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LOANS When you’re undertaking
major renovations for your exist-
one.According to Reimer, this
works well depending on what
CONTINUED FROM PAGE 1 ing home, what’s the best way to the customer’s current interest
finance them? It depends on the rate is and how much is owed on
down payment. project and your circumstances, the loan versus the home’s value.
says Greg Reimer, home loan “It lets the customer have a
ONE-TIME CLOSE/DRAW SCHEDULE consultant for Countrywide lower payment over a 10-, 15-,
LOANS Home Loans, Inc.,Trexlertown, 20- or 30-year term,” he says.
The one-time close or draw Pa. “This works well depending on
schedule loan allows homeown- how much money the customer
ers to control funds to the HOME-EQUITY LOAN needs and how much cash flow
builder and select a home to be A home equity loan gives you they have. Many customers opt
built outside of the traditional the amount you’re borrowing in for this loan because they want
builder’s tract or subdivision. one lump sum and is based on the lower payment.”
Adams says this type of loan the amount of equity in your
makes funding available for “the home. REHABILITATION LOANS
small-to-mid sized ‘scattered’ or “These loans are usually a Rehabilitation loans work well
‘on-your-lot’ builders.” It requires fixed rate for 5-, 10-, 15- or 20- for the customer who can put 5
a 5- to 20-percent down pay- year periods,” Reimer says.“The percent down and needs
ment, which means the home- benefit is the rate is fixed and $60,000 or more to complete the
buyer needs to have equity in your payments are of principal project.
the lot or funds from the sale of and interest.The drawback is if “The way this works is we get
their previous home.A general you take out $20,000, pay it plans and specs or the contrac-
contractor still is required, but down to $10,000 and need more tor’s price to complete the proj-
the homeowner has some con- money later, you have to refi- ect or projects,” Reimer says.“We
trol of the quality by controlling nance back to $20,000 and may then give it to the appraiser and
the purse strings. incur some fees.” they will give us an estimate of
what the home will be worth
BRIDGE/HOME-EQUITY LINE OF HOME-EQUITY LINE OF CREDIT after the work is complete.We
CREDIT LOANS A home equity line of credit structure the loan on that value,
If you’re building a new typically is based on the prime and, depending on the cus-
home, have a mortgage on your rate, and as prime moves up or tomer’s profile, we can fund the
existing home, which hasn’t yet down so does the rate. It also project up front or in draws as
been sold, and can’t make two allows you to draw funds as you the project progresses.”
mortgage payments, a bridge or need them, similar to a credit Knowing your financing
home-equity line of credit loan card.“Over the past two years, options ahead of time can help
could solve your problem. Either prime has moved upward,” says you choose what will work best
uses the equity in your present Reimer,“but the benefit is that as to make your home dreams a
home to help finance the new you pay the loan down you can reality.
home.When the new home is expand back to the original
completed and the existing amount with no fees.Also you © CTW Features
home is sold, you’ll be able to get can pay interest only for a speci-
a conventional mortgage to pay fied amount of time.”
off this short-term loan.
CASH-OUT REFINANCE LOAN
The cash-out refinance loan
REMODELING YOUR EXISTING HOME involves paying off your current
mortgage and taking out a new
FORECLOSURES
CONTINUED FROM PAGE 1
mortgage companies, title com-
panies and insurance providers
for leads and more information.A
Ask Our Broker
CONTINUED FROM PAGE 1
real estate professional also can
money buying their first home, help you find REO properties in
purchasing a foreclosure from your area, says Ste. Marie. son for wanting to see Brown’s bid and Brown has
the bank is a good option to “You can follow a foreclosure
every reason to prefer confidentiality.
explore.” listing in the newspaper and
Normally, bank-owned proper- wait for the for sale sign to Is there an absolute solution that provides ironclad
ties are the lowest-priced proper- appear on the front lawn,” she proof of another offer to Smith but does not violate
ties in the area, says Denise Ste. says.“You can also check for FHA Brown’s sense of privacy and security? Not really.
Marie, real estate agent with and VA foreclosures under list- Some brokers believe the solution is to provide Smith
RE/MAX Real Estate ings of government homes for with a “net sheet” showing the terms of Brown’s offer
Professionals, Shrewsbury, Mass. sale.”
but not revealing the identity of the bidder.Another
“The bank representatives have Prior to making an offer, Ste.
no emotional attachments and Marie says it’s essential to do approach is to provide the first page of Brown’s offer,
are more inclined to consider an your homework. Compare the with the bidder’s name inked out. In both cases, howev-
offer since they look at it as a price you’re willing to pay to er, Smith is not getting a full copy of the original offer.
business transaction at arm’s other homes in the neighbor- There is, however, a less-than-absolute answer, which
length and are more reasonable hood. Determine the costs of in practice works pretty well: Most brokers,like most
in negotiations.” improving and remodeling the
people, want to behave in a manner that is both fair and
The drawbacks to buying an property.And invest in a thor-
REO home, however, can include ough home inspection that honest.They understand that to claim the existence of a
working with a lender that includes checks for radon gas, bid that does not exist – or to inflate the value of a com-
moves at a snail’s pace, the rare lead paint, termites and mold. peting bid – is unethical and dishonest. Such fraudulent
but always possible problem of “Because these properties are claims could result in the loss of their real estate
having to deal with a difficult sold ‘as is,’ once the offer is license, the loss of their livelihood and, potentially, crim-
former tenant or homeowner, accepted, an unsatisfactory
inal charges.The result is that if you trust and believe
and possibly longer closing times home inspection is never a con-
(40 to 100 days from when your tingency to renege on the deal, your broker then you have reasonable grounds to pro-
offer is accepted).The biggest and deposits are not refundable,” ceed.
disadvantage is that you are she says.Also, remember that Whether you’re a buyer or seller, speak with your bro-
forced to buy the property “as is” “the listing agent is not an ker and ask how bid confidentiality is handled, especial-
with no cooperation from the inspector and can only disclose ly in a situation with multiple offers. If the issue really is
bank in making reparations or what he or she can see.They
a concern, you may want to require confidentially as a
allowances, says Beitler. have no records of work done or
These properties typically when.This is why an inspection condition of making a bid – that is, require the seller to
need a lot of work, says Ste. is money well spent.” sign a confidentiality agreement before a bid is opened.
Marie.“Owners who have lost As for those late-night A local attorney also can provide specific advice.
their homes are not happy and infomercials promising unbeat-
sometimes show their frustration able deals on bank-owned real Q: Our listing contract ended at the end of the
by stripping the property. Buyers estate, buyer beware, says Ste.
month. The property is under contract and clos-
need to make sure they have the Marie.The bottom line is that “if
wherewithal to repair.The ideal it sounds too good to be true, it ing is scheduled six weeks from now. Our broker
candidate is someone who probably isn’t true.” wants us to extend the listing agreement for 45
knows something about con- days. Is this necessary? If the deal falls through,
struction. Most buyers that pur- © CTW Features we had planned to get a different broker.
chase my bank-owned listings
are tradespeople, such as
plumbers or electricians.”
A: The broker wants to be able to take back-up offers
Ultimately, she adds, REOs in case the property does not close. He cannot do this
“allow a buyer to build sweat unless the property is listed, thus there is logic to his
equity, especially in a market of request.Why not extend the listing with a right to ter-
declining values. Buyers need to minate without penalty with 24 hours’ notice? This
budget repairs and have an emer- might be good for everyone.
gency fund for unexpected
repairs.”
Bank-owned homes often are © CTW Features
advertised in local newspapers
and many are listed in the multi-
ple listing service. Experts rec- Need real estate advice? Peter G. Miller, author of “The
ommend calling banks, lenders, Common-Sense Mortgage,” would love to hear from you. Send
your questions to peter@ctwfeatures.com.