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What You Don’t Know About Your Monthly Payment Table Can Hurt You!

By: Ed Lathrop

In the world of finance, having all expenses accounted for means everything. Hidden expenses are constantly sneaking up behind the investor, businessperson and homeowner and biting him in the backside.

Knowing where every cent goes and having every expense accounted for is one of the keys to gaining wealth. One tool any real estate investor or homeowner can use to find out where his money is going is the monthly payment table, which is also known as an amortization table, schedule or spreadsheet.

What a monthly payment table says

In a monthly payment table, the mortgage payment is shown as two parts, or separate payments. One part is the principal paid. This amount of money goes directly toward the amount borrowed.

For instance, if a person borrows $100,000 and pays $1,000 toward principal, he will need to make 99 more principal payments of an equal amount to pay off the mortgage.

The other part of the payment the table shows the interest paid on that payment. In the early stages of a mortgage, this amount is usually far higher than the principal part of the payment. When a person pays interest, it is money he has lost.

Interest is time value of money

By looking at a monthly payment table, you can look ahead to the next payment after the one just paid. Here, you can see what the principal and interest parts on the next payment are and pay just the principal part of this payment.

By doing so, you’ll avoid having to ever pay the interest part, which would be due if you waited until the payment’s due date. This is one way where monthly payment tables can be very helpful to anyone who is looking to save, or even make money.

The interest part of the payment shows the time value of money. So, by not using the allotted time to make a payment, the borrower will avoid paying the time value of the amount due on the loan, which is the interest. This is very beneficial because sometimes the interest payments in the first year of a mortgage are 10 times what the principal payments are.

Pay a little, save a lot

Saving the interest part of a payment by paying the 1/10 as big principal part is an example of leverage. This is an important point because leverage is the key to wealth building.

Leverage is used when a property owner uses the rent he has received from a tenant to pay the mortgage on that property. In this case, if the price of the property being rented increases in value, it is the person paying the mortgage, not the person paying the rent who is the beneficiary.

Until someone looks at his mortgage payment, or amortization table, he has no idea where the money is going or how he can use the leverage small principal payments give him.

It is amazing to see the looks on people’s faces when they see their monthly payment table for the first time. People who, in many cases, are very smart and well versed in math are shocked when they see how much money goes toward interest in the early stages of their mortgages.

Knowledge is king

Being familiar with monthly payment tables can help borrowers save thousands, and sometimes even hundreds of thousands of dollars, because they will know how much leverage they will have when they make relatively small principal payments upfront.

For this reason, it is very important any potential borrower has a monthly payment table printed out for him right at the beginning of that mortgage’s term. This way, the borrower is awakened to the fact most of the mortgage payments will go toward interest.

They say ignorance is bliss. Because of this so many people, who don’t know where their mortgage payment money is going, pay without giving it a second thought. Those to do know however, usually work very hard to make upfront small principal payments and avoid paying larger amounts of money toward interest; which is simply wasted money.
Author Resource:-> Ed Lathrop is a successful real estate investor. He has developed EzCalculator, a mortgage calculator that shows you how to save $100,000 on your mortgage. Come visit this free site at free financial calculator. Also, find out how to get and use your amortization spreadsheet to make big money at amortization schedules free These sites are not owned by any lender, so no one will harass you for visiting!

Article From: RealEstateArticles4U.com

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Why Should One Chose The Foreclosure Business?

By: Ranju Kumar

Foreclosure is a process that is instigated when borrowers are not able to consistently pay back the required mortgage payments to the bank or organization.

As the value of the property is used to as a guarantee against nonpayment of the debt, the said property is sold so that the debt can be repaid. Unfortunately for the owner, you rarely get the full market value for the house when it is sold.

This is because it is priced for a quick sale, plus any would be buyer is likely to be aware that it has been subject to a foreclosure, and so they won’t offer as much as they might otherwise.

Why would you want to be involved in the foreclosure business?

Lets examine all the advantages:

• Leads: If you are in a Deed of Trust state, foreclosure notices are published in the newspapers.

If you are in a lis pendens state, you have to go to the County Recorders office to research the suits, where you can get new leads every day. They may also be published in newspapers.

• Equity: You will have equity available on every single deal that you do upfront.
• No money in the game: After you get a foreclosure, you can sell the contract or assign it, that is, wholesale it to someone else immediately.

• Credit is not applicable at times, when you need a hard money loan: This type of lender is not looking at your credit scores. They are only interested in the type of deal that you are presenting, that is, how good is the deal and how many cents on the dollar you are going to pay for the property.

• Low risk and potential for significant profits: With all the foreclosures out there, there is a very good chance, with a good marketing plan, for real estate success; you will reap some substantial profits.

The best way to gain experience in the field is probably to find someone in the industry who is experienced, respected and has been in the same position for a number of years and ask them for a mentor ship, either on a complimentary basis, or splitting profits from the work done, or any other mutually beneficial arrangement.

It will be up to the former foreclosure victims to locate a local company in the area or find one online that specializes in work that provides homeowners with real services. This is how one can learn about foreclosure and make money out of it.

Author Resource: Why operate a Foreclosure Business?

Article From RealEstateArticles4U.com

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Riverside Short Sale Realtor
Challenges That Face Real Estate Agents

By: Lance Thorington

The short sale is a way of selling a property facing foreclosure, and although it is not a legislated method, it has become a common business practice.

Essentially it is a way of selling a property when the home owner is experiencing extreme difficulty in paying their mortgage loan repayments and when there is little or no equity in the property.

Many investors are interested in purchasing property in a short sale, this is because they are able to bag themselves a bargain. Lenders allow mortgage holders to sell the property for as close to market value as possible, even if they owe more on the mortgage than the property is valued at.

This is a regular occurrence in the US with the massive amount of foreclosures available pushing the market values of properties even lower. Short sales and REO (Real Estate Owned) are presently making up over 40% of all real estate sales taking place in the US and more than this in exceptionally hard hit areas such as Florida and Southern California.

Both of these states have seen remarkable drops in the market values of properties in the past two years, and this is pushing many home owners out of their homes as they are no longer affordable. There is also no value left in the home for them if they sell it and there will be a shortfall owed to the mortgage lender if they sell. The lender is then able to pursue a default judgment for the home owner to pay any balance left outstanding on the mortgage after the short sale, although this is only applicable in some state.

The short sale has to take place with the permission of the lender, and only after the home owner has proved that they are in extreme circumstances. This is the reason why a realtor who are experienced in this process is required.

A win-win situation has to be created for all the parties involved in the deal and the bank want to get as much as they possibly can out of it.

If the home owner and realtor manage to pull off the short sale, the home owner will be in a far better circumstance than they would be if a foreclosure took place. This prospect’s incentive is for them to sell their distressed property at less than market value. They get out of paying a mortgage loan they can no longer afford and escape with their credit rating in tact.

This is invaluable because there is very little anyone can do in the US with a bad credit rating. It is recommended that a home owner who has undergone foreclosure, wait two years before applying for a bad credit home loan.

There are many challenge which face the short sale realtor, they really have to work hard for their money and it is being referred to in some real estate circles as the “Wild West”. However in the economic recession being experienced, it is necessary for them also to make a living, so they cannot pass up on these opportunities. House sales are down so they have to get whatever they can take

Author Resource:-> No challenge to big or small for Riverside Short Sale Realtor.

Article From RealEstateArticles4U.com

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Tax Deductions Help Recoup
Lost Revenue In Real Estate Investing

By: Christine OKelly

Everyone knows the government will always get their tax money one way or another. That doesn’t mean you have to automatically turn over a higher percentage of your real estate investing profits than the law requires.

With good property management, you may be able to be entitled to substantial income tax deductions that help to increase your profits. This article will help to identify some of these legitimate tax deductions and will show you how you can benefit from them.

The Home Office

Many people avoid taking a home office deduction, but if you carefully follow the guidelines provided by the IRS, this could be a big savings to you.

This would include a portion of:

• Utilities
• Furniture
• Office Equipment and Supplies
• Telephone expense

You may even able to deduct a portion of your real estate taxes.

The office area of your home should be dedicated exclusively to your real estate investing and property management activities. This means just because you have a computer in the den that you keep property management records on you can’t claim it as a home office if the den also has a television or other entertainment activates that a family would normally enjoy.

If you follow the IRS guidelines and you should have no problem.

Travel Expenses May Be Deductible

If you have real estate properties spread out over an area of any size, you most likely will have to travel to check on them. This is true, even if your real estate investments are all within your immediate local area.

A portion of your gas expense and travel allowance as established by the IRS is deductible. You will need to keep an accurate record and log your travel. This goes for everything that is associated with your properties, for example, a trip to the hardware store for a replacement faucet or lumberyard for a gate repair. If you have properties outside of your immediate area, a portion of travel expense as well as meals and accommodations may also be deductible.

Taking Care Of Business

In real estate investing, almost anything associated with the property can be deducted from the income produced.

Possible Real Estate Investment Deductions:

• Property management expenses
• Interest on the loan secured by the property
• Repairs that are made - although some major repairs or renovations may need to be spread out over a longer time period.
• Depreciation on the property.

The government allows you to depreciate a portion of your cost each year as an offset to your income. This will of course reduce your initial cost for tax purposes and will affect the capital gains taxes when you go to transfer or sell the property.

A good property management company can advise you in greater detail.

Insurance Coverage Is Important

You should always have adequate insurance coverage for all perils including fire, wind, and flood. If you have a mortgage on the property, the lender will require full coverage to protect their interest as well. Insurance is not cheap, but necessary. The premiums you pay are a direct expense associated with the property, thus count as a legal deduction just as your real estate taxes would count.

If you have several properties that require the employment of others, and you provide insurance coverage for them as well, this too can be a deductible expense.

Legal And Professional Fees

Real estate investing can be complicated and you’re not expected to know everything or to be an expert in every field. There will be times that you may have to hire an attorney or an accountant.

Legal And Professional Fees Deductions:

• Plumbers
• Electricians
• Painters
• Other trade professionals

A number of expenses are commonly associated with property management and real estate investing.

Become familiar with the ones that you can put to work for you by reducing your taxable income and then document them accordingly. If you don’t feel comfortable in deciding which expenses you’re entitled to, consult with a good property manager, accountant, or tax attorney.

Author Resource:-> Christine O’Kelly is an author for Chicago Beal Property, the property management experts. Beal Properties help those involved with real estate investing make the most of their investments by using their expertise gained through over 80 years of experience.

Article From RealEstateArticles4U.com

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Mortgage Questions to Ask Your Lender

By: Gerald Meyer

Buying and financing a home today can be overwhelming.

Here are some questions to ask your lender so that you can make informed decisions.

• Are both fixed-rate and adjustable mortgage loans available? What is the interest rate?
• How long can I “lock-in” the financing at the current interest rate?
• Is a float down lock available in case rates drop after I have locked in?
• What are the other fees a lender may charge me in conjunction with my loan?
• Are funds for a second mortgage available?

On Adjustable Rate Loans:

• How often will the interest rate be adjusted?
• Is there a maximum limit on each rate change?
• How often will the monthly payment be adjusted?
• Is there a ceiling on payment adjustments?
• Can the term of the loan be extended?
• What is the maximum rate that can be charged over the life of the loan?
• Is there any potential for negative amortization?
• Is there a pre-payment penalty clause?
• This involves extra charges for paying off the loan before maturity. About 80% of all loans in the United States are paid off early.
• What is the “grace” period? How late can a monthly payment be made before a late charge is assessed?
• What will happen if a payment is missed?
• If you sell your house, will the new buyer (if he/she qualifies) be able to assume your mortgage at the same interest rate?
• Do you have to pay “points” to get your new mortgage? Usually lenders charge points for the cost of giving you a mortgage loan. A “point” is 1% of the loan.
• Will the lender require mortgage insurance?
• Is the loan serviced locally or is the servicing sold?

Ask for a written “Good Faith Deposit”.

Author Resource: Leanna Meyer is a Realtor with Re/Max Cross Country and can help you find Lewisville, Flower Mound, Lantana and Dallas Texas Real Estate.

Article From RealEstateArticles4U.com

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How To Generate Thousands Of Dollars Per Year Investing In Mobile Homes

By: Kris Koonar

All of us, once in a while, tend to get stuck with a raw deal in real estate investments. While most of us merely have theories and philosophies of real estate investment, only a few have a logical understanding and experience of profitable real estate investment ideas.

Investing in Mobile Homes is a Great option because not only is it economical, but it also has other advantages.

A Fixer-Upper Mobile Home is an Economical Investment Option

You can live in a fixer-upper and repair it at the same time. An additional advantage of investing in a mobile home is that you do not need to pay real estate taxes, as you would for a fixed real estate property. Apart from insurance, you would not be burdened with any other major payments.

In order to give the mobile home the feel of a real home, you could spend a little on designing the interiors to suit your lifestyle. Even if you decide to be a little extravagant in furnishing your mobile home, the cost of refurbishing will still be a lot more manageable and viable than fixing up a fixed real estate property.

After a year or two, when you have saved all the money by not paying the taxes and interest that you would have for a fixed real estate property, you can re-invest it in another fixer-upper mobile home. Then rent the previous mobile home while you stay in the second fixer-upper.

Charge separately for the utilities and the lot rent if you want to generate more cash flow. This way you can earn a good return on your investment within the very first year of buying the second mobile home. You could use the rental income from the first mobile home to repair the second one, while you stay in it at the same time. If you keep repeating the process this way, you would end up generating a handsome amount of liquid cash.

In this manner, you would even get an insight and experience of real estate investments, although on a smaller scale. This repetitive process of buying and repairing a fixer-upper, and then renting it out, can prove to be very beneficial.

While you double the cash flow by carrying out a similar deal over and over, you are also earning a generous rental income by investing a meager amount of money. And if things don’t work out according to your expectations, you always have the option of selling the mobile homes.

If you wish to own a real estate property of your own, but do not have sufficient capital, then investing in a mobile home is the perfect solution for you.

Author Resource: Real Estate Investments are easy with Real Net USA’s process. Using little or even no money down you can own a Real Estate Investment.

Article From RealEstateArticles4U.com

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Investing In Mobile or Manufactured Housing
By: David Gass

Investing in mobile or manufactured housing is beneficial, because it provides you more cash flow.

This can be better explained with the help of an example. In a small town, the average cost of two-bedroom house is around $130,000 and you will get $800 a month as rent for it.

The cost of a mobile home will not be more than $45,000 and the probable amount of rent is $500 a month. Therefore, the increase in the amount of rent is not in proportion to the increase in the cost of the house. There is about a 200 percent increase in cost as compared to only a 60 percent increase in the rent.

What it indicates is that investing in low-income housing like mobile homes, run-down apartments and old houses can be a wise decision.

Risk And Management Problems Are The Price For Higher Returns
People often tend to ignore investing in low-income housing, because of the greater amount of risk and problems in managing such kind of houses.

This is true!

Whatever negative points they may have in their minds are not baseless. You may need to manage small repairs here and there. Sometimes you may receive the rent late.

However, you should not forget that this is the price you are paying to get higher returns. Had there been no possibility of getting higher returns, nobody would have recommended investing in low-income housing.

Tips on Buying
Investing in mobile or manufactured housing is ideal for generating a long-term cash flow. In fact, low-income housing is a very good asset capable of producing income for several reasons.

The very first reason is that mobile or manufactured homes are plentiful. Houses exist everywhere, whether it is a city, a town or the neighborhood.

The easy availability makes mobile or manufactured houses easy to buy. Getting discounts on buying is also possible because so many sellers want to sell the property due to problems.

If the house is well maintained, the average period of occupancy for a tenant is three to five years, while most of the other cash flow vehicles do not have this longer occupancy period.

Tips on Selling
Investing in low-income housing may fetch you 10 to 15 percent price premiums if you sell the property by agreeing for a sort of payment contract with the buyer.

By investing in low-income mobile or manufactured housing you are not putting your money in slums. These are starter homes, but the location is not always so great.

25 Percent To 40 Percent ROI
You should keep an eye on the auction sales such as tax, estate, and foreclosure sales for investing in low-income housing. There, it is possible to buy these foreclosed mobile or manufactured houses for $3,000 to $25,000. You may receive $350 to $500 a month by renting out these houses. In terms of return on investment, it may be possible to get average returns between 25 percent and 40 percent.

Author Resource: David Gass is President of Business Credit Services, Inc. His company publishes a free weekly e-newsletter on Small Business Consulting at their web site: www.smallbusinessconsulting.com.

Article From RealEstateArticles4U.com

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By: Omar Johnson

They may not be the most popular housing, but manufactured homes are certainly a form of affordable housing to be appreciated. Mobile homes these days are a far cry from the ones being produced several years back. They are stylish, large, and some are even luxurious.

While some real estate investors may be inclined to turn up their noses at manufactured homes, that doesn’t mean they aren’t good investments. More than 16 million people reside in mobile homes in the United States. That translates into 16 million reasons to consider investing in manufactured homes.

As with flipping houses, investors can flip mobile homes by purchasing low and selling high. The best way to do this is to sell on terms. You can also provide seller financing.

If you invest in a mobile home and sell it, you can gain profit by collecting on the interest from the financing. Mobile homes can also be fixed and flipped like a regular house. In fact, you may be able to make inexpensive renovations to a mobile home and turn a quicker profit then that of a house.

If you don’t want to invest in an actual mobile home, you can always purchase land to put the home on. Mobile home parks are very popular these days. By picking up a park or some land, you can rent the space for owners to park their mobile homes. If you have a mobile home park, your tenants tend to be more secure because they can’t legally move their home out of the park until it is paid for. This will keep them sticking around for a few years at least.

If you do opt to invest in a mobile home park, you have a great opportunity to increase the value of the park. This can be done by increasing the net income the park yields. In turn, the market value of the park goes up.

You can also capitalize by buying a run-down mobile home park and fixing it up. If this is the case, try to find a park with fewer tenants. Then remodel the park and actively seek new tenants whom you can charge a higher rate then your old tenants because you have increased the appearance of the park.

You can also flip mobile home parks by purchasing a park in poor condition and improving it then selling it to another real estate investor. The property will actually sell for a higher price even if the tenants are not paying more in rent because the park itself has increased in value and will have a higher income potential.

Remember, mobile homes and houses are almost not quite one in the same. Most of the rules that apply towards investing in houses apply to mobile homes. You don’t have to live in a mobile home, you don’t even need to like them, to make a profit from them.

Mobile homes are just another form of investment property. They are a legitimate means of investment because Americans are living in them.

Author Resource: Omar Johnson is a successful Real Estate Investor and author of the home study course “The Real Estate Investor’s Guide To Finding The Motivated Seller” for more info: www.findingthemotivatedsellers.com

Article From RealEstateArticles4U.com

Technorati Tags: Manufactured home investing, Mobile Home Investing, Real estate investing

By: James Monahan

What is FHA?

FHA or Federal Housing Administration is a branch of HUD or Housing and Urban Development that works through local mortgage lending agencies to give Federal mortgage and loan insurance for those who wish to own a home or do home improvement projects.

It is a government owned corporation that was established under the National Housing Act of 1934 to promote better housing standards and conditions.

FHA aids first-time buyers and those who would probably not be able to pay the required down payment for conventional loans through insuring mortgage to private lenders. It also ensures loans for buying mobile or manufactured homes.

It also assists in providing low-cost houses for rent through insuring loans land developers and builders who make or improve apartments and other multifamily housing developments.

Generally, FHA aims to make available sufficient home financing system by providing insurance mortgages and to make the mortgage market as stable as possible.

FHA helped mortgage insurance products that started to make the nation’s rate of home ownership to spike to an all time high of 66% on the third quarter of 1997. One of these products is the long time amortizing loan.

The following are the programs conducted by FHA to achieve its goals:

     a. Streamline refinancing for FHA mortgages

     b. Down payment gifts

This is one very popular financing aspect from FHA. It allows you to receive your down payment as a gift, as long as it’s from a relative.

     c. FHA bridal registry account

     d. Bankruptcy and foreclosure

FHA must have the most lenient rules when it comes to bankruptcy, but it is still required that an applicant has a valid reason and has his credit re-established.

     e. Refunds on FHA loans

If one ever paid off a home loan supported by FHA, one may have money owed to that person.

     f. Single family mortgage insurance

Aims to provide mortgage insurance for a person to buy or refinance a principal residence.

     g. Single family rehab mortgage program

It provides mortgage insurance for a person to refinance or buy a principal residence or an investment property and to accomplish improvement of an existing 1 to 4 unit home.

     h. Property improvement loan insurance.

Another loan program from FHA which includes the 203(k) rehab program.

     i. Multi family mortgage insurance program

It is an insurance program for an existing 5 or more units home.

FHA keeps up with the government’s goal to keep on reinventing, automating, and streamlining the process of home ownership. This is made evident by the following data:

Several single family mortgage insurance programs, i.e., the section 203 (k) purchase rehabilitation project that has been greatly improved. It was given so much attention that trainings were conducted for realtors, lenders, and non-profit organizations country-wide to make the program work for them as well as with the consumers.

FHA relies on automation since it provides equal treatment for all the applicants and quicker processing.

With the manufactured housing area, FHA ensured that all manufactured homes comply with the required improved safety standards.

FHA utilizes the Internet in executing its business procedures. FHA Connection is made available online to enable lenders to submit information regarding their insurance endorsements. Through the HUD/FHA homepage, homeowners can easily access data concerning premium refunds on mortgage insurance.

Author Resource: James Monahan is the owner and Senior Editor of FHACentral.com and writes expert articles about FHAloans.

Article From RealEstateArticles4U.com

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Profiting From Mobile Home Parks
By: Kris Koonar

Ways to Profit from a Mobile Home Park or Community

A mobile home without a doubt is the most efficient and feasible housing ever created. But nowadays mobile homes have become less mobile.

These houses are comfortable, large and very luxurious and this is the reason that more than 16 million Americans have chosen to live in mobile homes. Those who invest in the manufactured homes look out for profits and it is not unusual that 25% to 100% profit every year is on record. We enjoy two out of the four sources of profits when we buy and sell mobile homes.

Buy low, Sell high: The best way to earn initial net profit is by buying low and selling high and you can do this by buying the mobile home for cash and then selling it on pre-set terms. However, to do this you need an extra amount of cash at hand and an easy way to get money is to take a loan.

Considering the amount of initial net profit you earn on the sale of mobile homes, you can easily pay the moneylenders a high rate of interest, as much as 11-15%. Once you demonstrate your repayment capability to the moneylenders and convince them that the loan is safe, they are certain to bite the bait.

Read the rest of the article at:
Investing In Mobile Home parks

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