Material Monster

A relatively new concept in the online world is “Virtual Real Estate Investing“. Everything from using the internet as an avenue to make more money in real estate to online games such as SecondLife seem to be included in the popular definition of this term.

In order to figure out the truth of the matter, I sought out Bryan Ellis, whose experience in the fledgling industry is truly impressive.

When I began using the term virtual real estate investing in the late 1990s, I did so because I saw clear parallels between the strategies used for profiting from physical real estate and those that would create income in the online world, said Ellis.

One example of the parallels between virtual and physical real estate Bryan Ellis cites is the similarity between the monetization of domain names versus physical property. “These types of assets - websites and physical real estate - can be monetized in very similar ways like buy lo/sell high, leasing/rental and advertising opportunities” he says.

The parallels really are obvious. Consider: A valuable piece of real estate is valuable largely due to the interest that other people have in that specific location. Likewise, if you own a desirable domain name, others will find value in it because it serves their purposes. So it doesn’t matter if you own physical real estate or virtual real estate - you’ll likely use similar strategies to turn them into money in your pocket.

In our next installment of this series on virtual real estate investing, Bryan Ellis will share the internet analogies to the physical concept of real estate development.

Purchasing Spanish Property has received considerable negative press lately, which you have undoubtedly read about if you have considered buying property in this region. In the past, unscrupulous developers have created legal traps that have cost unknowing buyers their deposits. Owning real estate in Spain is a completely safe venture as long as you have a thorough understanding of property laws. The following is an overview of the new methods of purchasing real estate in Spain.

It is only when you have not been fully informed of the relevant laws, or where the law has not been properly followed, that potential horrific situations might arise. Previously you could undertake real estate transactions informally in Spain but this was risky. Recent developments in purchasing with increased legal requirements have ensured that real estate purchasers have more safeguards. Most people and businesses accept the changes and understand them, meaning more agents and businesses are aiming to help you rather than to cheat you.

• Something to keep in mind is that lawyers working in Spain can work for the buyer and the seller, so they may not put your needs first. Your lawyer will provide you the most unbiased support, not your seller.
• The estate agent is not the right choice if you are looking for someone to look out for your benefit. Almost all estate agents will work in the interests of those that pay them, that is, the seller or the developer.
• Some people may pay more expensive prices than others. Agents are not always thinking about what is best for you when many times they have their own financial needs to worry about.
• Considering the right advice is out there, there is no excuse for falling for any of those issues. Make sure you check the person out carefully by asking searching and pertinent questions. Only then can you be happy that you can really trust that person to work on your terms and in your interests.
• You can get all of the legal protection that you need by just getting a correctly constructed private purchase contract. Even though this is a more common available option, most Standard seller purchase contracts do not provide it.
• Follow a completely different process if you plan to purchase property abroad because it is difficult to evaluate those properties in person to learn about the areas surrounding those properties and the rules that govern them.
• It will be advantageous if you can gain more knowledge about this process.

If you owe 40 percent or less of your original mortgage, there is a great program that is available to you that will generate extra monthly income. It’s called a reverse mortgage. The reverse mortgage is similar to a home equity loan, only in the fact that it pays you the equity you have in your house. The differences, though, are many. If you have a large amount of equity in your home, you’ll want to consider a reverse mortgage.

The reverse mortgage does exactly what the phrase says. Instead of the homeowner making monthly mortgage payments, the bank literally reverses the action and pays the homeowner. Sound too good to be true? It’s not, and it’s a completely legitimate program. Banks like it, because at the end of the term of the loan (usually when the homeowner dies), the bank acquires the house and may resell it.

Here’s how it works. Let’s say you own a home with a mortgage balance of $30,000 and it’s worth $100,000. The bank will put a loan on some or all of the remaining balance, amortize it over 30 years and send you a check for this amount monthly. Sometimes, they’ll use enough of the remaining equity to pay off your balance, so you owe nothing. Then, you get payments each month, and when you die, the house belongs to the bank.

This program is great for elderly people, who need to supplement their incomes. Check out seniorjobbank.org, as well as the wealth-building system, Winning the Mortgage Game to learn more about this interesting mortgage program.

Mark Barnes is an investment real estate and real estate finance expert. Get his free mortgage finance course at http://www.winningthemortgagegame.com and learn more about his wealth-building system. Mark is also the author of the new novel, The League, a shocking, sports-related conspiracy. Learn more about his suspense thriller at http://www.sportsnovels.com

Just a few decades ago, refinancing a home loan was relatively unknown. Most people decided to buy a house, got a 30 year, fixed-rate mortgage, and made monthly payments until the loan was paid off. Times have changed, however, and in today’s mortgage market, most new loans are more likely than not to be refinanced sooner or later. Today the average loan, even one issued for 30 years, is unlikely to last more than 30 years, as owners often exchange one loan for another one.

The reasons are many, and all of them are valid. Here are a few of the circumstances under which an owner might wish to refinance his or her home loan:

Refinancing often makes sense, but homeowners should realize that refinancing comes with closing costs that typically amount to several thousand dollars. Anyone considering refinancing a mortgage should take into consideration just how long they plan to remain in the home. If it is more than a few years, then a new mortgage might be financially worthwhile, particularly if doing so lowers your monthly house payment.

©Copyright 2006 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.HomeEquityHelp.net, a site devoted to information regarding mortgages and home equity loans.

An interest only mortgage is one in which you make only interest payments for a period of time. A third of all new mortgages are interest only mortgages.

Contrast this to traditional mortgage that pays back the mortgage balance you took out to purchase your home. Many traditional mortgages are “amortized” over 30 years; that is, the amount you pay every month pays both interest and helps reduce the balance of the loan; so at the end of 30 years the loan is completely paid off.

=== Why are Interest Only Mortgages Attractive? ===

Interest only mortgages allow you can buy a larger, more expensive home in a better neighborhood.

Consider a traditional $250,000 mortgage for 30 years at 6.35% interest. The principal and interest payment is $1,555.59. But, the interest only mortgage payment is only $1,322.92–a monthly savings of $232.67. This makes homes more affordable.

And, for nearly the same traditional monthly payment (of $1,555.59 for a principal and interest loan), an interest only mortgage payment (of $1,555.75) allows you to get a loan of $294,000. Adding $44,000 to the loan amount could easily let you afford a larger home in a better neighborhood.

The short term effects of the interest only mortgages are:

1) Homes are more affordable so more people can buy homes

2) People can buy more expensive homes

Another way of looking at interest only mortgages is from a real estate agent’s perspective. The interest only mortgage allows real estate agents to sell more homes because they are more affordable. And, interest only mortgages allow real estate agents make fatter commissions on more expensive homes.

=== What are the Downsides of Interest Only Mortgages? ===

Adjustable Rates: Most interest only mortgage loans are adjustable. That is, as key interest rates change, the interest payments on the loans change. Since interest rates have recently been climbing, eventually the monthly mortgage payments will also rise.

Those home owners with adjustable interest only mortgages will find their monthly payments higher than when they first purchased their home. If their income has not kept up, they will find it increasingly difficult to manage their mortgage payments.

Limited Term: Not only that, but depending on the terms of your interest only mortgage, your interest only payments may last only a few years. You could be expected to start making principal payments in five, seven or ten years. Once the interest only period ends, your monthly payment will go up because then you’ll be paying on both principal and interest.

Many Americans are living on a financial cliff. They save little, spend most of what they earn, and are sinking deeper into debt every year. If you bought the largest interest only mortgage you could afford, you could find yourself in the difficult position of defaulting on your mortgage.

Real Estate Price Uncertainty: Also, the past decades have seen housing prices increase, seemingly without limits. As the selling price of your home increases, you essentially are building equity. When you sell your home for more than you paid for it, you’re making a profit on it’s increased value.

Money Magazine reports that many home prices have gone up five times as fast as personal income. They credit home price inflation to a large extent to the interest only mortgage loan.

But, Forbes magazine indicated that the housing prices on the coasts have peaked. Rising interest rates have increasingly made expensive homes less affordable. With fewer potential buyers, expensive homes are harder to sell and their prices could eventually drop.

The theory many home buyers have used in the past is that if home prices keep increasing, the profit you can make from selling your home can be enormous–even if you never pay down your mortgage loan. This positive outlook is merely one form of real estate speculation. It may be worth while applying Alan Greenspan’s comment about “irrational exuberance” to holders of interest only mortgages. He said, “But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?”

But, if rising interest rates make expensive housing less affordable, and if retiring baby bombers begin to seek smaller, less expensive housing, then the prices of real estate could stagnate or even decline. This could place the interest only mortgage holder in the position of being “upside down” on their loan, owing more than their property is worth.

=== Is an Interest Only Mortgage for You? ===

There are certainly situations in which an interest only mortgage can be a valuable option.

Interest only mortgages can be useful if you are a savvy investor looking for cash-flow from income producing real estate. You will likely have investment property in several markets and a decline in one market could be offset by an increase in another market.

If you can obtain an interest only loan at a rate significantly below your traditional mortgage, you can take advantage of it’s lower rate. Just because it is an “interest only mortgage” does not mean, however, that you must only make minimum payments for interest. You can add money to you payment to decrease the principal (loan amount). Because your interest charges are less, by making the same monthly payments as before you can more rapidly reduce the amount of your debt.

Or, you could use the money you would have paid in principal payments to build equity by making improvements in your home–just be sure the improvements really add value to your home. For example, kitchen and bathroom upgrades usually add value to your home, but adding a built-in pool often does nothing to improve your home’s resale value.

Refinancing a partially paid for home with an interest only mortgage can free up money for other investments. You will still have equity in your home even if your home’s selling price declines somewhat.

=== Summary ===

Overall, you need to understand both the advantages and disadvantages of an interest only loan.

If you are buying a home merely because you can afford the payments, you may be in for an unpleasant financial education. So, evaluate your situation carefully before you choose an interest only mortgage.

Bob Sherman is the owner of http://www.bobshermancredit.com and provides information about managing and eliminating your debt and building wealth. His free ebook helps you end your credit card debt.

Times are getting rough these days. Everyday, the saying the money does not grow on trees seems to increase in value. Countless of individuals have grown bankrupt despite the progress economists have been observing. As life continues its course, needs increase as the money required to fill such needs seem to deplete. In such cases when people are faced with financial worries, one common option is borrowing money. There are several types of loans that people can take when they have financial problems, and one of the most common types is the home equity loan.

As its name suggests, a home equity loan is a type of loan that involves a house’s equity as the collateral being used by the borrower. The home equity loan is also sometimes called a second mortgage or an equity loan. Families who in the middle of their mortgage suddenly get a certain financial need find it necessary to borrow money once more. A common use of the money obtained from the loan is for paying medical bills, making major home repairs, and paying for college tuitions.

Some financial institutions call home equity loans as home equity line of credit. This is because the amount of money obtained from the loan is derived from the difference between a home’s present market value and the equity of the homeowner. The home equity loan is sometimes considered as a second chance for borrowers who are having a hard time paying for their mortgage. The danger when the home equity loan is not paid off is that the house may be sold to fill in the balance or remaining debt. The interest rates of home equity loans are usually lower and more flexible than those of credit cards and regular second mortgages.

There are two common types of home equity loans:

The closed-end home equity loan refers to the type of home equity loan wherein a lump sum is given to the borrower when the loan is approved, however, no further loans would be allowed. With this type of home equity loan, a borrower can get up to the entire value of the home assessed, minus any liens. The amortization of closed-end home equity loans can last up to fifteen years with a balloon payment for three, five, or seven years. When the balance for the balloon is matures, the borrower must either pay the remaining balance off, or refinance.

The open home equity loan involves a revolving credit wherein borrowing can happen several times depending on the choice of the borrower. It is also possible to get the entire value of the home for the loan with an open-home equity loan. The amortization may last up to thirty years at a variable interest rate that is rather competitive. One can pay as low as the only the due interest for the month with this type of home equity loan.

Both closed and open home equity loans are referred to as second mortgages because like regular mortgages, such loans are secured against the property value involved. Usually, the terms for home equity loans are shorter in duration compared to traditional mortgages. The good thing about home equity loans is that their interests may be deducted to borrowers’ personal income taxes when the right arrangements have been made.

The need for money is a reality of life. The times when money runs out are indeed devastating. Fortunately there are many options to obtain money and one them is getting a home equity loan.

Khieng ‘Ken‘ Chho - Online Home Equity Loan Resources. For more, visit Ken’s website: http://homeequityloan.1w3b.net/

2005 NAR Profile of Home Buyers and Sellers Points to Real Estate Advertising Trends

The annual report by the National Association of Realtors profiling homebuyers and sellers reveals some interesting information about how and where to spend money when it comes to marketing homes. The study’s findings should be of interest to real estate agents and clients alike.

For example, the study discovered that advertising properties on local television may not be the best use of advertising dollars when it comes to marketing properties. Although some 25 percent of homebuyers surveyed said they did sometimes use television as a source of leads, less than one percent of them said they had first learned about the home they eventually purchased by seeing it on TV.

The NAR survey has been going on for about ten years, and has proven useful over the last decade for being able to predict trends. For instance, it should come as no surprise that one of the most effective tools for marketing homes is the Internet, and that trend will likely continue to grow stronger as the years go by. Interestingly, even though consumers are using the Net more, they’ve also continued to use agents to help them with the purchasing process. Some 77 percent of homebuyers said they used the Net in their search for a new home, yet 90 percent of them also used the help of a real estate agent.

The survey also found that traditional methods of marketing, such as newspaper ads, open houses, and a simple sign in the yard are still effective means of reaching potential buyers. It seems as if people still enjoy driving around and looking for signs in the neighborhoods that interest them. In fact, some 15 percent of buyers said that a yard sign was a significant source of information for the home they purchased.

Open houses didn’t fare quite as well. Although nearly half of the homebuyers surveyed said open houses were useful sources of information, less than one percent said they had bought their home because of an open house.

In fact, among homebuyers surveyed, the number one source of information about the home they eventually bought was still their real estate agent. That’s good news for the Multiple Listing Service, because it means that their information is still being used heavily by agents in finding potential homes for their clients. However, savvy listing agents also make sure their homes are featured on the Internet to give them an even wider exposure.

Copyright © 2006 Jeanette J. Fisher

Jeanette Fisher offers free real estate investing information, free ebook, The Truth about Making Money Flipping Houses and teleseminars. http://doghousetodollhouse.com