Different Loan Types Explained

Purchasing your first home can be difficult to navigate, especially if you are new to the real estate world. All of the brand new lingo getting thrown at you can be super overwhelming, so if you’re feeling confused, you’re not alone! However, the good news is that even though this process may seem complicated, it’s truly very simple! Unfortunately, if you don’t have cash outright to buy an entire house (most people don’t, especially for their first one), you have to borrow the funds from a bank with interest. Your real estate agent may recommend a lender, or you can pick your own if you like to do your own research. Either way, you should expect the same process.

What To Expect When Talking to a Loan Officer

The first question your personal or suggested loan officer may ask: “What type of loan do you want?”

Your real estate agent, loan officer, or lender may suggest one that they recommend. Or, they may ask more questions about your situation to determine the right choice. They might throw out words like conventional, 10-31 Exchange, investment, FHA, fixed rate, adjustable rate, and more. If you’re feeling confused, let’s help break it down to terms that actually make sense.

Types Of Loans

  • Conventional: This popular type of home loan isn’t insured or guaranteed by any government entity. This separates it from the following types of loans.
  • FHA: The Federal Housing Administration (FHA) mortgage insurance program is managed by the Department of Housing and Urban Development (HUD), a federal government entity. Fortunately, these loans are available to all types of borrowers, contrary to popular belief. Check out our guide on FHA loans for more details on this type of loan.
  • VA: The U.S. Department of Veterans Affairs (VA) offers a loan program to military service members and their families. Similar to the FHA program, these types of mortgages are guaranteed by the federal government. This means the VA will reimburse the lender for any losses that may result from borrower default. The primary advantage of this program (and it’s a big one) is that borrowers can receive 100% financing for the purchase of a home. That means no down payment whatsoever. Thank you for your service!
  • USDA: The United States Department of Agriculture (USDA) offers a loan program for rural borrowers who meet certain income requirements. The program is managed by the Rural Housing Service (RHS), which is part of the Department of Agriculture. This type of mortgage loan is offered to “rural residents who have a steady, low or modest income, and yet are unable to obtain adequate housing through conventional financing.” However, the requirements vary by county. We recommend meeting with your local lender for more information on a USDA Loan.

Sub Types

  • Fixed-rate: Fixed-Rate loans have the same interest rate for the entire repayment term. This means you can expect your mortgage rate to stay the same forever. Well, at least until your home is paid off completely. It’ll never change, making budgeting easier. Simple!
  • Adjustable-rate: These types of loans will adjust every once in a while, usually every year after an initial fixed time period. This is also known as a hybrid loan, since there is a fixed rate before switching to an adjustable rate. For example, a 5/1 ARM loan has a fixed rate for the first five years. After this, it will adjust every one year, or annually.

Conclusion

A great real estate agent and loan officer will make the process of buying a house simple. They can explain the different types of loans and help you find the right one for you. However, our experts here at CDA Real Estate Investment recommend researching loan types on your own as well. This helps guarantee that you choose the perfect loan type for you.

Read More

Things Every Real Estate Investor Should Know

If you wish to invest your money, a stable option is real estate investing. Keep in mind that the location is key; if you find the perfect property, you will gain a profit. It is true what they say about location, location, location! Our experts here at CDA Real Estate Investment & Property Management are well-versed in this topic and are here to help you grow your profit. Read these tips to learn more.

Advertise

Marketing will be crucial to your success. Marketing is what generates your leads. Without solid leads, you are not going to find good deals on properties. Therefore, if something is not working in your investment plan, turn to your marketing strategy first to see what is going on and what can be adjusted.

Be Punctual

Always be on time when you set up a meeting with a potential client. This will indicate that you mean business and will show no disrespect to your potential customer. Coming to a meeting late shows that you are unorganized and do not care about your customers, which will cause you to lose them.

Choose Properties Wisely

Be careful about choosing properties with strange room layouts. You may personally find it interesting, but many people don’t like these strangely developed properties. They can be extremely hard sells. Picking one up without a potential buyer in mind can lead to it sitting in your inventory for months, if not years.

Be Cautious

If you purchase a property and need to make repairs, be wary of any contractors who ask for money in advance. You should not have to pay before the work is done, and if you do, you run the risk of getting ripped off. At the very least, never pay the full amount ahead of time.

Do Your Homework

If you are looking to buy a rental property from a seller, ask to see his Schedule E tax form. That particular document will honestly tell you what kind of cash flow you can expect from the property in question. Crunching the numbers tells you all you need to know about whether or not to buy.

Location, location, location

Don’t buy your real estate in a neighborhood that’s bad. Pay close attention to where your property is located. Do your homework before you make a decision. Sometimes a good deal is too good to be true. This can lead to problems down the road when trying to sell the property.

Investing is a good option instead of saving. There are a number of interesting options available, and one of the best is real estate. Keep this advice in mind, and use it as needed so that your experiences with real estate are positive.

Read More

Home Mortgage Tips from the Experts

Planning to get a mortgage starts with a great deal of research. You need to understand your local laws, how to find a lender and more. Luckily, you are in the right place! Our experts here at CDA Real Estate Investment & Property Management are happy to provide you with great advice which you can’t get a new mortgage without.

Do Your Homework

Know your credit score before beginning to shop for a home mortgage. If your credit score is low, it can negatively affect the interest rate offered. By understanding your credit score, you can help ensure that you get a fair interest rate. Most lenders require a credit score of at least 680 for approval.

Consider All Aspects

Remember that the interest rate isn’t the most important part of a mortgage. You also have to think about closing costs, points and other incidentals. There are different kinds of loans as well. That is why you have to find out as much as you can about what you’re eligible for.

Consider unexpected expenses when you decide on the monthly mortgage payment that you can afford. It is not always a good idea to borrow the maximum that the lender will allow if your payment will stretch your budget to the limit and unexpected bills would leave you unable to make your payment.

Be Cautious

Watch out for banks offering a “no cost” mortgage loan. There is really no such thing as “no cost”. The closing costs with “no cost” mortgages is rolled into the mortgage loan instead of being due upfront. This means that you will be paying interest on the closing costs.

Tell the Truth

Avoid fudging the numbers on your loan application. It is not unusual for people to consider exaggerating their salary and other sources of income to qualify for a larger home loan. Unfortunately, this is considered fraud. You can actually be criminally prosecuted, even though it doesn’t seem like a big deal.

Don’t Give Up

What do you do if the appraisal does not reflect the sales price? There are limited options; however, don’t give up hope. You can dispute the appraisal and ask for a second opinion; however, you will need to pay for the appraisal out of your pocket at the time of the appraisal.

 

Since you have read all of the advice in this article, you should feel confident in taking the next steps towards securing your mortgage. All you have to do is use each tip to its fullest extent. Soon enough, you’ll have the mortgage you need and your finances will be back on track.

Read More

More Tips for Real Estate Investing

Real estate investing could be complicated for a lot of people, but it does not have to be like that at all. If you are a seasoned investor or someone new to the market, there is something for everyone in the following article. Continue to read and learn how you can invest in real estate successfully. After reading, check out some of our other real estate investment tips!

Punctuality is Everything: Always be on time when you set up a meeting with a potential client. This will indicate that you mean business and will show no disrespect to your potential customer. Coming to a meeting late shows that you are unorganized and do not care about your customers, which will cause you to lose them.

Find Your Niche: Be sure to stay in a comfortable niche. If you really focus on a specific segment it’s much easier to be successful with investing. Whether you are flipping houses, working with starters or dealing with properties with low down payments, stick to what you know for success.

Think Long Term: Keep two things in mind. First, do not pay too much for the ground. Do not pay too much for the business itself. Objectively assess the land value and the anticipated profits from the business that will be conducted upon it. It is important that both of these numbers provide a good deal for you.

Stay Connected: You can join real estate groups online, and you can also follow blogs from prominent investors in the market. By doing this, you will learn important things to help you with your strategy. You might even have the opportunity to talk with someone on a personal basis.

Do Your Research: Pick properties that you’re confident will raise in value. Properties near businesses or waterfronts are likely to increase in value. Consider the long-term costs and think about the possibilities.

Network: Find a contractor to work with that you can get along with. There’s no reason to get someone to help you with fixing up the real estate you invest in if you don’t like how they operate. You can save yourself a lot of frustration if you just find someone that you know will work well with you.

Prep Work: Always remember that you should call all utility and cable companies to mark their lines that lay underground before you begin any landscaping or digging on the property. It may well be illegal for you to dig, and it can be harmful to the property also.

People make money investing in real estate, but they lose lots of money, too. Now that you’ve read this, you should boost your chances of success. Do not have fear when you are going into a deal. Share this advice with others to help them benefit from it, too.

Read More

Benefits of Selling Your Home in the Winter

If the weather outside is frightful, that doesn’t mean the real estate market is! If you’ve been scared away from selling your home in the winter by people claiming it’s a bad idea, it’s time to reconsider. In the past three winters, home sales have increased an average of 4.5% during November-January. Although there were less homes on the market, buyers were still buying at an increased rate. There is no doubt that this will continue this winter as well. Selling in the winter actually has it’s own advantages. Experienced real estate agents are aware of the advantages and downfalls of selling in different seasons. Let’s dive into some benefits of selling your home in the winter.

 

The Internet Has No Winter

There’s no doubt that the real estate game has changed drastically since the development of instant internet access to property listings. While it is known that spring is the most popular buying season, that doesn’t mean it’s the only buying season. Serious buyers are always looking, no matter the weather. Modern home buyers do most of their home searches online. This is especially true during the winter, when buyers are less likely to brave the winter roads just to drive to the local real estate office. This means that your photos and online listing must be attention-catching and professional, as buyers are probably going through many pages of them.

 

Less Competition

When spring comes, there’s always a massive spike in the amount of sellers on the market. But in the winter, you practically have the market to yourself, and less competition means more attention for your property. Since 2014, available homes have fallen an average of 15% from November to December – that means 15% LESS competition if you list your home during the winter. Shoppers have fewer properties to choose from, and this means you will sell your house faster and for a better price.

 

More Motivation

Most people don’t want to move in freezing weather, and that’s a fact. Winter is time to cozy up next to a fire and drink hot cocoa, not hire a moving company. However, if a buyer is trudging through our North Idaho snow to look at your home, they must be serious. Winter buyers are usually working against a deadline, and this makes them more motivated to find a new home and fast. Whether it’s an expiring lease or relocation, a winter buyer is a motivated buyer. You’ll likely have less showings, but the applicants will be more qualified and more serious about buying. This is truly ideal for a seller, as no time is wasted.

 

Many buyers plan to list their home in the spring because that’s what they are told to do. However, an experienced real estate agent will be able to advise you in any season. Contrary to popular belief, winter is an excellent time to sell. You can get top dollar for your home due to there being less competition, and your buyers will be motivated to complete the process fast. After all, the new homeowners will want to settle in next to their new fireplace as quickly as possible.

Read More