Quintin E. Primo III, a newcomer to commercial development plans to put a $500 million mixed-use project on land previously occupied by some of the Windy City’s most-impoverished housing projects.
Popularity: 12% [?]
In an article by the Buffalo News, New York Sen. Charles E. Schumer denounces rogue lenders and “liar” loans, proposing national regulation of mortgage brokers and bans on some kinds of high risk loans. This is just the latest in a host of government legislators who are decrying many of the practices in the home mortgage market, particularly the subprime lending market.
“The subprime market is the wild west of mortgage loans, and it’s time we bring a sheriff into town,†said Schumer, who is chair of the Senate Housing and Transportation Subcommittee.
There is a proposal being floated by regulators that calls for a national registry of brokers. The National Association of Mortgage Brokers said such a proposal does not go far enough because it does not include all mortgage lenders. I’d have to agree.
Someone has to get the lenders operating in a more healthy way — especially the subprime lenders. At Mortgage Guide 101, I’m still following the growing number of lenders that have either ceased to operate independently, have gone into bankruptcy or are shutdown. The Implode-O-Meter is my personal favourite for tracking the downfall of subprime lending; it has the number of lenders “kaput” at 44. This number only reflects lenders lost since December of 2006. So, while many still want to insist that there’s no problem in the subprime lending market, I’d have to disagree.
There’s serious problems still afoot.
Just this past week, I noticed that the stock price of a number of home builders are also on the slide. New home sales are down. The housing glut gets bigger and bigger.
Are you an investor who might like to pick up a few properties cheap? Pay attention to the foreclosure rates. With all these signs of a housing slow down, the prices will start to come down in many markets. Some regional markets may be able to hold on even while other areas slide, but the likelihood is that the national market will drop, at least somewhat.
As always, if you are looking for a mortgage, start with a few quotes. This site has sponsors that provide quotes and quote comparisons. It can help you with your legwork.
Michael Chantrel
Popularity: 11% [?]
Several initiatives across the U.S. use new mapping technology to open up troves of government data. These applications could potentially help people decide where to live and assess development projects requiring community approval.
Popularity: 12% [?]
Politicians everywhere are starting to wake up to the power of YouTube. However, most of them don’t also provide genuinely good information on how to go green in your home! Canadian Member of Parliament (MP), Olivia Chow, and her fellow MP and husband, Jack Layton, have put together just over 4 1/2 minutes of great information on how you can save money and energy in your home.
This isn’t just hypothetical either. The video features Chow walking the viewer through the home she shares with Layton, showing off the various green renovations and changes in their downtown Toronto home.
Now this is a smart political couple, making use of YouTube to promote their political fortunes while also helping consumers to understand how much green technology there is to heat and light your home.
They cover a wide spectrum of changes they made in their home, from low cost to high cost. They also don’t just focus on electricity and gas. Their low-flow toilet makes an appearance on the video, as part of their effort to go green.
Not Canadian? It doesn’t matter! The information in this video showcases technology available across North America and the world. In a worst case scenario, you can order the equipment for your home from a local provider or over the internet. In fact, we’ve been following the green movement at MortgageGuide101 for some time, and have reported on all kinds of new green technology for homes, including radiant heat. Your options in green technology are quite astonishing.
Sceptical? Don’t think it makes that much difference? Well, according to an article in the Toronto Star, Layton estimates their savings at 50 to 60 percent of their total energy bill.
Layton recommends starting small with a programmable thermostat and compact fluorescent lightbulbs. They also put in low flow toilets, because of the cost of water in a big city. He says you should always check for rebate programs to help with costs; these could be offered by your city, municipality, regional or national government.
If you are really feeling encouraged, and need some money to get started on your renovation project, check out a few of our sponsors. They will be happy to talk about home loans to fund your green project.
Michael Chantrel
Popularity: 12% [?]
Do you flip houses? Then you better be paying taxes; especially if you make a substantial income from it. You may think you’re getting away with it but you are very wrong. If you get caught you WILL have to pay but you might also pay extra for fees and interest that bypasses the assets in your possession. I am not a tax accountant nor do I know the real estate laws in your state but I do know what you need to discuss with your accountant and also a few measures you can take if you do your own taxes.
The major problem with doing taxes for yourself is that you don’t know the tax laws. You may think you made $5,000 but that is only the gross income before taxes. Many businesses have problems with paying taxes because it destroys the bottom line but they must be paid. There are two basic classifications you can place house flipping into; the first of which are self employed taxes and short term capital gain. You would rather be placed in the short term capital game section because you pay fewer taxes. If you’re self employed, you have to start paying as much taxes as a business.
To figure out how you fit, you have to look at a few elements. Firstly, you need to see how long the land is kept. Also, you have to keep track of how many transactions you make. Because they will all be real estate transactions, you will probably be placed in the self employed section.
You may think you don’t have to worry about taxes because you have not been audited and figure you never will be but with all the house flipping commercials on television, the IRS will start looking into real estate people to increase revenue.
Some of the people flipping houses can earn anywhere from $50,000-$150,000 from a single transaction. I predict the IRS will start monitoring this market more closely foreseeing regular people being unaware of tax laws.
Popularity: 23% [?]
You can’t sleep so you watch television and see all those advertisements about making money with real estate. What do you think of those commercials? Many think of them as scams. If you think these commercials are scams, you might be right but house flipping is still a huge opportunity to make money. Actually, some may say this is the best way to make money. Now that the trends show the real estate bubble is bursting, there will be a lot of foreclosures for people to buy, fix, and sell. Before you go into this kind of business, you will have to think about a few things like what to look for in a good property, what to stay away from, and how to make a profit.
When looking for a house to sell you must follow certain accepted aspects of the business. Firstly, make sure you find a house that is in a neighborhood being improved. This drives the price of the land up. In addition, look for a house that’s been on the market for a long time. Chances are these homes will have sellers who are tired of selling. They will be more than happy to work out a deal with you. If the house is a little run down, many families will not be willing to buy a house that needs fixing. Finally, make sure you can repair everything in the house you’re looking to buy.
You may think a crummy house that needs fixing in a nice neighborhood will make money but there is a little more to flipping houses than that. For example, make sure you don’t buy a house in a neighborhood full of “for sale†signs. This is a bad sign meaning the land value will decrease. Also, make sure not to buy a house with repairs that require you to basically rebuild the house. This problem will kill any profit you planned on making. Also, a problem that many people make has to do with mortgage rates. You must keep aware of the economy. Get a subscription to the wall street journal and keep up with Greenspan’s transcripts. These recourses will let you know if loan rates will increase. People are less willing to buy when they can’t afford loans.
The last and certainly not the least important aspect of house flipping has to do with profits. The purpose of this business is to make money and to do so, you need to make sure you stay under budget and sell at your target price. Also, don’t upgrade the appliances and fixtures in the house to the most luxurious on the market. This will destroy any profit you were looking to obtain. Secondly, focus your attention on fixing what will increase the houses land value. Finally, create relationships with real estate agents and contractors to lower the costs of materials and fees.
Flipping homes can be a very profitable business to enter. Many people know how to capitalize on houses using their own special secrets from experience. A recommended strategy for all to-be house flippers is to go out and try it, do your research, follow your own special built guidelines and see if you can earn a profit.
Popularity: 12% [?]
If financial analysts are right, just over 2 million homeowners are at risk to default on their mortgage loans, according to an article on CNN.com. High foreclosure rates are a real possibility.
In some cases, an area could be devastated by foreclosures — especially where areas have a very high rate of subprime mortgages. The top 10 subprime metro markets all have subprime loan rates at 20% or more of mortgages. Unfortuately, even a single foreclosure on a street can depress the home values all around it. With a large number of subprime foreclosures, there could be even more downward pressure on housing prices as whole neighbourhoods tumble in value.
Of course, this would also contribute to a growing glut of houses on the market.
How bad is the subprime lending market? Well, I’m still tracking the Implode-O-Meter; this website has been specifically focusing on the woes of subprime lenders for about 4 months now. The number of lenders now listed as “kaput” in that short time span is 42.
For those of us who are fans of the Hitchhiker’s Guide to the Galaxy, you’ll know that 42 is supposed to be the answer to everything. However, in this case, it’s the answer to whether the lenders are ailing, and the answer is yes.
Some folks have actually been put in subprime loans when they could have qualified for prime. Could that be you? Get to know your credit score, and be sure. It could help a lot when you next go to negotiate with a lender.
In the meantime, the good news is that the Fed is making noises about lowering interest rates. If you are in an ARM, it may not be fast enough for you; however, if your ARM doesn’t reset before the fall, you could get a break on the rate.
And if rates drop, it could even be time to look for another lender. If so, check out a few of our sponsors — it’s free to get a quote, and you might just find yourself a much better rate.
Michael Chantrel
Popularity: 11% [?]
Now that home prices seem to be coming down a bit in the US, and interest rates are staying fairly stable (although the Fed is making noises about inflation again), conditions would seem to be right for an improved US spring housing market. A locked in mortgage rate could look pretty attractive right now, and lower prices could be a real incentive.
In fact, a lot of folks get the “bug” to move in the spring, when weather takes a favourable turn and moving becomes less of a hassle. The spring is traditionally a “hot” real estate market.
I can tell you that my family has been looking again. We’ve all acquired a bunch of stuff at Christmas that we likely cannot find space for, and a bigger house starts to look really good when you are living in a lot of kid clutter! (If the state of my basement is any indication, most small families probably need about 15 to 20 % more space just for stuff with the addition of each new family member!)
With that in mind, I was thinking about how much house we could afford, and figured that others might be going through the same thinking process. Did you know that on this site we have a number of tools that you can use in your quest for the right house for the right budget? Check out our Mortgage Calculator, Amortization Calculator, and How Much House Calculator. These tools can really help in your decision-making process.
The other question, of course, is how much mortgage would you actually be approved for? If you have a good credit rating and minimal loans for other purposes, you can expect to be approved for a mortgage which is the equivalent of 4 to 5 times your annual gross salary. While this might seem like an excuse to buy a big home, you also may not want a debt burden that big. Keep in mind that sometimes, things happen. People can be suddenly fired. (That happened to me once.) Family members can get sick. (Another thing that our home has experienced. We were down to one income — we didn’t have any disability insurance at the time — for a whole year.) Even if both spouses are working, you may opt for a home that can be carried by one of you, for the extra security and the extra cash.
In our case, we opted for a bit less house (with a basement that we can refinish — if we ever get it organized) so that we’d have a bit more money in pocket for things that are important to us, like family vacations and two fully-paid cars. (We don’t like to have a loan on a car because the car is constantly losing value. Paying interest on an “asset” that is constantly losing value is a no-win proposition.)
Definitely got the bug to buy? We’ve got a whole section of the site devoted to the art and science of buying a house. Read up; get prepared; then, get out to a few of those open houses.
And don’t forget to be pre-approved for your mortgage! If you need a quote or two so that you can start to understand what you can expect from a lender, check out a few of the sponsors for this site. They’ll be happy to help you.
The first day of spring is March 21st. Enjoy!
Michael Chantrel
Popularity: 11% [?]
Planning on getting wealthy? Buying your own home is one of the standard strategies recommended by many financial experts. In fact, recent studies of how people gain wealth show that folks that own their own home accrue more wealth in a lifetime than those who don’t.
But it is enough? Will you be retiring comfortably on your home equity?
An article on Yahoo Finance says no. Apparently, too many of us are relying on our homes as our sole investment for our golden years, and that’s a mistake.
Why? Well, we are using our home equity to finance our current lifestyle! The tidal wave of home refinancing and decline in equity say that not only are our homes not building wealth for us, we aren’t saving anywhere else either. With foreclosures up and problems galore in the lending market, we aren’t even necessarily keeping the house we bought.
However, let’s say that you are carefully paying off your mortgage, and living within your means. Your homes still isn’t necessarily the best investment of your money. While homes are generally going to make money over your initial price if you stay in them long enough, the amount you pay for them (once you add up interest and other costs) far exceeds what you will get out of them.
The answer? Buy your house because you love it. Pay off the mortgage as quickly as possible, in order to save thousands (if not hundreds of thousands) in interest and other charges. And finally, be sure to have other savings and investments, so that you can enjoy your retirement years.
Michael Chantrel
Popularity: 12% [?]
Yesterday, we blogged about the problems in the sub-prime mortgage market and the effect those problems would have on home prices. This is not good news for homeowners currently thinking of selling their properties. They’re probably not going to get the price they hoped they would.
Today’s Wall Street Journal has an article about one man, James Odell Barnes, who buys foreclosures from lenders eager to unload their delinquent properties. In a recent acquisition, he bought 12 homes for $35,000. We’re not talking Manhattan real estate here. Barnes and his 40 or so investors then turn around and find buyers for the houses. They don’t fix them up preferring to unload them as quickly as possible. The buyers repay the loans over 15 years. The interest rate charged is 12 percent with monthly payments slightly less than what they’d pay for rental accommodation. Steep for anyone with good credit, but for those that can’t get a mortgage, this is their only way to buy a home.
How does Barnes make money?
For every deal he passes on to his investors, he receives $1,000 for his trouble. Last year he referred over 1,400 homes earning more than $1 million in fees. For some, there’s a silver lining in this sub-prime meltdown.
Popularity: 12% [?]
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