Home Buying 101 What’s a Point, and When Should I Buy One?

Writen by Brandon Cornett

What’s a Point?
A point, or discount point, equals one percent of a loan amount. For instance, one a mortgage loan of $200,000, one point would equal $2,000.

Why Do People Pay for Points?
Some home buyers pay points to their lender at closing in order to lower their interest rate over the life of a loan. Paying a point on a standard 30 year loan will typically lower the interest rate by .125 percent.

Should I Pay for Points?
Buying points can lower the interest rate of a mortgage loan, but that doesn’t automatically make it a good option for every situation. For instance, if you only plan to stay in the home for a couple of years, paying for points probably won’t help you.

On the other hand, if you plan to stay in the home (and keep the mortgage) for a long time, paying points could very well save you money.

To find out whether or not points will benefit you, you need to calculate your “break even” point. In other words, you need to run the numbers to see how many months you’ll have to stay in the home to make points a wise investment.

To calculate your “break even” point:

1. Figure out what your monthly payment would be without buying points.

2. Figure out what your monthly payment would be if you did buy a point (or points).

3. Subtract the lower payment from the higher to determine your monthly savings.

4. Divide the amount charged for points at closing by the amount you save each month. The number you end up with equals the number of months you must stay in the home (and keep the mortgage) to reach your “break even” point.

Example calculation:

Let’s run the numbers for a $200,000 loan for 30 years at a fixed rate.

1. 7% interest rate with no points = $1,330.60 monthly payment

2. Buying 1 point for $2,000 = $1,313.86 monthly payment

3. Monthly savings after the point: $16.74

4. $2,000 / $16.74 = 119 months

In this example, the “break even” point is 119 months, or about 10 years. You would have to stay in the house for 10 years to recoup the cost of the point you paid at closing. If you plan to stay in this house for only three or four years, paying for points would be a bad investment.

Conclusion
A point equals one percent of your loan amount. You can pay points to your lender at closing to lower your interest rate. Paying points may be a wise option if you plan on living in the home for more than a few years. You should always run the numbers to determine whether or not points are a good investment for you.

* Copyright 2006, Brandon Cornett. You may republish this article in its entirety, provided you leave the byline, author’s note and website hyperlink intact.

About the Author
Brandon Cornett is the editor of HomeBuyingInstitute.com, one of the Internet’s largest and most respected libraries of home buying information more than 100 expert articles in 12 different home buying categories! Put this knowledge to use by visiting http://www.HomeBuyingInstitute.com.

Fast Home Selling

Writen by Jennifer Bailey

This is a fast world, where everyone is on the move and wants to do everything quickly. People want fast food, fast travel and even to sell houses quickly.

The first thing that has to be done to quicken the sales process is to get the property appraised from a certified appraiser. This is to make sure that you quote the right price when making quotes on the house. Giving the right quote greatly enhances the sales proceedings. Offering incentives also help shorten the sales cycle. But if you do turn to this to hasten the sale proceeds, there is a probability that the buyer will get the hint that you are desperate to sell, and may then try to get you to accept a bargain basement price. However, if you do add premiums, the house sale process can be speeded up. You could offer a higher commission to your real estate agent for a speedy sale, or perhaps offer some show tickets, a meal at a fine restaurant or some other perk if the property gets sold quickly. There are also those “cash for homes” ads that you find on matchbook covers and late night TV. Houses sold this way are sold quickly, but they are usually heavily discounted.

Making the house accessible at all times greatly enhances the speed of home selling. This means that the house should be always ready to be shown, thus saving on time. There are many agents who are not willing to show a house that takes 24 hours to get into. You can attract more buyers to your home with a few low cost cosmetic steps like cutting the grass, painting drab walls, cleaning up the outside of the house and clearing up any clutter there is inside the house. It is advisable to do this, as most people like buying homes that appear clean, solid and well maintained. You could consider hiring a good real estate lawyer to represent you in the sales proceedings to save time in legal procedures. This may be an added expenditure, but in the long run, it is you who stands to gain.

Home Selling provides detailed information on Home Selling, Home Selling Tips, Home Selling Assistance, Fast Home Selling and more. Home Selling is affiliated with Home Buying Tips.

Five Key Principles to Real Estate Investment Riches

Writen by Joel Teo

Real Estate Investing is the craze today with people involved in the Carlton Sheets program spending money on courses to find out how they can make money in no money down real estate investing. This article hopes to help you create some sort of mental picture of five key principles that can help you make more money with real estate today.

Principle #1 The money is made in the purchase

Real estate investing is like value investing in stocks and you want to purchase the real estate during a period of a real estate slump. The reason for this is so that you can get a huge capital appreciation when the real estate market heats up again.

Spending time doing real estate valuation is critical since if you cannot satisfy yourself on the maths that is a viable proposition, there is no way that your real estate investment would be a good one.

Principle #2 Monitor Cash flow

Real Estate investment typically have a monthly rental income which then is used to pay for mortgage instalments and other problems with the building like a roof leak. You would thus have to keep a close watch on interest rate hikes since they can potentially erode any calculated return on investment quite quickly. Once you have enough cash coming in, it is suggested that you then keep some of it in a rainy day fund in case some of the rental tenants do not renew their property and then take the rest and consider investing in another real estate investment property.

Principle #3 Leverage on other people’s time

Remember that no one can do everything, so the key is to focus on what you do best. If your strength is in negotiating deals, spend time looking for property and then get professionals and contractors to handle all the rest of the deal for you. Similarly, if you are good at decorating property, then find deals and focus on the interior design of the property. By focusing on what you do best and getting other people to do the rest of the work, you are leveraging on their time and you can then make more money from each new real estate investment that you undertake. Spend your time to build your team of advisors and employees who work for you and you will see your profits start going up. Remember that by rewarding them financially, you will get a group of dedicated people helping you make more money from your real estate investment.

Principle #4 Learn how to use leverage with a good rainy day cash balance

Did you know that many real estate investors started off with very little money to invest? Even large real estate developers like Donald Trump have learnt the power of leverage when investing in property deals. You want to leverage as much as you can so that you can control property worth many times more than what you own. Remember however to keep a rainy day fund containing a portion of the rental payments so that you can hedge yourself against a possible period where unit occupancy of your real estate investment is low. Leverage when used well can make you lots of money but if managed badly, will bankrupt you. Thus planning your cash flow and learning how to use debt is critical before you start serious real estate investment.

Principle #5 Spend time networking with real estate professionals

Do you want the latest real estate investment deals? The best way to learn of them is to break into the local real estate professional group and make friends with them. Learn some real estate investment lingo and spend time making friends with them because they are your eyes and ears on the ground and they can tell you about recent developments and changes in rental, property and infrastructure of their geographical location. Having the first player advantage is what many large real estate investors have and by spending time to network with real estate brokers, you will substantially close the gap.

In conclusion, spend time looking at these five principles and determine how they can be applied to your real estate investment and you might start seeing an increase in your real estate income.

By Joel Teo 2006 All Rights Reserved

Joel Teo takes a keen interest in real estate investment as part of a larger investment portfolio. For more tips on real estate investing check out our real estate investment success series at our real estate investing resource.

California Real Estate

Writen by Michael Colucci

The process for purchasing a home in California is different from the procedures that are used in other states. Unlike the East Coast, attorneys are not used to complete the sale of real estate. Instead, an escrow is used. Once you have located a home you want to buy, you will begin hearing people talk about the escrow. In California, there are no closing meetings. It is not common for sellers and buyers to meet each other on a regular basis. If you want to buy a home in California, you will want to make sure you have a loan before you begin the process of looking for a home.

All real estate agents in California must be licensed to buy or sell real estate. Every agent you deal with should either have a Salespeople or Brokers license. Brokers are allowed to receive payment for the sale of a property, while salespersons must work under the broker. Multiple brokers are allowed to work together, and are called sales agents. Sales agents must answer to a Broker of Record, and this is the person who will supervise them. There are three agencies that will be found in California, and these are dual agencies, buyer’s agencies, and sub agencies.

Before you decide to get a loan or broker, you will first want to find the right home in the best possible neighborhood. You will also want to consult an agent to find out what type of home is best for your income level. The agent will want to know what home you’re interested in. You should always be ready to buy a home when you visit the agent. If you are truly ready, you will be given a better deal, because agents will often have to deal with people who are just “looking,” and are not commited to making a purchase. Once the agent knows what type of home you want, they will begin driving you around to show you the different homes that are available.

The agent will not want to drive you around until after they’ve interviewed you. As the buyer, you will want to make sure the agent is experienced. When you deal with agents in California, they should put you in the loan qualification process as soon as possible. By getting approved for a loan, you will be placed in a powerful position where you can negotiate. Once you have found the home you want, you will want to make an offer to the agent. In California, the offer should always be made in writing. The paper that it should be written on is named the Deposit Receipt.

You will want to place all the information about your offer on the Deposit Receipt. The agent will help by providing you a list of homes that are much like the one you’re interested in. When an offer is made, it is also customary to write a check which is about 3% of the offer that you are making for the home.

Michael Colucci is a writer for California Real Estate which is part of the Knowledge Search network.

Why Real Estate Investment?

Writen by Rik Foote

Why should you invest in real estate? Well, investing in real estate for profit is one of the most popular approaches to generating additional income in the United States today. In fact, if you pay attention to recent press you will have seen numerous reports about the real estate investment craze that seems to be sweeping the Nation.

When done carefully and intelligently, real estate can yield fantastic benefits that can not be achieved through any other type of investment. Here are just a few examples of why real estate investing can be such a powerful wealth generator.

1. Real Estate Markets Are Slow to React Although real estate, like everything else, has ups and downs, it is generally a lot slower to react than the stock market. For example, you won’t get up in the morning and discover that your real estate investment is worth ten or twenty percent less than it was yesterday.

2. Leverage. You can borrow money to buy real estate, whereas, generally you can not borrow money to buy stocks. You can control a large dollar value of real estate with a small amount of your own money by using loans and mortgages. The stock market, by law, limits the amount of leverage (margin) you can use to buy stock. There are no such limits with real estate.

3. You Can Purchase Real Estate For Less Than Its Market Value. In many cases you can purchase a property for as low as 60 to 70 percent of the market value. When buying stocks, you may be able to find a stock that is considered “under valued” but generally it’s tough to do that on a regular and consistent basis.

4. Real Estate Offers A Tremendous Amount Of Tax Advantages Through Depreciation. Real estate basically has two values, the land and the building(s) on the land. For example, if a property is valued at $250,000 and the assessed value of the land is $75,000, the building would be worth $175,000.

The government allows real estate investors to depreciate the value of the building in equal parts over its “useful life” which is defined as 27.5 years. So for example, based on the $175,000 building value above, the annual depreciation value would be $6,363.63 ($175,000 divided by 27.5). This means that for tax purposes, the investor would be able to reduce his/her annual income by $6,363.63!

Many people find the notion of depreciation to be confusing since it’s not really a loss of money. I recommend you check with a qualified tax professional for more details and how this can benefit you.

5. Real Estate Markets Are Insulated Local Markets. For instance, when the stock market falls, it takes down just about everybody and everything involved with it. When home values drop in one city such as New York, generally it does not affect property values in other cities like Boston or Chicago. To protect yourself, you can have a “geographically diversified” portfolio of real estate investments to hedge against these types events.

6. You The Investor Can Control The Value. Another aspect of real estate investment is that unlike any other investment, this investment is controlled by the investor. For example, as an investor, you can increase the value of your investment property by making some modifications to the property such as adding a garage or replacing the carpet, etc. With stocks or any other investment, the investor can’t do anything to increase the value of the investment.

7. The Efficient Market Hypothesis (EMH). When a market has prices that always “fully reflect” available information, it is called “efficient”. The stock market for example is considered by most to be an efficient market. When you call your broker to purchase or sell a stock, you can be sure of one thing - the price you bought or sold the stock for was indeed the “correct” price for that stock on that day and at that time. Why? Because the existing price for the stock will already incorporate and reflect all relevant available information about the company such as earnings, and other metrics.

With real estate, the market is very inefficient. Unlike the stock market, with real estate, the “correct” price discovery mechanism is left to each buyer and seller to figure out on their own. There is the almost always uncertainty as to whether the price offered by the seller is too high or too low. Moreover, there is typically little to no help available from analysts and research agencies (like when dealing with stocks) in this respect. This inefficiency is the very reason why real estate offers such a great investment opportunity to be smart and win! But it requires experience and a sharp eye for good deals and great negotiation skill. This expertise can be developed.

If done correctly, real estate is probably one of the smartest investments you could ever make. Hopefully this short rambling has provided you with a fresh perspective of the many benefits of real estate investing. So be smart, continue to learn and above all don’t wait for some magic moment, just get started.

To Your Success!

Rik Foote

Rik Foote is the President & CEO of The Dorian Group, Inc. Dorian is a software company that develops affordable software applications designed to help beginners get off to a realistic and practical start as real estate investors. To learn more about Dorian’s products and services visit http://www.reiscouts.com

Euro Pounds Currency Exchange How This Affects Your Bulgaria Property Purchase

Writen by Toby Fisher

Currency markets update 26th April 2006

Sterling Falls Against Majors

Sterling hit a fresh two week low against the euro and also lost ground against the dollar on Wednesday after UK growth data which came in line with expectations prompted some position adjustment.

Britain’s economy grew 0.6 percent in the first quarter of 2006 with the annual rate of 2.2 percent, exactly in line with analysts’ forecasts.

Service sector growth slowed to 0.6 percent, after growing 1 percent in the last three months of 2005, due to weaker retail and car sales.

“The data was bang in line with expectations,” said Ian Stannard, currency strategist at BNP Paribas. “We are seeing cable coming under pressure in a corrective pullback after the gains we have seen in the past couple of weeks.”

By 0845 GMT the pound fell to the day’s low of $1.7806, down 0.3 percent on the day, off Tuesday’s seven month high of $1.7943.

Elsewhere, ECB executive board member Lorenzo Bini Smaghi said that if the European economic recovery strengthened, the central bank would adjust rates to avoid inflation, in comments published in an Italian newspaper.

Meanwhile, ECB governing council member Axel Weber told Bloomberg television that risks of second round inflation effects had risen.

Most analysts expect the ECB to wait until June before raising rates from 2.5 percent after ECB President Jean Claude Trichet earlier this month doused widespread expectations for a move as soon as the May 4 meeting. Even so these comments will serve to put further pressure on Sterling in the coming months.

Interbank rates
GBP/EURO - 1.4340
EUR/GBP - 1.4389
EUR/USD 1.2379
GBP/USD - 1.7790
USD/GBP 1.7850
GBP/AUD 2.3880
GBP/NZD 2.8370
GBP/CAD 2.0140
GBP/CYP 0.822
GBP/AED - 6.535
GBP/ZAR - 10.95
GBP/CHF - 2.2610
GBP/PLN - 5.5790
GBP/CZK - 40.767
GBP/THB - 67.17

Toby is a senior FX manager who writes daily articles concerning the Euro Pound currency exchange markets and how this affects theBulgaria property market.

Using The Internet In Your Lease Purchase Business

Writen by Sue And Chuck DeFiore

First you need to find a list of For Sale By Owner Sites. You do this by going to one of the major search engines. Our two favorites are Yahoo and Google, but any one of them will do. Enter For Sale By Owner (FSBO) as your search words. After you search for FSBOs you will get a bunch of sites to go visit. Visit them, check them out, see how they work, and the ones you like put in a favorites folder entitled FSBOs.

Now that you have a list of FSBO sites you need to get telephone numbers of sellers who have homes you would like to lease purchase in your state. For those of you lucky enough to border another state you can enter a search for that state next.

Remember to set up your yellow legal pad with columns for telephone number, type of property (single family, condo, townhouse), price and notes section. Remember you also need to set up your database with the same information. However, you are going to want your database to have two additional fields for date your called, and action to take.

Go through the FSBOs sites you have collected and take down the appropriate information. Get your telephone script handy and start calling. After you are through with your telephone calls, enter the information in your database. We use Access, but any database will do. In the action to take field I make a note of whether I need to send a letter, email, newsletter, and/or to tickle to call again.

Next, however, you want to have a mail merge program. For example, we use Group Mail (MAKE THIS A LINK) for all on line correspondence. Group Mail allows me to take my Access files and import them into Group Mail. It also affords me the ability to make my emails very personable by using the individuals name in my letter, the date I called on the property, and depending on the email when I will follow up. In addition the program also allows me to put specific groups (prospects, consults, tenant buyers) into separate groups. I can have a very large Access database that Group Mail (it will import most major databases)

The Role of the Notaire in Purchasing Property for Sale in France

Writen by Adam L Smith

Notaires always oversee the legal aspects of the purchases of property for sale in France. Different from the English system, the notaire acts as the role of a solicitor, but on behalf of the state. English buyers often feel uncomfortable with the single notaire and often employ British based legal advisors to help out with the French bureaucracy that occurs with the purchase of property for sale in France. This is more expensive though but is often thought as money well spent, but it can also be thought as a waste of money; it all depends on individual preference. Some purchasers appoint two notaires, it is possible to do this as long as they can communicate effectively together but this is not necessary and does not cost more.

Notaires are basically lawyers and thus have little interest in estate agents in the purchasing of property for sale in France process. You will need to make an appointment with a notaire, they normally only speak French and will show you a selection of houses with often limited information. To view properties it is necessary to make further appointments that normally have to be accompanied. Upon deciding to purchase a property for sale in France all the paperwork will be in French so it is often advised to obtain some help with the translation. At the time of completion it will be up to you to arrange the provisions for all amenities and to cater for all required insurance.

It is also up to you to provide all the finance necessary and to discover builders if any restoration is required. When carrying out the final handover of property for sale in France you will probably need to put down a deposit ranging in between 10 15% of the asking price. This includes all of the legal fees and the notaire’s commission.

Notaires usually charge lower rates of commission than agents, and because you are dealing with legal professionals people are usually more comfortable using notaires than estate agents. Most notaires are used to foreigners purchasing property for sale in France and are often very helpful in these situations.

Property for Sale in France

Atlanta Real Estate A Report on the Market Conditions

Writen by Ben Hirsh

With half of 2006 already in the history books we have a fairly good idea of how this years’ real estate market will turn out. The Atlanta market seems to be very dependable as it continues the steady rise that it is known for. This is a very positive sign since many had predicted that this would be a down year for real estate in Atlanta.

The average home that closed during May took 65 days to sell for an average price of $313,110 in Cobb, Fulton and Cherokee Counties. During the same month last year the average home sold had been on the market for 70 days and sold for only $300,057. To do your own research on the homes available in Atlanta, search the Atlanta MLS Search Page.

I find the current numbers to be very consistent with what I am seeing on a personal level. In spite of the rise in interest rates to a four year high of 6.65% for a 30 year loan (still a very good rate historically), buyer demand has continued to increase, resulting in higher prices and shorter market time for the average home.

The future seems to indicate an extremely steady market for Atlanta Real Estate

Ben Hirsh is an active Realtor and an expert on Atlanta Real Estate He can be reached at 678 779 7702.

Reciprocity: The Key to Lead Capture

Writen by Kris Beldin

It might be said that the motto for the technology and information age is: The only thing constant is change. The main culprit for all this change is the computer, and subsequently, the Internet. As a real estate agent you’ve probably caught up with technology and realized what a great tool it can be. However, lest you be caught unaware, let me warn you that the Internet is as ruthless as it is charming.

One of the keys to your success with the Internet is to step out of your real estate agent shoes and into your potential clients’ shoes. You need to think like your clients do, and one of the first rules of human behavior is this: no one will do anything for you just because you want them to.

So what’s the answer? Simply this, give your visitors a reason to stay, give them something of value and they’ll be more likely to give you back something of value they’re business.

This is the reciprocity principle. Too often, agents have the principle of reciprocity backward. Because agents know their listings are of great value to home buyers, and that this is an easy way to capture a lead, agents will ask for personal information to access the listings. This is asking the potential client to scratch the agent’s back and then he or she will scratch the potential client’s back.

What agents may not realize is the effects of this practice are two fold. First, a majority of visitors will instantly leave the site (according to Statistical Research, Inc., typically, 67 percent of Web site visitors leave the Web site when personal info is asked for); and second, one fifth of Web site visitors falsify their personal information (SRI). Requiring personal information up front causes agents to lose a percentage of their potential clients.

Allowing visitors to peruse your listings is like a car dealer letting customers take a car for a test drive. Offering listings to visitors without strings attached is the foundation for a relationship of trust. Consumers tend to gravitate toward businesses and individuals they trust.

Someone put it simply by saying: “No one cares how much you know until they know how much you care.” The principle of reciprocity is the first and probably most important key to capturing quality leads.

Kris Beldin is a PR coordinator for 10x Media, a marketing solutions company.
Estatblished in 2003, 10x Media has expanded its online presence through consumer information networks Inside Real Estate, Inside Finances and Grab Real Estate which contain thousands of pages for city and state specific real estate information across the nation.