What is the Loan-to-Value

The way banks and mortgage lenders decide whether to make loans on certain houses with a certain value is not really a mysterious process, although you don’t hear much from them while you’re waiting for an appraisal and for a loan commitment. It can be a long, tiresome wait!

Mortgage lenders use a specific criteria to determine whether you are personally qualified for a mortgage, which all has to do with the ratio of your debts to your income. But the other part of their determination uses different criteria, it is all about the appraised value of the house, it’s not about you at all.

If you want the mathematical equation of a loan-to-value ratio, simply divide the amount of the mortgage by the appraised value of a house and look at the percentage that results, which is the way a loan-to-value ratio is expressed, as a percentage. Normally, the value of the loan will be lower than the value of the house, meaning the percentage will be less than 100%. Lenders are more likely to approve loans with lower percentage rates because their risk factor is lower.

It’s not impossible for a loan-to-value ratio to exceed 100%, but it is extremely risky. That means the outstanding loan is more than the market value of the house, making it very difficult to sell without additional funds to pay off the mortgage at the time of closing. While lenders are in business to make loans in order to make money, they are always concerned about their own interests in the transaction and avoiding risks. Our present mortgage crisis was caused by too many lenders approving loans with high loan-to-value ratios.

The interest rate a borrower will be required to pay over the life of the loan is affected by the loan-to-value ratio. It is determined by the lender’s assessment of risk and possible loss in the case of foreclosure. And, the borrower may be required to pay for private mortgage insurance which only benefits the lender if the borrower stops making payments.

It’s important to know that any loan-to-value ratio in excess of 80% means the loan must be kept as a “portfolio loan” by the lender because it’s not able to be sold on the secondary loan market, and selling loans to larger financial institutions is how lenders usually make their profits within a short period of time.

I hope this information on “What Is The Loan-To-Value Ratio” helps everyone.

Leo Kingston has the solution for those with the question, “How can I sell my home?. Leo is based in Oklahoma City and has over 3 decades. He pays cash for homes and has no closing costs or other fees which he charges the house owner. .

Help a Veteran This Valentine’s Day

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Habitat for Humanity
Habitat for Humanity

Habitat for Humanity of Westchester is holding its first annual “Love a Veteran” Valentine breakfast 8 a.m. to 1 p.m. Sunday Feb. 16 at the American Legion in New Rochelle, 112 North Ave. 

The cost is $20 and all proceeds will go to the Veterans initiative of Habitat for Humanity of Westchester. 

Established in 2003, veterans outreach was formed to encourage young veterans to plan for a successful future. 

The outreach invites all former members of the Armed forces to volunteer, build homes, gain knowledge and training on work sites. Employment opportunities are also available through Habitat for Humanity of Westchester, and interest-free loans are granted to those who qualify.

VA Home Loan Myths

VA loans are the most misunderstood mortgage program in America. Industry professionals and consumers often receive incorrect data when they inquire about them. In fact, misconceptions about the government guaranteed home loan program are so prevalent that a recent VA survey found that approximately half of all military veterans do not understand it. With this in mind, we would like to debunk the most common myths about VA Loans.

Myth 1: The VA loan benefit has a “one time” use.

Fact: Veterans and active duty military can use the VA loan many times. There is a limit to the borrower’s entitlement. The entitlement is the amount of loan the VA will guarantee. If the borrower exceeds their entitlement, they may have to make a down payment. Never the less, there are no limitations on how many times a Veteran or Active Duty Service Member can get a VA loan.

Myth 2: VA home loan benefits expire if they are not used.

Fact: For eligible participants, VA mortgage benefits never expire. This myth stems from confusion over the veteran benefit for education. Typically, the Montgomery GI Bill benefits expire 10 years after discharge.

Myth 3: A borrower can only have one VA loan at a time.

Fact: You can have two (or more) VA loans out at the same time as long as you have not exceeded your maximum entitlement and eligibility. In order to have more than one VA loan, the borrower must be able to afford both payments and sufficient entitlement is required. If the borrower exceeds their entitlement, they may be required to make a down payment.

Myth 4: If you have a VA loan, you cannot lease the home.

Fact: By law, homeowners with VA loans may rent out their home. If the home is located in a non-rental subdivision, the VA will not guarantee the loan. If the home is located in a subdivision (such as a co-op) where the other owners can deny or approve a tenant, the VA will not approve the financing. When an individual applies for a VA loan, they certify that they intend on making the home their primary residence. Borrowers cannot use their VA benefits to buy property for rental purposes except if they are using their benefits to buy a duplex, triplex or fourplex. Under these circumstances, the borrower must certify that they will occupy one of the units.

Myth 5: If a borrower has a short sale or foreclosure on a VA loan, they cannot have another VA loan.

Fact: If a borrower has a claim on their entitlement, they will still be able to get another VA loan, but the maximum amount they would otherwise qualify for may be less. For example, Mr. Smith had a home with a $100,000 VA loan that foreclosed in 2012. If Mr. Smith buys a home in a low cost area, he will have enough remaining eligibility for a $317,000 purchase with $0 money down. If he did not have the foreclosure, he would have been able to obtain another VA loan up to $417,000 with no money down payment.

Veterans and Active duty military deserve affordable home ownership. In recent years, the VA loan made up roughly 13% of all home purchase financing. This program remains underused largely because of misinformation. By separating facts from myth, more of America’s military would be able to realize their own American Dream.

Phil Georgiades is the Chief Loan Steward for VA Home Loan Centers, a veteran and active duty military services organization. Phil is a specialist in government mortgage products, consumer advocacy and affordable homeownership. Phil has provided real estate counseling for over 15 years. Phil is licensed by the California Bureau of Real Estate and has been with VA Home Loan Centers since 2009.

The Art of Negotiation

As a real estate investor and coach, negotiations are a part of my everyday life. As a Realtor, Seller or buyer the art of negotiation can mean the difference between great success and dismal failure. Everyone should take a lesson in the art of negotiation as it is an integral part of your life and your business. Artful negotiation is what separates the men from the boys so to speak. Can you say as a Realtor that you are a true negotiator or just the presenter of an offer? If you are a true negotiator, then selling yourself to potential clients should be like breathing in air. Once people realize that you have the power to make deals happen and make everyone in the transaction happy or at the very least feeling good about the deal, then you are worth your weight in gold…Add this to your resume or marketing campaign “I am a skillful negotiator”

You have to know your opposition in the negotiation game and understand their motivations. Successful negotiation is when both sides feel like they walked away with what they wanted. This is a true skill and anyone who is in the real estate business knows that this can be the most difficult, challenging part of your job, but it is also in my opinion the most rewarding when done right.

When it comes time to making a deal of any kind, you first must establish your bottom line. In other words it is sort of like gambling. If you go to the casino with a set amount of money that you are willing to lose and walk away from it when that money is gone, then YOU are in control of the situation. If you do not have a plan then the casino is in control of the situation. All too often it is the latter.

As a buyer and especially if you are a real estate investor, you have to have a ceiling or a maximum amount that you are willing to pay in the back of your mind and stick with it. Start lower than that of course, but walk from it if your ceiling is broken. They say in the real estate investment world your profit is made at the time you buy the home, think about that for a moment! If you go over “the budget” so to speak you are eating right into your profits right off the bat. Not a good way to start.

If you are a seller it can be a little more difficult, you want to set a price at which you will not go below, but you also have to take into consideration your carrying costs to hold the property whether you are a real estate investor or not. You want to get that home sold as fast as you can for as much profit as possible. This is where a good Realtor comes into play to help you determine where that fine line falls. 

As a Realtor you are the one that has to make the 2 ends meet if the buyer and seller are too far apart. Many times quick action in other words thinking on your feet is required to make the deal come together, strike while the iron is hot so to speak. I remember when we were selling one of our first homes and we were back and forth on the price. We countered one last time to the buyer, our Realtor was on the phone with the buyer and it looked like they would walk. This was the first good offer in months. Our Realtor said to the buyer as soon as there was hesitation on the buyers part that they were only talking about $50.00 a month more over the term of the loan and were they willing to lose the home over this small amount…That was a lot better than focusing on the few thousand dollar more that we wanted on the home. It worked and they accepted our counteroffer.

The whole point is if you find you are in a negotiation that is not going to go anywhere, you walk…I know it is easier said than done, but you have to be in control of the situation and not let others control you. This is true not only for buyers and sellers but for Realtors dealing with potential clients. If they are making you jump through hoops that you would rather not or they are not worth your time and effort…walk away.

Negotiations occur in all phases of life both business and personal. How about negotiating with your spouse, family members or friends…this can be especially tricky as personal feeling are involved. You may have to do a little more compromising in these situations, but true negotiators get what they want and the other party feels as though they got what they wanted…big difference from compromising.

So review your business and personal situation and consider how you can hone the art of negotiation. 

Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1000 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the UShttp://www.CoachingByPeter.com . .

Preemptive Renovations: Protect Your Rental Property

The term fixer-upper common applies to properties that real estate investors purchase, improve and then sell on the open market for a profit. Too often, investors involved in rental properties ignore the concept of a fixer-upper as something that should only be explored by those looking to sell their properties. However, by applying those some fixer-upper techniques to your property, you can gradually increase the value of your investment.

Plainly stated, your renters will pay you more for a nicer place to live. That concept has been proven over time and as long as your location remains viable and the renting market in your area remains steady, the renovations you put into your property can come back to you as increased rent payments over time. Proactive real estate investors that maintain rental properties continuously improve their holdings not only to have a more attractive property for an eventual sale, but to gradually increase rent payments in the mean time.

Take Advantage of Lost Tenants
While losing the revenue stream rent provides when a tenant moves out of your property is negative, it is also an opportunity to go into the unit and renovate it to command more rent from your next tenant. Just as a home buyer looks at common features such as the bathroom and kitchen amenities, so too do renters. By adding features to your property like updated appliances or a new dishwasher, you increase the value of your property and the amount of rent you can charge.

Of course, as you gradually increase the amount of rent you can charge, you also make your real estate property a stronger investment and a more attractive target for buyers should you ever choose to sell the property. The number one feature investors look at for an existing property is cash flow and if you can gradually inch that cash flow upwards, you can reap a bigger reward should you decide to eventually sell.

Be More Proactive Than Reactive
The common tendency for investors that own rental properties is to be a reactive landlord, only fixing those things that break and only tending that needs that are voiced. As you maintain your property over time, this can be a losing proposition as you see no benefit from having to replace a toilet for a renter that is locked into a particular rent payment. 

As tenants move in and out of your property, think about updating fixtures both within individual units and in common areas to not only save yourself money by preempting possible problems down the road, but building a more attractive environment that new renters can enjoy (and pay for). This proactive approach will leave you in a better situation down the road as you can present a unified, updated appearance to your property instead of a random collection of updated items that were repaired as they broke.

The concept behind fixer-upper properties is not limited to consumers looking to buy a new home and flip it for profit. Publicity and coverage of fixer-upper techniques has never been hotter in the media than it is right now and as a rental property investor, you can take advantage of those same bits of advice and techniques. Keeping up to date on the ways you can improve your investment is unique. 

For example, you cannot go down to your portfolio manager and perform maintenance on your mutual fund to improve its value. Take advantage of the unique nature of real estate investment and engage in all of the measures you can to gradually improve the cash flow of your real estate investment and the overall worth of your investment. 

This is another original article by Joe Lane, co-owner of The Lane Real Estate Team at http://www.joelane.com/. Are you looking for an experienced Tri City WA Real Estate agency? With 20 years of service based, business experience, Joe and Colleen Lane work hard to serve home buyers and sellers for the Tri Cities of Washington’s Kennewick, Richland, Pasco, and surrounding areas. 

Riding the Ups & Downs of Your Home’s Value Online

The Internet has certainly provided consumers with a wide array of tools used throughout real estate transactions that provide more information and more utility than ever before. One of the tools that has grown in popularity of late is the home value calculators that uses your location and historical data of sales in your area to compare your home against those to determine a value.

This value can change over time as new sales are continuously added to the program’s database, giving you a visual demonstration of the way your value has ebbed and flowed over time. Many consumers have used this tool as a way to uncover what kind of equity they have built up in their home and perhaps to decide whether the time is right to sell a particular piece of real estate.

However, because there are so many outlets offering this type of service, there is the capacity to get five wildly different estimates from five different sites, perhaps confusing a home owner more than before by offering such a diverse set of data. The key in accuracy sometimes lies in what the site is trying to accomplish by providing you its service.

For example, if you go to a home valuation site that does not nail down a specific price but rather provides a range and then prompts you to call a local realtor for a more accurate estimate, the credibility of that site as a home valuation site decreases dramatically. Instead of using the data it has to provide a rough estimate, the site offers a broad range that perhaps prompts more questions than answers.

This is all, it seems, a ploy to get you to call a local realtor that will pay the company for the referral. Obviously, there is a certain amount of bias to remain vague in this situation, making the site less useful for home valuation purposes. Take real estate valuations from sites like these with a substantial grain of salt.

Unfortunately, the bulk of sites used to peg a home value online employ some kind of agent tie-in to prompt contact with a real estate agent. For some sites, that means that you have to input personal data before a full value will be given and in some you have to call the realtor to get the actual value after putting in data for the process online. Either way, these tactics turn off many home buyers that might have an actual need for a home valuation.

There are other sites out there, Zillow being the most prominent, that offer home valuation services without all of the catches. Zillow, in fact, asks only for an address to determine the approximate value of a property and while there will certainly be disparities in a Zillow value and the actual value of a piece of real estate, its interface is easy to use and requires the input of no personal information, giving it a great deal of utility to simply get a rough estimate of a property’s value.

Of course, the best way to get a home valuation is to contact a professional home appraiser. While online sites use market data to formulate a price, nothing can beat an in-home appraisal that takes into account all of the features and amenities of your home when determining a value.

However, for those that want a simple valuation without the cost of a professional appraiser or the bait-and-switch tactics of many of the agent-driven sites out there, Zillow is a great site to get a quick and dirty estimate that can be used as a rough estimate for discussions on the future of a particular piece of real estate.

This is another original article by Joe Lane, co-owner of The Lane Real Estate Team at http://www.joelane.com/. Are you looking for an experienced Tri City WA Real Estate agency? With 20 years of service based, business experience, Joe and Colleen Lane work hard to serve home buyers and sellers for the Tri Cities of Washington’s Kennewick, Richland, Pasco, and surrounding areas.

9 energy saving tips!

Aside from the obvious benefit of saving money, running an energy efficient home benefits us all in the greater community. We reduce global warming and help keep our dollars in the country as supposed to sending them to often unsavory regimes overseas. Even if we implement just a few of the listed tips, the savings will be substantial and ones satisfaction even greater. 
Temperature Control of Your Home 
Heating and cooling accounts for approximately about 2/3 of your energy costs. Implementing just a few energy saving tips in this area will have a big impact on your energy bill. 

1.Install ceiling fans. 
They effectively supplement or may even serve as an alternative to air conditioning. They generally use very little electricity. To make them more effective, adjust your fan so that it is blowing air downwards. 

2. Install a programmable thermostat. 
Set it to lower the heat by a few degrees at night and when you are away. Raise the temperature of the AC when you have left for the day. You can save even more money if during your absence you switch off your AC altogether. Make sure that you turn the AC back on well ahead before your return. It may take a while to return the temperature in your home to a comfortable level. Your investment in a good thermostat  around $50  will be easily recouped in a few months. After that period, it is just pure savings into your pocket. 

3. Enlist the help of your window coverings to help control the inside temperature: keep them closed during the hot days in the summer. Open them especially on the south facing windows in the winter. 

4. Take off your socks and see how your feet feel on a bare floor. If your feet are cold, the floor likely cools the air in the house as well so lay down a few area rugs. 

5. In many countries, people are dressed quite warmly inside their homes. If you feel cool, don’t simply run to the thermostat as the first resort. Put on a sweater and warm slippers and keep your temperature low. 

6. Make the job easier for your furnace. Replacing the air filter on your furnace every month will improve its efficiency and thereby save you more money. 

7. When you are out of the room, turn off unnecessary lights. Most electric light fixtures produce heat which works against the AC. 

8. Here is one measure which will take a few years before you can reap its benefits. Plant a few leafy trees on the side of your house with the most sun. During the summer the trees provide shade and in the winter after they shed their leaves, they let the warming sun rays through. 

9. This energy saving tip may not affect the temperature control of your house but definitely affects your total energy consumption. When not in use, unplug your electrical appliances, TV sets and DVD players and so on. These electrical home gadgets, even if they are switched off but still plugged in, consume considerable amount of energy. In the state of California, the total amount of electricity required to power the switched off appliances, when they are showing just the time of day and perhaps fancy display screens, consume the equivalent output of one coal powered station. That’s a lot of energy we can all save and help clean the environment. 

More information can be found on my website Richmond Hill Homes and Condos for Sale:http://www.buysellyorkregion.com/richmond-hill-homes-for-sale.html andhttp://www.buysellyorkregion.com/richmond-hill-condos-for-sale.html.

Avoiding Foreclosure

Values; if you’re tired of seeing tax values on you personal or investment properties drop year after year… you’re not alone. The good news is you haven’t actually lost any money! Money or value is only truly recognizable at time of the conveyance of the property. If you can and are willing to, keep holding on. Values of real estate historically have had a handful of downturns or loss in value, most recently due to the lending/mortgage meltdown. Historically… things always bounce back and believe it or not, real estate will once again go up in value.

If you can’t continue paying towards your property or are not willing to… the good news is there are still options in today’s market.

1.Retail sale 
Believe it or not, homes are still selling. We continue to see glimpses of market recovery but contrary to popular doom and gloom homeowners through 08, 09, 10, and 2011 have continued to be able to move their properties. The rules of selling a house have not changed; make sure the home is clean, and price the home aggressively to move. The challenge with this solution is when a homeowner has little or no equity and can not cover the difference in the form of a check at the closing table.

2. Rent 
For many, this is not the correct solution. For others, this is a great opportunity to “buy” some time while the market recovers. With rent rates on the rise, the chance of covering you personal debt on properties is more realistic then ever. The individual looking at this option needs to make sure they have the time and patience to be a landlord along with the financial resources to cover any “mishaps or miscommunications” that can occur when working with tenants.

3. Investors 
For most people in a “tight” situation, an investor can feel like a godsend. Investors have certain criteria and price points they need to hit in order to pay cash for a property, but many times these same investors buy at an elevated price or take over payments on a mortgage when the balance is higher than favorable simply because they don’t have to jump through the hoops of getting traditional lending to acquire a property. This many times can serve as a win/win for both the homeowner and investor.

4. Short Sale 
A short sale occurs when the mortgage balance on a property is higher than what a property will retail for. In this situation, after careful analysis, a lender may be willing to “short” the mortgage and take a loss in order to get the home sold. The process of a short sale can be complicated and tedious making it necessary to work with a team that is experienced in such transactions. Your team may consist of a Realtor, investor, loss mitigation negotiator, and title officer. If and when a short sale is completed the homeowners debt many times will be settled in full with no other outstanding debt.

5. Deed in Lieu of foreclosure 
This is an option that many real estate professionals will not fully explain simply because they do not understand the process or they are not willing to because there are never commissions or profits in this type of transaction. This type of transaction occurs when a homeowner signs the deed back to the lender without the lender having to go through the lengthy and expensive process of foreclosure. Many lenders have different criteria that must be met in order to complete a deed in lieu but many times this can be a viable option.

These are simply options or alternatives that must be considered when trying to “unload” a house in a difficult market. None of this is to be considered as professional or legal advice.

Zachary Whitston works for Brick Home Partners LLC which specialize in owner financed transactions. More info at http://brickhomepartners.com .

The author has permitted the reprinting and redistribution of this article.
See our Terms of Use for more information on reproducing it.

 

3 Types of Personal Budgets

The key to some successful budget is obtaining right budget derived from the three major budget types. By maintaining a very good plan, you can actually manage your budget effectively and provide safeguards that will help you achieve your targets without delay. In order for you to have a concept which budget type is suitable in your case, consider the next solutions:

Problem Solving Budget

Problem solving budget is mostly a kind of budget plan for people who are having concern in managing their existing budget plan. Overspending is a standard financial problem. But then, you can actually control your budget by eliminating items that are not required or by simplifying your budget plan. Check your existing budgeting plan and see how you can simplify it. Make a comprehensive list of problematic categories and see how you can reduce the expenses in each area. You can start by focusing on your food grocery list. Check if you’re buying items that you could forego. If not, you’ll be able to take a look at cheaper brands which are known to have better quality.

Comprehensive Budget

Among the three budget types, the Comprehensive is known for being the Master Budget. This budget type is often rather detailed and ideal for individuals with low income and desires to reduce their daily expenditures. This is usually a version of financial budgeting that lets you monitor your expenses through an in depth list of budgetary items.

To make this work, the first thing you must do is determine your monthly income. Provide a budgetary allocation for each item like food, gas, bills, clothing and other needs. By focusing on the categories, you possibly can determine which areas need more budget allocation and which areas require less. You may determine if you are overspending on a unique category or spending less than you should.

Planning Budget

This is usually a type of budget designed if you intend to spend money on something for example a brand new home, a planned vacation or other expenses that need bigger amount. To make this budgeting work, it’s important to put an additional category on your budget line intended solely for the target. But you should know the item under this category is absolutely not a priority unlike food or bills. Therefore, only allocate money on it if you have extra cash and make sure to place it at the bottom of your list. The best thing about having this category is you are usually saving while slowly achieving your targets. You can even utilize it for emergency purposes if the situation calls for it.

Managerial accounting approaches a company’s financial situation in an operational way, giving information in a manner that supports managers in planning and control procedures. For further details about budget types please visit our website.

Learn About Real Estate

There is so much information to learn about real estate investing. Getting into real estate investing can be a scary thought these days. However, if you do your research, find the right neighborhood, and decide what your real estate investing strategy will be, investing in real estate can be a very profitable adventure. 

Buyers are afraid to take the plunge these days, but preparation and education will ease those fears. We have 3 Key Steps that will help you proceed with undeniable success: 

1) Education – A real estate mentor or coach is a must. Before getting into the real estate game you must educate yourself. You will do yourself a huge injustice if you do not understand the strategy behind investing. Get yourself a great real estate coach or mentor. Getting great direction will make it less intimidating as you begin your venture. 

2) Research – This is where your strategies are developed. Your coach or mentor can assist you in researching properties, the right areas to buy, the comparative rents in the area, the cash flow potential, and so much more. This insight will help you in putting together a more lucrative deal. 

3) Quality not Quantity – Another benefit of a mentor or a coach is to teach the difference between buying 7 houses at the market value because they are move-in ready and buying 3 houses that may need rehab, but have thousands of dollars in equity. Quality not Quantity. 

Do not get trapped as many new investors today find themselves with a negative cash-flow situation, meaning the rent does not cover their costs. Investors must be prepared financially to cover any such shortfall or risk losing the property if they can not foot the bill. Unfortunately, a debilitating problem many recent investors saddled with properties they expected to flip for a fast profit.

Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1000 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the UShttp://www.CoachingByPeter.com . .