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There’s more Regulation Z compliance on the way, courtesy of the Home Equity Loan Consumer Protection Act. This fall banks will have to implement the new home equity loan disclosure rules the Federal Reserve Board was required to issue under the act.

The Federal Reserve released the final version of the home equity regulation on June 5. The rules were made effective June 7. However, compliance is optional until Nov. 7 because Congress gave institutions five months after finalization to start. However, there’s no time like the present.

This column is devoted to bankers’ most common questions about the demands of this complicated rule. You should, of course, check the regulation and consult legal counsel before acting on these suggestions.

Product Design

Q. This is a disclosure regulation. Does that mean that, while we must provide customers lots of information about home equity products, we are free to design them as we see fit?

A. No. The regulation leaves many design matters to lenders and provides options in a number of other areas. At the same time, however, it creates three absolute restrictions on design:

(1) If you offer a variable-rate program, you must use a base rate beyond your control. Information on that rate must be generally available to the public. Examples include the prime rate as published in The Wall Street Journal or rates on U.S. government securities.

(2) Lenders generally may not terminate the plan and accelerate the balance before the loan’s scheduled expiration. There are three exceptions: customer fraud or misrepresentation; failure to meet repayment terms; or action or inaction adversely affecting collateral.

(3) Lenders may not unilaterally change any but insignificant terms of a home equity plan, with the following exceptions:

* You may make changes provided for in the contract, as long as both the triggering event and the resulting changes are stated specifically in the contract.

* You may substitute a new index if the original index becomes unavailable. This is subject to two conditions: the new one’s historical fluctuations must be substantially similar to the old one and it must produce a rate similar to that in effect when the old index became unavailable.

* You may prohibit further advances or reduce the credit limit in four circumstances: if the value of the dwelling falls significantly below original appraised value; if you have a reasonable belief, based on evidence, that there has been a material adverse change in the customer’s ability to repay; if the customer defaults on any material obligation he’s agreed to under the plan; or if government action–such as a reduced usury ceiling–either precludes imposition of the agreed upon annual percentage rate (APR) or adversely affects the priority of your bank’s security interest.

If you impose restrictions based on these four situations, you must reverse your action if and when the problem is eliminated.
Preparing Early Disclosures

Q. What are the basic early disclosure requirements?

A. The heart of this regulation is a new requirement that customers be given detailed disclosures and a general brochure about home equity plans when provided with an application form. The only exceptions are for applications contained in magazines or taken by telephone or through third parties. In these cases, the lender can mail or deliver the disclosures and brochure to the customer within three business days after receiving the application.

Q. Do these disclosures have to be in a form the customer can keep?

A. Not when they are provided with the application. This means that you have the option to simply print the disclosures on the application form. If you do so, however, you must include a statement suggesting that the customer make a copy.

Q. Must early disclosures be presented in any particular format

A. Yes. You must be sure that certain required terms are grouped together and are segregated from other information. These terms include the following (assuming they are applicable); the first four must precede all others:

* The customer should keep a copy of the disclosure.

* Any time limit within which the customer must apply to receive the terms described. Alternatively, include a statement that terms may change. In addition, the lender must state that the customer has the right to a refund of any fees if any terms change and if, as a result, the customer decides not to enter into the plan.

* A warning that the lender is acquiring a security interest in the customer’s dwelling and that the customer could lose his home if he defaults.

* An advisory that, under certain circumstances, the lender may terminate the plan and accelerate any outstanding balance; prohibit further advances; reduce the credit limit; or otherwise change the plan, as provided in the loan agreement.

* A discussion of the plan’s payment terms. This should include: the length of the draw period and any repayment period; an explanation of how the minimum payment is determined, the timing of payments, and whether making only minimum payments would not repay any or all of the principal balance; and the fact that the plan permits conversion of the balance to a fixed-term loan.

You must also include an example, based on a $10,000 outstanding balance and a recent APR, showing the minimum periodic payment, balloon payment, and the time needed to repay the $10,000 loan making only the minimum and balloon payments, with no additional advances.

* For fixed-rate loans, the APR must be one that was in effect within the previous 12 months. For variable-rate plans, the historical table satisfies this requirement.

* A description and itemization of loan fees that the lender charges to open, use, or maintain the account. These can be stated as dollar amounts or percentages. You must also give a total dollar estimate of fees imposed by third parties and invite the customer to request more specific information.

* The fact that negative amortization may occur and that it increases the principal balance and reduces the customer’s equity.

* Any limits on the number and size of credit extensions within any time period and any minimum balance or draw rules, stated as a dollar amount.

* A statement that the customer should consult a tax advisor regarding the deductibility of interest and charges.

Q. If we offer a variety of home equity plans, are we required to have a separate disclosure notice for each one?

A. No. The bank can choose to devise a separate plan disclosure for each home equity product or to use a more generic disclosure to cover all of them.

If you use individual disclosures, you must inform customers that they should inquire about other options.

If you use a single generic disclosure, you are required to spell out any linkages or relationships affecting the availability of certain terms. For instance, if you tell the customer that your home equity loans are available with certain payment plans, and if the customer’s opportunity to select these payment plans varies based on other loan terms, these restrictions would have to be explained.

An example of such linkages: Say a bank offers two plans, one with a five-year term and the other with a ten-year term. The bank permits interest-only payments under the five-year plan, but requires payments of interest and principal under the ten-year plan. A generic disclosure would have to point out such a difference.

Q. Where do we get the brochure that must be given out?

A. You can either use the model brochure provided by the Federal Reserve Board or develop your own that is “substantially similar.” If you want to use the Fed’s version, you can obtain a limited number of original copies from your Federal Reserve Bank and reprint them verbatim. You could also reprint the Fed brochure with the bank’s name and logo.

Q. The disclosures that go onto application forms seem fairly straightforward. But I foresee difficulties sending the required notices out within three days for telephone, third-party, and magazine insert applications. Is this going to be a management problem area?

A. Undoubtedly. You need to have a system and training for handling these applications. Staff should be directed to note them on a special log identifying the applicant, the time of receipt, and the source of the application. You then need to generate the required disclosures and record the date they were sent.

Q. We must disclose the circumstances under which we can change the terms of the plan and what the changes may be. These could grow quite lengthy. Must they all be included in the early disclosures?

A. No. You can include them all if you want to; if you do, you need not group them with the other early disclosures. However, if you prefer, you can simply disclose that the borrower may obtain a list of the conditions under which the lender could take these actions.

In either case, the segregated disclosures must state that the lender has the right to terminate, accelerate, prohibit new advances, reduce the credit line, or make other changes. You must also state the fees for termination.

Management tip: Designate which employees have the authority to terminate or change the plan terms. Then make sure these employees understand the rules. Permitting decentralized decision-making could lead to legal and customer relations problems.

Q. Our bank’s home equity lines can be accessed with a credit card. Do we have to incorporate the new credit card early disclosures (ABA BJ, June, p. 14) into those for our home equity plan?

A. No. The Federal Reserve’s new credit card rules specifically excluded such plans.

Initial Disclosures

Q. What is the difference between “early” disclosures and “initial” disclosures?

A. The early disclosures are the ones added by this regulation–those that must be provided with the application. The initial disclosures are the main Truth-in-Lending disclosures that have always been required at or before loan consummation.

Q. Does the new rule affect the initial disclosures we must make?

A. Yes. You must include in the initial disclosures the early disclosure terms that do not duplicate already-required initial terms.
In addition, the initial disclosures must include the full list of the conditions under which the bank can terminate or modify the plan, incorporating, of course, the restrictions described earlier. It is not sufficient here to simply tell the customer that he may obtain such a list, in contrast to the early disclosure requirements.

Loan Agreement

Q. Does the regulation require changing our standard loan agreements?

A. Very likely. As explained earlier, you must assure that the agreement uses a publicly available index beyond your control; that it only permits early termination within the circumstances permitted by the regulation; and that any provision for changing terms spells out specifically both the triggering event and the resulting change. An example of the latter: For an employee preferred-rate plan, the contract must provide that a specified higher rate will apply if the borrower’s employment by the lender ends.

Advertising

Q. Does the regulation change our ability to advertise these loans?

A. Yes. The rule adds new “triggering terms” to the advertising provisions of Regulation Z. “Triggering terms” are terms you cannot use in an advertisement without having to disclose additional information.
For home equity loans, the new triggering terms are all of the terms required in the initial disclosures (except the security interest), as well as any payment terms. You may not make either positive or negative statements (such as “no annual fee”) about these items without including, in the same ad, a clear and conspicuous statement of the following:

* Any loan fee that is computed as a percentage of the credit limit and an estimate of other fees for opening the plan, stated as a single amount or range.

* Any periodic rate used to compute the finance charge, expressed as an APR.

* The maximum APR, if it is a variable-rate plan.
Q. There have been problems in the past relating to advertising the tax benefits of home equity loans. Are these addressed?

A. Yes. If you advertise that interest may be tax-deductible, you must assure that the ad is not misleading. The Fed suggests, for instance, that you also add that the customer should consult a tax advisor to determine the impact in his or her own circumstances.

Q. Are there any other advertising rules?

A. Yes. If your advertisement mentions a discounted initial rate, you must state how long that rate will be in effect and display a “reasonably current” undiscounted APR with equal prominence. If you advertise a minimum payment, you must also disclose that a balloon payment will result from it, if that is the case. Finally, you cannot refer to a home equity plan as “free money” or use any other misleading terms.
Other Issues

Q. We are required to refund fees to customers who back out of an application because terms change. What is involved in handling this?

A. You must refund all fees, including credit report and appraisal charges, if the customer decides not to take the loan because terms changed between application and consummation. The only exception is if the APR has changed in accordance with a properly disclosed variable-rate feature.

Q. Third parties, such as loan brokers, distribute some of our application forms. Are they affected?

A. Third parties are obligated to provide the home equity brochure and, if they have them, the lender’s early disclosures. However, the lender is not obligated to supply them with either. Nevertheless, it is probably a good idea to furnish at least the brochure.

Q. Once we have put the compliance machinery for this regulation into place, what problems may we encounter in staying in compliance?

A. For variable-rate plans, one problem will be the need to update your historical $10,000 example every year. This needs to show how the indexed rate would have moved every year for the previous 15 years (not beginning in 1977, as is required for closed-end adjustable rate mortgages). The historical example must be updated each year.
A second maintenance problem will, of course, be the need to revise all your disclosures whenever program terms are changed for new accounts or when you offer new programs. When this happens, you need to review all steps taken to put together the initial compliance plan.

Marc Sylvester is expect based in Edison, NJ . He holds expertise in the banking and finance sector and is a conultant to leading business houses.

http://www.imdollar.com/home-equity-loan/

http://www.imdollar.com

Have you been through a bankruptcy? Have you wondered whether you could possibly refinance your mortgage loan or even obtain a new mortgage after your bankruptcy? You will be pleased to learn that there are mortgage lenders that will help you obtain a mortgage loan and even save you money by lowering your monthly payments. Local mortgage lenders are ready to help you find the best refinancing package available for your special circumstances.

Having to file a bankruptcy does not have to mean you are stuck with a high interest rate and less than desirable mortgage terms. Mortgage lenders will consider refinancing mortgages after bankruptcy because the risks involved in refinancing mortgages are extremely low. When we say refinancing mortgages, you are actually obtaining a new mortgage loan with current best mortgage rates.

Refinancing your home, even after a bankruptcy, is not impossible any more. You can lower your payments, consolidate bills and actually improve your financial situation. You can often get extra cash for that well-deserved vacation, fund college expense, and be well on your way to financial recovery. The difference could mean thousands of dollars in your bank account over time. Refinancing a mortgage, after bankruptcy, on your home is the best way to take advantage of the lowest interest rates in many years.

Mortgage lenders have hundreds of loan programs that will help you meet your financial goals. One of the easier loan products to qualify for is the FHA mortgage loan, where for the first five (5) years of the loan, you are paying a premium for mortgage insurance that protects the lender in case of default. After the initial five years, that premium drops from the loan payment. There are many mortgage investors and mortgage lenders that have many other mortgage loan programs available. These lenders are the experts, all you need to do is get in touch with a lender you are comfortable with and they will handle and explain the process with you.

Under federal law, you always should receive a Good Faith Estimate of Charges and an Estimate of Truth in Lending within the first three (3) days of the credit application being completed, which will explain all costs involved and how much your payments will be. If you don’t get this information, keep shopping! This information will help you to make the right decision and it’s the law.

There are several reasons that it is easier now to qualify for mortgages after bankruptcy. If you think about it, you have eliminated your other debt through the bankruptcy which gives you more ability to make your mortgage payments. Through the bankruptcy, you have maintained either your mortgage payments or your rent payments on a monthly payment history which has helped to reestablish a payment record. And, in most cases, whatever caused the problem/expense that caused the bankruptcy should be behind you and you should be ready to start over to build back up your good credit standing. Refinancing mortgages after bankruptcy on your home or taking out a new mortgage to buy A home, is the best way to reestablish your credit.

Michael Domeck was a multiyear sales and listing award winner for Century 21 and has designed and built many homes over the years. His wife has been doing mortgage financing for over 20 years. Together they can show you what all the “mortgage hype” is all about. Find out the secrets to getting the best mortgage financing at the best rates and the lowest fees. Learn why re-financing may NOT be the best way to go and why! Visit:
Free Advice Mortgage Re-Finanacing to get Free Advice on Mortgage Refinancing, Mortgage loans and how to handle credit problems!

Finding an online lender for a home equity loan is simple and convenient. The days of contacting mortgage lenders by phone or visiting their branches are over. With a few clicks of a button, homeowners are able to obtain quotes from several lenders for a mortgage, refi, home equity loan, etc. Here are few tips to help you find a good online home equity lender.

Reasons to Apply for a Home Equity Loan

Home equity loans are equivalent to your home’s equity. Equity is the difference between the house’s market value and the amount owed to the mortgage company. Home equity loans can be used for a variety of purposes. For example, if your home needs extensive home improvement work, a home equity loan makes financing the project easy. Additionally, if your consumer debts are snowballing and keeping up with the monthly minimums is impossible, a home equity loan affords the opportunity to consolidate debts.

Other common uses of a home equity loan include starting a business venture, building a solid cash reserve, or using the money to plan retirement.

Things to Consider Before Applying for a Home Equity Loan

Although home equity loans have many beneficial purposes, these loans can be dangerous. If used wisely, a home equity loan can ease debt problems and provide necessary funds for large projects. However, if using the money for debt consolidation, homeowners must avoid accumulating additional debts.

Home equity loans are protected by your home. If powerless to pay back the money, the lender has the right to foreclose on your property.

Furthermore, homeowners must avoid borrowing too much money for home improvement projects and other large expenses. Prior to applying for a specific loan amount, homeowners should sensibly assess their finances and make certain that an additional monthly payment is within their means.

How to Find a Good Lender

The key to finding a good online home equity lender is shopping around and making comparisons. The easiest approach for comparing multiple lenders simultaneously involves using a broker. Upon completion of a single home equity quote request, the broker will provide you with several lender options. Quotes include approval amounts, monthly payments, interest rate, and loan terms.

View our recommended lenders for a low rate home equity loan quote online.

Also, check out our recommended sources for a cheap credit report online, or view our recommended debt consolidation mortgage loan lenders online.

If you are selling your home through the assistance of a real estate agent, you don’t have to worry about a lot of things, most of all pricing. The agents are not only there to sell your house, they are also there to put an appropriate price tag on the property.

Pricing a home properly is the biggest problem home sellers, who choose to sell their property by themselves, encounter. They either set a price that is way below the market value or way above it. Either way, this proves detrimental to the seller.

To avoid the pitfalls of having an inaccurately priced home, you have to do your homework way before you put a “for sale” sign in your front lawn.

The first thing you should do is to study the market. Browse through classified ads and take note of the prices of similarly sized homes in similar neighbourhoods. This should be enough to give you an idea of the acceptable price range.

Bolster your information with data gathered from the internet. Look for websites that provide online appraisals or you can go to the websites of real estate agents and see if any company offers free home analysis.

If you are uncomfortable taking this route, you can secure the services of a full - time, professional appraiser. Having your home professionally appraised may entail an additional expense but you will be assured that the figure he will give is the closest approximation to the true value of your property.

LegalHomeForms.com provides all the real estate forms needed to sell your home yourself. Download a Home Sale Contract today.

Have you ever heard of a mortgage broker before? If you haven’t, then you definitely need to give yourself more options whether you are applying for a new home loan or are refinancing your current loan, and learn what they are all about. Mortgage brokers can help you save thousands over the life of your loan. It’s all about the interest rate and how it affects the amount of principal compared to interest that you pay each month.

Instead of just giving you whatever the posted mortgage rates are, the person from the brokerage office will go from institution to institution to try and get you the absolute lowest interest rate possible. This can often mean a savings of between 1% and 2% off the posted bank rate. What this means for you is a savings of several hundred dollars per month depending on the size of your home loan. Not only will your monthly payments be lower, but the amount of interest paid out will be lower too, allowing more of your hard earned dollars to go towards paying down the principal. This will help you pay your debt off faster.

A broker should be your first consideration when looking for a home loan, especially if the bank rates seem way too high. They will do all the work for you and find you the one financial institution that is willing to bend considerably on their rates.

You may be surprised at the time and trouble you will save by seeing a mortgage broker. Another tip would be to check out online lending companies. They are often very competitive with their rates as well. But don’t take my word for it, try it yourself and be pleasantly surprised!

Chris Ferguson is the author and webmaster for http://www.online-finances.com
We offer pertinent financial information on home loans, car loans, student loans, debt consolidation, and other finance related topics. If you are looking for a loan, but are worried about your bad credit, we can help! Visit us at http://www.online-finances.com

The days of most home owners putting ten percent down on a 30 year mortgage are long gone. One new option is zero down payment mortgage loans.

Zero Down Payment Mortgage Loans

Whenever you are looking for a loan, there are some good principles to remember. First of all, the more money you can put down on a home, the less your interest rate will be and the better deal you will get. Secondly, never settle for the first offer you get, always shop around and compare different offers. Those principles considered, there is a form of loan that may contradict them but still has its purpose: the zero down payment mortgage loans.

Zero down payment mortgage loans are just as they sound, they allow you to mortgage your home with a lender without having to put any money down on the loan itself. What you should know about this, first of all, is that it is violating the above principles and that this form of loan should be sought as a last resort. By restricting yourself to a zero down payment mortgage loan, you are restricting the offers you can get from lenders, since at that point most lenders will offer you the same exact deal. Also, putting no money down will lead to much higher interest rates then you would be paying otherwise.

That being said, zero down payment mortgage loans still serve their purpose. These loans, because they require no down payment, are good for those who have difficulty coming up with the cash savings required for a down payment on a home purchase. This loan can be useful in times when the market is at a low and starting to rise, since the value of the home will rise after the loan has been taken out, and the loan can be used in these cases since if the person receiving the loan waits, the market prices of home could rise considerably over that time. But remember, whenever you use a no down payment mortgage loan, the bank owns complete equity of the home and these leaves you no leverage for receiving loans against your equity. You will only earn equity as you pay off the home and as the value of the home rises.

At first glance, zero down payment loans sound like a great deal. In truth, they should be used as a last resort given the fact you will pay significantly more in interest over the length of the loan. At the end of the day, however, owning a home is better than not owning one, so these loans certainly have their place in the market.

Have you ever sat in your backyard and wished you could bring
everything you saw back inside the house with you?

With all the beauty nature has to offer, is it any wonder we
want to carry that into our homes. From brightly colored flowers
to deep green trees and shrubs to the rich earthly tones of
boulders and land, nature paints her canvas with a wide variety
of colors and textures.

But there’s no need to resort to planting a tree in your living
room to get the effect of bringing the outdoors in. Here are 3
interior design tips to get you started.

1. Windows. This is the obvious one but it bears mentioning. If
you want to enjoy the views surrounding your house, then adding
windows is a must. Make them as large as you comfortably can -
small windows may work for air flow but they won’t make it easy
to enjoy your views.

You may not, however, be in a position to change or adjust
windows. If you aren’t building a new home or remodeling, then
check out Tip 2 to get more mileage out of the windows you have.

2. Don’t distract with heavy window coverings. You want your eye
to flow from inside to outside without interference. Elaborate
drapes and window coverings can distract the eye, pulling it
away from the window and the view.

You may want to try less formal, less structured window
arrangements. The more involved the coverings, the more they’ll
dominate over the outside view. And stay away from busy patterns
as they distract - instead choose soft, solid lightweight
fabrics.

This tip is especially important if you aren’t in a position to
make your windows larger. Before you do anything else, try
minimizing the window coverings. That may just do the trick.
(However, for windows that don’t have much of a view, you may
want to consider drapes to dress them up a bit.)

3. Use color. This is probably the most important tip and one of
the most underused. By using colors you find outside, you can
“pull” the outdoors in with you.

So how do you do this? Start by choosing colors that are in your
environment. Greens, reds, browns, maybe even blue for the sky
or water. You may want to stand outside with paint swatches so
you can actually match what’s already out there.

Once you know what colors you want to use, it’s time to go
shopping. And no, don’t start in the paint section. While
painting the walls is an obvious way to add color, that can also
distract the eye from admiring the window views the same way
drapes can. Instead, why not look at fabric - pillows, new
upholstery for the coach, throw rugs, etc. Or other accessories
- artwork, vases, candles, knick-knacks, etc. If you’re
remodeling or building, you can also use those colors in your
tiles, cabinets, floors, etc.

It isn’t that difficult to bring your outside inside. With a
little planning and time, you can enjoy the beauty of the
outdoors both indoors and outdoors.

With an impending up-grade to the family due in a few months it soon became clear that our two-bedroom home would need an addition. We loved our house too much to consider moving. Not having the large sum of cash necessary to build it, however, we began a process that became a little more than burdensome. As my wife and I wandered in and out of financial institutions claiming to have “The lowest rates around” and discovering the degree of separation between institutions was greater than we had anticipated, it became very clear that this process would take a lot longer than we had originally thought.

As we were filling out the umpteenth loan application form one night a commercial for a popular insurance company came on. It offered to give us a free quote from them and from some of their competitors. I have no problem with the idea but I have always wondered how much effort they really put into finding the lowest rate available for the coverage needed. After all they too were trying to get our business. But then I had an idea!

Like some kid that had just realized a potential way to save themselves a ton of work, I went to the Internet and sure enough, there it was! A company that could take the same information that I had been supplying on application after application and shop it around for the best rates! It was over! No more wandering in and out of banks or finance companies to fill out the same paperwork over and over until I was literally cramping. In minutes they came back with the name of a place that would save us thousands of dollars over another company we had been interested in. We had now saved ourselves many hours of painstaking effort.

We started adding the addition the very next week. If you need a loan for any reason just get online and find yourselves an honest site that will find you the best rate possible. This is the Information Age and there are places online that can find you the best rate with less effort than you could ever hope to achieve on your own!

We all know the cost of not shopping around for the best rates. It can honestly add up to thousands of dollars over the course of your loan. Don’t work harder, grasshopperwork smarter!

Paul Sanford
Resources: http://gettingrichfast.com/bestratemortgages.html
http://gettingrichfast.com/mortgage1.html

If you’re new to Florida, then you’ve probably already realized how diverse culture is in the Sunshine State. The cost of living, schools, and people will vary from the Georgia, Tennessee and Alabama connections of life in the Panhandle, to Latino influences in the most southern tip. The good news about getting adjusted to life in Florida is that you’re not alone. Most of the people who live there have relocated from another state; therefore, you are surrounded by millions who know exactly what it feels like to be a newbie. Besides contacting the Chamber of Commerce in whichever community you end up in to get all of their new resident information, you can count on the following to be consistent throughout most parts of Florida.
Big tax breaks on property and personal income tax are some of the big bonuses to living in Florida. Be sure to file for the Homestead Exception to see if you qualify for further cuts. Unlike getting a driver’s license, filing for the Homestead Exception, registering to vote, or filling out a declaration of domicile, will establish your residency in Florida. A driver’s license will only establish your intent to reside in Florida.

Various permits, forms, and licenses are also necessary for boats, the use of beaches and coastal areas, docks, burning, vehicles and fishing. These will often vary according to county. StateofFlorida.com offers information specific to each of these needs and breaks them down into categories. It also has links to Florida State agencies to help relocating individuals or businesses.

Getting the right insurance for your Tampa Bay Florida real estate property and belongings while you live in Florida is a necessity. The recent rash of hurricanes has inspired the Office of Insurance Regulation to reorganize themselves to serve this important aspect of Florida living. Crosscheck some of their links to make sure that your insurance covers all of the possibilities.

Be sure to call or visit the website for the Florida Department of Education to find out how local schools rate in your area. In fact, selecting your property according to school districts may be a good idea if you have, or expect to start, a family in Florida. Each school also has a report on it done by the School Advisory Council Report which rates schools on performance, attendance and various features.

Afternoon thunderstorms are a part of life almost everyday for Floridians during the summertime. This is just one of the features of Florida’s weather that relocators should know about. Being prepared for Florida’s weather will make the transition of relocating much easier. Be sure to ask your neighbors how they prepare for hurricanes and heavy rain. Make sure that you have supplies on hand throughout the year. Also, ask your local authorities about what you should have on hand, what to expect, and who to contact for help.

Expect to see a lot more of your friends and families now that you live in Florida. Visiting you will become a vacation for many of them. It may save you money in the long run to buy year passes to some of the attractions in or around your town or city. It also wouldn’t hurt to collect some brochures from the local Chamber of Commerce, so you have a mini-library of resources at your fingertips for day trips and exciting attractions. Remember that Florida relies on tourism for one of its biggest economies. Your loved ones will still consider Florida one of the top vacation spots long after you have become accustomed to living in the Sunshine State. Be sure to keep any welcome packages you receive from your real estate agent or home owner’s association at finger’s reach for yourself, and for visitors.

Bob Lipply is a licensed broker associate with Remax Realtec in Palm Harbor, Florida.
He has many years of experience in selling Tampa
Bay Florida Real Estate and has helped many families relocate to Florida and
find their dream homes. Visit his website at www.lipplyrealestate.com
or contact him direct at 1-888-423-5775. e-mail address is info@lipplyrealestate.com

One of America’s billionaires was recently asked the questions, “How do you do it?
What is your number one wealth building secret?” Without even one second of hesitation he replied, “find what it is that people need the most, and give it to them.”

Remember taht statement. — Give it to them.

There are literally hundreds of different ways to acquire real estate. In future articles, I will be sharing some of the many different innovative techniques used in creative real estate financing.
In this article, were going to explore a very useful and profitable creative real estate financing technique commonly called Lease Purchase Options.
For ease of explanation, we will refer to Lease Purchase Options as Lease Purchase.

What exactly is a Lease Purchase?

A Lease Purchase is a process where a rental agreement is combined with a purchase or an option contract. Price, length of contract, escrow instructions, rent
credit and other pertinent terms are all negotiated in advance. This allows the tenant/buyer to have a defined percentage or dollar amount to be credited to a
down payment or off of the total purchase price of the property when a payment is made.

First and foremost, you must know what needs, wants, and desires the “right” property will fulfill. It is obvious that those needs, wants, and desires will be
the requirements of someone. That someone is the investor. It is the investor who establishes the value of any piece of property in the marketplace by his or
her requirements.

A real estate investor always has only two considerations. Those two things are:

1. A return on investment or Profit. (also known as ROI)

2. A return of investment or Security.

Remember that no matter what the circumstances are surrounding an investment, these two considerations are always the same: some form of profit (i.e. dollars, property exchange or other goods and services, tax savings, personal use) and security, or an assurance that the original investment will remain intact and can be recovered.

The Lease Purchase, (also known as a lease option), has everything an investor needs to make a profitable investment in real estate. Utilizing small down payments of 1% to 2%, an investor can control properties that would usually require 10% to 30% down, without ever having to see a lender or go through the loan application process.

There are three different ways a good deal can generate profits.

1. Cash upfront with option consideration

2. Cash monthly in the form of rent

3. Cash at closing or a note

Other options involve “flipping” of the optioned property to a third party or just acting as a consultant for the buyer and seller, retaining a portion of the option agreement.
Controlling properties by creating a lease purchase option is, by far, the best way to be involved in controlling homes and obtaining great cash flow, high profits and minimum risk. Lease Purchase may be the best way to create a quick cash flow for the first time homeowner or even the seasoned investor.

The key ingredients in putting together a profitable Lease Option are:

1. Finding a motivated seller

2. Determining what his Needs and Wants are and creating a
win/win situation.

3. Finding a tenant/buyer

Question: Where do I find a Motivated Seller?
Good question.

Remember a motivated sellers’ number one objective is to get rid of their property - as soon as possible. A sellers’ motivation can come from many different situations:

• Relocation - job transfers

• Financial difficulties

• Death/divorce

• Tennant problems

• Change in family size

• Building a new home

You need to determine what the sellers’ motivation is once you contact them. Often a seller is facing financial difficulties and at other times it’s just that he no longer wants to be bothered with the property because he now has other interests.
Our first priority then in talking with the individual initially is to determine Wants versus Needs. Most motivated sellers fall in the Need category. Their situation may not be negative. In the above list there are some items that are very positive for the seller. But still it remains, that this property is no longer needed for whatever reason(s).

You can find these deals:

• Looking in classified ads - “Homes for rent or lease” or “For sale by Owner” ads. You can ask if they would be interested in giving an option to buy
their property if you lease it from them.

• Distributing flyers and/or mailers stating, ” I can buy or lease your home” or “I can buy or lease your home in 24 hours! Any size, any condition, any
location. Call (your name) (000) 123-4567

• Running an ad in your local paper stating you are looking to lease a home. You can ask if they would consider an option after the owner contacts you.)

Question: Where do I find tenant buyers?

Your tenant/buyer is someone who desperately wants his or her own home, but for one reason or another, getting bank financing will not work for them at the present time. They either have credit problems, don’t have the large down payment necessary to qualify or they don’t have a high enough income. - You have the ability to give this person an opportunity to realize their dreams.

• Run an ad such as this: “Rent to Own. If you can rent you can own! Stop paying off your landlords’ mortgage! You can rent to own your own home
even with poor credit! Call (your name) (000) 123-4567

• Send mailers to occupants in neighboring apartment complexes asking if they’re tired of renting and if they would like to own their own homes.

Some benefits of a lease option for the Investor are:

1. You now control another persons’ asset. You’re in a position to make money on a property you don’t even own.

2. Provides a positive cash flow opportunity.

3. You have no closing costs.

4. A Lease/Option agreement is a unilateral contract - the seller must perform. You are not bound in any way. If the property should depreciate in value or some other catastrophic event occur, you can simply walk away.

5. You don’t have tax or insurance costs.

6. You are buying the property tomorrow at today’s prices.

7. Little or no money needed up front.

8. Very little management needed. Tenant/buyers take much pride in the property and therefore tend to keep it up and even improve upon it. That’s because they have an interest in owning it - not just renting it.

About the Author
Rodney Brooks is President and CEO of Brooks Enterprises.
Brooks Enterprises is headquartered in Bridgeton, New Jersey.
Rodney can be reached by email at: brooksglobal@yahoo.com
For more information on the Brooks Global Financial Network, visit our blog at: http://brooksglobal.blogspot.com