Draw Me Self

This article describes 12 recurring problems with commercial real estate loans that commercial borrowers and their advisors need to anticipate before it is too late. The following problems are common in traditional bank commercial real estate loans and should be avoided if feasible (special circumstances will periodically make some of these terms unavoidable).

COMMERCIAL REAL ESTATE LOANS PROBLEM NUMBER 1: Tax Returns versus Stated Income

Most traditional banks will require several years of tax returns in order to qualify for a commercial real estate loan. The alternative is to use a Stated Income lender that does not verify personal income or assets. Many borrowers will simply not qualify for a commercial mortgage loan if tax returns are used due to high business expenses (and low net income). Many lenders using tax returns will also continue to verify income after the loan closes. Stated Income lenders will not engage in this practice.

COMMERCIAL REAL ESTATE LOANS PROBLEM NUMBER 2: Special Purpose Properties

It is becoming increasingly difficult to get commercial loans for special purpose properties. Properties that do not fall in the categories of apartments or retail/office buildings are often placed in this special purpose classification. This means that business acquisition loans for commercial properties such as restaurants/bars and auto service businesses are frequently hard to find. Commercial financing will be even more difficult to locate for such specialized properties as churches, funeral homes, nursing homes and assisted living facilities.

COMMERCIAL REAL ESTATE LOANS PROBLEM NUMBER 3: Recall/balloon features

These terms are used by many banks to effectively shorten most commercial real estate loans to 3-7 years.

COMMERCIAL REAL ESTATE LOANS PROBLEM NUMBER 4: Short-term loans (less than fifteen years)

15-40 year commercial property loans without recall/balloon features are available.

COMMERCIAL REAL ESTATE LOANS PROBLEM NUMBER 5: Up-front Commitment fees

Under most circumstances, commercial borrowers should not pay such a fee. Please note that processing/retainer fees are not included in this discussion of commitment fees. Processing/retainer fees should be viewed as an acceptable and standard business practice when dealing with commercial real estate loans.

COMMERCIAL REAL ESTATE LOANS PROBLEM NUMBER 6: Business Plans

Under most circumstances, commercial borrowers should not use a lender that requires a business plan.

COMMERCIAL REAL ESTATE LOANS PROBLEM NUMBER 7: Cross-collateralization

Commercial borrowers should not be required to use their personal assets as collateral for a commercial property loan.

COMMERCIAL REAL ESTATE LOANS PROBLEM NUMBER 8: Sourcing and seasoning assets. Seasoning of ownership.

This particular problem will not be relevant to all business borrowers. However, if it is relevant, you should seek out a lender without sourcing and seasoning requirements or limitations. Most banks have strict guidelines for sourcing and seasoning of assets or ownership to qualify for commercial real estate loans. For a purchase, commercial lenders will frequently want documentation about where the down payment is coming from (sourcing). Commercial lenders will also frequently have very specific requirements stipulating that the funds must have been in a specific account for a specific period of time, often 3-6 months or longer (seasoning). Seasoning of ownership is similar to seasoning of funds, except this requirement involves the minimum time someone has owned a commercial property before they can refinance the property.

COMMERCIAL REAL ESTATE LOANS PROBLEM NUMBER 9: Requirement to sign IRS Form 4506

IRS Form 4506 authorizes the lender to obtain a borrower's tax returns directly from the IRS. This form is routinely required by most traditional banks and many other commercial lenders for a business acquisition loan. Commercial borrowers using a Stated Income lender with limited documentation requirements will avoid this requirement.

COMMERCIAL REAL ESTATE LOANS PROBLEM NUMBER 10: Debt Service Coverage Ratio (DSCR) in excess of 1.2 for a business acquisition loan

The most flexible approach to DSCR for a commercial property loan will require a DSCR in the range of 1 to 1.2, with exceptions permitting a DSCR less than 1.

COMMERCIAL REAL ESTATE LOANS PROBLEM NUMBER 11: Minimum commercial property loan size that is too high for your commercial mortgage needs.

It is not unusual to encounter a minimum commercial real estate loan requirement of $500,000 to $1,000,000.

COMMERCIAL REAL ESTATE LOANS PROBLEM NUMBER 12: Excessive length of the commercial real estate loan process

Many traditional banks require three to nine months to close a commercial mortgage. A more action-oriented commercial lender will close commercial real estate loans in 45 to 60 days.

Copyright 2005-2006 AEX Commercial Financing Group, LLC. All Rights Reserved.

With the financial market conditions the way they changed almost 2 years ago now, lots of people find it hard now to get a mortgage and buy real estate the way they used to during the "boom". This was dictated of course by the lack of mortgage products that banks and traditional financial institutions are now offering to consumers to fund real estate.

Where once real estate was viewed by the banks and mortgage companies as a very lucrative business because the property values were on the up and up, now these same banks and mortgage companies are not even offering mortgages on these properties anymore. The irony is real estate mortgages are much safer than a lot of other loans that the same banks are still doing.

What is one to do when you need to buy a property of your own or you find a good real estate deal that you need to acquire?

One of the best solution even in good times through history was always to find somebody who has money they want to invest in something secure, and offer them the opportunity to invest their money in the real estate you want to buy: that is what Private Money Lenders are.

Who is a Private Money Lender? Private Money Lenders can be people who saved cash in their bank accounts (making 0-5% interest rate these days), people who saved money in an CD (making (0-5% interest and locked for 1-5 years), people whose business generate more cash than they need and want to invest that money with a good return, people who saved money in an retirement account and want a safe return on their money away from the stock market or zero returns if not invested, ... Bottom line you can think of all kind of people that want to lend money on real estate funding as private lenders.

How to Find Private Money Funding for Real Estate Deals? A lot of times, these people are your normal people that you deal with everyday, and you wouldn't know until you start asking or offering the opportunity to people to fund your real estate deals after you talk about what you want to do. Basic every day marketing: spread the word that you are offering this opportunity and you'll be amazed who comes forward and tell you that they are interested. One small tip on where to start: pick up your cel phone, and go through the list of people you have saved there. These are important people to you for whatever reason, otherwise you wouldn't have saved their numbers. Just call and let them know that you are looking to offer this private money funding opportunity to people around you, and ask them to pass your name/contacts in case they know somebody is interested.

Now why would Private Money Lenders want to do that?

- Real estate private money funding allows them to earn a fixed private lending market rate typically from 8 - 15% on their money, that's a decent return compared to the 0 - 5% of the banks

- Their money is secured by a lien on the property that the owner is buying, and the property is their fall back in case of default: their money security is physical and cannot evaporate like in a stock market loss

- The owner is typically buying the property at a discount versus the market, so the private lender has an equity buffer that allows them to return at least their private money in case of liquidation of the property

- The owner agrees with the private lender to a mutual beneficial interest rate and term of the note for the borrowed funds

- The owner adds the name of the private lender to the property insurance so the private money lender gets his money back from the insurance company in case of a natural disaster or fire hazard

- The title of the property is encumbered with the lien of the private money lender, so the owner cannot sell or refinance their property without paying off the agreed upon money back to the private money lender.

- The terms of the loan are very flexible: it is really what both parties agree to fund the real estate deal, and since it is between 2 people usually, it is fast (as opposed to a normal 30-45 days bank loan) and does not require all the red tape and many documents a bank would require you to present in order for them to consider your loan or even approve it.

- The closing happens in a title company as usual, with title insurance or without as required by both parties, so you have a professional closing just like any real estate mortgage transaction. That protects both parties as per their requirements to the title company.

So you can see that there is plenty of benefits to actually use private money funding for real estate deals, and it can be applied to any type of property: Single family homes, land, investment properties (residential, apartments, ...). There is also no limit to how many private lenders you get, and the amount of each loans: it is a private loan between two people or organization. In a way, owner financing is a private lending deal to finance real estate between the seller (Private Money Lender here), and the buyer (the new Owner of the property), where both parties agreed to finance a certain amount at a certain interest rate for certain terms.

One of the first steps before you start looking for your dream house is to ask yourself what you can afford to spend on a monthly house payment. Keep in mind when financing real estate that the lenders will be able to tell you only what you MIGHT be able to afford based on your salary and level of debt including any credit card debt. As the real estate market continues to grow and new technology gains ground, widely accepted beliefs that were true just a few years ago may not be true today.

You want to work with your mortgage broker or lender to develop an individual loan or mortgage program based on your credit worthiness. Your property taxes may be deductible. Consult with your CPA or other tax advisor for current tax information. With an adjustable rate mortgage the initial interest rate is usually lower than with a fixed-rate mortgage and the monthly payment will also be lower.

If you're on a fixed income, an adjustable rate mortgage (ARM), especially a short-term ARM, may not be your best choice. And some lenders may impose limits on how much of your down payment can come from borrowing from other sources. Real estate financing is unique for each buyer.

If you're buying a second home or second property, you'll need to identify the sources for your down payment, since you'll not be selling your current house and using the proceeds. Expect a larger monthly payment for housing or other expenses too. Most adjustable rate mortgage programs do offer "rate cap" protection, which limits the amount the rate can be increased - each year and over the life of the loan. All adjustable rate mortgages are amortized over 30 years. Check with your CPA or accounting professional - you may be able to deduct the interest you pay on the mortgage loan and some of the financing costs of the home, like the points on your income tax return.

If you're having a problem getting a loan or home mortgage consider getting a lease-option on a property. A lease-option on the property will allow you to establish a good purchase price now, and then apply a portion of the rent each month toward your down payment, building equity in the process. A mortgage application can be resubmitted several times and it's not uncommon for this to happen either. I've seen it happen many times. If you have less-than-perfect or a 'bad credit' credit report don't worry too much.

If you do borrow money for a down payment it must be disclosed to the lender or if any of your money for your down payment was a gift, be ready to provide proof for it. And the interest rate for an adjustable rate mortgage may be adjusted up or down at predetermined times; then the monthly payment will increase or decrease. The disadvantages of a fixed-rate mortgage include a possibly higher cost because these loans are usually priced higher than an adjustable rate mortgage.

Advantages of adjustable rate mortgages include: lower costs - because they're usually priced lower than fixed-rate mortgages so you can increase your buying power and lower your initial monthly payments. And if the interest rates go down, you'll have lower payments. Usually an adjustable rate mortgage is the best choice for homeowners who are purchasing their first home and plan to be in the property for only three to five years or for those people who plan to relocate in the same period of time.

Make sure to get lots of advice about real estate financing, mortgages, interest rates, mortgage rates, mortgage refinance, bad credit mortgages, etc., and think about what makes sense to you. Thinking positive about your real estate financing is important but so is being realistic. Before you finish your real estate financing read every real estate contract and loan or home mortgage contract thoroughly before you sign on the dotted line; every line is important. Look for anything that is not specific or vague. And don't be afraid to question what you don't understand.

Anyone looking to buy their first home or invest in real estate should consider buying a foreclosure. Foreclosure listings provide detailed information on homes and buildings that are either in pre-foreclosure and foreclosure status. These listings usually include foreclosures from all sources such as banks and even the government. All listings are not made the same. There are companies that are charging people for foreclosure listings that are not accurate or up-to-date. To ensure that you are receiving the most current foreclosure listings there are a variety of resources you should consider.

One of the best places to find current accurate information on local foreclosures is through your local county clerk's office. The recording of a foreclosure is public record and can be assessed by simply going to your local county court house. When you get there be prepared to do some searching. It may help you to look for Notice of Defaults. This will narrow your search for foreclosed homes giving you something to search by. This is one of the most accurate ways to get information on foreclosed properties. In addition, if you are willing to invest some time and effort you will be able to collect as much information on foreclosed properties all for free.

Another avenue to pursue when buying a foreclosure is through your local newspaper or an online classified. Many local newspapers post information on foreclosed homes in the real estate or classified section of the newspapers. Usually the weekend printings of most newspapers have the most foreclosures listings. On the auctions page there is a through listing of upcoming property auctions in the area. Sometimes pictures of the properties are even included. When viewing these newspaper foreclosure listings it is best to read the fine print and there is almost always fine print. The fine print will basically provide information on the time, date and place of the property auction. In addition, there will be important details on how much is needed as a down payment on the property and how soon the remaining balance will need to be paid either in cash or through personal financing. Your local newspaper is an excellent reliable source for foreclosure listings.

Finally, you may want to seek the counsel of a realtor when looking for foreclosed properties. Realtors are trained to look for the types of homes that an individual wants. You should do some research either on line or by contacting a national organization such as the National Association of Realtors to locate a realtor that specializes in locating and selling foreclosed properties. There are realtors who do this and they can be a great asset if you are unsure how to navigate through the purchasing of a foreclosed property. The only stipulation about using a realtor is that this is always a fee of some sort but paying this fee may be very worthwhile if you can find the property you desire.

If you're considering buying a foreclosure, there are a number of reliable resources that you can use to search for foreclosed properties. By searching proactively, looking online, etc., you'll have the advantage over everyone else who wants to take advantage of the market. You just might be able to score the property deal of a lifetime!

I have heard many questions over the years from students about whether or not it is really possible to buy real estate with no money down. The most frequent questions I get are from mortgage brokers and realtors. Since mortgage brokers are by definition trained to fund a loan based on bank requirements like 20% down payments, then by definition anything else seems to be beyond the scope of their possibilities. It has been my experience that many real estate professionals don't seem to understand the concept of "no money down deals".   

Firstly, the definition of no money down does not mean "no money down". It simply means none of YOUR money down. It could be Uncle Bob's money, the sellers' money, or a loan from Aunt Sally. It could also be a credit line, a private investor, hard money lender or anyone else for that matter. It is very important to understand this concept.   Now, if you were to purchase a house and put down 20% which you borrowed from your relative, then you would have purchased the house with no money down. You can call it 100% financing or whatever you want to call it. As far as the bank is concerned you put down 20%. However there is a problem with that since as many mortgage brokers will tell you, banks want to know the source of the funds. When they see that the funds are borrowed and that you have no "skin" (your money) in the deal then they will reject the loan.  

So, what is an investor with no cash going to do to get around this problem? The solution is to borrow ALL of the money to purchase the house for cash. If you borrow from Uncle Bob all of the cash then you can be a cash buyer. Cash buyers are very rare today and if you are a cash buyer then you can buy bank owned REO properties at a substantial discount to market value.   But Uncle BOB is not going to feel comfortable loaning you money to buy a house unless there is substantial security for him. Since banks loan money at loan to value (LTV) ratios of 70% Uncle Bob might be especially cautious and only agree to loan money at 60% LTV. Is this risky for him? Well it is less risky than conventional mortgages that are funded by banks. Why is it less risky? Well firstly, conventional banks loan based on a mortgage application, a credit score and an appraisal. But Uncle Bob is a little smarter than the average bank. He actually can go out to the property and inspect it himself. After all, if you don't pay him then he is going to get the property since he has the first mortgage.   So Uncle Bob is going to need to have enough knowledge of real estate to feel comfortable that if you don't pay him, and he gets your house that he will have a deal.

Uncle Bob is going to do his own comps and is not going to rely on an appraiser. Uncle Bob is going to spend days or even weeks investigating the property compared to the 30 minutes that an out of state loan officer looks at a file. If Uncle Bob is convinced that your deal is a good deal, then he is going to loan the money. If you are paying him 10% interest and the bank is only paying him 2% then Uncle Bob will make more money loaning on real estate compared to having his money in the bank. If Uncle Bob has done his homework then he will only fund a deal at 60% LTV or less. What this means, is that if he thinks the house is worth $100,000 he will only loan you $60,000 and no more.  

Your challenge will be to find a $100,000 house that you can buy for $60,000. Being a cash buyer will make your job much easier because 99% of the buyers that are competing with you will be looking to get a mortgage. Currently it is very difficult to get anything other than an FHA or VA loan. Cash buyers are able to buy properties directly from banks for as little as 50 cents on the dollar. This is a once in a lifetime opportunity. So start looking for "Uncle Bob" or anyone that you know that has money. Then once you have an investor lined up begin looking for wholesale real estate deals. When you find a deal the mechanics will work like this:  

House is worth  - $100,000

You purchase for - $60,000

Uncle Bob loans  - $60,000

Money out of pocket - $0  

Now that you own the house, you wait 6 to 12 months for something called "seasoning of the title" and then you go to your mortgage broker and you tell them that you want to do a refinance. You want to get a conventional mortgage at 7% to pay off Uncle Bob at 10%. The bank will require an appraisal and if you were correct in your initial assessments the appraisal should come in at $100,000. If the bank agrees to give you an LTV loan for 70% of the $100,000 appraisal, then they will loan you $70,000. Assume closing costs are $5,000, so after paying Uncle Bob back the $60,000 you are left with the following scenario:  

House value  - $100,000

Bank Loan - $70,000

Equity - $30,000

Cash left over from refinance  - $5,000  

You just purchased a house with no money down. AND you now have $5,000 in your pocket and $30,000 of equity in the house. This is called distressed real estate investing. Your challenge is not finding Uncle Bob. There are many Uncle Bob's out there. They are called hard money lenders or private investors. Your challenge is to find a $100,000 house that you can buy for $60,000. That is the hard part. To do this you are going to need to find a distressed seller. If you can learn how to do that then you will have no problem finding the money.   Beginner distressed real estate investors think that finding the money and having good credit are obstacles to their beginning to invest in real estate. This is not true. The biggest obstacle is education. Learn and understand how and why you can buy a $100,000 house for $60,000. Understand and know what a distressed seller is and why they would sell a house for less than its current value. Then go out and start looking for a deal. When you find one, give me a call. Maybe I will buy it from you.

Is that a light at the end of the long, dark tunnel otherwise known as the Great Housing Meltdown of the 21st Century? It might be.

We've recently seen some of the most encouraging statistics for the housing market in some time, including North Fulton real estate. Housing starts nationwide jumped for the third straight month in May, by over 17 percent-"fresh evidence that the beleaguered housing market is beginning to stabilize," opined the Wall Street Journal. Closer to home, AJC Business columnist Thomas Oliver recently quoted a local expert who notes that the excess supply of houses is finally beginning to be absorbed.

Oliver also listed seven major economic development projects that have closed in recent weeks, which will add 4,000 new area jobs. With new jobs come new residents, more demand for housing; and in time, higher North Fulton real estate prices.

A likely factor in the positive housing statistics may be the efforts that have been undertaken by the federal government to help turn the housing market around. One of the first was a new first-time homebuyer tax credit that was part of the $787 billion American Recovery and Reinvestment Act (aka the Stimulus Plan) that was signed by President Obama in February.

If you qualify as a "first-time homebuyer" you may be able to receive up to an $8,000 tax credit if you buy a home before November 30 of this year. The home must be your principal residence (second homes and investment homes don't count) and the credit phases out for higher income couples and individuals.

In addition, Governor Perdue recently signed legislation that provides a state income tax credit of up to $1,800 for all purchasers of single-family homes in Georgia. Homes must be purchased by the end of this November and there are no income limitations. One-third of the credit can be claimed in each of the next three tax years.

More recently, as part of its comprehensive Financial Stability Plan, the Obama administration has introduced the Making Home Affordable program, which is designed to "stabilize our housing market and help up to 7 to 9 million Americans reduce their monthly mortgage payments to more affordable levels," according to the website http://www.makinghomeaffordable.gov

It consists of two parts:

o The Home Affordable Refinance Program is giving as many as 4 to 5 million homeowners whose loans are owned or guaranteed by Fannie Mae or Freddie Mac an opportunity to refinance into more affordable monthly payments. It's designed to help responsible homeowners who are current on their mortgage payments but have been unable to refinance because their homes have fallen in value and they no longer have sufficient equity.

You may qualify for this program even if your mortgage balance is more than the current market value of your home, as long as the balance doesn't exceed 105 percent of this value.

o The Home Affordable Modification Program is giving as many as 3 to 4 million Americans an opportunity to avoid possible foreclosure and remain in their homes by restructuring their mortgages to reduce monthly payments. It's designed primarily to help those who are struggling to stay current on their mortgage payments, or who have already fallen behind, due to a drastic rise in their payments as a result of interest rates that have reset on adjustable rate mortgages (ARMs).

You may qualify for this program if your mortgage payment is more than 31 percent of your pre-tax monthly income and is no longer affordable. Visit Makinghomeaffordable.gov for more details on both these programs, including eligibility calculators.

Of course, only time will tell when the housing market has actually "hit bottom" and started to normalize again. "Normal" home appreciation has typically been in the 3-4 percent per year range, not the double-digit rises that were common before the bubble burst and proved to be unsustainable.

Fortunately, most North Fulton real estate did not see these kinds of stratospheric rises in home prices, and so therefore are not experiencing as much pain on the way down.

"Love is lovelier the second time around", croons a Sinatra CD in the background. In your case, it's about falling in love with another, bidding your old flame adieu and getting a mortgage refinance to put the divorce to rest.

When Love is Gone

When love leaves, the travails of married couples begin. Everything about their partner is gross, unappealing, and irritating. Life becomes a struggle to keep up with the pretense that things are okay.

When you're the aggrieved partner, you silently wish that things will suddenly take a better turn, especially with an unpaid mortgage. Refinance plans have to take a backseat for a while, so, no go.

Not all divorces end well, but for those who want more money from their house faster, they'll settle fast and work around their mortgage. Refinance is usually another exit of a relationship and to get the spouse out of the house fast.

What to do Before the Divorce

There's no reason for couples to fight like wildcats over property bought during their marriage. If you're in this mess, try to convince your spouse to talk it over like politically correct adults.

Issue number one to be discussed is the custody of the children. Both of you must understand that the children need both of you in their lives. Work it out between you with the children's well-being in mind.

The second issue is the home. Equally divide the value of the house, subtract the outstanding balance of the mortgage and calculate the remaining equity and split it between the two of you 50-50.

If you want to keep the house, you'll have no choice to but to get a mortgage refinance to pay off your spouse. Untangle the legalities and ask the lender about your options as a divorcee.

During the Divorce

If you have opted to buy out your partner, get an appraiser to have an accurate assessment of the property before splitting your spoils. The value should then be entered in the divorce settlement agreement.

If you one of you has no idea about the appraisal values, then get your own appraiser just to be sure everything on paper is accurate. A real estate broker can also give you an idea of the current sales value of the house. Also ask your lender about the exact balance of your mortgage.

If you have agreed not to get the house, despite your contributions towards the monthly payment, pack up and go. You'll still be getting your share of the equity. If you got the kids, you can temporarily stay at your parents or a sibling, or stay in the house until the dust has settled.

Things to Watch Out For After the Divorce

If your spouse got the house and is paying for the mortgage, be prepared. If he or she fails to pay the mortgage, your credit ratings will be affected and getting a loan for yourself will be difficult. This is because mortgage companies or lenders have signed a contract bearing both your names and can follow up on repayment of the loan from the two of you.

If both of you are jointly tied to a debt, investigate ways to have your or your ex-spouse name removed. As a parting shot, make sure that if only your spouse is obligated to a lender, he or she is responsible, not you. This is your way to get a mortgage refinance when you're starting all over again.

You have found your perfect piece of San Diego real estate, and now you only need secure a real estate mortgage at a great rate. Simple, right? Definitely not!

Before a mortgage makes that real estate yours, the lender is going to check your credit score, which will determine what type of terms they offer to you, how much you will pay over the life of the real estate mortgage, and even if you can secure a mortgage. Your credit score tells a lender what type of credit risk you are and the likelihood that you will repay the money loaned.

Though there are several types of credit scores, most real estate mortgage lenders use the FICO score, which was developed by Fair Isaac. The FICO is used for several types of credit and can affect terms offered for credit cards, car loans, home equity loans, private mortgage insurance, the required size of your down payment, and even the amount of documentation a lender will require of you during your mortgage application. Your score determines what type of loan for which you are eligible, as well as how much money you can borrow.

Every person has three FICO scores -- one with each of the three major credit bureaus: Experian, TransUnion and Equifax. Since the information retained by each credit bureau varies, your score will differ between the "Big Three". Before you begin hunting for real estate, it is a good idea to check all three bureaus for your FICO score, as well as right before securing a real estate mortgage. Even if you have checked your FICO scores recently, your scores fluctuate as new information is received by the credit bureaus. It is best to know for certain your FICO scores, than to be surprised during crucial negotiations.

Some of the things each credit bureau looks at in developing your FICO score are your payment history, the amounts your currently owe, the length of your credit history, new credit you have obtained, and the types of credit you use.

The Higher Your Score, the Better

There have been many commercials on television recently about the FICO score and how it follows you wherever you go (as far as credit is concerned). Just remember, the higher your score, the less you will pay to buy real estate on credit. You can save thousands of dollars every year, or you can pay thousands of extra dollars each year on your real estate mortgage, depending upon your score.

The median FICO score is 723, with most lenders requiring at least a score of 760 in order to get the best real estate mortgage terms. The highest FICO score attainable is 850; however, only 13 percent of the population score over 800.

According to myfico.com, a score of 760 or better currently makes you eligible for an average interest rate of 5.98 percent on a 30-year, fixed-rate mortgage of $216,000. The interest rate rises to 7.47 percent, if your score is between 620 and 639, which translates to paying an additional $227 each month or $81,720 for the life of the mortgage. A score below 620 can add another three-to-six percent interest. Even a point or two can make a major difference over time. As scores dip below the 700 mark, borrowers are often limited on how much money may be financed; while many lenders will disqualify you all together for a mortgage, even if the rest of your credit file is fantastic.

So, check your three FICO scores when you first decide to look for real estate. Get counseling in how to raise your scores, if it is below 760. If you must purchase sooner than you can repair your credit scores, then plan to refinance after you have raised your FICO scores. Buy real estate with terms that are to your advantage. Know your credit scores and repair any problems early.

Many states have been hard hit by the collapse of home prices nationwide and the sluggish economy. Many mortgage brokers expect a slow but steady come back in the real estate market. Still there remains a glut of foreclosures and unsold properties, and job growth remains stagnant.

A few years ago, a booming market was a seller's market. Buyers were plentiful, the competition driving home prices upward. This led to speculators buying homes for the sole purpose of selling them six to twelve months later to make a tidy profit, further driving home prices upward. As long as the nation had a dynamic economy, it was still possible for homeowners to buy and prosper. It seemed like everyone was getting their share of the American dream.

As housing prices collapsed, followed by a deep recession, unemployment topped out at 12.5%. Housing depreciated by 40% to 50% as the rate of foreclosures soared. Residents who bought before the crash saw their equity disappear.

Now for the good news. Home sales are on the rise. Inventory is still high. Strong price corrections have already occurred. February 2010 sales were up 21% from February 2009. A large number of foreclosures and a glut of unsold condominiums in tourist areas continues to keep prices low. This is good news for buyers, bad news for sellers.

Lower prices mean residents can buy a higher quality home for a reasonable price with a low mortgage rate. Slow but steady growth should result in appreciation of home values allowing those of modest means to make economic progress. Although unemployment remains high, temp agencies are now adding jobs, usually a precursor to real job growth. Job losses have slowed, but until the unemployed get back to work, sales will remain weak. Prices will remain low.

New home building has rebounded ever so slightly as building costs have decreased. This trend is limited to areas near large cities where the jobs are. New home buyers are primarily first time buyers and retirees who are finding affordable again. Construction is proceeding slowly. Builders remain cautious. Major concerns are the weak job sector and the continued glut of foreclosures for sale.

Some investors are betting that the economy will improve and beach cottages and condominiums will be in increasing demand for seasonal rentals. Many investors are buying and leasing to foreclosed homeowners who can't qualify for a home loan. There has been some return to lease options between investors and renters. There are many opportunities and pitfalls to be considered. The cyclical nature of economies and real estate has to be factored in to any buying decision. An investor buying today should plan to hold his investment several years until the market rebounds.

Expect mixed signals and uncertainty to continue through 2011. Although strong price corrections have already occurred, the real estate market may not yet have hit bottom. Home prices and mortgage rates are expected to remain low throughout 2011. A lot depends on the job sector. The unemployed don't buy homes. Home owners who lose their jobs may lose their homes to foreclosure. Residents who fear job losses do not buy homes. For those who can and are ready to buy, low home prices are allowing more residents to purchase homes and low cost rentals are bringing seasonal visitors and tourists back to many areas of the country.

Did you know that you can refinance a reverse mortgage? Why would someone want to refinance? Well, the reasons are plentiful, but let's hit a few of the more common ones. Along with that, we will cover some of the steps needed to complete your HECM to HECM refinance.

1. The home is worth more now.

Don't laugh; it actually happens, even in this down real estate market. While most people would think that the higher value is due to appreciation in real estate, a reverse mortgage can be different. Depending on when you got your loan, there were county limits on how much your home could be valued for. There were many limited value loans done on homes that were valued higher than the reverse loan would allow.

2. Improve your interest rates.

Whether you had a higher fixed interest rate or a variable loan, refinancing can get you a better interest rate, or a fixed one. With fixed interest rates below 5%, you might be surprised about what is available

3. You need more money.

Sometimes the money just doesn't last, and with a lower interest rate or higher values, you can get the extra money needed to maintain a healthy retirement. This could be used for anything from repairs and maintenance, to just some extra monthly income to help cover your monthly living expenses.

With the reverse mortgage programs that are available, there are options to have virtually no fees. You already paid the mortgage insurance if you did a HECM reverse mortgage, and you won't have to repay it. Origination fee can usually be waived if you are taking the fixed interest rate programs, but you might even get them waived if you just want a line of credit.

Counseling is required. I know you already did it, but it will have to be done again. This time though, they are going to be more intrusive about your finances. It will be necessary to complete a budget with your counselor, to determine the benefit to you.

There is something called a tangible net benefit also. This is a term used to make sure you are getting a loan that benefits you enough to make the loan worth doing. Sometimes this benefit requirement can be a hurdle instead of a help. We will be covering more on tangible net benefit in future articles.

You can see from the above information that a refinance is possible and sometimes worth doing. If you have a reverse mortgage and you think there is a benefit to you, speak to a knowledgeable loan officer and see what is available.

There are currently millions of American citizens who have been affected by the recessionary economy and who may have considered a home mortgage refinance. Most of those who recently lost part of their income are facing difficulty making the monthly payment. Still others wish to sell their home but find they cannot do in the current market and may be facing foreclosure. These are the types of people President Obama is trying to help with his "Making Home Affordable" package.

About the "Making Home Affordable" Package

The president recently enacted this package with the requirement that lending institutions work with homeowners to come up with modifications or home mortgage refinance options that will help them make their monthly payments. With looser restrictions, many citizens are finding they are eligible for a great savings with this program, and many will find they will not lose their home.

Stimulating the sluggish real estate market is one reason President Obama pushed this legislation through Congress. As well, the millions of Americans who have been negatively affected by the poor economy will benefit by avoiding foreclosure from their lenders.

Most everyone has heard of the $75 billion bailout plan which Congress approved in the last couple months. Much of the money was earmarked for cash incentives to banks and lending institutions, which are required to pass it along to homeowners by modifying their loan terms. The result is that there are many more choices when buying a new home, or refinancing an existing one.

Will Making Home Affordable Work for You?

Anyone who felt the need to seriously consider a home mortgage refinance due to financial difficulties or the real estate market prior to now will be happy to know this package may be just the answer they were waiting for.

Making Home Affordable states that eligible homeowners can work with their mortgage company to lower payments to 31% or less of their reduced monthly income. This will affect quite a few Americans who are currently paying anywhere upwards of 40% or more on their mortgage each month.

Mortgage lenders are required to adhere to a set of guidelines outlined as part of the legislation in the Making Home Affordable package. In some instances they are able to offer a very low 2% interest rate. The money they are losing will be covered by the government's cash incentives as part of this plan.

Eligible homeowners must meet certain criteria to receive these great home mortgage refinance terms. First, they must be current on their loan, and stayed current on all payments in the last 12 months with no payment past due for more than 30 days. If they are seeking the 2% interest rate, they will have to sign a letter of Financial Hardship which outlines the reason for their loss of income. Another way to get the 2% rate is by proving that the value of the real estate mortgaged has fallen by at least 15% in value. And any homeowners who used Fannie Mae or Freddie Mac as their mortgage lender are automatically qualified.

Getting a great home mortgage refinance rate might just be within reach now that the Making Home Affordable legislation has been enacted. With a lowered interest rate or modification to the monthly mortgage payment, many Americans can save thousands of dollars and achieve peace of mind that they will not lose their home.

Real estate forbearance is a special type of legal agreement offered by mortgage lenders to borrowers facing foreclosure. The primary purpose of forbearance contracts is to help homeowners cure mortgage arrears over a period of time without entering into mortgage refinance or loan modification.

Once a real estate forbearance contract is in place, lenders are prohibited from commencing with foreclosure action unless borrowers default on the agreement. Mortgage forbearance contracts typically extend between three and six months, but may remain in place for up to one year.

Home loan payments are temporarily reduced or suspended during the forbearance period to help borrowers become current on their mortgage note. Lenders can roll past due payments to the end of the loan and extend repayment terms or allow borrowers to pay installment payments for a predetermined amount of time.

If borrowers are unable to fully cure mortgage arrears before the expiration of their forbearance contract they might be allowed to enter into a new agreement. Otherwise, lenders may require borrowers to pay additional funds with each normal home loan installment until delinquent amounts are fully paid.

In most cases, real estate forbearance contracts are reserved for borrowers facing temporary financial challenges. Homeowners must work with an assigned bank loss mitigator throughout the forbearance period. Once borrowers fulfill default resolution plans the mortgage loan returns to good standing with the mortgage provider.

In order to obtain forbearance approval, borrowers must provide evidence their financial hardship is temporary. Communication with loss mitigators is essential in order to orchestrate a successful real estate forbearance agreement.

Forbearance contracts are often the only option available to borrowers in the early stages of mortgage default. It is crucial for borrowers to contact their mortgage lender as soon as they realize they cannot pay their mortgage on time and in full. Borrowers have fewer options to prevent foreclosure once lenders issue Lis Pendens preforeclosure notices.

Real estate forbearance contracts can provide financial relief, but can also be financially restrictive. If mortgage arrears exist when the contract expires, borrowers must possess the financial means to contribute additional funds with each regular mortgage payment.

Additional payments can be as much as $200 or more until mortgage arrears are repaid. If homeowners defer $10,000 over the course of two years, they would increase their monthly home loan payment by over $400. Homeowners already struggling to make ends meet can quickly default on the contract and end up losing their home to foreclosure.

Mortgage lenders can initiate foreclosure proceedings the moment borrowers' default on their forbearance plan. Defaulting on home loan deferment plans places borrowers at a higher risk because banks are less likely to enter into mortgage refinance or loan modifications which can reduce mortgage payments.

Careful consideration should be given before entering into deferred payment contracts. It is best to retain the services of a mortgage specialist or real estate attorney. Borrowers can also obtain no- or low-cost housing counseling through the Department of Housing and Urban Development. HUD housing counselors can help borrowers determine which type of mortgage default resolution program is best suited for their needs.

Don't jump into anything blindly or sign any real estate contract or home mortgage loan contract or any type of contract without giving it serious thought. This year alone, Americans are expected to borrow $1.33 trillion in acquiring 7.4 million houses, condominiums and co-ops. If you have monthly obligations like car payments, credit card payments, personal loan payments, student loan payments, etc., be sure to take these into account when you're determining your bottom-line affordability figure.

Be careful when working on your real estate financing; if you make too many loan inquiries, with applications, it may look like you're shopping for credit; this can be a glaring red flag for many lenders. If you're working with a local builder within a sub-division or housing development and just making carpeting, lighting and appliance selections for a brand new home, you'll probably be able to get a standard mortgage loan; but if you're hiring contractors, electricians, plumbers, and painters, you will probably need a construction loan, which provides funds to pay the subcontractors as the work progresses. Get an estimate of your real estate financing closing costs from the lender you've chosen; by law, the lender is required to provide his statement to you within three days of receiving your loan application.

When financing real estate it's important to know that a low FICO credit score does not mean you won't qualify for a home loan or home mortgage. Some lenders may impose limits on how much of your down payment can come from borrowing from other sources. 15-year fixed-rate mortgages mean consistent monthly payments for all 15 years that you have the mortgage; you build equity even more quickly than with a 30-year or 20-year loan, and paying less in interest, you save money in the long run.

Keep in mind that adjustable rate mortgages are best for homeowners who aren't planning on staying with a property for a long period of time. If you're buying a second home or second property, you'll need to identify the sources for your down payment, since you will not be selling your current house and using the proceeds, and you'll need to expect a larger monthly payments for housing or other expenses too. If you have a less-than-perfect or a 'bad credit' credit report it may not be a problem.

With adjustable rate mortgages the initial interest rate is usually lower than with a fixed-rate mortgage and the monthly payment would also be lower. There are plenty of options that are ideal for those who have a few bad credit marks on their credit report. The real estate financing situation for each buyer is unique.

Disadvantages of an adjustable rate mortgage include the possibility of increasing monthly payments if interest rates go up. People usually are not aware that they may be able to customize their loans; just ask the mortgage broker or lender; although lenders advertise 15-year loans and 30-year fixed rate mortgages, applicants can ask for 20 years, 25 years or any other number of years; this may allow borrowers to build up equity faster but keep monthly payments affordable. If you're having a problem getting a home mortgage and the seller still owes money on the home you can check with your lender and see if you can get a wraparound mortgage; although not legal in all states, it will allow you to pay the monthly payment on the existing mortgage and an additional payment to pay the difference; make sure that a wraparound mortgage will not trigger a due-on-sale clause.

If you've applied to other lenders, when you finally do select a good lender you may have to explain why there are other inquiries from lending institutions on your credit report. If you do borrow money for a down payment it must be disclosed to the lender or if any of your money for your down payment was a gift, provide proof for it.

Take your time, study all the resources available online and offline and get lots of advice from several mortgage and real estate brokers and professionals before you do any real estate financing or investing. You have to be careful not to assume that you can cut back on your expenses and stretch yourself into a house payment; you don't want to be cutting into healthy eating habits by eating fast food or junk food for a house that you may not be well enough to live in for a long time - consider this when you first start out searching for the best real estate financing. Remember that buying a home may be the single biggest investment you'll ever make; invest carefully.

Fremont, California, is located in Alameda Count and 17 miles NW of San Jose, California. Fremont has a population of 203,413. Though the fourth largest town in the San Francisco Bay Area, Fremont retains its small town, friendly atmosphere. Fremont's proximity to many Silicon Valley companies, and its own position in the East Bay make Fremont a desirable place in which to live. Residents enjoy the natural beauty of the area, including sailing on Lake Elizabeth and outdoor sports. Institutions of higher learning include Ohlone College, a local community college. Fremont boasts a highly successful school district and a very diverse local population.

Fremont Homes

Fremont properties pool is 68,237 residential properties including Fremont new homes. The median age of real estate in Fremont is 1975. The average household size is 3.34 people. 3% are one bedroom homes, 14% are 2 bedroom homes, 42% are 3 bedroom homes, 33% are 4 bedroom homes, and 6% are 5+ bedroom homes.

Fremont Mortgage Statistics

Homes With No Mortgage 14%

Homes With Mortgage 86%

First Mortgage Only 65%

First & Second Mortgage or HELOC 21%

Fremont Area Real Estate Tax

Fremont Real estate Tax: Median Real Estate Taxes (2000) were $2,412 comparing to 1999 Median Family income $ 82,199. Compare to USA median yearly Real Estate Tax $1,300 and USA median Family Income $42,000 (1999).

Fremont School District: Children make up 25.8% of Fremont population. Fremont has 52,452 under 18 years old residents, or 0.52 kids per one worker, or 0.77 kids per one household.

Fremont Real Estate & Fremont Homeownership

There are 11600.29 or 17% one person households, 20471.1 or 30% two person households, and 13647.4 or 20% three person households in Fremont, California. Median residents age is 34.5, Senior citizens (65+) make up 16,967 or 8.3%% of Fremont population.

There are 100,215 workers (over 16 years of age) in Fremont. Of these, 89.8% drive to work. Approximately 5.01% of workers in Fremont take public transportation. An estimated 1.09% walk to work. There are eight major business districts in Fremont, most of which house technology companies, but also small and independent businesses. These include the Ardenwood Business District and Niles Business District with charming antique shops and ethnic restaurants.

Median Fremont homeowner's housing expenses are 22.5%

Crime in Fremont (2003), crimes per 10,000 residents per year

Violent Crimes 21.29

Robberies 6.88

Aggravated Assaults 12.63

Property Crimes 279.87

Burglaries 52.06

Larceny-Thefts 190.55

Motor Vehicle Thefts 37.26

Invest in Fremont Properties

When making a decision about buying real estate in Fremont California area, you should consider following statistical data:

Near Medium City

Near Large City San Jose, California

Fremont Zip Codes 94536, 94538, 94539, 94555

Fremont Area Codes 510

White population 47.67%

African-American population 3.1%

Asian 36.95%

American Indian & Alaskan

Hispanic (of any race) 13.47%

Median Family Income (1999) $ 82,199%

Population Below Poverty Level 5.37%

1.The Buyer's Mantra became "Ready, Fire, Aim".

Restated: Buy any attractive property, and buy it quickly. The only perceived mistake was not getting involved in the feeding frenzy for good looking real estate.

Frankly, there was a lot of truth involved in that strategy in a run-away market.

The old and wise adage of "look before you leap" turned into "Ready, Fire, Aim"

• Offer quickly or lose the opportunity to buy.
• Once you have it under contract, there will be plenty of time to decide if you really wanted the property.
• If you didn't like what you had roped, you could cut it loose to another investor who was waiting in line to buy it. Or, hold for a very short period and flip it for a profit.

Real estate brokers became familiar with the buying game.

• If three qualified buyers bid on an available property, there was the buyer would was able to get an accepted offer... he or she was referred to as "The Winner".
• The person who came in second was referred to as "First Loser", and the third buyer as "Second Loser"
• You only won as a "Winner". Loser" didn't count.

2.The Buyer's Mantra became "Debt is Your Friend... borrow as much as possible.

The Logic: If you could come in with say 10% down and the property appreciated at 20% per annum, then you had a 200% equity rate of return from appreciation only.

WHAT HAS CHANGED?

The following notable changes have happened that have changed the tried and true Real Estate Investment Model

1.A national and world-wide recession that has continued to deepen at an alarming rate.

2.The US Congress led by President Obama has tried all kinds of stimulus efforts to correct the economic downturn.

• Most of the visible efforts involved throwing previously unimaginable amount of money at the banking industry... unfortunately with no visible results of correcting the primary element that will cure the recession... employment.
• The National Debt has increased greatly in recent months.
• Someone in the future will have to shoulder the burden of dealing with and reducing that debt.
• Hope that you don't live long enough for your grandkids to understand exactly what we have allowed to happen. We have mortgaged their future.
• Big Moral Question: Maybe we owe it to our heirs to accumulate enough wealth to pass to them so they have a running chance at dealing with the situation. Give them "enough to assist them, but not enough to ruin them" with the concept of "entitlement to wealth".

3.Unemployment rates continue to rise.

• Consequence on the Real Estate Market:
• Unemployed people soon lack the financial ability to pay rent or make their mortgage payment.
• Increasing mortgage defaults mean increasing short sales or foreclosures for those who were not lucky enough to have sold prior to our current "short sale and foreclosure ridden market".

4.Property values are spiraling downward in the face of competition by low priced short sales and lender resales of properties that they foreclosed upon.

• If you are looking to sell or refinance, then a real estate appraiser will be required by the lender who would make the new loan
• As always, real estate appraisers are required to use the most recent sales that have occurred in the market
• However, a number of the recent sales are short sales or resales of bank-owned property. One low sale influences future sales in the eyes of the lender. The lender is looking for Market Value today as well as the current value trend of the market.
• This adverse impact of short sales and foreclosure sales will continue until the bank-owned properties have mostly all been sold.

5.There is a clear and obvious federal move from capitalism toward socialism.

• The move toward much stronger federal regulation of all financial activities is one that causes great uncertainty concerning important financial relationships.
• The federal government takeovers of General Motors and increasing control of the banking industry causes concerns that additional regulation and new governmental agencies could substantially alter the business models that have caused past stability and long term economic trends.
• The recent success of a nationalized health care program is positive in concept. How can you argue that people should not have some minimum level of health insurance? That would seem un-American! However, the question remains: "At What Cost?" The cost of the plan stacked upon the financial failures of this recession will cause further stress on a system that is bulging at the seams to hold things together.
• My friends in the insurance industry appear to be next for strong federal regulation. Anytime the government starts to dictate the "actuarial" statistics, something very strange is about to happen.
• Who Will Pay The Bill? Guess what? You will be fine....SO LONG AS YOU DON'T MAKE "TOO MUCH" MONEY!

6.Interest rates have been maintained at very low levels. This is highly unusual in a recessive economic environment.

• The recession of 1980 - 1984 was led by increasing interest rates. First mortgage price hit 21% during the heart of that recession.
• Very low interest rates and the availability of mortgage funding so far has characterized the current recession. This is very unusual.
• The recession of 1980-85 had first mortgage prime at 21%. You really needed to borrow money if you agreed to borrow it at that rate.
• It was high interest rates that led to the recession of 1980-85.

7.A mantra of "tax the rich" is heard at the federal level and at the state of Oregon level. Oregon is known for being one of the "Top 10 Most Taxed State in the Nation".

• This is a dangerous theme. New employment is required to lead us out of the recession. Oregon has lost much of its appeal to those companies who could help the quickest. Small business is the major source of jobs that will create local stability. However, a number of small businesses failed in 2008 and 2009.
• Interesting Issue: People with money have the capacity to maneuver their money to avoid taxation. The big problem with "soak the rich" is that sooner or later you run out of "rich companies" and "rich people" to tax. Then what do we do?

WHAT IS THE CURRENT REAL ESTATE INVESTMENT ENVIRONMENT?
- or -
WHAT DO WE HAVE TO WORK WITH?

Put the above in a blender and put it on "whirl" for about 30 seconds. Then, pour it out and evaluate what we have to work with.

1.Cheap Mortgage Money: At this time, there is an availability of "cheap" mortgage money for:

• Those who can afford to make a 30% to 40% down (depending upon the property type) and as little as 25% down on other asset types.
• Contact me for some hints of some that I have discovered.

2.Increasing Debt Coverage Ratios: The lender's Debt Coverage Ratio ("DCR") has replaced the Loan to Value Ratio ("LVR") as the standard for gauging maximum loan amount for income producing properties.

• Range of DCR: As the recession started to develop, the DCR was increased from 1.10 to 1.25 and 1.30.
• Restated: The amount of a new loan has been reduced rather substantially as the recession continued to progress.

How the DCR Works:

• Start with the Net Operating Income of the property and divide it by the Debt Coverage Ratio. This will define the maximum allowed annual principal and interest (P&I) payment.
• Next, divide that by 12 to identify the maximum allowed monthly P&I payment.
• Using a "present value" calculator, input that maximum monthly P&I payment in with the lender's allowed loan amortization term and the lender's required interest rate.
• The result is the maximum amount of loan that the lender will permit on that property using that DCR.

3. Uncertainty of the tenant's ability to pay rent.

Here is where the real estate market has been shaken to the core.

• Retail: A number of national credit tenants (Linen & Things, etc. etc,) have failed during the recession.
• Past Observation: The retail triple net lease has been valued highly on the pecking order of desirable "institutional quality" investments. Cap rates were relatively low to reflect the low risk faced with national credit tenants.
• The Problem: As some of the "big names" started to fold, the risk rating sky rockets. It would be logical that the cap rates would also increase to recognize that increased risk
• Conclusion: The retail triple net credit tenant lease has started to pick up a bad name. Flip on the Red Stop Light.

• Commercial Office: An interesting observation has been made about office tenants. They are starting to contract in amount of space needed. They are also attempting to renegotiate their leases for lower rents. Several of my commercial broker friends are starting to make a special practice in serving tenants as they negotiate against their landlord,

Commercial Medical: I have had several conversations with skilled doctors concerning the potential impact upon their career and their ability to generate income. They have expressed a deep concern about their continued ability to make good money.

• Some might say that they earn too much to begin with. Maybe so, but if they have less income, then they can't pay as much rent for leased medical space. Medical building landlords... are you listening.
• Lower rents would mean lower values for leased medical buildings

Residential Income: You have heard the adage... "Everyone needs a place to live". That is true, but watch the "trickle down effect" take an interesting gyration during a heavy recession.

• Vacancy factors has started to increase.
• However, in the Eugene-Springfield apartment market, the vacancy factor has increased from about 2% to about 4%. That is a rate that can very well be tolerated.
• My friend Brian Miles, CCIM of SMI Commercial Real Estate in Salem has observed that vacancy factors for apartment units has doubled over the past six months in the greater Salem apartment market.
• The commercial appraisers who appraise apartments are the best source of current vacancy rate and rent level information.
• The problem is there are few that are generating published vacancy and rent reports any more. Rick Duncan MAI and owner of Duncan Brown Appraisers in Eugene stated that he grew tired of his competition using his reports in their appraisal reports.
• Rick Duncan and several of the larger apartment complex property managers are the best source for vacancy factors in the Eugene-Springfield area. Rick is my "go to" guy when I need to get a quick and accurate temperature check of the apartment market in the Eugene-Springfield area.

My Caveat To You
Concerning "Real Estate Market Information"
Be very cautious when accepting information as "fact" concerning the "real estate market".
The "real estate market" consists of a number of localized sub-markets based upon:

1.Type of property
2.Type of tenant;
3.Location; and,
4.Quality of the information source.

Often I real articles in the local newspaper claiming that "real estate is a total train wreck". Then check the source. It is an article written in very generic terms about the "housing market" is some region far form the I-5 Corridor between The California border and the Canadian Border.

My Observation Concerning the I-5 Corridor (Oregon and Washington): to date

1.Property values for most types of tenant occupied real estate have held up rather nicely compared to other parts of the nation.
2. Mortgage funding is available to those qualified to purchase.
3. Occupancy levels are showing strains of a recession, but this is where the product types would be anticipated to have recessive problems

The real estate loan leads market is a BIG market now. With increasing popularity of the Internet, the fact is that more and more people find it an easy to use and access medium. So whether it's mortgage loans or buying real estate or searching for foreclosure properties, the internet is the best bet. All they need to do is decide where to buy the real estate loan, how to buy and then get the ball rolling.

While buying real estate loan leads is not difficult, it's important for you to understand what you are paying for. Firstly, let's understand real estate loan leads in more detail.

Websites that offer real estate loans sell the information to you. As millions of Americans browse the Internet looking for mortgage options, they also enter their contact information in these websites. Some of the best places to source real estate loan leads are lead sellers through who major sites like MSN, Yahoo sell this information. Some other recommended sites to buy real estate mortgage leads are directly from sites such as Live Lead Network, NR Leads and Juicy Leads.

Real estate loan leads are definitely good, but live consumers who are interested in your services are even better! Nowadays, mortgage lead companies are setting up call centers to call up the prospective leads on your behalf, which also helps in cutting down on the number of useless calls. Pre-screened leads are better than out dated leads and old data.

You can even buy real estate loans leads from companies who offer refinance deals. First time homeowners are just a part of this growing market, there are many there who want to refinance their own home and are looking for a cheaper and better deal. You can buy lists of existing mortgage holders from database companies like Century List, Selectory and Intelius.

And finally here are 3 main pointers:

1. Try to outsource the real estate loan leads generation work.
2. Always look for leads in your own market first and then from other cities.
3. Always keep the leads data update and call your prospective leads on a regular basis.

Besides your credit score and the other five qualifications you must meet to finance a real estate mortgage loan, you need to gather papers and documents. Speed up your financing and make your life easier. Organize your papers into a three-ring binder or file system. You won't need all of the documentation listed below. However, the more information you gather, the more likely you will be to get the best loan rates. Keep in mind that all of these documents may not be needed for all types of loans.

Documentation Required for Real Estate Mortgage Loan

Whether you want to buy your first home or many investment properties to build wealth, this checklist will help you save money on loan costs.

1. Proof of Income

Include copies of your last two pay stubs or other proof of employment and income verification. If you are receiving fixed income like trust income or social security, then include the beneficiary letter stating how much you get.

For self-employed, you will need to prove that you have been in the same line of work or business for two or more years.

If self-employed, show a copy of your business license for two or three years to show you have been in that business for at least two years. If you don't have these, then show whatever you do have to evidence you have been in business for at least two years in the same line or business field. You may also ask a CPA to amend your income tax returns for the previous two years and then write a letter verifying that you've been self-employed for at least two years.

2. Tax returns

Provide tax returns for the last two years or at least the last two years of W2's and/or 1099s if you don't want to disclose tax returns.

If you're self-employed, the mortgage company may require your personal and business tax returns for the previous two years and your company's year-to-date Profit and Loss Statement. If you own a business, you may need a Financial Business Statement prepared by an accountant.

3. Bank account records

Gather your account numbers, address of your bank branch, along with checking and savings account statements for the previous two-to-twelve months. You only need the last two months' bank statements in most cases. Most lenders will only need twelve months bank statements when you are trying to get a "full doc" loan (with the best rates) instead of stated income for a self-employed individual. Talk to your loan officer about whether twelve months of bank statements will help you get a better rate.

Include all bank accounts, savings accounts, retirement accounts, and investment accounts. Include any account that you sign for, even if your spouse also signs on the account, and even if your spouse does not apply for the loan with you. Financial assets like these are considered important by lenders as a reserve, particularly now that property values are not rising as quickly.

4. Driver's license and social security card photocopies

5. Proof of housing payments

Whether you own or rent, you must document your housing payments. Credit reporting agencies list mortgage payments. Provide copies of your mortgage statements or a copy of your lease agreement with twelve months' of checks showing rent payments on time.

If you rent your home from a professional management firm, they can verify that you have paid rent on time. If you rent from a private party, most lenders (though not all) will require you to show canceled rent checks for twelve months.

6. Major assets (other real estate owned, automobiles, boats, antiques, stocks, etc.).

You don't have to include individual stocks if you own shares in a mutual fund or hedge fund. Just provide the latest fund statement. Include vested cash value of whole-life or universal life insurance policy, if any. (Cash value is not the same as the face value. Cash value is what you would get from the insurance company right now, if you surrendered the policy while still alive.) If there are antiques or other collectibles, provide only the total collection value; you don't have to itemize.

7. List of debts (car loans, furniture loans, student loans, and credit cards)

Even though the debts will be on the credit report, you must be aware of all of your debts so that you can tell if the credit report has mistakes. Include any debts that you have co-signed for, like when you co-sign for a child's car.

8. Divorce settlement papers, if applicable, no matter how far back in time

9. Delinquent or inaccurate debts or credit report items

If you paid a collection, judgment or lien (especially a tax lien or other lien against your house), include proof of payment.

10. An irrevocable gift letter if you are receiving a monetary gift from a relative.

11. Purchase agreement (for new purchase).

Provide a copy signed by both parties, including all the signed disclosures.

12. Items needed for a refinance

Furnish copies of your note and deed of trust, home insurance declaration page, copy of your last property tax bill.

13. If you own investment real estate in your name, you need rental leases for each of your properties, plus the items listed in #12 for each of your properties.

14. Bankruptcy

Supply all pages and schedules for any bankruptcy filing within the last seven years, and the discharge sheet, for any type of bankruptcy (Ch 7, Ch 11 or Ch 13). Bankruptcy must be discharged before the date of the loan application.

Preparation Leads to Financial Freedom

Talk to your loan officer to see which documents you need to copy and send. Prepare your credit and your real estate mortgage loan documents so you can buy your dream home and even multiple investment properties.

A mortgage is a mortgage is a mortgage. NOT! Not only do mortgages differ between lenders, but they also differ greatly by the lenders, themselves. There are two types of real estate originators -- brokers and loan officers.

Brokers generally are self-employed professionals, who work to secure a real estate loan for you. They work through a variety of lenders and earn a fee for the transaction. Most of the mortgage lenders who advertise on the Internet are brokers.

Loan officers are employees of a bank, credit union, or other lending institution, such as a mortgage company. They sell and process mortgages and other loans only for their employers. They are usually local and in a physical location.

There are advantages and disadvantages in using both brokers and loan officers for your real estate purchase, so you need to shop for the one that is right for you and your particular circumstance.

Brokers

The advantages to using a mortgage broker for your home purchase are many. Usually, the better deal they get for you, the buyer, the more they are paid on the transaction -- a big plus for you. If your local bank, mortgage company, or credit union has refused you a loan, a mortgage broker may be able to find a lender, even if you have bad credit -- just expect to pay a higher interest rate. If your real estate is unique or commercial property, using a mortgage broker to secure a loan is at times easier and faster.

One downside of using a mortgage broker is that your mortgage loan will be sold to another lender immediately after closing. Another is that brokers choose to do either non-conforming loans, which are higher risk and usually higher interest rates, or conforming loans. This limits your loan options. Brokers do not have to disclose a "good faith" estimate on what closing costs will be, nor are they regulated by the Fair Credit Act. Additionally, they seldom have a physical office with employees offering you face-to-face customer service, and they generally are in another town or state than where your real estate is located. This means they may not understand the local market in which you purchased your real estate. Important issues may arise from the real estate classifications and terms used by your appraiser, for example.

Loan Officers

Though loan officers offer a variety in the types of loans available, you are limited to only those products offered by one institution. Usually a local institution, the loan officer will be familiar with all local regulations and issues will not arise over lack of knowledge in local market terminology.

Banks and Mortgage Companies

Bank and mortgage company loan officers will give you face-to-face customer services, at least before the closing. Like brokers, banks have the option of selling real estate loans on the secondary market. Some banks sell only low-end mortgages or those that require too much servicing with little return. Some sell the loan but keep the servicing portion, making it appear that your mortgage continues to be owned by the bank or mortgage company. They are required, however, to tell you during the initial paperwork if your mortgage may be sold. I suggest you ask before you ever get to that point, if this is a deal breaker for you.

Bank and mortgage company loan officers are licensed and must meet certain criteria. They have more criteria that you must meet, as well, in order to secure a loan (banks usually require the most). Many real estate buyers are refused mortgage loans by these institutions. Both banks and mortgage companies generally do offer better rates and terms. They also must disclose a good faith estimate on what closing costs will be, and they are regulated and audited under the Fair Credit Act.

Credit Unions

You must be a member of a credit union to apply for a loan with them. Many credit unions do not offer real estate loans. The major advantage of securing a loan from a credit union is that they pass on only actual costs of the loan to you -- no broker fees or commissions. They also never sell their loans on the secondary market, they always are local, and give you continuing face-to-face customer service.

What to Do

The time to begin looking for a mortgage lender is before you begin looking at real estate. Ask family and friends for referrals, as well as their experience with the real estate lender. Ask your real estate agent for referrals. Then, contact each prospective lender and ask questions -- lots of questions! Compare interest rates, terms, after the closing mortgage sale policies, and what criteria do they require that you meet in order to qualify for a real estate loan.

If you are a residential real estate buyer, consider getting pre-approved for a loan. You will know exactly what you can afford to buy, which usually turns out to be much more than you expect.

Spend as much time shopping for a mortgage lender as you will for your real estate. The deal you get can save or cost you thousands or even millions over the life of the mortgage. Get the best deal possible, as well as the right lender for your real estate purchase.

In the aftermath of the U.S. housing bust, one California woman recently sued her real estate agent for fraud, blaming him for getting her into a home with an inflated price. The woman claimed that other comparable homes in the area were selling for much less, but the agent concealed the information from her in order to collect a hefty commission on the higher sale price.

Unfortunately, this is not an exceptional tale from the now-past housing boom. With home prices appreciating at light speed in many areas of the country, greed took over for not only real estate agents, but homebuyers, speculators, mortgage lenders, home appraisers, and Wall Street investors. The traditional rules that guided the home-buying process were tossed out the window as people on all sides of the deal saw ways to get rich quick.

So whose fault is it? Who created the mortgage mess and is there still a place for ethics in the real estate market? The answer is varied and complicated, but two things are clear. One is that many different participants share the blame for the housing crash. The other is that the real estate scene can only properly function with the ethical cooperation of all involved.

Where does the guilt start? Let's begin with speculators. Several years ago, investors across the country started pouring money into homes in order to fix them up, rent them out, or sell them for greater profits. This led to a buying frenzy as people heard tales of the financial killing that was to be made from flipping houses. The result was an abundance of homebuyers. Homebuilders stepped up to the plate by overbuilding in many areas to capitalize on the housing frenzy.

As homes were being bought up after only minutes and hours of being on the market, the prices started to increase. Increased demand equals scarcity and higher prices, right? At that point average homebuyers started to have difficulty getting into the market as their incomes were not growing as quickly as were home prices. In order to get around this, many lied to their mortgage lenders, claiming higher salaries and greater assets.

Banks and mortgage lenders were willing to go along with the fraud because home prices were escalating so quickly that most buyers would be able to refinance or take out home equity loans with ease if they needed more cash to pay for the mortgage. Largely forgotten were the time-honored requirements of 20 percent down payments and good credit reports. Lenders created and pushed creative financing programs that included little or no down payments, risky adjustable interest rate plans, and plenty of no-income documentation loans.

Borrowers gobbled up these loans like crazy, barely pausing to read the fine print or find out how much they would be paying for their mortgage after the initial low interest period.

And of course real estate agents and housing appraisers got in on the act. They inflated appraisals to make more commission money and steered buyers into homes that were not worth as much as they were selling for.

Don't forget Wall Street. Investors across the country and the world invested billions into these risky loans because they seemed like a sure bet with the housing market on fire. With more investors, demand for these loans increased, causing many lenders to guide borrowers into exotic mortgages even when they were not a good fit.

The result is that millions of homeowners are facing high resetting interest rates and payments, hundreds and thousands of homes are in foreclosure and default, and the stock market has plummeted with the related losses.

Rebalancing has already begun in the real estate market with lenders reverting back to strict standards of good credit and large down payments. Borrowers now have to wait and save instead of diving into huge purchases and stock investors have started looking elsewhere for safer ventures. The process will likely take several years to complete and many have suffered and will suffer financial ruin in the mean time. Only ethical and wise behavior on the part of all involved can save the market from another devastating crash.

If you are looking to refinance your home for a lower rate, or you are interested in a refinance with cash out to do some home repairs, buy a new car, etc., you may want to consider finding a mortgage refinance advisor.

There are actually two ways you can go about refinancing your home. The first would be to do the shopping around for a refinance on your own. The second way would be to locate a mortgage refinance advisor.

A mortgage refinance advisor. Otherwise, known as a mortgage loan officer or mortgage broker are not at all hard to find.

The internet is perhaps the best resource for tracking down a mortgage refinance advisor. There are literally hundreds of them right in your own back yard, and the internet would be by far the best way to begin your search.

Once you have found a mortgage refinance advisor, don't stop there, shop around. By shopping around with a few different loan officers and brokers, you will give yourself the ability to compare rates and prices.

Think of it the same way you would go about purchasing a new car. Shop around, test drive a few by going to different dealerships. Once you have test driven a few cars and compared pricing, base your decision on the best and most reasonable deal.

By shopping around as opposed to committing to the first mortgage refinance advisor you come across could mean the difference of thousands of dollars in closing costs and interest fees' over the life of the loan.

By allowing no more than four loan officers or mortgage brokers to assess your situation, you are putting yourself in a much more ideal situation. Especially if your credit is challenged or your situation is unique, not only will the mortgage refinance advisors' expertise come into play, you will be in a position to compare rates and pricing.

Remember, the majority of mortgage refinance advisors are paid on commission, so it is just as important to them as it is to you to get to the closing table. Good luck.

When applying for a mortgage loan, one of the major considerations is the value of the home. After all, a lender will not want to lend more money on a home than it is worth. So to establish its value, a licensed appraiser will be normally required to perform an appraisal of the property.

Typically, an appraiser will visit and inspect the property, take measurements and photos and then do research on similar homes in the area. What the appraiser is looking for are fairly recent sales of similar properties within a close proximity to your home (known as the "subject" property.) These homes that are used for comparison (known as "comparables" or "comps") should be similar in design, function and size. Where there are discrepancies, the appraiser can determine the difference in value of such discrepancies.

When all the research is done, the appraiser should come to a conclusion as to the value of the property. Two things to keep in mind about this value:

1. It is an opinion and appraisers have the flexibility to interpret the market place as they understand it. A good appraisal should be within a reasonable range of value with another reputable appraiser and to be very solid should have few adjustments in value between the subject and the comps. (The adjustments in value are to account for the discrepancies between the subject and the comps.)
2. An appraisal is not to be considered a replacement for a qualified property inspection. While the appraiser does inspect the property, their inspection is limited and broad, typically seeking obvious defects that would affect overall value. Examples would be holes in the wall, missing fixtures, lack of flooring, etc. And inspector, however, will dig deeper into a property to uncover any defects they can find. They will find issues with wiring, HVAC, roof leaks (that are not so obvious), foundational and mechanical issues... and much more. And while they do inspect for issues, they can not assess value for the home.

Once an appraisal is completed, it is sent to the lender for review and approval. The lender will have many tools to validate the value of the appraisal. Some of these tools include a simple "desk" review in which someone looks over the appraisal report of red flags. A field review may be ordered in which someone would drive out to check out the home, but may not do a full review including measurements and inspection. And there are Automated Value Models (AVM's for short) that use data from the Internet to help determine a range of value. If the lender has used their tools and determines the value is ok, then the loan can move forward.

However, if the lender sees a problem, they can request a second appraisal or even "cut back" the value of the appraisal to what they feel is reasonable. While this is not a common practice, it can happen.

In most cases, especially in regards to a purchase, an appraisal is not that big a deal. They normally come in as expected with the value that is needed. On a refinance, it could be hit or miss depending on what the expected value is.

Either way, an appraisal will typically be done on 99% of all loans originated today. It not only protects the bank, but it can protect you as well from making a bad financial decision.