Free Credit Report (www.annualcreditreport.com) is the offical website where the three credit bureaus provide your legally mandated free credit report each year. You may order all three bureaus at once or one every four months so you can consistantly check your credit--for FREE!
Of course they are always trying to sell you something but if you just want to see what is on your Credit Report, get it here free.
Thursday, November 1, 2007
Monday, September 3, 2007
Getting Ready for the Future # 1: Assets
This is Labor Day so I thought we should think about how we should labor at our finances. Start a savings account.
With all the changes in the Mortgage arena in the past few weeks, I have been thinking about how this will impact you when you want a mortgage and how you should prepare your finances to get a mortgage in the future.
You will need to be able to document your income and assets. For assets, being able to show two months bank or account statements. Any large deposits will need to be explained. (You sold a car, had wedding gifts, received a bonus, etc., fine, no problem)
Approvals often look at Months of Reserves. This means that after closing how much money will you have in the bank to make payments in an emergency.
Some loans require a specific number of months reserves. A month of reserves is equal to the PITI + HOA monthly payment. Usually reserves are evaluated at 0, 1, 2, or 6 months. Retirement accounts count but only at 70% of value.
On marginally approvable loans, showing more assets could persuade the underwriter to approve the loan.
If you are planning for a mortgage, start saving some money. A savings account in a bank separate from your checking is good because you add to it each month like a payment but it is not as convenient to go get it out.
MMM
With all the changes in the Mortgage arena in the past few weeks, I have been thinking about how this will impact you when you want a mortgage and how you should prepare your finances to get a mortgage in the future.
You will need to be able to document your income and assets. For assets, being able to show two months bank or account statements. Any large deposits will need to be explained. (You sold a car, had wedding gifts, received a bonus, etc., fine, no problem)
Approvals often look at Months of Reserves. This means that after closing how much money will you have in the bank to make payments in an emergency.
Some loans require a specific number of months reserves. A month of reserves is equal to the PITI + HOA monthly payment. Usually reserves are evaluated at 0, 1, 2, or 6 months. Retirement accounts count but only at 70% of value.
On marginally approvable loans, showing more assets could persuade the underwriter to approve the loan.
If you are planning for a mortgage, start saving some money. A savings account in a bank separate from your checking is good because you add to it each month like a payment but it is not as convenient to go get it out.
MMM
Saturday, August 25, 2007
Taxed on Your Foreclosure or Short Sale?
Today's New York Times article talks about the double wammy of loosing your home and then being taxed on loan balance you did not repay.
The article is about foreclosure but the same principal applies to Short Sales and Deed inleu of Forclosure. If you borrow money and don't pay it all back, the difference is income to you and you owe tax on that income.
New York Times article gets into more of the details of what tax do you truly owe and how it should be computed but the bottom line is you owe tax.
Here is the Link:
Foreclosure and Taxes
The article is about foreclosure but the same principal applies to Short Sales and Deed inleu of Forclosure. If you borrow money and don't pay it all back, the difference is income to you and you owe tax on that income.
New York Times article gets into more of the details of what tax do you truly owe and how it should be computed but the bottom line is you owe tax.
Here is the Link:
Foreclosure and Taxes
Friday, August 24, 2007
Back to Blogging
Some of you may have noticed a two week gap in this blog. I have been looking for work and waiting for conditions to be met so I can start originating mortgages at a new company.
In the past three weeks 136 national mortgage companies, including my former employer American Home Mortgage, have gone out of business. Several others are hurting and may not make it. It was reported yesterday that over 30,000 people in the mortgage industry were out of work. Well I am one of them.
Although I will be employed again next week, the bigger picture is the impact on the US economy. Will we have a recession? One piece of this mess is the way mortgages were packaged for sale in the secondary market. Our foreign investors thought they were buying one thing and got another. Like buying steak and opening the package to find hamburger. Not the same value. Here is the link to Fidelity Investments newsletter that explains much of the mess.
Fidelity Newsletter
In the past three weeks 136 national mortgage companies, including my former employer American Home Mortgage, have gone out of business. Several others are hurting and may not make it. It was reported yesterday that over 30,000 people in the mortgage industry were out of work. Well I am one of them.
Although I will be employed again next week, the bigger picture is the impact on the US economy. Will we have a recession? One piece of this mess is the way mortgages were packaged for sale in the secondary market. Our foreign investors thought they were buying one thing and got another. Like buying steak and opening the package to find hamburger. Not the same value. Here is the link to Fidelity Investments newsletter that explains much of the mess.
Fidelity Newsletter
Thursday, August 23, 2007
More to Financial Security than Not Paying Interest
A friend sent me a link for You First Financial. (Look it up if you are interested, I won't give it to you because I think it is not in any one's best interest)
This link proposed setting up a Home Equity Line of Credit along side your first mortgage. By manipulating the $ in the Home Equity with your income and expenses they claim you can save thousands on your mortgages and pay off your debt quicker. Their fee is only $3500 which they show you never comes out of your pocket (but it is real money when it goes in their pocket and YOU do get to pay it back)
My first caution is that even if (and it is a big if) their method really works, it is dangerous to combine your assets and your debts. Their system takes 10 years to achieve. If anything unplanned happens in your life in the next 10 years where you cannot make scheduled payments, your house is at risk of foreclosure. When you put money into a debt, even a line of credit, you are not guaranteed you can take it back out.
You know if you prepay your amortized 1st mortgage, the next month your payment is still due in the same amount. You just have more equity in your home. If you miss a payment or if some other condition in your note on the home equity loan is not met, the note can be frozen from further withdrawls and amortized payments can be required.
I could pick apart their system or teach you how to do it yourself without paying them the $3500 but more importantly, your income needs to go into a bank account. When you have enough assets, get Money Market account that pays higher interest. When you earn interest or have some extra $ in the bank we can talk about another conservative investment so you can make payments should something bad happen in your life.
MMM
This link proposed setting up a Home Equity Line of Credit along side your first mortgage. By manipulating the $ in the Home Equity with your income and expenses they claim you can save thousands on your mortgages and pay off your debt quicker. Their fee is only $3500 which they show you never comes out of your pocket (but it is real money when it goes in their pocket and YOU do get to pay it back)
My first caution is that even if (and it is a big if) their method really works, it is dangerous to combine your assets and your debts. Their system takes 10 years to achieve. If anything unplanned happens in your life in the next 10 years where you cannot make scheduled payments, your house is at risk of foreclosure. When you put money into a debt, even a line of credit, you are not guaranteed you can take it back out.
You know if you prepay your amortized 1st mortgage, the next month your payment is still due in the same amount. You just have more equity in your home. If you miss a payment or if some other condition in your note on the home equity loan is not met, the note can be frozen from further withdrawls and amortized payments can be required.
I could pick apart their system or teach you how to do it yourself without paying them the $3500 but more importantly, your income needs to go into a bank account. When you have enough assets, get Money Market account that pays higher interest. When you earn interest or have some extra $ in the bank we can talk about another conservative investment so you can make payments should something bad happen in your life.
MMM
Monday, August 6, 2007
Weekly Rate Outlook
As I have mentioned before, when there is bad economic news, mortgage interest rates tend to go down. What I did not expect was that the bad economic news would be in the mortgage industry. But true to form, the bad news drove rates down last week. Technically, the bonds broke some barriers so rates should stablize or go down this week.
But, all these rate projections are for Fannie Mae, FHA, VA and Freddie Mac loans. These loans are of good quality and are not included in the news.
If you have a loan in process and it is not in the group mentioned, close immediately. Your lender may not be able to deliver on their promices later.
Anyone with wanting to finance outside of these loan types needs to meet with a mortgage professional to discuss their options. Jumbo loans (those over $417,000) have seen rates increase as the private investors who fund those loans want a higher return.
Link to my weekly Realtor news letter:
Paul's MMG Weekly Just be aware that American Home Mortgag quit originating loans last weeks. I should have a new work home by next week.
MMM
But, all these rate projections are for Fannie Mae, FHA, VA and Freddie Mac loans. These loans are of good quality and are not included in the news.
If you have a loan in process and it is not in the group mentioned, close immediately. Your lender may not be able to deliver on their promices later.
Anyone with wanting to finance outside of these loan types needs to meet with a mortgage professional to discuss their options. Jumbo loans (those over $417,000) have seen rates increase as the private investors who fund those loans want a higher return.
Link to my weekly Realtor news letter:
Paul's MMG Weekly Just be aware that American Home Mortgag quit originating loans last weeks. I should have a new work home by next week.
MMM
What's Going On
Before I start, please note that Fannie Mae and Freddie Mac loans and mortgage backed securities are doing just fine. They are not seeing an increase in foreclosures or other negative issues. Rates are actually coming down!
The stock market last week was responding to concern over "Alt A" mortgages. Alt A are mortgages made to good borrowers with less than full documentation (Full Doc). Full Doc loans have employment income and assets verified by the lender before closing. Alt A loans include State Income, Stated Assets, No Doc, No Ratio and variations on these. The fear is that more and more of these loans will end up in foreclosure so the value of the bond went down giving a bond buyer a higher return.
A few weeks ago the stock market reacted to the Sub Prime as the foreclosure rates climbed.
One article I read stated that the bond rating system was flawed and these mortgage bonds needed to be reexamined for quality.
Follow the link to my Realtor's Newsletter for more explaination of what is happening in the Mortgage Bond industry.
In today's New York Times, discussing SubPrime Loans, the complexity of the proble is also discussed. NY Times article
Link to my weekly Realtor news letter:
Paul's MMG Weekly Just be aware that American Home Mortgag quit originating loans last weeks. I should have a new work home by next week.
MMM
The stock market last week was responding to concern over "Alt A" mortgages. Alt A are mortgages made to good borrowers with less than full documentation (Full Doc). Full Doc loans have employment income and assets verified by the lender before closing. Alt A loans include State Income, Stated Assets, No Doc, No Ratio and variations on these. The fear is that more and more of these loans will end up in foreclosure so the value of the bond went down giving a bond buyer a higher return.
A few weeks ago the stock market reacted to the Sub Prime as the foreclosure rates climbed.
One article I read stated that the bond rating system was flawed and these mortgage bonds needed to be reexamined for quality.
Follow the link to my Realtor's Newsletter for more explaination of what is happening in the Mortgage Bond industry.
In today's New York Times, discussing SubPrime Loans, the complexity of the proble is also discussed. NY Times article
Link to my weekly Realtor news letter:
Paul's MMG Weekly Just be aware that American Home Mortgag quit originating loans last weeks. I should have a new work home by next week.
MMM
Thursday, August 2, 2007
Pay Your Mortgage
If your mortgage lender goes out of business, you are still required to make your payments on time. The servicing of your mortgage is a valuable asset of your mortgage company. When a company is liquidated, the servicing will be sold. Be sure to read all mail from your lender. Your new lender will expect you to pay as agreed.
MMM
MMM
Tuesday, July 31, 2007
Neg Am Loans 2
What interest do you get to deduct on a Negative Amortization Loan? You get to deduct the interest when it is paid. When you make your minimum monthly payment, the whole payment is usually interest so for most people it is all deductible.
But the payment on a Negative Amortization loan does not cover all the interest. Some of the interest is added to principal.
What happens with that interest? When you pay off the loan- either selling or refinancing-, the interest that was "deferred" will be listed on the payoff statement. This interest is deductible for most people. A nice deduction, especially if the gain on the sale will be taxed.
MMM
But the payment on a Negative Amortization loan does not cover all the interest. Some of the interest is added to principal.
What happens with that interest? When you pay off the loan- either selling or refinancing-, the interest that was "deferred" will be listed on the payoff statement. This interest is deductible for most people. A nice deduction, especially if the gain on the sale will be taxed.
MMM
Monday, July 30, 2007
Neg Am Loans 1
Negative Amortiztion. Words that scare many people. Reverse Mortgage. Words that bring great comfort to many. Ironic that a Reverse Mortgage creates the biggest Negative Amortization Mortgage!
As with all loans and mortgages, the right loan for you is one that meets your financial needs and goals and one you understand. Negative Amortization mortgages that help moderate monthly expenses while helping the borrower meet other financial goals are wonderful. Negative Amortiztion mortgages that put some one's home owership at risk are a traversity.
The number one question I would have is: What is your objective?
If you want to keep your payment low so you can invest the difference or make an income property give a positive cash flow a Negative Amortiztion loan is the way to go.
If you are trying to buy the home of your dreams that is out of reach any other way, you are looking for trouble.
More on Negative Amortization loans later.
MMM
As with all loans and mortgages, the right loan for you is one that meets your financial needs and goals and one you understand. Negative Amortization mortgages that help moderate monthly expenses while helping the borrower meet other financial goals are wonderful. Negative Amortiztion mortgages that put some one's home owership at risk are a traversity.
The number one question I would have is: What is your objective?
If you want to keep your payment low so you can invest the difference or make an income property give a positive cash flow a Negative Amortiztion loan is the way to go.
If you are trying to buy the home of your dreams that is out of reach any other way, you are looking for trouble.
More on Negative Amortization loans later.
MMM
Weekly Rate Outlook
Rates quit climbing as stocks went south last week. As the stock market went down, money flowed into mortgage backed securities bringing rates down a little. More importantly, the price of mortgage backed securities closed above the 25 and 40 day moving averages. These had been major ceilings of resistance.
This week there are major inflation and other economic reports. Bad economic news with low inflation news means lower rates will follow.
Link to my weekly Realtor news letter:
Paul's MMG Weekly
MMM
This week there are major inflation and other economic reports. Bad economic news with low inflation news means lower rates will follow.
Link to my weekly Realtor news letter:
Paul's MMG Weekly
MMM
Wednesday, July 25, 2007
NY Times: Mortgage Woes = Stock Sell Off
This mornings lead story in the New York Times reports on the comments made by Countrywide executives on company conference call. Read article
Although pessimistic in nature and Countrywide share price fell along with my company's and the whole market, if this drives us to the bottom of this housing resession, we can begin the recovery sooner.
The implecations for rates are good - bad economic news drives rates up - and bad - the news is about rates and the availability of funding for mortgages.
I think pressure will mount for rates to go down to stimulate the housing industry. Sooner the better.
MMM
Although pessimistic in nature and Countrywide share price fell along with my company's and the whole market, if this drives us to the bottom of this housing resession, we can begin the recovery sooner.
The implecations for rates are good - bad economic news drives rates up - and bad - the news is about rates and the availability of funding for mortgages.
I think pressure will mount for rates to go down to stimulate the housing industry. Sooner the better.
MMM
Sunday, July 22, 2007
Who should get a Reverse Mortgage?
The question comes up about once a week, "who should get a Reverse Mortgage?"
A Reverse Mortgage can give some one either a monthly income or money for major expenses or a combination of both. The two requirements are equity in your home and being over 65.
Since the no payment Reverse Mortgage needs to last a life time, the older the borrower, the greater proportion of equity that can be drawn from their home. The Reverse Mortgage calculates the portion of equity that can be drawn and how much equity needs to be reserved to pay the interest on the loan.
I would advise a borrower that the Reverse Mortgage be the last resource to tap so they will get the greatest benefit.
I am always an advocate of getting what you pay for. Reverse Mortgages are not free. They have upfront fees, while not out of pocket, are drawn from equity upon closing. Interest accumulates on all draws including these closing costs. Will the income provide enough benefit to justify the expense? That is the second question to answer before finalizing the Reverse Mortgage.
MMM
A Reverse Mortgage can give some one either a monthly income or money for major expenses or a combination of both. The two requirements are equity in your home and being over 65.
Since the no payment Reverse Mortgage needs to last a life time, the older the borrower, the greater proportion of equity that can be drawn from their home. The Reverse Mortgage calculates the portion of equity that can be drawn and how much equity needs to be reserved to pay the interest on the loan.
I would advise a borrower that the Reverse Mortgage be the last resource to tap so they will get the greatest benefit.
I am always an advocate of getting what you pay for. Reverse Mortgages are not free. They have upfront fees, while not out of pocket, are drawn from equity upon closing. Interest accumulates on all draws including these closing costs. Will the income provide enough benefit to justify the expense? That is the second question to answer before finalizing the Reverse Mortgage.
MMM
Weekly Rate Outlook
Sources I trust for stock investing suggest the market has room to move higher. Bad news for rates. Even though they took a rest from rising at the end of the week, look for them to move higher through the summer.
Link to my weekly Realtor news letter:
Paul's MMG Weekly
MMM
Link to my weekly Realtor news letter:
Paul's MMG Weekly
MMM
Thursday, July 19, 2007
Taking Rates in the News with a Grain of Salt
Today there is a news story about home mortgage rates staying the same. It quotes the FreddieMac rate survey rate.
People often ask why they cannot get the rate quoted in the newspaper. Here are some things to think about when talking about rates.
The FreddieMac rate survey is probably pretty accurate. They have been doing it along time and is a respectable organization. But they are surveying for rates not the price of a rate. The standard practice in some parts of the country is for the borrower to pay an origination fee for their loan. In other areas the standard practice is for the origination fee to be included in the rate. Net affect is rates are lower when an origination fee is paid by the borrower than when that fee is paid from the value of the loan. Rate difference is .25% to .375%
The source of the rate is also important. FNMA, the other large source of mortgage funds, has a wholesale rate that they publish and offer to news organizations. It is a "wholesale" rate meaning it does not include the cost of origination or servicing the loan.
Some other factors that affect rate are time, Loan to Value (LTV), and credit worthiness/risk profile.
The shorter the time to closing the loan, the lower the rate. Most surveys use a 30 day rate. 15 day rates are lower, 45, 60, 90, 120, 180, are each incrementally higher. The higher the ratio of loan amount to value of the home, the higher the rate. This is especially true for loans over 80%LTV. Credit Worthiness/ risk profile are also factors. The more risk a loan has the higher the rate.
Occationally a small bank or other institution will have an especially low rate. It is great if you can get it. Funds are usually limited and standards are very high. Most of the time when a low rate is quoted there is a catch. Get your quotes in writing from a reputable company.
People often ask why they cannot get the rate quoted in the newspaper. Here are some things to think about when talking about rates.
The FreddieMac rate survey is probably pretty accurate. They have been doing it along time and is a respectable organization. But they are surveying for rates not the price of a rate. The standard practice in some parts of the country is for the borrower to pay an origination fee for their loan. In other areas the standard practice is for the origination fee to be included in the rate. Net affect is rates are lower when an origination fee is paid by the borrower than when that fee is paid from the value of the loan. Rate difference is .25% to .375%
The source of the rate is also important. FNMA, the other large source of mortgage funds, has a wholesale rate that they publish and offer to news organizations. It is a "wholesale" rate meaning it does not include the cost of origination or servicing the loan.
Some other factors that affect rate are time, Loan to Value (LTV), and credit worthiness/risk profile.
The shorter the time to closing the loan, the lower the rate. Most surveys use a 30 day rate. 15 day rates are lower, 45, 60, 90, 120, 180, are each incrementally higher. The higher the ratio of loan amount to value of the home, the higher the rate. This is especially true for loans over 80%LTV. Credit Worthiness/ risk profile are also factors. The more risk a loan has the higher the rate.
Occationally a small bank or other institution will have an especially low rate. It is great if you can get it. Funds are usually limited and standards are very high. Most of the time when a low rate is quoted there is a catch. Get your quotes in writing from a reputable company.
Monday, July 16, 2007
Credit Loop Hole Closing
In the past I have recommended a loophole in the credit reporting system to quickly improve a credit score. By being added to an existing account with long history of on time payments, a borrower was able to have that history factored into their score. Today in the Mortgage Market Guide , my weekly Realor newsletter the closing of this loop hole was discussed. Fair Issac, the company that writes the software for credit scores, is looking out for "autorized users" and underweighting or not weighting that in the score.
Follow the following link to read the whole story.
Paul's MMG Weekly
Follow the following link to read the whole story.
Paul's MMG Weekly
Weekly Rate Outlook
Rates are currently resting after a crazy roller coaster up and down last week. Business news continues to talk about getting a higher rate of return in Australia, New Zeeland, and Western Europe. This is causing continued upward pressure on mortgage rates as we need investors to buy the bonds that fund your loans and their money goes to the highest return for the risk. The stock market has also been strong, pulling in more money. There are some indications that the stock market is "over sold" and ready for an adjustment. We shall see.
I am linking my weekly Realor newsletter from the Mortgage Market Guide if you would like more detailed information. I will link this every Monday.
Paul's MMG Weekly
I am linking my weekly Realor newsletter from the Mortgage Market Guide if you would like more detailed information. I will link this every Monday.
Paul's MMG Weekly
Thursday, July 12, 2007
Sub Prime Woes are NOT A Paper Woes
Even though Sub Prime Mortgage Bonds are getting a lot of press because of record foreclosures, Sub Prime Mortgages are still a small part of the market. "A" paper, mortgages underwritten to a higher standard, are the majority. Those loans continue to have very low foreclosure rates.
MMM
MMM
Tuesday, July 10, 2007
Freedom Day
Should you pay off your mortgage (s) or save and invest your money? Your Freedom Day is the day you havce enough savings and investments to pay off your mortgages if you choose to do so. Having your money seperated from your house not only allows you to earn income on the investments, but provides you more security along the way.
Your mortgage company has the right to foreclose if you fail to make payments whether you have no equity (100% financing) or 99% equity (1% financing). Every principal payment you make gives your lender more security and more of your equity is at risk.
Work toward your Freedom Day and give yourself more security along the way.
MMM
Your mortgage company has the right to foreclose if you fail to make payments whether you have no equity (100% financing) or 99% equity (1% financing). Every principal payment you make gives your lender more security and more of your equity is at risk.
Work toward your Freedom Day and give yourself more security along the way.
MMM
Monday, July 9, 2007
Weekly Rate Outlook
Rates continued their assent last week, pretty much following what I set out last week. This week is light on hard economic news. Since I am writing late in the day I can tell you rates took a rest on their way up. We need some major bad economic news to get rates to go lower.
Did you notice the Stock Market moved Higher Friday and again today. Money flowing away from mortgage backed securities and into the stock market continues.
Link to my weekly Realtor news letter:
Paul's MMG Weekly
MMM
Did you notice the Stock Market moved Higher Friday and again today. Money flowing away from mortgage backed securities and into the stock market continues.
Link to my weekly Realtor news letter:
Paul's MMG Weekly
MMM
Saturday, July 7, 2007
Why pay down your mortgage?
Who benefits when you pay down your mortgage? Your lender! The more equity you have in your home, the less risk the lender has. If the lender ever needs to forclose, the more equity the lender can control, the more likely they will be able to come out ahead on the loan.
If you put "extra" money in a savings account, and later needed the money to make your payment (and avoid forclosure), the money would be available.
Money in the bank earns interest too. When you prepay your mortgage, no income is produced from the "investment".
Put your money in the bank or other investment, not in your home.
MMM
If you put "extra" money in a savings account, and later needed the money to make your payment (and avoid forclosure), the money would be available.
Money in the bank earns interest too. When you prepay your mortgage, no income is produced from the "investment".
Put your money in the bank or other investment, not in your home.
MMM
Friday, July 6, 2007
Using Home Equity Wisely
How much is the return on your home equity? Answer 0%. It has no return. If you are over 62 you can arrange a reverse mortgage and take equity out of your home. (The Older you are the more you can take) Or you can take home equity and invest it.
Usually, invested equity will give you the ability to pay off a mortgage sooner than prepaying a mortgage. If future editions, we will look at some of the math that backs up that assumption.
A home is both shelter and a financial asset. I like to earn a return on my financial assets.
MMM
Usually, invested equity will give you the ability to pay off a mortgage sooner than prepaying a mortgage. If future editions, we will look at some of the math that backs up that assumption.
A home is both shelter and a financial asset. I like to earn a return on my financial assets.
MMM
Tuesday, July 3, 2007
Founding the Country On Faith in Money
Last night on Public Television the History Detectives found an authentic $6 bill from the Revolutionary War. Ben Franklin guided the use of money not only to pay the new country's bills but, through the printed images, illustrate how the colonists would overcome the most powerful country in the world.
Happy Fourth of July!!
MMM
Happy Fourth of July!!
MMM
Monday, July 2, 2007
Weekly Rate Outlook
Monday is interest rate recap day and last week was another volatile week.
As my Mortgage Market Guide Weekly newsletter states, rates improved some last week. I hope we are breaking this up trend on rates. Paul's MMG Weekly
Two things not mentioned in MMG Weekly are the stock market and foreign interest rates. On Bloomberg News this morning, the technical analysis suggests stocks are still headed up. England and the rest of the UK is expected to raise their Funds Rate this week to 5.75%.
I see the Worlds money supply as a vast ocean that flows to the perceived higher return and away from lower return. Money is flowing into the stock market and overseas and out of mortgage backed securities. Hopefully this week the outward flow will slow.
MMM
As my Mortgage Market Guide Weekly newsletter states, rates improved some last week. I hope we are breaking this up trend on rates. Paul's MMG Weekly
Two things not mentioned in MMG Weekly are the stock market and foreign interest rates. On Bloomberg News this morning, the technical analysis suggests stocks are still headed up. England and the rest of the UK is expected to raise their Funds Rate this week to 5.75%.
I see the Worlds money supply as a vast ocean that flows to the perceived higher return and away from lower return. Money is flowing into the stock market and overseas and out of mortgage backed securities. Hopefully this week the outward flow will slow.
MMM
Saturday, June 30, 2007
Home Ownership vs Renting
We all need to live somewhere and it costs money. The Federal Government has made home ownership a sign of success in the United States with tax favors, sponsored lending (think FHA, Fannie Mae and Freddie Mac) and other enticements to own.
When you own a home, you can deduct the mortgage interest (usually), property taxes, and in most markets, count on an increase in value year after year.
The community benefits when people own their own homes. Home owners tend to be better employees, have job stablity and their children get better grades in school.
Home ownership also comes with responcibilities: If some thing breaks, you get to fix it; failure to pay your mortgage can devistate your credit; and your neighbors (mortgage lender) expect you to keep your property up to maintain the value.
Visit with a mortgage professional or take a home ownership class to see if you have the resources and want to make the commitment to become a home owner.
MMM
When you own a home, you can deduct the mortgage interest (usually), property taxes, and in most markets, count on an increase in value year after year.
The community benefits when people own their own homes. Home owners tend to be better employees, have job stablity and their children get better grades in school.
Home ownership also comes with responcibilities: If some thing breaks, you get to fix it; failure to pay your mortgage can devistate your credit; and your neighbors (mortgage lender) expect you to keep your property up to maintain the value.
Visit with a mortgage professional or take a home ownership class to see if you have the resources and want to make the commitment to become a home owner.
MMM
Friday, June 29, 2007
Short Sale is a Dangerous Sale
The main topic of discussion with real estate professionals and consumers is the "short sale" where a lender agrees to take less than the agreed principal and interest due on a note. Some times there is a sale in process, some times a deed in lieu of foreclosure.
I have heard rumors that lenders are forgiving a set percentage of loans and that this short sale will not hurt one's credit.
There is no standard for a short sale. Lenders have to make hard business decisions based on the information they have. Be assured that every short sale is examined extensively before it agreed to and the lender is acting in its own best interest, not the borrowers.
Any time a lender, whether bank, credit card company, or mortgage holder accepts less that the amount due, the borrower will have negative consequences for the borrowers credit profile. The one situation I have heard with less damage is where the short sale agreement stated the short sale would not reflect on a credit report. This is negotiated, not automatic. In exchange, the lender wants a deficiency note. The deficiency note is where the borrower agrees to make the lender whole over time. Even though the lender does not have a lien securing the loan, the borrowers credit is only as good as the last on time payment.
One last piece often over looked is the tax consequence of a short sale. If a lender settles for less than agreed, that deficiency is treated as income to the borrower. The borrower will have to pay income tax on the money not repaid.
If you are contemplating a short sale, get a good lawyer. It will be money well spent.
MMM
I have heard rumors that lenders are forgiving a set percentage of loans and that this short sale will not hurt one's credit.
There is no standard for a short sale. Lenders have to make hard business decisions based on the information they have. Be assured that every short sale is examined extensively before it agreed to and the lender is acting in its own best interest, not the borrowers.
Any time a lender, whether bank, credit card company, or mortgage holder accepts less that the amount due, the borrower will have negative consequences for the borrowers credit profile. The one situation I have heard with less damage is where the short sale agreement stated the short sale would not reflect on a credit report. This is negotiated, not automatic. In exchange, the lender wants a deficiency note. The deficiency note is where the borrower agrees to make the lender whole over time. Even though the lender does not have a lien securing the loan, the borrowers credit is only as good as the last on time payment.
One last piece often over looked is the tax consequence of a short sale. If a lender settles for less than agreed, that deficiency is treated as income to the borrower. The borrower will have to pay income tax on the money not repaid.
If you are contemplating a short sale, get a good lawyer. It will be money well spent.
MMM
Thursday, June 28, 2007
Ready for Disaster?
Are you ready for a disaster? Many of us have done inventories and copied important records. I learned last week that you should supplement your inventory with digital pictures rather than video tape. Time to get with the times.
What I found out a few years ago as I endorsed insurance checks for hurricane damage is that those who had money to pay the contractor before the insurance money arrived had their lives back together much much sooner.
If you do not have several thousand dollars in your bank account, the next best thing is a Home Equity Line of Credit. You secure a line of credit with your home. You pay interest only on the money you have drawn out of the line. Some times, for a lower interest rate or better terms you may take a draw from the line at closing. Usually you can pay this back within a month.
Your bank, credit union and mortgage company are good sources to check. As always, low fees and low interest rates are best.
Just remember, the line needs to be in place before the disaster strikes!
What I found out a few years ago as I endorsed insurance checks for hurricane damage is that those who had money to pay the contractor before the insurance money arrived had their lives back together much much sooner.
If you do not have several thousand dollars in your bank account, the next best thing is a Home Equity Line of Credit. You secure a line of credit with your home. You pay interest only on the money you have drawn out of the line. Some times, for a lower interest rate or better terms you may take a draw from the line at closing. Usually you can pay this back within a month.
Your bank, credit union and mortgage company are good sources to check. As always, low fees and low interest rates are best.
Just remember, the line needs to be in place before the disaster strikes!
Tuesday, June 26, 2007
Natural Disaster and Mortgages
As you watch the news about tornadoes, floods and hurricanes, you might want to think about how this will impact your ability to borrow against your property.
Once a County is declared a Natural Disaster Area, no mortgage can close in that county until the lender has determined that the home is sound. Sometimes the appraiser must return to the home or a lending officer needs to inspect the property to certify that it is not damaged before closing.
If you have a property under contract to buy or sell, the fine print of your contract determines how natural disasters are handled.
Natural Disasters are not limited to hurricanes in Florida. Could be a volcano in Hawaii! Be ready for a delay if a Natural Disaster Strikes.
MMM
Once a County is declared a Natural Disaster Area, no mortgage can close in that county until the lender has determined that the home is sound. Sometimes the appraiser must return to the home or a lending officer needs to inspect the property to certify that it is not damaged before closing.
If you have a property under contract to buy or sell, the fine print of your contract determines how natural disasters are handled.
Natural Disasters are not limited to hurricanes in Florida. Could be a volcano in Hawaii! Be ready for a delay if a Natural Disaster Strikes.
MMM
Monday, June 25, 2007
Weekly Rate Outlook
Last week rates were on a rollercoaster ride but mostly rates went up. Kiplinger Letter thinks they will not get much higher than they are now. According to the Mortgage Market Guide mortgage backed securities, bonds that finance residential mortgages, are trading in range that supports the Kiplinger view.
I am linking my weekly Realor newsletter from the Mortgage Market Guide if you would like more detailed information. I will link this every Monday.
Paul's MMG Weekly
MMM
I am linking my weekly Realor newsletter from the Mortgage Market Guide if you would like more detailed information. I will link this every Monday.
Paul's MMG Weekly
MMM
Sunday, June 24, 2007
Conservative with Your Money
Clark Howard is my kind of Conservative. He is Conservative with your money. You may have heard of his radio show or website. Check him out at ClarkHoward.com
He has a variety of money saving ideas and ways of taking on the credit establishment.
Know that he does have advertising on his show and website. Clicking on the mortgage offer, I was immediately taken to an offer for a negative amortizing loan. Usually best recommended to sophiticated borrowers.
You cannot go wrong following his advise but take his advertisers with a grain of salt.
MMM
He has a variety of money saving ideas and ways of taking on the credit establishment.
Know that he does have advertising on his show and website. Clicking on the mortgage offer, I was immediately taken to an offer for a negative amortizing loan. Usually best recommended to sophiticated borrowers.
You cannot go wrong following his advise but take his advertisers with a grain of salt.
MMM
Saturday, June 23, 2007
Stop Uninvited Solicitations
Have you applied for a mortgage and then received unsolicited calls offering you a mortgage? When your credit is pulled, the credit agencies know the purpose of the request (car loan, credit card, mortgage) and are given information about you. Your loan officer and mortgage company (and ultimately you) pay for the credit report.
Then the Credit Agencies sell the loan purpose information as "leads". There is nothing the loan officer can do about this. To put it nicely, many of us in the industry think this is a gross abuse of your information.
But there is something you can do: Go to
www.optoutprescreen.com
Follow the directions on the site and opt out immediately for 5 years or send a letter and be opted out forever!
MMM
Then the Credit Agencies sell the loan purpose information as "leads". There is nothing the loan officer can do about this. To put it nicely, many of us in the industry think this is a gross abuse of your information.
But there is something you can do: Go to
www.optoutprescreen.com
Follow the directions on the site and opt out immediately for 5 years or send a letter and be opted out forever!
MMM
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