Opportunity From Real Estate Crisis

Who can complete with a 4.35% interest rate?.....Anyone and Everyone that doesn't have integrity and ethics.

JUST READ THE FINE PRINT nad the exhorbnant fees and discount points are there. Here is one example i foundon the internet today.

**Refinance at 4.375% Fixed. Example assumes a $200,000 loan amount with a fixed interest rate of 4.375% and Annual Percentage Rate (APR) of 4.748%. Terms of the payment are based on a 15 year term fixed rate loan with principal and interest payments of $1,517 per month with 1.875 loan points due at closing. The example assumes a credit score of 720 or greater with a loan to value (LTV) of 80% or less on a primary residence. Rate and terms offered may vary depending on your credit history and other qualifications, amount of equity in the property, location, type of property, and other factors. This program is available as of August 6, 2009 from a participating Service Provider.

Some of these unscrupulous national brokers who call themselves lenders are just allowing you to buy down the rate. Then they add an additional 1.875%  for a fee at closing. ($3750 on a $200,00. loan) 

The Ditechs Television ads are always good for a laugh now that we all have pause and rewind on our remotes. They are very good at quoting a rate 1/4 point below the national average and charging you 3.5% (points) to actually close. WHat amazes me the most is that they are getting away with telling borrowers that there are no closing cost. Then what is the 3.5%? It is $10,500 on a $300,000. loan, and that is a significant amount of closing cost. Not to mentio title and escrow fees.  

The next time you see that commercial call you trusted loan officer and ask for that rate. Offer him the 3.5% and you will make his month;;)

In today's volatile investment market seniors are watching their portfolios decrease in value while their living expenses increase. Your financial advisor probably suggested that you use no more than 4% of your total investments annually.  But, what do you do when your investments decrease in value?

While most of us are certain that the market will rebound. You may be causing financial uncertainty by using a higher percentage of your net worth. Consider the following case: A  widow needs to supplement her income by $8,800 per year or 4% of her $220,000. Due to a spiraling market her portfolio has dropped 36% in value and is now worth $140,000. The $8,800 would now equal a 6.3% drawdown rate, greatly increasing the odds of her running out of money in her lifetime. The solution would be a reverse mortgage.            

A reverse mortgage would give her anywhere from $100,000 to $225,000 in a growing equity line of credit. Now she can draw $8,800 from her line of credit rather than her investment portfolio. This will allow her investment portfolio time to recover. By utilizing the equity in her home she should see a total increase in her net worth after the recovery period. Even if that recover period is 6 years (which it may well be). Historically thsi scenarion would bring 23% increased in wealth over drawing funds in a down market.

For more information contact Kathy Hessberger 1-877-439-2665 mortgages@KathyHessberger.com

How much control should the government have?

Look at the current financial crisis, and tell me that government regulation and intervention has no place in home ownership. Did the Federal government have the right to demand that banks loan money to people who didn’t qualify based on the banks experience? Should the government through Fannie Mae buy those loans encouraging more subprime loans? Are we as citizens independent or interdependent as a nation?

Many believe that the American dream should be yours, no matter what you need to do to obtain it. When you purchase a home, you should have the right to obtain any loan you want. Only you really understand what your financial situation is. Only you know that you will have a better job when the balloon note comes due, or your interest rate adjusts. Many believe that the government shouldn’t impose regulations on what income is valid on any loan application. The MD state government recently made stated income loans illegal which outrages self employed borrowers.

But, understand that if we want to be completely free, then we can’t ask the government for assistance when trouble comes. Who was to say you might quit that second job in three months? Experience said it was probable. When you don’t get the promotion and you can’t pay your mortgage, do you believe the government should step in and give you another chance? Even if you are willing to bear the burden and lose the home, only you will pay the price of foreclosure, right?

What if your neighbor’s property drops in value because your home was foreclosed on, how do they recover? Now, your neighbor can’t sell their home and take a better paying job in another state, because they owe more than the home is now worth. When other neighbors are trying to sell their home at a reduced cost, but can’t because the buyers no longer qualify in a tight credit market. A tight credit market spurred by banks too frightened to lend. Do your individual rights trump the rights of your neighbors? Does the government now have the obligation to correct the problem with more government intervention?

If we are truly a great nation, we are interdependent. Some Government intervention shakes thing up a little, sometimes it gives people chances, other times it costs us all more then we are willing to pay. Each intervention is unique, but this great United States is definitely interdependent. We either grow as a nation or fail as a nation. Some small government intervention assures that all of our citizens grow. But, the government has the duty to carefully watch when they intervene in any market. Too much intervention has created the current crisis. The government should only intervene when there is injustice or a crisis, and they should limit their intervention. And they should stay out of a business environment they don't understand.

Opportunity from Crisis is a chinese proverb that means; Out of every Crisis is an Opportunity.

This year is one of the best years to buy a home in 35 years! Since the government has taken over Fannie Mae and Freddie Mac interest rates have dropped significantly. In fact, mortgage rates are about the same as they were in 1973.

The last time interest rates were at this level was in 2001-2002 during the height of a sellers’ market when there was little housing inventory. Today’s exceptionally low interest rates plus a substantial supply of inventory makes this one of the best times in 35 years to purchase a home.

For some, the current market is a crisis, for others, this crisis is opportunity. This opportunity suddenly allows younger and first-time home buyers with good credit the ability to afford a home.  The irony is that foreign investors are buying up our foreclosures at record rates. The REO properties that are selling at 50% lower that previous appraisel values are being financed by American Banks. Granted these foreign investord are placing 25% deposit. But they are refinancing later and taking that cash out to buy the next REO.

It would be easier for a younger or first time homebuyer to purchase these homes, and with less money down. But these inexperienced buyers are frightend that housing prices will go down evern more. Meanwhile investors are having bidding wars and paying thusands more than the list of manu of these homes.

Now is the time to receive the benefit of two opportunities in the Real Estate industry.

• An overabundance of inventory which has driven prices down to 2003-2004 prices., as much as 50% of 20052006 appraised values
• Mortgage rates are at an all time low.