Month: October 2020

Legal Real Estate Investing Tips To Know

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When it comes to the investment arena, it is paramount for every investor to be conversant with the legal procedures. That way, they don’t default in any laws that might lead to a lawsuit. It is essential to look at these standard procedures are a guide, not as obstacles. Before you dabble into an investment, you also need to understand how to protect yourself legally.

Hiring a lawyer is one step, as your lawyer will ensure you always thread the right route. During a contract, your lawyer will help both in interpretation and helping you make the right decision. Your lawyer can also perform a title search to avoid someone coming in the future to claim the property.

Without further ado, here are some legal real estate tips you should know

  1. Getting Insurance For Your Property

Insurance is an important aspect that every wise investor must not ignore. That is because it saves you in terms of the inevitable or uncertainties. Imagine getting a house, and after renovation, a catastrophe beyond your control occurs,

When your property damages due to a natural disaster or theft, insurance will help recoup and possibly fix every damage. There are lots of insurance policies that you can sign up for that offer such coverage.

  • Prepare A Contract That Protects Your Investment

Another legal tip every investor must never overlook is the preparation of a contract for their tenants. Most investors think the leasing agreement is all that is needed. However, there are numerous other ways to protect yourself and your property, and it entails getting an indemnity agreement with your tenants.

 What this agreement does it to exonerates you from all liabilities that might arise. If your tenant or someone else was harmed on your property, your tenant takes full responsibility without your involvement.

  • Hire A Personal Accountant

It can be pretty expensive to hire a personal accountant, but doing so will save you tons of headaches and money in the long run. An accountant who is exceptional in tax laws in your state will find diverse ways to maximize your profit.

In other words, an accountant can structure your business in such a way that deductibles are made from your taxable income. That way, you earn more in the long run. Numerous benefits come with having an accountant, and it will be in your best legal interest to not neglect such a professional.

  • Use Company Name As Investment Owner

It is a simple investment tip that will save you lots of hurdles in the long run. When you run an investment as a business, you as an individual cannot be sued but instead the company.  It is probably the first thing business tycoons learn in business schools; unfortunately, most investors make the mistake of carrying out investment in their name.

Conclusion

These investment tips will ensure you don’t find yourself in an ugly situation as an investor. They are not there to limit you as an investor but, instead, protect and serve you in the world of investment.

How To Choose The Best Mortgage For You

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Buying a home could be one of the giant steps you will take in life. However, you will need to decide on the best mortgage that will appeal to you. There are different types of mortgage, and it is paramount you consider your options and choose the one you’re most qualified for.

In this article, you will learn some of the various mortgages and what makes each of them distinct. When you compare the edges one mortgage has over the other, it will help you choose the best.

  1. Traditional Mortgage Vs. Government Mortgage

When you’re setting out to make a decision, you will need to consider if you want to conventional or, perhaps, a government mortgage. As you might already know, a traditional mortgage comes with a private lender or a federal company that isn’t insured by the government.

If you don’t qualify for a conventional loan due to a low credit score, a government mortgage will be the ideal option for you. You will need a specific credit score, down payment, and a debt-to-income ratio for a conventional mortgage.

  • Conforming Vs. Non-Conforming Mortgages

If you have an impressive credit score, you might decide to seek for a conventional mortgage. In that case, there are two types of a conventional mortgage you should know – conforming and non-conforming mortgage.

The difference between these two mortgages is the amount of money you need to borrow. For a conforming mortgage, it has to follow the Federal Housing Finance Agency (FHFA) standards. As of the year 2020, the limit is at $510,000 in some US parts. In areas where the cost of living is pretty high, the limit has risen to $765,000.

A non-conforming mortgage, on the other hand, is for an amount that goes beyond the FHFA limit. Most of the time, it is referenced as a jumbo loan – precisely what it is.

  • Government-Backed Mortgages: FHA, VA, Or USDA Loans

There is often a looser requirement for government-backed mortgage regarding credit scores, debt to income ration, and down payment. You will still need to go to a private lender to get a government-backed loan. Please take note that you will even need to specify that you’re opting for a government-issued mortgage.

  • Fixed-Rate Vs. Adjustable Rate Mortgages

After making your choice, to either go for a conventional or government-backed loan, you have more options to make, which are fixed-rate and adjustable-rate loans. What these two types of mortgage focus on is the interest you pay on your loan.

For a fixed mortgage, it automatically locks in your rate for the duration of the loan. In the US, the mortgage rate is likely to increase or decrease. However, you will still have to pay the same interest rate in 30 years, just as you did in your first year.

Conclusion

Getting the ideal mortgage is possible when you understand the various types of mortgages at your disposal. If your credit score is perfect, with a large down payment and debt to income ratio, you can also opt for a conventional loan. But if there are some misfits, a government-backed loan will be ideal.

Getting A Mortgage After Bankruptcy

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Many consider bankruptcy as a nightmare, but it doesn’t have to be with a formidable plan. Nevertheless, it is a horrendous undertaking that one has to take when debt is becoming intense or overwhelming. Taking such drastic action will halt activities such as lawsuits and repossession.

If you’re comfortable with having this mark on your credit score for seven to ten years, not being able to seek or obtain a loan, then go ahead. If you’ve filed for bankruptcy in the past and you’re considering getting a mortgage, this article will no doubt educate you on what you need to know.

Impact Of Bankruptcy On The Ability To Get A Mortgage

Although the impact of bankruptcy can lessen with time, it limits your ability to obtain loans. It is possible to get a mortgage after bankruptcy, but it is a challenging process. Before a lender can give you the attention you deserve, the default has to be discharged.

Most lenders will take a look at your credit score to determine your creditworthiness. So, you must check your credit score report before you apply for a mortgage. In your credit score report, ensure there are no mistakes by correcting incorrect or outdated information.

If there is an error in your credit score report, do contact your credit agency to correct or update your information. When applying, your lender is most likely to ask you a few questions regarding your bankruptcy. Take note that the questions are merely to understand your financial capacity to stick to the agreement.

Mortgage Loans To Consider After Bankruptcy

After filing for bankruptcy, you need to apply for a mortgage with less restriction. There are many mortgages to consider, and they have their unique requirement for bankruptcy filers.

Here are a few mortgages that are less stringent and more comfortable to acquire.

  1. FHA Loans

The federal government manages this type of loan and allows you to buy a house with a down payment as little as 3.5% of the purchase price. The only downside with this mortgage is that you will have to pay for mortgage insurance, thereby leading to a high monthly payment.

  • USDA Loans

If you’ve found a home in a rural area, you should consider applying for this mortgage. The U.S Department of Agriculture is designed to meet a specific income requirement. If you’re viewing this alternative, you might not even need a down payment and it comes with a low-interest rate.

  • VA Loans

If you’re a veteran or perhaps, currently working with the military, you might be qualified for a Department of Veterans Affairs (VA) loan. This type of mortgage doesn’t require any down payment and the interest rate is ridiculously low. However, you will need to pay a funding fee, which is the percentage of your home price.

Conclusion

Applying for a mortgage after bankruptcy can seem pretty challenging. However, applying for the right mortgage will make a difference, as the requirement becomes lesser than a conventional mortgage. If you’re yet to start applying for a mortgage, perhaps you should consider the options in this article

Common Commercial Real Estate Legal Issues

Posted by David Chang on with 0 Comment

Commercial real estate deals need extensive experience to pull off, which is why you might need to learn about some potential legal issues that might spring up.

Aside from the financial aspect, which is sometimes an issue, there are numerous other legal issues that you might encounter during a commercial real estate deal.

These legal issues can put you at risk, costing you hundreds of thousands if not mitigated as soon as possible. In this article, you’ll learn about these common issues. That way, you will know of a way to navigate around them.

  1. Assumption Of Liability

When you purchase a property, you need to ensure you’re not liable to any legal violation or damages caused by the previous tenant. Failing to do this might lead to you being responsible for any damage. Not only will you be accountable for removing the threat, but you will also need to restore the property to a safe level.

When you acquire a property, ensure that it is insured in case of the inevitable or uncertainty.  By having insurance coverage, you cut down on the issues which you might have to face.

  • Liens On The Title

Before concluding any deal, you must ensure that a title search is done. It is done to ensure there are no liens on the property, which might affect your inability to sell the property. 

By working with a reliable and competent lawyer, they will conduct thorough research to ensure no liens on the property. Although the title search is pretty expensive, it will save you from many headaches in the long run.

  • Reps And Warranties

In the real estate world, representations are factual, while promises are indemnity for false statements. Ideally, most real estate buyers will want a full contract of representatives and warranties to verify their income, expenses, and the general condition of the house.

Most buyers of real estate might want a contract with few reps and warranties. Take note that every deal is different; that is why working with a reliable real estate attorney will serve in your best interest.

  • Zoning And Land Use

Most real estate buyers often run into this issue, and that is because proper research wasn’t done. It isn’t always wise to rush into a deal, but rather take your time to evade most zoning and land-use problems. Your attorney will help you decide if the land can be used in ways you intend to use it. Also, he will be in charge of getting the local permit for your business or new project.

  • Defects In Title

Although deeds are meant to show who owns the land, sometimes they aren’t recorded, listed, or perhaps match the proposed land. It might be impossible to avoid most of these commercial real estate legal issues, but taking your time before concluding a deal will save you a lot of stress.

Conclusion

Every situation or contract is different, so you need to trust your agreement the same. By working with a competent real estate lawyer, you will avoid most of these real estate legal issues that might spring up.