Understanding Title Deeds: Types, Importance, and the Registration Process

In real estate, a title deed is a legal document that serves as official proof of ownership for a property. It outlines who legally owns the property and provides details about the property itself, such as its location, dimensions, and any rights associated with it. Title deeds are essential in property transactions because they confirm the seller's legal right to sell the property and transfer ownership to the buyer. They are typically registered with the local Sub-Registrar Office, ensuring that ownership transfers are legally recognized and documented.

Key Aspects of a Title Deed

1. Proof of Ownership: A title deed certifies that the person named in the document is the lawful owner of the property.
2. Transfer of Ownership: When a property is sold, the title deed is transferred from the seller to the buyer, establishing the buyer as the new owner.
3. Property Description: The deed includes a detailed description of the property, which might encompass the property's boundaries, exact location, and specific characteristics.
4. Legal Rights: The title deed may also specify the owner’s rights and any restrictions, such as easements (the right to use someone else's land for a specific purpose) or encumbrances (claims, liens, or other liabilities against the property).
5. Registration: In many countries, including India, the title deed must be registered with a local governmen ... Read More…

Understanding Wraparound Mortgages: A Unique Home Financing Approach

When navigating the complexities of real estate financing, unique structures such as the wraparound mortgage offer alternative pathways for both buyers and sellers. But what exactly is a wraparound mortgage, and how does it function? Let’s dive into what makes this method appealing, along with the potential benefits and risks it presents.

What Is a Wraparound Mortgage?

A wraparound mortgage is an alternative home financing option where the seller maintains their existing mortgage while creating a new loan that “wraps around” the existing amount owed. Unlike conventional home sales where buyers secure mortgages through banks or lenders, buyers in a wraparound agreement make their monthly payments directly to the seller. The seller, in turn, uses part of those payments to continue paying off their original mortgage. This type of mortgage often comes with higher interest rates than traditional loans, giving sellers an opportunity to profit.

How Does a Wraparound Mortgage Work?

In a typical real estate transaction, a mortgage lender provides the loan for the home purchase, and the seller uses the proceeds to settle their mortgage. With a wraparound mortgage, however, the seller retains the original mortgage and acts as the lender by providing financing to the buyer.

Here's how it works:

1. Negotiation of Terms: The buyer and seller agree on a down payment, loan amount, and interest rate ... Read More…

 How Does the Truth in Lending Act Work?

Lenders must provide borrowers with a Truth in Lending disclosure statement. It has handy information like the loan amount, the annual percentage rate (APR), finance charges, late fees, prepayment penalties, payment schedule and the total amount you’ll pay.

The law also established a “right of recession” for certain types of home loans. It’s basically a cooling-off period that gives consumers three days to cancel their loans without any financial penalty.

TILA does not require institutions to loan money to specific applicants or regulate the interest rates they can charge. It just requires banks, credit unions and other lenders to clearly lay out what the terms of the loan will be.

Applying the Truth in Lending Act

The law covers most forms of consumer loans, whether they are closed end or open-end credit. Closed-end loans mean you get a set amount of money when the loan closes and must pay it back (with interest, of course). Think of mortgages or auto loans.

Open-end is money you can draw repeatedly, up to a pre-approved amount. Think of credit cards and lines of credit.

Though TILA does not regulate interest rates, it does prohibit lenders from imposing excessive penalties if a borrower is late making a payment.

These loans are covered under TILA:

• Credit cards
• Mortgages
• Home equity loans
• Auto loans
• Home equity lines of credit

These loans are not ... Read More…

Where Do I Start?

There are many ways to market in real estate, including:

• Website
  A website is a powerful marketing tool that can help generate leads, establish authority, and communicate your unique selling proposition (USP). You can optimize your website for relevant keywords to attract more visitors. You get a free website through your MnREIA membership. Be sure to take advantage of it! Check out the How-To Videos to set up Your Free Website Today: See Tutorial Videos Here!
  
  
• Social media
  Social media marketing can help you build a community of followers who may become conversions. You can post content relevant to your brand and the industry. You get to create posts for free in our Private MnREIA Facebook Group and our Facebook Page. Be sure to take advantage of it!
  MnREIA's Private Facebook Group | MnREIA's Facebook Page
  
  
• Email marketing
  Email marketing can be used to build relationships with clients. You can create an email sequence that automatically goes out to new leads. Did you know you can email other MnREIA members through the system? Check out our member directory: View Members Directory
  
  
• Partnerships
  Partnering with local businesses can expand your reach and enhance your reputation. You can collaborate on events, cross-promote services, or refer clients to each other. Networking with other MnREIA members is a great way to build your team and find partnerships! Pre-Register for our next main monthly meet ... Read More…

Everyone knows that as interest rates rise, real estate prices drop.  It is only natural.  If the current interest rate is 4% on a $300,000 loan, the monthly PI (Principle & Interest) payment is $1,432.25.  If the interest rate goes up to 7% and the average buyer can only afford a monthly payment of $1,432.25, then the maximum amount they can borrow goes down to $215,277.40.

This is affectively what has happened over the past year and a half, so why have prices continued to climb?  That’s a great question and can be explained by the extremely low inventory levels.  The level of inventory has been so low for so long that the principles of supply and demand have caused prices to increase dramatically. 

In other words, if interest rates hadn’t risen so much so fast, the average loan balance may have risen to $565,000.  That is what the borrowers could afford based on the current average monthly PI payment of $2,700 and an interest rate of only 4%.

The following chart shows the affect interest rates have on a borrowers ability to pay over the past 18 months.

Yah… Your mortgages are going to cost you more to help offset the cost of people who have bad credit, isn’t that wonderful?  Yes, it’s true, beginning May 1, 2023, upfront fees for loans backed by Fannie Mae and Freddie Mac will be adjusted because of changes in the Loan Level Price Adjustments (LLPAs).

Example, beginning May 1, 2023, a buyer with a good credit score of 750 who puts down 25% on a $400,000 home would now pay 0.375% in fees on a 30-year loan, or $1,125, compared to 0.250%, or $750, under the previous fee rules, which is an increase of $375.

Meanwhile, a buyer with a credit score of 650 putting a 25% down payment on a $400,000 home would now pay 1.5% in fees on a 30-year loan, or $4,500. That compares with 2.75%, or $8,250, under the previous rules, which is a decrease of $3,750.

It is true that the increase to buyers with good credit is a small percentage of the overall loan and the borrowers with poor credit are still paying more, albeit less than before.  However, why should those of us who have worked hard and shown prudent money management and done without some things to build up good credit have to pay to lower the costs of those who have not suffered as much as those of us that have built good credit.

25% of all listing had a price reduction last month and inventory levels are rising. We are still in a sellers’ market, but we are transitioning into a buyers’ market.  When that happens, sellers buyers become picking and stubborn sellers slowly become more receptive.  The first phase of this transition is for sellers to drop their asking prices, and that is starting to happen. 

The next phase, if interest rates remain high, will shock the sellers and if they have to sell, they will drastically drop their price to get a sale and that has a snowball affect on prices.  The only thing that can help the sellers now is for inventory levels to remain low and interest rates to drop a little.

“There is no victory at bargain basement prices.” – Dwight Eisenhower

Prices are on the rise everywhere right now. What about yours? 

From just a few pennies to outright sticker shock, hiking prices is one of the quickest paths to losing customers. But you’ve got ends to make meet, too. 

Our inflation series continues with one of the most pressing problems for businesses today: How much you need to increase your pricing models – and what to think about before you do. 

Worry and response

Current inflation is 8.6% year over year, a seemingly endless upward direction that worries most businesses. Almost nine out of 10 have told surveys that they’re also already seeing the hit in higher expenses such as supplies and services, some by as much as 50%. Throw in employees probably wanting above-average raises and you’ve got a compound problem. 

Businesses’ response? Not hard to guess: Almost nine out of 10 small businesses in one survey said they had to hike their own prices – and that’s on top of the hefty percentage that'd already raised their prices since the pandemic started. 

The key question is, raised prices by how much? 

Almost half of businesses had to increase prices by more than 20%; almost half said they kept the increase to no more than 15%. Some companies that haven’t increased prices in years have had to pass along furious new costs to potentially furious old custo ... Read More…

Bank financing is getting harder to qualify for, interest rates are rising, and people are getting scared.  This is exactly what most investors have been waiting for.  Opportunity is brewing, the question is, are you ready for the coming storm? 

Inflation is destroying the value of the dollar. Every time this has happened in the past, people look for other investments and commodities to beat inflation or at lease does not lose too much value from it.  Hard assets like gold and silver tend to do well in times of out-of-control federal spending and inflation.

Real estate is another hard asset that does well over time. This is why so many people are looking to put their money into real estate.  Real estate investors are struggling to find good deals right now, but as the storm approaches, deals will become more readily available, however, the easy bank financing is also drying up.  This presents a problem to investors who have not prepared for this and started to raise their own private financing. 

Having access to private money is a game changer and will separate the doers from the wantabees.  You see most people get into real estate when things are going up because they heard about all the money that can be made in real estate.  However, that money was mad by the dowers who bought when everyone else was getting out and then resold years later to the new investors getting in.  It’s a vicious cycle, the question is, when ... Read More…

 When you first think of the consequences of rising interest rates, you could naturally conclude that would drive real estate prices down.  Over the long haul, you would be right.  However, when you look at what is going on now as rates are rising, you might be shocked to see that both rates and prices are rising together.

Mortgage rates have been increasing steadily since the begging of the year 2022.  At the beginning of the year, mortgage rates were right around 3.2%.  As of the end of April 2022, mortgage rates have risen to around 5.2%. Some resources are show as high as 6.1% as of this writing.

The interesting thing is that the median sales price for real estate is also increasing. The median home values of Minnesota, my home state is currently $326k, the twin cities metro area is a little higher at $340k. 

So why are prices still increasing at the same time interest rates are also increasing.  To explain that you need to have a little understanding of economics.  In the simplest form, when supply is high and demand is low, rates tend to drop lower to encourage borrowing.  This is one of the tools that the federal reserve uses to spur growth in the economy.  On the flip side, when inflation is out of control, like it is now, rates tend to rise to keep up with inflation which usually slows borrowing which in turn lowers demand on products which in theory increases supply over time which will bring inflation down.&n ... Read More…