Enrich your Financial Knowledge

In today’s marketplace, with the abundance of REO’s and foreclosures available, there are increasingly more opportunities with finding great deals at local property auctions. Let’s look at some of the advantages and disadvantages of purchasing an auction property:

With any property up for auction, it’s typically sold in As-Is condition. Meaning, what you see is what you get. So due diligence is vitally important before the auction sale to make sure you are completely satisfied with the home before you purchase it. One thing you must do is to take contractors into the home and see what issues there are with it. It would also be very smart to have a termite and moisture inspector inspect the underneath crawl space if applicable to see if there are any joist, ban board, moisture and mold issues, as well as termites and wood destroying insects. Just make sure that after calculating the repair costs, if any, you are still getting a good deal. This should also help you gauge what price is your maximum offer price at the sale.

The benefit of purchasing an auction property is that the price they sell for is typically pretty good. You can realistically expect a 10%-20% reduction on price. There is usually a buyer’s premium tacked onto the price, so just make sure you take that into consideration before bidding is over. Depending on the auction house conducting the auction, buyer premium is between 5%-10% of final price. They will also require a certain amount up front as earnest money, and that can vary depending on current owner and auction house.  Also, if you are not paying cash for the property make sure that you have financing available that that they can close within the specified given time frame, usually 30-45 days after the auction.

Once you have done all your research and homework, you should feel comfortable enough going through the process and hopefully getting an excellent deal. The research you do beforehand is vitally important to the success of your purchase. Don’t underestimate the houses condition, even if it looks like it’s in great shape, because once it’s sold, it’s yours, or else you risk your earnest money deposit you put down before hand, which is usually pretty sizeable. Fore more info on foreclosures and investment property, visit www.JoshSellsVirginia.com.

In 2007 the Spanish government made legal changes, the purpose of which being to reduce costs incurred when subrogating or transferring loans, otherwise known as the costs associated when re-mortgaging to a different lender. Certain factors behind this transfer will in addition will keep you from having to pay Spanish loan tax again. One of the reasons you might consider re-mortgaging to a new lender would be so that you can release finance from your Spanish property without having to actually physically redeem your old one. The main reasons behind this are:

• Extend the time limit of the mortgage
• Renegotiate the default loan penalty rate
• Decrease the interest rate on the mortgage

If you are locked into expensive and rigid Spanish mortgages, or if you want to change your terms of the mortgage, you should understand how to release equity from your property. This will allow you to access the extra value held in your property without the annoyance of any extra costs or other problems.

Registry and notary fees, as well as redemption penalties, are sometimes covered by the lender and allow the costs to be included into the new loan. As a result, the transfer of the loan to this lender is either free of charge - or offered at significantly reduced cost compared to obtaining a re-mortgage with another bank (where subrogation is possible).

Look at it another way. Spanish property has increased in value and because of pressures of the Sterling to Euro exchange rate this has left many retirees and other property owners asset rich and income poor. Lifetime mortgages are tying up the release of equity from these investments, denying the property owners any protections in the event that their financial situation should change. Fortuitously, products are not being offered that allow a percentage of the value of a Spanish home to be freed up and invested or used as cash to supplement income or to improve quality of life in general. This product offers a fixed rate rather than a variable interest rate meaning you can be clear from day one exactly how much is going to be owed if your circumstances happen to change over time.