FINC 371 Real Estate Financing

The two most common loans in real estate are the fixed rate mortgage and the adjustable-rate mortgage. A hybrid loan is a combination of both. There are also reverse mortgage loans, and loans that use a different term for the amortization as the loan term. Often time people want to have the term of the loan coincide with the time they want to hold the property, but this is not always the case. For mortgages, a common example of a loan term is around 30 years. There are many sources of capital for real estate. This can come in the form of equity or debt. For example, a REIT that is public will sell shares of it's stock to get capital for real estate. There are many ways to "Creatively" finance your real estate firm. I believe that a firm should be highly levered, meaning it should favor debt over equity, because interest is tax-deductible. Firms can also offer subsidized housing to lesser off families to receive tax credits.

FINC 371 Overview of Real Estate Finance

Real estate finance is essential in real estate investments because many times one needs a loan to acquire a property. Major employers in this arena include commercial banks, and regular banks, who give out loans to people who choose to use debt financing to acquire a property. Another employer in real estate finance is appraisal firms. Jobs in real estate finance include brokerage, real estate appraisal, mortgage banking, and title insurance. Some trade organizations in real estate are the American Land Title Association, the Building Owners and Management Association, and Mortgage Bankers Association of America. Real Estate financial markets have been on an increase since the housing downturn in the 2000's. http://finance.yahoo.com/news/everybody-says-downsize-everybody-may-213800235.html This article contends with the idea that downsizing to create a cash inflow can be the wrong idea. It claims that selling your house to beef up retirement accounts can be a bad decision because of the state of the market. It also says that your property can gain significantly in value, thus you will be losing money.

FINC 371 Overview of a Real Estate Appraisal

An appraisal is a document that approximates the value of something. In this case, that  something would be a real estate property. Appraisals take into account  many things, such as the value of the land and the expected revenue that comes from the property. Appraisals aim to get as close as possible to the marker value of the property. Appraisals are perceived as an opinion. You may agree or disagree with an appraisal. A bad appraisal would be one that you don't agree with the value that the appraiser assigns to the value. There are many types of appraisals. Sometimes they are done to evaluate an estate for a will. Sometimes appraisals are used by banks when a house is foreclosed on. The government also uses appraisals for tax purposes. With the influx of information available to the public, I believe appraisals will decline, as people will attempt to do their own appraisal.

The appraisal is also very important for your loan. As this article shows, an appraisal that is too low can mess up your valuation which can cause you to not get your mortgage loan. This is due to the fact that some banks use a loan to value calculation when deciding to give a mortgage or not. I believe in cases like this appraisers should lean to a higher value than lower when making a tough decision. This is a similar article which contends with appraisals that are on the low side. In this article it is the realtors who are complaining about the appraisals. Low appraisals are bad for realtors in that it effects their customers getting loans and it effects their sales price.

FINC 371 Overview of a real estate appraiser

Being a real estate appraiser sounds like an enjoyable job where you get to use your analytical and social skills. The first step in becoming an appraiser is getting a trainee license. The next few stages you don't make much money, but it is wise to find a job where you will have someone to show you the ropes and help you network. Last, you must get a real estate license, and you will be ready to appraise on your own after you become a certified appraiser. Right now there is high competition for real estate appraisers, the demand is not quite as high as the supply.

This article explains the pay, and the day to day activities of a real estate appraiser. On average, they make around 50K a year. The main day to day activity of an appraiser is appraising. Which means they go out to properties and provide estimates for clients. These can be used for a variety of reasons

One example of a major real estate appraisal firm is The Scott Appraisal Company. This specific company works in central California. They appraise any real estate from industrial to residential. An interesting fact that I saw on the website was their court experience. This leads me to believe that sometimes their appraisals are so serious they are used in a court of law.