Archive for the 'Investment' Category
BABY STEPS FOR PAYING DOWN YOUR MORTGAGE
March 8th, 2010 categories: Buying, Investment, Market Trends, Real Estate Finance, Selling
Lew Sichelman seems to be my new favorite columnist. Something I knew but didn’t internalize is how much a small amount of money applied to the mortgage principal can shorten the length of your mortgage. Lew Sichelman recently published an article that gives a number of scenarios for shortening the time you pay on your home. If you do decide to make an extra payment on principal, be sure to tell the your mortgage company that is what the extra money is for. Just like so many things in life, consistency is the key to success. Even $50 per month applied to the principal can shorten the life of your mortgage. Lew also has some good information on PMI (Private Mortgage Insurance) and how to negotiate your way out of it. Refinancing from a 30 year mortgage to a 15 year mortgage is another way to save a large number of interest payments. My suggestion to you is to read the whole article if you want to pay down your mortgage with lightning speed.
Do you need someone to talk to about Chicago real estate–either selling or buying? Please call me if you do–direct dial, 312-981-2360, cell phone is 312-607-1306. E-mail works just fine too!
Other articles you might like to read are:
Why Get An Inspector For My New Home?
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HOUSING FROWNIES FOR 2010?
February 19th, 2010 categories: Buying, Investment, Market Trends, Selling
Usually the Spring selling season begins with the Super Bowl. This year that didn’t quite happen–it actually started in the first week of January. January activity was quite good and February has been a bit slower. Dan Oppenheim, a home building analyst with Credit Suisse, is predicting that we’ll see a strong Spring selling season. He feels that builders are shifting from survival to rebuilding profitability and he also feels that five threats remain:
- The Tax credit will expire–this should give urgency to buyers and help first-quarter sales. What could happen after that is a slowdown.
- Mortgage rates rise. Low mortgage rates have prevailed for a long time. Most analysts expect a rise in rates later this spring when the Federal Reserve stops buying mortgage-backed securities.
- Foreclosures continue. In spite of the government’s efforts, people are still losing their homes and nobody knows when the end will happen. Mr. Oppenheim writes that “The continued supply of foreclosures will mute any improvement in demand.”
- FHA tightens lending. Higher insurance premiums and ecreased seller-provided closing costs will likely cut new home demand between 5% and 10%.
- Jobs. Employment has to improve. People without jobs don’t buy houses.
I don’t mean to end the week on a downer, and I feel we have to look at what is going on carefully. It would be my very greatest plesure to write a post surrounded by wonderful dancing leprechauns–I am going to look for good news and there will be some soon, I’m sure.
Need someone to answer your real estate questions? That is one of the things I do best–just call me. My direct dial is 312-981-2360 cell is 312-607-1306. And there is always e-mail.
Here are a few posts you might find helpful:
Home Affordability–A Balancing Act
Kid Gloves Not Mittens For Today’s Buyer
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FHA–CAN IT HELP ME?
January 29th, 2010 categories: Buying, Investment, Market Trends, Real Estate Finance, Selling
In words of one syllable, YES, it certainly can. The Federal Housing Administration was founded in 1934 as a response to the banking crisis of the Great Depression. There are a few frequently asked questions about FHA loans and I would like to answer them here. A recent Realtors Confidence Index report states that 39 per cent of recent home buyers purchased with a FHA loan. My problem with that is the question of what is a “recent period of time?” Suffice it to say that this type of loan has become more popular because of the housing credit crunch.
1. Does the FHA actually provide the loans?
No, the FHA insures the lender.
2. Are FHA loans available only to low income borrowers?
No, there are loan limits, but the loans are available to any qualified buyer.
3. Is it true that FHA loans are only available for small homes?
No, they can be used for all sorts of properties. Single family homes, condominiums–even owner-occupied multi-unit properties. Repeat, there is a limit to the amnount that can be borrowed. Note: not all condominium associations are eligible for FHA loans.
4. What about first-time home buyers, are FHA mortgages only for them?
No, again, anyone who qualifies can have a FHA loan. If you have a low credit score or a smaller down payment, they are particularly helpful.
5. Are FHA appraisals more difficult than other appraisals?
The lender must use an FHA approved appraiser when they order the appraisal. It shouldn’t take any longer or be any different from any other appraisal.
6. Does FHA loan processing take more time and is it more difficult and complicated than conventional loans?
No, it coesn’t take longer. Any delay can have a variety of causes–incomplete paper work or a slow lender or any of a number of reasons. I have heard of FHA loans closing in 30 days.
7. Can all lenders make FHA loans?
Not everyone can make an FHA loan. The lender must be approved by the FHA.
This is the basic nuts and bolts of the thing. Let me know if you need more information. I can also give you a list of approved condominium associations in a given zip code. Just call me at 312-981-2360 or my cell phone, 312-607-1306 or e-mail me.
Here are three other posts you might enjoy:
Credit Boo Boo Down With Your Credit Score
Home Affordability and Mortgage Rates
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A REVERSE MORTGAGE? FOR ME?
September 3rd, 2009 categories: Investment, Market Trends
It’s an appealing idea, isn’t it–my income has shrunk as my investments have shrunk, I have a lot of equity in my home or it’s paid for, why not use some of that equity to make me more comfortable now? Instead of paying the mortgage company, they pay me–heavenly! Not so fast–it just isn’t that simple. There are three things you really need to know:
- How much you can borrow is limited. You won’t be able to use the full amount of your home’s price. There is a formula to determine how much you can borrow that takes into account your age, the value of your home and current interest rates. If you still have a mortgage balance, that and the fees you pay will be deducted from the amount you can borrow.
- The fees are high. A reverse mortgage is costly–in addition to the usual closing costs, there is a 2% origination fee on the first $200,000 of the loan balance and 1% thereafter. There is also a 2% monthly service charge as well as a mortgage insurance premium of around 2%. The total cost of the loan can go as high as $10,000 to $15,000. This is a considerable investment which should be made only if you plan to stay in your home for quite a few years.
- It can be riskier than it appears. Suppose you live longer than you think you will and run out of money–your home equity is gone!
It would seem best to consider all other options before tapping into that precious home equity. Consider down sizing, re-locating to a less expensive area or home, cutting expenses, or even a home equity line of credit. It would seem to me that the reverse mortgage is the loan of last resort.
Here are a few articles that might also interest you:
Questions about Chicago real estate? I would like to help you find the answers–312-981-2360 is my direct line or my cell phone is 312-607-1306. E-mail works too!
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NEW YORK LOVES US AND SO DO A LOT OF OTHER PEOPLE!
July 16th, 2009 categories: Buying, Investment, Selling
A New York Times article last Friday highlights the different places in the world and the different places in people’s lives that send them in search of a second home in downtown Chicago. As we all know, Chicago has not been as badly battered as many other areas of the country. Home affordability is really great right now with mortgage rates still low and inventory still high. It is a perfect time to buy new construction because most developers are offering sizeable discounts. I think you will enjoy the boost the New York Times gives the so-called “Second City.” One of the most interesting quotes is from a buyer from Lugano, Switzerland. He says they were looking to find a modern American counterpart to the slower European country living. I have always felt that Chicago is a bit slower paced, cleaner, more civilised, more beautiful and generally more livable than Manhattan. Nice to know a European agrees with me. The renaissance of downtown Chicago in the last 15 years is absolutely amazing. I began in real estate in 1989 and I never had to leave Streeterville, the Gold, Coast, Lincoln Park or south Lakeview–there was no place else to go! It has been mind-boggling and fun to watch the growth of so many new neighborhoods that I can’t begin to count them or name them. Viva Chicago!
How would you like to explore some of the new neighborhoods with an old hand at real estate? Just call me at 312-981-2360 (direct), or 312-607-1306 (cell). E-mail is fine too!
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HOME INSPECTION 101
July 15th, 2009 categories: Buying, Investment, Market Trends
Being a firm believer in home inspections for my buyers, it was good to read an article in the Chicago Tribune last Friday (July 10,2009). There is a lost of 10 questions that you should ask your inspector and some very good ideas. One of the main points is that you should hire an inspector who will inspect for two things: major hidden problems and potential deal breakers. As a Realtor, whether I am on the buy or the sell side of a transaction, I want both buyer and seller to know the truth about a property. I have worked with inspectors who seemed to enjoy deliberately destroying a transaction by fear mongering–exaggerating dangers and flaws. This is as bad as a lackadaisical inspector who only does a superficial inspection. Asking for a sample report is a good suggestion that the article makes–one I had never thought of.
If you have a question about Chicago real estate, please call me 312-981-2360, direct or 312-607-1306, cell phone. I can e-mail listings to you or answer questions by e-mail.
Articles that might interest you: Why Get An Inspector For My New Home:, 6-09; Vacation Home, Retirement Home, 6 -09: Real Estate Rock of Gibraltar Constants, 7-09; A Picture Is Worth 1,000 words, 6-09
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REAL ESTATE ROCK OF GIBRALTAR CONSTANTS
July 7th, 2009 categories: Buying, Investment, Selling
Well, here we go again—I read and edited for you. An article by Ilyce Glink in last Sunday’s (July 5, 2009) Chicago Tribune tells about some eternal verities in the real estate business. Ideas that I think are as eternal as the Rock of Gibraltar in real estate. And it doesn’t hurt that her first point is about Realtors–she feels, as I do, that we are still a good deal for home buyers. Ilyce also has a book that I give to all of my first time buyers, “100 Questions Every First-Time Home Buyer Should Ask.” I probably should give it to all of my buyers who haven’t bought in the past few years. Actually Ilyce’s website is a treasure trove for people interested in real estate. Just scroll through and you will find lots to interest you I am sure–especially if you are a real estate junkie!
Here are a few of my posts that have similar ideas: Old Sayings, True Sayings, 6-09; A Realtor? I Can Do It Myself, 4-09, Real Estate Conversations, 3-09.
Do you have questions that only a Realtor can answer? If you do I have 20 years experience to bring to your questions–just call me at 312-981-2360 (direct) or 312-607-2306 (cell). In order to get my blogs as they are published, just subscribe at the RSS button just under my picture–I would love to have your comments! Thanks!
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IS THE TWO FLAT TANGO THE RIGHT DANCE FOR YOU?
July 1st, 2009 categories: Buying, Investment, Lifestyle, Market Trends
Last Sunday’s (June 28, 2009) Chicago Tribune had an excellent article about a renewal of interest in the classic Chicago two flat. The emphasis was on the availability and affordability of the homes and it also gave some good examples of people who have profited by investing in a two-flat.
There are some other benefits that I have seen in my career. Two members of a family can buy the home together–parents and children, brothers and sisters. I have even seen two very good friends buy a two-flat together. Awhile ago I worked with a young family whose dream it had been to own a classic Chicago greystone two-flat–for many people the most desirable example of that type of building. We found one in an excellent school district (yes, they do exist in Chicago with ever-increasing frequency!). The family bought the two-flat, rented out the first floor for a few years and when their income increased, they took over the first floor, renovated the whole home and now use it all for their own family. Any of these alternatives would work just as well in our classic brick two-flat–there is an especially appealing type that has a large front porch. As you drive around the neighborhoods of Chicago, look around. I think you will be amazed at the number of two flats you will see.
Would you like someone to help you look for a two-flat, someone who could e-mail listings to you? If you would, please contact me at 312-981-2360 (direct) or 312-607-1306 (cell). E-mail is great too. If you like my blogs and want to receive them regularly, please subscribe in the space just under my picture.
Other articles that might interest you: Why Get An Inspector For My New Home, 6-09; Chicago Real Estate Agent Before Buying Chicago Real Estate?, 6-09; Buying A Bank-owned?–Here’s A Check List, 6-09; Old Sayings–True Sayings, 6-09
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MORTGAGE BROKERS VERSUS BANKERS?
April 7th, 2009 categories: Investment
Ron Lieber, in his Your Money column, the New York Times, Saturday, April fourth, gives the best description I have read of the functions of both mortgage brokers and mortgage bankers. The article quotes a North Canton, Ohio, mortgage broker, “If you want to get ripped off, go to a broker, and if you want incompetency, go to a bank.” That sums up the article pretty well. If you want to read the whole article and understand the difference between broker and banker, just click here. The article gives tips on how to get the best mortgage rates and terms–a valuable piece of information for anyone who is buying, refinancing or just wants to know how to do it when the time comes.
Related Articles: Mortgage Approval No Nos, 4-09; The First Time Homebuyers Tax Credit Puzzle, 3-09; 95% Condo Mortgages are Back, 3-09
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UNFREEZE YOUR CREDIT SCORE
March 4th, 2009 categories: Investment
Your FICO (Fair Isaac & Co.–don’t know where the name came from, but that’s it!) score is a three digit number that shows how able you are to repay a loan. Credit scores can be obtained once a year with no charge (it’s a law) from each of the major credit bureaus (TransUnion, Experian and Equifax) so you can check on your credit three times a year. Just click on this link to get started. After you know your credit score, you can work to improve it. Here are a few suggestions for making that improvement.
- Pay your bills on time. Payment history can count for as much as one third of your credit score.
- Check your credit report for errors. Late payments can reflect badly–look for errors and expired negative reports. This is one of the easy ways to improve your FICO.
- Reduce your balances. One third of your FICO score is based on the total amount of balances you owe versus your total credit limit.
- Keep older credit lines open. Use your oldest cards regularly for small purchases and pay the balance each month. A lengthy history of active accounts shows that you are a good credit risk–also it counts for 10 per cent of your credit score.
- Use credit responsibly. 15 per cent of your FICO is based on a balanced account including a mortgage payment and timely payment of credit card balances and installment loans such as a car loan.
- Avoid new credit. Your average account age will be lowered if you open new accounts–best not to do so.
Credit cards and installment payments are useful tools–when used with caution and control. I hope these suggestions help you to raise your FICO score.
Related Articles: Must Haves For A Mortgage Applications, 2-09; Home Affordability and Mortgage Rates, 2-09
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