Kathy Foran - REALTY EXECUTIVES Boston West



Posted by Kathy Foran on 12/9/2012

If you have been dreaming of owning a vacation home now may be the time to buy. Home prices and mortgage rates continue to fall and there are some great deals for buyers looking for a second home. Here are five things you need to know before taking the leap. 1. Prices are at all-time lows In many second-home hot spots, prices are still close to their five-year lows. When the real-estate bubble burst, some of the hardest-hit markets were vacation destinations. Many vacation home areas experienced overgrowth and may now be suffering from foreclosures. 2. Think ROI Consider the possible return on your investment. Whether or not you decide to rent the home out, you will want to consider buying a place that has good rent potential. That's because a home's rent ability can affect its resale value. Before you bid on a house, make sure the homeowners association or township allows short-term rentals. 3. Don't count on rental income If you are planning on counting on rental income to cover the costs beware. According to HomeAway.com, a typical second home property rents out just 17 weeks a year. Make sure to account for the weeks the home won't rent. Plus, you'll need to pay for cleaning, maintenance, insurance, and maybe management fees. Make sure to plan on the maintenance costs of the property being at least 15% of the income. 4. Your mortgage rate depends on how you use the home How you use the home depends on the mortgage rate you will receive. If you plan to use the property primarily as a second home and you'll pay about the same mortgage rate as you would on a primary residence. If your plans are to use the home for rental income and need that income to qualify for the loan, you'll need to have as much as 25% for the down payment and pay up to one percentage point more in interest. 5. Take advantage of tax benefits Talk to your tax guy before you buy. If you rent the home out for two weeks or less you won't have to report a cent of income to the IRS. The good news here, you can still deduct property taxes and mortgage interest. On the flipside, if you stay there for less than two weeks or 10% of rental days, you can deduct operating costs in addition to interest and property tax. But where should you buy? According to CNBC here are the top places to buy a second home. If you are thinking about buying a second home I can help you find a professional agent in that area.





Posted by Kathy Foran on 4/29/2012

Many buyers today think buying a foreclosure means big savings and this can be true but buyers also need to be aware of potential pitfalls. A foreclosure takes place when a homeowner or property owner cannot pay the mortgage fees on the property and is forced to give up the property to the bank. First, potential buyers should know there are different stages of foreclosure.
  • Pre-Foreclosure
Pre-foreclosure stage is the earliest stage of foreclosure. Reaching pre-foreclosure status begins when the lender files a default notice on the property, which informs the property owner that the lender will proceed with pursuing legal action if the debt is not taken care of. At this point, the property owner has the opportunity to pay off the outstanding debt or sell the property before it is foreclosed. In this stage, many homeowners may opt for what is called a short sale. Many of these homes will sell for near their appraised values. Banks may be willing to negotiate on these properties but the process can be lengthy. Properties that sell at a 20 to 40 percent discount usually need repair or are in unstable communities.
  • Foreclosure Stage
If a property doesn't sell in pre-foreclosure, and the home owner actually defaults on his mortgage, the home goes to public auction. During this stage you can find the best bargains but it can be filled with unexpected changes and last minute details. Preparation, patience and knowledge are key here and remember if a property does go to auction it will go to the highest bidder which is often the bank.
  • Many auctions are canceled at the last moment as the property has been sold or payments reworked.
  • Court-appointed trustees only accept cash or cashiers' checks.
  • There's little time to arrange inspections, so bidders may have no clear idea of what they're buying.
  • Properties are sold "as is," without warranties. Sellers needn't disclose problems. Buyers may find themselves with unexpected and expensive repairs.
  • Post-Foreclosure
  • In the post-foreclosure stage, the lender has already taken control of the property. The home is then in the possession of the lender's REO (Real Estate Owned) department, or in the hands of a new owner or investor who purchased the property at auction. Lenders are typically extremely willing sellers, because an REO on the books is an obvious sign of having made a poor lending decision. Both the overhead and losses involved with an REO -- reflected in both the added reserves a lender must maintain as well as any potential property management fees incurred -- means the bank is likely a willing negotiator.
    • Bank will not agree to do any repairs; as-is sale.
    • Bank will usually require additional paperwork.
    • Bank cannot provide disclosures as to property history/condition issues.
    Bank foreclosure properties can definitely help you make a good buy in real estate properties and still have lots of savings. Doing your homework on the neighborhood, comparable sales and property condition are essential in making a good buying decision.