How mortgage refinance can be beneficial for your real estate deal?


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Every real estate investor has to agree with the fact that it’s not possible to manage a mortgage loan successfully without getting help of refinance. Not only troubled homeowners but investors who desire to make more money with real estate investment may also relish the benefits of mortgage refinance.

How mortgage refinance may help in real estate investment?

Many people generally have the idea that they can opt for mortgage refinance only when facing troubles with their mortgage loans. This isn’t completely true. You can refinance your mortgage loan whenever you want and for any probable reason. Now, you must be wondering, apart from making your mortgage loan affordable, what else mortgage refinance may do for you. Go through the following benefits to get an idea.

  1. Lowers interest rates and lets you save: Mortgage refinance undoubtedly helps by lowering the interest rate. With low interest rates you get to save more. For general homeowners the amount saved increases the payment for mortgage loan and for real estate investor, it turns out to be the down payment for another real estate property. So you can see, mortgage refinance actually makes your loan even more reasonable and you may refinance to earn some extra profit.

  1. Makes equity available to you: Refinance also helps you to access the equity in your property. if you have some home improvement plans in your mind or need money immediately to fulfill any financial obligation, then cash-out refinance is what you must look for. Make sure to use the equity cleverly. Remember, you’ll have to pay off the money you’ll take out from the equity in your property. So, the load will be there always. Just be careful while using the equity in your property and make the most of mortgage refinance.

  1. Changes the terms as per your convenience: Mortgage loans come with different terms like fixed rate and adjustable rate mortgage terms. At any point of time, if you feel your existing loan term to be inconvenient, then you can easily change the term by refinancing. This will even help you to manage your finances well.

These are the 3 chief benefits that you may relish by refinancing your mortgage loan.

How can you get all the probable benefits of refinance?

To get all the benefits of mortgage refinance you need to take all the necessary steps quite carefully. Apart from following the right procedure you must also make it a point to keep some simple facts in mind. The facts are like these:

  • Check your credit score before deciding to refinance.

  • Search well to get the most profitable interest rate.

  • Try to convince your original creditor first.

  • Arrange all of your essential financial documents from beforehand to save time.

  • Refinance when the market is right.

  • Manage your mortgage loan efficiently to prove your credibility.

You must definitely keep these facts in mind to make mortgage refinance a hassle free and profitable process. So just start your research to find out the best lender and refinance your mortgage loan to make your real estate deal ultimately profitable.


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Cheap Real Estate Property Is Hard to Find


When it comes to real estate in the post-subprime era, it’s really hard to find a cheap property, or even to identify one. Cheap property, including one-to-four family residential homes were very prevalent during the early part of the 1980s. They were ideal for people on a budget; and to give real estate agents a chance to do more business.

Agents could make a better impression on their buying customers by showing them how to buy a home at a low price, do some rehab work on it using the 203k rehab mortgage loan, and resell it at a higher price. Making money with real estate was much easier then – no matter how you approached it. Finding cheap property today is a totally different story.

Between 1987 and 2007 the price of real estate property increased by over 300 percent according to a Property Price Index chart I found on the Steadfast Finance website. While this post is not intended to be scientific in nature, it is necessary to use facts and figures to back up the main idea that, due to the balooning of home prices over the 20 year period mentioned, and the subequent crash, it is tough to find a cheap property which doesn’t have a mortgage that dwarfs its value.

There is not much room left to build equity for the foreseeable future without a dramatic rebound of real estate market prices, and I don’t see that happening anytime soon. However, there may be some instances where you may find cheap property throughout the United States, but the market areas – some being better than others – in which they are located will most likely be depressed, thus removing the motivation that would otherwise exist for you to purchase it.

Let’s face it, most towns/neighborhoods that offer the cheapest properties would normally be economically depressed in most categories. Even those areas that are considered middle class by the traditional definition suffered a great loss of property wealth and has none to offer you as an investor looking to turn a quick profit, or home buyer who is looking to build equity.

There is some indication that property values show signs of increasing but that increase in value, providing it is real and consistent will go towards leveling off the property owners’ existing underwater situations. It does not help prospective buyers simply because the property owners are unable to sell until they are able to satisfy their lenders from sale proceeds. It is unreasonable to assume that a property owner is willing to dig into his/her own pocket simply to make a sale to anyone and walk away that much poorer.

You may be thinking; well if all this is true, how will investors be able to stay in business? The answer to this question is rental income! Some investors buy to resell while others buy to rent. Short term versus long term investments; And you can safely assume that when the buy/sell market is tough, most of them will put their money into rental properties.

Keep in mind that when the market is tough for investors, it is similarly tough for home buyers to get reasonably priced homes to buy and mortgage money to finance them, so many of them become new tenants for the long term investors.

If you are in search of cheap real estate property in today’s (July 2012) market, you might get lucky and find that proverbial need-in-a-haystack property that is either free-and-clear or has a very low mortgage balance, where the owner has passed away and the estate is forced to sell…

Or a free-and-clear/low-mortgage-balance property that is in disrepair and perhaps uninhabitable without major rehabilitation and you have the means with which to purchase, repair and resell. However, you might have to look long and hard, so be prepared for the long haul.


If you have been in the market to buy a home for your own personal use, or you are an investor looking to buy cheap, repair and resell; I would be interested in learning about your recent experiences. If you have had some good luck and found the ideal property for your purposes, or you’ve had the worse time trying to find a property you can work with; tell me about your experience in the comment box. Good luck!

When True Real Estate Property Appraisals Count


During my early days as a real estate sales associate (circa 1981), the broker with whom I was associated was very fond of “old adages” and the historical aspect of real estate. As a newcomer to the business of real estate sales my thirst for knowledge was a leading factor in me clinging to every word (pearl of wisdom) uttered by the broker. One of those utterances was regarding a true appraisal.

He would often say that “the truest definition of an appraisal is what a “willing” buyer is willing to pay and a willing seller is “willing” to sell for”. This truest of true definition helped guide my own approach to doing business as a real estate agent in later years. Though, in the early days, I was unsure how much this “truest” definition was relied upon by appraisers who actually evaluated the homes we were selling, it was a lesson soon learned.

But first a two-part question: Does the data from an “all-cash” sale create a comparable for future sales of similar homes in the same community/neighborhood – and can that comparable be used by the lender’s appraiser to support a given value in his/her report? Answering no would be an indication that any “all-cash” sale comparable is to be ignored by property appraisers and therefore has no impact on future home values within the same neighborhood.

A “yes” answer would permit the use of these “all-cash” sale comparables in the appraisal reports thereby helping the appraiser to make neccessary adjustments in his final value because, not only is an appraisal based on the professional opinion of the appraiser, it must also reflect all recent sales activity in the area in which the subject property is located. Therefore any “all-cash” sales that were consummated within 3 to 6 months of the new sale must be taken into consideration, because they also have an impact on the community.

Overall, the appraisal will lead to the conclusion of what the market value is. If the market price can not be defined easily, then someone can look at the different parts of the property and determine what they believe the market price should be. Usually, this will be done by an inspector looking at the various mechanics that may have been swept underneath the rug. But this done ONLY in the absence of usable market data (prior sales activity).

An appraisal is a necessary requirement when a home is being sold and the buyer is obtaining financing from a bank or mortgage lender. The appraiser may use several external resources and definitions of what market value may include in relation to the opinion being made in order to determine the value of a home. When getting an appraisal, you can expect that the estimates will be based around various factors that are related to the particular market area at that time.

Instead of just examining the parts of the property, an appraiser will also examine the neighborhood and see what everything else is worth in relation to the property. So by appraising a property, you will know how much your home is worth in relation to your own needs as they relate to that property, as well as in relation to everything around it. Observing the standards that exist both inside and outside, you will have the knowledge you need to determine when the timing is right to put your home on the market.

What differentiates the “all-cash” property sale from a real estate sale that is financed by a bank/mortgage lender can be a number of factors, but two of the most important of those factors are: One, the lack of a “mortgage clause” in the contract and two, the absence of a bank-ordered certified property appraisal. This does not mean however, that private deal made between a willing seller and buyer in good faith should be ignored or even discounted.