Finance Tips

It is a painful and stressful experience to have to let go of your home because you do not have the means to settle your mortgage.  But, it is a reality that is faced by many Americans today.  Reports even show that about 50% of homes in the US are underwater or are worth less than what people owe on their mortgages.  These homes will most likely be subject to foreclosure proceedings.  Banks are over the top with these kinds of properties.  For both sides of the equation, there is nothing desirable at all about this scenario.  People are actually just giving their homes up by sending in the keys even before they are due for foreclosure.  They simply do not see any reason why they should even be paying more when their homes are not worth much these days.  This is a separate matter altogether in as far as ethical and moral considerations are concerned.  Much argument is being thrown at this particular recourse to the growing interest rates and falling real property values.  For people who are already at default on their mortgages, the only other option to losing their homes to foreclosure proceedings is a short sale.  This means that both the borrower and the lender agree to sell the property for an amount less than what the borrower owes.  There are, however, down sides to a short sale.  For these reasons, people are looking for viable alternatives to a short sale.

Contrary to popular belief, a short sale does not necessarily free you of any obligation towards your debt.  As you are selling your property for less than what you owe your lender, there definitely will be an amount that will be left unsettled.  Depending on your agreement with your bank, you might still be held liable for the balance left after the short sale.  In other cases, the short sale might not happen before the foreclosure sale date falls due or the bank might not even agree to a short sale.  One of the viable alternatives to a short sale is a walk-away program where you let another company take over your property and negotiate with your bank for the purchase of your promissory note.  By doing this, you are able to let go of your property without the fuss and the stigma that is associated with foreclosure proceedings.

Introduction

Interest rates for savers generally follow inflation trends and statistics show that these gains are always positive unless you are very unlucky. The reason why so many people invest in Banks is because they are usually a safe bet. Indeed, often your savings will be guaranteed.

Money in a savings account is usually a safe investment but the return can sometimes be limited for the investor when compared to other options.

There are many opportunities for investment depending on the level of risk an individual is prepared to take. These forms of investment might include stocks and shares, endowment insurance policies, pensions etc. We are focusing our attention on the property market where our expertise is.

Stability of Property Values

In real terms although property markets do suffer from peaks and troughs, property does increase in value in the long term. Recently in some areas, property prices have actually gone down, this is due to the economy which has an effect on supply and demand. An over supply of property can easily reduce property prices when the property market is struggling.

Property prices do go down but history has shown that they always recover and they are stable in the long term. Steady or significant increases in property prices are usually the norm.

Whilst there can be no guarantee that property prices will increase over say, a one year period it is generally accepted that a well maintained property in a reasonable area will appreciate in value.

Interesting Statistics

The following statistics make interesting reading:

50% of individuals mentioned in The Sunday Times Rich List made their money through investing in property. A property worth just EUR10,000 some 30 years ago would be worth around half a million Euros at today’s prices. Between 5th October and 6th November 1987 the FTSE share index fell by a massive 32.1%. (Published Bank of England Statistics) It would not be fair to say that money cannot be made on the Stock Exchange and no one could dispute that. Most people take professional advice before investing in the stock market which is advisable.

Property Investment

The most successful property investors usually research the market and build up a considerable knowledge before they invest. Speculators often make huge profits by predicting changes in the property market and investing for gain, often just at the right time.

Most individuals who invest in property do so based on their own research and experience. The success rate for property investments is usually quite high which is why it is such a popular and sometimes enjoyable choice.

Building up a Portfolio

When a property which has increased in value, or if the loan has diminished, equity can be released from that property. Many buy to let investors have successfully used their borrowing ability to build a property portfolio and many have generated substantial wealth for themselves.

Buying property enables the investor to secure borrowing which can then be used to make further investments in property; this cannot be said of most conventional types of investment.

Rental Income from a property can then be used repay the loan which in time also increases the value of the investment. As property prices increase, so to does the investment and the increased equity can therefore be used to secure more funds and increase investments in property.

Many individuals have also increased their gains by investing in property located in up and coming areas or by making improvements to properties. Property improvement will always enhance property value.

Short or Long Term Property Investment

Whatever type of investor you are, property should always be a good long term investment.

If you are purchasing that place in the sun you can still benefit from the same investment opportunities but perhaps also with the advantage of an increased income from holiday letting.

Buying an off plan property can be a lucrative short term investment because Developers usually sell the opportunities at less than the market value in order to attract investors. The reason for this is that the Developer will benefit commercially by the the Investor funding the development cost.

It is not unusual for Investors to make 20 per cent profit by the time they get the keys. The Investor benefits from the enhanced inflationary value of the property during the construction period because the price is fixed before construction. Some Investors are able to sell the property on before it is even finished.

Opportunities for Investment in the Property Market

Prices are probably lower now than they have been in real terms for a couple of years so now is a good time to invest.

We have many bargain properties and off plan property investments on our website, if you need any help deciding on the best opportunities why not contact us for advice.

A majority of people, have faced the question during their lifetime as to whether buying a house is a better option as compared with renting a house. During the varied scenarios in their life, they might have sought varied answers to the question. However, if it is viewed from a distinct perspective, buying a house is a better option than renting one. From diverse points of view, there are plentiful reasons for selecting this option. There are several reasons as to why buying a house is a better option than renting a house.

One of the greatest advantages of buying a house as compared with the option of renting one is the topic of equity. When you buy a house, the payments which are made by you, in this regard will contribute towards your owning the house. Remember that the greater the amount which you pay for the house, the higher would be the equity which you have within that house. When all the relevant payments have been made, you would have that amount of money in the form of equity which would be in your name. On the other hand, if you rent a house you are not entitled to any equity.

There is yet another reason as to why buying is a better option as compared with renting a house. This is due to the fact that when you buy your house, you are able to lock in the payment which you make on a monthly basis, for the time span during which you are the owner of the premises. When you are in the process of renting a house, there is normally no assurance that you would be required to pay the equivalent amount from one lease to the next.

When you buy a house, it is normally sold at the rate which it had been assured of, during the time of purchase. After a while, on account of changes in the locality or alternate property values, it is quite probable that the value of your house would increase with the passage of time. This translates to the fact that the amount you pay is lesser than the actual value of your house, which essentially means that when you would sell your house, you would be able to ensure a greater amount of revenue on your house.

Moreover, one of the supreme advantages is linked with restricted payments. If you have your own house, rather than rented accommodation, your payments would ultimately culminate some day. The normal time frame for mortgages is approximately 15 or 30 years. After this time frame, you would no longer be required to pay for the purpose of owning your house. This is one of the biggest advantages of purchasing a house rather than renting one. When you are renting your house, you would be required to make payments indefinitely.

These are the advantages of buying rather than renting a house. It is better to seek the option of buying a house as it would ultimately be your own property after you have paid off the dues.

There’s a good news for property seekers in Pune. The city is expanding its territories and adding new sub-urban areas to its borders. This spells more space for real estate developers and builders and more housing units for the property seekers. Adding to joy, is the fact that property values seem to be heading for a stabilisation phase. Recent reports from property markets indicate this trend.

Current property prices

Sample this, the rental value for two-bedroom house in Chinchwad East is currently between Rs 7,000-10,000 per month. These property values are almost same as they were two quarters ago. It’s the same story in other localities of the city. The capital value for apartment ranges between Rs 2,500-3,000 per sq ft in Dapodi area. For Kasba Peth region, the property rates for an apartment range between Rs 3,200-3,600 per sq ft. The capital value for plot in Hadapsar range between Rs 10,000-18,000 per sq yard, while the capital value for apartment are Rs 2,000-2,500 per sq ft.

Reasons for stabilisation

Property brokers and agents say that stabilisation in Pune’s real estate market reflects the trend prevalent in the country’s property segment. The country’s economy is facing a slow-down and it is the same case with the construction sector as well.

Ramesh Naik from Naik Navare Association, a property brokerage firm, explains that oversupply of property, especially in the residential segment is adding to this trend. “Most of the construction projects are in their initial phases. Hence, the property developers are in a hurry to sell their projects. The projects are priced comfortably. And the developers are luring home seekers with gifts and rebates. Some property developers are offering reduced Equated Monthly Installments (EMIs) and some are wavering parking fees for housing units,” says Naik. He adds that many transactions are happening the actually figures are difficult to compute.

When it comes to the bank accepting your short sale offer there are a few things that have to happen. The first thing is that the seller has to prove to the bank that they can no longer afford to pay them what they owe the bank. They have to show proof of no funds in the bank, having being laid off or maybe some other family problem like death of a spouse. There have to be some kind of a hardship that is proved for the bank to allow the seller to let go the property for less money than they owe the bank.

The second thing is that the bank will request that there are other houses in the area priced around the same price you are paying. They may just not accept any offer that is less than the going rate of any house in that area is. So as a buyer you maybe asking what are the advantages of buying a short sale if you are going to be paying fair market value and also the lender may not accept your offer.

Well often times a lender will accept a short sale in order to save themselves the time, trouble and expense of going through a foreclosure process and the auction.

Even worse after all that time and effort the house is not purchased at all, they have to put the house back on the market. At which time the going rate could be way lower at that time, than it is now.

As a buyer interested on a short sale, you still have to do the same investigations that are involved with any other property sale. Even if the property is being sold as is, you still have to do inspections, you still have to submit an offer similar to other property values in the area. You can submit a lower offer and attach a copy of lower priced property in the area.

Then make a case based on those on why they should accept your offer.

You should also mention the things that the buyers will be paying for such as home inspections and the like.
You also need to have time to make sure that you are not in a rush looking for a property. It is going to take time to hear back from the bank. Also be realistic in the offer that you put on the table and do not expect to get the deal of the century.

The odds are against you most of the time the bank will not accept that offer. The most important thing is whenever you make an offer for a short sale, make sure the agent includes an addendum. This is a form that says, if within a certain amount of time the bank does not get back to you, you have the right to cancel the contract and get your all deposit back. This protects you as a buyer.