Wednesday, February 6, 2008

Colorado Hit Bad!

Colorado has reported a raise in foreclosures since 2005, although it has been sometime since this problem originally surfaced it is getting worse! Why? At this point in time there are 2 main factors that are causing foreclosures. The first being; the mortgage brokers which placed home owners into mortgage programs they could not afford for various reason including, adjustable rates. Most mortgage brokers work for the client and offer the best rate and term for the specific client, however there were some brokers which operated illegally and did not educate the client and did not offer any advice. Simply offering the program which the lender was paying the highest rate of commission. The second issue is over building; too many homes and not enough buyers, this can quickly cause a to a stagnant market due to over saturation.

Since October 2007 the foreclosure hot line in Colorado received close to 28,000 calls. Many of the people that are caught in bad mortgages and can no longer make payments due to an adjusting interest rate.

How can you be certain that your mortgage broker is telling you the facts; Simply re-calculate the mortgage you have been presented (usually you will have more then one program to choose from). I have an online mortgage calculator available on my website www.jasoncampoli.com.
Now not only should you verify the numbers, but you must be certain that the rate on the disclosure documents reads Fixed!

Shopping for a mortgage should not be something that you are simply doing because you are buying a house. A mortgage is something you will have for many years and you should feel very comfortable with it.

Things to stay away from if you are buying a house you plan on keeping:

- I.O. (Interest Only)

- Adjustable Rate Mortgages

- Pre-Payment Penalties

Tip of the day: Re-calculate!!!!!!!!!!!

Labels: Colorado, Foreclosures, Interest, Money, Mortgages

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Tuesday, February 5, 2008

Recession?

The market is currently showing the early signs of a recession, with negative growth for the first time in 5 years. According to some economists a Recession is already underway. Although it is possible that certain market areas are showing decline because of employers cutting staff. Citi Bank mentioned the possibility of 24,000 layoffs this year, mostly due to the fact of higher than usual delinquencies by credit card holders have been reported. Causing a major down turn in earnings in the last quarter of 07 for Citi Bank.

A Recession right now is somewhat of a certainty to economists for one reason; history repeats itself and even though most agree that a Recession is bad for the economy in general it is actually is good for businesses as it allows them to cut the fat and shed the extra salaries they do not need to pay. What I can tell you; is that for the average American a Recession is not the ideal situation, as it becomes hard to sell your home and value is lost all around. However you still will recover and life will go on. One thing that is imperative to remember is always understand the market before you invest and or sell any of your property, vehicles, Stocks, etc .

QUESTIONS?Many people ask me what is the difference between a Recession and a Depression. Well great Depression lasted a lot longer and has more long term affects. Were as a Recession is a shorter more controllable situation.

Labels: Money, Recession, USA, World Market.

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Monday, February 4, 2008

To Pay Or Not To PAY?

I have covered this topic in earlier blogs, although I still get the question asked many times over. Should I pay off my mortgage? Why? I feel the answer is simple! YES! Why? Well first off if you plan on buying a home and your goal is not to pay it off, it is because you plan on selling it in a short time. Frankly the amount of interest you will pay the bank over 30 years (which is the most typical mortgage out there) is twice the value of your home. Therefore, if you had the possibility of saving or investing all of that money why would you work so hard for it and pay it to the bank?

Something I did not mention in a previous blog and came up as a concern for a client, was the fact that they did not know how much they could afford to pay every month for a mortgage. Well this is one of the more complex areas because even if you earn a great salary you must have someone revise your monthly spending in order to understand what you can afford. A great piece of advice someone once gave to me was; tell "them" how much you want to spend. "Them" could be a bank or a broker, remember the better the broker knows his/her client the better the final outcome.

Be realistic don't take a loan that banks on the fact you may get a raise or the housing market will do better next week. It just doesn't make sense! What does make sense is being smart about investing because; in the end once all is said and done you must be conscious about the fact that buying real estate is an investment. Probably the most sound one you will ever make.

Labels: Early Payoff, Lenders, Market, Mortgages

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Friday, February 1, 2008

COUNTRYWIDE TROUBLE!

Florida's attorney general is investigating Countrywide Financial Corp., for possible unfair and deceptive business practices related to its home loans.

Basically the state wants to know how borrowers were approved and under which guidelineso. The state also wants information on how Countrywide credited its borrowers' payments any time after January 2005.

Countrywide has stated that they will cooperate fully with the State. Although they declined to comment. The state received about 150 complaints on Countrywide through a dedicated phone line to report such activity. Countrywide will have until the 11th of February 2008 to provide the state with the requested documents. California and Illinois are both following suit to Florida states action.

Fact: In January of 2008 Bank of America Corp., agreed to pay $4.1 billion in stock for Countrywide.

Tip of the day: Be aware!!!!!!!!!!!!

Labels: California., Countrywide Problems, Florida, Illinois, Lenders

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Thursday, January 31, 2008

JAPANESE BANKS HIT BY US SUBPRIME!

Most people do not understand that their mortgages can affect a market a world over. Well it can and it has happened; Japanese Banks face a loss of 500 billion yen (about $4.7 billion) this year. Many corporations on the Nikkei are reporting losses and many of whom are currently holding US mortgages and securities.

What the Japanese banks did; was they invested primarily in highly rated securitized products that incorporated the sub prime loans as underlying assets. However a rating downgrade has sent prices in a downward spiral since November.

The company name (Mitsubishi UFJ) may be recognizable to you? Did you know that they are expected to report a 50 billion yen (Not an exact figure) in sub prime related losses for the first 9 months of the year. The 50 billion yen may climb to some 90 billion yen by March.
Therefore showing us exactly how much of a power house the US really is in the world market.

NB. One stone may cause more ripples then previously thought.

Labels: Losses, Market, Mortgages, Sub Prime, World Market.

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Wednesday, January 30, 2008

RATE CUT!!! AGAIN!?

The talk of the town is, will the Fed slash the rate again today in an effort to keep the economy a float. If the Fed does go ahead with the rate cut then we should see some very interesting after affects including a mild mortgage rate dip and a steady but again mild rise or steading of the markets as they are down today as of 10:50am EST.

The main reasons why Bernanke is considering another cut today at 2:15pm EST, is considering the simple fact that they said there would be news today January 30th 2008. The Fed felt compelled last week to slash rates again in an effort to balance out the markets which did work, although the actual meeting was planned for today.

Therefore if the Fed does cut the rates it will probably be due to earlier promises and not really that much more effective. The US debt is climbing and fear of a crashing dollar is keeping the investors at bay.

However there are many investors in the US that are starting to make moves into Florida and California where the housing markets have crashed so bad, that investors with large capital are placing there money into realty with the hopes they will be able to sell them within 3 years time.

Tip of the day: Do not invest capital you don't have unless you are a seasoned pro!

Labels: Bernanke, Federal Reserve, Market, Money, Mortgages, Rate Cut

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Tuesday, January 29, 2008

FORECLOSURES ON THE RISE!

The number of foreclosures in 2007 hit a grand total of 405,000 homes, this information comes from a report released on Tuesday of last week.

The hardest hit states were:

- California - 66,000 people lost there homes in 2007
- Michigan - 47,000 foreclosures
- Nevada - 10,000 people had their homes repossessed
- Florida - 165,000 Foreclosures

States that were not hit as bad include:

- Maine - 286 property foreclosures
- Vermont - 29 property foreclosures
- South Dakota - 24 property foreclosures

Job Losses:

- Michigan- 87,000
- Ohio -More than 89,000
- Colorado - 39,000

After a very shaky year in the markets everybody seems to be ready for a rebuild. How long will it take for the markets to recover? Some say it will take at least 3-5 years for a full market recovery.

Tip of the day: Think Emergency Fund!

Labels: Figures, Foreclosures, Job Losses, Reported Facts

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Monday, January 28, 2008

SHOULD I PAY OFF MY MORTGAGE?

The one most common question people ask me is; should I pay off my mortgage or should I use the equity that I have built up. Well it is pretty simple, if you are a young family and it is your first home, building equity should be your main goal. Why? Well for starters, your money will work the hardest for you in a property. Now if you are planning to buy and resell right away and you are very familiar with the market fluctuation in your area then you could get a lower payment program with an I.O payment (Interest Only) . By doing so you will be able to breath easier for a short period of time, rather than paying higher payments for 1-2 years before you are able to sell. Obviously you should sit down and do the numbers in detail before choosing a particular mortgage program.

For Golden Agers (anyone over the age of 62) may want to consider a reverse mortgage which pays you from the equity in your home every month. You may want to do this if you need to supplement your income. Not all mortgage brokers and banks offer this type of service.

The basic idea here is to be aware of the different options that are available to you and to know that whomever is working for you has a clear picture on what you are looking for. Don't be shy tell the broker or bank what it is that you are looking for. Don't get pressured into the mortgage program of the week!

Remember this simple fact as it is not here to scare you but to educate you;

If you take a loan for 200,000$ you will pay over 230,000$ to the bank in question in interest alone over a 30 year mortgage. Giving you a grand total of 430,000$ (Principal and Interest). This figure was estimated with a 6% interest rate.

Tip Of the Day:Be Smart and Play Safe!

Labels: Advice, Answers, Mortgages, Rates, Savings

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Friday, January 25, 2008

RATES TOO LOW?

Rates keep dropping! How low can they go?

Most analysts new the Fed would help the rate by cutting it! Know one thought they were going to cut the rate by that much this soon. The recession worries forced the Fed to act quickly and decisively; Bernanke cut the rate 8 days before the stated meeting was to take place.

Although the effort by Bernanke might like to keep the economy afloat by dropping interest rates, it's not clear how low he is willing to drop the rates. Although we are expecting another rate cut soon.

The Fed views the current situation as maybe a little worse than the typical downturn because of problems in the credit markets that threaten to starve businesses of capital needed to fund growth.

Currency Traders (Forex Traders) expect the dollar to fall further if the Fed continues to cut rates. If the Fed could learn from past errors they should see that perhaps dropping the rate too much will cause unnecessary repercussions if the market that will take longer to heal then a recession.

Labels: Bernanke, Market, Money, Mortgages, Rate Cut

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Thursday, January 24, 2008

Belief That Bernanke Is Wrong!

Economist are scared that Bernanke made the wrong move trying to save the market from crashing on Tuesday Morning. What do you think? I think that many people are scared for obvious reasons, but the fear is not sensed the same by economists & investors why is that?

Anyone in Bernanke's shoes would of done the same thing: Tried to save the market before a recession and market crash. Now we must ask ourselves the question what has President Bush been saying since 03 that the economy is strong....so could this be a plea from a dwindling Presidency to avoid a recession at all cost. I say plea because the Federal Reserve is a separate entity and does not belong to the US it simply shares its name.

I am not sure where to side with this one all I can say for certain is that rates are low and Bernanke seemed to do the right thing. He is more proactive then his predecessor Greenspan to say the least. Where do you think the economy would be in Greenspan were in charge still?

Tip of the day: Experiencing today gives you the wisdom that tomorrow brings.

Labels: Bank, Bernanke, Bush, Federal Reserve

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