Don’t Pay Another Cent in Rent To Your Landlord . . .

"If you’re like most renters, you feel trapped within the walls of a house or apartment that doesn’t feel like yours."

It’s a dream we all have - to own our own home and stop paying rent. But if you’re like most renters, you feel trapped within the walls of a house or apartment that doesn’t feel like yours. How could it when you’re not even permitted to bang in a nail or two without a hassle. You feel like you’re stuck in the renter’s rut with no way of rising up out of it and owning your own home.

Don’t Feel Trapped Anymore!

It doesn’t matter how long you’ve been renting, or how insurmountable your financial situation may seem. The truth is, there are some little known facts that can help you get over the hump, and transfer your status from renter to homeowner. With this information, you will begin to see how you really can:

save for a down payment

stop lining your landlord’s pockets, and

stop wasting thousands of dollars on rent.

6 Little Known Facts That Can Help You Buy Your First Home

The problem that most renters face isn’t your ability to meet a monthly payment. Goodness knows that you must meet this monthly obligation every 30 days already. The problem is accumulating enough capital to make a down payment on something more permanent.

But saving for this lump sum doesn’t have to be as difficult as you might think. Consider the following 6 important points:

1. You can buy a home with much less down than you think

There are some local or federal government programs (such as 1st time buyer programs) to help people get into the housing market. You can qualify as a first time buyer even if your spouse has owned a home before as long as your name was not registered. Ensure your real estate agent is informed and knowledgeable in this important area and can offer programs to help you with your options.

2. You may be able to get your lender to help you with your down payment and closing costs

Even if you do not have enough cash for a down payment, if you are debt free, and own an asset free and clear (such as a car for example), your lending institution may be able to lend you the down payment for your home by securing it against this asset.

3. You may be able to find a seller to help you buy and finance your home

Some sellers may be willing to hold a second mortgage for you as a seller take-back. In this case, the seller becomes your lending institution. Instead of paying this seller a lump sum full amount for his or her home, you would pay monthly mortgage installments.

4. You may be able to create a cash down payment without actually going into debt

By borrowing money for certain investments to a specified level, you may be able to generate a significant tax refund for yourself that you can use as a down payment. While the money borrowed for these investments is technically a loan, the monthly amount paid can be small, and the money invested in both home and investment will be yours in the end.

5. You can buy a home even if you have problems with your credit rating

If you can come up with more than the minimum down payment, or can secure the loan with other equity, many lending institutions will consider you for a mortgage. Alternatively, a seller take-back mortgage could also help you in this situation.

6. You can, and should, get pre-approved for a home loan before you go looking for a home

Pre-approval is easy, and can give you complete peace-of-mind when shopping for your home. Mortgage experts can obtain written pre-approval for you at no cost and no obligation, and it can all be done quite easily over-the-phone. More than just a verbal approval from your lending institution, a written pre-approval is as good as money in the bank. It entails a completed credit application, and a certificate which guarantees you a mortgage to the specified level when you find the home you’re looking for. Consider dealing only with a professional who specializes in mortgages. Enlisting their services can make the difference between obtaining a mortgage, and being stuck in the renter’s rut forever. Typically there is no cost or obligation to enquire.

There are many important issues you should be aware of that affect you as a renter. Why on earth would you continue to lose thousands by throwing it away on rent when with your agent you could take a few minutes to discuss your specific needs so that you can stop renting and start owning.

This conversation costs you nothing. And, of course, you shouldn’t have to feel obligated to buy a home at the time you review this. But by taking the time to explore your options, and learn about the ways you can afford to buy a home, think how prepared and relaxed you’ll be when you are ready to make this important step.

The Rich Get Richer: Investors are positioning for a HUGE year!

Investors Ready to Make a Fortune!

Those who know me or listen to my podcast, know that I always say, "When they say the real estate market is "bad", that means it's bad for home owners wanting to sell their homes for top dollar. But if you are an investor, then it's the best time to buy.”
Buy low / sell high, works in real estate as well as it works in anything else. Let's look at what's going on. There is a surplus of homes on the market, which means that there are far more sellers than there are buyers. Sellers are in trouble and can't afford to pay for their homes, so they are willing to do anything to just out from under their situation. Lenders are losing money and getting far too many properties back in their inventory (which they don't like, they are in the money lending business, not the real estate holding business), so they are very motivated to recoup as much as possible on their loans.

When you add all this up, what do you get?

You get a situation that is one of the best in many years for investors to make tremendous profits. More Millionaires are made in the economic downturns, than in the good times.

Smart investors who understand these markets, can make a lot of money. With foreclosures approaching record levels, opportunities are everywhere. Sellers are willing to sell their properties for literally no more than they owe on it, and lenders are willing to do what is called a "short sale", where they will accept a discounted amount as payoff for the loan in order to avoid having the property go through foreclosure and risk getting it back.

I know that all sounds incredible, why would the homeowners just walk away from their properties, and why would the lenders accept less than they are owed?

The answer is, because they don't have a choice. The homeowner is over leveraged, they owe more than the home is worth. Same for the lender, if they take the house back, they cannot sell it for enough to recover what they are owed. This presents opportunities for us, the investors. We get the house under contract from the owner, then negotiate with the lender for a lesser payoff amount (often 30%-40% off, sometimes much more) with a cash offer.

So while everyone else is running away from real estate, smart investors who want to create tremendous profits, are running out to buy all they can get. Even in a slower market, if as an investor, you buy the property right, you can still sell it for a profit. A market slowdown does not mean that there are no buyers. It means that the majority of the general buying public is not getting into home ownership at this time. In a slow market 2 things will sell a property .... Price, or terms.

Price means that if the price is right, you will find a buyer. Buy a property for 60% of value, you can turn around and sell it quick to an investor for 70%-80% and turn a profit. Buy it for even lower than 60% of value, and make even more.

Terms, means selling it with good financing. As a rent to own (also known as a lease/option), or owner financing. With the slow down in available credit from lenders, buyers are looking for ways to still get into home ownership. By being willing to sell on terms, you can get at or above full market value, and take a option fee or down payment up front to put cash in your pocket.

So if you want to truly make money as a real estate investor, do what the wealthy do (buy property now), and not what the average person does (wait for the market to improve, which means high prices and less profits).

NOW is the time to get into investing in real estate in the U.S.

Run that by me again? What will the Stimulus Plan do for me?

I've had quite a few inquiries from people wanting to know what is going to happen with the conforming loan limit and the upper limit for FHA loan guarantee programs in their market under the economic stimulus bill passed by Congress and signed into law today by President Bush (see story).

The language in the stimulus bill IS confusing, and the fact is nobody can tell you exactly what will happen to loan limits in your market until HUD publishes the median home price figures that will be used to determine them. HUD's got 30 days to do that, and then it will take Fannie Mae and Freddie Mac a few weeks (or months) to update their credit guidelines and automated underwriting systems.

But you can get a pretty good idea of what's going to happen to the loan limits in your market.

Here is what the bill says:

In high cost areas, the conforming loan limit, and the upper limit for FHA loan guarantee programs, will be 125 percent of the median home price for the area, not to exceed $729,750.

In areas that are not high cost markets, the conforming loan limit will remain $417,000. The upper limit for FHA loan guarantee programs in "normal" markets will be raised from $200,160 to $271,050.

So if you are in a high cost area, multiply your median home price by 1.25, and there's your new maximum loan limit for Fannie, Freddie and FHA loan programs (up to $729,750).

What is the median home price for your market? Am I in a high cost area? That's what we need HUD to tell us. They will be providing a median home price for your county or metropolitan statistical area (MSA). If you're in an MSA, it will be the median price for the most expensive county in the MSA.

If you click "continue reading," you will see a chart of an analysis done by the Stanford Group Co. that shows how this might play out in 19 markets. The analysis uses numbers from NAR, which is where HUD may get some of its numbers from. If you don't see your MSA on this chart, that doesn't necessarily mean you won't see increased loan limits.

It seems to me a simple rule of thumb would be if the median home price in your county or MSA is less than $333,600, you will not see an increase in the conforming loan limit (because 125 percent of $333,600 is $417,000).

But EVERYONE will see FHA loan limits go up. Instead of $200,160, the upper limit in "normal" markets will be $271,050. Instead of $372,790 in high cost markets, the upper limit for FHA loan programs will be 1.25 times the median home price, up to $729,750.

Don't forget, these new limits will only be good until Dec. 31, unless Congress works out its differences over other legislation that's intended to further expand FHA loan programs and strengthen oversight of Fannie and Freddie.

This is a very important issue for buyers and sellers alike, so please: everybody who's got any additional insight on how this will work, leave your comments.

Estimated conforming loan limit increases

Buyers: Should you wait for the market bottom?

The housing market will continue its downward spiral, forecasts say, and that means opportunities for buyers. But waiting for the market bottom may not be the smartest strategy. Here are 5 reasons to buy now -- and 5 reasons you may want to wait.

The latest housing headlines are far from encouraging: Foreclosures are up, home prices are down and new-home sales are at record lows. All this dismal news has many buyers sitting on the sidelines, afraid to make a move. But, economists say, waiting for the bottom may not be the smartest strategy.

Calling the market low is a difficult task, and it's most often spotted in the rear-view mirror. For one thing, there's no agreement on when the U.S. real-estate market will officially touch bottom. If you believe the National Association of Realtors, it will happen later this year. Investment bank Merrill Lynch is much more pessimistic, predicting that U.S. home prices will drop another 15% this year and 10%in 2009, with perhaps even more depreciation in 2010.

But for many buyers, there's no real need to wait for the market as a whole to officially bottom out, says Delores Conway, director of the Casden Forecast at the University of Southern California's Lusk Center for Real Estate. "Real estate is local," Conway says, and therefore what constitutes the bottom for the country is meaningless for those looking to buy and sell homes in their own neighborhoods.

Prices in many markets have not yet hit their lowest point, but they aren't that far off. And in other areas, only the pace of sales has been affected; prices have held firm or gone up.

Waiting for the absolute bottom to hit before buying puts you at risk of missing it and getting caught up in a market on the upswing. Plus, for some first-time home buyers, owning simply makes better economic sense than renting.

Downturn, what downturn?

Of course, in some parts of the country, there's no real reason to get cold feet about buying. Prices have ticked up slowly and are expected to continue that slow march for the foreseeable future. "We have not seen a downturn in our market," says Marianne Ackerman, of The Property Shop in Glenwood Springs, Colo.

Indeed, prices in this small community outside Aspen have been nudging up 5% a year unchecked for several years, thanks to a shortage of property suitable for development and a booming tourism market.

This appreciation prompted longtime Glenwood Springs resident Marianne Virgili -- who also heads the town's chamber of commerce -- to buy a parcel of land now, without the slightest bit of hesitation. "Prices are rising, so the best time to get in is now," Virgili says. She plans to start building a home on her lot in the spring.

Other markets that experienced healthy price increases in the latest quarterly sales data from the National Association of Realtors are Farmington, N.M.; Reading and Pittsburgh, Pa.; Columbia, S.C.; San Jose, Calif.; and Fargo and Bismarck, N.D.

"Just like the weather, there are large local variations in home prices," says Lawrence Yun, NAR chief economist. Yun says that in his examination of last quarter's metro home prices, two-thirds of the markets posted price increases.

Realtor Tom Rhodes in Dallas says that he has seen sales slow a bit, but that prices in his market haven't dropped as they have elsewhere. "Some people read what's going on around the country and say maybe this is not the best time to buy," he says. But, "we've got a pretty strong market. Those headlines are coming out of Miami and Las Vegas."

There are plenty of markets in Texas, Kansas, Arkansas and the Midwest that are now starting to tick up. In these areas, this might be a great time to buy, with interest rates historically low, a fairly large inventory of properties to choose from and less chance of getting caught up in a bidding war, analysts say.

Houses and neighborhoods that hold their value

There will always be some people who need to move because of job relocations, expanding families or a need for better schools. In desirable neighborhoods, there's a price to pay for waiting. You have to ask yourself, "How greedy do I need to be?" says James Gaines, research economist with Texas A&M's Real Estate Center. "If (the price) goes down much more, you've got other people trying to buy it, even if it's not the absolute bottom." Then, you might end up in a bidding war, erasing the savings you thought you had achieved by waiting.

Caren Saiet, a Los Angeles agent with Coldwell Banker Residential Brokerage, says that even in a down market, the best houses are at least holding their value. One of her listings -- a two-bedroom Craftsman with a large, professionally landscaped lot, in the gentrifying Highland Park section of Los Angeles -- has four offers and will likely fetch several thousands more than the $499,000 asking price that the seller paid for it 14 months ago. "We are in a really good position," she says. And, she notes, the buyer is getting a fair deal too, given the much higher prices in neighboring areas.

For some people, the value of the local public schools will play a large part in their buying decision. A well-designed house in an established area with a good public-school district will hold its value and save you money in the long run. "These places don't get hurt as much as the whole market, and they recover faster," Gaines says.

Schools were the biggest consideration for Michael Daniels, who recently purchased a home in Charlotte, N.C. The 34-year-old health-care manager and his family had outgrown their existing home, but wanted to stay in the same school district. After studying the market for months, Daniels and his wife recently decided to act, when the house they were eyeing dropped in price from $425,000 to $379,000.

"(The sellers) had had four contingency offers that had gone bad," Daniels says. When he agreed to buy the house without the contingency of selling his own house first, the price was whittled down a bit more.

How to get the best deal

If you're ready to buy, try to make the best deal you can in a neighborhood that is holding its own, analysts say. Check real-estate Web sites such as Realtor.com, Trulia.com and Zillow.com, or go through the real-estate sales data published in your local newspaper to see what houses are going for in your area. When you have zeroed in on a neighborhood, work with an experienced real-estate agent to go over the fundamentals: How much inventory is out there? How many of the listings are foreclosures? How have prices in that neighborhood fared historically and over the past year or two? This will give you a feel for the overall direction of the neighborhood.

If there are a lot of foreclosures continuing to pop up, prices might fall further than you'd like in the short term. That may not be an issue if you plan to stay put for a while, but it could limit your options if you need to sell or refinance your mortgage.

Once you've bought, don't get discouraged if prices don't begin to jump back up immediately. Many, including Gaines and Conway, are predicting this down market to remain in a trough for a while, rather than bouncing back up.

"I think it will go down, hit bottom and slink along the bottom before it comes back up," Gaines says.

But ultimately, the market will come back up, he notes, even those markets in California that are taking a beating. "Does anybody really believe that California won't come back again, and with a vengeance?" he says with a chuckle.

5 REASONS TO BUY

1. Prices in the neighborhood you are interested in are relatively stable. Either they are holding their own or increasing, or the pace of decline is slowing significantly. If you have to move and don't like apartments, the small penalty you pay for missing the bottom may not mean much.



2. You plan to stay in the home for more than five years. If you can stick it out that long before selling, economists say you’ll probably ride out any downturn and come out ahead on price.



3. Your rent rivals a mortgage payment. If you can afford to buy, it can give you one bonus that renting can't: the mortgage-interest deduction on your taxes.



4. You've found the right house in the right area for you. The schools are great. You love the area and know it would be hard to find another house like the one you have your eye on. In a better market, you would most likely have much more competition for that home.



5. You've built equity in your house and are moving to a place where homes are cheaper. In your new market, your money will go a lot further.



5 REASONS TO HOLD OFF

1. You've lived in your house less than two years. Chances are you haven't had enough time to accumulate equity in your home. Indeed, you may have negative equity, if you live in many areas such as California, Florida, Arizona or Nevada.



2. Your job security is uncertain. If your company or business is in distress, it's probably better to say put until the smoke clears.



3. You don't plan to stay in your next house at least five years. While it's not important to buy at the exact bottom of the market, it is important to stay long enough to ride it out completely.



4. You don't have good credit or a decent down payment. Do you have a job and income you can document? As a result of the subprime lending crisis, lenders are much more careful about whom they're giving their money to.



5. You have an existing home to sell in a neighborhood where prices are dropping precipitously or where the number of foreclosures is spiking. In this climate, you're probably better off waiting out the storm.