Are you familiar with the term "Stealth Inflation"? It's kinda like raising the prices on something without anyone really noticing.
For instance, say you love a particular brand of peanut butter and always buy the 16 oz jar for $3.49 (I'm just making up numbers here, so stay with me). The next time you buy your favorite peanut butter, it is still $3.49, but the jar contains only 14 oz. To make it worse, the company got sneaky and is using the same size jar, but the bottom is now concave so it holds less without being obvious about it.
Chances are, you may not have noticed as they do it over time. If you have, congratulations. My personal favorite (hint of sarcasm intentional) is that my soap now looks like someone has been whittling out the middle of the bar. The price has not gone down, but I get fewer uses from the soap.
Would a mortgage company do this? Sure... why not?
I found the following in an Associated Press article on March 18, 2009. Let’s look at it and break it down a little….
WASHINGTON - If you’ve got a good job, solid credit and your home’s value hasn’t fallen dramatically, you’re likely to benefit from the Federal Reserve’s extraordinary action Wednesday to help drive mortgage rates to historic lows and revive the U.S. housing market.
The Fed’s plan to buy up to $300 billion of long-term government bonds and $750 billion in additional mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac, should benefit many — but not all — borrowers.
It’s likely to produce a big drop in mortgage rates. Analysts expect rates will fall 0.25 to 0.5 percentage points as soon as Thursday.
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If you have a good job, solid credit and your home’s value hasn’t fallen dramatically…..
Unfortunately, a lot of people are not so lucky with the increasing unemployment numbers and financial hardships that many are going through. Even the value of the home, once thought to always increase at various rates, has fallen due to local foreclosures, among other things.
The Fed’s plan… should benefit many - but not all - borrowers.
For those in foreclosure, it may be too late. For those who have faithfully been paying their mortgage, but have delinquent credit cards and other obligations may have (will have) poor credit scores that could prevent a refinance.
Analysts expect rates will fall 0.25 to 0.5 percentage points as soon as Thursday.
On Wednesday, as I write this, the rates have decreased anywhere from .125% to .25% during the day. It would be foolish to think that the lenders would allow rates to drop too low. I say this for two reasons…
Ever since I though about moving out from under Mom and Dad's roof, I had the notion to purchase a house instead of rent. Probably all those horror stories from others about bad landlords. Of course, I don't recall the storytellers having intimate information; mostly it was hearsay. That's OK!
Now that I own a few rental homes, I like to think that I am a good landlord and take care of my clients. Of course, I ask that they take care of my house, but it's a two-way street. I can certainly see why some people like to rent and, as a mortgage planner, why others have to rent.
During a discussion the other day about interest rates and home prices, it occurred to me that there really may not be a better time to convert renters to buyers if possible. Here are my top four reasons in no particular order. Tell me what you think...
1. Mortgage rates are at near 35 year lows. Although I do not advocate shopping by rate along, this is really frosting on the cake. Even with good rates, an estimated 60% of potential homebuyers are sidelined due to credit issues. Fortunately, this is something I can help with. Visit my site at www.usccraonline.com and tell me what you think.
2. Home prices are still low. We are still in a buyers market and the buyer has a lot of options, including asking for the seller to pay their closing costs. While FHA will still allow 6% towards closing costs and prepaids, etc., they do require a downpayment of 3.5% currently. This can be either gifted from a family member or gotten from a secured loan or a loan from a family member.
3. The government has just given first time homebuyers an (up to) $8,000 tax credit. For full details, click here. The good news is that if you have not owned a home in greater than three years, you are now a first time homebuyer. Here's an idea.... get a loan for the downpayment, close before November 30, 2009, and then file an amended return or wait to file on your 2009 taxes for the credit and pay back the loan. Disclaimer: I am neither a CPA nor an attorney... consult yours first.
4. This may be one we are not talking about much, but we will. As more and more people unfortunately lose their homes to foreclosure, they will have to live somewhere. Combine the law of supply and demand with mini monopolies, and you will start to see rent increase. While those post foreclosure may have to pay the inflated costs, those that have been renting can now buy those same homes that were given up and get great deals. What about having that first time homebuyer purchase a bank-owned or HUD home and be able to borrow up to $35,000 to fix it up. How far will that and a tax credit check go for someone who has been renting????
As you can see, and please comment on, this is a great time to get the renters off the fence and into a home of their own. If you need some other suggestions, please contact me. If you are a Realtor in Indiana, let's talk about how we can work together to get more people into homes of their own.
In the past, I have written about the big three credit bureaus… Trans Union, Experian and Equifax. While there are several others, I would like to introduce you to a fourth; ChoicePoint.
ChoicePoint is the company that produces the CLUE reports (Comprehensive Loss Underwriting Exchange) that the insurance companies use to determine your risk, and therefore your rates, for your homeowners and auto insurance.
Much like the credit reporting bureaus, ChoicePoint gets it’s information from the insurance companies. If you file an auto or homeowner’s claim, the nature of the claim and the amount paid is reported to and stored by ChoicePoint. It is then sold to other insurance companies who use the information to determine your rates (and whether or not they will insure you).
I was searching online the other day and came across a great little article written by the Department of Housing and Urban Development (HUD). It states that they want all Americans to manage their money and have the option of preparing for homeownership.
So do I.
They list five “Key” steps to take to when preparing to purchase a home. You can remember them because the acronym is “OWNER”.
Here are the five steps with a brief description of each.
As most of you do not know, I was a firefighter / paramedic in my “former life”. In 1999, I had shoulder surgery because of an accident in an ambulance that essentially ended my career on the streets.
Lately, I have had several people ask about my time on the departments and some of the calls that I had been on. All in all, I have worked with a lot of great people and have been fortunate to save quite a few lives, some I can even take credit for. If you don’t believe in God, please help me explain some of the things I have witnessed…..
I just found this poem that I had seen long ago.If you have ever wondered what it's like to do the job, visit my Northwest Indiana Loan Guy blog.
Yes! And no! It just depends on what "free" site you get it from.
You can go to annualcreditreport.com to get a free copy of your credit report from each of the three bureaus once a year. The positive thing is that you do not have to get them all at one time; you can order one every 4 months and be able to check the accuracy of your reports year-round at no charge.
There are other reasons to use this service. First, it is monitored by the Federal Trade Commission and mandated by the government to ensure that everyone has access to their credit report. Second, it really is free of charge and there are no strings attached.
The only negative to this service is that you.....
(Another slected entry from a previous post on a different blog)
You betcha.... In the 2004 report "Mistakes Do Happen: A Look At Errors In Consumer Credit Reports" published by the National Association of State PIRGs, it was noted that 79% of credit reports surveyed contained "either serious errors or mistakes of some kind". 79% of ALL credit reports contain errors in case you just glanced over that part! Additionally, here is what they found.....
25% of the reports contained serious errors that could result in the denial of credit, such as false delinquencies or accounts that did not belong to the consumer;
54% contained personal demographic information that was misspelled, long outdated, belonged to a stranger, or was otherwise incorrect;
22% of the credit reports listed the same mortgage or loan twice;
8% (almost) were missing major credit, loan, mortgage or other consumer accounts that demonstrate the creditworthiness of the consumer;
30% contained credit accounts that had been closed by the consumer but remained listed as open.
My blogs are not about selling anything, but when a great product comes along, I feel the need to share it.
Don Conrad, an up-and-coming guru in the investment real estate circles, has just released a great new idea called the Tenant Reference Manual. In a nutshell, if you are a landlord, you need to be giving your tenants some type of reference book, if for no other reason than to avoid irritating calls at 3:00 a.m. The more important reason may be to alleviate issues that might arise and lead to legal battles.
Why not empower the tenants to take care of the home, maintain things such as smoke and CO detectors, as well as prepare them for the unexpected like fire extinguisher use.
For a very low cost alternative to creating your own 60 page manual, click here and read more about it. To paraphrase that credit card commercial, Don't Rent a Home Without It.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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