Ugh... Still in the top 10.
Good news is we aren't #1.
1. Detroit 4.9%
2. Stockton, Cal 4.86%
3. Vegas 4.2%
4. Riverside 3.8%
5. Sacramento 3.2%
9. Denver 2.6%
These of course are 2007 foreclosure statistice provided courtesy of Realty Trac. The US Average is a 1% foreclosure rate.
There is no doubt its a buyers market. Plan on living in to your place for 5 years or keeping it as a rental property.
Showing posts with label Education. Show all posts
Showing posts with label Education. Show all posts
Feb 14, 2008
Feb 11, 2008
Dirty Rotten Scoundrels...
Also known as mortgage brokers...
I found an interesting article online discussing mortgage brokers on cnnmoney.com today. Here is an overview.
"A good one (mortgage broker) can save you time & thousands of dollars over the life of a loan."
"It's up to you to understand the loans you're being offered and the fees involved."
Key Questions:
Do I need a broker?
-Do you understand mortgage products? 30 fixed, 2/28, 3/27, IO
-Do you know where rates are right now? 30 fixed, short term
Brokers can help. They have access to wholesale rate sheets from many banks & have the time to shop rates. Afterall, its their job.
Who can I trust?
Find out the following:
-How much does the broker stand to make on your loan?
-How will the broker make money (Fees &/or yield spread premium)
-If you don't feel comfortable, talk to another broker!
Am I getting a fair deal?
-$0 application fees. ONLY appraisal ($350) & credit ($13 - $25) should be charged in advance. That being said, these fees should not be required to complete an application.
-What are the pros & cons of at least 3 different types of loans
-Understand terms of loan (rate, fixed or adjustable, prepay, margin, rate cap, etc)
-The broker should be able to guarantee fees once the loan is locked.
-Request paperwork (a copy of the HUD-1) before closing & compare them with the good faith estimate
http://money.cnn.com/2007/07/24/real_estate/salesman_factor.moneymag/index.htm
I found an interesting article online discussing mortgage brokers on cnnmoney.com today. Here is an overview.
"A good one (mortgage broker) can save you time & thousands of dollars over the life of a loan."
"It's up to you to understand the loans you're being offered and the fees involved."
Key Questions:
Do I need a broker?
-Do you understand mortgage products? 30 fixed, 2/28, 3/27, IO
-Do you know where rates are right now? 30 fixed, short term
Brokers can help. They have access to wholesale rate sheets from many banks & have the time to shop rates. Afterall, its their job.
Who can I trust?
Find out the following:
-How much does the broker stand to make on your loan?
-How will the broker make money (Fees &/or yield spread premium)
-If you don't feel comfortable, talk to another broker!
Am I getting a fair deal?
-$0 application fees. ONLY appraisal ($350) & credit ($13 - $25) should be charged in advance. That being said, these fees should not be required to complete an application.
-What are the pros & cons of at least 3 different types of loans
-Understand terms of loan (rate, fixed or adjustable, prepay, margin, rate cap, etc)
-The broker should be able to guarantee fees once the loan is locked.
-Request paperwork (a copy of the HUD-1) before closing & compare them with the good faith estimate
http://money.cnn.com/2007/07/24/real_estate/salesman_factor.moneymag/index.htm
Jan 17, 2008
Happy Dance!
On the 15th, Tanna & I sold our first investment property. We bought at the right price, didn't overdue the rehab process and successfully sold the property for a property in a very difficult real estate market. We put $8,000 into the property and made almost $10,000 in profits. Tell me where else anyone can see that kind of return on their money?
It was a peice of cake... Or not.
I will say that I just passed real estate investing 101. However, it was NOT easy. It was one of the most challenging and rewarding tasks that I've ever taken on.
I feel like a giant gorilla just climbed down off of my shoulders...
Some advice for those of you considering real estate investments:
It was a peice of cake... Or not.
I will say that I just passed real estate investing 101. However, it was NOT easy. It was one of the most challenging and rewarding tasks that I've ever taken on.
I feel like a giant gorilla just climbed down off of my shoulders...
Some advice for those of you considering real estate investments:
- It won't sell tomorrow. Plan on hanging onto the property for 5 years. That being said, do enough updating so the property can be rented out. Wait until the market starts to take off before 'flipping' the property & putting it on the market.
- How long is your snorkel? Know your worst case scenario. If the property goes vacant or unexpected expenses pop up what is going to happen? Will you find yourself calling relatives and friends to stay out of foreclosure? Don't get in over your head!
- Get past appreciation. You make money buying at the right price and cash flowing. If you are banking on appreciation, you're going to need to hold onto the property for a long, long time.
- Get the right loan product. The right loan will help you meet your goals and maximize the return on your investment. There is no 'one size fits all' loan. Get the right loan for your needs.
I'm not an investment expert (yet). I believe that I am on my way. Wishing you all phenomenal returns on your real estate investments in 2008.
Jan 2, 2008
What To Do?
"Matt, we're buying our first home in June. How do we get the whole process started?"
Congratulations!
Buying a home (especially your first) is an extremely exciting time. Many times, it is a roller coaster process as you find the perfect home, make an offer and obtain financing.
Congratulations!
Buying a home (especially your first) is an extremely exciting time. Many times, it is a roller coaster process as you find the perfect home, make an offer and obtain financing.
- Establish a Budget & Get Preapproved. I would run numbers based upon a 6.5% interest rate. Rates are lower than that right now, but we're still 6 months out. Establishing and remaining within your budget is vital! When you are preapproved, find out when your rate will be locked.
- Find a Realtor. Typically, references are the best resources. Know anyone who has purchased a home recently and had a great experience? Make sure that your Realtor treats this purchase as an investment.
- Start shopping. Take notes to remember each property. As you narrow down your choices, have your Realtor pull some comparable sales in the neighborhood to make sure that you're getting into a sound investment.
“Should we put money down? If so, how much?”
I'm not a financial investor and won't pretend to be one. However, some basic financial principles need to be applied.
I would start with 3% down in order to qualify for FHA financing. You'll obtain great rates & will lower your mortgage insurance premiums. The more money you put down, the lower your mortgage insurance payments. However, mortgage insurance is only required on homes whose financing exceeds 80% of the value. For that reason, I would not recommend putting more than 20% down as it will not improve your financing. Conservative investments offer returns that exceed the 6 – 7 % mortgage rates so reducing your principle may not always be the wisest investment.
There is one big problem when you pay down your mortgage. Liquidity. Once additional payments have been made, your monthly payments do not change. Should you run short on cash, the bank will not float your payments for 30, 60, or 90 days, they will begin foreclosure proceedings. Ugh.
Always have a plan for a worst case scenario. If you do decide to put additional money towards principle, obtain a HELOC first. This line of credit will provide the necessary liquidity while allowing you to accelerate the pay off. This is a win, win. You have access to your equity & you will reduce the amount of time you are exposed to the interest rate, thereby reducing your effective interest rate!
Hope this helps! Happy home buying!
Nov 28, 2007
Problems...
The real estate industry is going nuts. We all see the news, read the horror stories and witness giants such as CITI and Countrywide scramble while their stock prices tumble and tumble and tumble...
Rust Belt city mayors recently met to discuss the mortgage mess. With all of the media hype, government officials are calling for changes. They are calling for help. The question is... will help arrive?
I hope not. Here is why. The mortgage mess is due to a few factors.
1. Lack of Consumer Education. Borrowers were told two things:
-Your credit will improve. This is true IF you embrace responsible spending.
-Your home will appreciate. Long term, this is always true. Short term, there are no guarantees. This is especially true for borrowers who didn't treat their home as an investment.
2. Greed.
-Wall Street was getting rich. Can you imagine 1% of hundreds of billions of dollars? -Brokers. While Wall Street was getting fatter than fat, individual mortgage brokers seized the opportunity to gouge clients on their loans.
-While 1% of hundreds of billions is hard to imagine, a $10,000 profit on a single closing hits a little closer to home.
3. Government -A president who wants to increase home ownership (Great principle, but the means to this end has proven errant).
-Greenspan. The jury is still out, BUT interest rate cuts made unaffordable homes, very affordable (for the time being).
Looking for solutions? Check out the next post.
Rust Belt city mayors recently met to discuss the mortgage mess. With all of the media hype, government officials are calling for changes. They are calling for help. The question is... will help arrive?
I hope not. Here is why. The mortgage mess is due to a few factors.
1. Lack of Consumer Education. Borrowers were told two things:
-Your credit will improve. This is true IF you embrace responsible spending.
-Your home will appreciate. Long term, this is always true. Short term, there are no guarantees. This is especially true for borrowers who didn't treat their home as an investment.
2. Greed.
-Wall Street was getting rich. Can you imagine 1% of hundreds of billions of dollars? -Brokers. While Wall Street was getting fatter than fat, individual mortgage brokers seized the opportunity to gouge clients on their loans.
-While 1% of hundreds of billions is hard to imagine, a $10,000 profit on a single closing hits a little closer to home.
3. Government -A president who wants to increase home ownership (Great principle, but the means to this end has proven errant).
-Greenspan. The jury is still out, BUT interest rate cuts made unaffordable homes, very affordable (for the time being).
Looking for solutions? Check out the next post.
Solutions....
Heads up... This post doesn't present a warm and fuzzy outlook filled with easy solutions. Most problems aren't solved the easy way.
First of all, let's start with solutions that are flat out wrong.
1 - Wall Street. Just take a peek at Citi & Countrywide stock prices. Tell me how bad any investor wants back in.
2 - Expanded Underwriting.
1. The reason this entire mess exists is a lack of underwriting standards. Essentially, people who do not qualify for loans received them.
Wall Street learned its lesson. It's done.
So should the government jump in and take on all of these bad loans? NO WAY!
I completely agree with the government expanding FHA standards to some extent. For example, people who were never late on their mortgage prior to the rate adjusting deserve to refinance. However, everyone does not deserve to get bailed out!
So what is the answer?
TIME! There is a ton of inventory on the market. There are too many builders. There are too many borrowers who simply can not afford their home. There is a lot of downward pressure on the housing market. We are not in a short term market. It's a buy and hold market.
My advice to you.
Get off of craigslist. Start working with a qualified Realtor. Make them show you some comparable sales. You can get a great deal. Buy the cheapest house in the best neighborhood and reap the rewards!
First of all, let's start with solutions that are flat out wrong.
1 - Wall Street. Just take a peek at Citi & Countrywide stock prices. Tell me how bad any investor wants back in.
2 - Expanded Underwriting.
1. The reason this entire mess exists is a lack of underwriting standards. Essentially, people who do not qualify for loans received them.
Wall Street learned its lesson. It's done.
So should the government jump in and take on all of these bad loans? NO WAY!
I completely agree with the government expanding FHA standards to some extent. For example, people who were never late on their mortgage prior to the rate adjusting deserve to refinance. However, everyone does not deserve to get bailed out!
So what is the answer?
TIME! There is a ton of inventory on the market. There are too many builders. There are too many borrowers who simply can not afford their home. There is a lot of downward pressure on the housing market. We are not in a short term market. It's a buy and hold market.
My advice to you.
Get off of craigslist. Start working with a qualified Realtor. Make them show you some comparable sales. You can get a great deal. Buy the cheapest house in the best neighborhood and reap the rewards!
Oct 11, 2007
No Cost Loans!!
Yesterday morning, a tv ad caught my attention. 'America's Home Lender' was advertising 'No Cost' loans!
No administrative fee.
No processing fee.
No credit fee.
No title insurance fee.
No recording fee.
No appraisal fee.
This is incredible! This sounds too good to be true!
'No Cost' loans are a great product, but they aren't no cost. (If something sounds too good to be true, it is.)
Below, I'm going to explain how a 'No Cost' loan works.
Appraisal, processing, credit, title insurance, recording and other fees are paid out of a couple of potential sources.
1 - Equity. If the pay off for your current loan is $200,000 but your new loan amount is $207,000, can you guess where the cost of the loan is? You guessed it... EQUITY!
....That being said, if you don't have/want to bring in $7,000 in order to close your loan, this is a good deal, BUT it is not a true no cost loan!
2 - Interest Rate Premium. The higher the interest rate, the more the bank pays mortgage professionals. By raising the interest rate a point or two, there can be more than enough $$ to cover the costs of fees which make it possible to bring no money into closing! Once again, this is not a true no cost loan, BUT it could be the right move for someone who doesn't plan on staying in their home long term, doesn't have $$ to bring to closing or is willing to refinance again in a few years.
Folks, mortgages are expensive. Addictions to refinancing regularly quickly eat up all of your equity (and sanity). Get into a fixed rate mortgage, make an extra payment occasionally (after you put some reserves into your savings account) and give the market an opportunity to provide you with some equity!
Wishing you all a wealth of real estate finance knowledge!
No administrative fee.
No processing fee.
No credit fee.
No title insurance fee.
No recording fee.
No appraisal fee.
This is incredible! This sounds too good to be true!
'No Cost' loans are a great product, but they aren't no cost. (If something sounds too good to be true, it is.)
Below, I'm going to explain how a 'No Cost' loan works.
Appraisal, processing, credit, title insurance, recording and other fees are paid out of a couple of potential sources.
1 - Equity. If the pay off for your current loan is $200,000 but your new loan amount is $207,000, can you guess where the cost of the loan is? You guessed it... EQUITY!
....That being said, if you don't have/want to bring in $7,000 in order to close your loan, this is a good deal, BUT it is not a true no cost loan!
2 - Interest Rate Premium. The higher the interest rate, the more the bank pays mortgage professionals. By raising the interest rate a point or two, there can be more than enough $$ to cover the costs of fees which make it possible to bring no money into closing! Once again, this is not a true no cost loan, BUT it could be the right move for someone who doesn't plan on staying in their home long term, doesn't have $$ to bring to closing or is willing to refinance again in a few years.
Folks, mortgages are expensive. Addictions to refinancing regularly quickly eat up all of your equity (and sanity). Get into a fixed rate mortgage, make an extra payment occasionally (after you put some reserves into your savings account) and give the market an opportunity to provide you with some equity!
Wishing you all a wealth of real estate finance knowledge!
Oct 8, 2007
MSNBC Agrees
Here is a recent article concerning new build homes. I've already written a blog on the topic. For more info, check out this link http://www.msnbc.msn.com/id/21151323/ and scroll down my blog to find 'Don't Buy New Homes.'
Can you imagine buying a home with an adjustable rate mortgage at the peak of the boom with hopes of double digit appreciation only to find yourself $25 - $50,000 upside down only two years later?
These people are left with two difficult choices:
1 - Eat the adjusting payments
2 - Lose the home to foreclosure
Horrible. Horrible. Horrible....
Can you imagine buying a home with an adjustable rate mortgage at the peak of the boom with hopes of double digit appreciation only to find yourself $25 - $50,000 upside down only two years later?
These people are left with two difficult choices:
1 - Eat the adjusting payments
2 - Lose the home to foreclosure
Horrible. Horrible. Horrible....
Sep 26, 2007
Hold Your Horses!
Reminder: We want our clients to be informed & educated!
The fed cut short term rates by a half point last week. That means lower interest rates for real estate finance, right? Not so fast! Rates for a 30 year fixed actually inched up slightly over the last week. Check out this article from bankrate.com to learn a bit more.
http://bankrate.com/brm/news/mortgages/20070920_rate_cut_affect_mortgages_a1.asp
History says that the chances of rates following after a rate cut are close to 50/50!
“There is zero causation between mortgage rates and the Fed reducing its target for the federal funds rate,” says Dan Dowling, president of United Mortgage Capital Group.
Why?
· Mortgage rates fluctuate based upon investor predictions concerning long-term inflation.
· Mortgage rates react to market forces. For example, prior to the short term rate cut, rates had dropped from 6.82% to 6.32% over the past 8 weeks!
The fed cut short term rates by a half point last week. That means lower interest rates for real estate finance, right? Not so fast! Rates for a 30 year fixed actually inched up slightly over the last week. Check out this article from bankrate.com to learn a bit more.
http://bankrate.com/brm/news/mortgages/20070920_rate_cut_affect_mortgages_a1.asp
History says that the chances of rates following after a rate cut are close to 50/50!
“There is zero causation between mortgage rates and the Fed reducing its target for the federal funds rate,” says Dan Dowling, president of United Mortgage Capital Group.
Why?
· Mortgage rates fluctuate based upon investor predictions concerning long-term inflation.
· Mortgage rates react to market forces. For example, prior to the short term rate cut, rates had dropped from 6.82% to 6.32% over the past 8 weeks!
Jun 29, 2007
Accountability
I'm working on some loans right now for an investor who owns over 15 properties and has been working within the real estate/ development industry for over 20 years. He has never missed a payment. He has over a million dollars in the bank.
His loans were just canned because of the Colorado legislature.
Why??
Foreclosures have been blowing up. The government has to step in to protect its constituents right?
I disagree.
The loans that the lender canned were sophisticated loans that required no income disclosure.
(If you want to know exactly why the no income loan fits borrowers who retain many properties, please contact me. Basically, those who own & rent real estate have an extremely high overhead because the mortgage payments are so high.)
Anyway.... back to the task at hand.
1.) Should mortgage broker's be licensed?
-Absolutely. You, as a consumer, have a right to know that the person handling your mortgage is not a criminal.
2.) Should consumers enter mortgage agreements with caution?
-Yes! If your mortgage broker isn't willing to tell you how much money they are making or let you know that your loan terms are changing minutes before closing, get out! Work with someone who can provide references. Work with someone who deserves your trust and has your prosperity in mind.
3.) Should the legislature determine which loans are acceptible for consumers?
- No! Borrowers need to take responsibility and understand the exact terms of their loan. When I speak with borrowers, the most important question I ask is, "What is your worst case scenario?" I work with investors, first time home buyers and everyone in between. Their needs are different. The loans that fit these needs are different.
The bottom line:
Don't trust anyone with your financial future. Ask the hard questions, understand your worst case scenario. Make wise investments that will build wealth! There will always be scum looking to kill it off of some poor sucker. Work with people who are honest and deserve your trust. Am I the richest loan officer you'll meet? Absolutely not. Will I do everything in my power to help my customers achieve wealth? Yes!
His loans were just canned because of the Colorado legislature.
Why??
Foreclosures have been blowing up. The government has to step in to protect its constituents right?
I disagree.
The loans that the lender canned were sophisticated loans that required no income disclosure.
(If you want to know exactly why the no income loan fits borrowers who retain many properties, please contact me. Basically, those who own & rent real estate have an extremely high overhead because the mortgage payments are so high.)
Anyway.... back to the task at hand.
1.) Should mortgage broker's be licensed?
-Absolutely. You, as a consumer, have a right to know that the person handling your mortgage is not a criminal.
2.) Should consumers enter mortgage agreements with caution?
-Yes! If your mortgage broker isn't willing to tell you how much money they are making or let you know that your loan terms are changing minutes before closing, get out! Work with someone who can provide references. Work with someone who deserves your trust and has your prosperity in mind.
3.) Should the legislature determine which loans are acceptible for consumers?
- No! Borrowers need to take responsibility and understand the exact terms of their loan. When I speak with borrowers, the most important question I ask is, "What is your worst case scenario?" I work with investors, first time home buyers and everyone in between. Their needs are different. The loans that fit these needs are different.
The bottom line:
Don't trust anyone with your financial future. Ask the hard questions, understand your worst case scenario. Make wise investments that will build wealth! There will always be scum looking to kill it off of some poor sucker. Work with people who are honest and deserve your trust. Am I the richest loan officer you'll meet? Absolutely not. Will I do everything in my power to help my customers achieve wealth? Yes!
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