Real Estate Networks

“I’ve been to all the seminars and read all the books. I’ve even listened to the CDs, but I just don’t know where to start my investing career!” Ah…the all-too-common beginner’s plea for help!

Knowing how and where to begin real estate investing is a valid concern. Though, I’m 12 years into my own investing career, I remember as though it were yesterday, my feelings of uncertainty about how to take the first steps in what would become my livelihood.

Let me tell you about the scarcity of information on real estate investing as it was when I started. Investor clubs? I sure couldn’t find one in my area in those days. Also unlike today, where major book stores dedicate entire business sections to real estate investing, I had to scrounge the shelves of local libraries for out-of-print, dusty, moldy-smelling, real estate reading materials.

What a difference time makes. The person starting out as a real estate investor today is faced with the opposite as a challenge. There’s an overload of information about real estate investor strategies. This overwhelming information is the main reason so many become confused. I’ve discussed this dilemma with enough people in search of their first steps as an investor to relate on the highest level. I feel your pain!

Here’s my suggestion as to what you do prior to choosing any one strategy over another. First things first! The goal of any investor is to make money. And making lots of money is perhaps the biggest focus of most of those. It’s no secret real estate investing is full of fortune hunters clamoring to get in the gold rush. Stepping over their own two feet, they stumble and bumble as though in perpetual darkness. Many give up and go back to their little cubicle of life. Off comes the cape. The super hero retreats from his dreams.

To choose a clear path, you must first know why it is you want to take the trip in the first place. Sounds simple doesn’t it? Well it isn’t. It’s been said a good salesman can sell to most because 90% of the people wandering around don’t even know what they want. Same with investors. The only goal is to be rich! A millionaire! Yet most never take a moment’s notice that to make money in this business is to solve problems for others.

Your mission after attending a multi-day event is to go out and solve problems for as many property owners as you can find. That’s were the missing link can be discovered.

You come home from a real estate seminar, all fired up to be a rehabber. Fix it and flip it! Only problem is, your area has a soft market for resells. Who you gonna sell it to? That was my first amateur challenge. I found the properties. Fixed them nicely enough, but no one was buying in those days. I was stuck, or so I thought. It didn’t take me long to figure out instead of selling my rehabs, I should keep them and rent them out. There was a strong renters’ market. With my beginners luck, I accumulated many rental properties, and the cash flow quickly surpassed my salary at my day job.

Your mission, find the demand in the market where you plan to invest

Figure out what’s going on in your market. Far too many “newbies” attempt to bring a supply of goods (strategies) where there is no demand.

What’s going on? Are rehabs going galore? If so what is the exit strategy of the rehabber? Is she fixing to resell, or keep as a rental? Are home owners suffering huge numbers of foreclosures? If so get in set up the plan to rescue these people with a quick purchase. Perhaps you live in an area where home owners are aging and moving on to retirement communities. If so, the opportunities are many to buy these properties with huge equity margins to keep as rentals, or rehab to resell.

Keep your ear to the ground. Find out what the needs are. Find the demand, then fill it! Those most successful in life are the men and women who’ve found a way to make life easier, more bearable for the rest of us. Gotta go. Now, it’s time for me to order my groceries. I’m eager to pay the company who created the online grocery ordering service. They keep me from having to jump in my car and drudge in misery up and down the food isles.

They sure solved my problem and made my life easier, didn’t they?

Here’s an example of what I mean. Let’s say you’ve just returned from a workshop all about renovating houses only to find out that in your small town of neatly kept homes, there are few properties needing renovation. Instead, upon further research you discover there’s a bigger market of investors looking for rental properties. Your strategy is to supply that demand! In this case your approach should be to locate properties to either wholesale to other investors looking for rentals or keep a few for your own portfolio. Hey, you might even place buyers in your properties on a lease option program.

Another great example of bringing the wrong goods to a market’s demand involves short sales and the scorching hot markets from a year ago. When I first heard about a “short sale” whereby a bank agrees to discount a loan balance payoff on a property with little or no equity, I was beside myself with excitement. Problem was, I invested in Washington DC, which was on fire in real estate sales, thus pushing appreciation through the roof monthly. Uh huh, the bank’s loss mitigation teams laughed at any unknowing investor who approached with the objective of discounting a loan on a prospective property.

At that time, the banks had little reason (can’t blame them) to negotiate with investors in the hot markets. They were certain to get the full payoff from an over-zealous buying frenzy. But now that the markets have cooled, the banks are ready to talk again to investors. The savvy investor who understands “short sales” and how to negotiate them, is poised to make a financial killing. But now the timing is right in those markets, where not long ago the opposite was the case.

That’s just two examples to illustrate my point. Never is it my intention to bash anyone’s investing strategy. No matter what path or strategy you choose it won’t work unless you do. It will require rolled up sleeves from time to time and digging in of your heels helps during the low points of discouragement and fading enthusiasm. So, roll up your sleeves and get out of the safety of your cocoon and see for yourself what’s going on in your area.

Here’s another tip to get you started, join a real estate investor’s association. They’re everywhere these days. Be sure to look for an association where there are active investors doing real deals. Beware of the fakes and phonies who are only out to impress you with theory…oh, and also to collect your money with little training in return. You should be able to join a group where membership is less than $200.00 annually, per person.

Next, go out and take inventory of the housing stock in your area. Note whether there’s mostly new construction or 50-year old properties in need of their second or third major face lift. Then make note of the action you see such as how many renovation projects are going on in the area. Perhaps you live in a rural area where vacant farmland is beginning to receive the attention of out-of-state shopping mall developers and big box retail stores ie. “The Walmarts.” Whatever is happening in real estate there’s always a strategy for making money. You just have to know what to do in any given situation and in any market, especially your own. Even in a flat market there are strategies for making money. I made some of my best money buying houses in the slow resale market of the mid 1990s.

First, go out and conduct a reconnaissance of your market. Keep your ears and eyes open and the market will speak volumes to you. Remember, this is a public service we provide as investors. What we do, when done correctly, contributes greatly to the financial well being of our communities. And finally, be on purpose!

Ken Williams, The Wholesale Wizard, is a real estate developer/investor who creates and delivers dynamic in-person and tele-seminars to thousands of people every year. Ken’s down-to-earth, no-nonsense approach to the world of real estate investing is highly valued across the real estate industry. For more information on Ken, his training seminars and products, visit thewholesalewizard.com thewholesalewizard.com or Ken’s blog at kenwilliamsthoughts.blogspot.com kenwilliamsthoughts.blogspot.com

Selling your first home in Sarasota real estate can be a worrying experience. When you finally decide to sell your biggest investment, many sellers are filled with doubt and questions.

When it comes with selling you biggest investment in Sarasota real estate, you certainly need some tips and advices, so read on; this article will give you some tips to have a successful sale.

Certainly you spent so much memory with your home, but now that you are decided to sell it, it is no longer your home but your property.

You have to forget about how much you paid for the property, what matters now is the present value of your property. The present value of your property can be compared with the homes which were sold within 6 months in your neighborhood. At some point, this factor can be hard for the seller, but you have nothing to do about it, there is something that you have no control over with. But, you see, in understanding this reality can help you sell your property in Sarasota real estate successfully.

Now in preparing your property for sale, you have to make sure that that your property is attractive enough to attract buyers. You have to clean up your home before showing it to buyers. Remove all the clutter and unnecessary equipment in order to make it appealing and spacious. Make sure that the property is not empty; you can put furniture that can attract buyers. It is also advisable to look around and repairs the small problems that you can see like leaking faucets and so on. Improve your property as much as possible. You can paint it, if it is already fading. You can also plant fresh flowers. And make sure that your home has a pleasant smell. So clean it up very well.

If ever you have done some improvements with your home, this actually play a huge part in your home’s value. But it doesn’t mean that if you spent this sum of money and it will mean that your home is only worth that amount. Let us say for instance, if homes with marble floors typically sell for $3000 more in your neighborhood, then your home is worth $3000 above comparable homes without marble floors.

As soon as you came up with the decision to sell your home in Sarasota real estate, you have to contact a trustworthy realtor. You can interview several realtors until you come up with the best one for you. You see, it would be stress-free on your part if you will search for the best realtor, someone you can trust and will help you out to sell your home successfully. Make sure that the realtor you are working with can give you exceptional service & communication throughout the transaction.

If you price your home in

It’s hard to miss the news reports about how the real estate bubble is bursting. While this may cause panic for homeowners or unseasoned investors, you can still invest in real estate in a changing market. The reason for this is that there really is no ideal market condition that you have to be in to make money in real estate. The key is to understand what your specific market is.

Know the area and the area economy. If you see many houses going into foreclosure, check the local economy. If the city has a very large corporate employer who closed or laid off a lot of employees, this could be the reason that the local people are going into foreclosure. This will also affect who will be able to purchase your property, if that employer was the major source of jobs in that area. So, those foreclosure deals are really not the investment deals they seem to be. However, if the economy is going along well in that area, it could be that too many people financed their homes with interest only loans or 100% financing. These are the foreclosure properties that are the deals for you. Do you understand how these two scenarios are not based on an overall real estate market, but local conditions?

Understand the seasonal fluctuations in your market. These fluctuations could be from weather or employment conditions. Are you in an area with year round warm weather? Then markets will be good for the ’snow birds’ that want to purchase in winter months. In multi season climates, house sales pick up during the spring and summer months. So take advantage of the down times in your area to find the deals. If people in your area are trying to sell a house in the off peak selling season, there is a reason. Usually it is a divorce, job change or something else requiring a fast sell. These are the motivated sellers that you want to find and can find easily during the non-peak selling seasons.

If your area is currently experiencing a rising housing market, as an investor, this is the trickiest market to manoeuvre in. It’s easy to get caught up the hype of quickly rising prices and many new investors happily pay market value for properties, only to find out that they can’t resell them for any profit. The sharper a market rises, the greater possibility that the market will at the very least flatten out, if not fall downward. If you are a lucky investor who gets in on the beginning of the rise, then you can hold the property a bit longer and take advantage of that. However, most investors grab properties at the height of the rise and then have a property worth less than they bought it for a few months earlier.

No matter how you decided to invest, make sure you have your exit strategy ready. This should be in place before you even purchase your investment property.

Michael Russell
Your Independent guide to

One of the most taxing activities tenants and landlords must do is to conduct the moving in and moving out inspection of the property. The moving in “grand tour” of the property is done primarily so both parties would be aware of the present condition of the unit. This way, the new tenant would know how he should leave the unit at the end of his lease period.

This same grand tour is conducted just before the tenant hands in his keys and moves out permanently. If the moving in tour was done for the benefit of the tenant, the moving out round is more for the landlord. This activity is done to show the landlord that unit’s condition is the same as when the tenant moved in (save probably for a few minor damages due to regular wear and tear).

When this moving in and moving out tour is done, the tenant and the landlord both hold a document which itemizes all the important parts and fixtures of the unit or house. As they go through each and every nook and cranny of the house, they both tick what condition these items are in. This document is called the move in / move out form.

A move in / move out form is something that anyone can make. There is no need to consult with a real estate agent or with a lawyer because this is simply a checklist of all the fixtures in the house. You also only need one set of these, as the form you used during the move in inspection, is the same one that will be used when the move out inspection is done.

If you don’t want to prepare a move in / move out form or would want to just follow a standard format, you can purchase and download this form from the internet. There are several real-estate related sites that provide users with various real estate forms and these can be downloaded by piece or by bulk or set, depending on the needs of the user.

If you opt to download a move in / move out form from the internet, you are still at liberty to modify the contents and format as you see fit as most of these documents can be opened using regular word processing programs.

This is article is brought to you by Gloria Smith at LegalHomeForms.com Created by a former, licensed Real Estate Agent, LegalHomeForms.com was designed to offer instant access to the most sought after type of legalhomeforms.com real estate forms. For the cost of what others charge for one legalhomeforms.com/move-in-move-out-form.htm move in move out form, you can have instant access to over 60 downloadable real estate forms.

Basement conversions can be a way to quickly make a home more valuable. Just be sure to do the math before you try this. You should also plan for a few surprises.

Why should you convert basements into living space? Because unfinished basements are the most under-valued space out there. Finish them, and you can quickly and efficiently raise the value of a home. You can even make an investment strategy of buying homes with large unfinished basements, in order to resell them for a profit.

Basements are not common in all areas of the country. They also take many forms, such as the “Michigan Basement,” which is essentially a hole in the dirt that the house sits over. The basements you want for this strategy are known as “full” basements, meaning they have the same square footage as the floor above them.

You also want basements that are absolutely dry. Look for damp corners or water stains from previous seepage. Unless you know for sure that you can resolve any moisture issues - and at a reasonable cost - don’t buy the house. You also want to check to see if basement space really does sell cheap in your area. Basements, like anything else in real estate, can be valued differently in different parts of the country.

A Basement Conversion Example

Suppose you find a neighborhood where the 1500 square-foot, 3-bedroom homes have been selling for around $135,000, and the 1000 square-foot , 2-bedroom homes without basements are selling for around $90,000. You also notice that 2-bedroom homes with full basements sell for about $100,000 - just $10,000 dollars more for that extra 1000 square feet of unfinished space.

You talk to a contractor. If done simply he can panel the walls, put in two walls for a bedroom on one side, install ceiling tiles, electrical outlets, carpet and two special windows - all for $16,000. He can do it in about two weeks time. The windows make the space legally habitable by allowing an exit in case of a fire.

Other alternatives include a sliding glass door and patio if the land dips low on one side. You might make two bedrooms as well. Put at one end of a basement, two bedrooms require just two new walls. Painting the basement wall without paneling them is possible too, if the cement blocks have a decent appearance. Light colors will brighten up the space.

You wait for the right opportunity, a 2-bedroom home which because it was a rental is dirty. You make an offer of $86,000 and eventually get it for $89,000. You decide on a family room in the basement, with a slider opening to a patio, and one small bedroom as well. This costs you $22,000. With closing costs and one month’s holding costs, you now have $114,000 into the property.

You also have a three bedroom home with 2000 square feet of finished space - more square footage than most of the 3-bedrooms in the neighborhood. It takes two months to sell, but you get $139,000 for it. Holding costs added another $1,750 in expenses, a 5% commission cost you $6,950, and other closing costs were around $1300. That means you had a total of $124,000 into the project, giving you a profit of $15,000.

That isn’t a large profit, but on the other hand, you are paying people to do all the work. If you find that this strategy can be replicated, you could have several projects going at once.
Another possibility? You could also look for homes with basements to convert in order to get more rent from a property. There are families that need four bedrooms, and a 2-bedroom home could be made to accommodate them. You might not be able to get cash flow by buying a renting out an existing four-bedroom home, but in this way you could have positive cash flow.

Copyright Steve Gillman. This article was an excerpt from

Maybe you’re buying your first home in Oregon, or perhaps you’re relocating to Oregon from another state. Either way, it’s important that you educate yourself on Oregon home loans before shopping for a home and mortgage. This article explains what you’ll need to know before buying a home in Oregon:

The median price of a home in Oregon is $152,000, and homes in Oregon have appreciation rates higher than the national average. The rate of job growth in Oregon is among the top five states in the nation. Additionally, mortgage interest rates have recently been lower than the national average, and many Oregon residents have been refinancing their adjustable rate mortgages.

Home prices in Oregon can vary greatly between zip codes. For example, in Portland, Oregon, the median price of a home in the summer of 2005 was $262,000; however, in Beaverton, Oregon, the median price of a home was $187,000.

The Homeowner Education Collaborative of Oregon offers a training course, The ABC’s of Homebuying, to Oregon residents planning to buy a home. This course covers the basic information a homebuyer needs to know about housing decisions, financial preparation, mortgages, shopping for a home, closing your loan, and protecting your investment.

If you’re buying a home in the state of Oregon, you qualify for both federal and state FHA and VA loans. First-time home buyers qualify for Oregon FHA loans with below-market interest rates, and, depending on their income, may also qualify for down payment assistance. The Residential Loan Program offers below-market interest rates to first-time homebuyers with low to moderate incomes, and the Downpayment Assistance Program offers down payment assistance to first-time homebuyers who meet certain income requirements. The income requirements vary from county to county.

Jessica Elliott recommends that you visit mortgage-lenders-plus.com/ Mortgage Lenders Plus.com for more information about mortgage-lenders-plus.com/mortgage/oregon-mortgage-lenders.html Oregon Mortgage Rates and Loans.

When I first started in property I would do everything myself. For example, I would source the property, prepare the property for letting, look for tenants, reference them, arrange viewings and do a lot of the property maintenance myself.

This was a real drag on my time and I found myself working harder and for longer hours than I would have preferred to. However, due to a lack of focus, the business wasn’t growing.

I later learnt that this was not the best way to run a successful business. By doing everything myself, I was actually hurting the business. I was focusing on menial jobs and not the most important job of all – that of growing the business.

I then began to outsource and the business benefited significantly as I was spending my time as a business owner and not as an employee.

Some of the things a property investor can outsource are:

 Property maintenance – anything including painting the walls, changing washers and the gardening can be outsourced.

The cheapest way to handle property maintenance is by finding a good ‘odd job’ man. This is basically someone who has skills to complete most of the general maintenance tasks around the house.

For specialist jobs such as roofing and electrics, you can outsource to professional tradesmen.

 Finding tenants – this can be outsourced to a letting agent.

By outsourcing the tenant finding you will save yourself a lot of time as you will no longer need to organise property viewings, interview tenants, apply for references etc

 Handling calls and general administration

If you are not able to afford a full time assistant, you can hire someone part time to handle any business enquiries.
An alternative to using a traditional assistant is to hire a virtual assistant. This is a great cheap alternative as you only pay for the virtual assistant’s time on your jobs, rather than a fixed income per week.

A virtual assistant can not only handle your phone calls, but can also be used for general secretarial tasks including answering your emails.

You can find a Virtual Assistant by for example, doing a Google search and choosing a firm that you can work with.

The only job I would recommend you don’t outsource is that of property sourcing.

Finding your investment property at the right price is the primary role of a property investor. If you were to outsource this, you could be in danger of losing your business.

However, you can still use property finders to source properties – but this would be to supplement your activities in this area, not to replace them.

Your business will only grow if you focus on it on a daily basis. Leave the subsidiary tasks to the specialists as your time is certainly worth more than the £10 an hour you would pay a painter and decorator.

You should aim to develop your property business into a fully automated system. This way, you can remove yourself from the business and the business would still continue to run without you, on autopilot.

Dr Javaid Kiyani is a successful Property Investor and Internet Marketeer. He has an MBA from Cranfield Business School and PhD from the University of Birmingham. Formerly a Chartered Engineer and Management Consultant, he has 10 years experience of property. His knowledge of property investment is vast as evidenced by the books he has written. Dr Kiyani believes in helping others achieve their dreams too by personally training them through his property mentorship programme.

hmopropertyriches.com/ hmopropertyriches.com/

Mortgage refinance or a refinanced mortgage is one in which a borrower pays-off a previous loan with a new loan. The benefits of doing this are low interest rates, lowering of payments or taking out of cash out of their home equity.

Due to the advantages, this mortgage is really coming up these days. Mortgage refinance allows a homeowner to lower his or her existing monthly mortgage payments or make the loan terms more favorable. You can also extend the term of your mortgage and reduce your monthly repayments. Mortgage refinance is also a wonderful way to consolidate your debts. You can consolidate your credit card/s and personal loan debts into your mortgage. This saves handsome amount of money in the long run. Homeowners also get to benefit from a lower refinancing rate by freeing up cash that can be used on much crucial expenses. So if you wish to save and earn then mortgage refinancing is just the right choice.

Mortgage refinancing is largely used to consolidate credit card and personal loan debt because a mortgage is available at a lower interest rate than the interest rate paid on credit cards and personal loans.

Once you consolidate your debt you will just have to make one payment rather than several payments every month. As a result most often you end up paying less money per month than what you are currently spending. This enables many people to manage their finances in a more systematic way.

Prior to applying for a mortgage refinance loan, there are several important things to be borne in mind. At first you should be confident and sure of your step in this direction. Mortgage refinance has long-term benefits; don’t expect returns in just couple of days. The interest rate of the second mortgage depends on the program that you have opted for. If it is a fixed interest rate loan, the interest rate remains the same or fixed throughout the time you have (don’t repay) the loan. If you go for the adjustable rate mortgages known as ARMs, it is important that you keep a track of and understand how your interest rate changes from time to time. You must study carefully that how the company is changing the interest rates and the criteria which it is following. Make a careful assessment of what future changes are expected and whether there are any limits on how much the interest can fluctuate.

The duration of the second mortgage varies with the requirements of the person concerned. You must take help of the mortgage refinance company and ask what duration of loan will best suit your case. Mortgage refinance loans can be from one year to twenty years. Don’t forget that the shorter the duration of the loan, the greater will be the monthly installments. But on the same hand a refinance for a shorter duration can result in some savings while one for longer duration will not.

To know your savings through mortgage refinance, keep a close eye on the market to find out the existing rates and other costs associated with refinancing. To calculate the amount of time it will take to recover the costs of refinancing, divide your closing costs by the difference between your new and old payments.

Mansi aggarwal recommends that you visit mortgagelowdown.com/refinancing/index.html Mortgage Refinancing for more information.

Learn the ABCs of local schools

Do you know what’s going on in your neighborhood schools? This type of information is important to parents who have school-age children, but it’s also important to residents who don’t. Why? School quality is one of the most important indicators of property values and “neighborhood desirability.”

An often-overlooked source of school information is your Neighborhood Expert real estate professional. He or she can provide extensive information on local public and private schools with a Neighborhood Report. Neighborhood Reports, such as those provided by eNeighborhoods, provide more than just names, address and phone numbers of local schools. They also provide information such as student enrollment, number of teachers, student/teacher ratio, student/librarian ratio and more.

You can also get an idea of school quality by looking at student achievements. Neighborhood Reports can tell you the percentage of students who have taken the SATs, average SAT scores, and average ACT scores. You can also learn about graduation rates, how many graduates attended two and four-year colleges, National Merit Scholar Finalists and more.

How does that school stack up? You can learn more by checking expenditures per student, how the school ranks in national and state spending, and what percentage of funds is spent on instruction. Where’s that money come from? Neighborhood Reports can tell you the percentage of funding from state, local and federal sources. To learn more about local schools request a free Report on your Neighborhood from your local real estate professional.

CLUE stands for Comprehensive Loss Underwriting Exchange, a report that tracks insurance claim histories for people and properties. Thinking of buying? Ask your real estate professional or buyer agent how to get a CLUE today to avoid unpleasant surprises in the future.

Safeguard your possessions with a home inventory

In case of a fire or other disaster, what happens if you lose all your possessions? Creating a home inventory is a simple step that can help you recover from such a loss. A current home inventory can help simplify insurance claims and tax matters at a time when you don’t need any more hassles.

A home inventory is a record of your possessions that would need to be replaced in the event of loss. This includes appliances, electronic equipment, furniture, jewelry, artwork, collectibles and more. To make this easier, you may choose to use a word processor or spreadsheet to allow you to save electronic copies.

Many people now use video cameras as an easy way to document home inventory. As you film each item, read any serial number or descriptions to help identify the item’s value in case of loss. This is also a good time to gather any sales receipts, contracts, warranties and appraisals you have. If you take still photos, you can write additional information about items on the back of the photo. Be sure to keep your records off-site or in a fireproof container.

If you find that some items appreciated in value, ask your insurance agent if they are adequately insured for their current value. For more information on creating a home inventory, visit Insurance Information Institute website at www.iii.org.

Charles Warnock is Marketing Director at eNeighborhoods in Boca Raton, Florida. eNeighborhoods provides powerful marketing tools for real estate professionals, including Neighborhood Reports, CMAs, Buyer Tours, NewsLetters, Maps / Aerials, and the InstaLead Marketing System. To learn more, or download your complimentary eBook on real estate marketing success, visit eneighborhoods.com eneighborhoods.com

Charles writes often on interactive marketing, marketing strategy and real estate marketing.

If you are a homeowner considering using one of these ultra risky option adjustable rate mortgage loans, you need to understand the risks inherent to these mortgage loans. Here is what you need to know about Option Mortgages.

Option Mortgages are a relatively new type of mortgage. This mortgage is called “Option” because it comes with four different payment options. The payment options all have adjustable interest rates; however, the first option is amortized on a thirty-year repayment schedule, the second option is amortized on a fifteen-year repayment schedule, the third option is interest-only payments, and finally, the fourth is the “optional payment.” These payment options all come with varying degrees of risk ranging from risky to ultra-risky.

Thirty Year Repayment Schedule

If you select this option your monthly payment will be based on a thirty-year mortgage with an adjustable interest rate. This is the repayment option with the lowest level of risk. The monthly payment will be lower because repayment is spread out over thirty years; however, you will pay more in interest to the lender and the interest rate will be updated at regular intervals.

Fifteen Year Repayment Schedule

This repayment option is the same as the previous example except for one difference. Repayment of the mortgage is based on a fifteen year repayment schedule. This means the monthly payment will be higher than the thirty year payment option. The advantage of this option is that you will build equity in your home at a faster rate and pay less interest to the lender.

Interest Only Option

This is option pays enough to cover the interest due for a given month. This results in a lower monthly payment; however, you do not build equity in your home with this payment. Making interest-only payments will never pay off the mortgage and the lender is going to want that principal paid back at some point. Abusing interest only payments can result in significantly overpaying for your mortgage.

The “Option” Payment

This is the ultra-risky payment option. The lender specifies the absolute minimum payment amount they will accept on any given month to keep your account current. This payment amount is less than the interest only payment amount and does not cover all of the interest due for that month. The remaining interest left unpaid is simply tacked on to the principal loan balance. This means your loan is growing, a phenomenon called “negative amortization.” The danger here is if your mortgage grows to a value larger than your home is worth, the lender could call in the loan, which could result in foreclosure.

Option mortgages are a dangerous risk to your financial well-being. To learn more about your mortgage financing options, register for a free mortgage guidebook.

To get your free mortgage guidebook visit RefiAdvisor.com using the link below.

Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of “