I am picking up where I left off on my last post. To reiterate a point. Just because it was a foreclosure does not make it a deal.
Your real estate agent should be doing some leg work for you. If you like the house then they should be telling you what other homes in the area are selling for. He may be able to tell when it was last sold, how much of a mortgage is on it, and how long it has been on the market.
All this information should be helping you to determine how much to bid on the house.
Banks want to get it sold but they don't necessarily want to give it away. Remember you are buying it as is. The bank is not going to do anything or fix anything (most likely).
I always tell clients to put in a purchase offer in with a price you can live with. On one end. I have had agents tell me that their clients have told them. "why hasn't anybody put even a low ball bid in on my house?" Then when we did put in a low ball bid they only come back with a 4% lower counteroffer. In this market it is not that great. If you are shopping for a bargain then it should be 10% plus in this market.
On the other end we have put in a 12% below market bid and it is accepted without a counteroffer. The sellers had a bigger mortgage than that. They just wanted to get out of the house.
Signs to look for when looking for a deal: empty house, low mortgage on home, house on market a long time, people have relocated, people are getting divorced. Check the house value against what has sold in the six months (not a year). Good luck and happy hunting. Search Michigan Homes free on my website www.russravary.com Russ Ravary
Thursday, March 29, 2007
Are you selling or aren't you?
My pet peeve of the week is sellers who won't let people in. Last weekend we set it up an appointment through another real estate office. We showed up at the house and the seller told us we could not come in. She wanted to know if 3 days from then would be okay!!! Duh. The seller just got the buyer mad and they are not coming back to look at that house. She supposedly does not empty her messages off the answering machine to know when the appointments are scheduled. Not the smartest seller in the world.
I have two more. Another one we called to see tomorrow they said how about next week towards the end of the week. This was a lease. The people need to move. They will be looking elsewhere.
Another one we called to see tomorrow (a different buyer and seller) the seller said not tommorrow but how about Sat between 12-1 or Sun 4-5. 3 days later again and to at thier convenience.
If you are going to sell your house make a committment to yourself and let it be shown whenever possible. It is a slow market you can't afford to let a buyer go by. There are some houses that are not getting lookers but once a month. I can understand if you have out of town guests, birthday party, a child sick, but let your agent show it as much as he can. Even if it short notice, even if it is not perfect.
I sold one house this way. Another agent was in front of my buyers house and called me. They wanted to get in right then. They liked the looks of the house. I called my buyer. He ranted and raved about no notice. I told him to quickly make the bed and apologize to the prospective buyer on how it was not totally cleaned up. That buyer bought the house. They put in a bid that night!!!
If you are thinking of selling your home. Don't let the buyer get away. Don't let the buyer get away. Don't let the buyer get away.
They are far and few between right now. They will put your house on the back burner like you did them. There are so many houses on the market to look at. Make it available. Make it easy to show all the time. I know it is work to keep it clean and pretty. But if you truly want to move and sell the house then you might have to pack up the kids, the dog and run out of the house. Go to my website and do one of the March things to do in Michigan. If you want to search for Michigan Homes go to my website www.russravary.com
I have two more. Another one we called to see tomorrow they said how about next week towards the end of the week. This was a lease. The people need to move. They will be looking elsewhere.
Another one we called to see tomorrow (a different buyer and seller) the seller said not tommorrow but how about Sat between 12-1 or Sun 4-5. 3 days later again and to at thier convenience.
If you are going to sell your house make a committment to yourself and let it be shown whenever possible. It is a slow market you can't afford to let a buyer go by. There are some houses that are not getting lookers but once a month. I can understand if you have out of town guests, birthday party, a child sick, but let your agent show it as much as he can. Even if it short notice, even if it is not perfect.
I sold one house this way. Another agent was in front of my buyers house and called me. They wanted to get in right then. They liked the looks of the house. I called my buyer. He ranted and raved about no notice. I told him to quickly make the bed and apologize to the prospective buyer on how it was not totally cleaned up. That buyer bought the house. They put in a bid that night!!!
If you are thinking of selling your home. Don't let the buyer get away. Don't let the buyer get away. Don't let the buyer get away.
They are far and few between right now. They will put your house on the back burner like you did them. There are so many houses on the market to look at. Make it available. Make it easy to show all the time. I know it is work to keep it clean and pretty. But if you truly want to move and sell the house then you might have to pack up the kids, the dog and run out of the house. Go to my website and do one of the March things to do in Michigan. If you want to search for Michigan Homes go to my website www.russravary.com
Tuesday, March 27, 2007
Foreclosures in Michigan
Good News Florida is number 1 in foreclosures. We are not the only state hurting with slow sales. One nationwide builder in Florida was 85% down from last year. That is a big number.
So you say, what about buying foreclosures. Is it a good time to buy a foreclosure? Let me explain the process of foreclosures in Michigan. First the homeowners miss 3 or more payments on their house. The bank may send them a letter right away stating they need to pay up or they are going to start foreclosure proceedings. Then it takes anywhere from 2 months to a year before the bank turns it over to attorneys and schedule a sheriff sale.
A sheriff sale is where the house is auctioned off to pay off the bank. It is usually held near the county building where the home is located. They send notices out and post it in the paper. When the house is auctioned off anybody can bid. The bottom line is that the bank will usually be the high bidder especially in this market. They have to buy the home back for at least at the price of the mortgage. So if the house was worth $200,000 and they had a mortgage of $190,000. The bank is not going to let it be sold for $100,000 or any low price. They will just buy it back.
In this market they may let you have it at $170,000 or $180,000. Maybe. But most of the time they will buy it back and then list it with real estate agents. The only time it is a good deal is if they have a low mortgage balance versus what the house is worth. But that does not happen very often because there are a few lenders that will loan 60 - 70% even if you are in foreclosure. They scoop up the house if you default again with only a 60% mortgage. They have done good.
So many of the houses have mortgages of over 70% on them. Lately many of them aren't worth the amount of mortgage on them. So it isn't a great deal to buy them at Sheriff sale. You must know what the house is worth for the condition it is in before you put in a bid. You are bidding blind because you can't get into the house to look around. The people who have defaulted on the mortgage are most likely living there. They have been living there rent free because the bank won't (most of the time) take any thing but the full past due amount. But there are times that there are deals at sheriff sale. You just have to be an educated buyer and know what is a good deal.
That comes to the next point. Even if you win the sheriff sale the people who have defaulted have six months to come up with the money to pay off the bank. That very seldom happens. If they haven't paid it up to this point they don't have the money. After six months you get to move in. They will be evicted at the end of the six month redemption period.
Now the bank has it back. I will tell you what they do next in my next post. If you want to search Michigan homes go to my website www.russravary.com and search homes free.
May tomorrows plans come off without a hitch for you. Russ Ravary
So you say, what about buying foreclosures. Is it a good time to buy a foreclosure? Let me explain the process of foreclosures in Michigan. First the homeowners miss 3 or more payments on their house. The bank may send them a letter right away stating they need to pay up or they are going to start foreclosure proceedings. Then it takes anywhere from 2 months to a year before the bank turns it over to attorneys and schedule a sheriff sale.
A sheriff sale is where the house is auctioned off to pay off the bank. It is usually held near the county building where the home is located. They send notices out and post it in the paper. When the house is auctioned off anybody can bid. The bottom line is that the bank will usually be the high bidder especially in this market. They have to buy the home back for at least at the price of the mortgage. So if the house was worth $200,000 and they had a mortgage of $190,000. The bank is not going to let it be sold for $100,000 or any low price. They will just buy it back.
In this market they may let you have it at $170,000 or $180,000. Maybe. But most of the time they will buy it back and then list it with real estate agents. The only time it is a good deal is if they have a low mortgage balance versus what the house is worth. But that does not happen very often because there are a few lenders that will loan 60 - 70% even if you are in foreclosure. They scoop up the house if you default again with only a 60% mortgage. They have done good.
So many of the houses have mortgages of over 70% on them. Lately many of them aren't worth the amount of mortgage on them. So it isn't a great deal to buy them at Sheriff sale. You must know what the house is worth for the condition it is in before you put in a bid. You are bidding blind because you can't get into the house to look around. The people who have defaulted on the mortgage are most likely living there. They have been living there rent free because the bank won't (most of the time) take any thing but the full past due amount. But there are times that there are deals at sheriff sale. You just have to be an educated buyer and know what is a good deal.
That comes to the next point. Even if you win the sheriff sale the people who have defaulted have six months to come up with the money to pay off the bank. That very seldom happens. If they haven't paid it up to this point they don't have the money. After six months you get to move in. They will be evicted at the end of the six month redemption period.
Now the bank has it back. I will tell you what they do next in my next post. If you want to search Michigan homes go to my website www.russravary.com and search homes free.
May tomorrows plans come off without a hitch for you. Russ Ravary
Sunday, March 25, 2007
Upside down in a Michigan home
What do you do if you are upside in a home?. What do I mean by being upside down?
With Michigan's economy and housing market we are seeing more and more people in this predicament. What has happen is that your house value has fallen below what you owe on the mortgage.
Upside down means that you owe more on the house than the house is worth. It does not mean anything if you are staying in the home and you can afford the mortgage payment. You just have to ride out our poor housing market and continue to pay down the mortgage.
The problem is if your payment is going to rise beyond what you can afford or you have to relocate. Or if you can't keep up and you are going into foreclosure. Then you have a problem. First you need to contact the bank and try to work something out with them. Either a lower payment or giving the home back to the bank(They call it deed in lieu of foreclosure) you are giving the house back to the bank and moving out right away. If you truly have financial problems the bank will try to work with you. However there are some banks out there that are hard noses.
If you can't work out something with the bank then you need to consult with a bankruptcy lawyer next.
The last choice if nothing else works out if that you may have walk away from the house. If you can't sell it, you can't afford the payment, you have to move to get a job, you can't work out a deal with the bank, you can't file bankruptcy, then you may have to walk away from the house. If you want to talk about your options go to my website and contact me. I'll try to help you on what to say to the bank. Or to see if you have any options. www.russravary.com
If you are upside down and are staying the house start paying a little extra each month to lower the mortgage balance. Do you know if you make one extra payment a year on a 30 year mortgage that you will cut it down to about 22 years. Even a little bit each month helps. Good luck and have a great week.
With Michigan's economy and housing market we are seeing more and more people in this predicament. What has happen is that your house value has fallen below what you owe on the mortgage.
Upside down means that you owe more on the house than the house is worth. It does not mean anything if you are staying in the home and you can afford the mortgage payment. You just have to ride out our poor housing market and continue to pay down the mortgage.
The problem is if your payment is going to rise beyond what you can afford or you have to relocate. Or if you can't keep up and you are going into foreclosure. Then you have a problem. First you need to contact the bank and try to work something out with them. Either a lower payment or giving the home back to the bank(They call it deed in lieu of foreclosure) you are giving the house back to the bank and moving out right away. If you truly have financial problems the bank will try to work with you. However there are some banks out there that are hard noses.
If you can't work out something with the bank then you need to consult with a bankruptcy lawyer next.
The last choice if nothing else works out if that you may have walk away from the house. If you can't sell it, you can't afford the payment, you have to move to get a job, you can't work out a deal with the bank, you can't file bankruptcy, then you may have to walk away from the house. If you want to talk about your options go to my website and contact me. I'll try to help you on what to say to the bank. Or to see if you have any options. www.russravary.com
If you are upside down and are staying the house start paying a little extra each month to lower the mortgage balance. Do you know if you make one extra payment a year on a 30 year mortgage that you will cut it down to about 22 years. Even a little bit each month helps. Good luck and have a great week.
Thursday, March 22, 2007
Rates holding steady
With Michigan economy slowed down, our interest rates are holding steady. For a thirty year fixed they are hovering around the 6% mark, which is an excellent rate considering 10 - 20 years ago they were are high as 8-10%.
I keep telling everybody if you don't have to sell don't. It is not a market that you can put your house out there and hope somebody will pay top dollar. It's a buyer's market here in Detroit. You can search Michigan Homes and find good deals out there.
The only reason you want to put your home up for sale is because you are relocating, you can't afford the payment, you are getting divorced, it is in estate. Or if you are moving up into a bigger house. You are not going to make as much as you would have on the sale of your house two years ago. But you will gain some much value on a bigger home.
Here is the big but - please do not stretch yourself into a variable rate or a negative amortization loan in order to buy a bigger home. If your loan is called an option arm, balloon mortgage, arm, smart choice loan, adjustable rate mortgage, pick a payment loan and you are pushing you monetary limits to get into the house....... You are doing the wrong thing to your self. What happens when the rate goes up, what happens when the balance of the loan goes up?
Houses in Michigan are not gaining in value. I am noticing even in the expired listings each day that about 25% of the home listed are owned by banks. I don't want you to get into that problem. I want you to buy a home, to be able to afford it, to be able to live a good life beyond being house poor. I want you to be able to say that was a good move 5-10 years from now while living in the house. I don't want to add stress in your life of you going into foreclosure.
For more mortgage information or Michigan real estate information go to my website www.russravary.com If have a great Michigan things to do section and a great Michigan things to do section by month.
"Life comes by you only once. Today will be gone forever soon. Enjoy it, thank a friend for their friendship and help, and forget about the little problems" Have a great day. Russ Ravary
I keep telling everybody if you don't have to sell don't. It is not a market that you can put your house out there and hope somebody will pay top dollar. It's a buyer's market here in Detroit. You can search Michigan Homes and find good deals out there.
The only reason you want to put your home up for sale is because you are relocating, you can't afford the payment, you are getting divorced, it is in estate. Or if you are moving up into a bigger house. You are not going to make as much as you would have on the sale of your house two years ago. But you will gain some much value on a bigger home.
Here is the big but - please do not stretch yourself into a variable rate or a negative amortization loan in order to buy a bigger home. If your loan is called an option arm, balloon mortgage, arm, smart choice loan, adjustable rate mortgage, pick a payment loan and you are pushing you monetary limits to get into the house....... You are doing the wrong thing to your self. What happens when the rate goes up, what happens when the balance of the loan goes up?
Houses in Michigan are not gaining in value. I am noticing even in the expired listings each day that about 25% of the home listed are owned by banks. I don't want you to get into that problem. I want you to buy a home, to be able to afford it, to be able to live a good life beyond being house poor. I want you to be able to say that was a good move 5-10 years from now while living in the house. I don't want to add stress in your life of you going into foreclosure.
For more mortgage information or Michigan real estate information go to my website www.russravary.com If have a great Michigan things to do section and a great Michigan things to do section by month.
"Life comes by you only once. Today will be gone forever soon. Enjoy it, thank a friend for their friendship and help, and forget about the little problems" Have a great day. Russ Ravary
Rates holding steady
With Michigan economy slowed down, our interest rates are holding steady. For a thirty year fixed they are hovering around the 6% mark, which is an excellent rate considering 10 - 20 years ago they were are high as 8-10%.
I keep telling everybody if you don't have to sell don't. It is not a market that you can put your house out there and hope somebody will pay top dollar. It's a buyer's market here in Detroit. You can search Michigan Homes and find good deals out there.
The only reason you want to put your home up for sale is because you are relocating, you can't afford the payment, you are getting divorced, it is in estate. Or if you are moving up into a bigger house. You are not going to make as much as you would have on the sale of your house two years ago. But you will gain some much value on a bigger home.
Here is the big but - please do not stretch yourself into a variable rate or a negative amortization loan in order to buy a bigger home. If your loan is called an option arm, balloon mortgage, arm, smart choice loan, adjustable rate mortgage, pick a payment loan and you are pushing you monetary limits to get into the house....... You are doing the wrong thing to your self. What happens when the rate goes up, what happens when the balance of the loan goes up?
Houses in Michigan are not gaining in value. I am noticing even in the expired listings each day that about 25% of the home listed are owned by banks. I don't want you to get into that problem. I want you to buy a home, to be able to afford it, to be able to live a good life beyond being house poor. I want you to be able to say that was a good move 5-10 years from now while living in the house. I don't want to add stress in your life of you going into foreclosure.
For more mortgage information or Michigan real estate information go to my website www.russravary.com If have a great Michigan things to do section and a great Michigan things to do section by month.
"Life comes by you only once. Today will be gone forever soon. Enjoy it, thank a friend for their friendship and help, and forget about the little problems" Have a great day. Russ Ravary
I keep telling everybody if you don't have to sell don't. It is not a market that you can put your house out there and hope somebody will pay top dollar. It's a buyer's market here in Detroit. You can search Michigan Homes and find good deals out there.
The only reason you want to put your home up for sale is because you are relocating, you can't afford the payment, you are getting divorced, it is in estate. Or if you are moving up into a bigger house. You are not going to make as much as you would have on the sale of your house two years ago. But you will gain some much value on a bigger home.
Here is the big but - please do not stretch yourself into a variable rate or a negative amortization loan in order to buy a bigger home. If your loan is called an option arm, balloon mortgage, arm, smart choice loan, adjustable rate mortgage, pick a payment loan and you are pushing you monetary limits to get into the house....... You are doing the wrong thing to your self. What happens when the rate goes up, what happens when the balance of the loan goes up?
Houses in Michigan are not gaining in value. I am noticing even in the expired listings each day that about 25% of the home listed are owned by banks. I don't want you to get into that problem. I want you to buy a home, to be able to afford it, to be able to live a good life beyond being house poor. I want you to be able to say that was a good move 5-10 years from now while living in the house. I don't want to add stress in your life of you going into foreclosure.
For more mortgage information or Michigan real estate information go to my website www.russravary.com If have a great Michigan things to do section and a great Michigan things to do section by month.
"Life comes by you only once. Today will be gone forever soon. Enjoy it, thank a friend for their friendship and help, and forget about the little problems" Have a great day. Russ Ravary
Monday, March 19, 2007
New home buyer
Are you a first time home buyer? Do you want to get pre-approved? Don't know if you can qualify for a home.
Lenders look at your credit score ( which means your credit history) How many open lines of credit do you have? Do you have a credit card? A car loan? A student loan? Those all show up on your credit report. Even if you are just an authorized user on somebody Else's credit card it shows up.
If you do not have any of those. Then FHA and some banks use rental history, cell phone bills, car insurance bills, utility bills. So if you are thinking of buying a home get the bills in your name if you are paying them. Be sure to pay by check and not money orders or cash.
Just because you never thought you could get a home, you may be pleasantly surprised. Sometimes it is very easy to get a loan even if you are self employed, just out of college, or don't have much money. I always tell young people to start saving money. It helps when you move into the house and you need to buy something. A safety cushion if something breaks or go wrong. If you think you can afford a certain payment, let say $1000 a month. If you only are paying $700 in rent then put the extra $300 away each month. Can you live comfortably? Save that money for a down payment or a rainy day fund.
Thinking of buying and want to see some listings of what you want. Go to my dream home finder and put in your wants. If you just want to surf the net and check out home listings and photos go to Search Michigan homes free. Or if you have to sell your home first go and find out your home's value. Go to www.russravary.com if you want to get pre-approved today.
Ready for a good burger go to Miller's Bar in Dearborn on Michigan ave just east of Telegraph, or try The Redcoat Tavern in Royal Oak at 3808 Woodward. Or for a brew pub go to Leopold Brothers Brewery in Ann Arbor or Thunder Bay Brewery in Auburn Hills. Have a great day.
Russ Ravary
Lenders look at your credit score ( which means your credit history) How many open lines of credit do you have? Do you have a credit card? A car loan? A student loan? Those all show up on your credit report. Even if you are just an authorized user on somebody Else's credit card it shows up.
If you do not have any of those. Then FHA and some banks use rental history, cell phone bills, car insurance bills, utility bills. So if you are thinking of buying a home get the bills in your name if you are paying them. Be sure to pay by check and not money orders or cash.
Just because you never thought you could get a home, you may be pleasantly surprised. Sometimes it is very easy to get a loan even if you are self employed, just out of college, or don't have much money. I always tell young people to start saving money. It helps when you move into the house and you need to buy something. A safety cushion if something breaks or go wrong. If you think you can afford a certain payment, let say $1000 a month. If you only are paying $700 in rent then put the extra $300 away each month. Can you live comfortably? Save that money for a down payment or a rainy day fund.
Thinking of buying and want to see some listings of what you want. Go to my dream home finder and put in your wants. If you just want to surf the net and check out home listings and photos go to Search Michigan homes free. Or if you have to sell your home first go and find out your home's value. Go to www.russravary.com if you want to get pre-approved today.
Ready for a good burger go to Miller's Bar in Dearborn on Michigan ave just east of Telegraph, or try The Redcoat Tavern in Royal Oak at 3808 Woodward. Or for a brew pub go to Leopold Brothers Brewery in Ann Arbor or Thunder Bay Brewery in Auburn Hills. Have a great day.
Russ Ravary
Saturday, March 17, 2007
Second Mortgage Rates
I'm a loan officer at a mortgage broker. We usually can get better deals than a bank can give you. But on second mortgages I tell people to shop the big banks and credit unions. They usually have the best rates and lowest closing costs for second mortgages. When you are shoping for a second mortgage you want to find out what the rate is, is it fixed or variable, is it a home equity line of credit, and how are the closing costs are. Usually you want to go with the lowest closing costs and the lowest rate. Also ask if you can lock the rate later on.
Second mortgage rates usually depend on how much you are borrowing (including the first and second loan amounts) compared to how much you house is worth. If you are only borrowing 70% of what your house is worth the rate will be cheaper than if you were borrowing 90% of what your house is worth. It is a bigger risk for the bank to loan you 90% of the house versus 70% loan. That is why they charge more for the higher risk.
If you want more information on mortgages or would like to apply for a mortgage go www.russravary.com We can help you get pre-approved for a mortgage and start searching for a home. Have a great St. Patricks Day.. May the luck of the Irish be with you all year Russ Ravary
Second mortgage rates usually depend on how much you are borrowing (including the first and second loan amounts) compared to how much you house is worth. If you are only borrowing 70% of what your house is worth the rate will be cheaper than if you were borrowing 90% of what your house is worth. It is a bigger risk for the bank to loan you 90% of the house versus 70% loan. That is why they charge more for the higher risk.
If you want more information on mortgages or would like to apply for a mortgage go www.russravary.com We can help you get pre-approved for a mortgage and start searching for a home. Have a great St. Patricks Day.. May the luck of the Irish be with you all year Russ Ravary
Thursday, March 15, 2007
Financial Risk
I had a fellow mortgage person tell me that a deal we did last year was in foreclosure.
The client worked at Ford Motor at one of the plants and got laid off. He had put on an addition. The client didn't know he was going to get laid off that I know of. I feel bad for this guy. I feel bad for his family. I know how tough it is out there. The construction industry is way down, friends of mine are working 1 and 2 days a week if that. The real estate industry is slow with houses being on the market sometimes over a year. Pfizer, GM, Ford, and Chrysler are all downsizing here in Detroit.
The bottom line is before you consolidate debt into a loan, fix the house up, or put an addition tread carefully. Find out what your house is worth. Is your house worth the money to add on or to update at this time? What would happen if you had to sell right now? Could you even sell your house for what it is worth? What would happen if you lost your job could you survive with the added payments?
The economy is Detroit is tough right now. It's time to make the right financial choice's for you and your family. Don't let some smooth talking loan officer talk you into a negative amortization loan unless you have no other choice and you have to lower the payment or loose the house. If you can't survive in these tough times, it buys you some time in the house.
I have seen some financial planners pitch this product to their clients because they make a lot of money off of it. (Some of their clients should have never even been asked, but the financial planner was looking out for himself more that the client) Some of the other names for a negative amortization loan is pick a payment loan, 4 choice loan, smart choice loan. It is a way of giving you 4 choices on which payment to make each month. Unfortunately the cheapest choice is actually adding principal onto your mortgage balance each month. All of us want the cheapest payment right. Unfortunately it becomes a nightmare for the homeowner later on because he owes so much more on the house.
If you hear 1%, or 2% or a rate so low it seems to good to be true. It is. Current rates are higher than 5 1/2 % for a 30 year fixed. (even with points) So if you hear 1, 2, or 3, 4% there is something hidden that they haven't completely told you. If the payment is different from what all the other loan officers are telling you then check into more. Feel free to pick up the phone and call me at (313) 310-9855 or go to my website www.russravary.com and email me about it, if there is a program you don't understand.
So the bottom line of this blog is don't take on any more debt, or update your house if you are worried about your job. Do the simple things like painting or updating the carpeting. Simple less expensive things that will make you feel good about your house yet not cost you a lot. For more mortgage information go to http://www.russravary.com/
The client worked at Ford Motor at one of the plants and got laid off. He had put on an addition. The client didn't know he was going to get laid off that I know of. I feel bad for this guy. I feel bad for his family. I know how tough it is out there. The construction industry is way down, friends of mine are working 1 and 2 days a week if that. The real estate industry is slow with houses being on the market sometimes over a year. Pfizer, GM, Ford, and Chrysler are all downsizing here in Detroit.
The bottom line is before you consolidate debt into a loan, fix the house up, or put an addition tread carefully. Find out what your house is worth. Is your house worth the money to add on or to update at this time? What would happen if you had to sell right now? Could you even sell your house for what it is worth? What would happen if you lost your job could you survive with the added payments?
The economy is Detroit is tough right now. It's time to make the right financial choice's for you and your family. Don't let some smooth talking loan officer talk you into a negative amortization loan unless you have no other choice and you have to lower the payment or loose the house. If you can't survive in these tough times, it buys you some time in the house.
I have seen some financial planners pitch this product to their clients because they make a lot of money off of it. (Some of their clients should have never even been asked, but the financial planner was looking out for himself more that the client) Some of the other names for a negative amortization loan is pick a payment loan, 4 choice loan, smart choice loan. It is a way of giving you 4 choices on which payment to make each month. Unfortunately the cheapest choice is actually adding principal onto your mortgage balance each month. All of us want the cheapest payment right. Unfortunately it becomes a nightmare for the homeowner later on because he owes so much more on the house.
If you hear 1%, or 2% or a rate so low it seems to good to be true. It is. Current rates are higher than 5 1/2 % for a 30 year fixed. (even with points) So if you hear 1, 2, or 3, 4% there is something hidden that they haven't completely told you. If the payment is different from what all the other loan officers are telling you then check into more. Feel free to pick up the phone and call me at (313) 310-9855 or go to my website www.russravary.com and email me about it, if there is a program you don't understand.
So the bottom line of this blog is don't take on any more debt, or update your house if you are worried about your job. Do the simple things like painting or updating the carpeting. Simple less expensive things that will make you feel good about your house yet not cost you a lot. For more mortgage information go to http://www.russravary.com/
Tuesday, March 13, 2007
Mortgage meltdown
If you have been reading the newspaper or watching Good Morning America this morning. You would have heard about the mortgage meltdown. What does the mortgage meltdown really mean to the average consumer?
Let's start with why it happened. Banks, and lenders began loosening lending guidelines about 6-7 years ago. They made it easier for almost anybody to get a loan. You did not have to show employment sometimes, sometimes you did not have to verify income, and sometimes you did not even need one dime to buy a house. It was easy to get a loan even if you were self-employed, had a recent bankruptcy, or even a prior foreclosure.
The gurus in the back room thought they had figured out the projected default rate. They factored that into the interest rate. So if 10 out of a 1000 people were going to default as they guessed then they charged a little higher rate to everybody. Just like they do with credit cards. The good payers subsidize the losses of the non-payers. That is the way of business.
Well unfortunately the gurus in the back room under figured the losses. So long as the real estate market is going up all was well. The foreclosures are huge right now. Especially Michigan foreclosures, we are near the top of the list. The banks, the lenders, and investment portfolios are taking losses. Yes investment portfolios, mortgages were being bundled up and sold on wall street. They are in various mutual funds and hedge funds now. So those funds are going to lose a little value here and there.
But the major consequence of what is happening is that lenders are going out of business, there is a tightening of loan criteria. No longer can anybody just sign and get a loan. There are less choices and less programs for loan officers. Less choices for consumers. So some people that could have bought a house last year with no money down, may need money or may not even be able to get a loan. Before lenders could sell those loans on wall street, now wall street wants nothing to do with them because of all the losses. It's not profitable.
Less people on Wall Street to sell to, less companies able to stay in business, less choices and fewer easy options for Mortgages for the average consumer.
Interest Rates are going to be higher for non-conforming people. People with bruised credit, self-employed people with no verifiable income, people with no reserves are non-conforming people.
Where the biggest danger is that some of adjustable rate mortgages may rise quickly. Good Morning America was saying that you needed to be in a 30 year fixed rate mortgage if you could be. I think that is a great idea. We are near the low point of mortgage rates. Rates may come down a little but the possibility of them going up is greater.
So if you are thinking of selling to get out from under your mortgage, or just thinking of moving out of state.... you can check your houses value at www.checkmyhousesvalue.com
I always thought people should have a little reserves when they buy a home. What happens if the furnace fails or the roof leaks. Sure it's nice to buy a home, but I would like my clients to be able to afford the home. So they can be in it 5 -10 years down the road and not lose it to foreclosure. If you want more information on mortgages, want a good rate feel free to call me at (313) 310-9855 or go to my website at www.russravary.com May life treat you and your family well today. Russ Ravary
Let's start with why it happened. Banks, and lenders began loosening lending guidelines about 6-7 years ago. They made it easier for almost anybody to get a loan. You did not have to show employment sometimes, sometimes you did not have to verify income, and sometimes you did not even need one dime to buy a house. It was easy to get a loan even if you were self-employed, had a recent bankruptcy, or even a prior foreclosure.
The gurus in the back room thought they had figured out the projected default rate. They factored that into the interest rate. So if 10 out of a 1000 people were going to default as they guessed then they charged a little higher rate to everybody. Just like they do with credit cards. The good payers subsidize the losses of the non-payers. That is the way of business.
Well unfortunately the gurus in the back room under figured the losses. So long as the real estate market is going up all was well. The foreclosures are huge right now. Especially Michigan foreclosures, we are near the top of the list. The banks, the lenders, and investment portfolios are taking losses. Yes investment portfolios, mortgages were being bundled up and sold on wall street. They are in various mutual funds and hedge funds now. So those funds are going to lose a little value here and there.
But the major consequence of what is happening is that lenders are going out of business, there is a tightening of loan criteria. No longer can anybody just sign and get a loan. There are less choices and less programs for loan officers. Less choices for consumers. So some people that could have bought a house last year with no money down, may need money or may not even be able to get a loan. Before lenders could sell those loans on wall street, now wall street wants nothing to do with them because of all the losses. It's not profitable.
Less people on Wall Street to sell to, less companies able to stay in business, less choices and fewer easy options for Mortgages for the average consumer.
Interest Rates are going to be higher for non-conforming people. People with bruised credit, self-employed people with no verifiable income, people with no reserves are non-conforming people.
Where the biggest danger is that some of adjustable rate mortgages may rise quickly. Good Morning America was saying that you needed to be in a 30 year fixed rate mortgage if you could be. I think that is a great idea. We are near the low point of mortgage rates. Rates may come down a little but the possibility of them going up is greater.
So if you are thinking of selling to get out from under your mortgage, or just thinking of moving out of state.... you can check your houses value at www.checkmyhousesvalue.com
I always thought people should have a little reserves when they buy a home. What happens if the furnace fails or the roof leaks. Sure it's nice to buy a home, but I would like my clients to be able to afford the home. So they can be in it 5 -10 years down the road and not lose it to foreclosure. If you want more information on mortgages, want a good rate feel free to call me at (313) 310-9855 or go to my website at www.russravary.com May life treat you and your family well today. Russ Ravary
Friday, March 9, 2007
What are points? Mortgage Information
If you have good credit, you should never have to pay points!!! The only reason to pay points when you have good credit is to buy discount points to get the rate down. You should know or have a general idea of what rates are. So let's say for example rates are 6% at some of the local banks and mortgage brokers. But you know you are going to stay in the house for a long time, you are a saver, and rates are pretty low. You can buy down the rate by paying 1 or 2 discount points. 1 point usually lowers the rate by a 1/4 of a percent and 2 points usually lowers the rate by 1/2 percent.
A point is one percent of the loan amount. So if your loan was $200,000, 1 point is $2,000 to lower it a 1/4 % from 6 to 5 3/4%. 2 points is $4,000 to buy the rate down 1/2 percent to 5 1/2%. The amount points buy down a rate vary from each bank or mortgage broker so be sure to check with them what the cost of the point and how much it will bring down your rate.
The reason you don't want to buy points usually is because it takes anywhere from 4 to 7 years to re coup the money from buying the points. So if you refinance or sell your house during that period you lose that savings. You just threw that money out the window. Most people refi or move during that period.
Let's continue with that example. A $200,000 30 year fixed loan at 6% will have a payment of $1199.10. If you buy that loan rate down a 1/4% you would have a $200,000 30 year fixed rate at 5 3/4% with a payment of $1167.15 that cost you $2000 to do . A savings of $31.95 a month or $11,502 saving over the life of the loan! If you minus the $2,000 cost for the point then it is $9,502 over the life of the loan. Quite substantial. But only if you stay in the loan.
To figure your breakeven point you take the cost of the point ($2,000) and divide by the savings ($31.95). $2,000 divided by $31.95 = 62.59 months. It would take you about 63 months to break even. So you would have to stay in the loan for 5 years 3 months before it is a benefit to you and you actually start saving money. For more mortgage information go to www.russravary.com May today's troubles disappear quickly for you. Russ Ravary
A point is one percent of the loan amount. So if your loan was $200,000, 1 point is $2,000 to lower it a 1/4 % from 6 to 5 3/4%. 2 points is $4,000 to buy the rate down 1/2 percent to 5 1/2%. The amount points buy down a rate vary from each bank or mortgage broker so be sure to check with them what the cost of the point and how much it will bring down your rate.
The reason you don't want to buy points usually is because it takes anywhere from 4 to 7 years to re coup the money from buying the points. So if you refinance or sell your house during that period you lose that savings. You just threw that money out the window. Most people refi or move during that period.
Let's continue with that example. A $200,000 30 year fixed loan at 6% will have a payment of $1199.10. If you buy that loan rate down a 1/4% you would have a $200,000 30 year fixed rate at 5 3/4% with a payment of $1167.15 that cost you $2000 to do . A savings of $31.95 a month or $11,502 saving over the life of the loan! If you minus the $2,000 cost for the point then it is $9,502 over the life of the loan. Quite substantial. But only if you stay in the loan.
To figure your breakeven point you take the cost of the point ($2,000) and divide by the savings ($31.95). $2,000 divided by $31.95 = 62.59 months. It would take you about 63 months to break even. So you would have to stay in the loan for 5 years 3 months before it is a benefit to you and you actually start saving money. For more mortgage information go to www.russravary.com May today's troubles disappear quickly for you. Russ Ravary
Wednesday, March 7, 2007
Well the stock market has added to Michigan's woes. Many people have been slammed by falling house prices. For many people their homes were their biggest asset. Michigan home values have fallen as much as 20% in some areas. Along with their 401k and mutual funds it has struck people hard.
Now is the time to buckle down and get down to financial basics. Have you gone through your expenses lately? Do you have extra features on the phone such as call waiting, call forwarding, caller id that you could do without? Can you survive on just basic cable? Have you checked prices on your car and home insurance? A friend of mine Bill Tuccini once told me that his dad used to say " take care of the pennies the dollars will take care of themselves".
Cut up the extra credit cards and live within your means. buy what you can afford. Don't use that home equity for nothing. Change it over into a fixed loan. Start paying down your mortgage.
If you are thinking of moving go to http://www.checkmyhousesvalue.comw/ have a great day.
Now is the time to buckle down and get down to financial basics. Have you gone through your expenses lately? Do you have extra features on the phone such as call waiting, call forwarding, caller id that you could do without? Can you survive on just basic cable? Have you checked prices on your car and home insurance? A friend of mine Bill Tuccini once told me that his dad used to say " take care of the pennies the dollars will take care of themselves".
Cut up the extra credit cards and live within your means. buy what you can afford. Don't use that home equity for nothing. Change it over into a fixed loan. Start paying down your mortgage.
If you are thinking of moving go to http://www.checkmyhousesvalue.comw/ have a great day.
Friday, March 2, 2007
There are millions of Adjustable Rate Mortgages and balloon mortgages that are coming due in the next year or so. Most of my clients are not in that fix. I was always a thirty year fixed or a fifteen year fixed type of guy. I was raised old school in that you pay off the mortgage.
Unfortunately many accountants, stock brokers, and investment people push clients not to pay off their mortgage for tax benefits, and hopefully investments gains. I myself like the security of knowing that my house is paid off and I owe nobody.
Do you know why mortgage people like Adjustable Rate Mortgages besides the low rates for customers? It is not all in the interest of the client. It is in the interest of the bank, or mortgage broker! If you the client gets a 3 year adjustable mortgage then the mortgage person sets himself up for repeat business in 3 years. That means if you do it every 3 years. He could refinance you 10 times and you still would never be paid off!!! Whereas a fixed person is paid off. Sure they paid more in interest but they are paid off. Plus they did not pay closing costs 10 times. 10 X $2000 in closing costs and you still owe money. It is just keeps coming back to the broker. The broker is setting up a retirement plan off of you!!!!
Then there is other problems that come with it. It is happening in Michigan right now. These are things most brokers never told you about. What happens if the value falls and you were close to 80% of the value of your home 3 years ago. Some Home Values in Michigan have plummeted as much as 20% from there highs. The average is 10 -20% in Michigan right now. That means the customer now has to pay PMI, or stay in the adjustable rate mortgage, or sell the house if they can't afford the new payment. Did your broker tell you that! If you want to check your houses value click here. It is not an appraisal but it will give you a general idea of what your house is worth. For more mortgage information, real estate information, Michigan things to do check out my website at http://www.russravary.com/
So the bottom line is that next time you get a mortgage think about the true cost.
Unfortunately many accountants, stock brokers, and investment people push clients not to pay off their mortgage for tax benefits, and hopefully investments gains. I myself like the security of knowing that my house is paid off and I owe nobody.
Do you know why mortgage people like Adjustable Rate Mortgages besides the low rates for customers? It is not all in the interest of the client. It is in the interest of the bank, or mortgage broker! If you the client gets a 3 year adjustable mortgage then the mortgage person sets himself up for repeat business in 3 years. That means if you do it every 3 years. He could refinance you 10 times and you still would never be paid off!!! Whereas a fixed person is paid off. Sure they paid more in interest but they are paid off. Plus they did not pay closing costs 10 times. 10 X $2000 in closing costs and you still owe money. It is just keeps coming back to the broker. The broker is setting up a retirement plan off of you!!!!
Then there is other problems that come with it. It is happening in Michigan right now. These are things most brokers never told you about. What happens if the value falls and you were close to 80% of the value of your home 3 years ago. Some Home Values in Michigan have plummeted as much as 20% from there highs. The average is 10 -20% in Michigan right now. That means the customer now has to pay PMI, or stay in the adjustable rate mortgage, or sell the house if they can't afford the new payment. Did your broker tell you that! If you want to check your houses value click here. It is not an appraisal but it will give you a general idea of what your house is worth. For more mortgage information, real estate information, Michigan things to do check out my website at http://www.russravary.com/
So the bottom line is that next time you get a mortgage think about the true cost.
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