Rent To Own Property
If you are worried that you income would never be enough for your next home, if you think you might not have access to mortgage finance, you can try a rent to own property Rent to own is a real estate term, used to describe a contract between a seller and a renter, this contract stipulates that a renter is to pay certain amount of money as rent in lieu of a final or out-right purchase of a chosen property Meaning the renter can stay in the property for a specific time paying rent but having the option to buy the property at a future time The rent therefore will not be the market value of rents in that community It will be much higher by a percentage For instance 20% higher than the market value, which will make the renter to pay 120% instead of the 100% others are paying in that vicinity The extra 20% will be targeted towards installment payment . .With this agreement you can have the joy of saving towards the purchase of your new home While you and your family can actually enjoy the ambiance of the new vicinity you wouldn’t have been able to enjoy .The buyer can in the long run enjoy the capital appreciation of his new home, since he would be buying at cheaper rate years back Another advantage is that the renter rental repayment may be fixed for the whole tenor of lease, thereby he would not be affected by the changes in rent . .Another merit of RTO is that you have ample time to make up your mind if you would buy the house or not Its also affords you the opportunity to know the extent of the repairs and maintenance expenses you would incur on the property before purchasing it It builds the credit worth of the buyer as he monthly deposit his rent to the seller It builds the income of the seller . .Problems with RTO: . .If in the long run you decide not to buy the home, you may forfeit the total sum you paid as well as the installment payments This is a big disadvantage A disadvantage to the seller is that the buyer can change his mind So if you want to have a glimpse of pleasure a while as you build up your finances to buy a new home think about getting a rent to own property .
Source: www.rsstnx.com

Why the Real Estate Crisis Had to Happen
We cannot understand the present unless we understand the past The first question to be asked is when did the real estate crisis become inevitable? The correct answer is in the time period between 1980 and 1982 It has been forgotten today but the last real estate crisis in this country were the twin real estate crises of the 1980s In the early 1980s the first crisis was brought on by double-digit mortgage interest rates Then in the late 1980s there was the savings and loan crisis, which in those days provided most of the nation’s mortgage capital In response to these twin crises congress passed two laws that made today’s real estate crisis inevitable . .After these acts were passed it was only a question of time until the stars aligned correctly for the volcano to erupt .In 1980, congress passed the DIDMCA Act Prior to this time, it was illegal to charge less credit worthy customers a higher rate of interest on their mortgage Then in 1982, congress passed the AMPT Act, which allowed adjustable rate mortgages or ARMs for the first time Prior to this act adjustable rate mortgages had been illegal . .If you go back to 1896 when reliable housing records first began to be kept you will find that from 1896 to 1996 housing prices tracked the rate of inflation Then suddenly from 1996 to 2006 housing prices doubled The problem of course in that the income of the American people did not come anywhere near to doubling in that time period .When you stop to think about it, you will realize that it is impossible for the price of housing to exceed the rise in the income of the American people for any sustained period of time Unless there is an enabler, a speculator’s tool that allows this to happen What was the speculator’s tool or device that enabled this process to occur? What was the enabler? . .In the whole of American history there has only been one prior real estate bubble that resembles the real estate boom and bust that we are now witnessing It was the great Florida land boom of the 1920s Real estate has always been expensive What has always held real estate prices in check was that people just did not have enough money to bull prices up for very long The money is just not there The device that enabled the Florida land boom to occur was the “binder ” This is a real estate term that has gone out of use today In the manner in which it was then used it was essentially an option payment on the down payment if you can conceive of such a thing . .What it boiled down to is that people thought they were speculating on real estate but in reality they were speculating on real estate options . .The stock market has long been the ultimate proving ground for speculative tools Those of us who are stock market speculators are very familiar with stock options The only thing that the reader has to know about options is that they are speculating tools that possess tremendous leverage In other words, you can make a killing on a chump change investment . .Both the binder of the 1920s and the ARM are in reality real estate options All options expire worthless if they are not exercised prior to their expiration date Most ARMs were written to expire in two or three years, the fixed interest rate period At that moment the option had to be exercised or rolled over because the option would become worthless People were deluded into believing that they were buying real estate When in reality they were speculating in real estate options As we have seen, the tools for the bubble were in place by 1982 the only thing lacking now was the mania The boom years from 1991 to 2007 provided the mania Real estate prices rose relentlessly It was a boom that seemed like it would never end You couldn’t lose in real estate because no matter how much you over paid because rising prices bailed out everyone . .Today in the aftermath of the boom, we are already discounting the impact on the human psych that manias and bubbles produce To put it bluntly by the end of the boom almost no one could believe that real estate prices could fall This nearly universal belief gradually eroded prudent behavior The more risks you took the more you were rewarded There was no down side . .In the early 90s the use of sub prime mortgages and ARMs were limited-since almost all sub prime mortgages were also ARMs they will be considered as a unit- but as the boom progressed their importance grew and grew .Mortgage brokers just could not stay away from sub prime mortgages They were three to five times more profitable than standard mortgages Once they had sold one they didn’t want to sell anything else The caution that lenders had originally shown toward the new mortgage products was relentlessly ground away as the endless boom continued Caution wasn’t being rewarded, it was being punished There was a Gresham’s Law in effect- Gresham was an economist-in which bad or reckless behavior which was constantly being rewarded by lush profits drove out good or cautious behavior because the profits were inferior In the final years of the boom, conservative firms could not even keep their mortgage brokers from bolting to subprime lenders . .Then around the year 2000 Minsky’s Law kicked in Hyman Minsky was a Noble Prize winning economist . .Minsky’s Law .Over periods of prolonged prosperity the economy evolves from financial relationships that engender a stable financial system to financial relationships that produce economic instability The longer the trend persists the more violent the correction when the trend reverses . .As the boom rolled on the most important factor was that almost everyone was a winner This was true in spite of the fact that subprime mortgages were constantly defaulting at the higher rates that had been predicted Not only was the higher default rate not a problem but everyone was making out like a bandit with subprime mortgages This included the subprime borrower As soon as he fell behind his friendly subprime mortgage broker would be there to write him a new subprime mortgage In fact he often got to take out new money when he refinanced the mortgage It was not unusual to have subprime borrowers take out new mortgages every two or three years during the boom . .If there wasn’t enough equity to suit the lenders, real estate speculators would be pounding at his door offering to take the property off his hands as soon as the notice of default had been published Often at a profit over his purchase price . .The banks were the greatest winners of all They were making a killing It is obscene how much money a bank can make during the foreclosure process as long as someone buys the foreclosed property Not only do they receive all the back payments but the brutal penalty fees as well .
Source: www.rsstnx.com