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    The Complete Guide to Locating, Negotiating, and Buying Real Estate Foreclosures: What Smart Investors Need to Know- Explained Simply Revised 2nd Edition
    The Complete Guide to Locating, Negotiating, and Buying Real Estate Foreclosures: What Smart Investors Need to Know- Explained Simply Revised 2nd Edition
    The Complete Guide to Locating, Negotiating, and Buying Real Estate Foreclosures: What Smart Investors Need to Know- Explained Simply Revised 2nd Edition
    Ebook379 pages3 hours

    The Complete Guide to Locating, Negotiating, and Buying Real Estate Foreclosures: What Smart Investors Need to Know- Explained Simply Revised 2nd Edition

    By Michael Cavallaro

    ()

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    About this ebook

    This thoroughly revised and updated second edition is a tremendous guide for buying pre-foreclosed homes in any market. You will learn the simple formula to build wealth through foreclosures. This book is a resource for novices and pros alike; it will guide you through every step of the process, including finding properties, negotiating, and closing.

    LanguageEnglish
    PublisherAtlantic Publishing Group, Inc.
    Release dateJul 15, 2016
    ISBN9781601389602
    The Complete Guide to Locating, Negotiating, and Buying Real Estate Foreclosures: What Smart Investors Need to Know- Explained Simply Revised 2nd Edition
    Author

    Michael Cavallaro

    Michael Cavallaro’ s life work has been finding ways for people to integrate their spiritual nature with their everyday lives. For almost 40 years, through classes, workshops, lectures, books, audios, articles and private consultations he has helped thousands of people lead healthier, happier lives by finding practical solutions to various challenges. His training as a family intervention counselor and clinical hypnotherapist has given him insight into established approaches to problems. The exploration of a variety of spiritual practices, traditional and non-traditional methods, combined with his own experience and insights inspired him to integrate and apply ancient wisdom with modern life. Michael’s background is as varied as his interests. He has worked in the fields of construction, management, finance, insurance and more; taught in schools and prisons and currently teaches classes in artistic expression. He serves as an Educational Consultant for Teamwork Wins, Ltd, a non-profit organization that guides individuals with Invisible ChallengesTM in becoming self-directed, free-thinking, creative individuals. Artistically, Michael has recorded several music CD’s and creates unique, energy filled artwork. All these interests are brought together with the intent of bringing light to the world and assisting others in finding joy in their existence and the connection to their own true selves. Though he is an international speaker, his true gifts stand out most powerfully in intimate workshops and individual sessions. Here Michael’s ability to see clearly past the facades and into the ways humans block and defend themselves with their fears, shames and beliefs truly comes out. His way of expressing what each person knows within their own heart but never fully admits allows participants the opportunity to shed what’s not working in their life and let their own light shine. He lives in Pennsylvania with his wife Adele and is the founder of Living Concepts, LLC. Michael is available for book signings, workshops and public appearances as well as private consulting. For more information or to design a program for you or your organization, contact admin@livingconcepts1.com or call 215.272.3153.

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      Book preview

      The Complete Guide to Locating, Negotiating, and Buying Real Estate Foreclosures - Michael Cavallaro

      Chapter 1

      MORTGAGE OVERVIEW

      & INVESTMENT PREVIEW

      The American dream of owning a home is relatively new. According to Theodore Dallow in How to Buy Foreclosed Real Estate, government development of the Federal Housing Administration (FHA) and similar agencies allowed typical Americans crowded in rent-controlled cities to branch out into the suburbs. Only when armed with the ability to borrow with government-backed loans were average Americans able to step into houses of their own.

      Most homeowners do not own their homes, at least not outright.

      In 1998, Carter B. Horsley reported numbers related to apartment purchases in New York City. Horsley said that 35 percent bought without financing. At the height of the real estate crisis in 2008, the federal government put Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs), in charge of about half

      30 The Complete Guide to Locating, Negotiating, and Buying Real Estate Foreclosures the nation’s residential mortgages. By 2011 GSEs held 45 percent of mortgage assets, followed by commercial banks and savings institutions with 25 percent. Following the crisis, home mortgage debt declined four consecutive years, with mortgage debt outstanding on single-family homes dropping by 2.5 percent from $10.5 trillion in 2010 to $10.3 trillion in 2011, while outstanding commercial mortgage debts declined for the three consecutive years by 3.5 percent from $2.3 trillion to $2.2 trillion. While that does not tell us how many homeowners purchased homes initially with zero financing, a 2015 housing market report by Freddie Mac (as shown in Figure 3) indicates only minimal declines in the amount of outstanding single family mortgage debts being carried by homeowners, with an uptick in housing valuation since 2012.

      So while the burden of outstanding debt remains static, housing prices have reestablished their pre-crisis housing bubble levels.

      Figure 3

      Chapter 1: Mortgage Overview & Investment Preview 31

      Many mortgage programs help new homeowners move in without putting very much down at all. Veterans Affairs (VA) loans have long been a popular way for new homeowners to move in without making a down payment. In the last 25 years or so, other types of mortgage vehicles have been created, often referred to as exotics in the mortgage business. They let homeowners move in without having to save for 10 years to buy the house. The U.S.

      Department of Veterans Affairs states that lenders will generally loan up to four times a veteran’s available entitlement without a down payment, provided the veteran is income and credit qualified and the property appraises for the asking price.

      With an average house price of $328,700 as of June 2015, according to the U.S. Census Bureau, a decent down payment would be about $65,740, based on the industry standard of banks request-ing 20 percent down in a loan agreement. Many house loans are available with 3 percent ($9,861 for the average house price of $328,700K) and 5 percent ($16,435 for the average house price of $328,700K) down payments. Many federal loan programs support 3.5 percent or even no money down loan programs. These programs include the following:

      • FHA 203(k) loans for fixer-uppers

      • FHA 203(b) loans for first time homebuyers

      • FHA Good Neighbor Next Door Program (for police)

      • Veterans Affairs Mortgage Program

      These programs sound appealing to the consumer looking to move into their own home. But many of these low or no-down payment deals can set up the homeowner for foreclosure, as they make it a little too easy for a person to move into a house. The problem often lies in unrealistically budgeting what owning a house will cost. Besides the actual mortgage payments, costs include utilities, lawn maintenance, property taxes, homeowner association fees, upkeep, repairs, and more.

      32 The Complete Guide to Locating, Negotiating, and Buying Real Estate Foreclosures When we talk about foreclosures, we are talking about homeowners who do not own their homes outright. They have purchased their homes via loans from banks. They are debtors. They are in the process of paying back to the bank the loan money via a mortgage agreement. We only have properties going to foreclosure because the homeowners are not paying back money that they owe and for which they secured the debt with the property.

      Even if most Americans bought their homes outright with cash and not with loans borrowed from moneylenders, we would still have properties going to foreclosure. Even if someone owns a house outright, he could still lose it to a serious secondary lien, such as owing back taxes to the IRS. Besides mortgage payments, many homeowners may have other financial problems that can impact their home ownership, such as construction bills, taxes, medical bills, and property taxes. They may then find themselves in a situation where other interested parties will try to get their money back via the property. This is where the so-called junior or secondary liens come into play. For more information on junior liens, look ahead to Chapter

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