December 20, 2011 5:22 pm
Q: Is it true some lenders grant loans based on very little documentation?
A: Not too long ago, they offered in abundance what are called “stated income loans," more commonly referred to as “no doc” or “low-doc" loans, mortgages that require no documentation or little documentation to verify the borrower’s income and assets. In return, the borrower, who must have very good credit, make a big down payment—generally 25 percent or more—and pay a higher interest rate.
Given current market conditions and the sub-prime debacle, these loans have become more difficult to find, cost more, and are mainly funded by hard money lenders who do not conform to bank standards.
The loans are common among self-employed borrowers who have difficulty substantiating all of their income and service industry employees, such as waiters and hair stylists, whose pay is hard to pinpoint exactly. Borrowers also may use no-doc loans when they derive most of their income from commissions or when they have very complicated income structures.
In reality, calling the loans “no-doc” and “low-doc” are misnomers. Some “low-doc” loans require plenty of documentation, such as tax returns and profit-and-loss statements. Even “no-doc” loans require a credit report and a property appraisal.
December 19, 2011 5:22 pm
In this tough economy, more and more individuals are looking at the potential long-term investment of rental property to provide a supplemental revenue stream and/or tax shelter. Like anything that appears too good to be true, beware of rental rehabs.
Mark Fitzpatrick of Lenox Home Loans (lenoxhomeloans.com) recently blogged that if you’re planning on rehabbing to rent, or purchasing investment property and are planning to take advantage of traditional bank financing, it’s important that you have your ducks in a row so the closing of the deal goes as smoothly as possible.
Fitzpatrick says taking the time to plan ahead for your traditional bank loan before you get into a deal will help hugely when you want to exit the deal. He says the following are the three biggest “gotchas” he sees when financing investment property for real estate investors:
1) Inadequate reserves. Reserve funds, i.e. cash in the bank, are not typically required if you’re refinancing a property you live in, but it’s a different story with investment properties. Plan on the lender asking you to document reserve funds of up to 6 months worth of principal, interest, taxes, and insurance for each financed investment property you own, according to Fitzpatrick.
2) Cashing out after your rehab. It used to be that you could buy a beat-up property for cheap, rehab it, and immediately transact a cash-out loan to get your investment and profit out of the deal. Not so today. Fitzpatrick says Fannie Mae guidelines require you to own the property for at least six months before you can do a cash-out loan. So make sure to account for this in your numbers, or consider financing the purchase and repairs with hard money.
3) Inadequate equity. Fitzpatrick says Fannie Mae limits the max loan-to-value for investment properties to 85%, but when you take into account pricing and bank overlay guidelines, the effective max loan-to-value for an investment property is actually around 70% to 75% right now (sometimes 80%), depending on the scenario.
If you want to learn more, Fitzpatrick offers a number of other points as well as regular articles on financing issues through the lenoxhomeloans.com site.
December 19, 2011 5:22 pm
In early 2011, the Census Bureau released a statement noting that the national average for vacant homes in the U.S. rested at over 11 percent, placing more pressure on the housing market. Selling a vacant home is more difficult than selling a furnished one, in any market. A vacant home—regardless of how nice the property—can seem eerily empty and lacking in character and warmth. However, if you are trying to sell a vacant home—whether it’s a second home or a space you were unable to sell before moving to a new location—there are a few key tips that can make the process easier and help provide a quicker selling time, and a better selling price.
Attention to Detail. Once furniture is removed from a space, even the slightest imperfections become apparent. An older carpet that was once disguised by modern furniture is now blaringly out-of-date. Nail holes in the entryway or a dining room in need of a fresh coat of paint are now obvious. Spend extra time fixing up any noticeable damages, repainting, and caulking, getting new carpets, pressure washing and fixing up anything in need of repair.
Freshen up. It’s amazing how quickly an empty house can begin smelling stale and musty. Before a showing, throw open windows and doors to allow for fresh circulation, and consider some mildly scented candles or air fresheners. Remember; nothing too overpowering.
Amp your curb appeal. Since the house may be lacking inside in terms of character, make sure the exterior packs a punch. Not only should you clear clutter, children’s toys, and debris from your yard but you should also keep grass neat and repair those broken fence posts. For even better results, consider planting new flowerbeds, upgrading that tired front walk or even hiring a landscaper.
Consider staging. Statistics show a well-staged home spends 50% less time on the market. Even if you have moved all your furniture out, you may want to consider hiring a staging company that offers furniture rental. These professionals can make an empty space into a scene of warmth and comfort, removing the burden of decoration from your shoulders and easing anxiety.
Remember, potential buyers are not just looking for a roof over their head. They are looking for a place to start a new chapter in their life. You want to show them everything your property has to offer. Since vacant homes often sell for considerably less—typically 15-20 percent lower than the asking price!—taking extra precautions is worth it.
December 19, 2011 5:22 pm
All of the different types of insurance coverage can make shopping for car insurance confusing and stressful. Below is a basic breakdown of the different varieties of auto insurance, and how you can save a few bucks.
If you're in an accident, this protects you from liability you might face from the other parties in the accident. It's divided into two areas; bodily injury and property damage.
Bodily injury covers medical bills, loss of income and legal bills. If you don't have enough liability coverage, you might have to dip into your savings to pay off big bills from lawsuits.
Property damage covers damage to physical property like homes and storefronts, and vehicle repair or replacement costs for any other parties in the accident.
Damage to your car is covered under auto insurance. Like liability it's split into two sections; collision and comprehensive coverage.
Collision covers repairs or replacement of your car because of a crash, up to your car's actual cash value. The cash value is your vehicle’s value after taking into account depreciation and wear and tear.
Comprehensive coverage is for damages to your car for things other than accidents, such as storms, vandalisms, or collision with an animal.
Underinsured/Uninsured Motorist coverage covers you in the event you're in accident, and the other party has no or very little insurance.
Medical Payments coverage covers medical expenses that may result from a covered accident.
Personal Injury Protection helps cover medical expenses—as well as any loss of income or child-care expenses—you might face while healing from an accident.
To determine your premium, determine the coverage limit; the higher it is, the more you pay in premium.
If you lower your coverage limit, you'll play less premium, but you'll pay more out of pocket if you're ever in an accident that exceeds the limit.
Another way to lower your premiums is upping your deductible, which is the amount you pay if you make a claim for an accident. If you have a higher deductible, you have a lower premium.
For example, if your car requires $3,000 in repairs after an accident and your deductible is $500, you will have to pay $500 out of pocket, and the insurer will pay the rest, $2,500.
You can lower your premium in other ways including safe driving, and avoiding traffic tickets and accidents. If you have children on your policy, their good grades can lower the premium.
When purchasing any large item, it’s always a good idea to shop around first. The Internet makes it easy to get multiple quotes, and you can tweak the various coverage and deductible levels to get different premium options.
December 19, 2011 5:22 pm
The Internal Revenue Service notes that by planning ahead, low- and moderate-income workers can take steps now to save for retirement and earn a special tax credit in 2011 and the years to come.
The saver’s credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and to 401(k) plans and similar workplace retirement programs. Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply.
Eligible workers still have time to make qualifying retirement contributions and get the saver’s credit on their 2011 tax return. People have until April 17, 2012, to set up a new individual retirement arrangement or add money to an existing IRA and still get credit for 2011. However, elective deferrals must be made by the end of the year to a 401(k) plan or similar workplace program, such as a 403(b) plan for employees of public schools and certain tax-exempt organizations, a governmental 457 plan for state or local government employees, and the Thrift Savings Plan for federal employees. Employees who are unable to set aside money for this year may want to schedule their 2012 contributions soon so their employer can begin withholding them in January.
The saver’s credit can be claimed by:
• Married couples filing jointly with incomes up to $56,500 in 2011 or $57,500 in 2012;
• Heads of Household with incomes up to $42,375 in 2011 or $43,125 in 2012; and
• Married individuals filing separately and singles with incomes up to $28,250 in 2011 or $28,750 in 2012.
• Like other tax credits, the saver’s credit can increase a taxpayer’s refund or reduce the tax owed. Though the maximum saver’s credit is $1,000, $2,000 for married couples, the IRS cautioned that it is often much less and, due in part to the impact of other deductions and credits, may, in fact, be zero for some taxpayers.
A taxpayer’s credit amount is based on his or her filing status, adjusted gross income, tax liability and amount contributed to qualifying retirement programs. Form 8880 is used to claim the saver’s credit, and its instructions have details on figuring the credit correctly.
In tax-year 2009, the most recent year for which complete figures are available, saver’s credits totaling just over $1 billion were claimed on just over 6.25 million individual income tax returns. Saver’s credits claimed on these returns averaged $202 for joint filers, $159 for heads of household and $121 for single filers.
The saver’s credit supplements other tax benefits available to people who set money aside for retirement. For example, most workers may deduct their contributions to a traditional IRA. Though Roth IRA contributions are not deductible, qualifying withdrawals, usually after retirement, are tax-free. Normally, contributions to 401(k) and similar workplace plans are not taxed until withdrawn.
Other special rules that apply to the saver’s credit include the following:
• Eligible taxpayers must be at least 18 years of age.
• Anyone claimed as a dependent on someone else’s return cannot take the credit.
• A student cannot take the credit. A person enrolled as a full-time student during any part of 5 calendar months during the year is considered a student.
• Certain retirement plan distributions reduce the contribution amount used to figure the credit. For 2011, this rule applies to distributions received after 2008 and before the due date, including extensions, of the 2011 return. Form 8880 and its instructions have details on making this computation.
December 19, 2011 5:22 pm
Secondary mortgage market. Market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; plays an important role in getting money from those who want to lend to those who want to borrow.
December 19, 2011 5:22 pm
Q: Are there ways to save money when adding new space to my home?
A: The direction in which you build can make all the difference. Experts say building up is normally less expensive than building out on the ground level. Adding an expensive wing or addition requires a new foundation. It is less costly to extend plumbing and other mechanical systems upward, as opposed to installing new ones. So using the “air rights” over your house may be your best bet.
December 16, 2011 5:14 pm
A walk down the vitamin aisle at your local pharmacy or grocery store can be overwhelming. There are so many options that it can be hard to know where to begin.
Pharmacist Lauren Fallieras says it's important to understand how and why your body uses certain nutrients in order to decide which supplements are right for your needs. "Vitamins play a key role in building a healthy body from the inside out," she says. "It is important to get these nutrients from a well-balanced diet, but it's not uncommon to fall short on select vitamins and minerals without even knowing it."
Fallieras recommends understanding what nutrients your body may need more of to ensure you know the ABC's of what to look for on the vitamin bottle.
Here's what you need to know about some of the "letter" vitamins—A, B, C, D and E—that will help you make the right choices to support personal health and wellness.
Vitamin A - An important developmental building block, vitamin A plays a key role in vision, white blood cell production, tissue maintenance and more. Good food sources include yellow and green leafy vegetables, such as carrots, spinach, sweet potatoes and squash, as well as yellow fruits such as peaches and cantaloupe.
The B Vitamins - There are actually quite a few B vitamins. Here are just some of them:
• Vitamin B-6: Involved in over 100 cellular reactions throughout the body, vitamin B-6 is instrumental in keeping various bodily functions operating at their best. B-6 is needed to metabolize amino acids and glycogen and is also necessary for normal nervous system, hormone and red blood cell function. Vitamin B6 is fairly abundant in the diet and can be found in foods such as meat, poultry, bananas, fish, fortified cereal grains and cooked spinach.
• Vitamin B-12: Is needed for the synthesis of DNA, for red blood cell formation and for healthy nervous system function. It also helps maintain healthy red blood cells which deliver oxygen to the body and support normal energy levels. Vegetarians need to be sure they get enough B-12 because this vitamin is found mainly in animal products like chicken, beef, seafood, milk and eggs.
• Riboflavin: Also known as vitamin B-2, riboflavin is a basic building block for normal growth and development. It is needed for normal/regular energy production and also supports antioxidant activity throughout the body. Commonly found in a variety of foods, such as fortified cereals, milk, eggs, cooked salmon, beef, spinach and broccoli.
• Folic Acid: While it is true that folic acid is very important for women of child-bearing age, all people should ensure adequate folic acid intake through the diet. It is essential in the development of DNA and amino acid synthesis. Fortified foods such as breads and cereals are good dietary sources of folic acid. Other good sources are dark green leafy vegetables such as asparagus and spinach, as well as, liver, orange juice, beets, dates and avocados.
Fallieras says, "If you are not able to get your daily dose of these important B vitamins through food consumption alone, I'd recommend a supplement, like Nature Made's Super B-Complex with Folic Acid and Vitamin C. As a pharmacist, I know that getting the nutrients you need means taking the highest quality vitamins available in the right dosage. I like Nature Made because they have been the leading choice of pharmacists in many of the key vitamin and supplement segments since 2006, according to a ranking by Pharmacy Times."
Vitamin C: As the body's main water-soluble antioxidant, vitamin C has been found to fight against free radicals and guard the healthy cells of the body. It is active throughout the body, and is especially effective when taken in conjunction with vitamin E. Additionally, vitamin C is a building block for collagen (connective tissue), supports healthy immune function, and is essential for synthesizing compounds involved in the energy-producing pathways of the body.
Vitamin D: It plays a key role in the proper absorption of calcium for strong bones and teeth, and some research suggests vitamin D may support colon, breast, prostate, ovarian, heart and colorectal health. It's needed to help muscles move, help support healthy nerve function and supports a healthy immune system.
For most people, sunlight is the most common source of vitamin D because they eat few foods that naturally contain it, such as cod liver oil, oily fish (salmon, herring, and sardines in oil), egg yolks and fortified milk. However, where you live may affect the amount of sunshine you receive, especially in winter, and therefore, sun exposure alone is not adequate.
The current recommendation for vitamin D is 600 IU a day. Some scientists and vitamin D researchers are now recommending having your blood level checked and possibly increasing daily consumption to 1,000 IU or more per day. In addition to fortified foods, such as yogurt, cereals, milk and orange juice, and exposure to sunlight, supplements are an effective way of improving levels of vitamin D.
Vitamin E - This is a fat-soluble nutrient that helps protect the heart and helps protect body tissues from free radical attack. Vitamin E and vitamin C work as a strong antioxidant team, and taking them together enhances their effectiveness. It's found naturally in nuts and vegetable oils.
When choosing a supplement, it's important that you keep these things in mind:
• Talk to your physician or pharmacist. Talk to a health care professional about supplements, including dosage values for your individual needs.
• Look for the USP Verified Dietary Supplement mark. Seek brands that participate in third-party verification programs with organizations such as the United States Pharmacopeia (USP).
• Think twice about chasing the latest headline. Sound health advice is generally based on research over time, not a single study. Consider vitamins and minerals for overall health, and be wary of results claiming a quick fix or one study suggesting a certain result.
• Do your research. There are a number of resources available. Visit FamilyDoctor.org for credible, physician-reviewed information on health and wellness topics, including the role vitamins and supplements can play in a healthy, active and balanced lifestyle.
• Read the label and follow dosage instructions carefully. Follow the dosage instructions on the label. Look for any warning statements such as combining certain supplements with prescriptions or over-the-counter medicines. Be wary of claims that seem too good to be true.
December 16, 2011 5:14 pm
While winter isn’t what you think of when someone says “pool season,” there is no reason to let your regard for safety drop with the temperatures. The following tips, from the professionals at Hawaiian Pool Builders, will help you keep your pool and spa in top shape, and your family safe, all winter long.
1. Check all the straps around the perimeter of the pool. Straps should be tight and not tangled. If any straps are loose, tighten them up to ensure even tension. If these are not tightened, small children might be able to crawl under the cover. It would be next to impossible to see someone that was physically under the cover.
2. A pool or spa cover is an essential piece of safety equipment. Inspect the cover for rips or tears. With a few inches of snow on the cover a child OR adult could unexpectedly walk on the cover and exaggerate the tear, subsequently falling though.
3. Make sure all the breakers to your pool equipment are turned off from the main breaker panel. No need to worry about a child accidently turning on your pump with no water circulation.
4. Inspect fences surrounding the pool to ensure locks and latches are working properly. Though it’s winter, it’s important to be sure unsupervised children are not able to access the pool while playing in the back yard.
December 16, 2011 5:14 pm
Sales contract. Contract that contains the terms of the agreement between the buyer and seller for the sale of a particular parcel or parcels of real estate.