RATES ARE LOW

Mortgage rates have hit the lowest on record!! The time is now if you are thinking about getting out of an ARM or looking to lower your monthly payment.

Click Here for the story

The real Wall Street greed!!

This is a great story that was posted on Yahoo today. This is what happens when people are blinded by greed!


Click Here for the story

FED rate is @ .25%!!

Wow, now it doesn't even cost Americans 1% to borrow our own currency!! If anything this should make banks really happy!

The link is for a Yahoo article which lists 6 things that lower FED interest rate will affect you.

http://finance.yahoo.com/news/6-Things-to-Know-About-the-usnews-13847905.html

The government is trying!!

The brain trusts of America are starting to think that lower interest rates on mortgages will help to solve the housing issues in America.

Not sure if this step will be a the cure all, but it will help. I personally think it is a start in the right direction. I will even go out on a limb and say that depending on unemployment rate, the housing bust might be over in late 2009/early 2010, if rates stay low for the next six months.

http://finance.yahoo.com/news/USbacked-banks-could-be-rb-13846617.html

Lowest level in 4 years!!

Mortgage rates are falling!! Not sure how long this will last, but I think rates should stay between 4.5% - 5% for the next month.

Contact us to find out what the current rates is.

DOOM n' GLOOM

It'sall about doom and gloom these days. Bloomberg is reporting today that 1 out of 10 homeowners are behind on their mortgage or in foreclosure. OUCH!


http://www.bloomberg.com/apps/news?pid=20601087&sid=a37uyBrX6dvY&refer=worldwide

A good deed

This company handed out more then a turkey this Thanksgiving!

SOURCE

Tips on how to boost your home’s value!

I still think the most cost effective way to enhance your home value is a nice fresh coat of paint. It can be done as a weekend project or you can hire a professional. Either way it will give your home a fresh look and is gentle on your budge.

SOURCE

Real Estate down 17% in Sept!!

SOURCE
SOURCE

The latest Case-Shiller home price index released Tuesday by Standard & Poor's shows prices falling at an annual rate of more than 17% in September across the country, with all 20 markets tracked by the index showing declines from August and to September of 2007.

Home prices on a national level are down 17% in September. Please keep in mind that not all homes are declining in value. Unlike other investments, real estate is based on the local market value rather then the national value.

At the same time, when looking at the big picture, it looks a little scary

The FED is buying mortgages

The FED is going to purchase trouble mortgage assets, which it hopes will ease lending and help put a bottom on home prices. With this announcement mortgage rates have dropped dramatically this past week.

“The rate reduction is exactly what the Fed intended: "This action is being
taken to reduce the cost and increase the availability of credit for the
purchase of houses, which in turn should support housing markets and foster
improved conditions in financial markets more generally," the central bank said
in its announcement."

SOURCE

Hats off to you Obama

Congratulations to Barack Obama on becoming the next president elect. I wish him well and hope that he is able to pull our country out of this bleak period. He has a lot of work to do!

Is that home a steal or overpriced?

This article courtesy of bankrate.com provides you with a simple formula to determine if the home you are looking at is overpriced or not. They use the price/rent ratio, which might help you figure out if the home your scoping out is a good deal or not.

The one true thing, I've seen in all my years of Real Estate is never just take the Realtors word for it. Always do your homework and ask for multiple options, unless it’s a specific type of house in a specific neighborhood, then your pretty much stuck.


SOURCE

Could we see 1% at the FED?

Rumors are starting to surface about the FED lowering the rate to 1%!! Not sure if this is true or not, but I think that it will be a good idea.

Will it affect mortgage rates? Not sure, most of the time when the FED lowers the rate, mortgage rates go up in the short term and lower in the long term. This time I expect the opposite to be true and you will see mortgage rates hit an all time low, before they start to climb back up. Either way, 2009 should produce a really wild market.

Story from Marketwatch

Up 71% and no it’s not your home value or 401K

Foreclosures are up 71% this quarter. That is an astonishing number. The article mentions that some of the hot spots are AZ, CA, and FL.

This quarter and next should be the end of the major spikes in foreclosures. Lending standards have been tighten for quite some time now and high LTV and risky loans have not been made for over a year.

Another stat that I read last year, was that in Oct. 2008 is the month when the most sub-prime ARMs come due and start to adjust. That means that the wave of bad sub-prime deals should be working it’s way through the system. I do also think that our government will step in after the election and help to curb some of these foreclosures.

Story

Real Estate is all about location…

Not all areas are on the decline in the US. This article posted on Yahoo, shows that some areas are still gaining values while others plunge.

Some of the areas where real estate is keeping value is Seattle, Des Moines, Denver and a few others.

The truth is that every city has pockets where Real Estate is still in demand. Do your homework before you buy it will help you to lower your risk.

Click here for the story

Fastest Selling Zip codes

This is a list of ten fastest selling Zip codes in America compiled by Business Week.

Click here for the story

Fannie and Freddie Mae News

With a open check book Fannie and Freddie Mae are now doing all they can to help people stay in their homes and bring stability back to the housing market. Both of these companies pledge to do what they can to help ease foreclosures.

At the end of the story they get in to mortgage interest rates and the thought that they might lower them. I hope this is the case because, it would help solve a lot of issues with the housing market. If every person had a chance to due a rate/term mortgage to 3%, they would have more income to spend on things, thus helping our economy.

I’m not in favor of helping out the people who are overextended and not helping out the people that keep their checkbooks in check. If we help one type person, we should help the other group of people.

Keep in touch with this news, because something will happen with in the next year!!

SOURCE

Reverse Mortgages 101

Great article on reverse mortgage basics for people that are over the age of 62. These mortgages due have some upside, but they come with some costs. I suggest reading this before you either take this option or are shopping these types of loans. Remember knowledge is power!

Click Here

What the ultra rich really think about you!!

A great read on the Washington Post today. It is about Wall Street and how those who control these big companies (BANKS) feel about the average American!!

Click Here to read the story

1.5% is the new FED rate...

The FED has now cut the rate to 1.5%!! Cheaper money was the theme all day on Wall Street.

How will this effect you? HELOCS, will be cheaper to obtain, because they are tied to the prime. Fix mortgages on the other hand, it might not effect too much.

Fixed mortgage rates have been going up all day today and I suspect they will do so for the next few days. At the same time, mortgage rates are really low right now. They are around 5.5% par and that is historically low.

Read more on bankrate.com

Up 7.4%!!

Things might be looking up in the Real Estate market. In the news today, existing home sales are up 7.4%.

In order for home values to stabilize, the huge inventory of existing homes will need to be reduced. Once we are able to obtain a more balanced market, then home prices will follow and stabilize.



Read the story here!!!

Rates are falling!!!!

Mortgage rates dipped today to 5.625% APR!!

If you are in the market, rates are really really really good. These will not last, so make sure you get top of it ASAP.

If you have any questions about current rates, please contact us!!

Countrywide, now Bank of America, is helping people!!

Good news for people who are stuck in a ARM and can’t afford it!! Bank of America (Countrywide) has reached a settlement worth $8.6 billion to help offset the wave of foreclosures. This could help upwards of 390,000 struggling homeowners!!

If you have a mortgage from Countrywide, you might be eligible for this. I strongly recommend contacting them and finding out if you can reduce your mortgage.


Find out more info here Click here

100% is not dead yet!!

Don’t be fooled by the media. 100% financing is not dead, but is now only available in select areas. If you live in a rural area and looking to purchase a home, more then likely you are eligible for a 100% mortgage.

In my mind this is the best product on the market. Great rates and no mortgage insurance!!

Contact us if you would like to learn more…

NO thank YOU Mr. Bailout

Looks like the bailout is back to square one. The Fed will not get a blank check to purchase all those pesky toxic assets.

I’m sure there will be more attempts to obtain the money from the Congress.

What will happen??

A great CEO

Warning: This has nothing to do with Real Estate

I always read articles about how CEO pay is astronomically high and how they make off with all the money, at the same time all of the other people suffer.

In this article, that is not the case. Well these poor employees get their paycheck cut in half, the other half is being deferred until the end of the year, due to turmoil at the parent company.

The CEO made a personal choice to work with out pay! SOURCE

Now, that is a great leader!!

The biggest bank failure EVER in the history of the US!!

Can you believe this?? Wow, one of the major banks in America, Washington Mutual, has now gone belly up. Along with this, a huge financial bailout is on the table, we're facing historical times in America.

The government is on the verge of passing a $700 billion dollar bill to help aide the financial institutions of America. Meanwhile unemployment is creeping up, our 401(k)s' are taking a noose dive and home values are in a freefall. Not good!!

What happens if we don’t pass the bill? I have read all of these things…

x.) No more payroll for a lot of companies
x.) More banks will fail
x.) No more mortgages
x.) No more credit cards


to be continued…..

Your equity is going down...

Home values across the nation are down again. This time it’s a new record!! The median national value fell by 9.5%

The pace of existing home sales decreased 2.2 percent to an annual pace of 4.91
million units while the median national home price declined a record 9.5 percent
to $203,100, the National Association of Realtors said on Wednesday. SOURCE

Dear Main Street,

This is great summary of what is happening on Wall Street and why mainstreet is now footing the bill for these bailouts.

Dear Main Street,

Are you trying to make sense of what's happening here on
Wall Street?

Don't worry -- you aren't alone. A lot of people even here are
trying to figure that out. It isn't that complicated, but Wall Street is so full
of mumbo jumbo that it's easy to get confused -- or bored.

Say "collateralized mortgage obligation" a dozen times and see if you can stay awake

Link to the story

The $700 billion dollar bailout??

I’m reading more updates every hour, so I will keep you posted as I know more, but here is what I have learned so far.

This bailout is for the government, or actually the FED, to have an open checkbook to purchase toxic assets. Purchasing these toxic assets will help the credit market bounce back and hopefully restores confidence in our markets. There is no data on how much they will pay for these assets.
This is all about bailouts for major companies, not common people of the United States. I’m strongly opposed to this bill unless they clarify what they are going to do with the money. I'm not for bailing Wall Street, but I'm for helping out mainstreet!!!

AIG Bailout

Let’s add another losing corporation to our books, this time AIG. Here is the wiki link.


The treasury gave AIG $85 billion for 80% stake of the company and it comes with an 11% interest rate on the terms of the loan.

The Fannie and Freddie bailout!

I have been hearing rumors about this for a long time and now it has finally become a reality. We the people of United States of America, now own the two biggest backers of mortgages in America, Fannie Mae and Freddie Mac.


This means that all of the tax payers will now be footing the bill to help keep these two companies afloat, during these wicked times.

I’m not sure how I feel about this event. I do believe in a free market, but at the same time I think we are at a major financial cross road. What happens if we don’t bail out these big companies? Huge job losses? The world withdraws all of their money out of our economy?


Truth is that no one really knows. All I can do is trust the people who are in place and hope that they have American’s best interest in mind, rather then the upper 1% of Americans.


What does this mean to the mortgage market?


Not much will affect the average consumer, besides that mortgages will still be available to the public, because if these two companies went out of business, mortgages would be really hard to come by for a long time. It might also help to stabilize rates, because now the treasury is backing the debt.

Mortgage Rates

Mortgage Rates

Last week mortgage rates were all over the place. They went really low 5.5% then went back up to 5.875%.

As of today bankrate is reporting that the average rate is 5.87% on 30 year mortgage rates.

Look for rates to head a bit higher this week but they might go lower if the market likes the bailout plan.

The GREAT Freddie and Fannie take over!

Government Take OVER!

Fannie Mae and Freddie Mac (if you want more info on these companies click on the name and you will be directed to their wiki page) are now controlled by the US government. This is a huge step in the “Mortgage Meltdown of 2008”.

“Effectively, the federal government has now become the nation’s mortgage
lender”, Mark Zandi, Chief Economist at Moody’s economy.com

How did it get to this point?

Well for starters, the housing market has been in ruins this year. Last quarter, Fannie Mae lost over 14 billion dollars and they are continuing to lose money on a daily basis. Obviously, as with any company, you can only lose money for so long before you are forced to close the doors.

Basically, both of these companies went up in smoke and were bailed out by the Fed.

If they just shut their doors and file bankruptcy, our financial system would blow up in our face. Not only does it affect all homeowners but, a lot of investors would pull their money from the US stock market and all US government backed companies to flee to safety which would cause a meltdown that would be catastrophic.

What does this mean for homeowners?

First, LOWER MORTGAGE rates are on the horizon for homeowners. People who are looking at buying homes are going to enter a historic window of low rates and low home prices. In theory, this should help to stabilize home prices and help to take a large amount of the inventory off the books.

Second, more lending options should be on the table soon. All of the experts I have read on this topic all predict that Fannie and Freddie will now release more options for homeowners and prospective buyers.

What does it mean for us, the tax-payers?

We will be on the hook for all of the debt for these companies. Some of the numbers I have read estimate the cost to be $100 billion and up!!! Sounds like a lot of cash to help bailout stockholders but, is it?

I think that no price tag is too great to help save our housing market. If this helps to stabilize the market, we will see a huge profit off of this investment. I think if you looked at the budget you would be shocked to learn how much money America sends overseas to help other countries. Well, now it’s time to bailout America and help our own people.

Keep in mind, this takeover is not to bailout foreclosures and home investors; this is to bailout the average American homeowners. It will affect every single person who holds a mortgage now and in the future!

Tips on Greening your home

Tips on how to make your home greener!

Click Here

If you have questions about Green mortgages, please contact The Satori Group

Interview with Barney Frank...

Interview with Barney Frank from the September edition of Money Magazine. SOURCE


Money Magazine senior writer Janice Revell recently caught up with Frank in Washington a few days before President Bush signed the bill into law in late July.

Question: How on earth did the U.S. mortgage market get here?

Answer: We had too little regulation at a point of great financial innovation. Twenty years ago, most loans were made by someone who expected to be paid back by the borrower. And lenders who want to be paid back by the borrower are careful about who they lend to.
Then came this great innovation called securitization. Securitization means that I lend you money and quickly sell the right to be paid back by you to other people. Well, when the lender ceased to have an ongoing relationship with the borrower, a tremendous amount of banking discipline was lost. And it was much harder to replace than we thought.

Q. Where were the regulators during all of this? Why didn't they step in?

A. Back in 1994, Congress gave the Federal Reserve the authority to ban irresponsible mortgages. Alan Greenspan, as a very committed anti-regulation conservative, refused - literally refused - to use that authority. Congress can give people authority; we can't compel them to use it.
Ben Bernanke, to his credit, realized that it was time to use that authority. So he promulgated a set of rules on July 14 of this year to prohibit a lot of the mortgages of the type that got us in trouble. If Alan Greenspan had done 10 years ago what Ben Bernanke did this past July, we would have much less of a problem in subprime mortgages.

Q. Is the current mess a result of naive consumers being duped into horrible mortgages or is it a case of greedy consumers chasing cheap loans?

A. Some were misled, others took part in the deception. There were people, for instance, who lied about their incomes.
But we have made a mistake in this society. The assumption that everybody can be a homeowner is wrong. We pushed and encouraged people into home ownership - people who, in some cases, weren't ready for it. You can't act on wishes that are unrealistic without having negative consequences.

Q. You are the architect of new legislation aimed at stemming the rise of foreclosures. How is that going to work?

A. The initial approach taken a year ago by Treasury Secretary Paulson, who has handled this crisis very responsibly, was to get lenders to hold off on resetting adjustable-rate mortgages to a higher interest rate. The theory was that homeowners could refinance at a lower interest rate than the 11% or 12% rates they were facing.
But because of the drop in house prices over the past year, the problem now is that most of these people owe more on the house than it's worth. Once the house is worth less than the loan, you can't refinance. People hadn't figured on that happening.
So we're now telling lenders that if they agree to modify these mortgages so that the loan amount is equal to no more than 90% of the home's current value, the Federal Housing Administration (FHA) will step in and guarantee the reduced mortgage against default. The homeowners will then be able to refinance into more affordable mortgages.

Q. But the lender still takes a big loss. Why would a lender go along?

A. We're telling them, "Look, if the borrower defaults you're going to take a loss anyway. We'll guarantee that you'll lose no more than you give up when you modify the loan."
I think a lot of lenders will take advantage of that. And they understand that massive foreclosures are bad for the economy - and for them. Plus, this is purely voluntary. If you think you're better off foreclosing on a homeowner, we won't stop you.

Q. How much will this cost taxpayers?

A. The borrower's mortgage is reduced by the lender, but the borrower gets no money from the government to pay off the new mortgage. Taxpayers are on the hook only if a borrower subsequently defaults on the reduced mortgage and the government has to take over the house.
Some of those houses won't be worth as much as the mortgage that we had guaranteed. The Congressional Budget Office estimates that our proposal would cost taxpayers about $1.7 billion. But it would also prevent 500,000 foreclosures. That's less than $4,000 for each avoided foreclosure.

Q. Why should responsible homeowners be forced to spend even a nickel of their tax dollars giving irresponsible borrowers a break on their mortgages?

A. Here's why: Foreclosures do damage in concentric circles. The pain hits hardest on the people whose houses foreclose, but it also hits the entire neighborhood. If you're a hard-working person making your mortgage payments and people around you are getting foreclosed, then your neighborhood starts to deteriorate.
The value of your home falls, and the entire city suffers because homes that used to generate property taxes are now eating up tax dollars. And when that happens, the whole economy suffers. So doing something about foreclosures helps the broader economy, not just the individual.

Q. Your legislation will also provide support to Fannie Mae and Freddie Mac should they need it. The tab could run tens of billions of dollars. Again, why should taxpayers bear the cost?

A. I believe Fannie and Freddie are better off than the market thinks. Over the long term the market is a very rational distributor of resources, but in the short term it can fall prey to hysteria. Sometimes you need to deal with that.
Part of the problem is rumormongering by short-sellers [investors who bet that a company's stock price will decline]. Our hope is that just by making U.S. financial support available, we'll quiet the fears and eliminate any need for that support.

Q. This isn't the first time we've seen housing prices fall. Why not just let the market work itself out?

A. Because it will cause tremendous pain that won't be restricted just to housing. If the housing market simply deteriorates, the problem won't just be foreclosures. Banks will fail. Pension funds won't be able to pay workers their pensions - because they all own these securitized mortgages. Packaged mortgages have now become such a major part of the economic landscape that a massive failure of them would have serious consequences around the world.

Q. IndyMac Bancorp failed in July, the third-largest bank failure in U.S. history. Are we going to see more bank failures before all this plays out?

A. I'm sure there will be more bank failures, but we shouldn't panic about that. Banks fail. That's why we have deposit insurance. I don't think we're at the point where we're going to have a rash of bank failures of the magnitude that could cause systemic failure.

Q. What has to happen to make you confident we're not going to relive this mess all over again someday?

A. The Federal Reserve should be given the authority to exercise regulatory authority over investment banks. The time has come to regulate the securitization process. We need the kind of regulation that diminishes abuses but doesn't stifle economic activity.

Minneapolis, Minnesota is getting more rave reviews…

Minneapolis, MN is again ranked as one of the best cities to earn a great living. According to those brilliant people at Forbes Magazine, Minneapolis is second only to Houston for best places to make a nice living.

Right behind Houston are Minneapolis, home to more of the nation's top companies
per capita than any other city; Boston, fueled heavily by the biotech industry;
and Washington, D.C., where unless the government goes out of business,
consulting firms will continue to make a killing.

SOURCE

The Big House Myth….

This is my personal theory on why it’s not always the best choice for your financial future to buy the biggest home you can afford. I started to think about this during the housing boom when a close friend of mine decided to go against the grain and purchase a bigger house than I thought he should.

I told him, “…if you run the numbers it doesn’t make sense.” There are factors that make this theory invalid such as number of kids and personal needs but, keep this in mind, math does not lie…sales people do!

Let’s look at some numbers,

In this example, I’m going to compare a $225,000 home versus a $325,000 home, using a 6% interest rate over 30 years.

Monthly payments:
$225,000 mortgage @ 6% = $1,348.99 monthly payment
$325,000 mortgage @ 6% = $1,948.54 monthly payment

These simply reflect the Principle and Interest payments that will be made on a monthly basis, for 30 years.

Total Interest Paid over 30 years:
$225,000 @ 6% = $260,635.93
$325,000 @ 6% = $376,474.11

T
his figure will be paid as long as you hold the debt and make regularly scheduled payments every month. A lot of people don’t take the time to learn how much is actually paid for a home when making monthly payments. But, as with all things there is generally a risk-reward relationship and in this case, the risk is the set amount of interest you pay over the loan term, and the reward is the growth in value of the home (Appreciation)

Let’s say these homes were financed at 100% and there was no starting equity in the home, if we assume 3% appreciation over 3 years, we would have gained the following amounts of equity:
$225,000 x 3% = $20,863.58 in equity at the end of the 3rd year
$325,000 x 3% = $30,136.28 in equity at the end of the 3rd year

This figure is looking at the appreciation of your property assuming that home values go up in the future. Most people think that the bigger the house, the more money they will make. It’s just like a savings account, the more you have in the account, the more money you make. This is the argument many people have always had against the theory of the big house myth.
Well, those people are half right. Looking at our example, you will see that 325k house will make $9,272.70 more than the 225k home over the three years. That’s true but, most people forget that the bigger the debt, the more interest you will pay. Even if the interest is tax-advantaged, you will still be paying more on a monthly basis to interest rather than using that money to pay off debt.

Now, let’s look at the numbers behind the mortgage payment:

Interest paid over 3 year period (Total interest paid in payments 1 thru 36)

225k = $13,073.50 interest over the first 3 years
325k = $18,883.94 interest over the first 3 year

On the 325k home will have to pay $5,810.44 more in interest over the first three years. In fact, if you make $9,272.70 more in equity but, have to pay $5,810.44 more in interest that would leave you with merely $3,462.26 more than what you would have made on a 225k home.
So, you’re thinking, “…well at least I’m up 3k on this home, how would it be a bad idea?” People tend to forget about the little things when purchasing a home. The 3k would be wiped out with an increase in property taxes and more costly utilities in a bigger home because, as we all know, the bigger the home the more it costs to keep up.

Let’s take this a step further…Think about this, if you could afford the 325k payment but, only purchased on a 225k loan, then you could afford to pay more on a monthly basis to your mortgage hence, mortgage acceleration.

The payment on the 225k mortgage payment is $599.55 less than the mortgage payment on the 325k home. If you use that extra payment savings and apply it to the 225k mortgage, it would reduce the total interest charges on your loan by 77k and save 73 monthly mortgage payments!! Now, don’t forget that in those three years you paid an additional $21,583.60 to principle, so it would leave with you a savings of 55k in total and that’s only paying extra for the first three years!!!

You think these numbers are mind blowing...The average homeowner does not understand how much money lenders make on mortgages. You see, the mortgage broker makes more, the real estate agent makes more, and the lender makes more the bigger the house you buy. How many sales people (or mortgage brokers for that matter) do you know that encourage you to spend less?

We encourage people to use “smart money”. With the combination of the SWBStm and our top-notch, industry knowledge, we have the ability to show you many ways of paying less to others and more to yourself.

Contact us with any questions regarding your mortgage situation…

The Crystal Ball of the Real Estate Market!!

Courtesy of two media conglomerates: Yahoo and News. Corp, they bring us a story about what to expect in the future of the housing market titled, “Where the Real-Estate Market May Be Headed, and How to Plan for It”, written by Jennifer Openshaw. The article sheds light on where the housing market is going and what to do.

Openshaw breaks the article into a few major sub-points, following with reasons for each. Let’s dive in!

The first sub-section supports evidence of a bottom:

“4. Rate resets on subprime loans to drop. Subprime rate resets are a big
foreclosure driver, and according to the research firm First American CoreLogic,
subprime resets should drop dramatically by October 2008.”

This is true, according to the stats I have seen, the biggest subprime resets were last October, so this means that most of these 2/28 loans will either be refinanced or foreclosed on by this October. From a lender standpoint, these loans have now been off the market for around a year so the crazy, subprime effect should be just about over.

On the flip side, many people chose to do 5 year Interest only ARMS. The problem is that some of these people in these loans can’t refinance again, even if they have outstanding credit scores. A lot of these loans were stated, meaning that there was non-traditional income documentation provided to qualify for the loan. These loans are used mainly by people who are self-employed or idiots who bought too much home and shouldn’t have really qualified. These could become a big issue because most stated programs have gone by the wayside. If people can’t afford their mortgages, they will walk away or get a loan modification.

Flies in the Ointment?

“1. Some principal payments required. Many
option loans allowed borrowers to defer principal payments for several years. As
those years go by, principal payment requirements could act like subprime
resets, pushing some owners over the edge.”

These are also known as negative amortization (or “neg-am”) loans. The resets of these could be very nasty. If home values are up in the area or are going up nationally, these types of loans can work with a savvy borrower; this requires a large amount of discipline and knowledge with investing.

I think some areas will not be affected as much by this type of loan, but states with a very sharp decline in values will be severely affected. The reason is, once these loans increase to a balance that is 115% more than the original, borrowed loan amount, the person is forced to start paying the full amortization amount and in many cases this will double the current payment. When something like this happens and the home can’t be sold because of being over-financed, the only other options are to foreclose or just walk away.

WHAT to do…
“2. Look for bargains this fall. At least three factors should
lead to a price nadir this fall, if it hasn't happened already, and the typical
seasonal fall sales decline will magnify the effect:
REO-holding banks get
more desperate. A lot of banks have been holding a lot of real estate for a long
time, and you know what that means.
Investors sell for tax reasons. A lot of
investors hoped for better but may throw in the towel to capture tax write-offs.
Homebuilders clear inventory, to get it off the books and start 2009 fresh.”

Yep, she is 100% right! There are deals all over the place. If you are looking at buying, this might be the best time to do so. I would say that in the next two years, the housing market should hit bottom and start to go back up. Again, it’s all local. Make sure you shop till you drop and research everything you can. Also, never pay the price they are asking, always low ball!!


Link for source
SOURCE

What is mortgage acceleration…

Mortgage acceleration is basically paying more towards your principle than the schedule payment. If your payment is $1,000 per month and you send in $1,001 or more, you are accelerating your mortgage.

Let’s look at a very simple example…

You have a $100,000 mortgage at a 6% interest rate. Your payment is $599.55 per month for principle and interest. The total amount of interest scheduled to be paid over the life of the 30 year mortgage is $115,838.19.

Now, if you pay $50 (total $649.55) more towards your first mortgage payment, your total interest over the life of the loan would now be $115,588.56. You will save $249.63 on total interest charges, simply by paying $50 more on your first payment.

There are several types of products that can aid in accelerating a mortgage:

1) 15 year mortgage – The 15 year mortgage operates the same as a 30 year mortgage, but you will pay half the total, overall interest, of course with a higher monthly payment. For instance, at a 6% rate on a $100,000 loan, your payment would be $843.46 per month and your total interest charges will be $51,822.13.

2) Bi-Weekly Mortgage – This is where you pay half your mortgage payment every two weeks. In essence, you make one more monthly payment every year. Looking at our 30 year example, on this option you would pay $90,196.39 in total interest. My personal recommendation is that this is the worst method to accelerate your mortgage, and I will elaborate in later editions of this article.

3) Satori Wealth Building System™ (SWBS™) – Our exclusive system is the best system on the market for mortgage acceleration and the reason is, it uses the power of your entire paycheck on a monthly basis. It will pay off your home faster than any option available in today’s market. Two of the major components to be eligible for the SWBS™ are: disposable income and equity. Now, these aren’t the only factors necessary to run the system as there are a wide range of setups. It would be in your best interests to contact our specialists to find out just how the SWBStm could work for you.

Why do it?
The average American does not fully comprehend just how much interest is paid over the life of their mortgage, while at the same time being compensated so little for the money they run through a bank account. In many cases, people can save tens of thousands of dollars in interest over the life of their loan simply paying a little bit more every month. If you are interested in saving thousands of dollars in interest on your mortgage, check out our Your Satori calculator and find how much you can save.

The man who wrecked the Real Estate market…

This article is a great read. It looks at the person who was really behind the whole sub-prime mess. It appears on the Village Voice and written by Wayne Barrett. It will shed light on how America got in to this mess and what was behind it.


Andrew Cuomo was the man who was in charge of HUD. It examines what he was thinking and how we got in to this mess. It all started with trying to improve home ownership percentages in America and with what we are witnessing today.

At least I finally know who I can blame for the collapse of the US housing market!:)

$500 billion and counting...

I have been reading for quite some time on predictions of how much investors will lose on the sub-prime crisis. Well, Bloomberg is reporting today that the number is going to be around $501 billion and counting!! Some experts predict losses will reach $2 trillion be over it is all over.

The collapse of the U.S. subprime mortgage market last year
has saddled banks worldwide with $501 billion of losses from declining values of
securities tied to all types of home loans and commercial mortgages as well as
leveraged-loan commitments.

Wow, that is a lot of money!! I would have to assume the in the next year or so, we will finally reach a grand total on the damages of sub-prime mortgages caused.

And they thought they were clever…

I have not seen this type of fraud for awhile. Most people think real estate fraud is where innocent home owners are swindled out of there life savings by a crooked agent or mortgage broker. Well, this is where the homeowners tried to pull a fast on the bank and got caught!!

“An Oak Grove couple who allegedly devised a scheme to defraud and collect
$690,000 from four mortgage lending companies was charged Aug. 4 with four
counts of mail fraud, the U.S. Attorney's Office said.
…In April 2006, Niska
allegedly filed a fraudulent satisfaction of mortgage form with the Anoka County
Recorder's Office stating that the Bravo loan had been paid off. In May 2006,
the couple sold the home for $675,000. The buyer borrowed $540,000 and got a
$135,000 fraudulent "gift of equity" from the couple, the indictment said.”

And then…

“…the couple induced the title company to pay them $510,000 instead of paying
the money to Bravo. The couple also kept possession of the house, the indictment
said.”

It never surprises me what people do. Do people actually think that lenders just forget about half million dollars?

Source

Its a slow down in the south...

Today on the watch, this article was posted “Housing slump causes more people to stay put”, by Amy Hoak which points out that some of the Mid-Western cities are keeping people, rather then losing people. This is unlike a few years ago where Sotuhern cities in the United States experienced a huge growth rate and Mid- Western cities were losing.

“According to U.S. Census Bureau estimates, the city's population rose 0.3%
between July 2006 and July 2007. While the growth may look paltry compared with
other U.S. cities', it hints at how the sluggish housing market and the credit
crunch is affecting migration trends, demographers say.”

Hoak gives a few reasons for this, but mainly she blames it on the current to real estate market.

“As home prices have plunged, many homeowners who want to move are staying put
instead of selling for less than what they think their homes are worth.”

It looks like more people are staying put rather then flocking to the warmer weather of the South. I’m not sure if I agree with all of Hoak’s points in the article. I would think that it’s not just due to the Real Estate market, but rather energy prices and the local job market.

A lot of Mid-Western major cities have very good job markets. I know for a fact, MN is home to many fortune 500 companies, which people come form all over the world to work for.

Factoid: Plymouth, MN was voted number one city to live in by Money Magazine in 2008!! The Mid-West can’t be that bad.

Good News today from the courts…

Today in the Star Tribune (MN biggest newspaper) break some good news!! “Mortgage fraud scheme architect gets 13 years in prison” by James Walsh breaks the news of that the people behind the Parrish Marketing are going to jail.

What is Parrish Marketing? This company was a multi-million dollar company that built real estate and sold it. The only problem is, they were crooks. They used straw buyers; other peoples credit reports, to purchase the homes. They also worked with a fraudulent loan officer at US Bank who made up income documents and pleaded guilty to mortgage fraud.

It’s not only the mortgage fraud that really pisses me off, but rather all of the innocent people he screwed over. I have a friend who did all of the lawn work for this company. He never got paid for any of his work!! I also feel bad for the neighbors next to these homes, because they all lost money on equity. Instead of neighbors these people now get discounted foreclosed homes.

The main man of Parrish Marketing, Michael Parrish got 13 years. I wish that with jail time, they could find out a way to pay back all of those poor people who worked hard, but got screwed.

Housing Bill 2008- UPDATE

Okay, so the President passed the new housing bill today. Aloha, new laws and regulations.

“Devils in the details” by Eva Rosenberg, posted on marketwatch.com 7/29/2008 examines the new laws.

In a previous post I thought that First-Time Home Buyers will be able to get some free money, but I was wrong. It looks like it’s a short-term, zero interest loan.

First, we have a $7,500 credit for new homeowners that is not really a credit,
it's a loan. Those who qualify to receive this credit will receive 10% of the
purchase price of their home -- up to $7,500, in the first year. Then, they will
repay the loan over a 15-year period, starting in the second year after the
taxable year in which the house is purchased.

It’s an informative read and I suggest doing so. If you have any questions regarding the new tax laws, please call your CPA or tax preparer. As always, if you have any questions regarding real estate, you know where to go!!

A what-if story....

I first read this article “Life in a Bubble”, by Carol Lloyd on sfgate.com in the 2004. At that time you have to remember that we were just starting to see the real estate bubble come to fruition.

The summary of this article is that Lloyd looks at three different scenarios of people thinking about buying real estate. She does the math and forecasts three "what if’s" for these people. All are unique and it really points out that its different strokes for different folks.

The moral of this post is, don’t always listen to the national headlines, but rather find out what works for you. Personal preference is a strong factor when it comes to purchasing real estate. Make sure you have a true, solid professional helping you out, who is not just out to make a bigger paycheck!!

What is a FICO™ (credit score)?

A FICO score is a credit scoring system that is commonly used by financial lenders to evaluate the borrower. Here's a list of different factors that impact your credit score and their approximate percent of impact.

Types of Credit in Use: 10%--Considers the number of credit accounts and the mix of credit types: credit cards, installment loans, mortgages, and is most important if you don't have a very lengthy credit history.

Payment History: 35%--Takes into account (1) many different types of payments, including mortgages, major credit cards, department store credit cards, car loans, other installment loans such as for furniture, etc., (2) information from public records such as bankruptcies, liens, lawsuits, foreclosures, judgments, and wage garnishments, (3) details of any missed or late payments, such as the amount, how long ago it occurred, and how late it was.

Amounts Owed: 30%--Looks at (1) the total of all the amounts you owe for all accounts, (2) the mix of amounts owed (credit cards versus installment loans, for example), (3) the number of accounts that have balances, (4) how much of your total credit available on credit cards and installment loans you're using (the closer you are to maxing out your available credit, the more negative the impact on your score), and (5) how much of the original balance borrowed you still owe on installment loans, like your car loan.

Length of Credit History: 15%--As long as you don't have negative information in your file, the longer your credit history, the higher your score.

New Credit: 10%--Considers (1) how many new credit accounts you've opened recently, (2) how long it's been since you opened a new credit account, (3) how many requests you've made for credit recently, (4) how long it has been since lenders have requested credit information on you, and (5) how good your recent credit history has been.

How far will it dip…

The Standard & Poor's/Case-Shiller 20-city index dropped by 15.8 percent in
May compared with a year ago, a record decline since its inception in 2000. The
10-city index plunged 16.9 percent, its biggest decline in its 21-year history.
Source

Will this ever end? I’m not sure, but I do know that this is good for people looking to buy. Homes are getting cheaper and cheaper by the day.

At the same point, this is a national figure. Not all areas are in a decline. Since this stat is Real Estate, it's location specific. I have heard reports of people selling their homes in some areas of the country in less than two weeks, while others have been waiting a year or more! It is all about location, price and demand.

The new mortgage bill….

The headlines around the nation have been dominated by a new mortgage bill that has already passed the senate and on the way to W’s desk to get signed.

The bill provides government money to help the housing industry. I’m not so sure about all of the FHA stuff in the bill. It’s a little hard to understand because I’m not sure if it’s between the lenders and their current customers, or if customers can refinance into a new FHA mortgage loan with a different lender?

One part of the plan is called "FHA rescue" which is supposed to help people get out of toxic mortgages. Sounds more like a way to help people stop foreclosing and to help ease the housing market crash. I will post more information on this topic when I gather more knowledge.

The highlight of this bill is for First-Time Home Buyers (FTHB). The numerous articles I have read state that there will be a tax credit issued to First-Time Home Buyers. On a bankrate.com mortgage blog, they are saying that FTHB will receive as much as $7,500 in tax rebates if they buy a home.

With this new tax incentive, next year might be the best time ever in the history of the United States of America to be a FTHB. Not only are there tons of great deals on the market today, FTHB will get a $7,500 dollar incentive to purchase a new home!! Basically, you can buy a new construction for a discount or buy a fixer-upper for a discount...You can’t go wrong!!

If you are interested in learning more about what you qualify for, or want to start looking at homes, please Contact Us. We have the answers for you.

A new tool for the mortgage market

The people that lend all the money in America have decided that they are going to start to use covered bonds as a way to finance mortgages. The top four banks think that these bonds will help to revitalize the mortgage market, especially in the secondary market.

Here is a link to the covered bonds definition on Wikipedia. The gist of these bonds is that they remain on the bank's balance sheet and are backed by the bank's cash flow/assets. They have a good credit rating and are almost fail-proof.

What does this mean for the housing market?

I’m not exactly sure, but I do know that at this point in the housing cycle, anything can help. Any money put in the housing sector is a good thing in my book. These bonds are also very popular in Germany where they have had some great success.

To read the full article, click here

Q and A on investment real estate from a smart realtor…

Well, there are so many homes on the market today that I start to get giddy. It’s a buyer's market and will be for the rest of the year and maybe even longer.

In today’s post, I interviewed one of my most trusted realtors in the Twin Cities area, Mr. Brian Amiot. He is my go-to realtor for investment real estate.

Satori: Where should I look at buying?

Brian Amiot: You should look for a neighborhood that is not over saturated with homes listed for sale and especially not over saturated with abandoned or foreclosed homes for sale. It should be within a decent proximity of where you live, regardless of whether you plan on renting or rehabbing. Other than that, it's all about trying to find a neighborhood that has relatively short listing times in general.

S: If I buy a foreclosure, what are some of the pitfalls I should be aware of?

Amiot: In buying a foreclosed home, you are buying the home "as-is" in most cases. A lot of foreclosed homes have been sitting vacant for quite some time, so there can be issues with cracking from the extreme temperatures and sometimes even pipes bursting. I always recommend getting an inspection, and to keep in mind that inspectors don't always catch everything. Plan on having more repairs than you initially see.

S: When do you see the market bouncing back?

Amiot: If I knew that answer for sure, I would be in a tropical paradise, being served on hand and foot...but I have seen signs of the market turning in the recent past. There have been more showings and offers on my listings, and I have seen more and more properties that I show clients sell before we even get a chance to see them. I don't think it's going to happen overnight, but I think we are at least starting to head the right direction.

S: If I have 100k to invest in another property what should I look at buying?

Amiot: What to invest in is very different for every investor. It depends if your goals are to buy and hold, or buy and sell first of all. Again, I believe in keeping properties close enough where you can manage them if need be. Other than that, it's all about finding the house that has some opportunity for improvement. I try and look for functional obsolescence, or something that is functionally wrong with a home. But, also something that can be fixed without too much of an expense.

S: What are some of the upsides you look at in homes?

Amiot: I am a personal fan of 3 bedroom, 1 bath homes that have an opportunity of adding another bath. I also like homes that are in nice neighborhoods and down the street from much larger, more expensive neighborhoods. Layout in general is a huge factor, but probably the two most important things that I look for are curb appeal and that "Wow" factor right when you walk in the door.

If you are looking into purchasing investment real estate in the Minneaoplis/Twin Cities, MN area, please contact The Satori Group or Brian Amiot (web-site posted under the link section). We love questions!

Where the smart investors are buying....

Yesterday in the Star Tribune an article written by David Peterson appeared, examining the issue of how the core cities of the Twin Cities are growing, unlike a few years ago when the burbs were bursting with new homes.

http://www.startribune.com/local/24283434.html?page=3&c=y

I have been saying this for a long time to my clients looking to buy a new home, buy in the city, not far away from the core. People are going to start to move closer to the core of the city and not to the far away suburbs. The McMansions are in trouble.

One of the major reasons for this is GAS PRICES!!! People are not going to be able to keep up an 80 mile commute when gas is $4 bucks a gallon.

Not only that, but energy prices are playing a part in the move also. Homes in the burbs are usually bigger, which means they cost a lot more heat and take care of then a smaller house in the city.

At the end of the day people will always live near and around the core of the Twin Cities. There are so many nice places to live in the area, unlike Detroit, that people will continue to move in to the city.

I suggest that people look at foreclosed homes in the range of 180-250k range and gobble up cheap foreclosed condos!! The thing about condos is that when people leave them, only so much can happen to them, unlike a single family home, where there is no association to protect against some of the damage.

As always if would like to get property listings or wondering what your financing options are, contact The Satori Group and we will do our best to make it happen.

Fire Sale!!!

Foreclosures are up 53% since last June!! Houses are getting cheaper!!! There are some good things about these stats and some really bad news regarding the stats.

I’ll provide the negative aspect first. America is not close to seeing an uptick in home values yet, especially on a national level. If you live in a home today, you are going to keep losing money on your equity (of course this is neighborhood specific). The market bottom will not take place until the majority of these foreclosures are passed thru the market to consumers.

In fact in this article they project that the number of 2.5 million homes nation wide, up from 1.5 million in 2007. These numbers point out that this mess is far from over!

Of course to some people this is great news!! Houses are getting cheaper and will continue to get cheaper. If you are looking at buying a home to live in or for a long term investment, this could be a wonderful time in the market. I have heard of homes dipping more then 30% in some markets and with this news, it looks like we might see a bigger decline.

The point is that not all people should be worried about these horrifying stats. In the short-term they hurt the current homeowners, but if you are looking in to buying home or investment properties, then it’s a great time to start shopping.

I my humble opinion I think that in the MN area, the end of this year and the start of 2009 will start to show the bottom of the housing market. We have not seen the huge declines in home values, like FL or CA; therefore it should not take as long for the local housing market to rebound compared to the national level.

http://biz.yahoo.com/ap/080710/foreclosure_rates.html

The FOUR C's

This article was posted on bankrate.com and provides a great mnemonic called the “Four C’s”

The four C's

Capacity, which refers to the adequacy of the borrower's income to pay
the interest and principal due on the loan, plus property taxes and homeowners insurance.

Character, which refers to the borrower's track record of paying debts
as evidenced by his or her credit history and credit score.

Capital, which refers to the borrower's down payment (or equity) as a
percentage of the current value of the home.

Collateral, which refers to the safety and soundness of the home and
the value of the home as determined by an appraisal relative to the agreed-upon
purchase price.
- Greg Gwizdz, national sales manager for Wells Fargo Home Mortgage in Des Moines,
Iowa. 7/10/2008

If you are okay according to the four C’s you should be able to get a mortgage. You might also be able to obtain a mortgage if one of these C's is a little weaker then the other one.

For example, you have a ton of equity (>35%) and have a lower credit score. You will be able to get a loan or vice versa, you have little equity, but a terrific credit score.

The truth is that there are tons of products on the market for consumers. Don’t be too concerned about not getting a loan if you live within your means and have a good credit score.

If you have any questions regarding your current mortgage, please contact us @ www.thesatorigroup.org.

If you meet all of the four C's you might be a perfect fit for our SWBStm.

http://www.bankrate.com/brm/news/mtg/20080710-mortgage-requirements-a1.asp

Time to ditch that ARM

Today on the watch, an article was posted about how rates will be going up over the next few years. People on ARMs will find that there rates are going to go up and so are 30yr mortgage rates.

"It's a pretty safe bet that if you are able to refinance out of your
ARM into a longer-term fixed rate, now is a great time to look and probably a
pretty good time to get it done," says Gerri Detweiler, author of "The Ultimate
Credit
Handbook."
http://www.marketwatch.com/news/story/feds-overlooked-message-dump-your/story.aspx?guid=%7BEFCC57B4%2D1C56%2D4A35%2DAB41%2D01AD7A60D6A6%7D

Even thou it points that it will take a few years, before we face higher rates from the Fed, the point of the article is that its time to start planning.

I for one think mortgage rates will fall sometime in the fall and then begin to climb up and up. If you are on a ARM I would look at getting in to a fix mortgage rate ASAP. Not only will it protect you against rising rates, your home is going down in value daily. The only way to position your self in the market safely is to lock into a long term rate. That way you can hold on to your house for the long term or you can sell it when the market turns.

I know many people with very good FICOS and wonderful jobs that still remain on ARMs. It’s not that bad if everything works out, but it could be devastating for these people if the market does not turn around in the next few years.

The end of the 1% interest rate??

Wachovia announces today that they are pulling there Neg-am loans off of the market.

What is a neg-am loan? These loans were made to people who desire more payment flexibility.

The payment options are:
1.) Pay half the of the monthly interest payment on the loan. The other half of the interest is deferred back to the principle.
2.) Interest only payment. Only the interest that is due on the loan. Uses a 30 year amortization schedule.
3.) Principle and interest payment, like a traditional 30 year mortgage payment
4.) 15 year payment. This is based off a 15 year amortization schedule.

The real tricky thing about these loans is that they are based on a floating index, meaning that interest rates are always adjustable. YIKES!!

I think the problem is not that these are bad loans, they have been used for 25 years, but they were made to the wrong type of people the past few years. If you are deferring your interest that is due on your home and its deprecating then it’s a lose-lose scenario. It looks like Wachovia finally woke up and decided that enough was enough.

Article:
http://www.marketwatch.com/news/story/wachovia-halts-mortgages-negative-amortization/story.aspx?guid=%7B4FB9EE95%2D6B1E%2D4F8D%2DA785%2DB989525C9641%7D&dist=msr_2

Ways to get out of the housing mess...

For all the articles that I read on a daily basis about the housing market, this one is a great! It gives some great advice on how we can fix this mess and get back to a normal housing market.

The lowlight in the article is it will take all of 2009 before we start to see a bottom in the Real Estate prices and bring homes back to a normal level, if we do what he suggest.

My personal opinion is that it will take at least that long before we start to see homes to go up in value on a national level.

The only that is for sure is this, it’s a buyers market out there!!!!!

Click this link for the article.
http://www.marketwatch.com/news/story/housing-remedies-how-steer-clear/story.aspx?guid=%7BA7F42B47%2D20BF%2D4723%2D8309%2DDD1CD5748F46%7D

More people thinking about moving to the city?

This article by the International Herald Tribune written by Peter Gordon, talks about how more and more Americans are thinking about moving back in to Urban cities. I always wondered how long the so-called suburban American dream will last. In MN the past few years, I’ve seen more and more people move to bigger lots and bigger houses farther away from the city. I have always been under the idea, which this can’t last.

Well now we are facing high gas prices and energy prices, these homes are starting to fall in value faster.

“In Atlanta, Philadelphia, San Francisco and Minneapolis, homes beyond the urban core have been falling in value faster than those within, according to analysis by Moody's Economy.com.”

http://www.iht.com/articles/2008/06/24/business/exurbs.php

The moral of this post is to think about all the factors that surround buying a home. Think about the school system, your time and where you work. Don’t think about how much money YOU MIGHT make in the future, because you never know what the future holds!!!

Will we ever hit bottom?

More doom and gloom news from the Real Estate sector. An article today on Market Watch shows that home prices are going down still.

“Home prices surged in 2003 through 2006, climbing by a cumulative 52%, according to Case-Shiller. Since then, however, the housing and credit bubbles have burst and homeowners have given up half of their gains from earlier in the decade.”

” Here's the city-by-city breakdown in the Case-Shiller index:
Las Vegas, down 26.8% in the past year; Miami, down 26.7%; Phoenix, down 25%; Los Angeles, down 23.1%; San Diego, down 22.4%; San Francisco, down 22.1%; Tampa, down 20.4%; Detroit, down 18%; Minneapolis, down 15.5%; Washington, down 14.8%; Chicago, down 9.3%; New York, down 8.4%; Atlanta, down 7.5%; Cleveland, down 6.8%; Boston, down 6.4%; Seattle, down 4.9%; Denver and Portland, both down 4.7%; Dallas, down 3.4%; and Charlotte, down 0.1%. “

http://www.marketwatch.com/news/story/four-years-home-price-gains-wiped/story.aspx?guid=%7BEB1B0595%2D37FA%2D4542%2D88A2%2DCE470ACAF101%7D

Well it looks like we still have a way to go before we see some sort of bottom in this crazy Real Estate market.