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The point of this home buying tip is to make you comfortable with snooping.

What do I mean by snooping?

I mean that when you look at a home you’re thinking about buying, you really need to look at the home. That sounds like a no-brainer, so let me explain:

Most people are not comfortable peeking into the nooks and crannies of a stranger’s house. Maybe it’s a closet you don’t feel comfortable entering. Maybe it’s the attic or basement, or that shed out in the yard. Examining the dark corners of someone else’s house is just plain weird.

But here’s the thing. You have to look. That is, if you’re serious about buying the home. There’s no other way to know what you’re buying into. So you have to accept the fact that it’s okay to snoop.

Of course, some areas are obviously off limits. For example, you wouldn’t snoop through somebody’s sock drawer [eek!] or a bookshelf. Those things are moving with the sellers. But any item that transfers with the property is fair game for snooping.

Snoop-able Areas Include:

• Attic
• Basement
• Cabinets
• Garage
• Closets
• Sheds or outbuildings
• Areas hidden by furniture

Still don’t feel comfortable snooping? Consider this:

1. Sellers were once buyers. So they’ve done some snooping of their own, and they probably expect you to be no different.

2. If you have a real estate agent, he or she will likely do some of the snooping with you.

3. Most sellers will step aside and give you plenty of privacy when you visit. It’s part of the unofficial home-selling “protocol.”

4. By listing a home for sale, the owners have knowingly turned their private domain into a publicly viewable product.

5. Sellers with nothing to hide won’t mind where you look. If you feel rushed, closely escorted, or “blocked” from certain areas … it’s a red flag!

Be Respectful
Keep in mind that snooping does not mean disrespecting the home. Be respectful. Be polite. But at the same time be thorough. I hope this home buying tip has helped you realize … it’s okay to snoop!

* Copyright 2006, Brandon Cornett. You may republish this article if you keep the byline and author’s note, and also leave the hyperlinks active.

Learn more!
This home buying tip was brought to you by HomeBuyingInstitute.com, the Internet’s largest library of home buying advice. Increase your home buying intelligence by visiting: http://www.homebuyinginstitute.com!

Mortgage interest rates are rising and single family homes are more expensive than ever. The American dream is becoming more like a fantasy to most average hard working Americans already struggling to pay the rent.

Additionally, what is going to happen to countless families that recently purchased their first home under those new adjustable rate mortgage loans that take effect after a very short fixed rate period? These people are going to have serious payment shock when they realize the effect that two percentage points has on a long term, several hundred thousand dollar mortgage. Foreclosure numbers are going to skyrocket in this country. A severely damaged credit score rating will drive these people back to the rental market or into some type of “owner financed” property.

A mobile home offers a solution to these families. Yet, because of the negative stigma associated with mobile home parks, city officials will generally do whatever it takes to prevent new park developments. Couple this fact with the significant cash requirements to build a mobile home park and you have a powerful discrepancy between demand and supply. Savvy real estate investors know this and are already profiting from our nation’s lack of affordable housing.

Still not sure if a mobile home park investment is a good idea? Perhaps, this might change your mind. The king of Wall Street, Warren Buffet recently invested 1.7 billion of Berkshire Hathaway’s capital by purchasing Clayton Homes Inc, one of the largest manufactured housing companies in the world. This was after an unsuccessful bid to buy a huge portfolio of delinquent mobile home loans from Conseco Inc.

Typically, when Warren jumps, millions follow and bank on yearly 12% returns. However, this is a unique opportunity for investors to gain huge profits from Buffets financial wisdom in the short term. The “Oracle of Omaha” as always been know for buying value, buckling down for the long haul and closing his position decades later when he’s squeezed every penny from each respective stock. The beautiful thing about a mobile home park investment is that (provided you know what you’re doing) you don’t have to wait a decade to realize triple digit returns on your money. Every day, mobile home park investors sell parks for multiples of what they paid for them a few years prior. Corey Donaldson, an experienced mobile home investor was recently able to retire as he doubled his equity (1.2 million) with his Texas mobile home park in just one year. Similar investors across the globe are able to accomplish this seemingly impossible feat with every park they purchase. These are generally deemed “turnaround” mobile home parks, where the investor finds an owner that has managed his/her park poorly over the years, either out of apathy or ignorance. Once locking up the property (many times with the previous owner carrying the mobile home park loan) this knowledgeable mobile home investor makes the sweeping changes necessary to increase net operating income.

However, you don’t have to buy a poorly run park to realize significant returns. Most of mobile home parks are between 15 and 30 acres. Historically, that land becomes so valuable that over time those mobile homes are replaced by larger commercial, retail or residential developments. However, unlike most land investments that are considered sunken costs until someone sells or builds, mobile home parks are producing large monthly cash flows as you rent the dirt the mobile homes sit on. In other words, you can profit by leasing the land to people as the value of your land appreciates.

To learn the detailed steps required to profit from a mobile home park investment please visit http://www.mobilehomeparkprofits.com

Central Florida’s holiday home market has expanded at a phenomenal rate over the last 10 years. Much of this expansion is due to Disney World’s 10-million visitors per annum not to mention the region’s other world class attractions, such as Universal Studios and Sea World. There is an excellent market for both US and European holiday rentals, Over 50% of Americans do not have a passport and holiday in the US, Furthermore, the American 2nd Home Market is booming, with many American families purchasing properties either as second homes or as holiday homes.

Property prices have been soaring in the last few years. With paying at least $350,000 for a 3 bed/3 bath villa.

Many developers are incurring more costs to their original agreed purchase price and are having to make some serious increases to meet the demand

* Land Value increasing

* Building Costs up by 30%

* Impact Fee rising from 7,000 to 22-25,000 dollars
Developers are passing these costs to the purchaser and increasing the Sale Price.

The investment below, I have found is a unique and easy way to get onto the Florida Investment Ladder

The Retreat in Kissimmee Florida

The Retreat will be a stunning purpose built Condominium Townhouse Complex, built on a picturesque wooded area less than 8 miles from Disney World in one of the fastest growing holiday destinations in the World.

With only a one-off booking deposit of £22,500 which covers the deposit and all fit out, purchase and legal costs.

A Full Turn Key investment, the 3 bedroom 3 bathroom townhouses come fully fitted out with full management and rental service in place.

Choice of two rental guarantee schemes

A great rental location, just 8 miles from Disney, 9 miles from international drive, 14 miles from seaworld and universal studios

Excellent Capital Appreciation potential: Florida has 4 out of the United States, 10 fastest growing real estate markets

This is an excellent opportunity for an Investor and First time buyer who would llike the chance to get on the Floridian property market and make some great cashflow and appreciation,

Flipps.co.uk has been providing real estate hot spot information for the last 2 years and has successfully matched Investors with Investments within the same period. If you would like to know more about Sipps and our 6 Hot Reasons to invest Right Now then please click here http://www.topinvestmentproperties.com

Located 30 kilometres north of Alicante on the Costa Blanca, the town of Villajoyosa lies at the mouth of the River Sella. Colourful, vibrant and decidedly Spanish, Villajoyosa (literally ‘joyful town’) is situated just south of Benidorm and is sandwiched between the mountains and the sea.

A bustling fishing port, the distinctive, brightly painted facades of the town’s houses were designed to guide the fishermen home from sea. Steeped in history, this is one of the few towns on the Costa Blanca that remains undiscovered, and property here is some of the most competitively priced in southern Spain.

Why Villajoyosa?
Villajoyosa has a colourful history, with the Romans building the first settlement here, but today the feel is overtly Spanish. The town has retained many traditional features, such as its fish market, and there are a number of restaurants along the harbour that serve some of the best seafood in the region. The town is also known for its production of chocolate. The old town has been declared a historic site, and it’s here that you’ll find the multi-coloured houses, Villajoyosa’s gothic church and a number of Roman bridges.

Only 10 kilometres from Benidorm, residents can enjoy the perks of being close to such a major town, while avoiding the tourists that inundate the resort in summer. Couple this with friendly residents, a welcoming local community and the fabulous weather (the temperature rarely falls below 16 degrees Celsius) and you’re looking at a fantastic destination.

The scenery is stunning, with a mountainous backdrop and surrounding citrus fruit plantations, as well as olive, carob and almond trees. The town is home to one of the region’s best fiestas, the festival of the Moors and Christians, which culminates in a colourful parade with fireworks. There are also a number of picture-book beaches, with talcum powder sand and clear blue waters. These include Playa Centro de la Vila, Playa Paraiso, Playa Bol Nou, and further afield, Torre and Estudiantes.

Where to buy
In Villajoyosa itself, average house prices range from 170,000 Euros to 300,000 Euros, depending on proximity to the city centre or beach. Villas are fetching roughly 350,000 to 800,000 Euros, again depending on the location. It’s possible to pick up a one bedroom apartment for as little as 85,000 Euros, while a two bedroom townhouse will cost you 110,000 Euros, and a country house as little as 133,000 Euros. Travel further north and you’ll come across Cala Finestrat, a cove in the borough of Villajoyosa that’s close to Benidorm’s Poniente Beach.

Cala Finestrat is a stunning resort, with a wide, sandy beach and shallow waters, making it perfect for families. It’s beaches have won the EU coveted Blue Flag every year since 1998. Enjoying its own special micro-climate, Cala Finestrat is sheltered from the southerly winds by the El Puig Campana Mountains.These are just a few kilometres away, so as well as snorkelling, scuba diving and beach sports, you can also enjoy mountain activities such as rock climbing, cycling and hiking. It’s also only one kilometre from Benidorm and three kilometres from Villajoyosa, although there are more local amenities and attractions close at hand.

In terms of property, there are mainly apartments and villas for sale. The cost of a two bedroom apartment varies from 146,000 Euros up to 150,000 Euros, while an average two bedroom villa close to the beach will cost around 255,000 Euros.

The property market
The town offers a range of properties to suit every budget, from inexpensive apartments to luxury cliff-top villas. There are a handful of developments springing up in the town, but not enough to damage the environment or spoil the coastal area.

During the last five years, property has more than doubled in value, and in some cases tripled, appreciating by as much as 100 to 150 per cent in some areas. Thanks to its proximity to Benidorm, with all its golf courses and attractions, there’s no sign of this trend slowing, especially as more people discover the area. It’s predicted that the market will continue to grow by between 15 to 20 per cent over the coming year.

Typical properties
In this area you will find something to suit every budget, with prices ranging from 115,000 Euros in Villajoyosa to over 1,000,000 Euros for a villa in Cala Finestrat. Apartments and villas are much more abundant than townhouses. Restoration projects are currently underway to repair and maintain traditional village houses, and a scattering of new developments are being built on the outskirts of the town.

The rentals market
Being close to Benidorm, there’s scope to secure a healthy rental income from a property, depending on where it is located and how close it is to the beach and amenities. If a property is well marketed and in a premium location, for example on the beachfront, it’s possible to secure an annual income of roughly 10 per cent of it’s sales value. For the average property, a yield of 7 per cent is more likely.

There’s been a rise in the number of people investing in buy-to-let property in and around Villajoyosa. Given that the tourist industry is growing, and that there are major renovations and development works being carried out on the seafront and old town, including the building of a theatre, swimming pool and football stadium, it’s likely that the next few years will see a rise in rental demand.

Living there
Villajoyosa is more popular with Spanish buyers than foreign investors, although the demand from overseas buyers is increasing. Those who purchase here tend to be mostly British and Norwegian, along with some Belgians. Buyers tend to be aged between 40 and 60, and are looking for apartments and villas.

The town is dominated by its local Spanish residents and life is very traditional, with fishing and the fish market central to Villajoyosa’s economy. Tourism is a growing industry, but for those looking to buy, be aware that despite being very close to Benidorm, life here is a very different proposition.

The town’s amenities are currently limited, but the development of the seafront and other investments means that facilities will improve. However, this situation is easy to endure - it’s reputed that the sun shines more in Villajoyosa than in any other part of the Costa Blanca.

The expat community is also on the increase, and given that Benidorm is just down the road, you shouldn’t feel too isolated. Couple this with it’s unique Spanish features and traditional lifestyle, it’s easy to appreciate why Villajoyosa is a ‘joyful town’.

Steve Murphy and Christine Dawson moved to the Costa Blanca in 2004. They left behind their pub, ‘The Rising Sun’ in Sidmouth, and moved to Venta la Nuza, close to Villajoyosa, where they purchased a villa. At first they found it difficult to settle and adjust, having been used to running a business and keeping busy.

However, this all changed when they purchased ‘The Bodegon’ in Villajoyosa itself. This hole-in-the-wall pub helped them settle into life in Spain, and they now spend their time with Christine working behind the bar and Steve beavering away in the kitchen, producing his British ‘pub grub’ of liver and onions and a ploughman’s lunch. “The pub has taken off really well,” says Christine, “not only do we attract the tourists, but many of our clients are locals.”

Costa Blanca statistics
Population Villajoyosa: 23,430
Population Alicante: 1,300,000
British Homeowners: 350,000
Foreign population: 15-20%
GDP Growth: 1.8%
Inflation: 2.4%
Unemployment rate: 3%
Length of coastline: 160kms
Languages spoken: Castilian and Valenciano Spanish

Martin Dell is Managing Director of Kyero Media S.L. - publisher of the largest English-language property portal in Spain, http://www.kyero.com

These tips are excerpted from my four real estate book: “1001 Tips for Buying and Selling a Home” by Mark Nash. ISBN: 0324232896 Thomson/South-Western 2004.

37 Know what to expect from a home inspector.
-A home inspector is a qualified professional who performs
an inspection of various home systems and structures.
-The home inspector is a generalist, that is, knowledgeable in many areas, but not an expert in all.

41 Know what to expect from a home inspection.
-An examination of the exterior and interior of residential property, including the grounds, the structure, and the mechanical systems, will discover any structural defects; broken or obsolete components; and damage due to water, wear and tear, and other conditions.
-The examination should be summarized in a home inspection report.

50 Determine whether if the main electric panel contains circuit breakers or fuses.

63 Locate a clean out; a pipe fitted with a removable plug to assist in dislodging a pipe obstruction on the main sewer line.

65 Be sure that the water heater is sized properly for number of bathrooms, kitchen, laundry, and special tubs such as a Jacuzzi.

68 See whether all water supply lines to fixtures, such as sinks, toilets, and laundry, have shut-off valves.

87 Always look for worn shingles that have curled edges.

94 Look for roofs that are properly vented with ridge and soffit vents.

101 Understand the meaning of load-bearing.
-It carries an imposed load.
-Exterior and some interior walls of a structure are load-bearing.
-Before removing any wall consult with a structural engineer to determine whether a wall is load bearing.

111 If the house is on a crawl space, make sure a vapor barrier is covered with gravel or poured concrete.

119 Look for carcks and buldges in foundation walls.

124 Look for spalling (the crumbling of brick) and the need for tuckpointing (loose or missing mortar between bricks) on older brick walls and chimneys.

139 Make sure to locate main shut-offs for natural gas, water, and electrical.

144 Request that the property sellers leave all appliance, furnace, hot water heater, and other manuals and warranties in the house or bring them to closing or escrow.

145 Confirm that required smoke and carbon monoxide detectors are installed and are in the right locations for optimal operation.

147 Identify the additional types of inspections that may be suggested.
-Chimneys and fireplaces.
-Swimming pool.
-Oil and gas tanks.
-Asbestos, radon and mold.

176 Check to see whether the house was built before 1978, in which case lead-based paint is likely to have been used.

188 Look for water stains on walls, floors,and carpets, including carpet over concrete floors. Lift area rugs up to see condition of floors beneath.

192 Make sure all vents lead outdoors and nt into attics or crawl spaces.

194 Hire a professional to inspect the heating and cooling system, including humidifiers, condensing units, evaporators, and vents. Have the inspector check duct lining and insulation for mold growth.

230 Understand that termites are not the only cause of damage to wood structures.
-Other wood-destroying insects are, carpenter ants, carpenter bees, and powderpost beetles.

232 For new construction, do not go to closing until a proper Certificate of Occupancy has been granted by the local government authority.

Mark Nash is a nationally recognized consumer advocate for buyers and sellers of residential real estate. Author of four books including the recently released “1001 Tips for Buying and Selling a Home” Thomson 2005. Mr. Nash has been featured in The New York Times,USA Today, Fidelity Investor’s Weekly, CBS The Early Show, Bloomberg TV, Dow Jones Market Watch, MSNBC.com Unique Homes Magazine and The Universal Press Syndicate. His radio show “Real Estate Coast to Coast with Mark Nash” http://www.business.voiceamerica.com on Wednesdays 9AM PST,11AM CST and 12 Noon EST. The show is looking for interesting guests including; real estate journalists, interior designers, home improvement experts, real estate attorney’s, appraisers, home inspectors and celebrity’s.

Private mortgage insurance is an additional fee that a lender may require if you do not put down the minimum down payment towards a house, usually around 20%. Does this mean that you can not get the house? No! A lender may option for you to get PMI (private mortgage insurance) which in the case of a defaulted loan, the insurer will pay the lender anywhere from 20-30% of the mortgage balance.

The lender will option for you to get a PMI if they want extra insurance that they will get at least most, if not all the money back that they borrowed. Even if they do lose out on some of the money that was originally borrowed by a home owner, they will have enough to cover costs that are associated with foreclosure and the resell of the property.

So if you can not afford the down payment that the lender expects, realize you have other options and that does not mean that this home is completely out of your range. The premiums for private mortgage insurance are usually less than adjustable rate mortgages and fixed rate mortgages. The premium for private mortgage insurance is based on the amount the home buyer is borrowing as well as the amount of down payment that the home buyer can afford.

For example, the less amount of money you can put down to satisfy the down payment, the more the private mortgage insurance premium would be. The premium may also be larger in neighborhoods or communities where the living expenses are much higher than average communities in the United States.

Because the home owner is expected to pay more money as insurance to the money being borrowed from the lender, there is a time that the PMI can be canceled and no longer will have to be paid. This will be decided by the lender, but usually cancellation of PMI can take place when the home owner has paid up to 80% of the property’s purchase price or current market value. This 80% mark will based of whatever total is less: the purchase price or current market value.

The lender is responsible for putting in writing the fact that the home owner indeed has PMI and must be in contact annually of when the PMI can be cancelled. In order to protect the home owner from paying too much money as insurance, when mort of the value of the house is already paid for, the Homeowners Protection Act (HPA) established these private mortgage insurance policies.

In addition to the lender having responsibilities regarding PMI, the home owner must maintain timely payments, not to exceed 60 days late with a mortgage payment in two years, and 30 days late within one year. This protects the lender as well, so that the insurance is not cancelled if the home owner is too much of a risk, and may possibly default on the payments.

In order to cancel PMI, the lender will have to agree that the home owner has paid at least 80% of the purchase price or current market value. He or she can do this by having the property appraised and taking in to account an increase or decrease in value over the time that has elapsed. The HPA also requires that there be no other mortgage on it or a home equity loan. They basically want to see that you can continue with the monthly mortgage payments without defaulting. This way, the lender will get his or her money back as originally proposed.

The home owner does not get to choose the company that distributes the private mortgage insurance because it is protection for the lender. Therefore, the lender may choose the PMI company and you can not really change that. However, in order to avoid complications or fraud, always be apprised of the terms of the loan, what is required of the down payment, what are the minimums in order not to pay additional PMI payments, as well as the terms for cancellation. Work with only reputable lenders that are fully qualified and licensed professionals that have good references.

If you feel PMI is too much additional money to buy a specific house, you can always save more money for a down payment and then try again with a new property or the current one if still available. Only make financial decisions that are with in your comfort zone in order to avoid default payments, foreclosure, and other horrible incidents that occur when financial obligations are greater than one can meet.

John R Blakefield is a mortgage and real estate specialist. For more information, articles, news, tools and valuable resources on home mortgages or investment loans, refinancing, debt solutions, visit this site: http://www.scourtheweb.com/mortgage/.

When it comes to trading mortgage leads, there are a lot of good
companies out there for you to study, and many roads to travel
down when considering which lead type will work best for you.
Researching lead companies is an essential aspect when deciding
to invest in one, but let’s be straightforward with each other;
we really don’t know what kind of mortgage leads we are getting
until we begin to buy them.

Starting out as a loan officer I bought my leads in bulk, fresh
and with a live transfer. I would take $100 of my hard earned
money and purchase about fifty leads at $2 each. I know that you
get what you pay for, and my goal was to close two at the most,
and at the very least one. Sometimes it worked and sometimes
not. The problem was that I had the feeling of working harder
instead of smarter.

Then I tried to buy real time leads, or fresh leads. I would
take that same $100 and get roughly three to five fresh leads
consisting of purchase leads and refinance leads. I would set up
a filter before hand: specific to state, type of loan, credit,
ltv, loan amount and so on. Automatically when a lead came in,
matching my filter, it would be stream lined straight to my
email account, only about ten minutes old. I had success with
this approach.

The other kind of lead I decided to try out was the live
transfer lead. I believed this to be an amazing concept to
increase my applications. Mostly I just sat at my desk, waiting
for the lead company to transmit customers to me by phone. The
problem was that there was no guarantee that I was there to pick
up the phone. If I stepped away from my desk the call would end
up in my voice mailbox, or the possible customer would hang up.
And again I felt as though I was working harder instead of
working smarter.

Prior to investing with mortgage lead companies, make sure you
do your home work carefully. Understand the companies terms of
service, find out what their return policy is. Even call to
speak with a sales rep, and don’t be afraid to ask for a free
trial. Does it consist of a free lead or some type of credit
toward your first deposit? If they are certain in the quality of
their leads, then they should not have a problem accommodating
you.

Many loan officers have had success with all of the mentioned
lead types. Some may work for you and some may not. If you find
yourself struggling too hard to make the lead work for you, pick
a different type of lead!

Real Estate Marketing slogans arouses interest in your audience
and can be the vehicle that helps establish your “name brand”
and invigorate your real estate career.

A good, well crafted slogan can propel your business in quantum
leaps, while a poorly considered one can be as effective as none
at all. Real estate marketing slogans can work equally well
online and offline, but they must be good enough to appeal to
mass, targeted audiences.

Consequently, agents work hard and long for the right words to
coin the right phrases, for the perfect slogans. After all,
their slogans may be powerful or aspiring enough to define their
careers.

Realtor Alert! Real estate marketing slogans don’t have to be
over intellectualized to create huge “brand names.” Catchy and
clever works every time.

For example, Century 21, ERA, & Coldwell Banker are national
and/or regional real estate companies whose corporate names
serve as their “real estate marketing slogans”. Examples of some
gigantic, non-real estate companies are Xerox, IBM, Pepsi and
Coke.

Successful Realtors know the importance of using real estate
marketing slogans to create “name brands”, but when conjuring up
a slogan for yourself why not something as simple as your name.

If Mike, Bill and Hillary can pull it off you can, too. Of
Course you know who I mean, which epitomizes the power of a
name.

Creating A Slogan!

Now, I can go to the yellow pages, write down a bunch of real
estate marketing slogans and throw a bunch of them at you to
jump start your creative juices, but you can do that yourself.

A more constructive approach in creating your own slogan is to
make a list of 10 slogans that reflect who you are, what niche
real estate market you want to be known for, and your interests
and personality in general.

Use the yellow Real Estate Agents section of your local yellow
pages to get ideas, then strive for phrases that uniquely
characterize you.

Imagine being the Madonna, or “leave the driving to us” of the
real estate industry.

Is it possible? Absolutely, but you’ll have to create a slogan
first! Then you’ll need to use and publicize it every
opportunity you get; in your ads, on your business cards, letter
head, website, vanity car tag, etc.

Don’t expect instant success right out of the gate. It’ll take a
while, but you’ll be amazed at how much you can accomplish in a
year or so. And if you have a real estate marketing system that
reaches a minimum of 10 prospects a day the numbers can quickly
add up in your favor.

10 contacts a day x 20 days a month = 200 contacts a month

200 contacts a month x 12 months a year = 2,400 contacts a year

Without too much effort you can passively market your slogan to
a minimum of 2,400 prospects a year.

I wonder what impact having your marketing slogan on your car
would have?

No matter where you live, or what market you’re in you’re
missing out on massive amounts of free marketing if you don’t
have a car tag of some kind advertising the fact that you’re a
Realtor.

And what about advertising your slogan through the penny, nickel
and dime publications? Think cheap advertising, high visibility,
and lots of readers of your slogan to drive business
opportunities your way.

So, create your own unique, real estate marketing slogan; then
publicize it heavily; freely and/or inexpensively, but heavily.

Can you see the impact that this might have on your real estate
marketing results? I can!

This is an excellent loan for those that are lacking the down payment required for other types of mortgages.

The 80 20 mortgage is simply two loans for 100% of the purchase price. It is a first mortgage at 80% of the purchase price with a 20% second mortgage.

If you are a conforming borrower, doing your loan in this manner will save you from having to pay mortgage insurance. Mortgage insurance is almost always required when you have less than 20% down. But with the 80 20 loan you avoid this necessary evil.

If you are a sub-prime borrower, doing you loan in this manner will typically keep your interest rates ½% to 2.5% lower than doing a 100% one loan. A 100% one loan is simply one loan for the entire purchase price.

Many times you will have two choices when it comes to the second mortgage portion of the 80 20 mortgage. The second mortgage can either be a fixed second mortgage or it can be a line of credit.

If it is a fixed second mortgage. The interest rate is fixed for the entire length of the mortgage. Most fixed second mortgages are a 30 due in 15. Meaning that the second mortgage is amortized over 30 years, but is due in 15 years. Basically it is a balloon payment. Don’t let this scare you. Statistically people refinance or sell their home every 7 to 9 years any ways.

If it is a line of credit as the second mortgage. The interest rate will fluctuate as the Federal Reserve adjusts the prime interest rate up or down. The benefit of going with the line of credit as the second mortgage is that the interest rate is normally much lower than the fixed second mortgages rate. It can be 2% to 5% lower.

If you are considering doing the 80 20 loan have your loan officer compare the two different options if you have both available to you.

You may also want to consider an 80 20 interest only loan. The interest only loan could save you hundreds of dollars in mortgage payments every month. This can help you purchase a more expensive home or keep the payments down on the home you want to buy.

About The Author

Matthew Allen is a mortgage consutlant with Action Brokerage Services, Inc. in Medford Oregon. He is also the author of “How To Buy A Home With Zero Down, Even If You Have Damaged Or No Credit” You can visit his website at http://www.realmortgageadvice.com.

Now that we have explained the benefits and told you how owner financing works, let’s talk about making contact with a contract buyer, with the idea of selling a newly created contract from the sale of your home.

The contract buyer will want several pieces of information from you. They will suggest the terms you should put in your contract, which gives it the highest cash value when selling it. They can suggest the amount of down payment you should try to get from your buyer, how many years the contract should be written for, plus the right interest rate you should charge. The contract buyer will also ask you about your cash needs from the sale. This is something you shouldn’t be afraid of. They’re not trying to pry into your personal affairs. The contract buyer’s goal is to construct an offer to fulfill your cash needs. Depending on your cash needs, there may be times when it is best to sell a part of your contract, rather than the whole thing. This method could give you a gigantic lump sum of cash when the sale closes. We’ll explain how selling a part of the contract works in a few moments. Disclose all the information you can with the contract buyer. Explore all your options with them. They will assist you in constructing a plan that lets you win from your home sale. Your goal is to create a contract that has high cash value that you can easily sell.

Let’s see what a high cash value contract should look like. We will call this Example One:

THE QUALITY CONTRACT

Let’s pretend you have a home you’re going to sell for a market value of $100,000.00. Let’s say you find a good buyer who can put down $20,000.00. The buyer is going to have a 20% equity position at the very beginning. A contract buyer likes to see that. The more equity your buyer has at the start, the better for you when you sell the contract. Lets assume the interest rate you charge on this contract is 10%. Market rates could be lower or higher, at the time you’re reading this manual. The 10% rate is only an example. The remaining balance of $80,000.00 is amortized over 15 years. This means the buyer will be making monthly payments for 15 years of $859.68. Here’s what the contract will look like.

Sales price of the house: $100,000.00
Down payment: $20,000.00
Remaining balance: $80,000.00
Interest rate: 10%
Monthly payment: $859.68

This represents a good quality contract. The home is selling for market value. The buyer made a good down payment, giving them decent equity at the start. The contract has a reasonable pay back term of 15 years.

Lets see what a contract that would be low in quality would look like. We’ll call this Example Two:

THE LOW QUALITY CONTRACT

Let’s say we’re going to sell the house again for $100.000.00. This time the buyers are only putting down $5,000.00. The contract will be amortized for 30 years with an interest rate of 10%.

Monthly payment $833.69. Here is what it looks like.

Sales price of house: $100,000.00
Down payment: $5,000.00
Remaining balance: $95,000.00
Interest rate: 10%
Monthly payment: $833.69

This contract is low in quality because the buyer is not putting much cash down. The pay back term of 30 years is very long. When comparing these two examples, you want to remember that contracts with shorter pay back terms, and good down payments always give you the highest cash values. Another way to measure the cash value of a contract is to calculate the loan-to-value on the home. You do this by adding up the total loans on the home. Then you compare that figure to the price or cash value of the home. In our first example of the quality contract, the loan amount is $80,000.00. The sales price is $100,000.00. That gives the home an 80% loan-to-value ratio. A contract buyer would be comfortable with that ratio. The low quality contract has a 95% loan-to-value ratio. Much too high. However, there is a way to make the low quality contract into a workable deal. We’ll show you how that works in a few moments.

Loan-to-value is very important to you. Do your best to create a contract that has the right ratio. If you’re selling other property like apartments or commercial real estate, a contract buyer would want the following ratios:

Multi-family units and apartments need to keep the loan-to-value at about 65% maximum. It can go lower but 65% is acceptable to a contract buyer. If you’re selling commercial property, your loan-to -value should be around 60%. For vacant land, or lots, loan-to-value should be no more than 50%.

O.K., you’ve seen what a quality contract looks like. You should now have a working knowledge of loan-to-value. Its time to answer the major question you probably have at this point. How much money would the home seller receive if they sold these two contracts?

Let’s review the first example of the quality contract. The home is selling for $100,000.00. The buyer is putting down $20,000.00. The balance of $80,000.00 is paid over 15 years at 10%. Monthly payment will be $859.68. How much will the contract buyer pay the home seller for this contract? As far as this deal goes, we would say around $72,000.00. When you add up the down payment of $20,000.00, plus $72,000.00 from the contract buyer, the home seller ends up with $92,000.00 cash. That’s $92,000.00 they won’t have to wait 15 years to get.

Your questions regarding the discount will be answered later in the section entitled:

“UNDERSTANDING A PRIVATELY HELD CONTRACT AND NOTE”

This section has good information for people creating contracts from a home sale. If you already own a contract you’ll discover some vital facts you may not be aware of. We encourage you to study section three carefully.

Let’s see you how the home seller could do even better in our example.

The seller is coming out with $92,000.00 cash they won’t have to waiting 15 years to collect. Lets make some changes that could make things better for the home seller. Lets pretend the seller doesn’t need all cash when they sell. What they really want right away is the large down payment.
A second offer could be made.

OFFER TWO

The contract buyer suggests the home seller could sell part of their contract, rather than the whole thing. The contract buyer offers $39,000.00 for the right to receive the first 60 payments of the contract. When the 60 payments have gone by, the contract will be returned to the home seller with a balance remaining of $65,053.30. The home seller will then start to receive the monthly payments. This method gives the home seller a gigantic lump sum of cash immediately with payments to follow.

Let’s review Offer Two:

Home sells for: $100,000.00
Down payment: $20,000.00
Contract buyer purchases first 60 payments for: $39,000.00
Total cash to home seller at closing: $59,000.00
After 60 payments the contract is returned to seller with a balance of: $65,053.30
Home seller begins to collect monthly payments.

Think about this. When you add up the $59,000.00 the seller received at closing, plus, the $65,053.30 remaining after the 60 payments go by. The seller ends up with over $124,000.00 plus interest on the balance remaining. Remember the home sold for $100,000.00. Not bad. The home seller comes out better when a part of the contract is sold versus the whole thing.

Lets assume the homebuyer needs a lower monthly payment. This is simple to solve. Write the contract with a 30-year pay back term. The monthly payment is then lowered to $702.06. We’ve accommodated the buyer by lowering the monthly payment. Now, in exchange, we can require that a balloon payment be placed in the tenth year. This makes the contract pay off in ten years instead of thirty. Now, our contract buyer can make a third offer.

OFFER THREE

The contract buyer will purchase the ten years worth of payments from the home seller, for $49,000.00 cash. After the ten years go by the balloon payment comes due. This goes directly to the home seller. In ten years, the value of the balloon payment would be $72,750.42. Let’s see how this offer looks.

Home sells for: $100,000.00
Down payment: $20,000.00
Contract buyer purchases the first ten years worth of payments: $49,000.00
Total cash to home seller at closing: $69,000.00
Balloon payment comes due in ten years and goes directly to the home seller: $72,750.42

The home seller does well with this offer. They get $69,000.00 when the sale closes. Plus, the balloon payment of $72,750.42 for a total of $141,750.42. Contract buyers can also come up with other offers and combinations. The next two sections in your manual will give you more ideas. Contract buyers don’t offer a set price for a contract. They’re all different. The values have to be measured on the individual merits of each contract. Remember to completely discuss your needs with the contract buyer. They’ll do their best to come up with the right plan that works for you.

Now, let’s talk a bit about The Low Quality Contract. Let’s see how an offer could be made for this one. This contract was set up on a long pay back term of 30 years. The down payment was low at $5,000.00. The contract buyer would probably offer around $71,000.00 cash for the whole contract. The home seller would only get around $76,000.00 when everything settles. The seller would certainly want to do better. Let’s make an alternative offer. The contract buyer could purchase the first ten years of payments from the home seller, for $53,000.00 cash. After ten years, the contract would be returned to the home seller. The balance owed would be $86,391.12. The home seller will start to collect the payments from then on. Let’s see how this looks.

Home sells for: $100,000.00
Down payment: $5,000.00
Remaining balance: $95,000.00
Contract written for 30 years at 10%
Monthly payment: $833.69
Contract buyer purchases first 10 years of payments: $53,000.00
Total cash to home seller at closing: $58,000.00
After ten years, contract is returned to home seller with remaining balance of: $86,391.12

We have turned a low quality contract into a deal that can work for the home seller. They get $58,000.00 cash at the start. Plus the $86,391.12 remaining after ten years, including interest. Not bad for a house that only sold for $100,000.00.

If a new contract is set up on a long-term pay back with a low down payment, your best strategy is to sell a part of the contract versus the whole thing. The contract buyer might suggest placing a balloon payment in the tenth, or possibly the fifteenth year. You could use the same strategy we used before. Sell the payments only and keep the balloon for yourself. Contracts that are low in quality can be made into deals that work for the home seller. There are other offers and combinations that can be made. Every situation is different. Remember, discuss everything in detail with the contract buyer.

Let’s talk about selling a house that you don’t own free and clear. You have a first mortgage that money is still owed on. Contract buyers can help you if you’ve got enough equity in the home. If your home is selling for $100,000.00 and you still owe $40,000.00 on a first mortgage, you have a 60% equity position. This is very good. Let’s say you still owed $80,000.00 on the first mortgage. Your equity is only 20%. This would not be good. The contract buyer would have a hard time working with something that small.

Let’s see two examples on how this works. What we’re talking about is the creation of a second mortgage that you would sell to the contract buyer.

EXAMPLE OF A QUALITY SECOND MORTGAGE

Selling price of home: $100,000,00
Down payment: $20,000.00
Home seller still owes on a first mortgage with a remaining balance of only: $40,000.00 (60% equity)
Home seller creates a second mortgage with a five-year pay back at 10%: $40,000.00
Monthly payment: $849.88
Contract buyer purchases second mortgage from the home seller for: $35,000.00
Cash to home seller at closing: $55,000.00

If you owe on a first mortgage that cannot be assumed by your buyer, a contract buyer can solve that problem for you. When you close the sale on the house, draw up a new mortgage for the entire cash amount owed on the house subtracting the down payment. In the case of our example, this new mortgage would be for $80,000.00. When the contract buyer purchases the deal from you, they’ll use part of the cash proceeds they pay for the contract, to pay off the $40,000.00 balance owed on the first mortgage. The cash that’s left goes to the home seller. So, loans that aren’t assumable are no problem for contract buyers. They simply pay off any senior mortgages from the cash proceeds when the deal closes. Now, we’ll show you a second mortgage that would not be as good.

EXAMPLE OF A LOW QUALITY SECOND MORTGAGE

House sells for: $100,000.00
Down payment: $5,000.00
Seller still owes on a first mortgage with a remaining balance of: $85,000.00 (equity only 15%)
Home seller creates a second mortgage with eight-year pay back term at 10%: $10,000.00

It would be very hard to get a fair price from a contract buyer for this second mortgage. The first mortgage still owed on the house has a huge balance of $85,000.00. Let’s say a contract buyer bought this second mortgage. Six months later it goes into default. The contract buyer would either have to make the payments on the first mortgage, or pay it off to protect their investment. This would not make financial sense for the contract buyer. There is too little money invested to take on the financial responsibility of the first mortgage. Remember it’s hard to do well selling second mortgages when the equity in your home is low. Each case varies. Talk the situation over with the contract buyer.

If the equity is low in your home at this time consider waiting awhile before selling. Your equity will get better as your home goes up in value. Plus, you’ll owe less on your first mortgage. The information in this article will work just as well in the future as it does today. Keep it handy and review from time to time. We’ve covered a lot of information. We hope you’re convinced that owner financing dramatically increases your ability to sell your home quickly.

Greg Winfield is the owner of the web site entitled “OwnerWillCarry.Com” located at http://www.ownerwillcarry.com OwnerWillCarry.Com is one of the largest web sites on the Internet that specializes in providing free advertising to home sellers who are offering owner financing or lease option terms to buyers.