The NEW Mortgage Revolution begins - Home Ownership Accelerator mortgage
"The Real Estate Story Hour" radio program - Tuesdays 9am-10am MST
To listen: http://www.castlerockradio.com/
Please call the show to share a Sad Story, a Happy Story, a Success Story or any Real Estate story - dial #888-321-7234
On the 9/18/2007 broadcast - Steve Hickox welcomed this week's guest: Jason Clark - Account Executive with CMG Financial Services - Home Ownership Accelerator mortgage
The whole real estate and mortgage industry has dramatically changed over the last 12 months. Remember the good times in Real Estate & mortgages in 2004-2006 ...allowing people to not only buying their own home - but also have a mortgage for them to have lower payments. For some, owning a home was living the American Dream. The mortgage industry followed by developing some Creative mortgage products and increased their markets (i.e. Option Arms, No Down-payment, Alt-A, Sub-prime, etc.). Everything worked GREAT in a good & increasing market; that is as long as real estate prices were appreciating.
But, "When It Rains, It Pours!" As soon as something went wrong ...everything started to come apart ...like, increasing numbers of defaulting loans to banks, foreclosures, valuation fraud, lenders imploding and closing their doors, lay offs from title companies & lenders, etc.
Listening to the mainstream media/news it was the various mortgage products to blame for the real estate market. Reporters asked Alan Greenspan his opinion of the whole real estate industry. Is this a bad time to buy real estate?
National politics is coming to the front stage in 2008, did you want the President, or the candidates like Fred, Barrack, John, Hillary, Rudy or Milt to allow the federal government to bail out the bad management decisions of big companies that went after market share and dramatic growth - loosening their underwriting guidelines for stated income borrowers (i.e. Countrywide, )? Are they promising to funnel taxpayer dollars to bail out people who wanted the Variable Rate Loans to buy the $500k home that they could not afford before? The foreclosure is just the real estate market correcting itself.
If today is a BUYERS MARKET in Real Estate - then logically, NOW is a Good Time to BUY! ...and there is a GOOD Solution as the NEW Mortgage Revolution begins - The Home Ownership Accelerator mortgage ...I'll get off my soap-box now and introduce Jason Clark - as this week's guest on ‘The Real Estate Story Hour.'
Jason Clark - an Account Executive from CMG Financial Services (a wholesale mortgage lender) and Steve Hickox started the show talking about Financial Discipline and the American Dream - owning your own home free and clear.
Our first caller asked: Has a brother (in WA state) who owns a rental home and wants to sell the property to his renter. He doesn't want to do an owner carry - just wants to cash out. However, the renters can not qualify for a loan. Do you have any options for them?
Steve had said that, he likes the brother's situation; having a good renter that is taking care of the property. There are so many times that's not the case. However, Steve pointed out the first thing to consider is some Credit repair/credit enhancement. It's going to take some time, but will get them moving forward to show they have financial discipline.
Dealing with a good mortgage broker that is a professional, to qualify them for a mortgage will understand their circumstances and know where to go for a good solution ...so, the suggestion for the brother is to be patient; reminding all of us to live below our means.
Jason concurred; saying that right now, everyone should first pay attention to your own credit. It is one step in being financially disciplined. Another step is not maxing out your credit cards while living paycheck to paycheck. When you create some savings, or have equity in your home instead of just making your monthly interest payment, it leads into good things. Shows your financial discipline, have positive cash flow, etc.
Steve also pointed out another option is to find a Co-signer for the loan.
Jason talked about the Home Ownership Accelerator mortgage (HOA for short) ...uses the money that sits in your checking or savings account (earning little interest at best) and pays down the principal amount of your mortgage. Using your positive cash flow, the HOA usually can pay off (compared to) a 30 year fixed-rate mortgage in about half the time. There's no special software, no outside management/fees or second mortgage is not needed.
Why would anyone use their entire checking/savings or entire paycheck to pay down the principal amount of your mortgage? What about the other monthly bills - credit cards, groceries, etc.? With the HOA, you have access to the equity in your house on a 24/7 basis by having unlimited checks and a ATM/Debit card ...the HOA is the only mortgage product we know of that allows you to gain back the money you just paid 1 day, a week, 5 weeks, etc. up to 90% of the value of your primary or secondary home. ...and it is all back by GMAC Bank - one of the nations Biggest Financial Institutions. Again, the HOA mortgage product is ONLY for people that have positive cash flow and the financial discipline to be their own bank.
The HOA has NO Minimum balance ...it is used as a sweep account - moving money from one account to the other as needed. If there is a positive balance in the checking account, it is moved over to pay down the mortgage. When you write a check or use the ATM - the money gets swept over from your mortgage account ...it's that simple.
The hardest question to answer is: What is the HOA monthly payment? There is no set monthly payment because it is based on your cash flow/financial discipline and account balance. If you want to check out our 5 minute video to explain this further - go to http://www.homeownershipaccelerator.net/
Steve did the same thing like the HOA a number of years ago for buying Fix & Flip properties, using a Home Equity Line of Credit (HELOC) as a second mortgage on his home. Anytime Steve would have some cash, or get people paying him their rent money, he would pay down the HELOC. But the down side of Steve's HELOC was having to re-apply every year; strict re-payment schedule and additional fees each year of the loan. The HOA is a 30 year line of credit and is not tied to a set repayment schedule.
The HOA works for three kinds of people with Positive Cash Flow:
•1) pay off the house as fast as possible (any kind of professional)
•2) investor ...(i.e. real estate, stock market, and business owners)
•3) reverse mortgage ...HOA allows a person before the age 62 to do a reverse mortgage
HOA is a Variable Rate mortgage product. It is tied to the 1 month LIBOR index - which is historically 1 to 2% under the Prime Rate. Currently, the Prime Rate is at:7.75 and LIBOR Rate is:5.5121 as of 10/1/2007 ...but with the news that the Fed Rate Cut could be up to ½ pt - Jason is thinking the 1 month LIBOR rate could be under 5% by the end of the year. HOA has a lifetime cap of 5 pts ...but the important thing is not to compare rate side by side with the Prime Rate - because the great thing about the HOA's benefit is using your cash flow to pay down principal first - and that dramatically effects the amount of interest you pay in the lifetime of the loan.
To really see the difference of how much interest you can SAVE using the HOA versus a 30 year fixed-rate mortgage - we have an loan simulator at: http://www.homeownershipaccelerator.net/
For more information about the Home Ownership Accelerator mortgage - you can contact either Castle United at: 866-901-9455 or visit the HOA web-site: http://www.homeownershipaccelerator.net/ to either watch the 5 minute video of how the HOA works; or, the loan simulator. Afterwards, you may want to JOIN the NEW Mortgage Revolution.
Our second caller's question: If I have a daughter going to college next year and we are thinking about buying a rental property in the town, is this a good time to buy real estate?
Great Question - Steve explained that college towns don't suffer the same volatility as the rest of the real estate market w/seasonal demand by students ...but this is also a good and practical lesson for the college student - to see and experience all of the things a rental property does ...cash flow, property management, collecting the rent, improvements/repairs, etc. Keep in mind, today's real estate is a buyers market ... finding the right deal - being patient & shopping are key to finding pretty good deals.
Steve asked Jason if people are considering this option - buy a second home, if that qualifies for the Home Ownership Accelerator mortgage? Unfortunately, Jason pointed out that in this case, it would be an investment property and is not eligible. The HOA can be put it on either their primary home or a second home. If you wanted to put the HOA on your primary home to finance the purchase of this investment property, that is possible and OK.
Steve talked about a Castle Commercial Mortgage - looking for new capital - contribute - for commercial loans: Fix & Flip loans and small construction loans - looking for people that want a higher rate of return - all mortgages/loans are made in Colorado.
Our third caller asked about Ski/Resort properties - Any Thoughts?
Steve said: Our analysis shows Colorado's western slope market due to the Oil & Gas development for at least the next 10-15 years (as long as the energy prices stay where they currently are) is a good appreciating real estate market. Ski/Resort properties tend to positively appreciate despite what the rest of national real estate market is doing; and are in constant demand from foreign investors (out of state) ...wanting a vacation home or rental property. However, Steve's hesitation is to these resort properties are hard to have them cash flow from seasonal rentals and property management fees.
Steve took some time to talk about Castle Commercial Mortgage - being a private money lender in Colorado; specializing in Fix & Flip Loans and small construction loans. Castle Commercial Mortgage is growing their pool of private funds and now has a cash-flow investment opportunity.
The minimum investment with Castle Commercial Mortgage is $50,000 ...liquidity? - with a demand letter, we can accommodate the request almost immediately - but the terms are current set at 30 days. For those people interested in investing in Colorado Real Estate, do not want the hassle of maintaining a property, nor want to look for renters, or have the ups and downs of the real estate market - this may work for you. Please call Castle United at: 866-901-9455 for more information about becoming one of Castle Commercial Mortgage's investors.
Many thanks to Julie, Denise, Milissa, Katie and Chris for your questions and funny real estate stories.
Listen and call the show with your questions or a Real Estate Story. Below is other some contact info of the show sponsors, bio and how to listen to past shows.
Until next time - We wish you much success & like to help you achieve it!
Take Care & God Bless!
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Program Sponsors:
1031x.com
2120 S. Birch St., Suite 300, Denver, CO 80222
Qualified Intermediary / Bonded & member of FEA
web-site: http://www.1031x.com/ toll free phone # 888-899-1031
1031 Energy Properties
1031 Oil and Gas Replacement Properties
web-site: http://www.1031energy.com/ phone # 866-901-9455
1031 Property Swap
FREE Property Listings
web-site: http://www.1031propertyswap.com/ phone # 888-899-1031
Castle Commercial Mortgage Co.
2120 S. Birch St., Suite 200, Denver, CO 80222
Private (Hard) Money Lender; Fix & Flip loans; Mortgage Broker Services; Personal Credit Report Analysis; member of CMLA
web-site: http://www.castlecommercialmortgage.com/ phone # 303-756-0277
IRS Form 8824
web-site: http://www.irsform8824.com/ phone # 866-901-9455
Castle-NNN
2120 S. Birch St., Suite 100, Denver, CO 80222
TIC (Tenants In Common) and Replacement Properties
web-site: http://www.castle-nnn.com/ phone # 866-901-9455
Castle Web Builders
2120 S. Birch St., Suite 350, Denver, CO 80222
Building Your Business on the Web; Web-site Design & Web Hosting
web-site: http://www.castlewebbuilder.com/ phone # 866-901-9455
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Program Host:
Steve Hickox - Real Estate Attorney in Denver, CO; seasoned Real Estate Investor (Fix & Flips); President of Castle United - including 1031x.com and Castle Commercial Mortgage Co. graduate from University of Colorado & law degree from Colorado State University.
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Past Broadcast Dates-Guests & Stories:
9/11/07 Brad Podhajsky - Investors Realty Resource of Colorado
9/11/07 Dave Hickey - United Title Co.
10/2/07 Suzanne West - Keller Williams Action Realty
10/9/07 Julie Forsgren - 1031x.com
10/11/07 Milissa Alexander - Castle-NNN
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To listen to past Broadcasts as a Podcast - go to: http://www.1031propertyswap.com/podcasts.php
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