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July 2018

Second Mortgage

A Second Mortgage: Should You Take It Out?

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We know from the economic meltdown that began in 2008 that using your house as an ATM may not be the best idea. A fat line of credit that can be accessed with a debit card or even checks can be quite tempting, but that doesn’t mean that you should automatically think about taking out a second mortgage loan to tap your equity—unless you have a good reason.

Taking Out a Second Mortgage: Not So Good Reasons

You should only borrow money if you need it. That may sound simple, but in some countries, people borrow money simply because they can. Even in the U.S. in the early 2000s, many people based their “wealth” upon the amount of money they could borrow. Some people with only $5000 in savings but with $100,000 of available credit thought they were well off because they had the ability to raise a substantial sum. Therefore, they acted upon any chance to borrow money and loaded up on credit lines. If you are borrowing money only because you can, that’s not a good reason.

Taking Out A Second Mortgage

Taking Out a Second Mortgage: Finances are Tight

This happens for a reason. If you spend more than you make, you will be cash-flow negative, and that will cause you to borrow. If you have amassed considerable credit card debt, it may be very tempting to take out a second mortgage at a lower combined interest rate and pay off those cards. Seven or eight percent is a lot better than 27.9 percent, but if you don’t cut up your cards after you have paid them off, you may not be able to resist the temptation to max them out again.

Finance are Tight

You Just Need Some Breathing Room

Breathing room is great, but if the forces that are suffocating you are not dealt with, you won’t make any progress. If your $800 monthly utility bill is killing you, turn down heat, turn up the A/C, quit watering your lawn or turn out the lights. If you don’t act, you’ll soon see another $800 energy bill, and you’ll have to figure out how to pay that. Borrowing against your home for monthly expenses that you can’t reduce is not a good idea. Instead of this, start looking for the best side hustles that allow for some extra income!

Economic Stimulus

Some Better Reasons for Taking Out a Second Mortgage

There are, however, some good reasons to borrow against your home:

  • You’re starting a business.
  • You want to go back to school and can’t get reasonable student aid or loans.
  • You want to help a family member.
  • You want to start a remodeling project that will increase your home’s value.
  • You want to assist your children with some expenses.
  • You found a great investment opportunity.

Like any other loan, make sure you shop around to get the best terms.

The Contract for Deed Crew

While we don’t do second mortgage loans, we at C4D can assist you with the purchase of your home. We are more flexible and understanding than a lot of banks, and we are experts at using the MN contract for deed as a path for true home ownership. If you have any questions, visit our site. We are here to help!

Pest Inspections

5 Pest Inspections Before Moving Into A New House

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Moving to a new home, for the most part, is thought to be an enjoyable experience. Sure, the unpacking, moving and general moving process might come with a few stresses, but overall it’s quite exciting.

However, stepping into your new home, or a property that you’re looking to buy or rent and noticing that there are signs of pests will make you want to turn around and leave. The first question you might be asking is ‘why didn’t they fix the pest problem?’ And while that’s a legitimate question, some pest problems are very discrete and can only be noticed by those who know what signs to look out for. But a thorough pest inspection is now necessary.

Spotting pests can be tough, especially bed bugs, ants and small rodents. These pests know how to remain undetected, at least to the untrained eye. Below are the 5 common signs there is a pest problem in the property you’re looking to purchase.

Inspect the Flooring

One of the most telling signs the property is suffering from a pest infestation is the state of the floor, specifically the carpet. Bed bugs, despite their name, will set-up camp anywhere that’s warm, dark and discrete.

Check the corners of the carpet and inspect furniture, curtains, sofas. These are all hotspots

. Even if the furniture won’t be there when you move in, bed bugs are likely to find a way to remain. Pests will however, have a tough time finding a way into or under concrete flooring. So, if you are contemplating moving into the property, be sure to have the carpets cleaned professionally or at least inspected by a professional pest control company.

Search for Smears and Marks

While it’s important to check for leaks, be sure to also check for any areas where there are marks or smears, as this may be a sign of cockroaches and/or rodent infestations. These spots are commonly found inside cupboards, floorboards and at the back of cabinets. While it may seem strange looking for these signs, identifying them and addressing it to your potential landlord or real estate agent could save you time and money. It also means you won’t have to solve the problem yourself.

The bedroom is another place you will want to look for smear marks, as if there’s and abundance of them, it’s highly likely there’s a bed bug infestation. Again, if this is the case, you must ensure that you have the problem inspected by a professional pest control expert. Bed bugs won’t necessarily cause you too much harm, but they are unsightly and can make your nights restless and grim.

Floorboards – Check Them!

Mice and rats are adept at hiding, even more so than insects. Ever hear scuttling late at night? It’s likely that a mouse or rat is under your floorboards, in your roof or even in your walls. Rats especially are masters of squeezing their way into tight areas to build nests.

Lookout for bite marks, chewed areas on wood and scratches on furniture and walls.

Look for Cracks and Fissures on the Exterior of the Property

Spotting cracks and fissures on the outside walls of the property is incredibly important. These gaps make for perfect entrance areas for pests such as wasps, ants, spiders and other unwanted insects. One of the worst-case scenarios is if wasps have already infiltrated the walls, as it’s likely that they have done this to make a nest.

While the usual fix for cracks and fissures is sealing with concrete, filler or other sealants, doing this with the wasps inside may make matters worse. Wasps are able to eat through dry wall, so before you seal the wall, spray soap solution into the crack (only if it’s safe to do so) as they will suffocate. After this has been done, seal the wall with sealant.

Of course, you can always wait until the colder months arrive, as they won’t be able to survive the drop in temperature. Following this, inform your landlord and/or the real estate agent and they will contact a pest control expert to fix the problem.

Pest Inspections in the Garden

If you’re moving, or viewing properties in the summer, be sure to check for any wasp, ant or insect nests that may be hiding in the garden. It might be that the garden has been vacant for some time and wasps have set-up a colony there. Unless you’re experienced in removing wasp and bee nests, contact your real estate agent and they will seek an appropriate pest control expert.

Additionally, you might find that the exterior has been affected by nesting birds, specifically the excrement they leave behind. Bird control is something that is commonly forgotten about because of other more prominent pest problems (rodent and insect infestations) but is still something that needs to be acknowledged.

These are 5 of the most important pest inspections you need to get into the habit of doing when you’re viewing a a new house with your real estate agent in Minnesota or all across the country.

Minnesota Realtors: More Contract For Deed Deals

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Some Minnesota Realtors view the current economic situation as murky with darker clouds on the horizon. Interest rates are moving higher and some mortgage rates have crossed the psychological five percent barrier. Top luxury home prices in places like Austin, TX have begun to stagnate and actually drop. While unemployment is at record lows, inflation is starting to re-emerge as a threat, the price of oil just recently fell from a six-year record high, and of course there is geo-political chaos. None of these factors are good for the housing market.

Minnesota Realtors Change in Real GDP

The Comeback of No-Doc Type Loans

We are almost 11 years removed from the Great Recession that began in 2008. Some new to the real estate business may have been in their early teens when this occurred and may not remember, but no-interest and no-doc loans were part of the problems that ultimately crashed the economy.

One of our older CD4 clients tells us that they were able to get their original home mortgage with a one-page typewritten business profit and loss statement. The mortgage loan officer said, “Are you making money?” and when he got an affirmative answer, they were approved.

In the early and mid-2000s, people used their homes as ATMs, and loan officers aided by appraisers approved scores of loans. Some were no interest, some were adjustable rate, and many were made without any debt-to-income ratio verification. If someone showed that their business cash flowed significant dollars, profits and income were ignored.

Check Out CNN Lately?

Listen to CNN today and you will hear ads for a mortgage company that claims that profits don’t matter–only cash flow does. When companies can advertise nationally and get customers for low documentation mortgages—even in view of what happened in 2008—it’s time to take notice and get worried.

CNN Real Estate

The Next Time for Minnesota Realtors

The U.S. economy is cyclical, and after the second worst downturn in history, we have now seen the longest recovery. Even though there are those that say “Well, this time is different,” savvy Realtors know that is not true. The next recession–whether it’s almost here or won’t arrive for another year–will cause difficulties for Minnesota Realtors. When the GDP falls, the stock market retreats, and interest rates go up, money tightens and loans can be hard to get. And therefore, you need C4D.

Global Trade Contract For Deed

What We Do

We at C4D use MN contract for deed to help prospective homeowners that were rejected for traditional financing to realize the home ownership dream. We use our strength and knowledge as we buy homes and then resell them to your clients who were rejected for traditional financing or unable to obtain it. Yes, your clients need a job and provable income, but we can work with issues like divorce, tax liens, garnishments, bad credit and large student loan balances. We can help where others have failed.

Listen, we do not want to see an economic downturn, and we genuinely hope that one day all of our clients will be able to get traditional financing. Until that time comes, however, Minnesota Realtors can call us with rejected deals and we’ll see what we can make happen. We’ve helped a lot of people.

Types of Mortgages

Should You Fear Certain Types Of Mortgage Loans?

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We all know that mortgages (there are many different types of mortgage loans) were the problem that caused the 2009 economic meltdown. Remember the movie The Big Short?

And while it was very difficult to obtain even the most basic and standard mortgages in the first few years following the crisis, things have begun to loosen up, and you now do have some different options.

Different Types of Mortgages

The Standard Mortgage Loan

Your parents probably got a 30-year mortgage. That meant that the total amount of their loan was divided into 360 equal payments. The word “equal” can be deceiving, however, because the amount of interest v. principal collected for every payment varies. At the beginning of the loan, most of the payment goes toward interest, while the smaller remainder is applied to the principal.

Types of Mortgage Loans: An Example

With a $300,000 standard repayment 30-year mortgage at 5.25 percent, the payment amount would be $1657. In month one, $344 would go toward principal with a whopping $1313 applied to interest. By year 30 this changes drastically, and the last payment provides only $7 toward interest and the rest finishes off the principal. Note that this arrangement greatly benefits the bank, because during the first few years of the mortgage, most of the payment goes toward interest and you basically make no progress paying down the loan. This is why it is a good idea to make sure you are going to stay in a home at least for five years if your goal is to pay down the principal.

The 15-Year Mortgage

Years ago, 15-year mortgages were introduced. Our same $300,000 loan paid off in 180 equal payments over 15 years instead of 30 would cost $2412. Sure, that’s $755 per month more, but if you followed the 15-year amortization schedule you would not only have your home paid off in only 15 years instead of thirty, but you would save $135,900! If you could make the larger payment, the 15-year mortgage is the way to go.

The Adjustable Rate Loan

Types of Mortgage Loans

These mortgages can be trouble, but they do have serve a purpose. Persons with lower credit scores can sometimes qualify for a mortgage with a floating rate. If general interest rates rise, so could your mortgage payment. If they fell, your payment could stay the same or actually decrease. The problem is, a two percent rise in interest rates would cause our $300,000 loan to rise to $2047 per month—a substantial increase.

Interest Only Mortgage Loan

While these loans can lower your monthly payment, you make absolutely no progress paying down your principal. These can work for flippable properties, but should be avoided for primary residence purchases.

Exotic loans like these are what caused the beginning of the last major housing crisis, and banks may not be very willing to make this kind of deal in the post-2008 era.

You Can’t Qualify?

Can't Qualify for Mortgage

Like we’ve said before, it would be great if everyone could go to a bank and get a traditional mortgage. Sometimes, however, because of credit issues, job loss, divorce, tax problems, or many other circumstances, the bank just says no. If this happens to you, don’t give up. We at C4D have developed a system where we use MN contract for deed to get you into a home. We deal with compromised credit every day, and we urge you to give us a call or email us before you just decide to keep renting. We’ve helped a lot of people!

Costs of buying a house

5 Lesser-Known Costs of Buying a House

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Ready to buy your first home? Do you know the costs of buying a house? You’re probably not actually. That’s not to say that you shouldn’t do it, but you should know what you’re in for.

No one is going to tell you, the homebuyer, that buying a house is cheap, because no matter where you are or how big the house is, it’s likely that the costs of buying a house will add up to a huge number.

And that’s just the house itself. You’ve also probably got a mortgage, furniture and several other things that are going to bump up the overall price too.

There’s the stuff that most people are aware of, but there’s a lot of other costs too that maybe you haven’t thought of before.

You should be thinking about them though, no one likes surprise fees. So here’s five of these lesser-known costs that you should familiarize yourself with.

costs of buying a house

Closing Costs of Buying a House

Closing costs are an expense that a lot of people don’t even know exists, because it doesn’t come up until pretty much the last second.

This is the final thing that you have to pay just before you’re given the keys. It’s a collection of fees that come from your mortgage lender to secure the final transaction.

Closing costs will usually amount to almost 5% of the price that you pay for your home which is quite a bit when you think about it.

It usually includes things like credit report and home appraisal, stuff that isn’t factored in to the original price.

Don’t let this be sprung on you because as I said it’s ignored completely by the seller in some cases and it can slow down the proceedings if you’re not prepared for it.

You should always plan ahead and try to work out roughly how much the closing costs could amount to. Make sure you have some money left over for it.

Homeowner’s Insurance 

If you’re getting a mortgage to help with the costs of buying a house, which I’m assuming you are, then this is something that will probably come up.

Mortgage lenders will be thinking ahead. The last thing that they want is for one of their clients to have an uninsured house.

As you can imagine, this could get in the way of their repayments if worst comes to worst and so they won’t give out the loan unless you’ve got the insurance.

It will protect you in the case of things like theft, fire and any kind of damage caused by storms and other natural occurrences.

So homeowner’s insurance is something that you’ll probably want to have anyway. Commonly this insurance will cost you a little bit more than $1,000 per year.

This depends on a few factors such as how old the house is and how much it cost in the first place. It’s definitely worth it though, and it will probably be a necessity.

Property Taxes on Buying a House

Property tax isn’t everywhere, but many local governments do have them in place for every homeowner in their area.

It’s become so widespread these days that you should probably just assume that it’s something you will have to spend money on.

In America, you can work out how much it will be in your area fairly easily. It exists for good reason.

Most of these smaller communities will use property tax to keep local schools, hospitals and various other infrastructures in good condition.

Much like homeowner’s insurance, this is another fee that will be different depending on where you are, how much the house cost and probably a few other, area-specific factors too.

Whether you pay it monthly or annually is also something that will depend on the area but sometimes that’s a matter of personal preference too.

Emergency Costs of Buying a House

This isn’t something that’s going to be a problem straight away like the other stuff that I’ve talked about, but it’s something that you need to plan ahead for.

Before you buy the house, you have no idea what sort of things could come up unexpectedly. And your insurance might not cover every single emergency.

For example, if your area has a massive power outage in the middle of Winter and it’s impossible for you and your family to stay there, homeowner’s insurance won’t pay for a hotel.

That’s just one example of the numerous things that you could end up having to shell out for at some point.

Some things that happened to you while you were renting that weren’t a big deal, could potentially be a big deal in a house that you actually own.

Do some research on possible emergencies, and ensure that you have some kind of emergency fund set up for yourself before you move in.

Buyer’s Demands

Now this particular cost is only going to apply to you if you eventually decide to sell. You might think that that’s never going to happen, but who knows what the future holds.

Even if it’s your dream house, there’s any number of reasons why you might actually want to sell it at some point.

And if you do, things will definitely have changed since the time you bought it. You must always keep your house in good condition.

If you slack on this, by the time you want to sell you could be looking at a price that’s significantly less than what you spent on it yourself.

You don’t want to have to spend like $10,000 to get the house fixed up and ready for selling, and you can avoid this by just dealing with it while you live there.

It will cost money. Over the time you own the house it will probably cost quite a bit. And there’s no real way of predicting what other factors will come into the price when it comes time to sell.

If you’re concerned that you won’t be able to afford to keep the house in check, you could always look for extra sources of income.

Maybe try investing. If you invest in high-dividend yielding stocks, you can guarantee yourself some extra cash every month.

It would definitely be helpful in the long-run for these kinds of expenses. It’s not something that many people think about for obvious reasons, but preparing for buyer’s demands is a good idea.

Wrapping Up

We’re not trying to scare you away from the idea of owning some property, because buying your first home really should be an exciting experience.

But it’s expensive. And it’s expensive in more ways than people realize. You can get ahead of the curve if you know what to expect.