Make Money and Build Wealth With Ephren Taylor The Social Capitalist

A Look At Assumable Mortgages

Any one who has ever taken on the task of purchasing a home is fully aware that it can be a very costly undertaking, and that it usually requires some type of financing or another in order to make the purchase even possible. In almost all cases, anyone who is looking to purchase a house goes to a bank or another type of lending institution and applies for a mortgage for the purchase of the home. One other alternative to this traditional technique that may prove feasible however is an assumable mortgage. With this type of mortgage, the homebuyer is given the legal right to take over or “assume” the existing mortgage of the seller, as long as he or she has the approval of the lender of the mortgage.

 

If it so happens that the interest rates on a particular piece of property has gone up since the time when the original mortgage was taken out by the seller, the buyer then is in a position to benefit the most from the assumable mortgage arrangement. The reason for this is simply that in the event of an increase in interest rates, the costs associated with borrowing also increases. Therefore, if the buyer can take over the seller's relatively low-rate mortgage, he or she can avoid having to pay having to pay the current interest rate, which can be considerably higher. Keep in mind however, that the cost of the home in question may not be covered in full by the assumable mortgage and that the person who assumes the mortgage may have to pay a down payment on the rest of the amount, or he or she will have to apply for additional financing.

 

To explain this more clearly, let us take as an example a seller who only has an assumable mortgage in the amount of $100,000 but is selling his or her property for $150,000. In this particular case, the buyer will then have somehow come up with a way to raise the additional $50,000. Since the buyer will only assume $100,000 dollars out of the total cost of the house, the rest of it will have to be borrowed at the current interest rate, which will of course be higher. In addition, although the mortgage is going to be assumed from the seller, the lender has the option to change the terms of the loan for the buyer, taking into consideration several factors, some of which include the credit risk of the buyer and the current condition of the market.

 

As far as the seller of the property is concerned, there is however a certain degree of risk inherent in this type of mortgage. An assumable mortgage can actually render the seller legally liable for the loan even after the assumption had already taken place. In the event that the buyer defaults on the loan, the seller may have to be responsible for whatever amount the lender is unable to collect from the buyer. In order to avoid this risk, a seller may opt to release their liability upon assumption of the mortgage.

Stopping Foreclosure

A foreclosure is something that we would all like to avoid as much as possible but due to various circumstances, there may come a time when such an occurrence is inevitable. It would be beneficial then to become familiar with the ways and means of stopping foreclosure in order to be fully prepared when the time comes.

 

When a bank or lending institution files a Notice of Default against you as a property owner, it becomes obvious fairly quickly that your options are limited. This is why it is tremendously important to call your lender before you begin to fall behind on your payments, if you see this coming up at any time in the near future. Most lending institutions are typically reluctant to work out a repayment schedule for you once foreclosure proceedings have begun, and they will definitely be more open to finding solutions to your dilemma before the fact.

 

Lending institutions will usually give you a certain time period in order for you to bring your payments up to date and to pay off the costs of filing the foreclosure, as well as to stop foreclosure proceedings. This process is commonly known as a reinstatement of your loan.

 

But what if in spite of all this, you still cannot make up the missed payments and the lending institution in question is less than agreeable to finding a mutually beneficial solution? In this case, you still have a few other options open to you for stopping foreclosure. Some of the most effective ones are outlined below.

 

Sell Off Your Home.

One thing you can do is to interview real estate agents in your area in order to get a better idea of the current market value and average DOM of selling your home. While you may think that hiring a discount broker would be good enough for your needs, the added exposure and marketing services that a full-service broker offers may prove to be a better solution. Try to determine what your specific needs are especially with regard to time frame before you make a decision.

 

Look Into A Short Sale.

If the current value of your home is less than the amount that you owe, it might be a good idea to look into a short sale. This move will still affect your credit standing but not in as negative a manner as a foreclosure. In addition, you or your agent will probably have to strike a deal with your lender to find out if you can undertake a short sale. This procedure is called redeeming a pre-foreclosure.

 

Apply for a Deed-in-Lieu of Foreclosure

This procedure is known as deeding the home back to the lender and the process involves you as the homeowner giving the lender a notarized deed to the effect that the lender rescinds the mortgage and cancels any foreclosure proceedings. Deeds-in-lieu of foreclosure typically have the same effect on a borrower’s credit as a foreclosure, with the difference being that the home owner may be able to continue living in the home until finding an alternative place to live in.

Why Detroit and Cleveland are great markets for Real Estate Investing

Over a year ago I was getting ridiculed for saying Detroit, MI and Cleveland, OH were the next great real estate markets.  Everyone looked at me like I was absolutely crazy, and especially since I was basing some of my City Capital turnaround on two depressed markets.  I even debated on Fox News live with Neil Cavuto of why these markets were ones to watch. 

Funny how things come to pass!  Last month Money magazine came out with a list of the top 10 markets to invest in now, and what two markets were on that list?  Cleveland and Detroit!

As an investor you have to be able to spot trends when others can't see them, as well avoid at all costs the "Herd Mentality" of doing what everyone else is doing.  There is a reason most of the wealth is controlled by a few entities, obviously cause they don't do what everyone else does.  So why do we as investors do what everyone else does, despite racking up loss after loss.  With many of the people I have asked the question to many give reasons with no logic whatsoever.

I believe real estate is an investment and should be treated as such!  Find the opportunities where everyone else isn't looking, or scared to look then capitalize on it.  Right now in Detroit we have a waiting list for our units, as well in Cleveland.  These two markets you will see presenting opportunity after opportunity.  Now am I advocating blind investment by rushing in? Of course not, however there is money in pain!  When people are feeling pain money is being made.  When housing collaspes look at the worst markets for the easiest profits, and best buying opportunities.  It's a formula that has worked for years, and we see it being played out day after day. 

What stops you from moving on them? 

Are you a herder or part of the herd?  I don't know about you but I prefer doing the grilling of the steak, than being the one grilled myself!

See it, plan it, then act on it.  Otherwise its just a plan or dream that won't put any money in your pocket. 

PS:  The same strategy applies to other industries as well.  For instance fuel, oil, food, health care, and financial are all painful places for the American People. What investment opportunity, or business opportunity is within your grasp that you are avoiding  because the herd has moved on?  This may be the next big opportunity for you.  The grass may be greener possibly in other pastures, but if you take the time to water your own grass you can find opportunities way before the rest of the herd arrives!

For More Info

Buy Real Estate With No Money Down :: www.cashfreeinvesting.com
Make Your IRA / 401K Double It's Return :: www.IraCashFlow.com