Q. Explain the concept of leveraging in real estate investments.

A. Leveraging means being able to make a relatively small investment to purchase a more valuable asset that can appreciate at a higher multiple than the invested cash. For example, say you make a $10,000 cash investment to purchase a $250,000 home and the house appreciates 5% during the first year….that means after one year the home would be worth $262,500 – a gain on the asset of $12,500. Your annual return on your $10,000 investment would be a whopping 125% for one year. By contrast putting the same amount of $10,000 cash in the stock market and posting a similar 5% gain would only net a $500 return on the same investment.

Ever wondered what they mean by “Builder Pays $$$ of Buyer’s Closing Costs & Prepaids”? In today’s buyers market you’re seeing more and more seller ads with this phrase. So what does it mean? What are the real savings?

Closing costs are fees and taxes that are part of the settlement transaction when title to the property is transferred from the seller to the buyer. This transaction is referred to as the closing.

Money has been tight this year and you were a month late on a couple of credit card payments. But that won’t hurt your credit score, because you are paying on time now, even if it’s just the minimum. You got a raise at work, which boosts your score. And you don’t plan to apply for new credit anytime soon, so your score doesn’t matter.

None of the above about credit scores is true, but if you believe any of it, you have company. A survey recently released by the Consumer Federation of America shows Americans, continue to harbor numerous such misconceptions.