Good morning! Welcome to the Real Estate Mortgage Shoppe program. I’m Jo Garner, Mortgage Officer with Evolve Bank & Trust and with us today we have Richard Scarbrough, realtor, buyer, broker with First National Realty and Kevin Perk owner of Kevron Properties and blogger on www.smarterlandlording.com Our topic today is “How To Find and Make Real Estate Deals.”
In the mortgage news this week, the big news is the HARP program that allows homeowners who are underwater with the mortgages to refinance. The program, in most cases, does not require an appraisal and allows people who owe more on their homes than the home’s current value to refinance to today’s low rates. You can refinance your primary residence, vacation home or even a rental property on the HARP 2 program. There are some restrictions to this program, so give me a call on my direct line at (901) 482-0354 and Susan and I can talk with you to find out if your loan qualifies for the special HARP refinance.
In other news the FHA government loan program is clearing the deck to make way for an upcoming program to help borrowers who have FHA loans to refinance to lower rates with less cost. If your FHA mortgage was on the books prior to June 1, 2009 and you have made the last 12 consecutive payments on time, you may be eligible to refinance to a historic low interest rate with less upfront AND per month.
There are several different programs out there that sound alike but are vastly different. There is an FHA Short Refinance out there that requires your lender to reduce the amount you owe before this program will work. You will also have to show perfect payment history over the last 12 months. On the Short Refinance, you loan cannot be owned or guaranteed by Fannie Mae, Freddie Mac, FHA VA or USDA. There are a few more restrictions on this one.
Now for those of you who are interested in BUYING a house. The time is great to buy a primary residence, vacation home OR investment property. Rates are at a 50-yr low AND the national affordability index is better for buyers than it has been since 1970. Here’s an interesting fact though. Even though mortgage interest rates are at historic lows and houses are at a record affordability, the trend has turned in Memphis for some of the more popular locations, from a Buyers market to a Sellers market.
Word to the wise: Don’t sit around and miss some awesome opportunities to buy a home or build some wealth buying several. If you are a first time homebuyer, we have multiple outlets to get you some down payment assistance with some restrictions. Call us on our direct (off the air) line at (901) 482 0354. We would like to talk with you personally.
Mortgage rates are great whether you are purchasing a home or refinancing one.
This week the rates spiked up but came on back down a little to 4.25% on the 30 yr fixed but eased back down to a comfortable 4% for most loan scenarios with 30 yr fixed rate. The 15 years are still comfortably in the 3’s . The 5-1 ARM (that’s the loan with the fixed rate for the first 5 years and then converting to an adjustable rate). The rate on the 5-1 ARM went up to about 3.15% from his recent low point of 2.625%.
As for lending trends–we have some very definite trend going on right now in lending. Here’s the biggest one in two words TIGHTER RESTRICTIONS. But the terms you get on loans today can be more than worth the hassle. If you have large deposits (maybe not even THAT large on your bank statement that is not payroll, be prepared to document the source of those deposits.
Here’s another one: more and more people are being required to show copies of tax returns. If you are a W2 salaried employee but you own your own business on the side and show a loss on your tax returns, the tax transcripts done by the bank WILL SHOW the loss and it will be deducted from your regular job income. If you write off unreimbursed employee expenses, that amount is deducted from your regular income too.
We can add back to your income depreciation expenses that you show on your taxes for your business or rental real estate property.
We can get into more mortgage and real estate topics later. But for now let’s go to Richard Scarbrough, Realtor, Buyer, Broker for First National Realty and Kevin Perk, real estate investor and owner of Kevron Properties and blogger on www.smarterlandlording.com .
Our topic today is “Finding And Making The Real Estate Deal” Richard and Kevin, I am so glad we have you with us on the program. You guys are the PERFECT experts to educate us. How DO you find and make a great real estate deal? Hear the answers on the podcast 4-7-12.
Question 2. answered by Richard and Kevin:
Your philosophy is that, not property, but PEOPLE make a great real estate deal. What are some suggestions or real live stories you can share to illustrate an effective way to deal the PEOPLE involved with the transaction?
Question 3 answered by Richard and Kevin. When trying to FIND a good real estate deal, are there some investigation tools that work better for foreclosures and vacant property and other tools that may work better for other types of property?
Question for Jo : How should an investor best prepare when applying for a real estate mortgage?
-Latest paystubs, (in some cases all pages of the last 2 yrs signed tax returns) check adjusted gross income first. Remember you can add back depreciation usually appearing on the Profit and Loss page.
-Last 2 months bank statements. Remember large deposits other than payroll will require you to document a papertrail on a large deposit.
-If you own real estate properties, be prepared to provide mortgage statements for each property. If the property is NOT escrowed you will need to provide the lender a copy of the tax bills and insurance declaration pages detailing the homeowners insurance cost on each property. If the property is subject to association fees, you will need to document them also.
The lending industry is continuing to tighten restrictions.
Question 2 answered by Jo Garner : What are some sources available for down payment and renovation money?
1. Home Equity lines on primary residence or other property to use to purchase additional property
2. cash out refinance to pull equity out of one property to use to buy another one
3. Borrow against your 401K
4. Evolve does margin loans on your stock portfolio. You can use this money to purchase or fix up real estate.
Real Estate Tip of the Week: Richard and Kevin Keep up your real estate education. Memphis Investor Group is an organization offering top quality, hands-on education and networking . www.memphisinvestorgroup.com
Specific Topics covered by Richard Scarbrough, realtor and buyer-broker with First National Realty (901) 753-3491 and Kevin Perk, investor and blogger www.smarterlandlording.com -Finding and Making the Real Estate Deal
Deals are everywhere, you are just not seeing them because you do not know what to look for. It is like when you want a new sports car, suddenly you mind opens and you see them everywhere you go. However there is still work involved and they just don’t fall out of trees. There is some low hanging fruit but not very much.
Here is what we suggest you do first before going and looking for deals.
1. You need to decide on an area- Pick a place to farm – Why – Discuss
2. You need to decide what you are going to invest in – SFH, Apts, Commercial – Why? Discuss
3. You need to decide the type – 2/1, 3/2, duplexes, etc. Why? Discuss
Most deals are going to be found on the MLS. It is where people go when they want to sell. But you have to know what to look for and you will need access to the MLS for that. You will need a real estate professional like Richard.
What do you look for in the MLS? Bank owned homes – That is the reality today.
Look in the realtor comments section, these are not public comments and you can’t see them on realtor.com – May be vacant, moving, nursing home, estate sales, bring offer. All of these are signs to dig deeper.
When you contact the property owner or their agent, remember the people, not the property make the deal. Here is what you want to try and find out:
Why are they selling? Why do the property owners need the money?
Once you find out these things you may be able to make a deal work by being creative, owner financing for nursing home, trade things.
You should have your money in order because the order of the day may be the one who closes the fastest. Jo, you can set up HELOCS? Like writing a check
Also remember that some deals take time. Many do not realize the true value of their property and may need to be educated or just need time to realize it. We have worked deals for over a year.
Some other options to find deals. Look for tall grass, signs in the windows, look for that unkempt property that just does not look as nice. You can investigate those and then try to contact the owners with a letter or better a phone call if you can find a number.
Ads in the papers and on Craig’s list have worked.
Come to MIG and let others find what you are looking for. There are wholesalers and bird dogs out there.
MIG meets this Thursday, April 12th at 6 PM at the Memphis Hilton at poplar and I-240. This month all about contractors and managing rehabs, we have a contractor panel to answer you questions. Richard will be doing getting started right.
For timely information on getting the best terms and programs for your mortgage refinance or home purchase with mortgage rates and more contact Jo Garner, mortgage loan officer for Memphis and across the country. For good information on how to find and make real estate deals get the latest tips from the real estate experts on the Real Estate Mortgage Shoppe radio show.