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What is a short sale? It is a sale wherein the lender accepts the mortgage discount to evade possible foreclosure on the property for auction or bankruptcy. As a buyer, you are not going to purchase from the seller but instead, you are buying the property from the lender directly, and yes, as mentioned previously, with a discount. So why are lenders okay with discounts on their properties? Well, first and foremost, banks are not in to extra inventories and bad loans so if ever they see chances wherein they can have the property sold without big loss, they will certainly do it. Also, lenders know very well that if their property is up for auction, they will lose more cash. You see, many fees are actually involved if ever the property will go to the auction so lenders believe that they are definitely better off with the discounted price rather than bigger money loss.
Today, it is not surprising that foreclosures are definitely at their peak and that would mean that there will be more opportunities for everyone – for you. Since foreclosures are at their best, this is definitely the best time to learn and start as there will be more lenders offering their properties with the best discounts. You surely wouldn’t want to miss on that!
Mortgage foreclosures are which the deeds are only foreclosed through the process of court action. They are also called as judicial foreclosures.
Now what is a mortgage? It is a significant document which allows you as the borrower to keep the property’s title while using the property as collateral or security for a loan. The lender will then put a lien on the property if ever the owner is not able to pay the agreed fee. When you are able to fully pay off the loan, the lender then provides the borrower a mortgage satisfaction that will have the property’s lien removed. Do you know that half of the U.S states utilize mortgage foreclosures as means for satisfying loan balances?
With many of the lawsuits on mortgage foreclosures, it usually begins with a summons where a complaint is being issued to the borrower and other parties who have rights with the property. The notice is usually issued by the attorney of the lender and is often filed in court where the trial is going to be held. The borrower has twenty days to respond to the court once he has been notified of the complaint. When the borrower has successfully challenged the lawsuit on mortgage foreclosure, the court has forty days to respond to the borrower. The correspondence must always be legit and should deal with the complaint’s specific part. Because of this, the process slows down the mortgage foreclosure everytime the borrower finds something wrong with the complaint and it has to pass through the court system.
Many people worry on how to finance foreclosures as they think that they need to have lots of money to start investing in foreclosures which is probably the reason why it keeps you from starting. But of course, you will be glad to find out that you don’t have to have a lot of cash to start foreclosure investing. Just remember though that we are all in varied financial situations so it’s important to remember that not all tips would work for everyone. All you have to do is find out which of the techniques that will work best for you and continue doing it. Would you believe that those people having issues such as having little money, jobless, or with bad credit can find themselves investing in foreclosures? It’s true, you will just need to learn on where to find the best foreclosure deals.
Here are some of the best tips on how to finance foreclosures:
1.) Assume the obligations of a seller.
2.) You can borrow against the life insurance policy.
3.) Try transactional funding. This is a process wherein you as a buyer utilize funds for a short period of time in order to facilitate transactions.
4.) Use Home Improvement Loans.
5.) Use Home Equity Loans.
6.) Use VA Loans.
7.) Try to get a partner.
8.) Use Hard Money Lenders.
9.) Utilize banks or lending companies or institutions
10.) Use “Subject To” existing financing.
The above are just some of the best tips to financing foreclosures. You can think of more creative ways on doing this wonderful opportunity.
When your property has been placed a tax lien, you have the right to appeal if you believe there was a mistake. According to the law, the IRS should notify you within five days when a tax lien has been filed. When you do get your lien notice, the document will include a date due if you decide to appeal this tax lien. So remember, if you want to appeal a tax lien, do not miss out on this required date. Act as quickly as possible and follow the rules and process that is outlined in the tax lien notice.
So what could be the reasons to appeal a tax lien? Here are just some of the reasons:
1.) If you have already paid off your owed taxes before the IRS filed for the tax lien.
2.) If you were in the state of bankruptcy and the IRS filed a tax lien.
3.) You were not given the chance to dispute the liability that resulted in the filing of tax lien.
4.) Before the tax lien was filed, the statute of limitations expired.
If you decide to ask for some professional help, you might want to consider hiring an attorney specializing in taxes. With this, it will be a lot simpler communicating with the IRS and a lot easier to understand the appeal process.
In order to secure interest in your property, the property tax collector uses a tax lien so as to assure payment for the taxes which will limit your chances in obtaining and selling mortgages while you still owe taxes. By definition, a tax lien is the claim against the property so the property owner can ensure payment of his owed property taxes. The county or the state or the local government has the right to foreclose the tax lien and then sell the property following the legal procedures that is required by the law.
The following are some effective tips to avoid foreclosures in tax liens:
1.) Setting a repayment plan with the tax agency. You will have to fill out important papers such as the tax agency’s repayment plan forms. With these forms, you will have to include attachments such as pay stubs, proof of income, and significant statements that will show your debts and assets that may be asked by the tax collector. You can have down payments on your debt that is required to set up your repayment plan. Get ready to answer questions on your finances by the tax collector.
2.) To pay off your tax debts, get a loan. Search for a lender that has the best loan program that will fit specifically for delinquent property taxes payments. Have your financial documents ready as well.
3.) File for bankruptcy. With this, you will be entitled to a stay or a stop of actions by the creditors. The tax agency will then be informed by the court of the stay.
Properties that are in the last stage before they are taken by the bank are called pre-foreclosures. With this, the property owner is still in charge but if he is not doing anything, the bank will claim the property.
So why choose pre-foreclosure properties?
1.) The price. Since the owner has to have the property sold before the bank repossesses it, it is not impossible to find pre-closure offers that are way less than their original market values such as 50% offs.
2.) Dealing directly with the owner. Aside from getting a great price, with pre-foreclosures, you can deal with the owner directly. You see, if the property owner turns your offer down and then fails to have the property sold, he will lose everything. If he gets the property sold, he can make up some money from it.
3.) Less competition. Yes it’s true, there will be less competition when you buy and search for pre-foreclosure properties. This will certainly prove to be helpful when making a great deal with the property owner.
4.) Searching procedure is not that hard. When you search for pre-foreclosure properties, it is exactly the same way as you do with properties that have already been owned by the bank. You can look for pre-closures online, in the newspaper ads, or by contacting a lender on the phone.
You may not be fully aware that when you invest in tax liens, there are risks that will always be involved. As an investor, you will have to secure your other assets and to do this, you can create an LLC or a Limited Liability Company. With an LLC and having your tax lien business placed under this, your assets will be protected.
So what do you get from an LLC?
1.) As a member of an LLC, you will have a limited liability protection on your assets. This explains that they are not accountable personally in case of debts or liabilities. The members’ personal assets are not included in the LLC so these cannot be sequestered when problems do arise.
2.) Unlike other business organizations, LLCs need not pay taxes.
3.) When you are part of an LLC, it will show that you are a serious investor. Your credibility as a business person is higher compared to others who are not part of LLCs.
4.) Since LLCs have lesser requirements for compliance compared to a corporation or sole business, creating an LLC is undoubtedly faster.
5.) LLCs have fewer requirements in reporting.
6.) While the number of members in corporations is controlled, LLCs are not as they are more flexible in organization.
While there may be a couple of things that make you realize that LLCs are indeed necessary, you will also have to consider the following things:
1.) When you form an LLC, you will have to consider the expenses involved such as initial fees. Other states may need annual reporting fees.
2.) There are mandatory reports that need to be filed yearly when you are part of an LLC.
3.) When transferring ownership for LLCs, it is not an easy task.
4.) You will have to know the rules and regulations in forming LLCs in your specific state as it may differ from others. This will surely help you avoid wasting your money and effort.
At this stage, you probably know that the county tax office places a tax lien on a property which has unpaid taxes and sell it to investors in order to recoup the lost tax revenue. If you plan to be an investor of tax lien certificates, you have to note that laws and methods may be different in each counties and states. Due to this, you will have to learn and understand your chosen state or county’s tax lien purchasing rules and processes by paying a visit to the tax office or county courthouse for detailed information. Most likely, they will properly explain to you the procedure of the sale.
Most counties have their tax sales at a county courthouse. Now, tax lien sales may be held several times in a year while other large municipalities only hold one tax lien sale auction per year.
So when you get the schedule for an upcoming tax lien sale, obtain a property list from the county tax office. Since the property information will not be very detailed during auction, you will have to do proper research and due diligence about the properties you plan on bidding to. Remember, check out the properties in the auction list before deciding to bid on any of them. Make sure that the property you are going to bid will be profitable.
By now, you have already known the fact how a lot of investors and people who want to improve their living, just like you, are doing their best in learning more about the wonderful opportunity from investing in tax lien certificates. To give you an insight, tax lien certificates provide the best way to earn large profits promptly by loaning delinquent home and property owners the cash to pay for their tax debts to prevent their property from having foreclosed. And of course, this loan comes with an interest. With tax liens, you as the investor will be given an opportunity to buy properties for just a fraction of their original worth and make money when these properties are being resold. In fact, there have been reports indicating that some investors make as much as 50%-75% in initial investments in just a few weeks!
Take note that while there are properties that have not been bought for years, there are also cases where top homes are confiscated when the property owner is unable to pay off its taxes. These open land parcels are often available because an individual who has inherited it somehow failed to pay for its taxes.
So if you decide to join in the next tax lien auction bidding, remember to do proper research first. During the auction, there will not be much information given so if you want to do some inspection, which is highly recommended, you will have to do it days before the schedule. You certainly don’t want to be disappointed when learning that the property you have just won is exactly the opposite of what you have in mind.
Planning to acquire foreclosed properties that are for sale? Then get ready and follow the tips below, you’ll be on your way to getting big returns. Take note of each of the pointers as they do not only have advantages, but you have to consider their disadvantages as well. To become a good investor, choose the best option that will help you get properties or houses in low rates as much as possible.
Number 1: Pre-Foreclosure Purchasing
In this first option, you can approach the owner of the house or property and just make an offer before it gets foreclosed, just like that. This option is considered to be most beneficial for both the owner and you, as the buyer. You see, the owner doesn’t have to worry that he’s not going to be able to pay for the mortgage of the property so his credit history won’t have any bad records. On the other hand, as the buyer, you can fully inspect the property, do a title search, and then you can offer around 20-30% lower deal than the actual market rate right now.
Number 2: Auction Bidding
You already know the fact that a house or property can be very well place up for sale at public auctions where buyers like you can bid and then buy it. This option is very straightforward and it doesn’t take a lot of your time because when you win the auction bidding, you instantly become the new owner of the property or house. You will just have to close it before 90 days end. But you have to take note as well that you should pay around ten percent of the amount fee immediately after the auction bidding. And this would mean that you won’t have ample time to fully examine and check your newly acquired house or property.
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- Exactly How To Start Buying Tax Liens Today
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