Archive for the 'Real Estate Finance' 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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FOR ONCE–A GOOD DISTRESSED PROPERTY STORY
February 10th, 2010 categories: Buying, Real Estate Finance
Dennis Rodkin recently published an article in Chicago magazine about a young college student who found a good distressed property and bought it. The end result is that her monthly housing costs are about 50 per cent less than rent for a comparable apartment. After all of the preaching I have done about the difficulties of buying foreclosures and short sales, it was truly refreshing to read about a successful purchase. My feeling has always been that bank-owned and foreclosed homes were for experienced real estate buyers and investors–OK, so I am not always right! And she did have good help, her mother is a real estate appraiser. The article mentions that some of the condos had missing appliances and other kinds of damage. The purchase of a home certainly sounds like a step in the right direction for this young woman. The buyer’s Realtor gave her the traditional gift of a bottle of champagne–problem is the new home owner is too young to drink it! If you would like to read the article, just click here.
Here are a few articles you might find helpful:
Buying a Foreclosure–Is It For Me?
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2010 MARKET? ON THE ONE HAND. . .
February 8th, 2010 categories: Buying, Lifestyle, Real Estate Finance, Selling
Mary Ellen Podmolik’s recent article takes a backward look at 2009 and a forward look at 2010 and is a sobering, hopeful assessment of the market. 2009 wasn’t a good year and 2010 doesn’t look extremely positive either. There are specific statistics on who bought what and what their income was. One of the statistics quoted is that sellers sold their homes for 95 per cent of list price and that 58 per cent of home sellers would cut their listing price at least once. Approximately 45 per cent of sellers offered incentives such as help with closing costs and home warranty policies.
Another statistic given is that50 per cent of single family homes and 18 per cent of condos in the city of Chicago were short sales or foreclosures. Mary Ellen’s conclusion is that there are buyers out there for all types of housing with all kinds of list prices and they want a deal. My mantra with sellers for a long time has been that in today’s market, you can’t be just a good deal, you have to be the BEST deal.
The good news, according to the article, is that there is a base for the recovery of the market. And the bad news is that a University of Illinois analyst feels that the market won’t return to normal until 2011. This analyst is feels that there will be another 100,000 to 120,000 jobs lost in Illinois in 1010. So it is sort of a hopeful mixed bag of news–my glass is always half full so I am positive 2010 will be a good, if not great year! To read the entire article, click here.
Need someone to help you sort through the market? How about using my 20 years of experience in the Chicago market? Just call me at 312-981-2360, my direct line, or my cell phone 312-607-1306. E-mail works too.
These three articles might be helpful to you:
Turnaround Turnaround, Wherefore Art Thou
Hold Everything–Storage Needed
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WHAT IS A SHORT SALE?
February 2nd, 2010 categories: Market Trends, Real Estate Finance, Selling
Larry Steinway is a great source for information about financing–I read his blog almost every day. One of the things Larry does is give you an idea of where mortgage rates are going in the current week. He recently published an article that defines a short sale. This is one of those real estate definitions we would rather not put into use and we also need to know what it is. So read Larry’s article just for information. He explains why a short sale may be an alternative to a foreclosure. Just click here for the straight scoop from Steinway! This is probably from the sublime to the practical–Franks Lloyd Wright one day and a short sale the next–hope you enjoy the contrast!
Should you need a Realtor to help you, please feel free to call me. My direct line is 312-981-2360, my cell phone is 312-607-1306 and e-mail is a good way to find me too.
Here are some other informative articles:
Reverse Mortgage? What is it ?
Appraisal Questions that are OK to Ask
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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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REVERSE MORTGAGE? WHAT IS IT?
January 22nd, 2010 categories: Buying, Market Trends, Real Estate Finance
Have you ever wondered about a reverse mortgage? I know I have. Mary Ellen Podmolik recently published an article in the Chicago Tribune that explains what a reverse mortgage is and how it operates. She gives both the pros and the cons. One of the significant negatives is the fact that the total cost of the fees can be up to 10 per cent of the loan amount. If your home is paid for and you are finding yourself strapped for cash, you might want to investigate a reverse mortgage. To read the entire article, just click here.
Do you need an experienced Realtor to help you identify a new home? I would love to be that Realtor–just call me at 312-981-2360, that’s my direct line or on my cell phone, 312-607-1306. I also like e-mail! In this day of electronic marvels, I can e-mail listings to you after we have identified the price range and neighborhood that suit you best. So, I am applying for the job of helping you find a new home.
Here are some other articles that you might find interesting:
Credit Boo Boo Down With Your Fico Score
Underwriting Can Be a Minefield
15 Year Mortgage vs. 30 year Mortgage
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CREDIT BOO BOO–DOWN WITH YOUR FICO SCORE!
January 13th, 2010 categories: Buying, Market Trends, Real Estate Finance, Selling
The Fair Isaac Corporation is that mysterious entity that gives us our FICO credit score. My friend, Larry Steinway, has published an extremely informative article about understanding the score and how common errors can affect your score. If you would like to know how to avoid making the mistakes that will lower your credit score by leaps and bounds, please do read Larry Steinway’s post. Two paragraphs give actual dollar figures for the increased amounts that a 30-day late4 payment would cost you for a car loan and a mortgage. All in all this is valuable material that every consumer should know. The entire article is much more lengthy than is usual for me–you will benefit from reading the whole thing. Try it, you might like it!
FICO Reveals How Common Credit Mistakes Affect Scores
by Jeremy M. Simon
Disclosed for the 1st time, ‘damage points’ taken off for late payments
Borrowers already knew that late payments hurt their credit scores, but for the first time, they now know the extent of that damage. Did you max out your credit card? Expect a credit score drop of 10 to 45 points. Declare bankruptcy? Your score will plummet by up to 240 points, and your odds of getting credit will nosedive with it. The “damage points” data, unveiled recently by FICO, are part of the most revealing glimpse into the firm’s once-secret — and still mysterious — credit scoring model. The new information discloses how many points borrowers’ scores will drop when they make the most-common mistakes.
‘Help People Understand’ Scores
“I hope this information will help people to better understand FICO scores and the value for them of avoiding credit missteps. It illustrates key points such as the higher your score, the farther it can fall if you stumble,” says FICO spokesman Craig Watts. “Getting and maintaining a good score isn’t complicated. We all just need to pay our bills on time, keep credit card balances low and take on new debt sparingly. The greater transparency about FICO scores is important because American consumers’ ability to get credit rises and falls with the number. FICO, the company that pioneered credit scoring, assigns consumers a three-digit number from 300 to 850, depending on how well they handle credit. Other companies also offer scores, but FICO’s version is the most widely used by lenders in determining whether a consumer can borrow, and at what rate.
FICO’s credit score has been around for decades, but only within the past decade have consumers gradually gained access to theirs. Though the raw numbers can be purchased, how they’re figured remains a FICO secret, as closely guarded as the formula for Coca-Cola. Until Thursday, FICO revealed only broad categories of factors influencing the score, but not the number of points at stake for consumers who fail to pay as agreed. The “damage points” information, revealed in a report by personal finance writer Liz Pulliam Weston, will be made available through its myFICO.com Web site starting this weekend.
FICO’s information shows that bankruptcy does the most serious damage to a credit score (up to 240 points), followed by foreclosure (up to 160 points) while maxing out a credit card has the least numerical impact (as few as 10 points).
Those with good or excellent credit — so-called prime borrowers — put more points at risk with each mistake. For example, someone with an average credit score of 680 who pays a bill 30 days late will see a drop of 60 to 80 points. But for someone with an excellent credit score — 780 — that same delinquency can send a FICO score tumbling by 90 to 100 points.
The Cost in Dollars
In order to show just how badly a drop in your FICO score can hurt your wallet, we spoke with members of the home mortgage, auto and credit card lending industries. We presented hypothetical scenarios of a consumer who decided to apply for a $200,000, 30-year mortgage; a $20,000, five-year auto loan and a credit card. While all the industry insiders stressed that a FICO score isn’t the only factor in determining who gets credit and at what cost (other factors they cited include the borrower’s debt-to-income ratio and whether they have already established a relationship with the lender), they were able to provide an idea of what a borrower who had the following credit scores could expect
.
For a Consumer Who Started With a FICO Score of 780:
Following a 30-day late payment, the consumer’s car loan rate would jump nearly 3 percent, costing the borrower $26 more each month.
Following a debt settlement, the consumer would pay as much as $109 more each month on a home mortgage.
For a Consumer Who Started With a FICO Score of 680:
Following a 30-day late payment, the consumer would pay $41 more each month for a car loan.
Following a 30-day late payment, the consumer would pay as much as $95 more each month on a home mortgage.
Following a debt settlement, the consumer would no longer qualify for a credit card.
Some Surprised By the Details
Consumer advocates say it’s important for borrowers to know what can damage their FICO scores. “If they know it in advance, they won’t go out and step in a pile of doo-doo. They won’t go out and do some of these things,” says Linda Sherry, director of national priorities with advocacy group Consumer Action. Even experts found some surprises in today’s news. “FICO imposes bigger hits than I would have thought for being maxed out or 30-days late just once, reinforcing my view that it is a cruder, blunter instrument than they like to claim. Nevertheless, it is a powerful, widely used crude blunt instrument,” says Ed Mierzwinski, consumer program director for the U.S. PIRG consumer advocacy group.
Of course, knowing the impact on a FICO score and actually avoiding these mistakes are two separate things: Amid rising unemployment and other daily financial struggles, paying bills and staying on-track financially becomes a much bigger challenge for many borrowers.
“Some of these things are out of their control,” Sherry says of consumers.
Additionally, as Weston points out, consumers with identical FICO scores can have different credit histories. That means the same slip-up — such as maxing out a credit card — could have different impacts on consumers who have the same FICO score. In the examples they provided, FICO assumed each borrower had several active major credit cards, a mortgage, car loan and student loans.
Sherry acknowledges the benefit of putting a number to a financial blunder. “I don’t think we necessarily knew the numbers that a bankruptcy could apply to a credit score,” Sherry says.
Helping You Make Better Decisions
While knowing the numbers may not keep you filing for bankruptcy if given no other choice, the information may help you make the best decision when faced with a bad situation.
FICO scores — and the access to credit they provide — are a valuable asset to consumers and supply a safety net when incomes are stretched. It’s an asset that needs to be protected, Sherry says, even if job loss or catastrophic illness makes bill paying problematic.
“In that period of time, paying down debt is the last thing on your mind. Paying the minimum payment may also be the last thing on your mind, but you’ll be doing yourself a big favor if you do,” Sherry says.
There, you made it to the end! Congratulations! Call me with questions, direct, 312-981-2360, cell is 312-607-1306 or e-mail. You’re undoubtedly worn out with all that heavy reading so I am not going to suggest any additional articles today.
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UNDERWRITING CAN BE A MINEFIELD!
December 17th, 2009 categories: Buying, Market Trends, Real Estate Finance, Selling
A recent article by Kay Severinsen, gives a great example of what can happen to a mortgage application while it is being processed. I won’t relate the nightmare happenings in detail–you can read the article for that. Kay makes the point that you can avoid some of the problems with a few simple precautions. To read the entire article, just click here. Kay suggests that to prevent a frustrating experience you do a few things such as:
- Have your credit in good order.
- Be absolutely George Washington truthful on the loan application.
- Choose your lender carefully–use one recommended by your Realtor or one that has served a trusted friend well in the recent past. Be sure to meet the broker in person–online rate shopping is a good place to start and you should still be able to meet with the person you are dealing with.
- Look at the association very carefully if you are buying a condo. The Illinois Condominium Act helps a great deal with that. Have your Realtor find out about any possible special assessments and most particularly about any pending lawsuits.
- Sellers–listen to your Realtor about price–today’s market is a different kettle of fish.
- For condo buyers it is probably best to find an FHA approved building because of the smaller amount of down payment needed.
Chicago real estate is on the rebound–I would really like to tell you about it. Just contact me at 312-981-2369 (direct), or 312-607-1306.
Other articles that might appeal to you:
15 Year Mortgage vs 30 Year Mortgage
Mortgage Approval Process No Nos
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ENERGY TAX CREDITS GOING DOWN THE DRAIN!
December 16th, 2009 categories: Buying, Market Trends, Real Estate Finance, Selling
The American Recovery and Reinvestment Act is one of two government acts that can put some real dollars in your pocket. A 30 percent tax credit, up to $1500, can be claimed for a lot of energy saving products. Among them are tank-less water heaters, windows and doors, roofs, insulation, and alternative energy sources. The provision that covers this is the Energy Property Credit. You can qualify for the credit if your improvements are made in 2009 and 2010. Here are some of the categories and requirements:
- Insulation–the purpose must be to insulate. Insulated siding does not qualify.
- Windows, doors, and skylights. You should see a red or black label along with the Energy Star designation on the product. It is also a good idea to look for the National Fenestration Rating Council (NFRC) label.
- Storm windows and doors. Ask your supplier for the Manufacturer’s Certification Statement.
- Roofs. Only the actual roofing materials qualify and they must be asphalt roofs with appropriate cooling granules or metal roofs with appropriate pigmented granules. No credit is given for the labor or coatings.
- Alternative energy sources. The credit for this is generous–up to 30 per cent of the cost, no upper limit until 2016 for both existing homes and new construction. Best to find out about the specifics on this one from a tax accountant. This one makes me wish somebody would come up with a way a condo owner could have a solar or wind powered generator–many of the condos in Chicago were built when all electric building was the rage and we now are saddled with heating and cooling bills that could be helped with a wind or solar generator.
- A little known rebate is being given by the Department of Energy for getting rid of old energy hog appliances. Note that this is not a trade-in program–it is a rebate. Any spanking new appliance with an Energy Star logo is eligible. Rebates should start at the end of 2009 and really get going in 2010. For more information go to energysavers.gov/financial/index.cfm and click on Rebates for Energy Star Appliances.
Thinking of using the first-time-buyers or the move-up buyers tax credit? Let me know if you have questions about Chicago neighborhoods, availability of properties, or any other Chicago real estate questions. Call me at 312-981-2360 (direct) or 312-607-130. I would love to talk to you!
Here are a few more articles you might find interesting:
Need to Spruce Up Your Home and Stretch Your Dollars?
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15 YEAR MORTGAGE VS. 30 YEAR MORTGAGE
December 7th, 2009 categories: Buying, Real Estate Finance
Thanks for bearing with me through Friday’s rant–the weekend was busy in a good way–lots of showings for two of my listings, it looks like my wonderful buyer is going to be able to close next week, and our new washer is already installed. In case you have never used Abt–they are really fabulous–my husband was able to arrange the whole operation over the phone with a real live person and a tape measure. Abt came on time, wonder of wonders in today’s world, they took the old machine away and installed the new one. Of course we paid them to do that–if you live in a condo building it isn’t exactly easy to dispose of a dead washing machine. The whole operation was slick as can be.
Now, I know I promised you a scintillating subject today and I don’t think the first paragraph of this post qualifies as scintillating. I am not sure about my choice of a subject either. You know how fond I am of Steve Levitt–he has written the best comparison between 15 year mortgages and 30 year mortgages that I have seen. I hope you enjoy it! Click here to read.
Other articles that might interest you:
When the WSJ is Right, It’s Right
To Buy or Not to Buy, That is the Question
List or Buy a Home In December? No Way!
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