That does not mean that consumers do not have emergencies such as unexpected car repair, an upcoming trip for a school child, a new and necessary medication, a forgotten and suddenly found utility bill, or just a little cash to squeak by until payday. Because of these hard times, many folks have depleted their rainy day funds, and may have poor credit to boot. It is for folks such as these that there is a market for short-term loans.

What Is a Short-Term Loan?

Short-Term loans can bear any number of names: Cash Advance Loan, PayDay Loan, Unsecured Loan, and, of course, Short-Term loan. They are usually made in the amount of $100 up to $1500. The most common amount usually being around $500. Payback terms usually involve repaying interest, principle, and any fees within 14 to 90 days. You must be 18 to apply, in some states 21.

Are Short-Term Loans Easy to Get?

Most importantly, these lenders do not even ask about credit scores. Some lenders boast that they require no faxing of documentation and approval within minutes. This is not always so. If a lender cannot verify your credentials using online resources, you will have to provide documentation via fax or sending them scanned documents. If you do not have a fax or scanner, you can find facilities at the local library or at a print shop such as Kinkos.

Will I Need a Lot of Paperwork?

Documents required can include: Photo ID from a certified government agency (driving license, military ID, state ID, etc.). Bank statement or voided check. Pay stub. Utility bill (to prove residency). Social Security Number. Even with this inconvenience, money can still end up in your bank account within 24 hours. No direct deposit checking or savings account? Some lenders offer a reusable, preloaded credit card at a small fee of 5-10 dollars.

Where Can I Find Short-Term Loans?

For sheer ease and facility, it is easier to go online and punch payday loan or cash advance loan into your favorite browser. You will be rewarded with a plethora of online lenders eager to help you with your cash necessities. Since the market is rather crowded, you will be able to pick and choose from a number of lenders. Compare fees, interest rates, and payback terms. You will eventually find a lender that is comfortable to you.

Is There Anything Else I Should Consider?

Before you approach a lender, know exactly what you need the loan for and have a good estimate of that cost. If there are a number of things to cover, make a list. Do not ask for any more than what you strictly need. Stick to your agreed upon payment dates, amounts. Though short-term lenders do not rely of credit reporting agencies for approvals, they are obliged to report defaults.

Why Is Everybody So Down on This Sort of Financial Assist?

You will pay interests and fees on every $100 of the loan amount of around $25 to $35. A loan of $400 will cost you about $540. And, extensions are available. If one takes a loan of $400 and an extension is requested on the due date, the lender may say yes, but ask again for a finance fee of $100. After six months of this activity, the $400 loan will have cost $1000.

Do not borrow more than you need, shop around, do not request extensions, pay back as agreed. Following these few rules will make a short-term loan work for you. And improve your credit rating.

Jessica Peterson is an Unsecured Personal Loan Consultant with more than twenty years of experience. For more information about Bad Credit Personal Loans and other financial products please visit YourLoanServices.com

Originally published here.

Introduction

Car dealerships are just as important as the car themselves. You may know a lot about the car you intend to purchase and you should also know about the car dealerships to. Here are some tips that will help as you are buying a car.

Article1-obtaining car loans

Before one can be able to buy a car, they actually need to have a source of finance. There are several ways which this can be done and one of them is through the use of car loans. Auto loans come in various shapes and sizes and one of them is through the use of auto refinance loans. There are plenty of Companies that offer this service so it is up to the car buyer to make sure that he gets the best deal. The best deal in this instance is the one that will allow him or her to able to pay a low interest rate. (Dauglaus, 2007)

Most car buyers actually think that it is only possible to get a good refinance when they have good credit. But these days there are alternatives that allow one to be able get some good deals at despite cases of sub prime loans with high interest. Car dealerships these days have become so expensive. It is therefore appropriate to find some other alternative in the market that allows one to save up; these are car refinances.

When one is given several offers, they should first check for some issues to make sure that all the aspects necessary are dealt with before hand. First of all, one should know what the value o the vehicle they would like to purchase. This should then be followed by checking for the offer in writing. Besides that, a potential car owner should make sure that the value of the car to be bought will have a higher value than what he will owe the auto lenders. Payment should be done in due time and on top of that one should make sure that they have been holding their loan for a period of twelve months. The potential buyer should make sure that he or she monitors their credit rating such that they get reports for every year they have been paying.

Interest rates are also an important thing to watch out for. One should make sure that they choose a refinance loan that offers interest rates that at least one percent less than what they have been offered by their car lenders. (Dauglaus, 2007)

It is quite easy to get a refinance loan. Most companies have their websites in the internet and one can be signed up at the touch of a button. One should approach these Companies with caution though because it is so easy to seal a deal. It can be finished even after just fifteen minutes.

Article2- car dealership tactics

This article talk about all the basic things one needs to know about car dealerships before they purchase a car. First of all, one should note that there is a lot of information out there about car dealerships. But most people normally get their information from advertisement on the net. But what they normally overlook is that you can be able to get fantastic deals at web blogs.

As you are looking for a car dealership, you should go directly to where they are. You can start with three car dealerships. Then asses the way those people give you information and whether they have good services. Little attention should be paid to price at this point because you are not buying yet, you are simply looking for a good car dealership. (Hoffman, 2007)

When you have found an appropriate car dealership, then it is necessary to state your case before hand. There is no need to waste hours and hours of precious time trying to settle on a price which you already know.  You should move out as soon as you realize that the car dealership’s offer is not going to change.

Car purchasers should take advantage of rebates. This is because they offer exceptional prices that may lie anywhere between five hundred to three thousand dollars below their invoice price. This normally occurs when the car to be purchased has stayed for very long in the store room and the car dealers simply want to get rid of it. But it should be noted that not all car dealerships can go below their invoice prices because sometimes these may be the only way that those dealerships have to make profits. (Hoffman, 2007)

Article 3- What to do when negotiating with car dealers

It is advisable to finance the car elsewhere rather than getting it from the dealership. As one shops for finance, it is crucial to find good rates. On top of that, buyers should beware that salesmen at car dealerships will try to get you to buy as many things on offer as possible; from financial services to car spare parts. One should only buy what is absolutely necessary since these people are simply trying to do their job. (Lorio, 2007)

It is advisable that if one is going to purchase a new car, then they should first sell their previous car on their own. This is because they might be counting on profits gained from the old one to set off expenses for the new car. Yet the deal might not go well.

Buyers should also beware that there are some car dealers that take advantage of their position as the first party to access a given car when I has been released for sale by the manufacturers. These car dealers get some parts of the car and sell them separately for very high prices yet those parts are supposed to be part of the entire car package. One car part that most dealers take advantage is the car alarm. This is what most car dealerships might tell you; we sell the car alarm to you as part of the entire car finance and all you will have to pay is say fifteen dollars a month. What they are not telling you is the fact that you will end up paying a total of one thousand two hundred instead of about three hundred dollars at an electronics store. I you are to tell the car dealers about this, they will probably try to discourage you from pursuing that line because they claim that installing foreign parts not designed for the car would damage others. They will also tell you that the part has a warranty that falls under the one offered for the car. This is just a gimmick to make more cash from you so do not fall prey to this. (Lorio, 2007)

A car dealership should only offer cars that are in tip top shape. Make sure that you only buy cars whose mechanical conditions are flawless. This is because in case the car breakdowns, then the good deal which you worked so hard to get has no meaning.

Article 4-governement car auctions

The article talks about how to purchase a used car. I know you can probably ask why would l go for a used car. Well, there are plenty of reasons why this is a suitable alternative. First of all, you get great bargains; it is not uncommon to find cars that may cost as low as one thousand dollars when you would purchase them at a local car dealership for ten or twenty times that price.

It’s advisable to consider government auctions as a suitable alternative to purchase a used car. You might ask yourself where those cars in the auctions come from. Well, most vehicles are the ones that have been captured by branches of the government like the DEA or the Federal Bureau of Investigation. These auctions charge a small fee like say thirty dollars; these are peanuts compared to the savings you will get from such a deal. On top of that it is possible to find that most of these auctions display vehicles that are in almost new status. However buying any item from auctions is always a risk because you are basically swimming into unknown waters. They normally tell you that you are purchasing items in the as- is state. That is, you may not get a chance to see it all the fine details for yourself before the purchase. But chances are most of the vehicles will be in quiet good condition. Here’s something you did not know; most used car dealerships normally come to these types of auction to get bargains. It is not uncommon to find a car dealership that bought a certain car for a reasonable price and then find them selling it at say five times more than what they bought it for. (Aguirre, 2007)

If you are probably asking where these government auctions can be found, well the internet is a God send. All you have to do is visit websites such as http://realtimeauction.com/ which is a government car auction website. Besides that, there are numerous advertisements normally placed on radio, television and other forms of media. They usually give details about where the car auctions will be, time, types of vehicles sold there. One should take their time to select the exact make of car they would.

There are also other options for finding used vehicles. One of the most obvious places to look for is EBay or other sources like Crag lists. When you decide to settle for EBay, then you may not get the exact car you like at an instant. It is therefore necessary to take your time and keep checking until you finally get what you need. (Aguirre, 2007)

There are certain things that need to be examined when purchasing a used car whether it is obtained from government auctions or simply from any type of dealership. One should start with the vehicle’s body work. Never choose car that has too much repair done on it. This will normally ooze out through the paint job done. Through the paint on the body, you can still see what kind repair work has been done. If it is quite visible then this is a big no- no. Otherwise such vehicles simply tend to fall apart after you have bought them.

If you are not very familiar with vehicles, it is advisable to bring a friend who knows lot about mechanics. Here’s what you should look out for. First, the general appearance, then make sure that there is no oil leaking out of the car. There should be no leaking gaskets either. Also, make sure that the car does not make any funny noises as this is normally a sign that there is something that has gone wrong somewhere. On top of that make sure that there are no weird smells either. Nothing should go unchecked. If anything is where it should not be, or you are just not sure about it, then the best thing is to simply let go.

After checking out the exterior, it is quite advisable to get inside the car. Make sure that all the systems inside are in perfect condition. These include the air conditioner, radio; electronics and any other system necessary to get the car working properly. Avoid cars that have been poorly maintained by their previous owners. Make sure that they are not torn or that they do not have a dashboard that is just aching for attention and repairs. On top of that, it is also necessary to smell it. Avoid cars that have quire smells even if it was a smoker’s vehicle. It is also possible to find that some vehicles have been damaged by water. These are all cars to stay away from because they will only complicate your motoring experience. (Aguirre, 2007)

If the car is being bought from a private arrangement rather than a government auction, then make sure that you obtain all the necessary receipt work that put down the repair work previously done to the car. This will go a long way to show how rugged the car has been or what kind of condition it is in. If the repairs were too many, then it is an indication that the car will damage you financially. Also make sure that you ask as many questions as possible. This is because most owners selling their cars actually have good intentions. They would like it if they sold their car to someone who did not seem reckless or to someone who was bound to take good care of vehicle. Besides, it is your right, if that car is going to be part of life for a while, you might as well know as much about it as you can.

Article 5- avoiding car dealership scams

When getting yourself a new car, it is crucial to remember that there are plenty of people out there who are not as legitimate as you are. So you should exercise discretion and caution. Cases have been reported of car dealerships that involved themselves in scams. The thing is, car dealerships scams are so easy to do and do not involve a great deal of wit. You might be asking yourself what is all the fuss about. Are these scams really worth all the fuss? Well, reports have been found in the papers and other news sources about car dealers that have committed title fraud, where title fraud is failure to adequately transfer ownership of property from one party to another without the knowledge of the buyer. In the year 2006, there were cases of title fraud committed by car dealerships. One such example is a dealer in Mitsubishi vehicles located in Escondido California. This owner was found guilty of title fraud and was given a punishment of spending a day in jail, paying forty thousand worth of restitution and would be kept on probation for a period of three years. There was also another case of someone who had been accused ten times for this kind of fraud and was investigated and found guilty. (Serge, 2007)

Title fraud has become a common phenomenon because some car dealerships may be getting desperate. Maybe they had mismanaged their funds and did not have any sort of cash flow to fall back on. This means that the car dealer did not have a means to pay his employees and settle all other expenses. He therefore opts for a scam as an easy target for money. Other car dealerships just want to get what they do not deserve; they are greedy and will look for money any away they can.

Here’s how to make sure that one does not fall into the trap of car dealership scams. Taking an example of a car to be traded in to the car dealership for the purchase of another, let’s say the car to be traded in has been in use for the past two years and that the car dealership will give me a total of fourteen thousand dollars for the car. Maybe the past car payments are still not complete after the bank asked me to make installments of four hundred dollars every month for the next ten months. The car dealership will clear any accrued payments to the bank and still get their remaining ten thousand. A good car dealership will settle the remaining credit owed to the bank within a period of about three to five days. However, when dealing with a fraudster, they will not complete those payments owed to the back because they want to use the money for themselves. According to the bank, the car owners are the ones who asked for the loan and they will still be the ones held responsible for clearing the debt of four thousand. Such car dealerships will tarnish your credit record and will deny you chances from accessing another loan from them. Most car dealers doing this sort of thing normally keep lying to the car seller and to the bank that they will clear payments very soon but that doesn’t happen and time simply keeps on accumulating. (Serge, 2007)

Article 6-how to discourage car dealership fraud

Here’s another classic case that could be a potential loss for you as you purchase your vehicle. There are some car dealerships that contract mainly with floor plan lenders. These are lenders who will give the car dealership a number of cars to stock up their premises. Then the car dealerships will pay up interests and then finish off the whole amount after selling a car. This normally occurs because the car dealership may not want to owe too much in terms of inventory. If they had about 100 cars and each of those cars is about twenty thousand dollars, then they would have to pay a total of two million in stock. So to go around this, car dealerships look for a floor plan. They are supposed to pay of the floor plan lenders as soon as a customer purchases a car. But when one comes across some car dealerships who intend on committing a scam then they keep delaying payments made to these car dealerships.

Taking an example of someone who may be purchasing a car that costs about twenty thousand dollars, if it happens that this person is using auto finance from a bank then there is a window of opportunity for the fraudsters. Let’s say that the car dealership requires a down payment of three thousand dollars and the remaining is settled by the bank. You as the person making the car purchase may think that you are getting a good settlement for your payment but that may not be the case when dealing with crooks. What these people may do is that they may refuse to transfer ownership to you. They delay registering you and fail to notify their floor plan lender about the purchase. What normally happens is that the bank that was supposed to finance the purchase will send its money to you. But this will be used for other purposes. (Lorio, 2007)

There are a number of problems that could arise from this. First of all, if one falls into an accident, while using the car and it happens that they get seriously injured, and then insurance can become a very difficult issue to deal with. First of all, insurance Companies cannot offer compensation for a car that is registered. This is because the floor lenders still believe that their car has not been purchased and it is still in their name. The driver of the vehicle will be forced to pay for damages from his own finances. As if that is not enough, one might be forced to pay their own medical expenses and this may total up to around one hundred and fifty thousand dollars. Let’s not forget the fact that you will have tarnished your credit record with the bank.

There are a number of things that can be done in order to avoid such an awkward situation. First of all, one can make sure that they find out if the car dealership they are buying from has a floor plan dealer and who they are. After completing the down payment and all the necessary paperwork, it is advisable to call the floor plan lender and tell them about the transaction. It is also necessary to make sure that one gives them all the relevant details needed in transfer of ownership like one’s address, name etc. These are all essential details in making sure that the floor plan lender will expect payment from the car dealership after a period of three to five days. The car dealer will be discouraged from trying anything funny because their lenders already know. One should also call the given bank that lent them the money for financing the car purchase and should similarly give them all their details. One should also write letters to these latter two parties so that they can have evidence in case any questions arise.

Article 7-what to consider before making a car purchase

There are number of payments that have to be cleared before a certain purchase can be made. First of all, one has to make sure that they have a title for their car purchase. This means that the car dealership transfers the name of the vehicle from them to you. One also has to pay fees for getting a license. These fees depend on what state one stays in and what laws govern these payments. On top of that, one also has top clear with the dealership concerning the issue of paying up document preparation fees and also paying up notary fees. It should be noted that all these fees are stipulated within the laws. However charges differ from car dealer to another so it is up to the buyer to make sure that they get a good offer. (Law Guru, 2007)

In formation concerning these payments can be found from a license bureau within ones location. These are the ones that will be able to clarify on the limits that are allowed within that location. It should be noted that the car dealerships are the only ones with the legal mandate to complete all the requirements so one should make sure that no other third parties comes in.

Article 8- Can a car dealership refund car parts

There are times when one has purchased second hand car, and not long after using the vehicle, they experience some problems with it. For example if you bought a car around two weeks ago and its tires got worn out such that you cannot use them anymore, then one should not assume that they can get the car dealership to do something about it. The thing is the purchase of a used car is a risk on its own. So it is essential for one to make sure that all the parts are in perfect condition otherwise it will be up to that given person to finance the payments of purchasing the new tire or any other repairs that may come with the tire. However, one may sometimes get lucky and find a car dealership that will take responsibility especially if the vehicle in question has flaws that were made a short while after purchase. (Bellows, 2006)

Article 9 – which option is better trade- in’s or auto finances

If one has an old car that they purchased through auto finance and they would like a new car, it is a better idea to wait until one has finished paying of all the amounts owed to the given Company. Most people would rather trade in their old vehicle and then the rest of his payment owed to the bank will be left to the car dealership. This choice is not a very wise decision because of the following reasons. First of all, it leaves a lot of room for all sorts of scams and cons. This is normally because some car dealers may not notify all due parties about the transactions made. Secondly, selling the car yourself will always get you a better deal. This is because you will only settle for what is comfortable with you. When you are seller, you are at a better standing than when you are a buyer as the case would be for someone who is doing a trade in. Besides that, it is always better to deal with one loan before jumping into another when the other one is still left accrued. (Lorio, 2007)

Article 10-how to negotiate

The first thing you need to do before you go to a car lot is do loads and loads of research. Make sure that you find out everything about the car you want to purchase. This means that you should know the model you want, the color and most important the price you will pay for it. Remember that it is not a rough idea of the price but the exact price you will pay for it. If undecided, check out all the prices on offer at websites, car magazines and the like. Make sure that you know exactly what other additional payments car dealerships charge. These include taxes, inventories etc. Do not wait until you are at the car dealership with your check in hand before you find out the prices of these offers. (Saleman, 2007)

On top of that, it is crucial that you understand the psychology of a car salesman. Make sure that they do not have an undue advantage over you. This normally occurs when any of the following things occur. First of all, most customers make the biggest blunders when they feel that they are need to make the purchase as soon as possible. Choose a day in the week when few people are buying cars like say on a Tuesday. Saturdays are definite no because the salesroom will be packed and there will be no salesman to attend to you. This means that you will run out of patience when they finally get to you and you will be too tired to bargain. It is also crucial to make sure that you go over all the nifty gritty details with the salesmen at the car dealership. Most people may simply want to get- it-over with and this could be the point at which the car dealership takes advantage of you. Most car dealerships claim that the highest sales made are the ones where someone felt like they had a sense of urgency. (Saleman, 2007)

There are some things that you should do to create an impression within the first ten minutes of your encounter with the salesman at the car dealership. First of all, you should already know everything about the car you are looking for that is its features what kind of engine it has and many other futures. But let the salesman do his job. If you act too eager, he may be tempted to think you read desperate and may inflate prices. But also do not look awed by the car. This will normally be revealed by uttering words like ‘oh my god’. It is essential to remain calm because the work of a salesman is to read his customer and place him in a category. Ask some questions about the vehicle and other models but stick to what you came for. The problem with trying out other models is that you may not know their price ranges, charges for extra installations, fuel consumption rates etc. These may spell doom for you in the end because you will purchase something you had not planned for. Next, go for a test drive and, make sure that you check on all the details of the car. After the test drive, you may want to start talking about payments; this may be through a trade-in (a bad idea) or other auto payments. The first ten minutes will go along way in making sure that you are on the right track to purchasing your dream car. (Saleman, 2007)

Conclusion

Buying a car is an investment. This is something that should not be done abruptly or on impulse. Make sure that you do your homework thoroughly and this will place you at an advantage when you go to the dealership. It is important to ensure that al the aspects are counterchecked; from the form of auto finance charges by the dealership, makes or models available and all other necessary items. This will ensure a good deal. (Lorio, 2007)

Reference

Dauglaus Hondo (2007): Getting a good loan for your car; retrieved from http://www.modernautoloans.com accessed on 8th February 2008

Gary Hoffman (2007): Car dealership Tactics; retrieved from http://autos.aol.com

accessed on 8th February 2008

David Bellows (2006): Confessions of sales man, a journal on cars for 2006 (2nd March)

Luis Aguirre (2007): Government Car Auctions; retrieved from http://EzineArticles.com/?expert=Luis_Aguirr accessed on 8th February 2008

Richard Serge (2007): A car dealership scam to avoid; retrieved from http://EzineArticles.com/?expert=Richard_Serg accessed on 8th February 2008

Law Guru (2007): Bill of Sale Car; retrieved from http://www.lawguru.co accessed on 8th February 2008

Tony Lorio (2007): Inside Car Buying Tips; retrieved from http://www.insidercarsecrets.com accessed on 8th February 2008

Tony Lorio (2007): Some information about car dealership fees; retrieved from http://www.car-loan-quotecom accessed on 8th February 2008

Lawrence Saleman (2007): How to save money at a car dealership from an ex-salesman; retrieved from http://www.salberg.org accessed on 8th February 2008

Originally published here.

By December 2010, lenders owned or were foreclosing upon more than three million loans, and 2011 is predicted to be a record breaking year for foreclosures according to Realty Trac, a publisher of the largest database of foreclosures and bank-owned homes in the country.

The question that must be asked of President Obama is why lenders haven’t been more willing, or eager, to make loan modifications. Answering that question thoroughly will include exploring the contours and parameters of the securitization market, including a brief discussion of each of the market participants and their role in the process.   Clearly, some major roadblocks to modifications spring directly from the incredible complexity of mortgage securities; any discussion must include problems attributable to securitization.

This article will briefly explore and describe the securitization market, the players and their roles in securitization and some of the most common roadblocks a borrower will face when attempting to have his or her loan modified.  In this article, modification will only refer to changes in loan terms consistent with the model initiated by the Federal Deposit Insurance Corporation (FDIC) in 2008 and incorporated into President Obama’s February 2009 Home Affordable Modification Program (HAMP).

Securitization Market

In the United States, the most common securitization trusts are Fannie Mae and Freddie Mac, both of which are U.S. government-sponsored enterprises (GSE).   Some private institutions, such as Real Estate Mortgage Investment Conduits (REMICS) and the Real Estate Investment Trusts (REITs) also securitize mortgages, but these are commonly referred to in the industry as “private-label” mortgage securities.

There is currently about $14.2 trillion in total U.S. mortgage debt outstanding.  There are about $8.9 trillion in total U.S. mortgage-related securities.  The volume of pooled mortgages stands at about $7.5 trillion.  About $5 trillion of that is securitized or guaranteed by the GSEs, the remaining $2.5 trillion are pooled by private label conduits.

Typical Securitization

A typical securitization is composed of approximately $500 million to $1 billion or more of assets.   A residential mortgage backed security (RMBS) is secured by a single-family or a two-to-four family home.    This means that a pool of RMBS is composed of a minimum of 26,737 and a maximum of 53,475 single family or two-to-four family homes.

Key Players

Securitization involves a number of players.

First, there is the borrower, who wants to buy a home.  The borrower can go directly to a mortgage broker, who arranges with a mortgage banker to originate the loan.  Alternatively, the borrower can go directly to a mortgage banker, who originates the loan.  The mortgage banker, who in many cases acts as the issuer, will securitize the loan with other similar loans.

A particular loan originator, the entity that interfaces with the future homeowner and lends him/her money, often cannot generate sufficient loan volume through its direct branches and personnel.  Thus, to supplement its own loan production, an originator often purchases loans from, or indirectly through, a network of mortgage brokers or correspondent lenders.

In this fashion, originators both initiate loans through their own efforts and aggregate loans initially generated by third parties. Traditionally dominated by commercial banks and savings and loans, the loan origination process has grown to include other parties such as non-insured financial institutions. Although federally-insured financial institutions continue to generate the largest volume of loan originations, today, non-bank financial institutions make up a much larger share of the loan origination market.

To initiate the lending process, the originator collects from the borrower the required personal financial and asset valuation information necessary to underwrite the loan. This information varies by loan type, but will typically address the borrower’s ability to make the required monthly payments of principal and interest, as well as an assessment of the value of the asset that will serve as collateral for the loan.

Once the loan underwriting process is complete and the loan has been approved, the borrower will execute a note, and either a mortgage or deed of trust, depending upon the jurisdiction in which the collateral is located. In the residential mortgage situation, the originator will then fund the loan with the proceeds being directed by the borrower to the purchase of a residence, retirement of prior debt or cash out to the borrower.

Typically, the source of funds for the originator will predominantly be a loan from a warehouse lender and a small amount of the originator’s own funds. Warehouse lenders often advance a very high percentage of the ultimate loan principal amount. The originators’ own funds usually represent just a small percent of the loan amount.

Frequently, the warehouse financing arrangement is accomplished through a repurchase agreement, often referred to as a “repo,” whereby title to the loan is held by the warehouse financier and the originator has the right to repurchase the loan for the amount advanced by the repurchase agreement counterparty, plus an interest charge.

As a first step in effecting the securitization, the loans created or purchased by the originator are sold to a Depositor pursuant to a Loan Purchase and Sale Agreement. In this role, the originator is referred to as the Loan Seller.

The Depositor is an entity established for this sole purpose, but has no creditors.  The Depositor is essentially a middle man who is in between the Originator and what will ultimately be the securitization entity.  Simultaneously, the Depositor sells the loans to another special-purpose, bankruptcy remote entity (SPE), which will eventually serve as the securitization vehicle.

Although other corporate forms are possible, the SPE is usually a trust which has been set up specifically to hold the residential mortgages and loans to be securitized. This SPE becomes the Issuer of the securitization—the Issuer “issues” the securities that will be purchased by the investors. In order to buy the assets from the Originator, the Issuer sells certificates – the proceeds of which are used by the trust to fund the purchase by the trust of the underlying loans.

Since the 1986 Tax Reform Act, most mortgage securitization trusts are designed to qualify under the Section 860D of the Internal Revenue Code as a REMIC. The principal advantage of a REMIC is that the entity is disregarded for federal income tax purposes; thereby, avoiding double taxation. However, to qualify for this tax advantage, REMICs may only hold qualified mortgages and permitted investments, including, for example, single family or multifamily mortgages and are subject to significant number of other restrictions.

The certificates sold by the securitization trusts are often of multiple classes, with each class having different rights with respect to interest rates, principal repayment and other repayment priority upon losses being recognized on the underlying assets held by the trust.

Each class of certificates is often referred to as a “tranche,” which means a thin slice in French and refers to the particular slice of the cash flow and risk that will be received by the holder of that class of certificate. The certificates can be publicly registered securities or sold in a private transaction. Most registered certificates are also rated by one or more of the rating agencies.

The Participants—the Sponsors/Guarantors

The issuer of securities is typically a trust and is established solely for the purpose of holding title to the mortgage and note, but has no employees. Therefore, the structure of the securitization calls for the formation of another entity commonly referred to as the Sponsor.

Sponsors are charged with the responsibility to accumulate and pool the loans, engage counsel and investment bankers to execute the securitization and create the trust so that certificates can be issued.

Historically, the largest Sponsors of RMBS were GSEs, including FHLMC and FNMA. These sponsoring entities purchase from originators only loans which conform to the GSE-published underwriting standards and whose principal amount does not exceed annually determined ceilings. As such, these loans are deemed to be and often referred to as “conforming mortgages.”

FNMA and FHLMC together accounted for 40% of the RMBS that were issued in 2006, whereas GNMA accounted for 4%. The remaining 56% of RMBS issued in 2006 are “private-label” MBS. Sponsors of these securitizations typically are investment banks, mortgage companies and other financial institutions, both federally insured and uninsured. Loans in these residential mortgage-backed securitizations typically do not conform to the GSE underwriting requirements or exceed their lending ceiling, in which case they are known as “jumbo loans.”

The mortgages that serve as collateral for these issuances include prime mortgages, which are usually considered loans made to borrowers with better credit and usually meaningful equity in their homes, and also often include Alt-A loans and subprime loans.

In the private label market, the Sponsor of the securitization is frequently the same organization as the Originator, particularly if the Originator’s wing-span is large enough to enable it to generate substantial volume of loan originations on a regular and consistent basis.  Nonetheless, it is also commonplace for the Sponsor to be a third party accumulator of loans in the secondary whole loan market who then creates a trust that issues the securities under its name.

Certificate Holders

Investors who place funds in an MBS transaction receive a pass-through certificate, which evidences their ownership interest in a pool of mortgage loans.  The pass-through certificate entitles the investor to a particular interest in the cash flows from an entire pool of mortgage loans as opposed to specific loans in the pool. Thus, investors in a MBS transaction are referred to as certificate holders.

Securities from already existing RMBS are now frequently bundled into new investment vehicles, called Collateralized Debt Obligations (CDO), which are in turn segmented or sliced and diced into their own series of senior and subordinated investment certificates. Further, bundling of certificates from such CDOs, often intermixed with participations in primary MBS certificates, are referred to as “CDO-squared” transactions.

The Investment Bankers

Sponsors invariably obtain assistance from investment banks, which help the Sponsors structure securitizations to facilitate investor interest and sales.  Investment banks in this process are intermediaries between Issuers and Investors, which assist the Issuers in structuring the securitization transaction, interacting with the rating agencies and credit enhancers, as well as selling the resulting securities to their investor base.

The Servicers

The securitization trust usually owns hundreds or thousands of loans, each of which needs to be serviced monthly.  This servicing responsibility is handled by a Master Servicer, which is responsible for management of the loan portfolio owned by the trust, including establishing policies and procedures for servicing, monitoring performance and handling cash collections.

The Master Servicer provides monthly reporting to the trustee on the loan pool performance and remits cash to the trustee for distribution to the bondholders.

The duties of the Master Servicer are set forth in detail in a pooling and servicing agreement (PSA) to which the Master Servicer, the Trustee and the Depositor are parties.  In some situations, the Master Servicer will engage a sub-servicer to carry out the day-to-day servicing functions with the Master Servicer remaining liable to perform the duties if the sub-servicer does not.

Master Servicers typically receive a monthly fee for their services denominated as a percentage of the principal amount of loans they service or on a per loan basis. They also often receive additional fees for extraordinary services. When a sub-servicer is retained by a Master Servicer, some, or all, of the periodic servicing fee will be paid to the sub-servicer.

A Special Servicer is typically retained to handle defaulted loans or loans that after securitization are identified as having special defects or deficiencies. The servicing of a loan is transferred from the Master Servicer to the Special Servicer upon the occurrence of various identified events, usually including a loan default remaining uncured for a period of time, often 30 to 60 days.

The Special Servicer has particular expertise in the collection of delinquent credits and supervising foreclosure and real estate sale processes. If a loan transferred to a Special Servicer has its defaults cured, after a period of time, the servicing of that loan is transferred back to the Master Servicer.

The Rating Agencies

The Sponsor, on behalf of the Issuer, will invariably engage one or more credit rating agencies (for e.g., Moody’s, Fitch, and Standard & Poor’s) to rate or grade each tranche of certificates that are proposed to be sold by the trust to certificate holders.

The rating agencies will also provide ratings to each class of bonds that are to be created by the securitization. In transactions where credit enhancement is required, the rating agencies also decide the levels of subordination required to permit the bonds to obtain the desired rating. In evaluating such deals, rating agencies determine the subordination levels required to support particular ratings.

Trustee and Fiscal Agent

A neutral third party is appointed to act as Trustee for the securitization trust. The Trustee’s responsibilities include overseeing the distribution of cash in accordance with trust requirements, as well as to ensure that the terms and conditions of the PSA or trust indenture are complied with.  There is also typically a Fiscal Agent (which may or may not be the Trustee), normally a bank, which is appointed as the certificate holders’ agent under the trust. Typically the Fiscal Agent’s main role is to act as paying agent but it has none of the fiduciary responsibilities of the Trustee.

Internal Conflicts Disincentivize Loan Modifications

Given the complexities of mortgage securities, it is not surprising that one of the least understood impediments to doing modifications is the inherent conflicts created by these instruments among the different classes of ownership. Let’s examine just two of the many potential conflicts that might be present.

First, imagine that a group of mortgages is divided into three sub-groups: the top 20%, the next 20% and the bottom 60% (safest). Those three sub-groups would be sliced and diced and sold off to investors.

If a loan goes into default, the three sub-groups have sharply different perspectives of a proper response to default.  The 60% group thinks, “We have plenty of equity cushion; let’s just foreclose and get our money.”   On the other hand, the top 20% group thinks, “We’ll be wiped out in a foreclosure; let’s lower the rate, and/or extend the term hoping to get something back.” Of course the 60% group sees no advantage in making any concessions, so without a contractual provision for modification, there is likely no practical alternative to foreclosure (remember that the two 20% groups got higher returns for the higher risk).

Many RMBS are subject to a PSA, under which servicers collect payments and remit the net proceeds to the investor pools. Often, the PSA provides that in the event of default, servicers will be paid extra for the additional work. They normally require servicers to advance any missed payment to the pool to be repaid upon recovery. While some have suggested the former provision encourages foreclosures (for the extra fees), in reality it is the latter provision that is the problem.

The PSA typically requires servicers to maximize returns to the pools in defaults. If modifications yield the highest returns, servicers should modify. However, the PSA may actually prevent or eliminate the possibility of a loan modification, or even worse, the PSA may require that the request for loan modification be sent to the firing squad for investor approval. This may be the death knell of the request, as the requisite number of investor votes will be impossible to obtain due to ownership fragmentation. Furthermore, even if the PSA permits or encourages a loan modification, the PSA may be unclear as to what funds can be used to repay the servicer for any money that the servicer advances or may require that servicers receive shares of each modification payment.  In the latter case, it will take years before servicers are fully repaid, so servicers will predictably not find borrowers to be qualified for modifications.

Second, insurance can greatly impact the possibility of obtaining modifications, including mortgage insurance (typically required for loans over 80% of value) and Credit default swaps. Unfortunately, if the agreements do not treat modifications as defaults, lenders must forego modifications and foreclose to collect on insurance or credit default swaps. Insurers, stung by massive losses on many loans of questionable quality, are increasingly declining to pay claims, asserting that loans failed to meet the standards required for coverage.

Finally, the FDIC/HAMP model to determine qualification for a modification is relatively simple. “Housing expense” is reduced to 31% using rate, term and/or principal, as prescribed. Then the net present value (NPV) of the modified mortgage compared to the foreclosure value is calculated using a standardized program. If NPV favors modification, i.e. if the lender will make more money modifying than foreclosing, the modification is supposed to be granted.

Some factors entered into the program must be estimated, e.g. resale price, times to foreclose/resell, likelihood of re-default, etc. As such, the servicer or sub servicer can skew the results by including deliberately false estimates of costs and/or values.  Furthermore, calculating modification income can be tricky, as it need not follow underwriting standards exactly. Given the high probability that one or more factors used may be unreasonable or deliberately skewed, denials of modifications should trigger close scrutiny of the input factors to determine if denials were truly warranted.

Conclusion

Unfortunately, for reasons summarized above and for internal policy reasons that lenders may not be disclosing, lenders have not embraced the modification concept. The foreclosure frenzy has now and will continue to overwhelm and overburden the administration of justice to the extent that final judgments will continue to get robo-stamped, despite the plethora of examples of robo-signed documents being used to effectuate the foreclosure.

Until the U.S. government subsidizes bank write-downs so that the principal outstanding balances of delinquent loans are in line with current market values, there will only be a slow, grinding progress toward resolution of the mortgage crisis and that progress could stall or reverse in a still-fragile economy where unemployment remains at record levels.  As such, we can only hope that lenders will finally begin to appreciate the long-term benefits to them and the nation of speeding up resolution of this foreclosure crisis.

Originally published here.

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Home Page > Finance > Real Estate > “HOW TO STOP FORECLOSURE”

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“HOW TO STOP FORECLOSURE”

By: David Mills
Posted: Jun 11, 2009

If you are struggling to pay your mortgage, you are probably worried sick that you will eventually

lose your home. You do have options though, which could help you overcome this terrible

predicament.

When you are facing financial difficulties and it becomes imminent that you will miss your upcoming

monthly payment, it is a prudent thing to contact your lender. If you havealready received letters

from your lender, then you really have to start talking to them. When contacting your lender, be

sure that you talk to the right persons. Find the persons that works with clients in financial

difficulties. You won’t get anywhere if you do not talk to the appropriate person.

Remember that your lenders are not there in the business of foreclosing your house. This fact is

to your advantage so make sure to use it to your advantage. Lenders almost always do not

foreclose if you show that there may still be a way for you to pay them what you owe.

Read more articles
“LEARN HOW TO STOP YOUR HOME FROM FORECLOSURE”
“HOW TO STOP FORECLOSURE WITH FHA FINANCIAL COUNSELING”
“REVEALED THE TRUE FACTS ON HOW TO STOP FORECLOSURE ON YOUR HOME”
“HOW TO STOP FORECLOSURE AND REGAIN YOUR PEACE OF MIND”

Hiding from lenders is the surest road to foreclosure.

Do not be like most homeowners who avoid their lenders. If lenders feel that you are

ignoring their letters and calls,they will not know how to help you and have no other

recourse but to proceed with taking your home. These are troubled economic times and lenders

are aware and most of them are even sympathetic to the predicament of their client. They are

mostly more than willing and eager to work out a solution and offer you an alternative.

Act fast

When facing prospects of foreclosure, time is of the essence. The remedies disappear as time

passes you by. Do not wait until you receive what is called a Notice of Default which is

basically half way through eviction. From the time you missed payment, NOD is given around

the 90th day. In short, you wasted 90 days to talk to your lenders. At this point, your account is

already in the hands of the foreclosure department and it would have been a lot easier if you had

talked to your lender before it got to this point.. From this point, it is a matter of

30 days before you receive a notice that your lender will sell your house at an auction.

Explore alternatives

One of the very popular alternatives that lenders offer is a mortgage modification. Lenders

generally offer this to those that contact them at the earliest opportunity. If you are far behind in

your mortgage payments, lenders might think twice of offering you this remedy as the

adjustment might be too high for you anyway at this point

Always be aware that there are foreclosure scammers operating everywhere, so always be sure you can trust the people you are relying on for help.

David Mills – About the Author:

David Mills specialises in helping US citizens who are facing financial problems and the threat of foreclosure.Having spent most of his career working within the financial sector, he has published a number of books on various subjects relating to mortgage,debt,housing market, bankruptcy and credit debt.
His latest ebook “HOW TO PREVENT FORECLOSURE” gives you the true facts on how to avoid foreclosure.
Plus for a limited time,a free bonus ebook on how to “STOP FORECLOSURE SCAMMERS”
For more information visit http://www.how2keepyourhome.com

Source: http://www.articlesbase.com/real-estate-articles/how-to-stop-foreclosure-965992.html

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Article Tags:
stop home foreclosure, stop a foreclosure, help with foreclosure, foreclosure information, foreclosure laws, foreclosure assistance, short sale, pre foreclosure, loss mitigation, foreclosures, prevent foreclosure, house foreclosure, bankruotcy, mortgage, mortgage debt

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“STOP FORECLOSURE – THE CLOCK IS TICKING, YOU HAVE ZERO TIME TO WASTE”

Losing your home is a devastating experience for anyone.
Facing Foreclosure is one of the worst things that a person can go through.
It can cause sleepless nights, terrible stress, fear of opening the mail and answering the phone.
Fear for the future is like a big black cloud sitting on your shoulders that just won’t go away.

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“HOW TO STOP FORECLOSURE AND REGAIN YOUR PEACE OF MIND”

If you think you’re at risk of losing your home, don’t panic!
There are plenty of things that you can do to stop your house from being foreclosed in the face of mounting financial problems

By: David Mills

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Real Estate
Jun 11, 2009

“LEARN HOW TO STOP FORECLOSURE WITH THESE 3 OPTIONS”

Are you at risk of losing your home? Are you desperate for help? Is fear for the future like a black cloud hanging over you? Here are 3 ways that could help you stop foreclosure.
These options will enable you to work fast and decisively and to maintain a level of harmonious relationship with your bank or lender.

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“REVEALED – HOW YOU CAN STOP FORECLOSURE IF YOU TRY HARD ENOUGH”

Losing your home is a devastating experience and must be avoided if at all possible.
Here are ways to stop foreclosure, and there are many different programs that can help, but you have to get out there and ask for them. You need to modify your mortgage to stop foreclosure, and, if not, find other ways to stop it.

By: David Mills

Finance >
Real Estate
Jun 11, 2009

“HOW TO STOP FORECLOSURE WITH FHA FINANCIAL COUNSELING”

The Federal Housing Administration (FHA) provides free financial counseling services. You can contact your local FHA to speak to a financial counselor. Your counselor can link you up with your state, regional and city resources for available financial assistance that could very well save your home. Many states offer low-interest loans specifically preventing foreclosure.

By: David Mills

Finance >
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Jun 11, 2009

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Originally published here.

Florida FHA Mortgage Lender

Providing FHA Mortgage loans in Florida

with High or Low FIco Scores

To endure and be the most successful Florida FHA mortgage lender, we have learned to adapt to a Florida real estate market that changes quickly.  One reason http://fhamortgagefhaloan.com/ still here after 15  years, when so many other Florida FHA mortgage businesses around the state of Florida have closed their doors.
We really do take a long-term approach to Florida FHA mortgage lending.

About five years ago, adjustable rate mortgages with five year fixed periods were the rage with most Florida FHA Mortgage lenders.

However, not with our team.

Why take an ARM when Florida FHA mortgage interest rates were near historic lows?

As an FHA mortgage lender in Florida, over the last ten years we’ve earned a reputation for listening to our clients and for recommending the FHA mortgage solution that is best for their long-term home ownership goals. As a result, we receive a large number of new Florida FHA mortgage loan business by referral from past clients and our Florida real estate agents.

If you are fortunate enough to be looking to buy a home with an FHA mortgage or FHA mortgage Refinance an existing one in the current market, we’ll be glad to offer you sound advice and friendly service. Service and advice you deserve from a Florida FHA mortgage lender that’s been around for a decade and will be around for the long haul. Call 1-800-570-0448 or use our FHA mortgage application for a no-pressure and no-obligation quote on your Florida mortgage or refinance.

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Although many Florida FHA mortgage lenders are tightening credit standards and demanding higher FICO scores and more money down, we still have excellent conventional home loan programs with no money down for 1st time home buyers. In the current Florida real estate market, selling Realtors(r) are often eager to offer 3.5% and even 6% toward closing costs to coax an offer from our FHA approved Home Buyers in Sarasota and other cities throughout Florida.

Don’t let lack of a downpayment keep you on the sidelines in a prime Florida FHA real estate market that offers some of the best buying opportunities in years. Call 1-800-570-0448 to discuss your first time home buyer mortgage options with a representative from the premier mortgage lender in Florida. You can even use our quick application for a no-hassle consultation. Even if you’re not a first time home buyer, we have excellent fixed rate home loans with terms from 10 to 50 years.

Florida home buyer the FHA mortgage loan program can simplify the purchase of a Florida home, making financing easier and less expensive than a conventional FLorida mortgage loan product. Some highlights of the Florida FHA loan program include:

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Down payment less than 3% of Sales Price Gifts are allowed Seller can credit up to 6% of sales price towards closing and prepaid costs. 100% Financing available No reserves required. FHA regulated closing costs.

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The Mortgage Lender in Florida Excellent FHA mortgage Refinance Options For Florida Homeowners

As a Florida FHA mortgage lender, we know well how quickly the world can change. Sometimes you outgrow your FHA mortgage before you’ve outgrown the home that you financed.

Whether you need to make the move from a dangerous adjustable rate mortgage to a low Florida fixed rate mortgage or just want to do a refi to pull some cash out, chances are good we can help. We will be happy to review your present Florida mortgage financing to ensure you’re getting the right solution and that you do not have any prepayment penalties. For some Florida mortgage applicants, a Second Mortgage or home equity line of credit is a better way to create a financing solution. To discuss your situation with an outstanding Florida mortgage lender who actually is in Florida, call 1-800-570-0448

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Try finding an FHA Mobile Home or modular home loan at your local bank and you’ll quickly learn about one of the lasting prejudices in the world of mortgage lending. Many banks don’t offer mortgages for mobile homes with land, modular homes, or double wide trailers on rural acreage. They’re much more comfortable lending on traditional “Brick” built block homes in subdivisions. It’s a sentiment we’ve heard from all across the state: Duval County, Seminole County, and Dade County!

We’re an FHA  mortgage lender business that welcomes and understands that a manufactured homes can offer superior quality at an affordable price in a high cost Florida housing market. We offer both Florida FHA mortgage loans and conventional financing for purchasing or refinancing mobile homes on lots, modular homes, and double wide Florida trailer homes on land.

For a free no obligation quote on a manufactured home mortgage, call 1-800-570-0448 or use our quick application. You’ll know you have found the right Florida mortgage lender for your manufactured housing loan!

Originally published here.

Purchasing a property can be very exciting.  Maybe because of the whole process of home buying requires great understanding.  For you to have the feeling of the purchasing process, you need to master how to negotiate.  Apparently, you do not instantly pay for the initial price offer of the house.  If possible you will have to bargain not until both parties agreed to the price.  If you do not have any knowledge on the haggling process, you can go over these tips and use it when you start to talk to your broker.

Comparable market analyses (CMAs)

If you already found the property that you wish, the first step in negotiation is to assess the fair value.  CMAs show what similar properties in the area have sold for.  The real estate agent can give you the details on the CMAs.  There are real estate sites on the internet that can give you free property value estimators that will permit you to determine the selling prices of homes in your possible community.

Usually, CMAs aid you to evaluate if the proposed price is fair and just.  You can take a look at the prices of sold properties.  You will then assess the figures listed against the proposal offered to you because these amounts are not generally the

Best indicators of what the house will sell for.  There can be a big difference between the two figures.

The CMA normally shows you primary info about the properties being compared:  how many bedrooms and comfort rooms, square footage, the price list and the selling price.  Do not focus too much on the houses similar to the one you want, take a look at their description and location.  And secure that the details are current to prevent any miscalculation of the amounts.

Status of the Property

The condition or status plays a big role in the entire selling price of the house.  This will let you ask if the property that you want is attractive enough compared to the houses that are already sold?  Set a realistic comparison of the status, and then weigh everything.

Extra amenities

Apparently, you surely hope to stay in a house that has complete set of high-end facilities right?  Although amenities do not necessarily have a big effect on the price, not like the location and status, but it can still have a slight impact.  Watch out for this, since you might be too attracted to the living room facilities in the house you wish for, but keep in mind that it will not have a huge effect on the value of the house if you decide to sell in the future.

Eagerness

Expert negotiators gather as much data as possible on the house and the sellers.  The reason of the owner why he sold the property should be the first on your list.  Is there really a need to sell the property?  If the agent that represents you is a buyer’s agent, they can try to give you such details.  However, if you are talking to a broker that represents the seller, they usually keep mum about such data not until they have the permission of the seller.

Preparation

If you are trying to be an expert negotiator, you have to be prepared always.  The major point is your state of mind.  Do not let your emotions rule over your common sense while negotiating.  Set a realistic goal and focus on it.  If the price offered is unfavorable for you, then leave the deal and find another one.

Originally published here.

Purchasing a property can be very exciting.  Maybe because of the whole process of home buying requires great understanding.  For you to have the feeling of the purchasing process, you need to master how to negotiate.  Apparently, you do not instantly pay for the initial price offer of the house.  If possible you will have to bargain not until both parties agreed to the price.  If you do not have any knowledge on the haggling process, you can go over these tips and use it when you start to talk to your broker.

Comparable market analyses (CMAs)

If you already found the property that you wish, the first step in negotiation is to assess the fair value.  CMAs show what similar properties in the area have sold for.  The real estate agent can give you the details on the CMAs.  There are real estate sites on the internet that can give you free property value estimators that will permit you to determine the selling prices of homes in your possible community.

Usually, CMAs aid you to evaluate if the proposed price is fair and just.  You can take a look at the prices of sold properties.  You will then assess the figures listed against the proposal offered to you because these amounts are not generally the

Best indicators of what the house will sell for.  There can be a big difference between the two figures.

The CMA normally shows you primary info about the properties being compared:  how many bedrooms and comfort rooms, square footage, the price list and the selling price.  Do not focus too much on the houses similar to the one you want, take a look at their description and location.  And secure that the details are current to prevent any miscalculation of the amounts.

Status of the Property

The condition or status plays a big role in the entire selling price of the house.  This will let you ask if the property that you want is attractive enough compared to the houses that are already sold?  Set a realistic comparison of the status, and then weigh everything.

Extra amenities

Apparently, you surely hope to stay in a house that has complete set of high-end facilities right?  Although amenities do not necessarily have a big effect on the price, not like the location and status, but it can still have a slight impact.  Watch out for this, since you might be too attracted to the living room facilities in the house you wish for, but keep in mind that it will not have a huge effect on the value of the house if you decide to sell in the future.

Eagerness

Expert negotiators gather as much data as possible on the house and the sellers.  The reason of the owner why he sold the property should be the first on your list.  Is there really a need to sell the property?  If the agent that represents you is a buyer’s agent, they can try to give you such details.  However, if you are talking to a broker that represents the seller, they usually keep mum about such data not until they have the permission of the seller.

Preparation

If you are trying to be an expert negotiator, you have to be prepared always.  The major point is your state of mind.  Do not let your emotions rule over your common sense while negotiating.  Set a realistic goal and focus on it.  If the price offered is unfavorable for you, then leave the deal and find another one.

Originally published here.

Buying a home and making a purchase offer are two different things.  However, potential buyers often can not distinguish the difference of the two.  In some other places, it is common to write a letter of intent to purchase and in many ways, it seems to be the proper way to buy a home.  On the other hand, other states have policies in standard purchase contracts that permit a buyer to cancel the agreement and get back their entire money deposit.

When getting a house that is considered to be hot on the market, and if you do not have any reason to withdraw the contract in the future, you must immediately make a purchase offer.  Do not postpone just because you have second thoughts on buying the house.  If you wait for all your queries to be answered before making an offer, you can lose the chance of getting the house that you wish for.  There are a lot of probable buyers that can take away the opportunity from you.

Keep in mind that you are not the only person who as the capacity to purchase such property.  There are also other aspiring property buyers who are very eager to get the property.  They have the ability to look for an excellent unit like what you have been eyeing for.  Thus, if you already spotted the one you like, make a purchase offer immediately.

Once you give a purchase offer to the property seller, other potential buyers will lose the opportunity to buy the unit.  When the seller receives your offer, other offers can no longer get into the way, unless you cancel the contract.  It is also favorable to you because you can negotiate on the price and terms.  You can start by giving a lowball offer.  Normally, if there are several individuals who compete for the same house, your negotiation power starts to decrease.  Even though buyers are interested, they will have to give way to those who made the first offer.

Nevertheless, there are probable pitfalls when giving an immediate purchase offers.  If you are choosing between the two houses and you made an agreement with the first party, the second property might not be available when you already changed your mind.  The refund for the money deposit is not automatic.  The two parties are required to sign the cancellation instructions.  In some other areas, a seller can delay signing for 30 days, without any fees, an authorization to give back the good faith money deposit.  You can encounter different charges such as appraisal, credit report and home inspection charges that are non-refundable.  Normally, title policy, escrow and other closing costs can be cancelled.  Hence, you definitely need to be firm on your decision before you make an offer.

If you are given the option of losing the house you want, but, it is better to learn from the mistakes of others who have lost their opportunity—since they were hesitant to make the offer with urgency—instead of learning this depressing lesson on your own.

Originally published here.

As a seasoned Realtor, sometimes, you still just don’t see this coming.  So, for the rookies out there, I share this story:

My buyer was under contract and everything was going just as planned. Lender Larry was on top of things and closing looked to be a walk in the park. Then out of nowhere, the home buyers got the blues; worry warts started to appear. How does this happen? They had been all excited just a week ago. Ready to go!

After rooting around for the source of the remorse, I find the planted seed. In their exuberance to spread the word they found a curmudgeon-a person that likes to rain on other people’s parade. Who was it?

A curmudgeon can come from any number of given sources. There are those people who have read about buying real estate and other theorists that are quick to pipe in. Then, there are the well intentioned friends who bought a home a couple of years ago, eager to tell you what to do when purchasing your new home. And, last but not least,  we know some family members can’t help but give your clients their sage home buying advice.

Well, it seems that an expert relative gave darth warnings about buying a home and all the supposed evil it can bring. This free advise may have little or no strings attached, however, it  has the potential of making one vulnerable to misinformation. In this particular case, my clients reaction to Auntie Mame, was akin to watching a home buying horror movie.

How much does professional advise cost,  you ask? The answer is: How much will it cost you, if you DO NOT use Professional Real Estate  advise. In real estate, it can be 1000’s of dollars-sometimes not discoverd until you go to sell the home.

Back to the story:

Sometimes it is our job to right the ship. After an hour of rehashing all of the reasons why my buyers  chose this home and reviewing it’s value, they began to relax. They said that the whole process had been a little emotional and were sorry about dumping their doubts on me. I told them it happens and that it is part of my job. I also told them if their relative had any questions, they should give me a call.

Is there such a thing as a well intentioned curmudgeon? Maybe….but they should have all the information before plying their trade.  Beware of free advise, coming to an ear near you!  There is a ton of free advise. In real estate, it’s everywhere. Unfortunately, some of it may not prove to be very valuable. So here is my professional real estate advise to anyone getting ready to buy or sell a property. (and it’s Free !)

Find a local Realtor(r) who has good credentials. That person will have the knowledge of the local market and the experience to advise and guide you. Going it alone, with post-it notes filled with advise, will certainly risk the outcome you desire. Trust your professional Realtor to guide you through the transaction. We have a stake in it; our reputation and livelihoods are on the line.

Originally published here.