How to Acquire a Home and Build Equity Even with Poor Credit

Until recent years, if you had a middle score of 520 or even as low as 500, you could qualify for mortgage. For example if your Experian score was 513, your TransUnion score was 522, and your Equifax score was 507, your middle score would be 522. 

That would be the score the mortgage company would use to set up your mortgage financing. 

Because of this low score, you may have had to accept a higher interest rate, come up with a higher down payment, or our accept a lower loan-to-value if you are refinancing, but you could still would have gotten your financing done.

Now, you must have a middle score of at least 620 to even get considered.

And along with the need for a higher score, the interest rate for a conventional loan is 4.12%. And, for a FHA loan the current interest rate is 3.75 % if you and the property meets the qualifications. Both of these rates require specific down payments and closing costs.

Nevertheless, despite these mortgage requirements, you still have a chance to acquire your home and build equity. You just need a higher level of sophistication and be willing to carry out your search either with or without a realtor. 

Here are some choices:

Rent with an Option to Buy.
Many sellers are realizing that buyers are having more difficulty qualifying for a mortgage, but have a steady job, adequate income, and some savings. This type of buyer would make a good candidate for Rent with an Option to Buy.

Contract for Deed
This is often referred to as buying on an installment contract or just buying on contract. This as another option for the similar type of buyer, but gives the buyer more rights while living in the property.

Seller Financing
On occasion a seller might have a need to move because of a death in the family, a need to relocate for employment purposes, or just tired of the property and the location. If the property has a low mortgage balance or a non-existent one, the owner may be receptive to a wraparound mortgage. 

In a situation like this, the owner may agree to an amount which will wrap around his current monthly mortgage payment as well as a give him a profit.

The details covering the owner and buyer obligations are very important and it would be wise to consult a real estate lawyer to review the agreement.

Finding these types of sellers will require persistence and follow through. These types of sellers generally advertise in the classified sections of the local newspapers. 

They are receptive to your calls and offers and although they may be tough negotiators, it is possible to have a meeting of the minds. The key is being diligent and persistent.

Almost ready to make a decision? E-mail me at wwillbar@gmail.com or call (773) 614-3201

 

5 Ways to Make Sure Your Mortgage is on Track

It's time to make sure your mortgage is on the right track. The Consumer Financial Protection Bureau (CFPB) rules require that your mortgage servicer send you more information and fix mistakes quickly. 

And if your interest rate has changed this year, you should have got a heads up to give you more time to shop for a better deal. 

I hope you have taken the steps to make this year one with fewer runarounds and surprises.

By February you should have received a new monthly mortgage statement showing how your mortgage servicer credited your monthly payments along with any extra payment. Your statement also puts the important information you need in one place: Your interest rate, the balance on your loan, and how your payments are applied. If you use a coupon book, your mortgage servicer will have to send you a coupon book that complies with the new rules.

1. Check for delays.

With very few exceptions, your servicer must credit your mortgage payment as of the day they receive it. Check your statement to see if your payments were credited on time.  If not, call or write your servicer and tell them to correct the problem.

2. Fix mistakes.

The new CFPB mortgage rules require servicers to investigate and fix, in a timely manner, any mistakes that you report. If your servicer won't help you when you call, submit a written error notification for more protection.

3. Shop around.

Your monthly mortgage statement will show you your interest rate and principal balance. Compare your rate to current interest rates. You can find local rates online or in the business section of your newspaper. If your interest rate is higher than current rates, you might look into refinancing.

4. Prepare for your rate reset.

If you have an Adjustable Rate Mortgage (ARM), your mortgage servicer is required to send you an estimate of your new payment seven or eight months before your interest rate resets for the first time. If you have an ARM that has already reset once, you will be notified two to three months in advance of the next reset. This advance notice is designed to give you time to budget for your new payment or shop for a different mortgage.

5. Get help and take control.

If you are having trouble paying your mortgage, you will get a warning that you're late on your payment on your new monthly statement. CFPB rules also generally require your mortgage servicer to reach out to you. But you don't have to wait until you fall behind to act. 

Take control. If you submit a complete application for help soon enough—often called a loss mitigation application—CFPB rules require your servicer to evaluate you for options that may be available to you to avoid foreclosure.


Call (773) 614-3201 if you need some help in understanding your mortgage statement or if you are considering refinancing. Click here to calculate your mortgage.

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Raise Your Children in a Home, not an Apartment

While the value of home ownership as a way of building wealth over time for either single parents or two parent families is well accepted, hardly mentioned is the value of home ownership on the cognitive and behavioral outcomes of the household's young children. Homeownership and Child Outcomes In a recent study on the impact of home ownership on child outcomes, while controlling for the child's gender and health, number of siblings, and characteristics of the household's locality, has indicated that the impact on a child's cognitive outcomes is up to 9% higher in math achievement and 7% higher in reading achievement for children living in owned homes.  Moreover, it is found that the measure of child behavior problems is up to 3% lower if the child resides in a owned home. The result concludes that these youth's greater cognitive abilities and fewer behavior problems will result in higher educational attainment, greater future earnings, and a reduced tendency to engage in deviant behaviors. Steps to Becoming a Homeowner If you are a single parent with the responsibility of raising your children without the help of a spouse, the home environment is even more significant. Although, renting an apartment might be your only current alternative, it would be wise for you to begin taking the necessary steps towards becoming a homeowner. In recent years, the criteria for acquiring a mortgage has become less restrictive. Even though the 30-year interest rate continues to be at an all-time low, unless you apply for a FHA mortgage in which the down payment is 3.5%, you will have to have a down payment of about 5%. And, in addition to the down payment, your middle score on your credit report has to be at least 620. Planning for A Mortgage Consequently, even though the 30-year interest rate is still at an all-time low (currently approximately 4.5% nationwide), home ownership is down because of the down payment and credit score requirements. Planning ahead has to include both saving consistently to build up the down payment as well as a careful review of your credit report with the goal of getting your middle score up to at least 620 or above.  Nevertheless, with a FHA loan and a down payment of 3.5%, your monthly mortgage payment on a $125,000 home would be $611.19. Compare that with your rent payment as well as another mortgage payment scenario. Recently many conventional mortgages have began offering programs with only 3% down.  Many landlords now looking to rent their apartments have discovered the need to be receptive to an applicant with a lower credit score due to the shaky job market and the realization that many applicants are losing their homes to foreclosure.  If you are currently renting, use the time remaining on your lease to take the steps mentioned earlier. In my opinion, renting should be only temporary and out of necessity. For a single parent, the overwhelming value to yourself and your children is to be a homeowner. Call (773) 614-3201 or e-mail me at bwillbar@gmail.com for a free consultation. Any Comments? Leave them below.

What Is the Best Way to Hold Title to Your Home?

There are three common ways in which people hold title to their property: 

1. joint tenancy with the right of survivorship, 
2. tenancy in common, 
3. and tenancy by the entirety. 

Under joint tenancy with the right of survivorship all parties have equal interest. Each has a right to possession of the whole. 

At death, the interest of the decedent passes to the surviving tenant automatically. This is the right of survivorship. This ownership must be created on purpose. There is one deed, equal interest, survivorship must be defined, and there must be four unities: time, title, possession, and interest.

Each tenant has an undivided share in the whole property; is equally responsible for expenses and is equally entitled to rent and profit. The unities are terminated by one co-tenant or more than one tenant. The new owner then becomes a tenant in common.

Under tenancy in common the owners does not necessarily have equal interests. Each unit is inheritable with no right of survivorship. Tenancy in common may accidentally happen by inheritance by more than one heir; through purchase in which shares may and may not be equal; or through failure to specify joint tenancy with right of survivorship. Each tenant has undivided share in the whole property; is equally responsible for expenses and equally entitled to rent and profits. Sale by one co-tenant does not terminate the tenancy in common. The buyer succeeds to interest. Substitution occurs.

And, under tenancy by the entirety, which is created by a deed to the husband and the wife, both have an equal interest in the property and each spouse is entitled to possession of the whole. Upon divorce, the property ownership converts to a tenancy in common. Upon death, interest of the decedent passes automatically to the surviving tenant.

This form of ownership requires the four unities plus the unity of marriage. Each is equally responsible for expenses. Also, only the principal residence can be held in the entirety. One member cannot sell his or her interest. The right of survivorship is not defeated by an attempted sale and divorce converts ownership to tenancy in common.

What is common in each one of these types of ownership is that once the deed is recorded, the names of the parties in each of these forms of ownership are available to the public. If you're concerned about your privacy, you should not consider either of these forms of ownership. Rather you should consider a land trust. Under a land trust, a trustee holds title to the property for the benefit of the beneficiary. The trustee would hold legal title to the property under a deed in trust.

Nevertheless, the beneficiaries have the right of possession of the property, the income generated from the property, the income from the sale of the property, the ease of transferability, and the protection of having the property considered as personal property rather than real property. 

The name(s) of the beneficiaries can be concealed. In my judgment this is the best way to hold title to your property. Not all states have land trusts. But, if you live in Illinois, Florida, Virginia, North Dakota, Indiana, and Hawaii, you should seriously think about it.

Stop Renting. Here's 7 Ways Get an Affordable Home

According to the Department of Housing and Urban Development, the general accepted definition of affordable housing is for a household to pay no more than 30% of its annual income on housing.  A family that pays more than 30% of its income on housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation, and medical care. This post, however, focuses on home ownership as opposed to renting and will offer an overview on owning affordable housing while not having to pay no more than 30 per cent of your annual income for it.  In acquiring affordable housing and building equity, it depends on you and not on the mortgage lender. Here are 7 ways in which you can acquire affordable housing with a minimum down payment if you qualify for mortgage or how to do it if you don't qualify for a mortgage.  The ways to acquire affordable housing are as follows:   county down payment assistance,   city down payment assistance,   lease with an option to buy,   contract for deed,   owner will carry,   not-for-profit grant money,   and, a wraparound mortgage. Each of the seven ways represent a viable strategy for acquiring affordable housing whether you are going for a mortgage or not and should be looked into and discussed with a trusted adviser in detail. Remember. as a homeowner, you own equity and an appreciating asset; you have have peace and privacy; and, you have an estate that can be inherited by your survivors.  For a free consultation on homeownership, call (773) 614-3201

What You Need to Know Before Making a Home Buying Offer

Your home is likely going to be the greatest asset you have and what you can leave to your posterity. 

Once you decide upon the home that you want, your next step is to negotiate about what to include in the offer or purchase commitment.

 In most states, your Realtor will help you determine what to say or even say it for you. Some states may require an attorney to take part in the transaction.

If possible, ask your Realtor to let you see a blank copy of a purchase agreement when you first begin looking at homes. 

This is the document that you will present to the seller, and where you offer a price and any conditions you have for the purchase. That way, you will have time to think about what you want your agreement to cover. 

Be sure to include in your agreement a stipulation that the purchase depends upon a satisfactory professional inspection. If you have any doubts about the results of the inspection, ask for another one.

Here is What You Need to Know Before Making a Home Buying Offer:

1. Get recent selling prices of similar homes in the area to justify your offer price.

2. Be careful not to let your feelings rule. Remember, if the offer is turned down, there are (usually) other homes to your liking.

3. Do a background check on the property. How long has it been on the market? Why is it being sold? What are its good and bad points? Doing your homework will help you make an offer that meets the needs of both buyer and seller.

4. Check out the neighborhood and speak to neighbors.

5. Consider the home's resale value.

6. Negotiate about the offer price and other items to be covered in the offer before you sign any formal papers.

When your offer is formally accepted, you sign the purchase agreement which is a legal contract. It covers many items, such as the price, total down payment, and closing date. (The closing date is when you sign the closing or settlement agreement that officially makes the home yours. 

This date may change if all the necessary paperwork is not finished. The offer also states which party (buyer or seller) will pay for which settlement costs, the type of loan you are applying for, and the interest rate. 

Keep in mind that earnest money or a good faith deposit is required when the offer is accepted. This is a cash deposit towards the down payment and shows your commitment to buying the home. 

Ask your real estate agent how much money is needed for a deposit and use your pre-qualification certificate to back up your offer.

Again, to protect yourself, be sure that the purchase agreement is conditional. This means that you can cancel it if you do not secure the loan or if the inspection identified major problems that can't be corrected before closing.

Any Comments? Leave them below. Click here if you want to calculate your mortgage.

4 Most Popular Ways to Own a Home - the Pros and Cons

You will probably look at and consider many homes before you make an offer on one. 

But even before you begin house hunting, it helps to have in mind the type of home you want and the features that are most important to you. 

Here are the 4 Popular Ways to Own a Home and the Pros and Cons.:

THE TYPES OF HOME OWNERSHIP

1. Single family Ownership 
This is the most popular type of home ownership. As the owner of a single-family dwelling, you are totally responsible for paying the mortgage, property taxes, and any other carrying expenses, including all maintenance and repair costs.

2. Condominium Ownership
As the owner of a condominium, you own your living quarters (apartment, town home, or other unit) in the same way that a single-family homeowner does. You also own a share of the common space, such as gardens, parking areas, and community facilities (e.g., pool, recreation hall, tennis court). You pay a monthly maintenance fee for the common expenses. The owners' association, which you belong to makes decisions about how the condo is run.

3. Co-operative  Ownership
As the owner of a co-op, you buy a share or a number of shares in the corporation that owns and manages the building your apartment is in and the land it is on. If you took out a mortgage for the apartment, you are responsible for paying it off. You also pay a monthly maintenance fee for your part of co-op expenses, repairs, and taxes. You must, however, be approved by the co-op board before you can purchase.

4. Multi-family Ownership
This type of home has separate living quarters for two or more families to rent. The owner may be able to use rent from the other tenants to cover his or her own housing costs. These homes are often restricted to certain areas by zoning laws.

Condominiums and co-ops 
Depending upon the location, this type of home may be less expensive than single-family homes, although association fees can drive up the cost. They may also be safer and provide a variety of services and extra features that single-family homeowners often can't afford. However, you must obey the by-laws and rules of the association. Also, these dwellings generally do not appreciate in real estate value as quickly as single-family homes do.


Interested in home ownership, call for a free consultation, (773) 614-3201

A Little Known, But the Best Way to Own Your Home or Any Property

In real estate jargon, four of the most common ways that people own real estate are: ownership in severalty (owned by one person or entity), co-ownership, tenancy by the entirety (limited to husband and wife), and community property.

However the common thread that runs through each of these types of ownership is that whoever has title to the property that name or names are recorded in the public records for the entire world to see. 
If it's fine with you for the entire world to know that you own your home and perhaps other properties, the option under discussion in this article will not benefit you. However, if you would like to keep your ownership away from the eyes of attorneys, bill collectors, tenants, and other similar types, then having your property in a land trust should be a clear and beneficial choice.

In Illinois, as in Florida, Virginia, North Dakota, Indiana, and Hawaii, by statute or court cases, the option of owning your property in a valuable way by using a land trust is available to you. Essentially a land trust is a type of ownership in which a trustee holds title to the property while the beneficiary of the trust (whose name is concealed) has the power to dispose of the property, manage the property, receive income from the property, and retains the obligation to pay the taxes on the property. 

A trustee can only act under written direction of the beneficiary who can instruct the trustee to buy, sell, exchange, or mortgage the property. In other words, the sole function of the trustee is to hold title and sign documents, to transfer title to another, and to lease or finance the property all under the direction of the beneficiary.

Another benefit is that the beneficiary's ownership is considered personal property and not an interest in real estate. The values of having the beneficiary interest considered as personal property are as follows: 

• personal property has different probate requirements than real property; 
• the beneficiary is protected against liens and other laws regarding real estate; 
• a land trust allows the beneficiary to sell or give away portions of his interest without subdividing the property or deeding a partial interest in the real estate; 
• personal property transfers are generally not recorded in the public records, the trustee is simply notified of any transfer of beneficial interest; and, the beneficiary of a land trust could even be another trust, perhaps a living trust.

Once again, a beneficial interest in a land trust is considered personal property and does not appear on the public records. You can easily and quietly transfer your interest in a land trust to someone else whenever you desire.

If you value privacy, ownership in a land trust should be seriously considered. Anyone searching the public records on your property will only you see the name of the trustee and not know who owns the beneficiary rights to the property. Let it suffice to say that whether you are a homeowner or investor, a good choice for you would be to use a land trust and let the title of your property be in the name of your trustee.

What are your thoughts. Leave your comments below.

Get Down Payment Assistance to Buy Your New Home

Even in this economic climate, down payment assistance remains available. With the mortgage interest rate continuing to be historically low and the prices of homes 30% to 40% lower than just a few years ago, its time to buy your new home.

Almost every state has a home finance agency that offers down payment assistance. Its up to you to explore what the criteria are for becoming eligible and to meet the requirements.

If you live outside of Illinois go to the State Mortgage Finance Agencies to find out what's available in your state. If you live in Illinois, go to the Illinois Housing Authority for assistance 

In addition, here are some more sites that offer a variety of housing assistance in Illinois, New Smart Move, METEC Partners , North Shore Trust, and the Greater Chicago Housing and Community Development Organization.

Leave your comments below.

What You Need to Know About Appraisals

An appraisal is a report that helps to determine the market value of a property. Appraisals compare similar homes in the area to substantiate the value of the property. The term "comps" is often used in reference to this report. As required by the lender, the appraiser's report can be prepared by either a simple drive by the property to a full blown inspection with photographs of the real estate with color pictures.

Since 2009, the appraisal game has changed. Whereas before then the appraiser was often a local individual, now it may often be a non-local individual. This individual may be unfamiliar with what's going on in the neighborhood and the neighborhood's norms. Also, lenders are requiring more market information, including more facts about the structure, more photographs to document the findings, and more demands for "comps" to help establish the baseline for the home's value.

So, be present when the appraiser is doing his work. Ask about the appraiser's familiarity with the neighborhood and recent local sales to make sure that the house gets apples-to-apples comparison. Strive to be in agreement on what exactly constitutes, "the neighborhood". Furthermore. it doesn't hurt to have the real estate agent there also.

I will be going into more of this in a future post.

What has your experience with the appraisal process?  Let me know.