Home > February, 2012
So you just got that contract you’ve been waiting for and now you need a loan to help you buy, fix, and flip. You’ve gone to various money lenders and were turned down by all of them. You want to learn why before going to another lender. If this has already happened to you, consider how you are selling yourself. Just like when buying the actual real estate, it’s all about how you sell it.
Keep in mind, the lender is now your customer. While you do need that loan, you have some ground work to lay. Take control of it from the very beginning and you will be much better off in the end.
Begin by organizing your materials. Put together a binder complete with tabs outlining each section. The sections should be as seen below.
Begin with an “About Me” section. Here you will include your FNMA 1003 loan application, a copy of your credit report, a copy of your driver’s license, and a resume briefly outlining your past experience. If you have never had experience flipping houses, at the very least be sure to include a list of books and seminars you’ve attended. List references if you have them as well.
Next you’ll need the purchase contract. You’ll need to include a copy of the purchase contract complete with addendums.
Now you need to include the appraisal. This would be ideal if you have it. If not, you’ll at least want to supply a real estate broker BPO (broker’s price opinion).
You will also need an insurance binder. This is a copy of your insurance company’s commitment to insure. It will help the lender understand just how serious you are about the loan.
You will also want to include a copy of the title commitment. Again, this will illustrate how serious you are about making the sale.
You will also need photos. Choose pictures of the property as it appears both inside and outside. This will show it in its best possible light.
Be sure to also include a copy of the inspection report. The professional inspection is a very important part of any sale and showing the report will help you obtain your loan.
Include a repair estimate. This should come from a licensed general contractor. A copy of the license should also go here.
Break down the numbers. Make a spreadsheet of all the numbers involved and add it to your binder. This will include: purchase costs, closing costs, repairs, holding costs, realtor fees, and any other costs you will incur.
The last item should be your timeline. This should diagram your entire construction project.
Now that you have a product to sell, it’s time to go out and approach your hard money lender to acquire different results. You may just wind up getting that loan after all.
A burglary is one of the biggest fears that many homeowners face. While it is true that a determined burglar will probably find a way into your home, there are several things that you can do to make your home safer. Most of these methods are free or cost very little.
One of the simplest things that you can do to make your home safer is to remember to lock your doors and windows. Many homeowners forget to lock their doors and many burglaries result from people who simply walk into a home. First story and sometimes basement windows can also be entrance points for burglars. Your locks should be steel locks and should extend an inch at the very least. Opt for dead bolts, not standard doorknob locks. If you have a sliding door, make sure that you have a lock for it that keeps the door from being pushed off the track or slid open.
It is important that you lock your windows and keep the areas around them clear. Large shrubs, for example, can hide an intruder who is looking for a way to get into your home. Many people do not lock their windows and sometimes leave them cracked at night for fresh air. While the fresh air is enjoyable, this leaves an access point for criminals. All windows should be locked, especially at night or when you are gone, and this includes second-story windows. Most homeowners do not lock the windows on the second floor, and if a ladder is left nearby, this can let a burglar into your home.
Make it look like you are at home, even if you aren’t. This is an easy and effective strategy for protecting your home. Nothing tells a burglar that you are gone like the mail overflowing your mailbox or the pile of newspapers littering your porch. Ask that your newspapers and mail be held while you are gone. If you can, have a neighbor keep your driveway shoveled or grass mowed. You can also set timers to have your lights turn on and off at random times. If you’re just going to be gone for a few hours, you can leave the TV on, which will make a burglar think someone is at home.
One of the best ways to protect your home is to learn who your neighbors are. You do not have to make your neighbors your best friends, but you should be on good terms. Offer to watch your neighbors’ homes when they are gone and let them know when you see something that seems strange. They will be glad to return the favor. This way someone is always watching after your home. If you exchange cell phone numbers you can easily call or text if you see something that seems suspicious. However, it is not a good idea to give your neighbors a key to your house, just in case they aren’t as trustworthy as they seem.
Homeowner’s insurance is almost always a requirement. Even if you happen to live somewhere that does not require you to take out a policy, it would greatly benefit you to do so. Your mortgage lender will want to protect the investment almost as much as you, and a homeowner’s policy will do just that. You may be wondering, however, just how your credit score will be affected by taking out your policy. Just as lenders base your loan interest on your credit score, insurance companies also use it to determine how much you will be charged for premiums.
Your credit score is a measurement of your ability to handle borrowed money. The more credit cards you have, the harder it can be to pay them all back. If you are able to pay more than the minimum payment on time, your credit score will remain excellent. If, on the other hand, you have difficulty making payments, your score will suffer.
The most common type of credit score used is the FICO, or Fair Isaac and Company Score. This score is based on five factors. They are: your payment history, the total of all current credit balances, the amount of time you’ve had credit accounts, whether or not you have recently opened any new accounts, and the credit types you use. So how does all this tie into your insurance?
Credit companies use your score to help determine premiums. It’s called risk management. Insurance companies want to know how much of a risk you will pose to them in terms of paying your insurance premiums. They want to make sure you will be able to afford the homeowner’s policy you are taking out. They try to estimate the number of claims their customers will file each year, and charge premiums based on this average that will be sufficient enough to cover liability for at least that amount.
Studies have shown people who have lower credit scores are much more likely to file an insurance claim than those whose scores are average or high. Because these clients are riskier to insure, the insurance companies develop their own rating numbers. These numbers are based on the credit scores of customers. Customers with high scores are offered the best terms and rates while customers with low scores may not receive the same great terms and will be required to pay more.
Before buying a home, you will be able to check your credit score. Your mortgage company can usually do this for you as your credit score will also determine the amount of money you receive for a loan. If you find your score is lower than you would prefer, you may wish to pay off some of or perhaps even all of your creditors before buying a house and taking out a homeowner’s insurance policy.After all, the insurance is there to help you and the better the coverage, the safer you’ll be in the long run.
