The Wrap-Around Mortgage-An Investing Tool (with Restrictions) for a Slow Real Estate Market

The Wrap-Around Mortgage-An Investing Tool (with Restrictions) for a Slow Real Estate Market
A 'wrap-around" mortgage is an "old school" financing
technique. It isn't as popular as it once was, but it still
has definite advantages for the creative real estate
investor in a slow market. It also has advantages for
buyers facing foreclosure or who have poor credit.

In basic terms, a wrap-around is a loan deal in which you,
as the investor, assume responsibility for an existing
mortgage. Here's an example:

The Smiths have a $70,000 mortgage on their home. They sell
it to you for $100,000. You pay $5,000 down and then borrow
$95,000 on a new mortgage that they grant you. This new
mortgage "wraps around" their original $70,000 mortgage
because there are still payments to be made on the old
mortgage.

So, what are the main advantages to you as an investor? The
first is leverage. Here's an example to illustrate how you
gain leverage with a wrap-around mortgage:

Assume that the Smiths original $70,000 mortgage has an
interest rate of 6%. Assume the new $95,000 "purchase
money" mortgage has a rate of 8%. The Smith's "equity
spread" is $25,000 ($95,000-$70,000) and they will earn 8%
on that portion. But, the Smiths also are earning the
difference between 8% the Buyer pays on the full amount and
6% they have to pay on the $70,000 underlying loan that
remains in place. So, the Smith's total return is a full 8%
on the $25,000 and 2% on the 70,000 that they still owe. In
fact that 2% return is huge because it is really not their
money, they still owe it on the first mortgage.

Question: How would you like to earn 2% on someone else's
money?

Answer: All day long!

So, through this strategy, you've taken the existing
mortgage's lower interest rate(6%) and leveraged it into a
higher yield (8%) for yourself. In addition, you can deduct
all interest paid on a yearly basis as well as the real
estate tax. Of course, as a shrewd investor, you can also
use wrap around mortgages to turn around properties quickly
at a profit.

There are advantages for the borrowers as well. Perhaps due
to the current lack of sub prime financing, they can't get
financing at an acceptable rate so they opt for the
wrap-around mortgage method. By choosing this route, they
also avoid the hassle of conventional mortgage procedures
(closing costs, etc.). And, as mentioned earlier, they may
be facing foreclosure, and a wrap-around sale can spare
them the embarrassment of being foreclosed upon.

As with any financial tool, there are disadvantages.
Wrap-arounds can only be used with assumable mortgages
(i.e., existing borrowers can transfer their obligations to
qualified house purchasers).

Bad News: As of this writing, there are no loans that can
just be assumed without the written permission of the
lender.

So, if a mortgage has a "due on sale" clause, and today
most do, this means that the existing mortgage can't be
assumed without the original lender's permission. The
result--the original lender can decide to call the loan.
This is perhaps the biggest risk to you as an investor.

I would not recommend that anyone take over a mortgage in
this fashion without first getting written permission from
the lender to do so. There is essentially a "due on sale
jail", despite what the real estate gurus of today may
preach. Proceed with extreme caution!

It's also important to remember that the original lender
has first legal rights. So, if the home owners fail to make
mortgage payments to the original lender, the original
lender can initiate foreclosure procedures.

Key Points: Understand the risks of wrap-around mortgages.
Understand the legal technicalities completely before ever
attempting this kind of transaction. Make sure all parties
understand what's involved in the process. Get written
permission from the lender or don't do it! Have an
attorney or Title Company write all documents carefully
with protections for everyone involved.

----------------------------------------------------
Jack Sternberg is a nationally recognized expert on real
estate investment who's been in the business for more than
30 years. Sternberg's deals have totaled over $750 million
and he's been to the closing table more than 1,500 times.
For more, visit http://www.askjacksternberg.com

Do You Know What You Need To Do To Sell Your House Online?

Do You Know What You Need To Do To Sell Your House Online?
Are you trying to sell your home but you do not want to
just rely on a real estate agent to do it for you? Did you
know that you can sell your house online?

You can get online and find many websites where you can
sell your home. You will have to do some research to find
the sites. Thankfully the search engines have become better
at delivering reliable information on this topic.

You want to make sure that you look at each site that you
want to list your home on. Make sure it is a legitimate
site and that they can help you sell your house online
because not every site will be able to.

So always check out each site thoroughly before you list it
with any site. The more websites that you can find to list
your home on, the faster you will sell your house online.
You can't just list it one place and expect it to sell.

People have to be able to find your home if you want anyone
to buy it, so the more places that you list it the more
people will see it. This could even mean putting up a
website of your own and selling it online yourself.

For sale by owner transactions have been taking place for
years so why not online as well. If this seems a bit to
much then read on.

You may want to also list it with a real estate agent in
your area but that is your choice. It is always a good idea
to talk to an agent to see what they can tell you about
selling your house online and offline.

Local real estate agents are good because they have their
pulse on what is going on in their own marketplace. This
includes things like average sale prices, how quickly homes
are moving, and what you need to do to your own home to get
it ready to sell.

The more information you have the faster you will be able
to sell your home. Always do your homework before you list
your home anywhere so that you can get it sold for the
money you are asking for.

To sell your house online you still have to get traffic to
it. The internet is getting searched everday for all kinds
of things and buying homes is one of them. You may want to
consider a combination of offline and online marketing to
cover all of your bases.

----------------------------------------------------
James Redmond invites you to visit his best home offer
website if you must sell your house fast. If you are a
private party who must sell your home because of divorce,
to stop foreclosure, bankruptcy or other issues he can
help. He specializes in private party must sell home help
including selling high end homes. Please click here now to
learn more:===> http://www.thebesthomeoffer.com/

Trade The Forex? Profit From This Stock Trading Strategy

Trade The Forex? Profit From This Stock Trading Strategy
Trading the currency market can be a very lucrative
business, especially with the large amounts of leverage
that most forex brokers provide. In order to be a trader
that can consistently earn pips in the forex market, it is
wise to have at least a basic understanding of all the
economic factors that go in to determining exchange rate
values (and in fact many successful traders have multiple
economics-related degrees).

However as I have recently found out, when it comes to your
knowledge of the global economy and your day-to-day
knowledge of the exchange rates of all the major
currencies, you can apply this knowledge outside of forex
trading and make money by investing in companies that have
a certain business plan. This stock picking strategy is
the topic of this article, and I have personally used it to
make tens of thousands of dollars all by trading the forex
as I normally do and then finding companies who have a
business plan that is heavily dependent on international
trade.

This investment strategy works because of a very simple
principle: Companies that do business in multiple countries
must always exchange their native currency for a different
country's currency, and because of this their costs and
profits are highly dependent upon the currenct exchange
rate. This is why I mentioned the background in economics
because for a man or woman who has spent years learning
macroeconomics, they have no trouble understanding the
different effects that the appreciation or depreciation of
a particular country's currency will have on their
international trade.

In terms of the amount of time that I recommend holding on
to the stocks that you pick for this strategy, it is
probably wise to approach it as a swing trader and hold on
to positions for 7-14 days at a time. Those of you who
thrive on daytrading may not be happy to hear this, but the
fact is that it takes at least a week for the increased or
decreased costs of doing business (due to exchange rate
changes) to affect the price of that company's stock in any
noticable way. And if you ARE a forex daytrader like I am,
you are in a unique position because you are constantly
informed of where exchange rates are and where they should
be headed, and you can use this knowledge to determine
whether business is going to become cheaper or more
expensive for American companies working in Europe,
European importing parts from America, etc.

For this stock picking strategy to work, there are a few
things you need to know. For starters, you need to find at
least one company whose business plan relies heavily on
importing or exporting. A good example would be an American
company that sells laptops and imports most of their
supplies from European manufacturers. If a stock is
publicly traded then all of this information should be
readily available, and you want to find a business model
that is largely centered on only two countries (or rather,
only on two currencies such as the Euro and the dollar, so
that any large movements of this single currency pairing
will affect the costs of this company).

Once you have found at least one company like this, and it
is obvious to you that a large change in the value of one
currency (such as the USD appriciating) will significantly
impact this company's profits, the next thing to determine
whether the specific currency pair that you have isolated
is trending or not (in our example it would be EUR/USD). If
the currency pair is moving sideways then that might not do
you much good, but if the currency pair is in an obvioud
trend then this should work to your advantage. We are
looking for a trend that is at least one month long, and
during that time we are looking for a change of about 100
pips per week or more.

In our example of the American company that sells laptops,
if the USD was appreciating against the EUR (meaning that
EUR/USD was in a downtrend), then it would become cheaper
for the company to import parts since their dollars will
now buy more Euros. This would mean that, since costs have
been slowly declining over the past few weeks, profits
should be slowly rising and there is a good chance that you
will see this factored into the value of the stock. So if
you met all of your trading conditions and the EUR/USD was
in an obvious trend for at least one month and was moving
at the rate of 100 pips per week or more, then you would
want to buy or sell the stocks of companies that rely on
importing or exporting.

When I finally began to apply this trading strategy a few
months ago, I was quite simply amazed that I did not think
of it before because it is just so obvious. I have been
trading forex for years, but I have only recently ventured
into the stock market because I discovered a way to apply
my currency market knowledge to stocks. Hopefully reading
through this article has got your brain working and now you
can more easily come up with ways that you can pick stocks
based on exchange rate values.

----------------------------------------------------
If you want to learn more about how you can use your
knowledge of the forex currency market to make a killing by
investing in specific stocks, you can read more on these
two pages:

http://TheCurrencyMarkets.com/forex-stock-trading.htm
http://TheCurrencyMarkets.com/stocks-forex.htm