Real Estate Investing Blog -Rich Urban Explains How To Buy Foreclosures and Vacant Property

Port Saint Lucie Wholesale Deal Of The Month - $69,000 Or Best Offer

Rich Urban (Equity Resq) — Mon, 12 May 2008 08:25:53 -0500

Cement Block - PSL House - Must Sell -> New Kitchen / Bath / Electiric

735 SE Airoso, Port Saint Lucie, FL
2 Bedroom / 1 Bath
Cement Block Construction <-- Not A Mobile Home!!

Call Rich: 772-708-4750
Email: rich@equityresq.com

Brand New Kitchen & Bath / Updated Electrical / Freshly Painted Inside & Out
Move In Ready - $69,500
Must Sell Fast!
http://www.735airoso.com

REALTORS WELCOME: MLS ID# R2910649

New Kitchen / New Bath / Updated Electrical / Updated Plumbing
Call & Ask About The Special Financing That Is Available!

Call Rich: 772-708-4750 Email: rich@equityresq.com

SPECIAL FINANCING OPTIONS AVAILABLE

The Home Purchase Program is designed to help Saint Lucie county residents that would not otherwise be able to own a home, purchase a home by providing assistance for down payment, closing costs, prepaids and/or repairs.

In addition, Florida Housing also offers up to $14,999 to assist eligible borrowers with their down payment and closing costs!I want to see that you take advantage of EVERY PROGRAM THAT YOU ARE ENTITLED TO!

Who is eligible for this Special Financing Program? Households are eligible for assistance if they meet the following guidelines: (CREDIT IS NOT A MAJOR FACTOR)

A) Must meet income guidelines - For This Particular Property, you must make $800 per month ($200 per week).

B) Must have worked at the same job for at least 1 year, OR within the same field of work within the last 2 years.

D) Must be able to contribute at least $500 - $1,000 toward home ownership.

What To Do Next --> Contact Rich Urban - 772-708-4750

735 SE Airoso at Prima Vista google map yahoo map

Rich Urban Reveals How He Is Capable Of Stealing Your Real Estate Deals On A Regular Basis

Rich Urban (Equity Resq) — Sat, 03 May 2008 16:42:26 -0500

Have you ever wondered who's getting all of the mind blowingly profitable Real Estate deals in your community? Well I'm "That Guy"..Talking to owners in distress has really become my thing because I follow a system that none of my competition has been able to recognize.

It's quite simple actually, and I want to show you a few of my tactics so you too can be the one in town that grabs deals that all of the local investors are grabbing for.

Allow me to set the stage for you. Mrs. Johnson, a motivated seller with only 30 days until her auction, has called every single investor in town. If you had a bandit sign or an ad in the paper, you got a call from her. Every investor in town has also run the numbers on the deal to find that it's a whopper. The kind of deal that would let them put their wholesaling business on cruise control for a few months. You've received that very same call.

What do you do?

First off, "Other Investors" are irrelevant because you're going to be the one that closes the deal. For me, I like to be the first one to the house....I try to find out if she's meeting with other investors and what time, then I make sure that I'm scheduled in to be first....

A few things I would do:

1. Do research on the property and make sure you know the neighborhood comps. Print up the lowest comps that you can find...bring them with you. Print up the property appraisor's sheet on the property that you are visiting. You will look prepared and efficient.

2. Build rapport before you start even talking about the house.

3. Emphasize how you get things done quickly and easily. You're the best home buyer in your area. Let her know that she can have confidence that you'll handle everything right away and correctly. Your offer is really the best deal for her..she may get slightly higher, but they're not experts like you are.

4. If she balks at your offer, be sure to whip out those old comps and say..."I know Ms. Seller...I thought that I could pay more than that too...I really wish I could...EXCEPT...whoever bought 101 Maple Street really screwed it up for all of us. He paid so little that he brought down everyone's property value. John Doe at 202 Maple Street did the same thing..." You get the idea..make sure that you're on her team working against a greater evil. In this case the NEIGHBORS that forced you to offer such a low price....:)

5. Don't leave her with a copy of your contract EVER!!! If you leave her with an unsigned contract, she'll shop that bad boy around town so fast and every other shark will have a copy of your contract. You'll be used for leverage and you don't want that. You want to be the guy that gets the deal. I personally don't leave without a signed contract....but if you're not as ballsy as I am, you could always tell her to speak with the others and give her the courtesy of a call before she signs with anyone.

6. Make sure that you put "AND/OR Assigns" on your contract so that you can flip that contract to another investor.

Now go close that deal!

Sign Up To Receive Rich Urban's Free Real Estate Investing Course at: http://www.youngrealestateinvesting.com/freecoaching

You want know the REAL TRUTH about making money in Real Estate that everyone else is too scared to reveal you? Are you sick of all the B.S., hype, lies and scams out there? Get your free course now -- Make Sure That You Enter Your Name & Email at: http://www.youngrealestateinvesting.com/freecoaching

Article Source: http://EzineArticles.com/?expert=Rich_Urban

The Good, The Bad, And The Ugly Of Being A Landlord...

Rich Urban (Equity Resq) — Tue, 29 Apr 2008 13:11:05 -0500

The Good, The Bad, And The Ugly Of Being A Landlord...

I will present here the good sides, as well as the bad sides of being a private landlord. Consider them some useful tips for those who want to engage in a real estate activity and develop a rental business.

Most of the people who want to enter the real estate area are looking forward to making a fortune in no time, in other words, earning lots of money by doing, basically, nothing. I'll be the first to tell you that once you have the system down, Real Estate investing is quite simple. Keep in mind though, that you can't make a fortune by working three hours a day. If somebody tells you that it is possible, than they are full of crap! This is true in any type of business...You're going to have to put your time in!

The first thing to know about being a private landlord is that Rental Properties can work great as a long term profit increasing instrument, probably even the BEST vehicle for long term wealth that you can find. The problem is that it just doesn't work for new investors. And this is based upon the fact that, in many states, a landlord has fewer rights than his renters. You must manage your properties in order to keep your renters satisfied, which actually involves a lot of work, and it will probably turn out to be a mess if you pass this to a management company. You can't try a stunt like the little girl in Will Ferrell The Landlord, where she verbally abuses and threatened Will Ferrell for the rent money (If you don't know what I'm talking about, google "Will Ferrell The Landlord" it's hilarious..:) You'll end up sued, or even worse in jail!

On the other hand, if you have problems with them (for example, they don't pay their rent) and you're obviously the individual that is "In The Right", your only alternative is carrying them into court. Believe me, there are times when court is the only option, but it's the kind of thing that you should try to avoid at all costs. Any type of litigation takes a huge amount of money. And it's also possible that this will happen to you more than once. So, for getting involved in any kind of rental business, on the real estate market, you must have a significant amount of money available, just in case problems will show up. I would recommend getting involved in a rental property until you have at the very least, twenty thousand dollars sitting in the bank available to you. If you don't have these kinds of funds available, how do you expect to fix an air conditioner when it breaks or solve a leaky roof issue, or pay the plumber that comes out at 2 in the morning on a Saturday night to stop the flood in your basement? These things all cost money and there will be a time when you'll have to plunk down a nice piece of change.

Another significant aspect, which stands for every segment of almost any business, and in particular, for any rental business too, is that you must be able to communicate with other people. You must try to understand their problems, in order to find a way to solve them so that the both sides (and that means you and them, as well) will be satisfied. It's preferable that you do this work yourself, at least when you're a beginner, so that you can learn about how to earn people's trust and how to make them consider you a good thing that's happened to them. If you manage to do so, you'll probably find your own success and build a great career in this specific area.

So, it takes both experience in the real estate field and money available for one to successfully manage a rental business as a landlord. But if you have them both, than you can be sure that this is a great way of making money on a long term basis.

I hope that I haven't discouraged anyone from becoming a landlord, I just want to present the cold hard reality of what land lording really involves. Like I said earlier, with a few rental properties you can easily become a multi millionaire, the problem is that with that great wealth comes great responsibility. Just be sure that you are prepared to take on those responsibilities before you embark on your journey into real estate investing.

You want know the REAL TRUTH about making money in Real Estate that everyone else is too scared to reveal you? Are you sick of all the B.S., hype, lies and scams out there?
Sign Up To Receive Rich Urban's Free Real Estate Investing Coaching at:
http://www.youngrealestateinvesting.com/freecoaching

Free Real Estate Investing Course

Rich Urban (Equity Resq) — Tue, 29 Apr 2008 09:41:18 -0500

You want know the REAL TRUTH about making money in Real Estate that everyone else is too scared to reveal to you? Are you sick of all the B.S., hype, lies and scams out there?

Get a FREE course now -- Make Sure That You Enter Your Name & Email at:
http://www.youngrealestateinvesting.com/freecoaching

Sign Up To Receive Rich Urban's Free Real Estate Investing Coaching at: http://www.youngrealestateinvesting.com/freecoaching

Which Is A Better Real Estate Investing Strategy - Wholesaling OR Rehabbing?

Rich Urban (Equity Resq) — Tue, 29 Apr 2008 09:37:48 -0500

This topic has been one of heated debate for quite some time now. You have the "Die Hard" Wholesalers, your Rehabbers, and Landlords that all feel that their strategy is the best.

Probably the best way to describe where everything fits in, it's best to think of a triangle. If you look at Real Estate like a triangle you'll see that on one side we have Rehabs, on another side we have Rental Property and on the last side of the triangle we have wholesaling.

I consider wholesaling to be the bottom side of the triangle, the foundation. Wholesaling is the foundation that quickly injects large chunks of capital into your home buying business. This is the capital that you'll be using to grow your business and purchase long term wealth vehicles like Rental Properties. I personally wouldn't recommend trying to do any of the other real estate investing strategies until you've had a few wholesale deals under your belt.

Wholesaling, or "Flipping" properties is by far the easiest way for a new real estate investor to go from zero to $20,000 in 30 - 45 days. It won't take you long to get to the point where you're making $10,000 to $20,000 checks each and every month only working a few hours a week. That's probably one of the greatest benefits that you'll find when wholesaling Real Estate.

Who wants to worry about fixing junk properties..or unclogging toilets? This is a strategy that you can put on auto pilot if you put the appropriate systems in place. If done properly, you should only need to show up to Close The Deal & then to pick up your check at the title company. Remember that time is your most valuable asset!

Once you've created your investor list (which we will discuss) it won't be hard for you to move these deals in a short amount of time, normally within 10 to 15 days. Your buyers will be paying with All Cash and financing is not an issue.

This is much easier than selling to an "End Buyer". In a slower Real Estate Market, it may literally take two to three months for you to find a qualified buyer who wants to buy the property. Remember that the keyword here is "QUALIFIED BUYER". When you're dealing with other investors you know that they either have cash or hard money, and financing isn't a big issue. When you're dealing with "Joe Q. Public" you're going to get interested buyers with various financing issues and you're the one that has to worry about getting the deal closed. Once you find a buyer, you've got to get their loan approved, then you've got to get the loan taken care of, get the appraisal and all the other things that come with a regular retail buyer, and so it may take anywhere between three months to eight months to close a deal on a rehab, going from purchase - rehab - resale.

That brings me to another reason why I prefer wholesaling real estate over rehabbing. When you buy, fix and resell real estate, you're committed to the property. Once you close on that baby it's your's...The Good And The Bad! If some unforeseen problem arises (It always does), you're going to be the one that carries the expense. If you're rehabbing a property, you've got to start by hiring a contractor or handyman. You've got to get him to do all the repairs to the property, market the property, go through the process with the end buyer. All of this may take a long time, and you are the one carrying the costs. Every day that this property remains in your possession, money is pouring out of your wallet.

In a wholesale deal, all that you are really doing is getting control of the property. You would simply take the same property that you would normally buy and rehab, and get it under contract. Then, you're taking that contract, marketing it and selling it to other investors that want to take on the project. There are investors out there that prefer doing rehabs. These are investors who have the cash to pay and who don't mind waiting six months to do a rehab. There are also investors that want to do a deal, but are horrible at talking to sellers and would not be able to secure the pricing that you can. These Rehabbers have no problem paying you an "assignment fee" (the amount that you pocket when you sell your contract) because they understand that it is a cost of doing business for them.

The Rehabber will generally net more than a wholesaler, but look back at all of the risk and time associated with doing a rehab. The average, depending upon your location is between $25,000.00 to $40,000.00. and at times even more. But most wholesale deals are going to net you anywhere between $10,000.00 and $20,000.00. Usually about half of what the average Rehabber makes per deal. However, unlike the rehabber, as a wholesaler, you have more control of the amount of money you earn. The best part of wholesaling is that your pay is directly proportionate to your ability to put deals together and not how much time or physical labor you have in a deal. As you get better at negotiating, you'll be getting properties under contract for less and less, allowing you to sell the contract for more and more.

I would personally rather do four wholesales and spend less time than to wait six to eight months for a single rehab to cash out. Even if you're in a position to wait that long, is it really worth the risk? That's the question that you need to ask your self when deciding which real estate investment strategy you want to take on. Exactly how much risk are you willing to accept?

Sign Up To Receive Rich Urban's Free Real Estate Investing Coaching at: http://www.youngrealestateinvesting.com/freecoaching You want know the REAL TRUTH about making money in Real Estate that everyone else is too scared to reveal to you? Are you sick of all the B.S., hype, lies and scams out there?

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Track Down The Elusive Homeowner Bloodhound Style...

Rich Urban (Equity Resq) — Tue, 29 Apr 2008 09:34:13 -0500

"Vacant - Boarded Up Houses" are my FAVORITE DEALS for quick turnaround flips. You're talking about someone that cares so little about the property that they've left it to decay. The owner of that house should be begging you to take their junk house off of their hands. Except, the only problem is, the owner has completely vanished without a trace...Or so it may appear!

In these times of computers and the Internet, It's a very rare occasion when someone can't be tracked down. Every homeowner leaves little clues, and it's your job to piece them together. If you want to be successful at this, you need to have a system and you need to follow it exactly as I'm describing it to you. If you only do one or two things, you may get lucky...but if you do them all, you'll almost always get your "Mark". I suggest you print up the following Ten Step Plan and follow the process every time you track down a seller.

The Ten Step Plan To Finding Homeowners "Bloodhound Style"

1. Place A Flier in the door stating that you buy houses in any condition & stick one of your "I Buy Houses" bandit signs right in the front yard.

2. Ask The Neighbors....Not Just immediate neighbors. I always go Four houses out on each side and across the street. You should be able to get bits and pieces of information from each person. Don't be afraid to ask questions..Leave your card and offer money (if you buy the property) for any information that they may "remember" after you leave...Ask & You Shall Receive!

3. I go to Whitepages.com or you could call 411 - You'll find about half of them right here!

4. Visit your local Tax Assessor's Office. Check the "Mailing Address" to see where the tax statements are headed. ALSO, I ALWAYS run that person's name to see if they own other property in hopes that there are more abandoned junkers that we can cut a deal on. Sometimes a new mailing address will be on other properties as well.

5. Run the name through the clerks office and look at all the recorded docs and court indexes for that person. You can often get a good picture of what's going on, and sometimes even some other addresses or addresses of relatives, etc. This is where your detective skills kick in. You want to scour through and see if you can find anything...divorce filings, new loans, liens, Law Suits. If their salary is being garnished, the employer's name and address will be their for you. . Many times you'll see that the individual is in jail or just got out of jail. You can usually find their attorney or a new address off of the arrest info. If they're in jail, you can call the prison and set up a visit with the inmate.

6. Send out a letter and put "Address Service Requested" on the envelope. Make sure that the address is hand written on the envelope and regular stamp is used (NO BULK RATE)

7. Hire a Skip Tracer. usually use "FINDTHESELLER.COM" because they're pretty inexpensive and they're pretty good at finding people that I can't with very limited info. It usually takes 24 - 48 hours to get a match but you can be trying the other methods while you're waiting.

8. If it's a unique last name, I'll start calling everyone in the phone book within the area...hoping to get a relative. I've been surprisingly successful with this "Shot Gun" approach. If the name is something like, "Johnson" or "Jones"...I wouldn't even attempt it..:)

9. Voter Registry - You can get updated addresses

10. Place the lead in your file in case another clue arises in the near future (Property goes into foreclosure, neighbors call you, someone calls on the sign, etc).

Sign Up To Receive Rich Urban's Free Real Estate Investing Course at: http://www.youngrealestateinvesting.com/freecourse
You want know the REAL TRUTH about making money in Real Estate that everyone else is too scared to reveal you? Are you sick of all the B.S., hype, lies and scams out there?
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92 Ways A Small Time Real Estate Investor Can Beat "Homevestors"

Rich Urban (Equity Resq) — Tue, 29 Apr 2008 09:31:55 -0500

When it comes to the Home Buying Business, the small "work out of your house" guy can easily dominate the corporate giants through simple creativity. Sure, Homevestors can afford to advertise on every billboard in town, and have several television commercials running at the same time but if you follow my strategy, you won't have to. The amount of overhead that they spend EACH MONTH on Branding makes it somewhat cost prohibitive for the newbie. If you want to beat the corporate giants, you need to think Guerilla Marketing tactics. Besides, a limited budget can actually be a benefit to the true entrepreneur. It will force you to look closely at profits and how much you buy houses for. You'll be driven by the numbers and saving money rather than Throwing Cash At Your Problems! Eventually, that cash is used up, and your problems will still remain. It's amazing how a lack of cash will create incredible focus.

If you have a ton of cash...I want you to put it away....FAR AWAY...Pretend that it doesn't exist!

The key to wholesaling Real Estate is pulling in leads of motivated sellers AS WELL AS finding tons of individuals that want to buy these wholesale priced houses in order to put the deal together.

How do we do this "On The Cheap"?

Well, I sat back the other day and wrote down every technique that I personally use to find motivated sellers and buyers for my deals and figured that I'd share them with my readers. Now, I must warn you that these techniques work best when used in conjunction with eachother. You don't have to use all one hundred techniques at the time, but I DO try to use a mix of at least 8 or 9 for any given campaign. Different strategies will work better for different people, and once you find what works for you keep shaking it up a bit and TEST TEST TEST...

Please Comment and let me know if you have any other interesting low cost strategies to grabbing tons of leads....In the mean time here are 92 lead generation strategies to help you grow your home buying business in no particular order...

1. Sales Letters to targeted neighborhoods

2. Classified advertisements in "Freebie Papers"

3. Craigslist

4. Create a Simple "Magazine" with information that would be of interest to individuals trying to save their home / divorce / etc. and place them in neighborhood convenience stores. (Can be simple black and white 2 or 3 pager) . You can get it printed CHEAP online (google it)!

4. Flyers on cars- Pay neighborhood kids to go to every mall & walmart in your area armed with "We Buy Houses" flyers.

5. Leaflet dispensers at tageted locations

6. Special reports

7. Online "We Buy Houses" page - InvestorPro.com is a great prefab one, or you could make one yourself.

8. Telemarketing - look through your local property appraisor's website and grab the info on properties in a particular area that meet your buying criteria. Go to - whitepages.com and input the address to grab a phone number. Give them a call and see if they're interested in selling or know of someone that is.

9. E-Newsletters

10. Traditional newsletters

11. Viral marketing

12. Ebooks - Write a Book about how to sell your house Easily Without a Realtor and place links to your website.

13. Magazine and paper inserts

14. Bird Dogs - Have a bunch of Worker Bees out looking for properties for you. Pay them $1,500 for every deal that you make a profit on---They only get paid when you get paid so get as many out there as you can find!!

15. Introducers

16. Bandit Signs - Some people are totally against them. I put these bad boys all over town...:)

17. Family and friends

18. Joint ventures - There are tons of other investors that want to partner up their deals in exchange for your labor.

19. Radio ads

20. PR - Cheaper than TV ads and more effective. Call your local news and get a story that ties into "Local Real Estate". Example: How To Keep From Losing Your House To The Bank In Such A Horrible Real Estate Market And Recession. <-- The news LOVES that kind of horrible, negative sounding stuff..:)

21. Position yourself / your company as an expert

22. Internet adverts (PPC) - Google adwords can get expensive but will direct IMMEDIATE traffic to your website that is TARGETED. Great for selling property to.

23. Press releases

24. Yellow page ad - A little expensive for the newbie but the response rate is quite good. I'm guessing that most people TRUST the yellow pages.

25. Local Chamber Of Commerce

26. Sponsor an award - sporting event - scholarship...anything newsworthy

27. Fax marketing - Careful with this one..:)

28. Business cards

29. Join Your Local Real Estate Investing Club - You will find tons of investors looking for partners or to purchase wholesale properties from you. Visit my website for a list.

30. Take other investors that have been doing this for years out to lunch Do The Same For local small bank presidents, Probate-Divorce Attorneys, Top Realtors...you get the idea.

31. Attend industry seminars

32. Gather and use testimonials - I usually bring a video camera to the closing to get a video testimonial for my website.

33. Offer a free consultation to discuss saving the individuals home from foreclosure. Of course, if you can help the person by moving some paper around or getting a forebearance agreement, you should do it. Believe me, it's worth it because you'll be known as the expert and will begin receiving referrals to deals that pay off far greater sums.

34. Offer to pay the individual for their time just to get your foot in the door. Yes it sounds bold...but it works!

35. Organize a seminar or a Free How-To clinic.

36. Promote an industry event - Have a booth and COLLECT AS MANY NAMES AS POSSIBLE!

37. Give endorsements to prominent people

38. Set up a Squidoo lens

39. Write articles online - EzineArticles.Com is great for that. You can put a link to your homebuying site and get ranked high on google.

40. Form alliances with other investors

41. Create a give away e.g. calendars, mugs, posters...

42. Write for the local newspaper

43. Syndicate a column

44. Create a Flier and pay the newspaper delivery guy to deliver them when he delivers the morning paper.

45. Conduct Local Real Estate Research and present it to your local media. You'll get credit for the information in a story again making you an industry expert.

46. Send articles to those in foreclosure that you might think would be helpful.

47. Advertise on buses, cabs

48. Speak at the local college

49. Panel at professional seminars

50. Write a how-to pamphlet

51. Make up cards that Offer a finder's fee

52. Do pro bono work for charity with Real Estate links - Example: Habitat for Humanity

53. Put Signs on your car

54. Make up Polo Shirts Or T-shirts and give them out (I prefer the polo collared ones

55. Pull a publicity stunt - Careful my friend...:)

56. Cross-promote with other investors - Chip in for an 800 number and advertising. Split the leads up evenly or partner the deals.

57. Enter a contest

58. Create a contest

59. Direct mail to owners that have just filed divorce

60. Post card promotions

61. Business cards

62. Networking offline

63. Networking online

64. Go To House Expos

65. Referrals

66. Speeches

67. Door Knocking - Grab a list of houses that are in foreclosure and start knocking on some doors. 68. Social networking sites -ActiveRain, Stumbleupon - DIGG - Myspace - Facebook There's Tons...

69. Christmas cards

70. Birthday cards

71. Thank you cards

72. Add value notes / paper cuttings

73. Promotional give aways..

74. Article writing

75. Online forums - Think local

76. Bill boards

77. Freebie pens / t-shirts / mugs

78. Loss leaders when selling property

79. Free teleclassses

80. Youtube

81. Ebay

82. Mini-courses - Send a ton of free content to individuals that give their contact info on your website. Investorpro automates this process.

83. Two-step paper ad

84. Rotary Club

85. Church

86. Schools - Advertise in the PTA Flier or sponsor a school function.

87. Chinese Food & Pizza Parlors - Pay them to send your flier out with every delivery that they send out.

88. Drive through older neighborhoods and locate the owners of homes that look in need of great repair, boarded up, high grass, vacant.

89. Code enforcement dept.

90. Find Owners that have Tax Leins against property.

91. Locate recent probate's -- Check Obituaries

92 Let Realtors know that you buy houses quickly for cash, and to let you know if they have any pocket listings.

Sign Up To Receive Rich Urban's Free Real Estate Investing Course at: http://www.youngrealestateinvesting.com You want know the REAL TRUTH about making money in Real Estate that everyone else is too scared to reveal you? Are you sick of all the B.S., hype, lies and scams out there? Get your free course now -- Make Sure That You Enter Your Name & Email at: http://www.youngrealestateinvesting.com

Why You Have Not Made A Dime As A Real Estate Investor...

Rich Urban (Equity Resq) — Tue, 29 Apr 2008 09:29:40 -0500

Ok, so you haven't made a dime in Real Estate yet right? You want to be a Real Estate Investing Millionaire, but for some reason you can't seem to find good deals on houses. Well, I can tell you what your problem is.

You are doing all of the things that don't make you money in real estate! Going around with a Realtor, looking on the web, driving around nice neighborhoods looking for For Sale signs, telling a few people that you Buy Houses....it's a major waste of time.

That's just keeping yourself busy! Do you want to "PLAY REAL ESTATE" or do you want to be a "Real Deal" Real Estate Investor? If you don't want to do what it takes, do yourself a favor and go down to Toys R' Us pick up a game of Monopoly and call it a day. If you're more interested in the latter, then you need to listen up! Spend that time knocking on the doors of homeowners in foreclosure. Quit doing all of the "Safe" things like meeting with Realtors. That's why they're safe, because you're not going to make any money. If you don't put yourself out there...YOU'LL NEVER GET A DEAL!

What you're doing is looking for deals on houses & not looking for people that need their problems solved. No one sells their house at a serious discount unless they HAVE TO! Would you sell your house to me for 50 cents on the dollar because I'm a nice guy? Of course not, you worked hard for your home and you don't HAVE TO. But if you had lost your job, were 30 days from losing your home, and I showed you how I could put immediate cash in your pocket, wouldn't you consider it?

As investors we buy houses from people that NEED TO SELL, NOT PEOPLE THAT WANT TO SELL. When you're dealing with a Realtor, 9 times out of 10 they're going to show you nice houses, owned by people that are in no urgent rush to sell. I hardly ever deal with Realtors. I'm not saying to completely alienate yourself from them. That would be foolish. Simply network with them, and let them know that if a killer deal comes along, you can close with cash quickly. Explain what you're looking for and that's when they will call you. I wouldn't go around looking at houses with them. Most Realtors are not trained to look for the types of deals that we're looking for. Actually, they'll probably tell you that it's NOT POSSIBLE to find the kinds of deals that we do.

There's a few things that you need to be looking for..THESE are the things that will lead you to the good deals that you're looking for:
1. Divorce
2. Imprisonment or Court Costs
3. Loss of Job - Foreclosures
4. Bankruptcy
5. Death
6. Job Transfer
7. Bad Tenants - Contact Landlords who have filed evictions

Most of these types of people can be searched by looking through the public information on your local courthouse records. Depending on your location, most of the time these are available online. Situations like Loss Of Job would be discovered by looking through the foreclosures and knocking on their door. You need to focus your attention on people with these types of situations.

These people usually have serious issues that need to be solved. They at one time had the cash to pay for their mortgage and the expenses associated with it. Now due to circumstances beyond their control, things have been thrown out of whack and they need someone to get everything reorganized for them. That's your job...Solve their problem and you'll get a good deal.

Sign Up To Receive Rich Urban's Free Real Estate Investing Course at: http://www.youngrealestateinvesting.com/freecoaching
You want know the REAL TRUTH about making money in Real Estate that everyone else is too scared to reveal you? Are you sick of all the B.S., hype, lies and scams out there?

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How A Homeless - Bag Lady Can Jump Start Her Real Estate Investing Career

Rich Urban (Equity Resq) — Sun, 20 Apr 2008 22:49:30 -0500

Upon looking at the Real Estate Investing message boards, I've come to find a very common question that seems to resurface over and over again. "I have No Money and I have horrible credit. Can I still invest In Real Estate?" . I want to answer this question once and for all, so I thought about it from the perspective of having absolutely nothing. What would I do if I was homeless and had zero resources?

Well, life is much easier if you have one of the two, but it's not a necessity. With great credit you could write a check against a credit line and buy houses immediately. Obviously, you'd be in an even better situation with pure cash. Still yet, all is not lost if you lack both Cash and Credit. You will merely need to use the following strategies until you can increase either your cash supply or build up your credit:

1. Wholesale properties - Locate great deals, put them under contract and sell the contract to an investor with cash or great credit. If you do a few of these you'll be buying houses for cash in no time. Expect to make from $10,000 - $20,000 per flip depending upon the equity spread. **THIS IS THE BEST SCENARIO FOR A NEWBIE WITH NO MONEY

2. Go through a Hard Money Lender (you can find them at a local real estate investing club) and rehab the property and sell retail. Hard money lenders will usually lend up to 70% of the After Repaired Value and base their decision on the property values not your credit. Hard Money Lenders are usually real estate investors that have amassed a ton of capital and need to make an easy return on their money. Keep in mind, you'll pay for the nose for a hard money loan and I wouldn't use them for anything that I was planning on holding for more than 3 - 4 months total. Like I said, they're expensive but if lack of funds is what's standing in the way of a nice profit, it's well worth it. What's the cost of NOT doing the deal?

3. Purchase the property Subject to the existing financing with a promise to pay the owner's portion of the proceeds in 90 - 120 days.

Example: Owner owes $50,000 and you agree to purchase the house for $62,000. You have the owner deed their property to you and you continue to make their payments every month. In 90 - 120 days when you sell the property or can Refinance (it's easier to refi then to obtain a new loan) the homeowner will get their lump sum check for $12,000.

OR....you could negotiate with the seller to receive that $12,000 over a five year period and you would just make the payment each month to them. REMEMBER--- EVERYTHING IN LIFE IS NEGOTIABLE!! This would be the best bet if you plan on using the property as a rental.

4. Find an established investor in your area and arrange a partnership on a "Deal By Deal Basis". If you locate the properties, manage everything and handle any needed work & the other investor puts up his money you'll split the deal 50 / 50. Don't be shy about contacting other investors with this proposition. BELIEVE ME, if you have a good enough deal they'll want in on it. This is a great scenario because aside from having a financial backing, you'll also be taking advantage of the years of experience that the established investor will be bringing to the table. Believe me, even though you'll be managing everything, the other investor is going to be keeping you in the right direction. After all, he wants to make money on that deal...he'll have a vested interest in it so you'll be getting a free education to boot! You just want to make sure that you have everything in writing to ensure that there are no misunderstandings when it's time to split the proceeds. Write out exactly what is expected of all parties involved and you shouldn't have any problems.

Sign Up To Receive Rich Urban's Free Real Estate Investing Coaching at:
http://www.youngrealestateinvesting.com/freecoaching
You want to know the REAL TRUTH about making money in Real Estate that everyone else is too scared to reveal you? Are you sick of all the B.S., hype, lies and scams out there?

Get a FREE course now -- Make Sure That You Enter Your Name & Email at:
http://www.youngrealestateinvesting.com/freecoaching

Microfinancing - A Way For Real Estate Pros To Give Back and Lend To 3rd World Countries

Rich Urban (Equity Resq) — Fri, 02 Nov 2007 16:50:08 -0500

I want to let you all know about a cool non-profit that is doing great things: Kiva.org

Kiva.org allows individuals to make $25 loans to low-income entrepreneurs in the developing world (microfinance). By doing so, individuals like you provide affordable working capital for the poor (money to buy a sewing machine, livestock, etc.), empowering them to earn their way out of poverty.

It's a new, direct and sustainable way to fight global poverty, with a true return on your money.

Anyways, if you have a minute, please check out the site: http://kiva.org. If you need more "reputable" validation than my recommendation :), know that they have received great press in publications ranging from The Wall Street Journal to NPR to BusinessWeek.

The Following Companies Currently Sponsor Kiva:

Websites That Will Allow You To List Your Real Estate Inventory For Free

Rich Urban (Equity Resq) — Thu, 01 Nov 2007 14:44:24 -0500

I compiled a list of websites that I use to sell properties on the Internet. These sites will allow you to post your inventory for free, and get very good rankings in the search engines.

Feel free to respond with any websites that I left out!

http://www.rehablist.com

http://www.craiglist.com

http://www.backpage.com

http://activerain.com

http://www.zadzoo.com

http://www.wordpress.com

http://www.blogger.com

http://www.listmeforfree.com

http://www.steveshotlist.com

http://www.freerealestateads.net

http://www..ads4homes.com/

Response To "My Dirtiest House Yet" -- Hilarious!

Rich Urban (Equity Resq) — Wed, 31 Oct 2007 21:15:41 -0500

If you have been reading my posts, you'll see that I was having a "Dirtiest House Contest" to see who could come up with the most deplorable conditions..:) I had made a video of a house that we had purchased in REALLY BAD SHAPE, and wanted to see if anyone had any houses worse than mine. If You want to see the original video click here --> ORIGINAL DIRTIEST HOUSE VIDEO

We received several submissions, and they were all pretty good...I picked the top 3 and posted them for you to see. I got a laugh out of the first one..:)

"Shadester420" - Best Commentary

"WestCoastCop"

"75 Robert"

Happy Halloween!

Rich Urban (Equity Resq) — Wed, 31 Oct 2007 10:59:38 -0500

I just wanted to wish all of my readers a happy and fun filled Halloween!

Anyhow, here is a spooky mystery car for your viewing pleasure.

If you turn up your speakers, you’ll be able to faintly hear somebody in the car yelling for help. Enjoy!

Volunteer With Me -- It's For A Good Cause!

Rich Urban (Equity Resq) — Tue, 30 Oct 2007 12:49:24 -0500

So while I was online, and I was just reading some of your emails, and a friend of mine sent me this link...

The link is of a myspace page, that myspace started. For Anyone that wants to Volunteer and help the less fortunate, there are many things you can do.
You could work at a hospital, Shelter, help out in fashion Shows, Theres loads of things you could do - over 100 things....

Volunteer from 1 hour to as long 4 hours per day....You don't have to do this everyday either. You can set it up to help out only when you want to....

YOU HAVE never seen me promote anyones page here unless it was a credible thing, and this is def. something good..

I know 95% of you can't do it because of your work schedules, children, etc... but that 5% please do so.....If you work only Monday to Friday then helping out for like 2 hours on a Saturday from like 2pm to 4pm is not going to kill you......

Please Check out the Link:

http://offto.net/volunteer/
I already signed up to help 2 things in South Florida..

PLEASE leave me a comment here....on what you thought on the Page. If you can't do it, the least you could do is REPOST MY Blog Posting to your friends so they can help out....

Don't Forget to SUBSCRIBE TO MY BLOG to get all the news before anyone else..........

Your friend,

Rich

Home Unsold - Mortgage Brokers Open A Brothel..:)

Rich Urban (Equity Resq) — Mon, 29 Oct 2007 13:32:46 -0500

Police: Westchester Couple, Unable To Sell House, Turn It Into A House Of Prostitution

The downturn in the housing market appears to have driven two New York homeowners to desperate, illegal measures when their house went unsold.

Police say the Westchester County couple, both mortgage brokers, turned their home into a brothel.

Robert Werner, 34, and Heather Mazzenga, 32, were arrested at the three-bedroom home Friday night and were charged with promoting prostitution. Four women, ranging in age from 21 to 30, are charged with misdemeanor counts of prostitution and practicing massage without a license.

All six are free on bail.

New Rochelle Police Lieutenant George Rosenbergen would not say how police learned of the alleged operation.

The house, they say, had been turned into a brothel complete with a red ribbon placed out by the sidewalk to indicate they were open for business.

Werner and Mazzenga moved out of the house roughly two years ago so they could begin renovating a home on Mountain Road in Pleasantville.

New Rochelle neighbors told CBS Station WCBS the house had originally been listed for $750,000 but didn’t sell even after the price had been dropped to $600,000. The house was rented to families who came and left, and then fell into neglect until new neighbors arrived about two weeks ago.

The lawn was mowed. Heavy windowshades were put up.

A neighbor, David Saperstein, told WCBS correspondent Lou Young that he never saw the new neighbors. "But at night there’s five, six, seven cars there," he said.

Natalie Nanzo told Young she'd even considered buying the house when it was first put on the market. She couldn't get over talk that the North Avenue home was allegedly a house of ill-repute.

"I’m in shock," Nanzo said, "because these people were business people. I can’t believe they would be involved in prostitution."

The alleged brothel sits across the street from a museum dedicated to Thomas Paine, the author of 1776 pamphlet "Common Sense," that helped rouse the nation to war.

It's the second alleged sex-for-sale bust in a premiere Westchester neighborhood this year. In February, Bedford police accused dominatrix Sandra Chemero of running a prostitution business out of her home - which she rented from a local yeshiva.

Choosing The Right Type Of Real Estate Investment Strategy

Rich Urban (Equity Resq) — Fri, 26 Oct 2007 05:57:14 -0500

You need to focus on deals where you can get in and out of, with a quick profit where you have no further obligations or liability in the deal. Then you can use the profit you make and spend it on whatever you choose. You wont have to worry about getting caught up in a mess that you cannot financially afford to be in.So what type of deals can you do that will allow you to do this? Well, the answer is pretty much any type of deal if you know how. So lets look at some of the ways you can accomplish this using different types of deals.

The most common deal that everyone hears about getting started with is flipping properties. The first thing that comes to mind when hearing the term, "flipping properties", is doing wholesale flips, where you find a run down property, get it under contract, and flip it to another investor, leaving the other investor with the lion share of the profit and making a quick profit for yourself. The truth of the matter is there is more ways to do flips than just looking for run down properties. You can flip just about any type of deal, whether it be a wholesale flip, a retail flip, whether it be making a cash offer, doing a L/O, or even a "subject to" deal.
This is where having the knowledge comes into play. The more knowledge you have, the more ways you will know how to structure the different types of deals and be able to make a fast profit without having to take on the risk by staying in the deal.

If you have done your research then you should already know by now that the deals to be had are from sellers that are motivated. You also know that the best way to find these motivated sellers is by making it easy for them to find you. You know that the way you make it easy for them to find you is by marketing yourself and letting the world know that you buy property.

Once you are set up with marketing yourself, this means you are going to run into many different types of sellers, with different types of properties, with different types of problems that you are going to need to know how to structure the deal in order to make it work. Not every deal is going to work by just trying to do a L/O on it. Not every deal is going to work by being able to just get the deed by doing a "subject to" deal. Not every deal is going to be a Junker, where you can do a wholesale flip. In order to take advantage of anything that comes your way, youre going to have to know about as many ways as possible to do a deal in order to prevent from missing out on the opportunity of making a nice profit, just because you only knew about one way of doing things.

Based on my experience and knowing what I know now, if I were just starting out and I was cash poor, or had little cash to start with and I needed to make some money to pay other obligations first, these are some of the ways I would focus on putting fast cash in my pocket, without having to take on the risk of staying in the middle of a deal.

One way, would be the wholesale flip. If a ran into a property that was in need of a lot of repair I would get it under contract and flip it to another investor that was into doing rehabs. Depending on the amount of profit I was able to pencil in for myself would depend on how I would handle doing the flip with my Buyer. If I were just making a smaller profit, between $2k - $5k, I would just assign my contract over to my Buyer and be done with the deal. If I were to stand to make a larger profit on the deal, where I didnt want my Buyer to know what I was making to prevent from losing that Buyer, I would set up a simultaneous closing and close the deal at a title company or at an attorneys office if attorneys were the ones that handled closings in my state, rather than title companies.

Whichever way I handle closing the deal, once its closed, Im out of the deal with a quick profit in my pocket and I dont have any further obligations or liability in the deal. I can use the profit for anything I choose without having to be concerned about something going wrong with the deal later since Im not involved with it after that.

I might have a seller that calls with a nice property they need to get rid of. It could be a deal that might be had by getting it way below market value if it had a lot of equity in it. This may require a cash offer in order to get it tied up under contract. Once I have it under contract, I can then market it at a good price below market value in order to get a fast sale, and either assign my contract over to my Buyer, or set up a simultaneous closing between the Seller, myself and my Buyer. This is pretty much the same as flipping a wholesale property in need of a lot of repairs, only in this case, Ill be marketing it for a retail Buyer instead of a wholesale Buyer. Just like the wholesale flip, once I close the deal with my Buyer Im out of the deal with a fast profit in my pocket. Now I can use that profit towards anything I want without having to worry about any unforeseen circumstances that could arise since Im no longer tied to the deal.

I might have a Seller that calls with a nice property to get rid of, but they have little to no equity. Well, we know trying to make some kind of a cash offer isnt going to work because the Seller owes too much on it. So in order to make a deal out of this Im going to have to be able to buy this one on some type of terms. If I can buy it with favorable terms then I can structure the deal in such a way that would allow me to use forced appreciation. I can do this by reselling the property and offering some type of terms to my Buyer. The problem is, I don't want to have to remain in the middle of this deal because any cash I need I have to use for something else. Since Im cash poor, and I dont have an adequate reserve fund set aside, and I wont be able to put any cash I get up front from this deal into a reserve fund, Im going to have to do this deal in such a way that will allow me to get in and out of it, with no further liability on my part.

So what if I were to get this under a L/O arrangement? Usually under a L/O deal I would get a Tenant/Buyer to put into the property where I would make some up front cash from the option consideration my Tenant/Buyer pays me, plus some monthly cash flow while they lease the property from me, and some additional profit on the back end when they go to exercise their option, since their option price would be higher than my option price I have with the Seller. Since Im going to be using any cash I get up front on this deal for other obligations I cant afford to take any risk by staying in the middle of this deal.

What happens if my Tenant/Buyer turns out to be a deadbeat and stops paying? Or what if they lost their job and couldnt pay? What if they refused to peacefully vacate the property and I had to hire an attorney to have them evicted? What if I got the property back and I had to go in and make $2k - $5k in repairs just to get the thing ready for another Tenant/Buyer?

Remember that Im cash poor and I had to use any option money I got up front from the Tenant/Buyer to pay other obligations. I only made a couple hundred bucks per month while they lived in the property that they did pay on. I probably used that extra cash for other things also. So where do I get the money from to take care of this problem? Im cash poor and I have no credit where I can borrow from anywhere. So now what? Let me tell you what. YOURE SCREWED!!!
OK, so how can I avoid that from ever becoming a problem? Easy! Dont stay in the middle of the deal! Rather than getting all wrapped up in becoming greedy with wanting to risk everything just to get that extra monthly cash flow, and any back end profit, IF the Tenant/Buyer was to exercise their option, just get as much as you can up front and ASSIGN your contract over to your Tenant/Buyer. Just use that money they would normally pay you as the option consideration and take it as your assignment fee to let them just step into your position. Your Tenant/Buyer actually ends up with a much better contract because they will have more than one year to exercise their option that you would have given them under a new L/O contract with you. They will get your contract, which will be a lower monthly payment than what a new contract with you would have been. They end up with a much better deal by being able to take over your original contract you have with the Seller. ALWAYS make sure you get a signed release of liability from the Seller when you assign your contract over to someone else. That way if youre Buyer should ever screw up; the Seller cant come back to you and hold you liable for the contract.
All you need to do is continue to do deals like this until you have made enough money to take care of your other financial obligations that you needed the cash for. Once you have taken care of that you are ready to move on to the next step. The next step will be building your cash reserves. I would want a minimum of $25k in cash reserves built up before feeling safe enough to protect myself before using any of the profits from the deals I do, that I will remain involved with.

If you are already in a position to where you dont need to make some fast cash to use towards other obligations, then you can start with this next step, which is building up your cash.

Now that you are ready to start building up your cash you can either continue to do deals, where you flip them to an end Buyer or assign your contracts over to them. You can then take the cash you make and put that away in your reserve fund until you get enough saved up before venturing into other things. Or you can jump-start your investing by doing more deals where you can take advantage of building up monthly cash flow and equity that will provide you with some nice paydays on the back end when youre Buyers eventually cash you out. Your main goal here should be focused on getting your reserve fund built up before you touch any of the up front profits you make from your Buyers down payment money or option consideration money. Put all of that into your reserve fund until you have at least $25k in reserves. If you average $5k per deal in up front cash then you will only need to do 5 deals to get your reserves up to $25k.

Once you have built up your reserves you will have the cash on hand to deal with any unforeseen problems that may arise. Basically, you will be using your Buyers cash to cover any expenses you incur should one of them default on their agreement. Then when you get another Buyer to put into the property again you can replace the reserves you used with the cash you get up front from them. Meanwhile you can use any of the monthly cash flows coming in for other things, like replacing your income to live off of.

Once youve reach your minimum goal of getting $25k in reserves you can then start using some of the up front cash you get on future deals towards other things. Even though you have some reserves built up you should continue to take some of the up front cash you get on future deals and put that away towards building cash that will allow you to do other deals you normally couldnt do without having cash on hand to invest. As your portfolio of properties continues to grow you should add a little more towards your reserve fund to allow you enough cash to carry you over, should you ever run into a problem where you end up with a handful of vacant properties at once. If the economy or something were to take a dive you will have enough cash to carry you over until things turn around again, hopefully!

As you continue to do deals and get more experience your knowledge base will grow with it. Then you can start looking into other things if that is something you choose to do and diversify your investments.
So if I were starting out today I would start with flipping property, L/Os and doing "subject to" deals. With having a good understanding in each of these types of avenues of real estate investing, I could have more than enough to keep me busy with doing a lot of deals. The key is to educate yourself in everything you can that pertains to these types of deals and you should be way ahead of the game if you implement a good solid plan and take action!

If you could afford to, I would buy at least 3 courses. One on flipping properties, one on doing L/Os and one on doing "subject to" deals. If you cant afford to get all 3 right away then pick one on L/Os or flipping properties and start with one of those. Then take action and get out there and just do it! Get that first deal under your belt by flipping or assigning it over to another Buyer and cash out with a quick profit. Take $300 - $400 of that profit and buy the next course. Then go out and do another deal and take enough out to buy yourself the 3rd course. Then crank out the marketing and get those Motivated Sellers finding you! Then close some deals and begin building your way to financial freedom!
The important thing is to implement a good plan and stick to it until you reach your minimum goals in order to give yourself a solid foundation to where you dont get yourself into trouble and end up living in a financial nightmare!

I can get into a lot more detail on this but it would require writing an entire course on the subject and this is already getting way to long. These are just some basic ideas to help you with finding some direction on where to start after you have done your research and educated yourself with the basics.

Giving Away A Ton Of Real Estate Ebooks For Free...

Rich Urban (Equity Resq) — Tue, 23 Oct 2007 18:32:49 -0500

Mike Perl & I have decided to give back to the real estate community, and created a bit of a "Free Ebook Resource Page" for a limited time.

If you want to instantly grab all of the free ebooks that you see below (Plus Many More).

Visit this website: http://mikeperl.com/freegift/

"The One Minute Millionare"

Robert Allen & Mark Victor Hansen

The One Minute Millionaire by Mark Victor Hansen and Robert Allen is actually two books in one. The book is half fiction and half non-fiction. It’s a unique idea that I’ve never seen before in print. The right hand pages present a fiction, developing a story from beginning to end. The facing pages are non-fiction as they develop the real world concepts that are being used in the fiction story.

"Conversations With Millionaires"

Mike Litman

BRAND NEW "Best Selling Book" - Read the book in a INSTANTLY Downloadable PDF!

You will also have the option to download the AUDIO format, which you can listen to in your car.

"Think and Grow Rich"

Napoleon Hill

BRAND NEW "Best Selling Book" - The Napoleon Hill Classic in a INSTANTLY Downloadable PDF!

You will also have the option to download the AUDIO format, which you can listen to in your car.

Again, Here Is The Link To The Free website: http://mikeperl.com/freegift/

Port Saint Lucie, FL Real Estate Deal - Below Wholesale Pricing

Rich Urban (Equity Resq) — Tue, 23 Oct 2007 18:12:13 -0500

Here are this weeks specials for Real Estate Investors or someone that is looking to get a HELL of a deal. Ask any of the realtors on this board, and they will confirm that my prices are UNHEARD OF....

Airoso Blvd, Port Saint Lucie, FL

2 Bedroom / 1 Bath / Carport

- Only $82,000

(This Is The Lowest Priced Home In All Of Port Saint Lucie, FL)

Beautiful Terrazzo Flooring Throughout

New Hot Water Heater

Newer Roof

In Great Shape

Needs New Kitchen

Perfect If You're Looking To Make A Monthly Cash Flow On A Rental Property OR For A First Time Home Buyer.

Port Saint Lucie, FL Real Estate Deal - Below Wholesale Pricing

Rich Urban (Equity Resq) — Tue, 23 Oct 2007 18:04:13 -0500

Sharpe Street, Port Saint Lucie, FL

3 Bedroom / 2 Bath / 2 Car Garage

Square Feet: 1789

- Only $92,000

Easily Worth $150,000

The house has a new a/c, new roof, new windows, new fence, new siding, and new paint.

It needs some kitchen work and other minor cosmetics

Act Fast On This Super Low Priced Handyman special In
Port Saint Lucie In A Nice Area.

Realtors Welcome--Add Your Commissions

Questions and Answers on Home Foreclosure and IRS Debt Cancellation

Rich Urban (Equity Resq) — Mon, 22 Oct 2007 14:37:23 -0500

1. What is Cancellation of Debt?

If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.

2. Is Cancellation of Debt income always taxable?

Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:

Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you.You are insolvent when your total debts are more than the fair market value of your total assets.Insolvency can be fairly complex to determine and the assistance of a tax professional is recommended if you believe you qualify for this exception.
Certain farm debts:If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.The rules applicable to farmers are complex and the assistance of a tax professional is recommended if you believe you qualify for this exception.
Non-recourse loans:A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral.That is, the lender cannot pursue you personally in case of default.Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income.However, it may result in other tax consequences, as discussed in Question 3 below.

3. I lost my home through foreclosure. Are there tax consequences?

There are two possible consequences you must consider:

Taxable cancellation of debt income.(Note: As stated above, cancellation of debt income is not taxable in the case of non-recourse loans.)
A reportable gain from the disposition of the home (because foreclosures are treated like sales for tax purposes).(Note: Often some or all of the gain from the sale of a personal residence qualifies for exclusion from income.)

Use the following steps to compute the income to be reported from a foreclosure:

Step 1 - Figuring Cancellation of Debt Income (Note: For non-recourse loans, skip this section. You have no income from cancellation of debt.)

1. Enter the total amount of the debt immediately prior to the foreclosure.___________
2. Enter the fair market value of the property from Form 1099-C, box 7. ___________
3. Subtract line 2 from line 1.If less than zero, enter zero.___________

The amount on line 3 will generally equal the amount shown in box 2 of Form 1099-C. This amount is taxable unless you meet one of the exceptions in question 2. Enter it on line 21, Other Income, of your Form 1040.

Step 2 – Figuring Gain from Foreclosure

4. Enter the fair market value of the property foreclosed.For non-recourse loans, enter the amount of the debt immediately prior to the foreclosure ________
5. Enter your adjusted basis in the property.(Usually your purchase price plus the cost of any major improvements.) ____________
6. Subtract line 5 from line 4. If less than zero, enter zero.

The amount on line 6 is your gain from the foreclosure of your home. If you have owned and used the home as your principal residence for periods totaling at least two years during the five year period ending on the date of the foreclosure, you may exclude up to $250,000 (up to $500,000 for married couples filing a joint return) from income. If you do not qualify for this exclusion, or your gain exceeds $250,000 ($500,000 for married couples filing a joint return), report the taxable amount on Schedule D, Capital Gains and Losses.

4. I lost money on the foreclosure of my home. Can I claim a loss on my tax return?

No. Losses from the sale or foreclosure of personal property are not deductible.

5. Can you provide examples?

A borrower bought a home in August 2005 and lived in it until it was taken through foreclosure in September 2007. The original purchase price was $170,000, the home is worth $200,000 at foreclosure, and the mortgage debt canceled at foreclosure is $220,000. At the time of the foreclosure, the borrower is insolvent, with liabilities (mortgage, credit cards, car loans and other debts) totaling $250,000 and assets totaling $230,000.

The borrower figures income from the foreclosure as follows:

Use the following steps to compute the income to be reported from a foreclosure:

Step 1 - Figuring Cancellation of Debt Income (Note: For non-recourse loans, skip this section. You have no income from cancellation of debt.)

1. Enter the total amount of the debt immediately prior to the foreclosure.___$220,000__
2. Enter the fair market value of the property from Form 1099-C, box 7. ___$200,000__
3. Subtract line 2 from line 1.If less than zero, enter zero.___$20,000__

Step 2 – Figuring Gain from Foreclosure

4. Enter the fair market value of the property foreclosed.For non-recourse loans, enter the amount of the debt immediately prior to the foreclosure. __$200,000__
5. Enter your adjusted basis in the property.(Usually your purchase price plus the cost of any major improvements.) ___$170,000__
6. Subtract line 5 from line 4.If less than zero, enter zero.___$30,000__

In this situation, the borrower has a tax-free home-sale gain of $30,000 ($200,000 minus $170,000), because they owned and lived in their home as a principal residence for at least two years. Ordinarily, the borrower would also have taxable debt-forgiveness income of $20,000 ($220,000 minus $200,000). But since the borrower’s liabilities exceed assets by $20,000 ($250,000 minus $230,000) there is no tax on the canceled debt.

Other examples can be found in IRS Publication 544, Sales and Other Dispositions of Assets, under the section “Foreclosures and Repossessions”.

6. I don’t agree with the information on the Form 1099-C. What should I do?

Contact the lender. The lender should issue a corrected form if the information is determined to be incorrect. Retain all records related to the purchase of your home and all related debt.

Credit Repair Secrets Revealed- Your Rights & How To Repair Bad Credit

Rich Urban (Equity Resq) — Mon, 22 Oct 2007 14:27:42 -0500

The Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness, and privacy of information in the files of the nation's consumer reporting companies. The FTC enforces the FCRA with respect to consumer reporting companies. Recent amendments to the FCRA expand consumer rights and place additional requirements on consumer reporting companies. Businesses that provide information about consumers to consumer reporting companies and businesses that use credit reports also have new responsibilities under the law.

Here are some questions consumers have asked the FTC about consumer reports and consumer reporting companies, and the answers.

Q. Do I have a right to know what's in my report?
A. You have the right to know what's in your report, but you have to ask for the information. The consumer reporting company must tell you everything in your report, and give you a list of everyone who has requested your report within the past year - or the past two years if the requests were related to employment.

Q. What type of information do consumer reporting companies collect and sell?
A. Consumer reporting companies collect and sell four basic types of information:

Identification and employment information: Your name, birth date, Social Security number, employer, and spouse's name are noted routinely. The consumer reporting company also may provide information about your employment history, home ownership, income, and previous address, if a creditor asks.
Payment history: Your accounts with different creditors are listed, showing how much credit has been extended and whether you've paid on time. Related events, such as the referral of an overdue account to a collection agency, also may be noted.
Inquiries: Consumer reporting companies must maintain a record of all creditors who have asked for your credit history within the past year, and a record of individuals or businesses that have asked for your credit history for employment purposes for the past two years.
Public record information: Events that are a matter of public record, such as bankruptcies, foreclosures, or tax liens, may appear in your report.

Q. Is there a charge for my report?
A. Under the Free File Disclosure Rule of the Fair and Accurate Credit Transactions Act (FACT Act), each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it.

These consumer reporting companies are phasing in free reports geographically through September 1, 2005. After that, free reports will be accessible to all Americans, regardless of where they live.

Free reports have been available to consumers in the Western states — Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming — since December 1, 2004.
Consumers in the Midwestern states — Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin — have been able to order free reports since March 1, 2005.
Consumers in the Southern states — Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, and Texas — can begin ordering their free reports June 1, 2005.
Consumers in the Eastern states — Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, and West Virginia — the District of Columbia, Puerto Rico, and all U.S. territories can begin ordering their free reports September 1, 2005.

Q: How do I order my free report?
A: The three nationwide consumer reporting companies are using one website, one toll-free telephone number, and one mailing address for consumers to order their free annual report. To order, click on www.annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can print the form: www.annualcreditreport.com. Do not contact the three nationwide consumer reporting companies individually. You may order your free annual reports from each of the consumer reporting companies at the same time, or you can order from only one or two. The law allows you to order one free copy from each of the nationwide consumer reporting companies every 12 months.

Q: What information do I have to provide to get my free report?
A: You need to provide your name, address, Social Security number, and date of birth. If you have moved in the last two years, you may have to provide your previous address. To maintain the security of your file, each nationwide consumer reporting company may ask you for some information that only you would know, like the amount of your monthly mortgage payment. Each company may ask you for different information because the information each has in your file may come from different sources.

Still, www.annualcreditreport.com is the only authorized online source for your free annual credit report from the three nationwide consumer reporting companies. Neither the website nor the companies will call you first to ask for personal information or send you an email asking for personal information. If you get a phone call or an email — or see a pop-up ad — claiming it's from www.annualcreditreport.com (or any of the three nationwide consumer reporting companies), it's probably a scam. Don't reply or click on any link in the message. Instead, forward any email that claims to be from www.annualcreditreport.com (or any of the three consumer reporting companies) to spam@uce.gov, the FTC's database of deceptive spam.

Q: Are there other situations where I might be eligible for a free report?
A: Under federal law, you're entitled to a free report if a company takes adverse action against you, such as denying your application for credit, insurance, or employment, and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You're also entitled to one free report a year if you're unemployed and plan to look for a job within 60 days; if you're on welfare; or if your report is inaccurate because of fraud, including identity theft. Otherwise, any of the three consumer reporting companies may charge you up to $9.50 for another copy of your report within a 12-month period.

To buy a copy of your report, contact:

Equifax
800-685-1111
www.equifax.com

Experian
888-EXPERIAN (397-3742)
www.experian.com

Trans Union
800-916-8800
www.transunion.com

Under state law, consumers in Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey, and Vermont already have free access to their credit reports.

For more information, see Your Access to Free Credit Reports at ftc.gov/credit.

Credit Scores

Q. What is a credit score, and how does it affect my ability to get credit?
A: Credit scoring is a system creditors use to help determine whether to give you credit, and how much to charge you for it.

Information about you and your credit experiences, like your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report. Using a statistical formula, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor. A total number of points — a credit score — helps predict how creditworthy you are, that is, how likely it is that you will repay a loan and make the payments on time. Generally, consumers with good credit risks have higher credit scores.

You can get your credit score from the three nationwide consumer reporting companies, but you will have to pay a fee for it. Many other companies also offer credit scores for sale alone or as part of a package of products.

For more information, see Credit Scoring at ftc.gov/credit.

Improving Your Credit Report

Under the FCRA, both the consumer reporting company and the information provider (the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under the FCRA, contact the consumer reporting company and the information provider if you see inaccurate or incomplete information.

1. Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report that you dispute, state the facts and explain why you dispute the information, and request that the information be deleted or corrected. You may want to enclose a copy of your report with the items in question circled. Send your letter by certified mail, return receipt requested, so you can document what the consumer reporting company received. Keep copies of your dispute letter and enclosures.

Consumer reporting companies must investigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.

When the investigation is complete, the consumer reporting company must give you the written results and a free copy of your report if the dispute results in a change. (This free report does not count as your annual free report under the FACT Act.) If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that the information is, indeed, accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider.

If you request, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. A corrected copy of your report can be sent to anyone who received a copy during the past two years for employment purposes.

If an investigation doesn't resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. Expect to pay a fee for this service.

2. Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct - that is, if the information is found to be inaccurate - the information provider may not report it again.

Sample Dispute Letter

Date
Your Name
Your Address
Your City, State, Zip Code

Complaint Department
Name of Company
Address
City, State, Zip Code

Dear Sir or Madam:
I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.

This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely,
Your name

Enclosures: (List what you are enclosing)

Accurate Negative Information

When negative information in your report is accurate, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. There is no time limit on reporting information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you've applied for more than $150,000 worth of credit or life insurance. There is a standard method for calculating the seven-year reporting period. Generally, the period runs from the date that the event took place.

Adding Accounts to Your File

Your credit file may not reflect all your credit accounts. Most national department store and all-purpose bank credit card accounts are included in your file, but not all. Some travel, entertainment, gasoline card companies, local retailers, and credit unions are among those that usually aren't included.

If you've been told that you were denied credit because of an "insufficient credit file" or "no credit file" and you have accounts with creditors that don't appear in your credit file, ask the consumer reporting companies to add this information to future reports. Although they are not required to do so, many consumer reporting companies will add verifiable accounts for a fee. However, if these creditors do not generally report to the consumer reporting company, the added items will not be updated in your file.

Dealing with Debt

Having trouble paying your bills? Getting dunning notices from creditors? Are your accounts being turned over to debt collectors? Are you worried about losing your home or your car?

You're not alone. Many people face financial crises at some time in their lives. Whether the crisis is caused by personal or family illness, the loss of a job, or simple overspending, it can seem overwhelming. But often, it can be overcome. The fact is that your financial situation doesn't have to go from bad to worse.

If you or someone you know is in financial hot water, consider these options: realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy. How do you know which will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future.

Self-Help

Developing a Budget
The first step toward taking control of your financial situation is to do a realistic assessment of how much money you take in and how much money you spend. Start by listing your income from all sources. Then, list your "fixed" expenses — those that are the same each month — like mortgage payments or rent, car payments, and insurance premiums. Next, list the expenses that vary — like entertainment, recreation, and clothing. Writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses, and prioritize the rest. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education.

Your public library and bookstores have information about budgeting and money management techniques. In addition, computer software programs can be useful tools for developing and maintaining a budget, balancing your checkbook, and creating plans to save money and pay down your debt.

Contacting Your Creditors
Contact your creditors immediately if you're having trouble making ends meet. Tell them why it's difficult for you, and try to work out a modified payment plan that reduces your payments to a more manageable level. Don't wait until your accounts have been turned over to a debt collector. At that point, your creditors have given up on you.

Dealing with Debt Collectors
The Fair Debt Collection Practices Act is the federal law that dictates how and when a debt collector may contact you. A debt collector may not call you before 8 a.m., after 9 p.m., or while you're at work if the collector knows that your employer doesn't approve of the calls. Collectors may not harass you, lie, or use unfair practices when they try to collect a debt. And they must honor a written request from you to stop further contact.

Credit Counseling
If you're not disciplined enough to create a workable budget and stick to it, can't work out a repayment plan with your creditors, or can't keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But be aware that just because an organization says it's "nonprofit," there's no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, which may be hidden, or pressure consumers to make large "voluntary" contributions that can cause more debt.

Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.

Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.

Auto and Home Loans
Your debts can be secured or unsecured. Secured debts usually are tied to an asset, like your car for a car loan, or your house for a mortgage. If you stop making payments, lenders can repossess your car or foreclose on your house. Unsecured debts are not tied to any asset, and include most credit card debt, bills for medical care, signature loans, and debts for other types of services.

Most automobile financing agreements allow a creditor to repossess your car any time you're in default. No notice is required. If your car is repossessed, you may have to pay the balance due on the loan, as well as towing and storage costs, to get it back. If you can't do this, the creditor may sell the car. If you see default approaching, you may be better off selling the car yourself and paying off the debt: You'll avoid the added costs of repossession and a negative entry on your credit report.

If you fall behind on your mortgage, contact your lender immediately to avoid foreclosure. Most lenders are willing to work with you if they believe you're acting in good faith and the situation is temporary. Some lenders may reduce or suspend your payments for a short time. When you resume regular payments, though, you may have to pay an additional amount toward the past due total. Other lenders may agree to change the terms of the mortgage by extending the repayment period to reduce the monthly debt. Ask whether additional fees would be assessed for these changes, and calculate how much they total in the long term.

If you and your lender cannot work out a plan, contact a housing counseling agency. Some agencies limit their counseling services to homeowners with FHA mortgages, but many offer free help to any homeowner who's having trouble making mortgage payments. Call the local office of the Department of Housing and Urban Development or the housing authority in your state, city, or county for help in finding a legitimate housing counseling agency near you.

Debt Consolidation

You may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. Remember that these loans require you to put up your home as collateral. If you can't make the payments — or if your payments are late — you could lose your home.

What's more, the costs of consolidation loans can add up. In addition to interest on the loans, you may have to pay "points," with one point equal to one percent of the amount you borrow. Still, these loans may provide certain tax advantages that are not available with other kinds of credit.

Bankruptcy

Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, and can make it difficult to obtain credit, buy a home, get life insurance, or sometimes get a job. Still, it is a legal procedure that offers a fresh start for people who can't satisfy their debts. People who follow the bankruptcy rules receive a discharge — a court order that says they don't have to repay certain debts.

There are two primary types of personal bankruptcy: Chapter 13 and Chapter 7. Each must be filed in federal bankruptcy court. As of January 2005, the filing fees run about $185 for Chapter 13 and $200 for Chapter 7. Attorney fees are additional and can vary.

Chapter 13 allows people with a steady income to keep property, like a mortgaged house or a car, that they otherwise might lose. In Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off a default during a three-to-five-year period, rather than surrender any property. After you have made all the payments under the plan, you receive a discharge of your debts.

Chapter 7 is known as straight bankruptcy, and involves liquidation of all assets that are not exempt. Exempt property may include automobiles, work-related tools, and basic household furnishings. Some of your property may be sold by a court-appointed official — a trustee — or turned over to your creditors. You can receive a discharge of your debts through Chapter 7 only once every six years.

Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments, utility shut-offs, and debt collection activities. Both also provide exemptions that allow people to keep certain assets, although exemption amounts vary. Note that personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. And unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or lien on it.

For more information, see Knee Deep in Debt and Fiscal Fitness: Choosing a Credit Counselor at ftc.gov/credit.

Avoiding Scams

Turning to a business that offers help in solving debt problems may seem like a reasonable solution when your bills become unmanageable. Be cautious. Before you do business with any company, check it out with your local consumer protection agency or the Better Business Bureau in the company's location.

Ads Promising Debt Relief May Really Be Offering Bankruptcy

Consumer debt is at an all-time high. What's more, a record number of consumers — more than 1.6 million in 2003 — are filing for bankruptcy. Whether your debt dilemma is the result of an illness, unemployment, or overspending, it can seem overwhelming. In your effort to get solvent, be on the alert for advertisements that offer seemingly quick fixes. And read between the lines when faced with ads in newspapers, magazines, or even telephone directories that say:

"Consolidate your bills into one monthly
payment without borrowing"

"STOP credit harassment, foreclosures,
repossessions, tax levies and garnishments"

"Keep Your Property"

"Wipe out your debts! Consolidate your bills! How?
By using the protection and assistance provided by federal law. For once, let the law work for you!"

While the ads pitch the promise of debt relief, they rarely say relief may be spelled b-a-n-k-r-u-p-t-c-y. And although bankruptcy is one option to deal with financial problems, it's generally considered the option of last resort. The reason: it has a long-term negative impact on your creditworthiness. A bankruptcy stays on your credit report for 10 years, and can hinder your ability to get credit, a job, insurance, or even a place to live. What's more, it can cost you attorneys' fees.

Advance-Fee Loan Scams

These scams often target consumers with bad credit problems or those with no credit. In exchange for an up-front fee, these companies "guarantee" that applicants will get the credit they want — usually a credit card or a personal loan.

The up-front fee may be as high as several hundred dollars. Resist the temptation to follow up on advance-fee loan guarantees. They may be illegal. Many legitimate creditors offer extensions of credit, such as credit cards, loans, and mortgages through telemarketing, and require an application fee or appraisal fee in advance. But legitimate creditors never guarantee in advance that you'll get the loan. Under the federal Telemarketing Sales Rule, a seller or telemarketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or receive payment until you've received the loan.

Recognizing an Advance-Fee Loan Scam
Ads for advance-fee loans often appear in the classified ad section of local and national newspapers and magazines. They also may appear in mailings, radio spots, and on local cable stations. Often, these ads feature "900" numbers, which result in charges on your phone bill. In addition, these companies often use delivery systems other than the U.S. Postal Service, such as overnight or courier services, to avoid detection and prosecution by postal authorities.

It's not hard to confuse a legitimate credit offer with an advance-fee loan scam. An offer for credit from a bank, savings and loan, or mortgage broker generally requires your verbal or written acceptance of the loan or credit offer. The offer usually is subject to a check of your credit report after you apply to make sure you meet their credit standards. Usually, you are not required to pay a fee to get the credit.

Hang up on anyone who calls you on the phone and says they can guarantee you will get a loan if you pay in advance. It's against the law.

Protecting Yourself
Here are some tips to keep in mind before you respond to ads that promise easy credit, regardless of your credit history:

Most legitimate lenders will not "guarantee" that you will get a loan or a credit card before you apply, especially if you have bad credit, or a bankruptcy.
It is an accepted and common practice for reputable lenders to require payment for a credit report or appraisal. You also may have to pay a processing or application fee.
Never give your credit card account number, bank account information, or Social Security number out over the telephone unless you are familiar with the company and know why the information is necessary.

Credit Repair Scams

You see the ads in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:

"Credit problems? No problem!"

"We can erase your bad credit-100% guaranteed."

"Create a new credit identity-legally."

"We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!"

Do yourself a favor and save some money, too. Don't believe these statements. They're just not true. Only time, a conscientious effort, and a plan for repaying your debt will improve your credit report.

The Warning Signs
If you should decide to respond to an offer to repair your credit, think twice. Don't do business with any company that:

wants you to pay for credit repair services before any services are provided
does not tell you your legal rights and what you can do yourself — for free
recommends that you not contact a consumer reporting company directly
suggests that you try to invent a "new" credit report by applying for an Employer Identification Number to use instead of your Social Security number
advises you to dispute all information in your credit report or take any action that seems illegal, such as creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.

You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It's a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.

The Credit Repair Organizations Act
By law, credit repair organizations must give you a copy of the "Consumer Credit File Rights Under State and Federal Law" before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before signing the contract. The law contains specific consumer protections. For example, a credit repair company cannot:

make false claims about their services
charge you until they have completed the promised services
perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.

Your contract must specify:

the total cost of the services
a detailed description of the services to be performed
how long it will take to achieve the results
any "guarantees" they offer
the company's name and business address.

Where to Complain
If you've had a problem with any of the scams described here, contact your local consumer protection agency, state Attorney General (AG), or Better Business Bureau. Many AGs have toll-free consumer hotlines. Check with your local directory assistance.

Identity Theft

An identity thief is someone who obtains some piece of your sensitive information, like your Social Security number, date of birth, address, and phone number, and uses it without your knowledge to commit fraud or theft.

How Identity Thieves Get Your Information
Skilled identity thieves use a variety of methods to gain access to your personal information. For example, they may:

get information from businesses or other institutions by:

stealing records or information while they're on the job
bribing an employee who has access to these records
hacking these records
conning information out of employees

rummage through your trash, the trash of businesses, or public trash dumps in a practice known as "dumpster diving"
get your credit reports by abusing their employer's authorized access to them, or by posing as a landlord, employer, or someone else who may have a legal right to access your report
steal your credit or debit card numbers by capturing the information in a data storage device in a practice known as "skimming." They may swipe your card for an actual purchase, or attach the device to an ATM machine where you may enter or swipe your card.
steal wallets and purses containing identification and credit and bank cards.
steal mail, including bank and credit card statements, new checks, or tax information
complete a "change of address form" to divert your mail to another location
steal personal information from your home
scam information from you by posing as a legitimate business person or government official

How Identity Thieves Use Your Information
Once identity thieves have your personal information, they may:

go on spending sprees using your credit and debit card account numbers to buy "big-ticket" items like computers that they can easily sell
open a new credit card account, using your name, date of birth, and Social Security number. When they don't pay the bills, the delinquent account is reported on your credit report.
change the mailing address on your credit card account. The imposter then runs up charges on the account. Because the bills are being sent to the new address, it may take some time before you realize there's a problem.
take out auto loans in your name
establish phone or wireless service in your name
counterfeit checks or debit cards, and drain your bank account
open a bank account in your name and write bad checks on that account
file for bankruptcy under your name to avoid paying debts they've incurred, or to avoid eviction
give your name to the police during an arrest. If they are released and don't show up for their court date, an arrest warrant could be issued in your name.

Protecting Yourself
Managing your personal information is key to minimizing your risk of becoming a victim of identity theft.

Keep an eye on your purse or wallet, and keep them in a safe place at all times.
Don't carry your Social Security card.
Don't share your personal information with random people you don't know. Identity thieves are really good liars, and could pretend to be from banks, Internet service providers, or even government agencies to get you to reveal identifying information.
Read the statements from your bank and credit accounts and look for unusual charges or suspicious activity. Report any problems to your bank and creditors right away.
Tear up or shred your charge receipts, checks and bank statements, expired charge cards, and any other documents with personal information before you put them in the trash.

How To Tell If You're a Victim of Identity Theft
Monitor the balances of your financial accounts. Look for unexplained charges or withdrawals. Other indications of identity theft can be:

failing to receive bills or other mail signaling an address change by the identity thief;
receiving credit cards for which you did not apply;
denial of credit for no apparent reason; or
receiving calls from debt collectors or companies about merchandise or services you didn't buy.

What To Do If Your Identity's Been Stolen
If you suspect that your personal information has been used to commit fraud or theft, take the following four steps right away. Follow up all calls in writing; send your letter by certified mail, and request a return receipt, so you can document what the company received and when; and keep copies for your files.

Place a fraud alert on your credit reports and review your credit reports.
Contact any one of the nationwide consumer reporting companies to place a fraud alert on your credit report. Fraud alerts can help prevent an identity thief from opening any more accounts in your name. The company you call is required to contact the other two, which will place an alert on their versions of your report, too.

Equifax: 1-800-525-6285; www.equifax.com
Experian: 1-888-EXPERIAN (397-3742); www.experian.com
TransUnion: 1-800-680-7289; www.transunion.com

In addition to placing the fraud alert on your file, the three consumer reporting companies will send you free copies of your credit reports, and, if you ask, they will display only the last four digits of your Social Security number on your credit reports.
Close the accounts that you know, or believe, have been tampered with or opened fraudulently.
Contact the security or fraud department of each company where you know, or believe, accounts have been tampered with or opened fraudulently. Follow up in writing, and include copies (NOT originals) of supporting documents. It's important to notify credit card companies and banks in writing. Send your letters by certified mail, return receipt requested, so you can document what the company received and when. Keep a file of your correspondence and enclosures.

When you open new accounts, use new Personal Identification Numbers (PINs) and passwords. Avoid using easily available information like your mother's maiden name, your birth date, the last four digits of your Social Security number or your phone number, or a series of consecutive numbers.
File a report with your local police or the police in the community where the identity theft took place.
Get a copy of the police report or, at the very least, the number of the report. It can help you deal with creditors who need proof of the crime. If the police are reluctant to take your report, ask to file a "Miscellaneous Incidents" report, or try another jurisdiction, like your state police. You also can check with your state Attorney General's office to find out if state law requires the police to take reports for identity theft. Check the Blue Pages of your telephone directory for the phone number or check www.naag.org for a list of state Attorneys General.
File a complaint with the Federal Trade Commission.
By sharing your identity theft complaint with the FTC, you will provide important information that can help law enforcement officials across the nation track down identity thieves and stop them. The FTC also can refer your complaint to other government agencies and companies for further action, as well as investigate companies for violations of laws that the FTC enforces.

You can file a complaint online at www.consumer.gov/idtheft. If you don't have Internet access, call the FTC's Identity Theft Hotline, toll-free: 1-877-IDTHEFT (438-4338); TTY: 1-866-653-4261; or write: Identity Theft Clearinghouse, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580.

For more information, see ID Theft: What's It All About or Take Charge: Fighting Back Against Identity Theft at www.consumer.gov/idtheft.

For More Information

The Federal Trade Commission enforces a number of credit laws and has free information about them:

The Equal Credit Opportunity Act prohibits the denial of credit because of your sex, race, marital status, religion, national origin, age, or because you receive public assistance.

The Fair Credit Reporting Act gives you the right to learn what information is being distributed about you by credit reporting companies.

The Truth in Lending Act requires lenders to give you written disclosures of the cost of credit and terms of repayment before you enter into a credit transaction.

The Fair Credit Billing Act establishes procedures for resolving billing errors on your credit card accounts.

The Fair Debt Collection Practices Act prohibits debt collectors from using unfair or deceptive practices to collect overdue bills that your creditor has forwarded for collection.

Real Estate Terms To Know

Rich Urban (Equity Resq) — Mon, 22 Oct 2007 14:21:25 -0500

203(b): FHA program which provides mortgage insurance to protect lenders from default; used to finance the purchase of new or existing one- to four family housing; characterized by low down payment, flexible qualifying guidelines, limited fees, and a limit on maximum loan amount.

203(k): this FHA mortgage insurance program enables homebuyers to finance both the purchase of a house and the cost of its rehabilitation through a single mortgage loan.

Amenity: a feature of the home or property that serves as a benefit to the buyer but that is not necessary to its use; may be natural (like location, Woods, water) or man-made (like a swimming pool or garden).

Amortization: repayment of a mortgage loan through monthly installments of principal and interest; the monthly payment amount is based on a schedule that will allow you to own your home at the end of a specific time period (for example, 15 or 30 years)

Annual Percentage Rate (APR): calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan.

Application: the first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.

Appraisal: a document that gives an estimate of a property's fair market value; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.

Appraiser: a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.

ARM: Adjustable Rate Mortgage; a mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the Change in monthly -payment amount, however, is usually subject to a Cap.

Assessor: a government official who is responsible for determining the value of a property for the purpose of taxation.

Assumable mortgage: a mortgage that can be transferred from a seller to a buyer; once the loan is assumed by the buyer the seller is no longer responsible for repaying it; there may be a fee and/or a credit package involved in the transfer of an assumable mortgage.

Balloon Mortgage: a mortgage that typically offers low rates for an initial period of time (usually 5, 7, or 10) years; after that time period elapses, the balance is due or is refinanced by the borrower.

Bankruptcy: a federal law Whereby a person's assets are turned over to a trustee and used to pay off outstanding debts; this usually occurs when someone owes more than they have the ability to repay.

Borrower: a person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms.

Building code: based on agreed upon safety standards within a specific area, a building code is a regulation that determines the design, construction, and materials used in building.

Budget: a detailed record of all income earned and spent during a specific period of time.

Cap: a limit, such as that placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease.

Cash reserves: a cash amount sometimes required to be held in reserve in addition to the down payment and closing costs; the amount is determined by the lender.

Certificate of title: a document provided by a qualified source (such as a title company) that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.

Closing: also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller.

Closing costs: customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application.

Commission: an amount, usually a percentage of the property sales price, that is collected by a real estate professional as a fee for negotiating the transaction.

Condominium: a form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas.

Conventional loan: a private sector loan, one that is not guaranteed or insured by the U.S. government.

Cooperative (Co-op): residents purchase stock in a cooperative corporation that owns a structure; each stockholder is then entitled to live in a specific unit of the structure and is responsible for paying a portion of the loan.

Credit history: history of an individual's debt payment; lenders use this information to gouge a potential borrower's ability to repay a loan.

Credit report: a record that lists all past and present debts and the timeliness of their repayment; it documents an individual's credit history.

Credit bureau score: a number representing the possibility a borrower may default; it is based upon credit history and is used to determine ability to qualify for a mortgage loan.

Debt-to-income ratio: a comparison of gross income to housing and non-housing expenses; With the FHA, the-monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income.

Deed: the document that transfers ownership of a property.

Deed-in-lieu: to avoid foreclosure ("in lieu" of foreclosure), a deed is given to the lender to fulfill the obligation to repay the debt; this process doesn't allow the borrower to remain in the house but helps avoid the costs, time, and effort associated with foreclosure.

Default: the inability to pay monthly mortgage payments in a timely manner or to otherwise meet the mortgage terms.

Delinquency: failure of a borrower to make timely mortgage payments under a loan agreement.

Discount point: normally paid at closing and generally calculated to be equivalent to 1% of the total loan amount, discount points are paid to reduce the interest rate on a loan.

Down payment: the portion of a home's purchase price that is paid in cash and is not part of the mortgage loan.

Earnest money: money put down by a potential buyer to show that he or she is serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal.

EEM: Energy Efficient Mortgage; an FHA program that helps homebuyers save money on utility bills by enabling them to finance the cost of adding energy efficiency features to a new or existing home as part of the home purchase

Equity: an owner's financial interest in a property; calculated by subtracting the amount still owed on the mortgage loon(s)from the fair market value of the property.

Escrow account: a separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc.

Fair Housing Act: a law that prohibits discrimination in all facets of the homebuying process on the basis of race, color, national origin, religion, sex, familial status, or disability.

Fair market value: the hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Fannie Mae: Federal National Mortgage Association (FNMA); a federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers.

FHA: Federal Housing Administration; established in 1934 to advance homeownership opportunities for all Americans; assists homebuyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages.

Fixed-rate mortgage: a mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.

Flood insurance: insurance that protects homeowners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan.

Foreclosure: a legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.

Freddie Mac: Federal Home Loan Mortgage Corporation (FHLM); a federally-chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors; this provides lenders With funds for new homebuyers.

Ginnie Mae: Government National Mortgage Association (GNMA); a government-owned corporation overseen by the U.S. Department of Housing and Urban Development, Ginnie Mae pools FHA-insured and VA-guaranteed loans to back securities for private investment; as With Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders.

Good faith estimate: an estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application.

HELP: Homebuyer Education Learning Program; an educational program from the FHA that counsels people about the homebuying process; HELP covers topics like budgeting, finding a home, getting a loan, and home maintenance; in most cases, completion of the program may entitle the homebuyer to a reduced initial FHA mortgage insurance premium-from 2.25% to 1.75% of the home purchase price.

Home inspection: an examination of the structure and mechanical systems to determine a home's safety; makes the potential homebuyer aware of any repairs that may be needed.

Home warranty: offers protection for mechanical systems and attached appliances against unexpected repairs not covered by homeowner's insurance; ,overage extends over a specific time period and does not cover the home's structure.

Homeowner's insurance: an insurance policy that .combines protection against damage to a dwelling and Is contents with protection against claims of negligence or inappropriate action that result in someone's injury or property damage.

Housing counseling agency: provides counseling and assistance to individuals on a variety of issues, including loan default, fair housing, and homebuying.

HUD: the U.S. Department of Housing and Urban Development; established in 1965, HUD works to create a decent home and suitable living environment for all Americans; it does this by addressing housing needs, improving and developing American communities, and enforcing fair housing laws.

HUD1 Statement: also known as the "settlement sheet," it itemizes all closing costs; must be given to the borrower at or before closing.

HVAC: Heating, Ventilation and Air Conditioning; a home's heating and cooling system.

Index: a measurement used by lenders to determine changes to the Interest rate charged on an adjustable rate mortgage.

Inflation: the number of dollars in circulation exceeds the amount of goods and services available for purchase; inflation results in a decrease in the dollar's value.

Interest: a fee charged for the use of money.

Interest rate: the amount of interest charged on a monthly loan payment; usually expressed as a percentage.

Insurance: protection against a specific loss over a period of time that is secured by the payment of a regularly scheduled premium.

Judgment: a legal decision; when requiring debt repayment, a judgment may include a property lien that secures the creditor's claim by providing a collateral source.

Lease purchase: assists low- to moderate-income homebuyers in purchasing a home by allowing them to lease a home with an option to buy; the rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment.

Lien: a legal claim against property that must be satisfied When the property is sold

Loan: money borrowed that is usually repaid with interest.

Loan fraud: purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.

Loan-to-value (LTV) ratio: a percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment.

Lock-in: since interest rates can change frequently, many lenders offer an interest rate lock-in that guarantees a specific interest rate if the loan is closed within a specific time.

Loss mitigation: a process to avoid foreclosure; the lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan.

Margin: an amount the lender adds to an index to determine the interest rate on an adjustable rate mortgage.

Mortgage: a lien on the property that secures the Promise to repay a loan.

Mortgage banker: a company that originates loans and resells them to secondary mortgage lenders like: Fannie Mae or Freddie Mac.

Mortgage broker: a firm that originates and processes loans for a number of lenders.

Mortgage insurance: a policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home's purchase price.

Mortgage insurance premium (MIP): a monthly payment -usually part of the mortgage payment - paid by a borrower for mortgage insurance.

Mortgage Modification: a loss mitigation option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments.

Offer: indication by a potential buyer of a willingness to purchase a home at a specific price; generally put forth in writing.

Origination: the process of preparing, submitting, and evaluating a loan application; generally includes a credit check, verification of employment, and a property appraisal.

Origination fee: the charge for originating a loan; is usually calculated in the form of points and paid at closing.

Partial Claim: a loss mitigation option offered by the FHA that allows a borrower, with help from a lender, to get an interest-free loan from HUD to bring their mortgage payments up to date.

PITI: Principal, Interest, Taxes, and Insurance - the four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowner's and mortgage, if applicable) goes into an escrow account to cover the fees when they are due.

PMI: Private Mortgage Insurance; privately-owned companies that offer standard and special affordable mortgage insurance programs for qualified borrowers with down payments of less than 20% of a purchase price.

Pre-approve: lender commits to lend to a potential borrower; commitment remains as long as the borrower still meets the qualification requirements at the time of purchase.

Pre-foreclosure sale: allows a defaulting borrower to sell the mortgaged property to satisfy the loan and avoid foreclosure.

Pre-qualify: a lender informally determines the maximum amount an individual is eligible to borrow.

Premium: an amount paid on a regular schedule by a policyholder that maintains insurance coverage.

Prepayment: payment of the mortgage loan before the scheduled due date; may be Subject to a prepayment penalty.

Principal: the amount borrowed from a lender; doesn't include interest or additional fees.

Radon: a radioactive gas found in some homes that, if occurring in strong enough concentrations, can cause health problems.

Real estate agent: an individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.

Realtor: a real estate agent or broker who is a member of the NATIONAL ASSOCIATION OF REALTORS, and its local and state associations.

Refinancing: paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate).

Rehabilitation mortgage: a mortgage that covers the costs of rehabilitating (repairing or Improving) a property; some rehabilitation mortgages - like the FHA's 203(k) - allow a borrower to roll the costs of rehabilitation and home purchase into one mortgage loan.

RESPA: Real Estate Settlement Procedures Act; a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships.

Settlement: another name for closing.

Special Forbearance: a loss mitigation option where the lender arranges a revised repayment plan for the borrower that may include a temporary reduction or suspension of monthly loan payments.

Subordinate: to place in a rank of lesser importance or to make one claim secondary to another.

Survey: a property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc.

Sweat equity: using labor to build or improve a property as part of the down payment.

Title 1: an FHA-insured loan that allows a borrower to make non-luxury improvements (like renovations or repairs) to their home; Title I loans less than $7,500 don't require a property lien.

Title insurance: insurance that protects the lender against any claims that arise from arguments about ownership of the property; also available for homebuyers.

Title search: a check of public records to be sure that the seller is the recognized owner of the real estate and that there are no unsettled liens or other claims against the property.

Truth-in-Lending: a federal law obligating a lender to give fuII written disclosure of aII fees, terms, and conditions associated with the loan initial period and then adjusts to another rate that lasts for the term of the loan.

Underwriting: the process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower's credit history and a judgment of the property value.

VA: Department of Veterans Affairs: a federal agency which guarantees loans made to veterans; similar to mortgage insurance, a loan guarantee protects lenders against loss that may result from a borrower default.

100 Questions & Answers About Buying A New Home

Rich Urban (Equity Resq) — Mon, 22 Oct 2007 14:18:05 -0500

1. HOW DO I KNOW IF I'M READY TO BUY A HOME?
You can find out by asking yourself some questions:

Do I have a steady source of income (usually a job)? Have I been employed on a regular basis for the last 2-3 years? Is my current income reliable?
Do I have a good record of paying my bills?
Do I have few outstanding long-term debts, like car payments?
Do I have money saved for a down payment?
Do I have the ability to pay a mortgage every month, plus additional costs?

If you can answer "yes" to these questions, you are probably ready to buy your own home.

2. HOW DO I BEGIN THE PROCESS OF BUYING A HOME?
Start by thinking about your situation. Are you ready to buy a home? How much can you afford in a monthly mortgage payment (see Question 4 for help)? How much space do you need? What areas of town do you like? After you answer these questions, make a "To Do" list and start doing casual research. Talk to friends and family, drive through neighborhoods, and look in the "Homes" section of the newspaper.

3. HOW DOES PURCHASING A HOME COMPARE WITH RENTING?
The two don't really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing.

Owning a home has many benefits. When you make a mortgage payment, you are building equity. And that's an investment. Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities - like insurance, real estate taxes, and upkeep - which can be substantial. But given the freedom, stability, and security of owning your own home, they are worth it.

4. HOW DOES THE LENDER DECIDE THE MAXIMUM LOAN AMOUNT THAT CAN AFFORD?
The lender considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses. Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support. According to the FHA, monthly mortgage payments should be no more than 29% of gross income, while the mortgage payment, combined with non-housing expenses, should total no more than 41% of income. The lender also considers cash available for down payment and closing costs, credit history, etc. when determining your maximum loan amount.

5. HOW DO I SELECT THE RIGHT REAL ESTATE AGENT?
Start by asking family and friends if they can recommend an agent. Compile a list of several agents and talk to each before choosing one. Look for an agent who listens well and understands your needs, and whose judgment you trust. The ideal agent knows the local area well and has resources and contacts to help you in your search. Overall, you want to choose an agent that makes you feel comfortable and can provide all the knowledge and services you need.

6. HOW CAN I DETERMINE MY HOUSING NEEDS BEFORE I BEGIN THE SEARCH?
Your home should fit way you live, with spaces and features that appeal to the whole family. Before you begin looking at homes, make a list of your priorities - things like location and size. Should the house be close to certain schools? your job? to public transportation? How large should the house be? What type of lot do you prefer? What kinds of amenities are you looking for? Establish a set of minimum requirements and a 'wish list." Minimum requirements are things that a house must have for you to consider it, while a "wish list" covers things that you'd like to have but aren't essential.

FINDING YOUR HOME

7. WHAT SHOULD I LOOK FOR WHEN DECIDING ON A COMMUNITY?
Select a community that will allow you to best live your daily life. Many people choose communities based on schools. Do you want access to shopping and public transportation? Is access to local facilities like libraries and museums important to you? Or do you prefer the peace and quiet of a rural community? When you find places that you like, talk to people that live there. They know the most about the area and will be your future neighbors. More than anything, you want a neighborhood where you feel comfortable in.

8. WHAT SHOULD I DO IF I'M FEELING EXCLUDED FROM CERTAIN NEIGHBORHOODS?
Immediately contact the U.S. Department of Housing and Urban Development (HUD) if you ever feel excluded from a neighborhood or particular house. Also, contact HUD if you believe you are being discriminated against on the basis of race, color, religion, sex, nationality, familial status, or disability. HUD's Office of Fair Housing has a hotline for reporting incidents of discrimination: 1-800-669-9777 (and 1-800-927-9275 for the hearing impaired).

9. HOW CAN I FIND OUT ABOUT LOCAL SCHOOLS?
You can get information about school systems by contacting the city or county school board or the local schools. Your real estate agent may also be knowledgeable about schools in the area.

10. HOW CAN I FIND OUT ABOUT COMMUNITY RESOURCES?
Contact the local chamber of commerce for promotional literature or talk to your real estate agent about welcome kits, maps, and other information. You may also want to visit the local library. It can be an excellent source for information on local events and resources, and the librarians will probably be able to answer many of the questions you have.

11. HOW CAN I FIND OUT HOW MUCH HOMES ARE SELLING FOR IN CERTAIN COMMUNITIES AND NEIGHBORHOODS?
Your real estate agent can give you a ballpark figure by showing you comparable listings. If you are working with a REALTOR, they may have access to comparable sales maintained on a database.

12. HOW CAN I FIND INFORMATION ON THE PROPERTY TAX LIABILITY?
The total amount of the previous year's property taxes is usually included in the listing information. If it's not, ask the seller for a tax receipt or contact the local assessor's off ice. Tax rates can change from year to year, so these figures may be approximate.

13. WHAT OTHER TAX ISSUES SHOULD I TAKE INTO CONSIDERATION?
Keep in mind that your mortgage interest and real estate taxes will be deductible. A qualified real estate professional can give you more details on other tax benefits and liabilities.

14. IS AN OLDER HOME A BETTER VALUE THAN A NEW ONE?
There isn't a definitive answer to this question. You should look at each home for its individual characteristics. Generally, older homes may be in more established neighborhoods, offer more ambiance, and have lower property tax rates. People who buy older homes, however, shouldn't mind maintaining their home and making some repairs. Newer homes tend to use more modern architecture and systems, are usually easier to maintain, and may be more energy-efficient. People who buy new homes often don't want to worry initially about upkeep and repairs.

15. WHAT SHOULD I LOOK FOR WHEN WALKING THROUGH A HOME?
In addition to comparing the home to your minimum requirement and wish lists, use the HUD Home Scorecard and consider the following:

Is there enough room for both the present and the future?
Are there enough bedrooms and bathrooms?
Is the house structurally sound?
Do the mechanical systems and appliances work?
Is the yard big enough?
Do you like the floor plan?
Will your furniture fit in the space? Is there enough storage space? (Bring a tape measure to better answer these questions.)
Does anything need to repaired or replaced? Will the seller repair or replace the items?
Imagine the house in good weather and bad, and in each season. Will you be happy with it year-round?

Take your time and think carefully about each house you see. Ask your real estate agent to point out the pros and cons of each home from a professional standpoint.

16. WHAT QUESTIONS SHOULD I ASK WHEN LOOKING AT HOMES?
Many of your questions should focus on potential problems and maintenance issues. Does anything need to be replaced? What things require ongoing maintenance (e.g., paint, roof, HVAC, appliances, carpet)? Also ask about the house and neighborhood, focusing on quality of life issues. Be sure the seller's or real estate agent's answers are clear and complete. Ask questions until you understand all of the information they've given. Making a list of questions ahead of time will help you organize your thoughts and arrange all of the information you receive. The HUD Home Scorecard can help you develop your question list.

17. HOW CAN I KEEP TRACK OF ALL THE HOMES I SEE?
If possible, take photographs of each house: the outside, the major rooms, the yard, and extra features that you like or ones you see as potential problems. And don't hesitate to return for a second look. Use the HUD Home Scorecard to organize your photos and notes for each house.

18. HOW MANY HOMES SHOULD I CONSIDER BEFORE CHOOSING ONE?
There isn't a set number of houses you should see before you decide. Visit as many as it takes to find the one you want. On average, homebuyers see 15 houses before choosing one. Just be sure to communicate often with your real estate agent about everything you're looking for. It will help avoid wasting your time.

YOU'VE FOUND IT

19. WHAT DOES A HOME INSPECTOR DO, AND HOW DOES AN INSPECTION FIGURE IN THE PURCHASE OF A HOME?
An inspector checks the safety of your potential new home. Home Inspectors focus especially on the structure, construction, and mechanical systems of the house and will make you aware of only repairs, that are needed.

The Inspector does not evaluate whether or not you're getting good value for your money. Generally, an inspector checks (and gives prices for repairs on): the electrical system, plumbing and waste disposal, the water heater, insulation and Ventilation, the HVAC system, water source and quality, the potential presence of pests, the foundation, doors, windows, ceilings, walls, floors, and roof. Be sure to hire a home inspector that is qualified and experienced.

It's a good idea to have an inspection before you sign a written offer since, once the deal is closed, you've bought the house as is." Or, you may want to include an inspection clause in the offer when negotiating for a home. An inspection t clause gives you an 'out" on buying the house if serious problems are found,or gives you the ability to renegotiate the purchase price if repairs are needed. An inspection clause can also specify that the seller must fix the problem(s) before you purchase the house.

20. DO I NEED TO BE THERE FOR THE INSPECTION?
It's not required, but it's a good idea. Following the inspection, the home inspector will be able to answer questions about the report and any problem areas. This is also an opportunity to hear an objective opinion on the home you'd I like to purchase and it is a good time to ask general, maintenance questions.

21. ARE OTHER TYPES OF INSPECTIONS REQUIRED?
If your home inspector discovers a serious problem a more specific Inspection may be recommended. It's a good idea to consider having your home inspected for the presence of a variety of health-related risks like radon gas asbestos, or possible problems with the water or waste disposal system.

22. HOW CAN I PROTECT MY FAMILY FROM LEAD IN THE HOME?
If the house you're considering was built before 1978 and you have children under the age of seven, you will want to have an inspection for lead-based point. It's important to know that lead flakes from paint can be present in both the home and in the soil surrounding the house. The problem can be fixed temporarily by repairing damaged paint surfaces or planting grass over effected soil. Hiring a lead abatement contractor to remove paint chips and seal damaged areas will fix the problem permanently.

23. ARE POWER LINES A HEALTH HAZARD?
There are no definitive research findings that indicate exposure to power lines results in greater instances of disease or illness.

24. DO I NEED A LAWYER TO BUY A HOME?
Laws vary by state. Some states require a lawyer to assist in several aspects of the home buying process while other states do not, as long as a qualified real estate professional is involved. Even if your state doesn't require one, you may want to hire a lawyer to help with the complex paperwork and legal contracts. A lawyer can review contracts, make you aware of special considerations, and assist you with the closing process. Your real estate agent may be able to recommend a lawyer. If not, shop around. Find out what services are provided for what fee, and whether the attorney is experienced at representing homebuyers.

25. DO I REALLY NEED HOMEOWNER'S INSURANCE?
Yes. A paid homeowner's insurance policy (or a paid receipt for one) is required at closing, so arrangements will have to be made prior to that day. Plus, involving the insurance agent early in the home buying process can save you money. Insurance agents are a great resource for information on home safety and they can give tips on how to keep insurance premiums low.

26. WHAT STEPS COULD I TAKE TO LOWER MY HOMEOWNER'S INSURANCE COSTS?
Be sure to shop around among several insurance companies. Also, consider the cost of insurance when you look at homes. Newer homes and homes constructed with materials like brick tend to have lower premiums. Think about avoiding areas prone to natural disasters, like flooding. Choose a home with a fire hydrant or a fire department nearby.

27. IS THE HOME LOCATED IN A FLOOD PLAIN?
Your real estate agent or lender can help you answer this question. If you live in a flood plain, the lender will require that you have flood insurance before lending any money to you. But if you live near a flood plain, you may choose whether or not to get flood insurance coverage for your home. Work with an insurance agent to construct a policy that fits your needs.

28. WHAT OTHER ISSUES SHOULD I CONSIDER BEFORE I BUY MY HOME?
Always check to see if the house is in a low-lying area, in a high-risk area for natural disasters (like earthquakes, hurricanes, tornadoes, etc.), or in a hazardous materials area. Be sure the house meets building codes. Also consider local zoning laws, which could affect remodeling or making an addition in the future. Your real estate agent should be able to help you with these questions.

29. HOW DO I MAKE AN OFFER?
Your real estate agent will assist you in making an offer, which will include the following information:

Complete legal description of the property
Amount of earnest money
Down payment and financing details
Proposed move-in date
Price you are offering
Proposed closing date
Length of time the offer is valid
Details of the deal

Remember that a sale commitment depends on negotiating a satisfactory contract with the seller, not just making an offer.

Other ways to lower ins-insurance costs include insuring your home and car(s) with the same company, increasing home security, and seeking group coverage through alumni or business associations. Insurance costs are always lowered by raising your deductibles, but this exposes you to a higher out-of-pocket cost if you have to file a claim.

30. HOW DO I DETERMINE THE INITIAL OFFER?
Unless you have a buyer's agent, remember that the agent works for the seller. Make a point of asking him or her to keep your discussions and information confidential. Listen to your real estate agent's advice, but follow your own instincts on deciding a fair price. Calculating your offer should involve several factors: what homes sell for in the area, the home's condition, how long it's been on the market, financing terms, and the seller's situation. By the time you're ready to make an offer, you should have a good idea of what the home is worth and what you can afford. And, be prepared for give-and-take negotiation, which is very common when buying a home. The buyer and seller may often go back and forth until they can agree on a price.

31. WHAT IS EARNEST MONEY? HOW MUCH SHOULD I SET ASIDE?
Earnest money is money put down to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and is usually between 1-5% of the purchase price (though the amount can vary with local customs and conditions). If your offer is accepted, the earnest money becomes part of your down payment or closing costs. If the offer is rejected, your money is returned to you. If you back out of a deal, you may forfeit the entire amount.

32. WHAT ARE "HOME WARRANTIES", AND SHOULD I CONSIDER THEM?
Home warranties offer you protection for a specific period of time (e.g., one year) against potentially costly problems, like unexpected repairs on appliances or home systems, which are not covered by homeowner's insurance. Warranties are becoming more popular because they offer protection during the time immediately following the purchase of a home, a time when many people find themselves cash-strapped.

GENERAL FINANCING QUESTIONS: THE BASICS

33. WHAT IS A MORTGAGE?
Generally speaking, a mortgage is a loan obtained to purchase real estate. The "mortgage" itself is a lien (a legal claim) on the home or property that secures the promise to pay the debt. All mortgages have two features in common: principal and interest.

34. WHAT IS A LOAN TO VALUE (LTV) HOW DOES IT DETERMINE THE SIZE OF MY LOAN?
The loan to value ratio is the amount of money you borrow compared with the price or appraised value of the home you are purchasing. Each loan has a specific LTV limit. For example: With a 95% LTV loan on a home priced at $50,000, you could borrow up to $47,500 (95% of $50,000), and would have to pay,$2,500 as a down payment.

The LTV ratio reflects the amount of equity borrowers have in their homes. The higher the LTV the less cash homebuyers are required to pay out of their own funds. So, to protect lenders against potential loss in case of default, higher LTV loans (80% or more) usually require mortgage insurance policy.

35. WHAT TYPES OF LOANS ARE AVAILABLE AND WHAT ARE THE ADVANTAGES OF EACH?
Fixed Rate Mortgages: Payments remain the same for the the life of the loan

Types

15-year
30-year

Advantages

Predictable
Housing cost remains unaffected by interest rate changes and inflation.

Adjustable Rate Mortgages (ARMS): Payments increase or decrease on a regular schedule with changes in interest rates; increases subject to limits

Types

Balloon Mortgage- Offers very low rates for an Initial period of time (usually 5, 7, or 10 years); when time has elapsed, the balance is clue or refinanced (though not automatically)
Two-Step Mortgage- Interest rate adjusts only once and remains the same for the life of the loan
ARMS linked to a specific index or margin

Advantages

Generally offer lower initial interest rates
Monthly payments can be lower
May allow borrower to qualify for a larger loan amount

36. WHEN DO ARMS MAKE SENSE?
An ARM may make sense If you are confident that your income will increase steadily over the years or if you anticipate a move in the near future and aren't concerned about potential increases in interest rates.

37. WHAT ARE THE ADVANTAGES OF 15- AND 30-YEAR LOAN TERMS?
30-Year:

In the first 23 years of the loan, more interest is paid off than principal, meaning larger tax deductions.
As inflation and costs of living increase, mortgage payments become a smaller part of overall expenses.

15-year:

Loan is usually made at a lower interest rate.
Equity is built faster because early payments pay more principal.

38. CAN I PAY OFF MY LOAN AHEAD OF SCHEDULE?
Yes. By sending in extra money each month or making an extra payment at the end of the year, you can accelerate the process of paying off the loan. When you send extra money, be sure to indicate that the excess payment is to be applied to the principal. Most lenders allow loan prepayment, though you may have to pay a prepayment penalty to do so. Ask your lender for details.

39. ARE THERE SPECIAL MORTGAGES FOR FIRST-TIME HOMEBUYERS?
Yes. Lenders now offer several affordable mortgage options which can help first-time homebuyers overcome obstacles that made purchasing a home difficult in the past. Lenders may now be able to help borrowers who don't have a lot of money saved for the down payment and closing costs, have no or a poor credit history, have quite a bit of long-term debt, or have experienced income irregularities.

40. HOW LARGE OF A DOWN PAYMENT DO I NEED?
There are mortgage options now available that only require a down payment of 5% or less of the purchase price. But the larger the down payment, the less you have to borrow, and the more equity you'll have. Mortgages with less than a 20% down payment generally require a mortgage insurance policy to secure the loan. When considering the size of your down payment, consider that you'll also need money for closing costs, moving expenses, and - possibly -repairs and decorating.

41. WHAT IS INCLUDED IN A MONTHLY MORTGAGE PAYMENT?
The monthly mortgage payment mainly pays off principal and interest. But most lenders also include local real estate taxes, homeowner's insurance, and mortgage insurance (if applicable).

42. WHAT FACTORS AFFECT MORTGAGE PAYMENTS?
The amount of the down payment, the size of the mortgage loan, the interest rate, the length of the repayment term and payment schedule will all affect the size of your mortgage payment.

43. HOW DOES THE INTEREST RATE FACTOR IN SECURING A MORTGAGE LOAN?
A lower interest rate allows you to borrow more money than a high rate with the some monthly payment. Interest rates can fluctuate as you shop for a loan, so ask-lenders if they offer a rate "lock-in"which guarantees a specific interest rate for a certain period of time. Remember that a lender must disclose the Annual Percentage Rate (APR) of a loan to you. The APR shows the cost of a mortgage loan by expressing it in terms of a yearly interest rate. It is generally higher than the interest rate because it also includes the cost of points, mortgage insurance, and other fees included in the loan.

44. WHAT HAPPENS IF INTEREST RATES DECREASE AND I HAVE A FIXED RATE LOAN?
If interest rates drop significantly, you may want to investigate refinancing. Most experts agree that if you plan to be in your house for at least 18 months and you can get a rate 2% less than your current one, refinancing is smart. Refinancing may, however, involve paying many of the same fees paid at the original closing, plus origination and application fees.

45. WHAT ARE DISCOUNT POINTS?
Discount points allow you to lower your interest rate. They are essentially prepaid interest, With each point equaling 1% of the total loan amount. Generally, for each point paid on a 30-year mortgage, the interest rate is reduced by 1/8 (or.125) of a percentage point. When shopping for loans, ask lenders for an interest rate with 0 points and then see how much the rate decreases With each point paid. Discount points are smart if you plan to stay in a home for some time since they can lower the monthly loan payment. Points are tax deductible when you purchase a home and you may be able to negotiate for the seller to pay for some of them.

46. WHAT IS AN ESCROW ACCOUNT? DO I NEED ONE?
Established by your lender, an escrow account is a place to set aside a portion of your monthly mortgage payment to cover annual charges for homeowner's insurance, mortgage insurance (if applicable), and property taxes. Escrow accounts are a good idea because they assure money will always be available for these payments. If you use an escrow account to pay property tax or homeowner's insurance, make sure you are not penalized for late payments since it is the lender's responsibility to make those payments.

FIRST STEPS

47. WHAT STEPS NEED TO BE TAKEN TO SECURE A LOAN?
The first step in securing a loan is to complete a loan application. To do so, you'll need the following information:

Pay stubs for the past 2-3 months
W-2 forms for the past 2 years
Information on long-term debts
Recent bank statements
tax returns for the past 2 years
Proof of any other income
Address and description of the property you wish to buy
Sales contract

During the application process, the lender will order a report on your credit history and a professional appraisal of the property you want to purchase. The application process typically takes between 1-6 weeks.

48. HOW DO I CHOOSE THE RIGHT LENDER FOR ME?
Choose your lender carefully. Look for financial stability and a reputation for customer satisfaction. Be sure to choose a company that gives helpful advice and that makes you feel comfortable. A lender that has the authority to approve and process your loan locally is preferable, since it will be easier for you to monitor the status of your application and ask questions. Plus, it's beneficial when the lender knows home values and conditions in the local area. Do research and ask family, friends, and your real estate agent for recommendations.

49. HOW ARE PRE-QUALIFYING AND PRE-APPROVAL DIFFERENT?
Pre-qualification is an informal way to see how much you maybe able to borrow. You can be 'pre-qualified' over the phone with no paperwork by telling a lender your income, your long-term debts, and how large a down payment you can afford. Without any obligation, this helps you arrive at a ballpark figure of the amount you may have available to spend on a house.

Pre-approval is a lender's actual commitment to lend to you. It involves assembling the financial records mentioned in Question 47 (Without the property description and sales contract) and going through a preliminary approval process. Pre-approval gives you a definite idea of what you can afford and shows sellers that you are serious about buying.

50. HOW CAN I FIND OUT INFORMATION ABOUT MY CREDIT HISTORY?
There are three major credit reporting companies: Equifax, Experian, and Trans Union. Obtaining your credit report is as easy as calling and requesting one. Once you receive the report, it's important to verify its accuracy. Double check the "high credit limit,"'total loan," and 'past due" columns. It's a good idea to get copies from all three companies to assure there are no mistakes since any of the three could be providing a report to your lender. Fees, ranging from $5-$20, are usually charged to issue credit reports but some states permit citizens to acquire a free one. Contact the reporting companies at the numbers listed for more information.

CREDIT REPORTING COMPANIES

Company Name	Phone Number
Experian	1-888-524-3666
Equifax	1-800-685-1111
Trans Union	1-800-916-8800

51. WHAT IF I FIND A MISTAKE IN MY CREDIT HISTORY?
Simple mistakes are easily corrected by writing to the reporting company, pointing out the error, and providing proof of the mistake. You can also request to have your own comments added to explain problems. For example, if you made a payment late due to illness, explain that for the record. Lenders are usually understanding about legitimate problems.

52. WHAT IS A CREDIT BUREAU SCORE AND HOW DO LENDERS USE THEM?
A credit bureau score is a number, based upon your credit history, that represents the possibility that you will be unable to repay a loan. Lenders use it to determine your ability to qualify for a mortgage loan. The better the score, the better your chances are of getting a loan. Ask your lender for details.

53. HOW CAN I IMPROVE MY SCORE?
There are no easy ways to improve your credit score, but you can work to keep it acceptable by maintaining a good credit history. This means paying your bills on time and not overextending yourself by buying more than you can afford.

FINDING THE RIGHT LOAN FOR YOU

54. HOW DO I CHOOSE THE BEST LOAN - PROGRAM FOR ME?
Your personal situation will determine the best kind of loan for you. By asking yourself a few questions, you can help narrow your search among the many options available and discover which loan suits you best.

Do you expect your finances to changeover the next few years?
Are you planning to live in this home for a long period of time?
Are you comfortable with the idea of a changing mortgage payment amount?
Do you wish to be free of mortgage debt as your children approach college age or as you prepare for retirement?

Your lender can help you use your answers to questions such as these to decide which loan best fits your needs.

55. WHAT IS THE BEST WAY TO COMPARE LOAN TERMS BETWEEN LENDERS?
First, devise a checklist for the information from each lending institution. You should include the company's name and basic information, the type of mortgage, minimum down payment required, interest rate and points, closing costs, loan processing time, and whether prepayment is allowed.

Speak with companies by phone or in person. Be sure to call every lender on the list the same day, as interest rates can fluctuate daily. In addition to doing your own research, your real estate agent may have access to a database of lender and mortgage options. Though your agent may primarily be affiliated with a particular lending institution, he or she may also be able to suggest a variety of different lender options to you.

56. ARE THERE ANY COSTS OR FEES ASSOCIATED WITH THE LOAN ORIGINATION PROCESS?
Yes. When you turn in your application, you'll be required to pay a loan application fee to cover the costs of underwriting the loan. This fee pays for the home appraisal, a copy of your credit report, and any additional charges that may be necessary. The application fee is generally non-refundable.

57. WHAT IS RESPA?
RESPA stands for Real Estate Settlement Procedures Act. It requires lenders to disclose information to potential customers throughout the mortgage process, By doing so, it protects borrowers from abuses by lending institutions. RESPA mandates that lenders fully inform borrowers about all closing costs, lender servicing and escrow account practices, and business relationships between closing service providers and other parties to the transaction.

For more information on RESPA, go to www.hud.gov/offices/hsg/sfh/res/respamor.cfm or call 1-800-569-4287 for a local counseling referral.

58. WHAT IS A GOOD FAITH ESTIMATE, AND HOW DOES IT HELP ME?
It's an estimate that lists all fees paid before closing, all closing costs, and any escrow costs you will encounter when purchasing a home. The lender must supply it within three days of your application so that you can make accurate judgments when shopping for a loan.

59. BESIDES RESPA, DOES THE LENDER HAVE ANY ADDITIONAL RESPONSIBILITIES?
Lenders are not allowed to discriminate in any way against potential borrowers. If you believe a lender is refusing to provide his or her services to you on the basis of race, color, nationality, religion, sex, familial status, or disability, contact HUD's Office of Fair Housing at 1-800-669-9777 (or 1-800-927-9275 for the hearing impaired).

60. WHAT RESPONSIBILITIES DO I HAVE DURING THE LENDING PROCESS?
To ensure you won't fall victim to loan fraud, be sure to follow all of these steps as you apply for a loan:

Be sure to read and understand everything before you sign.
Refuse to sign any blank documents.
Do not buy property for someone else.
Do not overstate your income.
Do not overstate how long you have been employed.
Do not overstate your assets.
Accurately report your debts.
Do not change your income tax returns for any reason. Tell the whole truth about gifts. Do not list fake co-borrowers on your loan application.
Be truthful about your credit problems, past and present.
Be honest about your intention to occupy the house
Do not provide false supporting documents.

CLOSING

61. WHAT HAPPENS AFTER I'VE APPLIED FOR MY LOAN?
It usually takes a lender between 1-6 weeks to complete the evaluation of your application. Its not unusual for the lender to ask for more information once the application has been submitted. The sooner you can provide the information, the faster your application will be processed. Once all the information has been verified the lender will call you to let you know the outcome of your application. If the loan is approved, a closing date is set up and the lender will review the closing with you. And after closing, you'll be able to move into your new home.

62. WHAT SHOULD I LOOK OUT FOR DURING THE FINAL WALK-THROUGH?
This will likely be the first opportunity to examine the house without furniture, giving you a clear view of everything. Check the walls and ceilings carefully, as well as any work the seller agreed to do in response to the inspection. Any problems discovered previously that you find uncorrected should be brought up prior to closing. It is the seller's responsibility to fix them.

63. WHAT MAKES UP CLOSING COST?
There may be closing cost customary or unique to a certain locality, but closing cost are usually made up of the following:

Attorney's or escrow fees (Yours and your lender's if applicable)
Property taxes (to cover tax period to date)
Interest (paid from date of closing to 30 days before first monthly payment)
Loan Origination fee (covers lenders administrative cost)
Recording fees
Survey fee
First premium of mortgage Insurance (if applicable)
Title Insurance (yours and lender's)
Loan discount points
First payment to escrow account for future real estate taxes and insurance
Paid receipt for homeowner's insurance policy (and fire and flood insurance if applicable)
Any documentation preparation fees

64. WHAT CAN I EXPECT TO HAPPEN ON CLOSING DAY?
You'll present your paid homeowner's insurance policy or a binder and receipt showing that the premium has been paid. The closing agent will then list the money you owe the seller (remainder of down payment, prepaid taxes, etc.) and then the money the seller owes you (unpaid taxes and prepaid rent, if applicable). The seller will provide proofs of any inspection, warranties, etc.

Once you're sure you understand all the documentation, you'll sign the mortgage, agreeing that if you don't make payments the lender is entitled to sell your property and apply the sale price against the amount you owe plus expenses. You'll also sign a mortgage note, promising to repay the loan. The seller will give you the title to the house in the form of a signed deed.

You'll pay the lender's agent all closing costs and, in turn,he or she will provide you with a settlement statement of all the items for which you have paid. The deed and mortgage will then be recorded in the state Registry of Deeds, and you will be a homeowner.

65. WHAT DO I GET AT CLOSING?

Settlement Statement, HUD-1 Form (itemizes services provided and the fees charged; it is filled out by the closing agent and must be given to you at or before closing)
Truth-in-Lending Statement
Mortgage Note
Mortgage or Deed of Trust
Binding Sales Contract (prepared by the seller; your lawyer should review it)
Keys to your new home

HOW CAN HUD AND THE FHA HELP ME BECOME A HOMEOWNER

66. WHAT IS THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT?
Also known as HUD, the U.S. Department of Housing and Urban Development was established in 1965 to develop national policies and programs to address housing needs in the U.S. One of HUD's primary missions is to create a suitable living environment for all Americans by developing and improving the country's communities and enforcing fair housing laws.

67. HOW DOES HUD HELP HOMEBUYERS AND HOMEOWNERS?
HUD helps people by administering a variety of programs that develop and support affordable housing. Specifically, HUD plays a large role in homeownership by making loans available for lower- and moderate-income families through its FHA mortgage insurance program and its HUD Homes program. HUD owns homes in many communities throughout the U.S. and offers them for sale at attractive prices and economical terms. HUD also seeks to protect consumers through education, Fair Housing Laws, and housing rehabilitation initiatives.

68. WHAT IS THE FHA?
Now an agency within HUD, the Federal Housing Administration was established in 1934 to advance opportunities for Americans to own homes. By providing private lenders with mortgage insurance, the FHA gives them the security they need to lend to first-time buyers who might not be able to qualify for conventional loans. The FHA has helped more than 26 million Americans buy a home.

69. HOW CAN THE FHA ASSIST ME IN BUYING A HOME?
The FHA works to make homeownership a possibility for more Americans. With the FHA, you don't need perfect credit or a high-paying job to qualify for a loan. The FHA also makes loans more accessible by requiring smaller down payments than conventional loans. In fact, an FHA down payment could be as little as a few months rent. And your monthly payments may not be much more than rent.

70. HOW IS THE FHA FUNDED?
Lender claims paid by the FHA mortgage insurance program are drawn from the Mutual Mortgage Insurance fund. This fund is made up of premiums paid by FHA-insured loan borrowers. No tax dollars are used to fund the program.

71. WHO CAN QUALIFY FOR FHA LOANS?
Anyone who meets the credit requirements, can afford the mortgage payments and cash investment, and who plans to use the mortgaged property as a primary residence may apply for an FHA-insured loan.

72. WHAT IS THE FHA LOAN LIMIT?
FHA loan limits vary throughout the country, from $115,200 in low-cost areas to $208,800 in high-cost areas. The loan maximums for multi-unit homes are higher than those for single units and also vary by area.

Because these maximums are linked to the conforming loan limit and average area home prices, FHA loan limits are periodically subject to change. Ask your lender for details and confirmation of current limits.

73. WHAT ARE THE STEPS INVOLVED IN THE FHA LOAN PROCESS?
With the exception of a few additional forms, the FHA loan application process is similar to that of a conventional loan (see Question 47). With new automation measures, FHA loans may be originated more quickly than before. And, if you don't prefer a face-to-face meeting, you can apply for an FHA loan via mail, telephone, the Internet, or video conference.

74. HOW MUCH INCOME DO I NEED TO HAVE TO QUALIFY FOR AN FHA LOAN?
There is no minimum income requirement. But you must prove steady income for at least three years, and demonstrate that you've consistently paid your bills on time.

75. WHAT QUALIFIES AS AN INCOME SOURCE FOR THE FHA?
Seasonal pay, child support, retirement pension payments, unemployment compensation, VA benefits, military pay, Social Security income, alimony, and rent paid by family all qualify as income sources. Part-time pay, overtime, and bonus pay also count as long as they are steady. Special savings plans-such as those set up by a church or community association - qualify, too. Income type is not as important as income steadiness with the FHA.

76. CAN I CARRY DEBT AND STILL QUALIFY FOR FHA LOANS?
Yes. Short-term debt doesn't count as long as it can be paid off within 10 months. And some regular expenses, like child care costs, are not considered debt. Talk to your lender or real estate agent about meeting the FHA debt-to-income ratio.

77. WHAT IS THE DEBT-TO-INCOME RATIO FOR FHA LOANS?
The FHA allows you to use 29% of your income towards housing costs and 41% towards housing expenses and other long-term debt. With a conventional loan, this qualifying ratio allows only 28% toward housing and 36% towards housing and other debt.

78. CAN I EXCEED THIS RATIO?
You may qualify to exceed if you have:

a large down payment
a demonstrated ability to pay more toward your housing expenses
substantial cash reserves
net worth enough to repay the mortgage regardless of income
evidence of acceptable credit history or limited credit use
less-than-maximum mortgage terms
funds provided by an organization
a decrease in monthly housing expenses

79. HOW LARGE A DOWN PAYMENT DO I NEED WITH AN FHA LOAN?
You must have a down payment of at least 3% of the purchase price of the home. Most affordable loan programs offered by private lenders require between a 3%-5% down payment, with a minimum of 3% coming directly from the borrower's own funds.

80. WHAT CAN I USE TO PAY THE DOWN PAYMENT AND CLOSING COSTS OF AN FHA LOAN?
Besides your own funds, you may use cash gifts or money from a private savings club. If you can do certain repairs and improvements yourself, your labor may be used as part of a down 8 payment (called "sweat equity"). If you are doing a lease purchase, paying extra rent to the seller may also be considered the same as accumulating cash.

81. HOW DOES MY CREDIT HISTORY IMPACT MY ABILITY TO QUALIFY?
The FHA is generally more flexible than conventional lenders in its qualifying guidelines. In fact, the FHA allows you to re-establish credit if:

two years have passed since a bankruptcy has been discharged
all judgments have been paid
any outstanding tax liens have been satisfied or appropriate arrangements have been made to establish a repayment plan with the IRS or state Department of Revenue
three years have passed since a foreclosure or a deed-in-lieu has been resolved

82. CAN I QUALIFY FOR AN FHA LOAN WITHOUT A CREDIT HISTORY?
Yes. If you prefer to pay debts in cash or are too young to have established credit, there are other ways to prove your eligibility. Talk to your lender for details.

83. WHAT TYPES OF CLOSING COSTS ARE ASSOCIATED WITH FHA-INSURED LOANS?
Except for the addition of an FHA mortgage insurance premium, FHA closing costs are similar to those of a conventional loan outlined in Question 63. The FHA requires a single, upfront mortgage insurance premium equal to 2.25% of the mortgage to be paid at closing (or 1.75% if you complete the HELP program- see Question 91). This initial premium may be partially refunded if the loan is paid in full during the first seven years of the loan term. After closing, you will then be responsible for an annual premium - paid monthly - if your mortgage is over 15 years or if you have a 15-year loan with an LTV greater than 90%.

84. CAN I ROLL CLOSING COSTS INTO MY FHA LOAN?
No. Though you can't roll closing costs into your FHA loan, you may be able to use the amount you pay for them to help satisfy the down payment requirement. Ask your lender for details.

85. ARE FHA LOANS ASSUMABLE?
Yes. You can assume an existing FHA-insured loan, or, if you are the one deciding to sell, allow a buyer to assume yours. Assuming a loan can be very beneficial, since the process is streamlined and less expensive compared to that for a new loan. Also, assuming a loan can often result in a lower interest rate. The application process consists basically of a credit check and no property appraisal is required. And you must demonstrate that you have enough income to support the mortgage loan. In this way, qualifying to assume a loan is similar to the qualification requirements for a new one.

86. WHAT SHOULD I DO IF I CAN'T MAKE A PAYMENT ON LOAN?
Call or, write to your lender as soon as possible. Clearly explain the situation and be prepared to provide him or her with financial information.

87. ARE THERE ANY OPTIONS IF I FALL BEHIND ON MY LOAN PAYMENTS?
Yes. Talk to your lender or a HUD-approved counseling agency for details. Listed below are a few options that may help you get back on track.

For FHA loans:

Keep living in your home to qualify for assistance.
Contact a HUD-approved housing counseling agency (1-800-569-4287 or TDD: 1-800-483-2209) and cooperate with the counselor/lender trying to help you.
HUD has a number of special loss mitigation programs available to help you:

Special Forbearance: Your lender will arrange for a revised repayment plan which may Include temporary reduction or suspension of payments; you can qualify by having an Involuntary reduction in your Income or Increase In living expenses.
Mortgage Modification: Allows refinance debt and/or extend the term of the your mortgage loan which may reduce your monthly payments; you can qualify if you have recovered from financial problems, but net Income Is less than before.
Partial Claim: Your lender maybe able to help you obtain an interest-free loan from HUD to bring your mortgage current.
Pre-foreclosure Sale: Allows you to sell your property and pay off your mortgage loan ,to avoid foreclosure.
Deed-in lieu of Foreclosure: Lets you voluntarily "give back" your property to the lender; it won't save your house but will help you avoid the costs, time, and effort of the foreclosure process.

If you are having difficulty with an-uncooperative lender or feel your loan servicer is not providing you with the most effective loss mitigation options, call the FHA Loss Mitigation Center at 1-888-297-8685 for additional help.

For Conventional Loans:

Talk to your lender about specific loss mitigation options. Work directly with him or her to request a "workout packet." A secondary lender, like Fannie Mae or Freddie Mac, may have purchased your loan. Your lender can follow the appropriate guidelines set by Fannie or Freddie to determine the best option for your situation.

Fannie Mae does not deal directly with the borrower. They work with the lender to determine the loss mitigation program that best fits your needs.

Freddie Mac, like Fannie Mae, will usually only work with the loan servicer. However, if you encounter problems with your lender during the loss mitigation process, you can coil customer service for help at 1-800-FREDDIE (1-800-373-3343).

In any loss mitigation situation, it is important to remember a few helpful hints:

Explore every reasonable alternative to avoid losing your home, but beware of scams. For example, watch out for:

Equity skimming: a buyer offers to repay the mortgage or sell the property if you sign over the deed and move out.
Phony counseling agencies: offer counseling for a fee when it is often given at no charge.

Don't sign anything you don't understand.

MORTGAGE INSURANCE

88. WHAT IS MORTGAGE INSURANCE?
Mortgage insurance is a policy that protects lenders against some or most of the losses that result from defaults on home mortgages. It's required primarily for borrowers making a down payment of less than 20%.

89. HOW DOES MORTGAGE INSURANCE WORK? IS IT LIKE HOME OR AUTO INSURANCE?
Like home or auto insurance, mortgage insurance requires payment of a premium, is for protection against loss, and is used in the event of an emergency. If a borrower can't repay an insured mortgage loan as agreed, the lender may foreclose on the property and file a claim with the mortgage insurer for some or most of the total losses.

90. DO I NEED MORTGAGE INSURANCE? HOW DO I GET IT?
You need mortgage insurance only if you plan to make a down payment of less than 20% of the purchase price of the home. The FHA offers several loan programs that may meet your needs. Ask your lender for details.

91. HOW CAN I RECEIVE A DISCOUNT ON THE FHA INITIAL MORTGAGE INSURANCE PREMIUM?
Ask your real estate agent or lender for information on the HELP program from the FHA. HELP - Homebuyer Education Learning Program - is structured to help people like you begin the homebuying process. It covers such topics as budgeting, finding a home, getting a loan, and home maintenance. In most cases, completion of this program may entitle you to a reduction in the initial FHA mortgage insurance premium from 2.25% to 1.75% of the purchase price of your new home.

92. WHAT IS PMI?
PMI stands for Private Mortgage Insurance or Insurer. These are privately-owned companies that provide mortgage insurance. They offer both standard and special affordable programs for borrowers. These companies provide guidelines to lenders that detail the types of loans they will insure. Lenders use these guidelines to determine borrower eligibility. PMI's usually have stricter qualifying ratios and larger down payment requirements than the FHA, but their premiums are often lower and they insure loans that exceed the FHA limit.

FHA PRODUCTS

93. WHAT IS A 203(b) LOAN?
This is the most commonly used FHA program. It offers a low down payment, flexible qualifying guidelines, limited lender's fees, and a maximum loan amount.

94. WHAT IS A 203(k) LOAN?
This is a loan that enables the homebuyer to finance both the purchase and rehabilitation of a home through a single mortgage. A portion of the loan is used to pay off the seller's existing mortgage and the remainder is placed in an escrow account and released as rehabilitation is completed. Basic guidelines for 203(k) loans are as follows:

The home must be at least one year old.
The cost of rehabilitation must be at least $5,000, but the total property value - including the cost of repairs - must fall within the FHA maximum mortgage limit.
The 203(k) loan must follow many of the 203(b) eligibility requirements.
Talk to your lender about specific improvement, energy efficiency, and structural guidelines.

95. WHAT IS AN ENERGY EFFICIENT MORTGAGE (EEM)?
The Energy Efficient Mortgage allows a homebuyer to save future money on utility bills. This is done by financing the cost of adding energy-efficiency features to a new or existing home as part of an FHA-insured home purchase. The EEM can be used with both 203(b) and 203(k) loans. Basic guidelines for EEMs are as follows:

The cost of improvements must be determined by a Home Energy Rating System or by an energy consultant. This cost must be less than the anticipated savings from the improvements.
One- and two-unit new or existing homes are eligible; condos are not.
The improvements financed may be 5% of property value or $4,000, whichever is greater. The total must fall within the FHA loan limit.

96. DELETED.

97. WHAT IS A TITLE I LOAN?
Given by a Lender and insured by the FHA, a Title I loan is used to make non-luxury renovations and repairs to a home. It offers a manageable interest rate and repayment schedule. Loans are limited to between $5,000 and 20,000. If the loan amount is under 7,500, no lien is required against your home. Ask your lender for details.

98. WHAT OTHER LOAN PRODUCTS OR PROGRAMS DOES THE FHA OFFER?
The FHA also insures loans for the purchase or rehabilitation of manufactured housing, condominiums, and cooperatives. It also has special programs for urban areas, disaster victims, and members of the armed forces. Insurance for ARMS is also available from the FHA.

99. HOW CAN I OBTAIN AN FHA-INSURED LOAN?
Contact an FHA-approved lender such as a participating mortgage company, bank, savings and loan association, or thrift. For more information on the FHA and how you can obtain an FHA loan, visit the HUD web site at www.hud.gov or call a HUD-approved counseling agency at 1-800-569-4287 or TDD: 1-800-877-8339.

100. HOW CAN I CONTACT HUD?
Visit the web site at www.hud.gov or look in the phone book "blue pages" for a listing of the HUD office near you.

My Dirtiest House Yet,,,

Rich Urban (Equity Resq) — Sat, 20 Oct 2007 07:52:24 -0500

Well, I thought that I had seen it all - I was gravely wrong...:) I'll just let this video do the talking! Sorry about the poor quality, I shot this video "on the fly".

After making this quick video, I started thinking that this could become somewhat of a Fun Contest. I challenge all Real Estate Investors & Realtors to send me their "Dirtiest House", and let's get a competition going! Comment back with Pictures and / or youtube videos.

PRIZES-

Anyone that enters the contest will receive a Free Book - The Death Of Real Estate Investing by real estate mentor, Mike Perl (mikeperl.com).

The winner will receive an entire real estate investing course by Mike Perl, "Finding Vacant Properties in Your Own Backyard" Valued at $550.00

I'd imagine that this could become quite amusing! The winner will be chosen before November 1st, so get your entries in now...:)

Real Estate Investors - Don't Pull A Larry Smith...

Rich Urban (Equity Resq) — Sat, 20 Oct 2007 07:50:40 -0500

Excerpt From Treasure Coast News-

FORT PIERCE - Larry Eugene Smith claimed he could help solve the problems of a couple who wanted to sell their Port St. Lucie home.

Instead, he allegedly swindled Nancy and George Krueger out of their house on the 2210 block of Southwest Edison Circle, claiming he bought the property for $10.

St. Lucie County sheriff's deputies arrested Smith, 53, Tuesday at the home he moved into with his girlfriend after he persuaded the Kruegers to sign a purchase agreement for their home and power of attorney and warranty deed over to him in order for him to sell the house. Smith was charged with first-degree grand theft and taken to the St. Lucie County Jail, where he remained Friday evening.

St. Lucie County Sheriff Ken Mascara said Friday he believes Smith may have attempted the same scam with other homeowners in St. Lucie County. Even Mascara, who has a home for sale in the county, was targeted. He said he actually received a letter from Smith in July, which he hadn't yet followed up.

The sheriff's office is still investigating one other case involving Smith and another couple, said Detective Angela Flowers.

Smith, a licensed mortgage and real estate broker, reportedly sent the Kruegers a letter stating he worked for All Florida Mortgage Centers Inc. He said he wanted to help them sell their home, which they wanted to sell as they were looking to relocate and because of the rise in taxes and insurance. After receiving the letter, the couple met with Smith and decided to allow him help sell their home.

Smith conned the Kruegers with a "white knight" scam that targets homeowners needing to sell their homes looking for someone to "rescue" them, said Flowers.

According to Mascara, Smith probably targeted homeowners in the county with "For Sale" signs in their yards by driving around neighborhoods and then looking up the owners through the property appraiser's Web site.

According to a sheriff's report, Smith convinced the couple to move out of the home, telling them "it was better to show the house when it was staged" and he would take photos of it and market it, Nancy Krueger said. Not long after they moved out, one of the Kruegers' neighbors called to tell her someone was living in their home.

The Kruegers found Smith living in the home and when the couple confronted him, he would not answer their questions or vacate the home.

When sheriff's deputies spoke to Smith, who hasn't worked at All Florida Mortgage since April, he showed them copies of the paperwork and said that he bought the home for $10 and would not pay the $263,208 mortgage, insurance or taxes. Money between the Kruegers and Smith never changed hands, Nancy Krueger said