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http://realestatemarketingthisweek.com/real-estate/were-in-recession-and-hank-paulson-holds-the-purse-strings/ – Were in Recession and Hank Paulson holds the purse strings. -
Part 1 – Brett has brought with him some updates on the economy and how things are changing theses days and he brought some great information to discuss with you. We talk about all these different things in the economy and let’s be honest there are a lot of problems out there, no one can dispute that, the unemployment rate is the highest it’s been in many year, with Fannie Mae, Freddie Mac AIG being taken over by the government, Lehman brothers Bear Sterns, WAMU, Countrywide all gone, banks and insurance companies getting their bailout, the auto industry is the next one to get a bailout, were already working on our second stimulus package.
95% of the people according to President elect Obama are going to be getting a tax cut soon. Where is all of the money for all of this going to come from? It just seems to be a downward spiral. Brett’s got some great insight on this that he wants to talk about and some more, unfortunately, a little bit more dismal news, just want you to know before you drive off a cliff there is light at the end of the tunnel. We are going to talk about that so Brett, why don’t you share a little information if you could.
Yeah, I would be happy to, you mentioned a couple of things in your opening comments and one was about, the market seems to be anticipating bad news, and it certainly is not surprising it was a pretty significant down day on Wall Street again today, most of that was attributed to two things. Retailers such as Best Buy and Macy’s came out with their projections for consumer spending. Best Buy actually said something to the effect that it is the lowest level of consumer spending that they have ever experienced in the history of their business. Best Buy is actually one that hopefully will stick it out as we know Circuit City is filling for bankruptcy.
The other thing that you mentioned was jobless rate has climbed, the number has definitely increased, the NEBR is the government agency that is responsible for reporting when a recession begins and when it ends. They call it. They officially have not called one, but I think every reasonable person believes that we have been in one and probably have been in one for some time already.
So right supposedly there is some technical factor that says this is a recession that doesn’t mean that we flip the switch and boom here we are out of the recession is that right?
That is absolutely right and in hindsight is how they judge that time of when it started and when it comes to an end, and it’s usually several months after the fact, but it remains to be seen. We believe we are in a recession but we are going to talk about a couple of things that people are feeling this economic crunch and what they can do about it, specifically as it is regarding their home ownership and their mortgages.
A couple of interesting things that came out, Secretary of the Treasury Hank Paulson today made an announcement this morning regarding a change in the governments, they call it a rescue plan. Others call it a bailout. Thats the 700 hundred billion dollar plan, and apparently Wall Street is unhappy with the changes that took place, pretty significant.
The idea at the time this legislation was passed in congress and ultimately signed by President Bush into law was to use the funds to buy the bad assets, mortgage backed assets from banks and lending institutions, they changed that and recanted that today, Hank Paulson specifically announced that they are no longer going to be using those funds, that the current plan calls for 250 billion dollars of the 700 billion to be used to buy stock of those banks and financial institutions
Does Hank Paulson, does he need to get approval for this? One of the things that have been discussed all week long has been, was the fact that as this legislation was passed and approved, is that he has full power to make these types of decisions, without the benefit of it being discussed through congress and those traditional channels. He is currently the most powerful man in the world. He has the whole checking account to himself to decide what the best distribution of those funds is. It certainly appears that way and apparently he changed his mind and announced it today… http://realestatemarketingthisweek.com
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What are mortgage brokers paid and how is payment calculated? What is a good faith estimate and how can you tell junk fees from legitimate costs? Watch this Expert Real Estate Tips segment for more information about mortgage brokers fees and how mortgage brokers are paid.
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What is a fixed rate mortgage loan? A fixed rate mortgage means the borrower has the same monthly payments on the mortgage every month. Fixed rate mortgages are repaid within a specific time frame (10, 15, 20 or 30 years). Watch this Expert Real Estate Tips segment for all you need to know about fixed rate mortgages.
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Every week we hear about historically low rates on home loans. Rates on 30-year fixed mortgages are well below 5% and still falling! At any other time, interest rates like these would have jump started the real estate market from a standstill to a frenzy in no time. So who is getting these super low interest home loans? Very, very few people. Why is that?
The fact that so many homeowners are upside down on their mortgage is the root of the biggest problem. Property values have fallen significantly in the last few years. Many homeowners are finding that their homes are worth less now than when they bought them. Even those who bought their homes several years ago are now under water because they took out cash when they refinanced their homes or got second mortgages.
The maximum loan amount is typicallly a percentage of a home’s current value – current value being the key word. It’s not possible for people to pay off their old loan with proceeds from a new loan with a lower balance. That’s true for a refinance or for selling one house and buying another. Unless a homeowner can come up with the cash to make up the shortfall, they’re stuck, no matter how well qualified they are.
Unemployment Rates have been very high for a very long time. There are more than a few people who have been out of work for years. There are also a lot of people who are working jobs that are far below their qualifications – and pay less – or working part time jobs. Somehow many of these people are making ends meet in spite of the challenges. They’ve cut back on spending, stay-at-home moms have gone back to work, and they’ve started their own businesses. But they can’t show sufficient income to prove to a lender that they can make a lower mortgage payment than the one they’re making now. Even for those who have sufficient income, changes in employment can make it difficult to qualify. Most lenders want to see two years of employment in the same field to consider a buyer stable. Borrowers who switched to a different field because they couldn’t find work in their chosen field, or borrowers who took a contract position won’t qualify until they have a two year history to show.
The standards for qualifying for a loan have become more stringent. The huge number of defaults can be traced back to lending practices that were too lenient. As a result, lending requirements have become much tougher. Requirements for debt ratios and credit scores are much stricter than they were even years ago. If a homeowner has been keeping it together through falling home values, employment problems and other challenges, the chances that they have near-perfect credit and lots of money in the bank is slim.
First time buyers face all of these problems, except for being upside down on their mortgages. Unfortunately potential first time buyers with sufficient verifiable income, a hefty downpayment and great credit are in short supply. Many of those that can buy a home now are worried that home prices will decline further and/or that they’ll lose their jobs. This isn’t a comfortable time for a beginner to take the plunge.
So those tantalizing interest rates that we keep hearing about in the news remain just out of reach. Something that’s technically true, but simultaneously too good to be true.
If you are one of those in a position to buy a new home in San Diego, this is the time to do it. Once the market turns around, interest rates will rise quickly. New homes San Diego are sure to appreciate in the long run.
David Bach helps you understand the basics about your mortgage; how much you can afford, how to get qualified, what term is best for you and much more. You’ll learn how to find a lender of integrity to help you make these important decisions and prepare you for the homebuying process and serve you after you’ve bought your home.
Remember, homeownership is still the single most important investment you can make in your lifetime. Look for other webisodes in this series by searching for “Smart Homeowners” or visit finishrich.com
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Please consider debt consolidation if your income is not enough in spite of doing overtime and your unpaid bills are being accumulated on your desk.
Debt consolidation happens when you’ve accumulated a lot of debt in various places and you choose to gather them under one large umbrella that you can pay off each month until you have no bills left.
A debt consolidation involves acquiring one single loan to clear off all the previous loans that you may have. All you have to do then is to only return this loan in easy monthly instalments to be taken from your salary every month. This idea can be suitable and comfortable to handle. There will not be various bills to be paid all adding up to a big sum, a task that can be very demanding.
Second home loans on your home makes it easier for you to be dept free. It makes you secure financially by allowing you to have your house and enough money to pay off the loan with debt consolidation .Second bond gives you an option of refinancing to be financially safe on the future.
If you want to acquire a second bond for debt consolidation then there are many places, institutions such as banks and lender companies are all over the place, and they are always on the people like yourself. Not sure of where to start, seek advice from local bank, family and friends.
Doing some research via the internet will greatly aid you in locating the lender who can give you a second mortgage. Find the names of lots of them so you can do comparison shopping with regard to interest rates. That way you can select the best for yourself.
Since you are interested in obtaining a debt consolidation loan, it stands to reason that you are not the most credit worthy individual. However, the majority of financial institutions understand this fact. Instead of being stressed out over a bad credit score, you need to be sure that you have the ability to satisfy the loan, within the monthly instalment terms, for the second bond. If you honestly don’t see yourself being able to do this, you should not get a second bond. Doing so will only aggravate your existing financial issues because you will still have debt to pay. Also, don’t forget that you can’t get a second mortgage without having a home, or mortgage, loan.
One wants everything perfect in life – right from house to neighbourhood, and from sizes to styles. But one has to rise to the occasion when he/she is slapped by reality. There may be a house that one really likes, but is not at all sure whether he/she can pay the equal monthly payments for the same. However, all these issues are handled over the internet.
Let’s now look into the mortgage instalment element by element. The four elements of the mortgage instalment are given one by one. The first is the base payment which includes base payment and the payments on interest. Second comes the costs of administering the loan on a monthly base, third the cost of insurance and finally the life insurance policy if it is applicable.
Light has to be thrown on the calculation of mortgage instalments as far as lenders are concerned. It is done in more or less similar manner by all the banks. Prime rates are used for the derivation of interest rates; thereby making them an important driving factor. Credit rating, period of the loan, age of the client etc. are few other important factors to be considered.
Usually the repayment period of housing loans is 20 years but the lenders are not strict enough to be firm on that. You may discuss your difficulties and thereby the repayment period may be extended up to 35 years .The disadvantage of the longer term for repayment accumulates the interest as well as the high interest rate. Therefore it is advisable to go for a variable rate.
The aggregate of your total charges for a month cannot exceed 25% of your earnings according to the South African institutional guidelines. Suppose you are married, then your earning can be put together and you can apply jointly for a 30% of your joint incomes. You have all the probability of getting a homeloan and possibility of getting better rate of interest at that, on condition that you are married and both you and your partner are in permanent jobs.
Your mortgage will generally have more charges added to it, but of course the principal will be your biggest expense along with the interest charged for you to borrow it. Every bank won’t ask for the following items, but a lot will require at least two or three.
These different fees may be monthly administrative costs, which are usually negligent. Then there is the cost of life insurance. Again, this is something that’s cheap little company. Some may wonder why life insurance? Finally, you need a home owner’s insurance since apparently this is mandatory. It protects you, as well as the bank’s property at issues such as crime, natural disasters and other unforeseen events.
Thinking of buying a new home? You will find a lot of options available. There are many banks waiting to provide housing loans. Internet search can provide you with a lot of information on the current interest rates prevailing in the market. Information on banks terms and conditions also will be available. You can make a comparison sheet from the data available and choose the best possible option. Recently, banks have also made the online loan application process available for customers, thus making it easier and quicker to get a loan.
Refinance is a terminology used for the decomposition of the costs incurred on the loan against the profits earned from the same loan to see whether any amount is being saved on the same. In common language, people feel that refinancing is the substitution effect of the first loan along with the second loan for the basic purpose of saving money.
You will find a number of reasons to let yourself move in the direction of refinancing your primary home loans excluding the credit card finance and the miscellaneous debit. Before refinancing your home loan, it is very important for you to realise that the new loan will always be greater than the present one and it would be increasing at much lower rates than the present one. While searching for a loan, you should try to find one which offers you reasonable and sensible borrowing conditions.
You have to gather maximum possible information about the interest rate and other borrowing conditions while you are involved in the process of mortgage refinancing.
You must first apply to your financial situation when you think about refinancing a mortgage. If you’re going to make a payment to keep the cheaper or want to make monthly payments to get a small amount of interest, consider several factors, such as in the case of a credit score will be better by refinancing, or not? Will you be able to contain the costs that might be involved?
Before considering mortgage refinancing, one must pay attention to his/her financial condition. If payments are going to be made cheaply and regularly, and if one is interested in making monthly payments for earning nominal interest, he/she should take into consideration minor factors like the betterment of the credit score by the usage of refinancing. One needs to evaluate whether the savings amount will be greater than the costs incurred for the refinanced home loan.
Refinancing can be a great thing to save your money when necessary. You can save up thousands of dollars through mortgage refinancing. You should always look for good deals on loans from banks, so you can get good quotes and by exploring, you will learn that the bank provides loans refinancing good for your site.
You should always be aware of adjustable mortgage rate which is shortly known as ARM. It will give you the home loans for a period of time. For this your interest rates should be fixed. This is easier and you can quietly deviate from the same path of your home loan policy, which gives minor interest rates.
You probably have never heard of Mortgage Credit Certificates (MCC) before, most real estate professionals don’t even know about it. It’s THE best kept secret, and now everyone will know!
Basically, this program gives potential homebuyers an opportunity they might not have had otherwise. By reducing the amount of federal income tax you pay, the Mortgage Credit Certificate (MCC) gives you more available income to qualify for a mortgage loan and assist you with house payments. Now that increase in your take-home pay can be incorporated into your mortgage application!
It is a tax industry standard that the IRS allows homeowners to reduce the taxable income for the mortgage interest paid annually.. But for a homeowner with a MCC, they’re allowed to deduct 20% of their annual mortgage interest directly from their tax liability, resulting in a dollar-for-dollar reduction in taxes owed. If I’m losing you, I can make it easier. I have found that sometimes it’s best to let the numbers tell the story.
Loan Amount : $250,000
Interest Rate: 6%
Payment: $1,499
Now in the first year, you will pay a total of $14,916 in interest on your mortgage. Those numbers don’t change if you have a MCC or not. Hypothetically speaking, you have the MCC.
That’s $14,916.00 you paid in mortgage interest. 20% = $2,983.00. That means if you would normally owe the IRS, let’s say, $4,297 that year, you would now owe $1,314 ($4,297-2,983) instead ! It’s a dollar-for-dollar reduction in your tax liability. And the remaining 80%, ($14,916 X 80% = $11,933) would be an itemized deduction on your Schedule A as usual. Please note: if your tax liability is less than the credit, you will not receive a refund for the difference. I know, I know, wouldn’t that be nice. The remaining MCC tax credit can be carried forward up to 3 year, reducing future taxable income..
If you are eligible for the MCC, you can take advantage of the tax savings immediately or wait when you file your 1040.? You can keep an additional $249 a month.? MCC can result in increase in take-home pay because the W-4 can be revised to reduce the amount of federal taxes withheld from each paycheck..
Most readers, right now, are wishing they heard of this MCC thing years ago. It must be new right? Wrong. MCC program is a Tax Reform Act established in 1984 to provide housing assistance to low and moderate income families.. The Mortgage Certficate Credit program sets income and purchase restrictions for the homebuyer, in addition to other federal guidelines which must be met in order to qualify for the credit..
Not every real estate transaction will be approved for the MCC.. This program is typically for first-time homeowners, or those who have not had ownership interest in a principal residence at any time in the last 3 years. Investment and secondary homes are not eligible for the MCC tax credit.. For refinance mortgage transactions, MCCs won’t be issued.. Racapturning the MCC tax credit is contingent on the sale of the home or taxpayer’s income.. A CPA, EA or Tax Attorney can better assist you in calculating your credit. But for the curious, more tax information can be found at http://www.irs.gov/pub/irs-pdf/p17.pdf on page 259.
All-in all though, the MCC is a great benefit for anyone who qualifies. Your area might be different, so be sure to research the guidelines first if you are interested in this program. Most MCC information can be found on your state’s government website. Along with the forms you’ll need, they will also have a list of participating lenders. By asking about the MCC program, you can quickly decipher which mortgage consultants work with the participating lenders in your area. Better still, go to http://loangoose.com and request more information today!
