August « 2010 « Entre Realty

August, 2010

Realty — No Comments
27
Aug 10

Housing Finance in Islamic Banks

Diminishing Musyarakah

Diminishing musyarakah or musyarakah mutanaiqisah is another form of musyarakah which was developed recently by the scholars. It is a musyarakah in which the Islamic bank agrees to transfer gradually to the other partner its (the Islamic bank’s) share in the musyarakah, so that the Islamic bank’s share declines and the other partner’s share increases until the latter becomes the sole proprietor of the venture. According to this concept, a financier and his client participate either in the joint ownership of a property or an equipment, or in a joint commercial enterprise. The share of the financier is further divided into a number of units and it is understood that the client will purchase the units of the share of the financier one by one periodically, thus increasing his own share until all the units of the financier are purchased by him so as to make him the sole owner of the property or the commercial enterprise.

Diminishing musyarakah has taken different forms in different transactions. Some examples are given below:

A. It has been used mostly in house financing. The client wants to purchase a house for which he does not have adequate funds. He approaches the financier who agrees to participate with him in purchasing the required house. 20 per cent of the price is paid by the client and 80 per cent of the price by the financier. Thus the financier owns 80 per cent of the house while the client owns 20 per cent. After purchasing the property jointly, the client uses the house for his residential requirement and pays rent to the joint owner for using their ownership in the property.

At the same time, the share of the financier is further divided in eight equal units, each unit representing 10 per cent ownership of the house. The client promises to the financier that he will purchase one unit after three months. Accordingly, after the first term of three months, he purchases one unit of the share of the financier by paying 1/10th of the price of the house.

It reduces the share of the financier from 80 per cent to 70 per cent. Hence, the rent payable to the financier is also reduced to that extent. At the end of the second term, he purchases another unit increasing his share in the property to 40 per cent and reducing the share of the financier to 60 per cent and consequently reducing the rent by that proportion.

This process goes on in the same fashion until after the end of two years, the client purchases the whole share of the financier reducing the share of the financier to ‘zero’ and increasing his own share to 100 per cent. This arrangement, among other forms of diminishing partnership, allows the financier to claim rent according to his proportion of ownership in the property and at the same time allows him periodical returns of a part of his principal through purchases of the units of his share. B. ‘A’ wants to purchase a taxi to use it for offering transport services to passengers and to earn income through fares received from them, but he is short of funds. ‘B’ agrees to participate in the purchase of the taxi. Therefore, both of them purchase a taxi jointly; 80 per cent of the price is paid by ‘B’ and 20 per cent is paid by ‘A’. After the taxi is purchased, it is employed to provide transport the passengers whereby the net income of 1000 ringgit is earned on a daily basis. Since ‘B’ has 80 per cent share in the taxi it is agreed that 80 per cent of the fare will be given to him and the remaining 20 per cent will be retained by ‘A’ who has a 20 per cent share in the taxi. It means that 800 ringgit is earned by ‘B’ and 200 ringgit by ‘A’ on a daily basis. At the same time the share of ‘B’ is further divided into eight units. After three months ‘A’ purchases one unit from the share of ‘B’. Consequently the share of ‘B’ is reduced to 70 per cent and the share of ‘A’ is increased to 30 per cent, i.e. from that date ‘A’ will be entitled to 300 ringgit from the daily income of the taxi and ‘B’ will earn 700 ringgit. This process will go on until after the expiry of two years, whereby the whole taxi will be owned by ‘A’ and ‘B’ will take back his original investment along with income distributed to him as aforesaid.

Both the Buyer and the Bank will each contribute towards the purchase of the home. For example, the Bank may contribute 90% and the Buyer 10% of the purchase price. Over a period of up to 25 years, the Buyer will make monthly purchase installments through which the Bank will sell its share (90%) of the home to buyer. With each payment installment, the Bank’s share in the property diminishes while the Buyer’s share correspondingly increases. While the purchase installments are being made, the Bank will charge the Buyer rent for the use of its share of the property, the rent being calculated according to the respective number of shares owned.

Many see this as little different from a conventional mortgage, because, under both methods, monthly payments are made which may be similar in amount. However, unlike a conventional mortgage, where money is lent to help with the purchase of a property, the Bank makes its profit through the property’s physical use via buyer occupation as a tenant. This is one of the fundamentals of Islamic finance whereby you can charge for the use of something physical, like a property, but you cannot charge for the use of money, because this is interest. The relationship between buyer and the Bank is also quite different.

Realty — No Comments
24
Aug 10

Get a Mortgage Loan From a Bank

Choose a bank that offers low interest rate mortgages. Some of your current financial service providers may lend money for buying or refinancing a home. Banks want to extend loans, financial products and services to consumers, as well as small businesses within their community. A bank that provides exceptional service and is in close proximity to your home or place of employment may obtain your request for a mortgage.

Step 1.

Evaluate your banking relationships where you currently have a savings or checking account. Your personal banker can help you obtain a mortgage loan.

Step 2.

Consider getting a mortgage from the credit union that is associated with your employer. Many people utilize banking services and member discounts that offered by credit unions. Some benefits include travel discounts, auto buying services and preferred loan rates.

Step 3.

Inquire about mortgage programs with the bank that financed your auto loan. Banks that finance auto loans such as GMAC, Chase and Citibank may fund your request for a mortgage loan.

Step 4.

Contact the company that insures your home or cars, such as Nationwide Bank or State Farm Bank for a mortgage loan.

Step 5.

Visit the Bank Rate website to view a list of banks that provide mortgage loans. Choose a bank based on the interest rate and points offered for mortgage loans.

References:

Fox Business: Bank-Shopping?

http://www.foxbusiness.com/personal-finance/2010/05/25/bank-shopping-heres-choose-1144297493/

Smart Money: Choosing A Bank

http://www.smsmallbiz.com/bestpractices/Starting_Up_Choosing_A_Bank.html

Resources:

Nationwide Bank: Mortgage Loans

http://www.nationwide.com/bank-mortgage.jsp

State Farm Bank: Home Mortgage Loans

http://www.statefarm.com/bank/loans/mortgage/mortgage.asp

Bank Rate: Compare Mortgage Rates In Your Area

http://www.bankrate.com/funnel/mortgages/?prods=1&points=&loan=165000&perc=20&ic_id=CR_searchMortgage_default_30yearfixed_V1

Realty — No Comments
23
Aug 10

Tips For Buying Unfinished Homes

You may also be able to buy a larger foundation size as well, which you can easily add on to and save money in the process.

Normally, unfinished starter homes leave the upstairs area unfinished. The question here, is just how much equity you want to put into an unfinished area. Sometimes though, an unfinished home may leave the roofing, framing, plumbing, or electrical aspects unfinished. Before you make a purchase, you should always decide how much money you have to finish what needs to be finished.

If the home you are looking at has plans for a garage, you can save thousands if you decide not to go with the garage. On the other hand, if there is another attached room that is planned to go onto the house, you can save just as much if you decide to forgo it.

There are always ways that you can save money just by looking at the plans. Unfinished homes may have other planned on additions as well, in which you can save a lot of money just by leaving them out.

The is something that you should always keep in mind. When builders acquire a piece of property that they plan to build a home on, they will do everything they can do make as much money as possible on their homes. You might be able to get them to agree to some of these ideas, although they probably won’t agree to all of them. Building homes can be a very profitable business – which is why most companies like to build their homes exactly as the plans call for.

When looking at unfinished homes, you also need to look at what banks are willing to accept. If you are planning to get a mortgage, most banks will need to ensure that the home is up to local codes and in living condition. What this means, is that there will need to be a living room, bedroom, and other rooms finished. If the home is lacking quite a bit in terms of being unfinished, most banks won’t give you a mortgage.

Most banks are also known to turn down unfinished home mortgages that they feel will have trouble selling in the event that you default. Normally, the entire downstairs area will need to be finished, along with most of the landscaping.

You might be able to do some of it yourself and save money, although in most cases the home builder will need to do a majority of the topsoil and grass just to satisfy the bank. Banks have strict requirements when it comes to unfinished homes, which is why you should always check with your bank before you invest in an unfinished home.

As most of us already know, buying an unfinished home provides an excellent way to get into the housing market and get your very own home. Unfinished homes also allow potential buyers the chance to grow into their home along with their family.

If you are interested in saving money, you should be sure to talk to the builder. This way, you can go over the plans and decide what doesn’t need to be there. In most cases you can save a lot of money and still get a home that will provide years and years of memories for yourself and your entire family.

Realty — No Comments
17
Aug 10

Ways To Buy A Short Sale Property

When you are in the market for buying a house, you may come across various short sale options. A short sale is where the residence goes into foreclosure with nearly no equity built up, frequently meaning that the seller owes more than the house is worth. In many instances, lenders who have these homes are prepared to just accept less than what the complete amount is with a purpose to get out from under the home rapidly.

It is unhappy to think that someone who has spent so much money and time investing in their residence finally ends up having to sell it as a result of they can’t make the payments, and that the property is valued lower than they paid for it, however this can be advantageous for you as a buyer. The true drawback here is that the method for actually obtaining these properties can be a daunting task.

One of many problems is finding a banking officer who can really settle for a reduced offer. The real department for these short sales is called the ‘loss mitigation division,’ although each banking and lending institution could call it by completely different names. You need to be patient, and anticipate to be put on hold or transferred from division to division until you discover the appropriate person.

Now from the attitude of the bank, a short sale can eradicate many of the issues involved with the process of foreclosures. These can include lawyer’s fees, delays from bankruptcies, problems with getting the occupant out, as well as damage to the house. These are just a number of the costs and issues associated with the process. The concept with a short sale on your behalf as an investor should be to try convincing the lending company that’s selling off the property at a reduction is a much wiser resolution than having to wait, and pay all of these further prices, on top of the particular price of the investment property.

As a person eager to invest in short sale homes, you will have the accountability to make some sort of deal with the original owner, then take this information to the lender. The bank will also need to know exactly how much the home is worth, and can hire a real property agent to find this data. That is called the BPO, or Brokers’ Value Opinion. You can too hire your individual appraiser, or present data on the values of different houses in the area. In addition, at this point you need to provide as much destructive data as possible, as a way to persuade the bank that it is in their best interest to let the house go at a discounted price. These can take account of damages to the actual residence, what the area is like, and the poor financial system in the area. You need to get contractor proposals for any repairs, and since you want to express the costs involved, you wish to present them the top bids.

The next step in the process is where the bank checks all of the background information about the current borrower. The borrower has to prove to the lender that they are not able to afford to make their payments. This can come from notices that they’ve been fired or laid off, with no other opportunities available to them. They could also submit a ‘hardship’ letter, where they disclose their story about what happened in their life that resulted in their incapacity to pay. This too generally is a lengthy process, with much data being bounced back and forth between the lending institution and the original owner.

The lender may even need to see the selling contract between you and the original borrower. That is so the lender can make sure that the contract only covers the price of the sale, and that the resident isn’t strolling away with any capital. Normally this means that the buyer is taking all the duty for the deal, and that the net cash solely insures the banks expenses. In addition, you could have to come up with a HUD 1 statement, which can be troublesome to obtain because the escrow companies don’t like to supply these reports ahead of time.

Now while the method could be considerably lengthy, in the long term you might come out ahead, paying less than what the home is actually valued, saving you a bunch of cash.

Ken Schmidt is a West USA realtor from the Scottsdale region of Phoenix and specializes in Scottsdale real-estate, golf developments and investment property.

Realty — No Comments
17
Aug 10

What is Strategic Foreclosure

Jingle mail, strategic foreclosure, and walking away are just a few new terms for a growing trend in the American real estate market. Life happens. There are many reasons why people face foreclosure today. Job losses, medical expenses, emergencies, and a mountain full of debt can cause people to get in over their head. Perhaps they bought a house too big for their pocketbook. They may have decided to do an adjustable rate mortgage and can no longer afford the payments. The amount of foreclosures in this country has grown at a rapid rate.

So, what is strategic foreclosure? Strategic foreclosure is when you know the inevitable is going to happen so you decide to take advantage of the situation. Foreclosure is going to happen. You know it. So you decide to drag it out and collect a few months of mortgage payments. Perhaps you begin negotiations with the bank. You may start the process of bankruptcy to stall foreclosure proceedings. Once you have banked that money, you abandon the property before a foreclosure can mar your credit score.

There are a few reasons why people will do this. Some people will use it as a down payment on another house to try and beat the system. Foreclosure can affect your ability to get another mortgage for years to come. If they get a mortgage before foreclosure this becomes a non issue.

Others are just looking to be able to rent a new place before their credit is trashed. Many apartment complexes and landlords are now running background checks before a lease can be signed. If a foreclosure shows up, it could hinder your ability to get a mortgage.

Once they have abandoned the property they mail the keys to the mortgage company. This is why the term jingle mail was created. Some have even gone as far as to trash the home or strip it bare of everything of value before leaving.

There are several websites available now that will help you walk away from your home. A quick search on Google shows a plethora of information on foreclosures as well as stall tactics and methods to drag out the foreclosure process.

Foreclosure is becoming a more common occurrence these days. It’s more in the limelight and a large amount of people can say they know someone who has foreclosed on their house. I’m not saying it’s right. I’m just saying it happens.

Realty — No Comments
10
Aug 10

Sarasota Foreclosures – 4 Strategies For Avoiding Foreclosure!

4 “Options HELP Homeowners Avoid Foreclosure – Real Foreclosure Defense!

Foreclosure prevention offers 4 choices, each depending on a property owner’s unique situation.

No matter what you might hear, avoiding foreclosure is NOT a one-size-fits-all solution.

Every property owner’s situation is unique:

1. Some property owners want to try to save the house.
2. Other property owners want to unload the house.
3. Some property owners clearly suffer documented (financial) hardship.
4. Other property owners clearly do NOT suffer documented (financial) hardship.
5. Some property owners have one mortgage…on which they are current.
6. Other property owners have 2 or more mortgages on which they’re many months in default…an HOA/condo lien…a code enforcement lien…on a funky property with scattered comps.

With just 6 examples, do you see what I mean?

No one-size-fits-all solution exists.

Warning: Florida is what is called a RECOURSE state. What this means to you is that losing a home to foreclosure is NOT the worst that can happen to you. Getting rid of the noose around your neck is your ultimate objective. In fact, some people actually walk away, simply to lose the noose. What they and you (probably) don’t know is that losing the property does NOT lose the debt obligation!

Discover the 4 most popular options for avoiding foreclosure and WHY you (or anyone you know in a similar situation) MUST NOT walk away from a house or allow a house to go into foreclosure.

FORECLOSURE IS WORSE THAN LOSING A HOME!

Let’s get something out of the way: in Florida (a recourse state), a CREDITOR (bank for instance) legally can repossess your house AND demand payment for deficiency.

Questions for you:

1. What is YOUR state’s foreclosure laws?
2. Are you in a judicial foreclosure state?
3. Are you in a RECOURSE state?

What this means is that if you walk away and/or the bank forecloses on you, the bank eventually will sell the house.

Let’s say you owe 0,000. The house is worth 0,000 (see below what happens after you walk away from the house). The bank adds another ,000 in legal fees & all other fees/penalties to push your debt obligation to 0,000.

Bank (debt owner) unloads your house for BELOW market value at ,000 just to get rid of it quickly. In fact, when you walked away from (or abandoned) the house months earlier, you didn’t know thieves broke in to the house and stripped it down, stealing everything inside AND outside the house including but limited to:

1. AC units – both compressor & air handler
2. Pool equipment
3. Pool cage – shredded to pieces.
4. Kitchen appliances – gone.
5. Kitchen cabinets, top and bottom – gone.
6. All copper plumbing lines in house – gone! Yes, it does happen.
7. All bathroom fixtures – gone!
8. Swiss cheese drywall – vandals punched holes in drywall at every inch of house.

I could go on and on…but you get the point.

Bank foreclosures, get JUDGMENT against you. In Florida, a judgment creditor has up to 20 years to chase you down for satisfaction of judgment.

* Judgment creditor can get a garnishment order against you – and garnish your wages.
* Judgment creditor can seek and receive a bank levying order – and empty your bank account(s).

Bottom Line – You CAN lose your home (and) be on the hook years later for 0,000 debt obligation!

So, what 4 choices exist for property owners?

1. Loan modification — Mortgage debt owner modifies the terms of the property owner’s mortgage to make the payment affordable. This modification may or may not involve principal reduction;

2. Short refinance — Property owners with more than one mortgage and the minimum credit scores to qualify to refinance both mortgages into one mortgage with a better payment and interest rate might qualify for short refinance;

3. Short sale — For property owners who don’t want to keep the home and/or can’t qualify for loan modification or refinance, short sale (hopefully) allows the property owner to sell the house for today’s value and walk away with ZERO deficiency owed – FULL PAYOFF AND LOAN SATISFACTION. That is the objective of short sale. Whether or not that happens depends on the property owner’s true financial condition. By the way, a short sale simply is a sale where the mortgage debt owner allows the house to sell for LESS than what the borrower owes;

4. Bankruptcy — Some property owners never consider short sale when they can’t afford a house. They believe their only option to get our from under a house is bankruptcy. What you need to realize is the bankruptcy attorney with whom you consult doesn’t get paid to advise you NOT to file bankruptcy. Therefore, YOU must know your options. If you have overwhelming debt in addition to a house where the “bank” or “banks” will not approve short sale, you might be a candidate for bankruptcy. If you want to keep the house, some bankruptcy attorneys advise filing bankruptcy to discharge any 2nd mortgage and to stop the bank from foreclosing as the bankruptcy judge forces the bank to modify their mortgage.

To choose the best strategy for you, talk with your realtor, real estate attorney AND your tax professional. Clearly, I am NOT an attorney and I don’t pretend to be. I’ve sat through many (many) meeting with customers and their attorneys. In no way should you think there’s a one-size-fits-all solution for keeping or getting out from a house.

Sarasota foreclosures always get me thinking about what happened (or didn’t happen) to cause foreclosure. Clearly, foreclosure is not just a Sarasota real estate issue. This is nationwide! If you or someone you know wants to buy or sell a house in or around Sarasota, PLEASE call me now to discuss your options. Should you ask me, I gladly will refer you to a VERY INFORMED foreclosure defense attorney. Please scroll down to leave a comment, share an experience or ask a question. What foreclosure situation has a friend of yours encountered?

Realty — No Comments
7
Aug 10

Foreclosure Loans Are Best Suitable All Types of Real Estate Investors

There are thousand and one professions in these days and none is satisfying its practitioners to the fullest. There is a room for improvement in every person’s life, and one needs to assess what is best for him. Actually it is a little exaggerated statement as the number of professions in modern days has increased from the above mentioned level. If you feel a little bit of understanding for Real Estate Investment then it is surely going to be your next choice. You can easily get Foreclosure Loans from different Private Money Lenders who are all interested in making careers of their clients. There are so many things in life that you have not enjoyed till yet, and you can get all luxuries in next few years for you and your family.

Foreclosure Loans are really going to help you out in participating in actual auction process, and that is in real connection of what you are doing for your own good. There are number of good houses in the process of foreclosure as their owners were unable to pay regular installments to mortgaging banks. So, the banks sent the notice of foreclosure in order to recover their loan funds. It is more of a common experience due to increase in unemployment rate, owing to the recently passed economic recession. The number of houses under foreclosure process provides more and more opportunities for real estate investors, and they must take full opportunity of such events.

If you are a new entrant in the field of Real Estate Investment then you can visit the foreclosure activity, as a great learning experience for you. Here you would be able to see some of great houses under auction, and then the actual process with minute understandings of legal processes. Once you are quite confident with your knowledge and want to experience it for sure then you can ask for Foreclosure Loans, to a good private money lender. Most of us keep on lingering on our desire to be full time realtors, and own a self run business. There are so many things that are practical and possible even in the times earlier than foreclosure and even after the auction process completes.

Most of times, the buying authority is the bank itself and it would become easier for you to make a good deal. But it depends on the factor that you really like the property and wants to acquire it for future selling purposes. You have to make a good level of survey of the house under foreclosure or the one recently gone through that procedure. The accuracy in judgment would let you Foreclosure Loans, being dealt with preferences. Most of the times, people make wrong choices that are based on their concept of getting a property that is appealing to the eye, but there are some major flaws in its manufacture or some key points that can rebel the potential buyers. So, it is best advisable to make a thorough investigation before applying for loans with your all time helping Private Money Lenders.

Realty — No Comments
5
Aug 10

What a Home Loan Calculator Can Do For You

Home loan calculator is the automated tool that helps the user to automatically determine the EMI of the loan by proving the inputs of total loan amount, repayment period and rate of interest.

Home loan calculators are used by most of the professional in the banks and other home loan departments to calculate the loan EMI and save time. This tool is freely available on internet and can be downloaded easily for home use. One can also calculate the loan amount and find out the estimated and projected loan amount with interest sitting at home and just proving the basic details about the loan. This tool is proving much beneficial for the professionals as it saves much of their time. Any changes in the interest rate or loan amount do not require making changes in whole calculations from the beginning, but you just need to change the amounts in the respective columns.

If you are thinking of buying a new house and don’t have any idea about the home loans and the terms associated with it, the home loan calculator is the best option for you. Here, you just need to enter the figures of the loan amount required, interest rate charged by the bank and repayment period and you will directly get the details of the home loan payment and the principal EMI amount.

Columns in the Home Loan Calculator:

Home Loan Amount: It is the total amount of the loan required by the individual for starting the business. Entering this amount and filling the other necessary details, you can know what will be the monthly installment for that particular loan amount.

Annual Interest Amount (%): This column requires the input of the annual rate of interest charged by the bank or the money-lender on the home loan. The annual interest amount can vary from bank to bank and lender to lender.

Home loan Term: This column represents the total repayment period of the complete loan amount including the rate of interest. The borrower has the option for choosing the repayment period according to his paying capabilities. If he chooses the short-term period for loan repayment, the monthly EMI for the loan amount will be higher. If the repayment period is maximal, the EMI will be minimal.

Starting Month: The EMI starts after the loan is disbursed to the borrowers. You can provide the month when your loan process is completed and loan is ready to disburse in this column.

Display Using: The home loan calculator also provides you with the option for displaying the output information in the tabulated or plain text format. You can select any one option as per your interest.

The home loan calculator tool is becoming famous very fast as it is used by many people for evaluating the details of the home loans immediately with proving some input figures. This tool can save your time and without going to the banks you can calculate the estimation for the home loan if you know the interest rate charged by different banks. Home loan calculator is the automated tool that helps the user to automatically determine the EMI of the loan by proving the inputs of total loan amount, repayment period and rate of interest.