspends the companies from writing new business in Florida.
Gov. Charlie Crist, who has long criticized the insurance industry for its resistance to lowering property insurance rates, praised McCarty’s action against the Illinois-based carrier.
The Allstate Corp. is based in Northbrook, Ill.
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In 2005, 23% of all homes sold were investment properties, according to the National Association of Realtors. There's no question that investing in real estate can be lucrative, but it's important to choose your properties carefully to make sure you don't end up getting burned.
Choose the Right Neighborhood
Just like with any other real estate purchase, location is all-important. Whether you're buying an investment property to rent or to renovate for resale, a large part of your success will come down to the neighborhood you buy into. Developing or undervalued neighborhoods are both good prospects for investment buying. The easiest way of getting a feel for good prospects is just to jump in your car and drive around your area. Look for areas with a lot of development going on, or where new housing projects are planned. If you're buying a rental property, bear in mind that if you're going to be doing maintenance and repair work yourself, somewhere relatively close to your own home is a good idea so that you don't have to spend a lot of time traveling to the property.
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Don't forget the old rules still apply - buy the worst house in the best street, not the best house in the worst street. You don't want to end up buying a property that's worth significantly more than neighboring houses, as this will mean your investment has no room to appreciate in value because the surrounding properties are dragging its value down.
Foreclosures
Buying foreclosures can be risky, much more so than buying property in the traditional fashion. However, if you're aware of the risks beforehand and take steps to minimize them, you can end up with a great deal. Before you even consider buying in this way, you should be very familiar with foreclosure laws in your state, in addition to knowing as much as possible about the neighborhoods you're interested in.
To find foreclosures, look in your local newspapers for advertisements with key words such as "bank-owned," "foreclosed," or "REO" (real estate owned). Look on lender websites to check for foreclosure listings, and call lenders and ask to speak to someone who handles foreclosures.
As a final caveat - don't buy anything without having it inspected first, no matter how good the property looks on the surface. Property inspection is the best way of ensuring you end up with a profitable deal.
Why Good Credit is Important
When it comes to financing the purchase of rental property, lenders often require larger down payments and higher interest rates. This is because lenders know that owners of rental properties are more likely to default on loan payments than on payments for their personal homes. Simply put, you pay more because rental property is a higher risk investment. To improve your chances of getting a good loan, it's important to have good credit and to reduce your credit card and other consumer debt as much as possible.
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It's also important to ensure you have a good-sized cash reserve left over after you've bought your property, to help pay for surprise expenses such as repairs (and periods when the house is vacant, if you've purchased a rental property).
Get to Know the Tax Laws
Owning investment properties can provide big tax benefits. Getting to know your state and federal tax laws is important for maximizing the profits you can make from investing in real estate. For example:
Depreciation on an investment property is tax-deductible at an annual rate of 3.64% of the home's market value.
Mortgage interest on investment properties is tax-deductible.
Do your homework, choose your properties carefully and watch your investments grow.
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]]>As the property market cools down, it becomes a good time for property buyers. If you don't have that much money to spend on a house, but you're absolutely convinced that it's the right time for you to move (or if you've found an intriguing investment property) then you need to learn how to make a lowball offer - and get it accepted. Generally, a lowball offer is 10% or more below list price.
First and foremost, learn what types of properties you're looking for in terms of both the house and the seller.
The House
The properties you're interested in have been on the market more than a month. There's not necessarily anything seriously wrong with them, but they're just not generating much attention. Maybe they're unattractive, in a busy street, or in disrepair. The key is to find properties that maybe need a little repair work, but nothing major. Your lowball offer isn't worth much if you have to spend all the money you saved on structural or wiring work.
The Seller
The seller you're looking for needs to move ASAP. Perhaps they're relocating to a job in another city, or they've already bought another house but want to sell the old one before leaving town. Maybe they're selling the home of a recently-deceased relative, and they just want to get the whole thing over with. Maybe they've defaulted on their mortgage payments and the house is foreclosing. These are motivated sellers and they're more willing to accept a low offer on their property.
The Secrets
• Get pre-approved for a mortgage before you start shopping. It'll make you more attractive to sellers.
• Shop at the right time - one of the best times to look is during the week between Christmas and New Year's, simply because very few people are looking then. If you find the right house or the right seller at this time, it's a great opportunity for getting a low-ball offer accepted.
• Make an initial offer that's below what you want to pay, and prepare to be rejected. Let the seller feel that they're negotiating a better deal with you and they're more likely to accept your second or third offer. Note: in a competitive market this strategy isn't advisable, but in a slow market it's worth trying.
• Make offers on several properties. The more opportunities you create, the more likely you are to have a seller accept your offer.
• Hire a buyer's agent. The seller's agent is trying to get the best possible deal for their client and they're not going to help you get a low-ball offer accepted. A dedicated buyer's agent will, and they'll most likely have more in-depth knowledge of the neighborhood and current market prices, too.
• Don't use the list price as an indication of a property's true market value. List prices are often inflated, so do your own research. Get a Current Market Analysis for the area and find out how accurate that list price really is.
• Give the seller a good reason to accept your price. Offer to close quickly, offer to pay in cash, and be flexible on inspection dates. Accommodate the seller in every way possible, and if they're motivated to sell they'll be more amenable to your offer.
For more information regarding the above web blog, please call Dean or Bonnie Isenberg at 305-936-2489 / 800-819-5466 or visit us on-line at A-Realtor.Com
Click Here To E-Mail The “I-Team”
Click Here To Request More Information About The Above Web Blog
South Florida Real Estate Information
Sell Your Pre-Construction Property .COMmission Free
Thank You !
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