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Real Estate Market - Bubble or No Bubble
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Bank Foreclosure
Everyday, there are properties that are foreclosed by the banks. This happens when a loan borrower is unable to make up for the payment of his loan. Now having a property foreclosed can be very detrimental on the part of the client.
In as much as possible banks would not want to foreclose properties but it is just that they have vivid rules which have been stipulated in the contracts th... Read real estate article
Cheap Government Repo Houses
These days, the prices of houses are extremely high and unaffordable for people who've got a low or average income. And because the prices of houses are expensive, most families find their niches in apartments or condominiums. But a wise family head can better think of a solution. The government has a way of opening chances for people to own their dream houses. That is none other than the cheap go... Read real estate article
Real Estate Market - Bubble or No Bubble
Over the past few months, newspaper writers have quoted "experts" as they predict gloom and doom for the Florida real estate market.
While we all read these gloomy predictions about real estate in Florida, let's not forget the underlying fundamentals that support and sustain a strong housing market. Favorable mortgage rates, population increases and strong job creation all serve to keep demand high and support prices.
Mortgage rates have been falling steadily over the past few weeks, and are now only one percent above the lowest point in 40 years.
Population gains in Florida are nothing short of robust. Did you know that Florida's population grows by 1,060 every day and the number of residents increases by over 386,000 each year? Consider that New York and California both lost over 232,000 residents last year. The U.S. Census Bureau says that Florida will pass New York state and become the third most populous state in the nation by 2010.
Did you know that one of every three new jobs in our country over the past 5 years was created in Florida? Florida has led the nation in job growth for the last three years. Add this to the fact that Florida has had the lowest unemployment rate over the last four years and personal income in Florida has grown 31% faster than the national average, and we start to wonder what the "experts" are looking at.
As a typical example, one study shows that Palm Beach County will need 22,000 more housing units to meet demand by 2010.
Considering all of these facts, it makes sense to ask the question "Bubble, what bubble?" The doomsayers need to look at history and realize that Florida has never had a significant decline in the real estate market when there was strong support from favorable interest rates, population increases and strong employment growth. Every market correction presents opportunities for those who understand the real forces that drive the market.
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Commercial Real Estate Loan Strategy
The use of "Stated Income" (no tax returns and no income verification) commercial loans is a critical strategy to avoid several commercial mortgage loan problems. For example, many borrowers will simply not qualify for a commercial real estate loan if tax returns are used due to high business expenses (and low net income). This article will describe what differentiates a Stated Income business loan from a conventional or traditional business loan.
Very few traditional banks use Stated Income for a commercial real estate loan. Many/most commercial lenders will perform a thorough income verification as part of their underwriting process. Most non-traditional commercial lenders do not require tax returns or any income verification for a Stated Income commercial loan. Traditional bank commercial loan underwriting conditions will typically include copies of tax returns as well as a requirement to sign IRS Form 4506 which authorizes the lender to obtain tax returns directly from the IRS. Some lenders require this form in addition to current tax returns. The more devious use of this form is when lenders make a point of not requiring tax returns but separately ask the commercial borrower to sign this form. The most common explanation in asking for this form will involve the words "routine request". This will usually occur just before the final closing and be further characterized as "one final small detail". In reality IRS Form 4506 is neither "routine" nor a "small detail". The use of this form is a lending practice that can have a potentially detrimental impact on a commercial borrower's financial interests. In contrast, for most non-traditional commercial lenders, IRS Form 4506 is not required for their Stated Income business loans.
The value of using Stated Income does not end when the commercial loan closes. Many/most traditional banks require income verification/audits even after the commercial real estate loan closes. Most commercial borrowers won't believe this until it happens, but many traditional commercial loans will have covenants stipulating that the lender must receive financial data even after the loan closing and that the loan can be recalled (forcing the commercial borrower to pay the bank back early) if the audit of this data is not satisfactory to the lender. Most non-traditional commercial lenders do not verify income either before or after the Stated Income commercial loan closes.
I have prepared a Special Report entitled "The Top 5 Reasons that Banks Decline Business Loan Applications and the Top 5 Strategies for Converting a Declined Loan into an Approved Loan". One of those five reasons is that loan underwriters find something on a tax return that disqualifies a borrower under the bank's lending guidelines. This "something" will frequently be insufficient net income, but when loan underwriters look at tax returns, there are many other possibilities which produce a similar result. If the commercial borrower is applying for a Stated Income business loan, this situation will not occur because tax returns will not be included in the commercial loan underwriting process.
Many commercial borrowers should be interested in strategies for preventing a lender from obtaining their tax returns directly from the IRS or preventing a lender from forcing a long-term loan to be repaid early. Stated Income commercial real estate loans provide a viable commercial financing strategy to alleviate concerns about these issues. Stated Income business loans are no longer just a strategy to help a commercial borrower that could not obtain a commercial loan any other way. Stated Income commercial loans are now increasingly viewed as a a vital method to protect the commercial real estate borrower's overall financial interests, both before and after the loan has closed.
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