Resource for all consumers to use to help them avoid the most common ways people may be mislead or ripped off in the real estate and banking industry.
This guide is a resource for all consumers to use to help them avoid the most common ways people may be mislead or ripped off in the real estate and banking industry.
1. Most people are unaware of what their personal credit score is, and they don’t know that they can do simple things to improve it. Every transaction you do in the industry will call for a personal credit check. You will lose thousands of dollars unnecessarily if you do not manage your personal credit score. Go into every loan application process with your most current credit score in hand, and make sure you have corrected any errors that you may find on your report before you begin to buy real estate.
Some mortgage brokers may quote you a teaser rate based on the need to have a very high credit score and then disclose a much higher interest rate days before the closing of your transaction when your true credit score is revealed. Ask the broker to quote you an interest rate based on your current credit score AND the kind of mortgage you want to apply for.
Understand that no matter what your credit score is - interest rates are always higher for a stated income mortgage than they are for a full document mortgage.
3. Realtor love to sell property to new investors by telling them about how much it will appreciate over time. Beware of property that loses money on paper every month because of negative cash flow.
Just because a realtor tells you a property will appreciate enough over time to cover your monthly losses does not mean it is a good investment.
The best investments are ones that come close to breakeven or have positive cash flow BEFORE possible appreciation is calculated.
Tax benefits to owning real estate can be a powerful factor in what kind of property you invest in, but start with the basics.
a. does the property cash flow?
b. can you buy it below market and flip it later?
c. can you add value to it by making improvements to it?
d. are you in a HOT market that is appreciating rapidly because of a PROVEN TREND.
e. can you resell the property at a higher price by offering better financing terms than the bank will to your prospective buyer?
