What happened to the days when getting a loan meant one piece of paper? When the fine print wasn't fine print?  When you borrowed money from your bank and that’s where your loan stayed?  Well, we’re not in Kansas anymore Toto!

Most of us failed to think about our mortgages either because we trusted the person we were doing business with, because we believed that, “that’s just the way it is”, or because we found the topic too complex and mind boggling.  Zillow Mortgage Marketplace conducted a survey and found that people who borrowed money to buy a home over the last five years spent only five hours looking at their options.  People spend over ten hours researching the next car they’ll drive.  Almost one-third of the borrowers spent two hours or less researching.  Your purchase of a home is one of life’s largest investments and your loan terms will affect affordability and your long term expense or return.  There are five home loan basics you must understand.

1.  I have a fixed-rate mortgage.  Right?  I was surprised to find out how many people I talked with THINK they have a fixed-rate mortgage loan when in fact they really have an adjustable rate that is fixed for a short period of time.  The quickest way to find out what kind of rate you have, fixed or adjustable, is to look at your mortgage note.  If the NOTE says ADJUSTABLE RATE NOTE at the very top, then your loan is not a fixed-rate mortgage loan.  And where will you find that Note, look at the packet of documents that you received at the title company when you purchased the home.

Why does it matter?  An adjustable-rate mortgage loan most often offers a low rate at the start of the loan and for perhaps three to five years, but the interest rate can increase significantly after that term; and with an increase in the rate comes a significant increase in your payment.  If you have a fixed-rate mortgage loan then your interest rate and your monthly loan payments stay the same throughout the term of the loan.

Information through Zillow Mortgage Marketplace

Do you know someone struggling with their mortgage payment?  Many beleive they need to have missed a mortgage payment to get assistance from their mortgage lender.  Wrong...please watch this foreclosure myths video by Freddie Mac.

Equity Lock Takes The Worry Out Of Your Home Losing Value

Equity Insurance Company, a Denver based company is launching Equity Lock.  As its name implies, Equity Lock ‘locks in’ your equity. 

At the time of purchase you buy a policy in a dollar amount based on the local current industry index.  The cost of the policy is 1 ½ - 3$ of the value of the home.  When you sell the home, the company claims it will cover your equity loss if the index has fallen and based on the formula your home has lost equity.

Anyone concerned about a purchase and having the home lose equity might explore this new option.  I’ll be watching it closely to see how many folks are buying in.

We will have to wait a bit to see the end result. The contract term is for 15 years, but you must live in the home for 2 years prior to submitting any claim for loss of equity in a sale. 

reposted from realestateinsidernews.com

Have the government foreclosure prevention programs been successful?  Perhaps not. 

All of the programs were proclaimed as possible solution to the housing crash.  CoreLogic and the New York Times report:

Congress set aside $50 billion for foreclosure prevention, amid administration projections that three million to four million homeowners would benefit from modifications. So far, the Treasury Department, which oversees the program, has spent slightly more than $1 billion, and just 607,000 homeowners have received permanent loan modifications (of those, 11 percent have defaulted).

The projections were that three to four million homeowners would benefit from the modification programs.  So far only 607,000 have.  60,000 of the trail loan modifications have already defaulted, so it seems that the programs have not performed as expected.

Homes that are seriously delinquent on their mortgage, likely 90 days or more, in foreclosure, or real estate owned by lenders (REO) are considered “Shadow Housing Inventory”.   Last week CoreLogic presented some refined data on the shadow housing inventory and reports that the total number in inventory declined from $2million to $1.8million in January.  Could that be reason to celebrate?

Banks are working to renegotiate mortgages but continue to struggle to keep up with the problem of shadow inventory.   The number of foreclosures have gone down recently but not because there are fewer homes that are headed for foreclosure, rather because the  lenders and loan servicers are overwhelmed by the large volume of work involved; they are just catching up. 

A few other facts on the state of the shadow inventory supply are:

• Of the $1.8-million unit shadow inventory supply, 870,000 units are seriously delinquent (a unit means a living structure or commercial structure) .
• 445,000 units are in some stage of foreclosure
• 470,000 are already foreclosed on and considered  REO (REO = real estate owned by a financial institution)
• Lender Processing Services, says the loan delinquency rate in the United States stands at 8.8%, and the foreclosure inventory rate is at 4.15%.

Sadly, all of this data tells me that the programs have not helped the homeowners and certainly done little if nothing to aid the housing market.  The question remains, how do we solve the problem.

reposted from realestateinsidernews.com

If you are lik me there are some things you feel strongly about: the coffee you drink, the state of your college or high school's basketball team, and surprisingly, what kind of light bulbs Iuse in my home.

If lightblubs are important to you, then brace yourself because starting in January 2012, to meet the requirements of the CLEAN Energy Act of 2007, which was signed into law by former President George W. Bush, some incandescent bulbs will be phased out, starting with the 100-watt incandescent bulb. But, before we go out and start stock-piling incandescent bulbs, be aware that this does not mean all incandescent bulbs will be banned. It just means that “…American companies will stop making and importing 100 watt light bulbs.”  Also, if your favorite store still has the 100-watt incandescent bulbs in stock, you can buy them, but the supply won’t be re-stocked after it empties. You will still be able to buy 76, 60 and 40-watt incandescents until Jan. 1, 2014.

The CLEAN Energy Act requires new energy standards for light bulbs —specifically, lumens per watt, which measures the amount of light produced per watt used to power the bulb. The requirement is that all bulbs use 30 percent less energy. According to the National Lighting Bureau, compact florescent bulbs (CFL), produce about 62.5 lumens per watt, up to four times the lumens an incandescent bulb produces per watt.

Those energy savings translate into pocket savings. Consumer Reports found that the average American would save $57.55 per year by switching to CFLs, noting that one CFL bulb lasts as long as 10 incandescent bulbs. According to Energy Star, a program run by the Environmental Protection Agency, switching to CFLs, or any other non-incandescent bulbs such as LEDs or halogen lights, saves “about $600 million in annual energy costs, and prevent 9 billion pounds of greenhouse gas emissions per year, equivalent to those from about 800,000 cars.”

Issues with CFLs

While there’s little to argue in the way of  savings, there are concerns about the small amounts of mercury found in CFL bulbs. According to Russ Leslie, associate director of the Lighting Research Center at Rensselaer Polytechnic Institute, the actual amount of mercury found in one bulb is quite small —five milligrams —”just enough to cover a ballpoint pen tip,” he told Popular Mechanics. He concluded that the risks of getting mercury poisoning by a CFL are very slim.

However, if a CFL bulb does break, it will need to be handled in a different way than a normal incandescent: Air out the room by opening a window or door and vacuum up the glass and debris. Wearing gloves, clean the area with a damp paper towel. CFLs cannot be disposed through standard waste pickup but most home improvement stores, Home Depot, Wal-Mart,  or recycling centers have options for CFL disposal. Ask your local store or try searching Earth911.com for your nearest disposal location.

Despite  legislation, CFLs won’t replace every incandescent bulb, including most specialty bulbs — like the refrigerator bulb — three-way bulbs or shatter-resistant bulbs. Energy Star’s website has the full list of exemptions included in the Act.

Heads up, Easy-Bake fans

But, if you are an Easy-Bake oven fan, holding onto a few 100-watt incandescent bulbs may be a good idea. Hasbro’s popular children’s toy has long used a 100-watt bulb to “bake” its goodies.  To prepare for the new legislation, Hasbro is developing a new “Easy-Bake Ultimate Oven,” which uses a heating element that is not a light bulb; it is planned for release in fall 2011. In the meantime, Hasbro has also developed “Microwave & Style,” a new toy that cooks treats using a microwave, rather than the Easy-Bake oven.

I know, you wonder just like me what difference can this make--I'll just stockpile all the bulbs I need for the rest of my life!  I am learning that one little action by a lot of people can make a big difference in the way we leave this earth for the generations to come.  So, I won't stockpile light bulbs and I'll continue with my New Year's resolution to be a responsible steward of this great place, Door County Wisconsin!

As for our Easy Bake Oven...we have not used it in over 25 years...so I guess it will just continue to be a memory of toys-past under the Christmas tree!

reposted from realestateinsidernews.com

Where are you Spring?

Video #2 in a series by Freddie Mac.  Today's post deals with the question, "Should I stop making my mortgage payment".

Reposted from RealEstateInsiderNews.com
This message is not intended to be legal advice.

Will foreclosure black-list you from ever owning a home again?  Watch this video.

Myth 1:  If my house is foreclosed on, I can never buy a house again. - the foreclosure will stay on my record forever.

Truth 1:Foreclosure can have a devastating effect on your finances and you personally, but you can recover. Use the time after foreclosure to prepare yourself for successful homeownership the second time around by creating a spending and savings plan and rebuilding your credit.

Please call me if you know someone who is troubling with their mortgage payment...I am here to help.

Reposted from www.realestateinsidernews.com

Remember, I am not a proponent of short sales for the simple reason of not wanting the house any longer.  But, when there is a hardship, there are options.  Here is an example of a purchase, how it went wrong and how it might end with a short sale.

In  this example a homeowner paid $500,000 in 2006, at the market peak.  Homeowner put 5% down and did a 7 year interest only mortgage.  Monthly payment including principle/interest/taxes/insurance and upkeep is $4200.

The property has declined 50% and in May 2010 was worth only $300,000.  The owner has negative equity, or is upside down by $200,000.

The market is continuing to depreciate and is projected to possibly level off in 2012.  In other words, months and months more of losses for the homeowner.

What should this homeowner do?

He can try to stick it out and keep the home.  He will pay $50,400 per year to keep the house.  He is deeply upside down in the home with negative equity. In late 2011 to mid-2012 the home’s value stops depreciating.  In last 2012 or early 2013 the market starts to slowly appreciate again.  Best case, the home starts  to appreciate at 5% per year.  Based on this rough example it will take at least 10 years for the home to be worth what the owner paid in 2006.  During the course of those years the homeowner will have paid $352,000—and that’s IF there is 5% appreciate, IF that is consistent for 10 years and IF the market does indeed level off in late 2011 and begin to slowly appreciate in 2012.  During this time the homeowner may deplete his reserves and suffer in many other ways.

In another scenario, another option we created for this homeowner, the home would be listed for sale in an effort to accomplish a short sale.  If the home sells, the bank agrees to accept the loss in equity as the short sale.  The bank takes a loss of $200,000.  The homeowner moves to a rental home and pays $2,000 per month or less—so that is less than ½ of his previous house payment.  The homeowner no longer has to worry about the repairs to the property or property taxes while he  gets back on his feet after a job loss, an illness, a death in the family, or any of the other hardships being experienced today.  The homeowner can save the difference between what he had been payment in his mortgage and his new rent payment.  That’s $26,400 per year, saved.  Yes, the homeowner does have significant negative credit ramifications as a result of the short sale.  This negative credit will stay with him for approximately 18-24 month—that’s a lot less than the 7-10 years that may stay with him were the home to go into foreclosure. 

If our homeowner times it right he can buy at the bottom of the market and have a significant down payment resulting from the saving created by the downsizing of their house payment.  Some homeowners experience even faster credit recovery due to a more favorable debt-to-income ratio because they no longer have the big mortgage payment.  Remember, you payment history accounts for 35% of your credit score; it is not your entire score.  30% is your length of credit history, 15% has to do with new credit established, and 10% is the type of credit used, etc.

To read the first two posts in this series scoll down the blog.  And check back often or subscribe to the RRS feed to read future posts.

If you or someone you know is experiencing a hardship and having trouble with a mortgage payment, contact me confidentially.  There are other solutions than having a house fall into foreclosure.  I will be your advocate.  I am committed to help financially distressed homeowners.  My focus is to give the hope of a dignified solution to financial crises through current lender loan modification, loan refinancing, or a short sale (a lender-approved sale at less than the outstanding loan balance)—to get you back on the road to financial recovery.