When you are in the market to buy a home, you are going to come across a lot of terms and real estate lingo that you have probably never heard of before. Buying property is like stepping into a whole new world with so much to learn, processes to endure and rules and regulations that must be followed to a T. Most home buyers are amazed on how much they learn so fast. Take for instance the importance and benefits of an easement, right of way and restrictive covenants. What are they and why do you need to know? Well, let’s take a look.

Easement. An easement is the right to use someone else’s property for a specific purpose. Normally these easements are granted to telephone companies or to public utility services to run lines under joint properties or perform other work on or under your property to neighboring houses. A housing developer may also possess an easement to allow him to build or maintain a water storage facility on your property.

Long ago easements were limited to the right over flowing waters and other rights that would only be attached to adjacent properties to benefit all parties involved and not just one specific person. Easements can be beneficial to a property as well as significantly affecting the value of the property. All easements should be included and described in your deed and remain there until your land is sold.

Usually a land owner who grants an easement cannot install fences or build other structures within the easement area that would impede access. Before purchasing any property, you should be fully informed of where all the easements are placed and any restrictions associated with them.

Right of Way. A right of way is a different form of an easement that has been granted by a property owner to give permission to others to have reasonable use of your property as long as it doesn’t interfere with your personal time. Ownership rights to the property may be lessened by an easement, but there can be a great amount of benefits due to the additional freedom.

Restrictive Covenants. They may not sound like it, but restrictive covenants are actually a good thing. Restrictive covenants are basically deed restrictions that apply to groups of homes as in a subdivision. The restrictions are normally placed there by the developer and can be different, depending on what area you live in. These restrictive covenants help give a development a more common appearance and market value and will also help control some of the activities taken place within those boundaries. When enforced, these covenant restrictions can help prevent homeowners from letting the appearance of their property fall into disarray and actually protect the property values.

Although these restrictions are normally a plus, all home buyers should always do their homework and study the restrictive covenants before making an offer on any home. It’s important for home buyers to understand restrictive covenants and other deed restrictions because these restrictions dictate how you can use the property. Home buyers need to be certain that they will be able to live with the rules and regulations before deciding to buy.

Other issues you may see in a restrictive covenant may be:

1. Easements for pathways and other land use that must be described.

2. Maintenance or other amenity fees.

3. Rules regarding pets and other animals, e.g., prohibitions on breeding domestic animals, livestock or having unchained pets.

4. Rules regarding home businesses or renting homes.

5. Clauses that dictate what types of fences, if any, can be used.

6. Clauses that prohibit home owners from storing clutter, inoperable vehicles or other recreational vehicles within view on the property.

This is only an example of what can be expected in a restrictive covenant. This is why it is so important to thoroughly investigate what restrictions apply before placing an offer. Your real estate agent or the seller of the property should supply you with a list of restrictions before you make an offer. These restrictions may or may not benefit you, it all depends on the buyer and what you are looking for. It’s important for you, as the buyer, to be well informed to protect your own interests.

Understanding the differences between housing options when you are searching for a home to purchase is very important. In your search for your dream house, you will encounter housing terms such as stick built, modular, and manufactured (mobile home). Each type of dwelling has their benefits and drawbacks, both temporary and long term. Primarily though confusion exists about modular home manufacturing. Also, many are unaware of the benefits of owning one.

The overall production of modular homes is a unique process. However, design begins as with most floor plans; with an architectural engineer using a CAD (Computer Aided Design) program, and is approved by structural engineers for durability and safety. There are benefits to having your home constructed in the fashion of a modular home. The construction of the modular home sections begins on an enclosed factory floor. Quality control is strictly adhered too for each section of the house. Your home during the building phase is never subjected to inclement weather conditions, and usually the home can be ordered and delivered on site with in two weeks. Also, during this phase your contractor can set a pre - made foundation, and ensure that all necessary permits and grading work is completed in time for your modular home delivery. Finishing work such as crown molding, carpeting and appliance installation is completed once the home is joined and all utilities are hooked up. During this phase you can begin to pack and schedule your date for move in. Note worthy too is the fact that many modular homes can be special ordered from any standard house design on the market.

Other beneficial considerations of modular home purchasing are that because they meet state and local home building requirements, and are inspected by a certified inspector they usually exceed existing building codes, which makes obtaining financing easier. Banks and other types of mortgage lenders consider modular homes on par with the traditional on site stick built homes for varied reasons such as meeting state codes, and the use of a permanent foundation. Insurance rates for your home is in line and competitive with the traditionally constructed home too. Over all these factors influence two very important aspects of your home – its appreciation in value and the equity. If you ever decide to sell your home you will find few if any problems with anyone obtaining financing, or questioning the value of the home as compared to other stick built homes.

In a comparison between modular and manufactured homes the differences are clearly amplified, and the benefits of owning a modular home clarified too. When comparing them, the potential home owner must think in terms of the long run. Its true manufactured housing does have short term benefits, but over the long haul it might be wise to invest a little more money into a modular home. Take a glance at a few important comparisons below.

Modular Homes – Appreciate in value, manufactured homes depreciate.

Modular Homes – Set on a permanent home foundation, manufactured homes set on a block pier making financing harder if not impossible to obtain.

Modular Homes – Meet state and local building requirements and are inspected, manufactured homes don’t, and structural reliability can be faulty.

Modular Homes – Meet federal, state and local regulations, while manufactured housing must meet only HUD (Housing and Urban Development) requirements.

Modular Homes- Are accepted into most communities of stick built homes, but restrictive covenants exist on where a manufactured house may be placed.

Modular Homes – Are in comparison just as energy saving in heating and cooling as any stick built home.

Other benefits of modular housing are that many contractor groups specialize in not only assembly of the home, but also in the other facets associated with home site development. For example, larger firms can help you finance your new home. Also, site excavation, site preparation and the installation of the foundations for the home and garage can easily be done. Not only will this eliminate any unnecessary headaches for you, in the end it will save your hard earned dollars. Modular homes are fast becoming the housing choice for the future, but whatever housing option you choose make sure it’s a decision you can live with.

If you are a first time homebuyer or are in the low to moderate income range, buying a home listed through the Department of Housing and Urban Development (HUD) is an appealing option.  HUD homes are actually available to anyone who can qualify for a mortgage. Although they are popular with lower income families, they are also appropriate for savvy consumers looking for a great deal.  HUD also has special purchase programs for educators and law enforcement officers, which may qualify them for discounts up to 50%. 

If you have fallen on hard times or have less than stellar credit, you may still be able to purchase a home with government assistance.  There are several government programs available to those in need. You can go over your alternatives with a HUD funded housing counseling agency. 

In order to find a HUD home, go to your state’s HUD website.  You will be able to browse the available homes.  When you find a home you like, you should find a HUD approved real estate office to show you the property.  The agency’s website will have a list of approved offices.  Contact them so that they can set you up with an agent.  When you meet with an agent, the process is much like buying any home.  You want to lay out your wants and needs so that the agent knows what you are looking for in a home.  Pictures may not be enough to base your decision on, so you need to have an open dialogue with the agent.

The home buying process is a little different for HUD homes than it is for a regular listing.  If a homeowner with a HUD insured mortgage cannot make the payments, the home is auctioned off after the lender forecloses.  HUD pays the lender for what is owed on the property and takes ownership of the home.  These homes are sometimes auctioned off for less than the appraised market value.  This is why such great deals can be found on HUD homes.  The auction is considered the “offer period”.  Everyone places their bids and the highest bidder gets the house.  You can submit a bid at any time if the house isn’t sold in the offer period.  If HUD approves your bid, your agent will be contacted within 48 hours. 

In the event that your bid wins, your agent will help you with the paperwork. Your settlement date will usually fall within 30-60 days of your winning bid.  It is important to remember that you cannot finance a home through HUD. You need to have your own financing arrangements.  Have everything ready to go at the time you place your bid.   If your bid wins, but you do not close, you may lose your deposit. 

If the home is in need of repairs, the responsibility falls on the buyer.  HUD homes are sold “as is” and do not come with a warranty. HUD will not make the repairs because the price of the home is always adjusted downward to reflect the cost of repairs.  Don’t consider buying a HUD home unless you are willing to absorb the cost of repairs.  The repairs might be minor, so don’t turn your back on good home because it needs a little work.  Before looking for homes, you should determine what your repair threshold is and stick to that.  Some like the challenge of it and others would prefer to keep repairs to a minimum.  It is important to have the home inspected prior to making an offer so that you can figure the cost of repairs into your bid.

If you are purchasing a HUD home for real estate investing, you should be aware that you cannot bid during the initial offering.  Families in need of housing take priority; therefore, the initial offering is only available to buyers with the intent to live in the home.  If no one bids on the home, investors can then place their bids.

If a foreclosure cannot be sold within 6 months, HUD will then sell them to charities or agencies for the purpose of providing housing for needy families.  Either way, the homes are likely going to those individuals that need them the most. 

Home ownership has long been a major part of the American Dream. Yet for many Americans, the skyrocketing price of real estate makes it impossible for them to save enough money to qualify for an adequate mortgage let alone buying a home outright. That’s why the Federal Housing Administration of the United States Department of Housing and Urban Development has a loan insurance option that allows first-time buyers or anyone without a lot of money for a down payment to purchase a home.

By guaranteeing lenders won’t lose all of their money if you default on your home loan, FHA’s insurance program increases the number of potential home buyers who are able to secure a loan from the lending institution of their choice. While the FHA program does help qualified buyers secure home loans, not everyone is qualified.

The first measures of whether a potential home buyer will qualify for FHA assistance is whether he or she has a good credit history and whether he or she is employed or has enough income to handle a house loan. It is a good idea to start establishing a credit history as early as you can. You can do this by paying your utility bills, school loans, and car loans on time, or by applying for credit cards and paying the bills in a timely fashion. You may not qualify for a standard credit card right away, but most departments will issue their in-house charge card with very little proof of income, and using these cards is a good way to build a solid credit history. It is also a good idea to keep copies of bank statements, pay stubs and contracts as proof of steady income when you go to apply for a home loan.

Most lending institutions require a down payment equal to about 25 percent, or one quarter, of the full price of the home you wish to purchase. With real estate prices booming as they are, this goal is out of reach for many Americans. However, with an FHA-insured loan, qualified home buyers can secure a house loan with as little as a three percent down payment.

So how do you know if you qualify? Either before you begin looking for a home to buy, or after you have found one you think is a good prospect, do some simple calculations to find out how much of a home loan burden you can afford each month. To determine how much you can afford to pay, multiply your monthly income by .29. Most loan experts agree that spending 29 percent of your gross monthly income on housing costs is a reasonable burden for buyers looking to secure a FHA loan. The amount you get by multiplying your gross monthly income by .29 will give you that magic 29 percent figure. Total housing costs include more than your mortgage principal and interest costs. You also have to calculate your estimated property taxes and insurance, as well as utility costs such as heat, water and electricity. Your total monthly debt load, including payments for any long-term debt you may have, should not exceed 41 percent of your gross monthly income. These debt burden figures are slightly more favorable than conventional loans, which generally require a debt load one to five percent less than what is needed for an FHA loan.

Once you know how much you can afford to pay, you also have to figure out if you can raise enough cash to make a down payment equal to no less than two to three percent of the price you pay for your home. This money will be due on the date you close or settle the deal. You may actually need more than that amount to pay for private mortgage insurance, title insurance, title search fees, attorney’s fees, loan origination fees, discount points costs and any other relevant disbursements, so leave a financial cushion to handled these additional expenses.

Buying a home is exciting, but it is also an investment that requires planning and careful management. An FHA loan can help you buy the home of your dreams, but be sure you can afford the house you want to buy so that the dream does not turn into a financial nightmare.

What exactly is a bridge loan and what can it do for you? A bridge loan is simply a short-term loan used by a person or business that needs a fast cash infusion until permanent financing can be achieved. A bridge loan, sometimes referred to as a swing loan or gap financing, is generally expected to be paid back very quickly. Most bridge loans have a term of about six months to one year.

When would someone need a bridge loan? Bridge loans are often used by prospective home buyers who are ready to buy, but who have not yet sold their current home. When the housing market is booming and houses are selling within days or weeks of being listed, a bridge loan makes little sense. But what about those times when the housing market seems to be moving along at a more reasonable pace?

Imagine, for example, that you find your dream home. You are eager to purchase it, except for one major setback: you need to sell your current home first. In the meantime, you can snatch up that dream house by applying for a bridge loan. A bridge loan can allow you to pay off the mortgage on your current house, or gather enough cash to make a down payment on your dream house while you wait for your current home to sell. In hindsight, the opposite situation would be ideal: selling your home, and then finding your dream home. But since life, and especially issues of personal finance, are not always ideal, a bridge loan is a viable option for anyone who finds themselves caught in between.

The terms of a bridge loan can vary widely. Some types of bridge loans allow you to completely pay off the mortgage on your current home. A fairly typical bridge loan might work as follows: the bridge loan is used to pay off the mortgage on your current home, and the rest of the money is used to make a down payment on your new home. In this type of scenario, closing costs and six months of prepaid interest are normally subtracted from the loan amount. If the first home is not sold after a period of six months, the borrower is usually allowed to begin making interest-only payments on the bridge loan. When the first home is sold, the bridge loan can be paid off in its entirety, with any unearned interest payments credited to the borrower.

Be warned that using bridge loans in this way—to span the disparity between two separate transactions—can be costly. Bridge loans often come with high fees, so make sure you understand the terms of your loan before signing. Also, be prepared to face the possibility of having to pay the equivalent to three mortgage payments (your current house, new house, and the amount of the loan itself) until your home is sold. Before even considering a bridge loan, speak to your real estate agent. Find out how long homes in your houses’ price range are taking to sell. If the housing market is so slow that you expect your home to remain unsold for many months, a bridge loan may not be such a good idea.

Bridge loans are also commonly used in real estate investing. Individuals interested in investing in real estate property, but who may not have access to conventional loans, can use a bridge loan to make the purchase. Individuals who use bridge loans may be unable to qualify for conventional loans due to credit problems. Thus, many bridge loans are often available through non-traditional lenders, who offer interest rates ranging from 14 to 20 percent. These lenders often also charge ‘points’, or fees, on these loans. One point is one percent of the total loan amount. Because these lenders are not as concerned with credit ratings as traditional lenders, bridge loans are much more accessible, though also much costly.

Bridge loans offer a fast and relatively easy way to receive a fast cash infusion. But they are also saddled with higher than average fees and interest rates. The best advice regarding bridge loans is also perhaps the simplest: don’t use them unless you really have to.