When you apply for a mortgage, the lenders will process your application one step at a time. They need to make sure that you are financially capable to pay them back. Unfortunately, there are no shortcuts when it comes to getting approved for a loan.
- Know your credit score
The lenders will look at your credit score as it will give them an idea of how responsible you are in managing your credits. Make sure that you know what your credit score is before you apply for a loan. It is very easy to find out what your credit rating is. Go to your bank or credit card statements and it will show you your credit rating. Your credit score and credit history determines whether you will get approved for a mortgage or not and what terms of payment they will offer you.
- Save enough money
Before you get the final approval for a mortgage, you need to make a down payment. Normally, lenders will ask 20% of the entire loan amount for a down payment. It will be better if you can pay more than that so that you will pay smaller interest rate at shorter terms. Paying a big down payment will save you a lot of money in the long run.
- Stay at your job
The bank will look at your current and past jobs to check if you have an atrocious history. If you keep on company hopping for the last five years, it will not help in getting approved for a loan fast. If you have a plan to buy a house in a five-year timeframe, stay at your current job. Lenders will assess your financial capability and stay at your job will give them an idea that you have a steady source of income.
- Pay Down Debt
The lenders will look at how well you manage your debts on your credit card. It’s not a requirement that you must have a zero credit in order to be approved for a loan. Keep your credit to at least 25% or below of your credit score. If lenders find out that you have a lot of credits; they might turn down your application or offer a lower mortgage. It is extremely important that you keep your credits to the minimum to fast-track your loan approval. While in the process of acquiring a mortgage, avoid making new debts.
The good thing about investing in real estate is that there are so many types to choose from which gives you the freedom to pick the one that suits your needs and budget. Whatever your purpose is in acquiring a property, check out these types of real estate investments:
Residential real estates are properties which include homes for sale napa, townhouses, apartment units, and rest houses where a family pays to live in the property. The length of stay depends on the agreement that you signed which is known as the lease agreement. Most residential leases are on a twelve-month basis in the United States.
The commercial real estate includes office buildings and skyscrapers. If you have enough savings and you own a big lot, you can construct a building with individual offices. Look for tenants who would lease the office spaces in exchange for rental payment. It is advisable to keep the length of the lease for only a year as it will give more flexibility to you as the owner to adjust your rate depending on the market condition.
The industrial real estate consists of properties with larger interior spaces such as warehouses, factories, or showrooms. You can buy a warehouse and have it leased to companies who need a place where they can store their items. Some industrial real estate properties can be used directly for business outlets such as car washes, indoor badminton or basketball courts, home improvement store, and factories.
Retail real estate investment is being used for shopping malls, strip malls or other retail outlets. There are two ways that you can earn from owning a retail property. First, to oblige the tenants to pay you a certain percentage of their sales and second, to receive the base rent. You can use their payment to pay the mortgage and to maintain the top-notch condition of the property.
Mixed-use real estate investments combine two types of real estate properties into a single purpose. For example, you can combine both residential and commercial properties into a single building. If your building has two floors, lease out the first floor as a commercial space for banks, retail stores, etc. The second floor can be used as residential rental spaces for single, working individuals.
If you don’t want to deal with the physical properties yourself, you can try the real estate investment trusts or REITs. With REITs, you are buying shares of a company who owns real estate properties and shares the income to its investors as dividends. Of course, you will be paying some taxes but overall, REITs can be a good investment if you buy at the right valuation and with sufficient margin of safety.
Selling your home is entering into a very competitive marketplace. The strong demand has driven the prices up and as a result, more and more people are selling their homes. They want to cash in on their investments by taking advantage of the Real Estate Market’s current state. Get people interested to buy your house by going the extra mile in preparations to make your home stand out. Here are some ways to make your home more enticing to buyers.
Tell people that your house is located in a great neighborhood. Crime rates are lower in your area compared to other neighborhoods and assure them that they are moving to a peaceful and secure community. Hospitals, Supermarkets, Schools, Museums are all within 30 minutes of travel time. By highlighting the neighborhood and how easy it is for them to move around, you give them a feeling that your house is a great buy they shouldn’t miss.
Price the house slightly lower than current market price
People love getting good deals. When you price it just slightly below than what other similar houses are selling for, interested buyers will really notice. For this strategy to work in your favor, make sure to do your homework. Have your house appraised and compare the current market value with how much money you spent to acquire this property including the cost of renovations done. If you are making a substantial profit, even at a slightly lower selling price, you can’t go wrong.
Work with a top Real Estate Agent
A top producing Real Estate Agent should help speed up the process of getting your house sold. The agent will know how to market your house like using stunning HD pictures, virtual tours, and using drone videos in order to give it maximum exposure and get interested buyers to make solid offers. You’ll also receive professional advice on what you need to do to prepare your house to make it stand out.
Small improvements can make a big impact like fixing faulty doorknobs or damaged closets, fixing leaky roofs, and most of all, eliminating foul odors. These things can significantly hurt your chances of getting your house sold immediately.
Showcase the main selling points
Any interested buyer will take particular notice of how your house looks like as they are approaching the property. As they enter your house, their focus will now move on to the kitchen and master bedroom. Make sure that after the house tour, all they can think about next is negotiating the terms to buy your house.
Remember that every buyer who goes on and visits your house should be able to see themselves living in your house. If you fail to get that point across, it will take more time to sell your house.
As far back as the 1970’s Sears envisioned a kiosk in their stores where a customer could buy stock and even real estate. It was a bold look at the future from one of the world’s largest retailers. All they had to do was to get the consumer to come to their stores to do business. This was quite a challenge thrown down to both Wall Street and Main Street USA. Most of us probably never heard or remember this strategy, and it never got off the ground. People just did not equate Sears with stock or real estate; they were a department store.
In fairness to Sears, the technologies and conveniences did not exist to enable the plan. Sears may have also thought themselves too big to fail. That theme does seem to be a constant.
Hmm, it appears that history does indeed repeat itself, and perhaps at shorter and shorter intervals. It may be ironic that by speeding up processes and the rate at which things can change, the lessons of history are lost at a quicker rate. Did that make sense? If it did, you may be thinking a bit like me – you’ve been cautioned.
In the 1980’s the successful real estate agent became more independent and needed fewer and fewer services from the brokerage firm. As they claimed a higher and higher portion of the brokerage fee, margins for the real estate brokerage began to shrink. Some phenomenally high interest rates had a similar impact on the mortgage banking industry. Unless buyers had no choice, they did not take on these inflated mortgages. The mortgage industry literally shrunk along with their profit margins. We all know that real estate cycles; it goes up and it goes down. The curve is rarely smooth, and is punctuated by sharp turns in one direction or another. Most features of the real estate industry react quickly to the conditions in the market that affect it. Now we have the background for the next attempt to create a commodities market from the real estate process.
In 1974, the Real Estate Settlement and Procedures Act (RESPA), as amended, were passed. It opened the door for consolidations within the industry. To foster competition, companies were regulated to prevent abuses in the industry and to keep prices to the consumer lower. It was almost ironic that the very act that was passed to prevent abuses, in a way opened the door. I don’t know that it has empirically been demonstrated that RESPA actually lowered costs or prevented abuses. With HUD as a watchdog, there was little real enforcement, and although fines were levied, industry practices ultimately were left to the states to manage. It took decades to sort it out, and Wall Street only a few months to make it yesterday’s issue.
The point for mentioning RESPA was that it allowed what was called “controlled business entities,” a term later changed to “affiliated business entities.” The home builder and the real estate brokerage could now have a captive mortgage and title business. The theory was that this would somehow create efficiencies and economies lowering the cost and improve service to the consumer. It didn’t. With all of this vertical integration, each one of the independently managed businesses was caught in the same financial wringer.
I often tell people that becoming a millionaire in the real estate business is an easy thing to accomplish. They usually give me a look of bewilderment. I say that you don’t have to understand every aspect of real estate in order to begin investing. The best thing to do is start with a basic buy-and-hold strategy purchasing whatever type of property you are capable of buying with as little money down as possible. How you buy something with as little money down as possible depends on your financial situation and what types of mortgages you’re capable of qualifying for. Since guidelines for mortgages and government intervention changes daily, it’s impossible for me to tell you the best way to do that. I can tell you how I did it for years using the all-money-down technique I described earlier in the book. But I’ll give you a quick refresher course below.
If you bought $100,000 house through conventional means, you may have to put 20 percent down is $20,000 plus closing costs that will cost you approximately $3000. In this example, you put $23,000 down to buy $100,000 investment property. Using the all-money-down technique, you would buy a $100,000 property for cash putting all $100,000 down plus the closing costs of $3000. At this point, you have $103,000 down on the property and you begin to invest an additional $5000 to fix the property up. You now have a total of $108,000 of your money into the property. You put the property up for rent and you find a good tenant, so now you’re empty investment property is a business making money and shows a profit. Now you go to the bank and you get the property appraised with the intention of doing a cash-out refinance. Because you fixed up the property and it’s a money-making business, the property appraises for $114,000. The bank is willing to lend you an 80 percent mortgage on the $114,000 appraisal giving you a mortgage of $91,200. You originally put down $103,000 and received back a mortgage for $91,200 making your out-of-pocket costs $11,800.
When using the all-money-down technique as compared to buying a property through conventional methods, you save $11,200. Now of course, you’re going to have a higher mortgage and less cash flow coming from the property, but you’re also going to have $11,200 to buy the next property with.
Sometimes the homes you buy are going to cost you $10,000 to buy; other times you’re going to break even on the deal. You might even be lucky enough to actually get paid to buy a house, which has happened to me once or twice. The goal was simply to just keep buying as many properties as possible until you build up a portfolio worth millions of dollars. You will make a profit from the cash flow, but most likely that’s going to go back and do things like repairs and vacancies in all the other issues that come up with real estate. If you do end up banking $10,000 during the year from the cash flow of your buildings, there is your down money to buy an additional property and expand your portfolio further.