Helping Homeownership With Dividends

        In a recent press release, JPMorgan Chase announced it has reached a $13 billion settlement in principle negotiated by the President's Residential Mortgage-Backed Securities Working Group of the Financial Fraud Enforcement Task Force. This announcement was made a week following Freddie Mac announcing since 2009, $71.3 billion in dividends to be paid to the U.S. taxpayers and Fannie Mae announcing $114 billion in dividends to be paid through December 2013. In total the U.S. Treasury will receive over $198 billion in dividends. These companies have also created programs to assist individuals in distressed homes and implemented programs to prevent future poor business practices. This is great for potential buyers and individuals going through the foreclosure procedure but what about the individuals who have already lost their homes as a result of the meltdown? These families have been forgotten and were just collateral damage. To strength the housing market and increase home ownership, these agencies responsible for the meltdown have to assist those families who have lost there homes.

        Simple measure to assist those whom have lost their homes is to commit resources to develop a claim center with federal fraud oversight. The claim center will be responsible helping families find a house of equal or comparable value to the home lost; assist with a below market interest rate loan; provide a down-payment exemption; and work with credit agencies to repair individual's credit.

        For individuals currently unemployed or not financially capable of paying on a house, the claim center needs to establish a reasonable grace period equal to the previous ownership period.  This will allow those individuals time to get back on his or her feet.

        The measure will help the home ownership rates rebound from what is currently reported by the U.S. Census Bureau as record lows this year.

        Home ownership is the key to America's economic recovery. The two goes hand and hand. When home ownership is up, the economy is stable. Although ownership is low, it is getting better. This is evident in Freddie Mac, Fannie Mae, and JPMorgan Chase's ability to report steady profits. As long as the profits continue and the companies make good on their promises, the economy will continue to grow along with the housing market.

My House Is Shrinking

        It's two and a half paces from the right side of my bed to the bathroom door.  From the bathroom door to exit the bedroom,  it's five paces.  Just outside the bedroom door to the left,  is the top of the stairs.  Down 13 steps,  a  left turn, a half step forward, another left turn, then 12 paces leads to the front entrance.  I've walked this same pattern consistently  for the past five years and the distance never changes.   Occasionally, I may bend forward to massage my aching arthritic knees or stop to stretch my lower back but my strides remain the same.   Yet I believe my house is shrinking around me significantly.  I can't physically see it shrinking nor will measurements prove it.  I can only feel it as the days pass.

         When I mentioned it to my two children, the room became silent and I was given a weird look.  They claimed that I'm losing my mind and asked that I stop embarrassing them in front of their friends.   My wife probably agrees with the children.  She hasn't said it but I can see it in her facial expression.  Every time ask for her opinion, she becomes dismissive and tells me to figure it out.  I now have a few theories to how my house is shrinking.

 
        Individuals looking to purchase a house often get introduced to a house with light colored walls, open bright windows, and 100 watt light bulbs shining in every room.   All the bright lights and light colors are used to create an illusion of endlessness.  This makes the rooms seem bigger than they actually are.  Brighter rooms also look cleaner which also make them more inviting.

Furniture placement also important in making rooms seem bigger.  Furniture that doesn't fit in a room properly make the room seem cluttered and uneasy to navigate.   This can make an individual uncomfortable and cramped.

         In addition to the lighting and furniture placement, another theory is that my family is still growing.  At the time of purchase, neither of my children were teenagers.   Now they are teenager and require more personal space for themselves and their belongings.   The amount of friends that visit on a regular bases has tripled and the invasion seems to never stops.   For individuals looking to buy a house, it's always good to take in consideration family planning.  How many children are desired?  And, will this space be adequate enough for a growing family?    

        My house isn't shrinking.  My styling preferences and growing family has changed the dimensions of the house.  

Credible Real Estate Writing Source

        It's been said, "They can't put anything on the internet that it's true."  This is the most incredible news I've ever heard.  No longer do I have to waste countless hours scouring the internet in search of valid real estate information to complete my research paper.  Everything is true.  I can just stop at the very first site listed on my search engine results and start typing.  Just like, I'm sure somewhere on the internet there is a rule that states, "Educators have to give good grades to any student who signs-up for their class and shows little effort."  I, personally, haven't found it yet but I'm confident a team of scientists at Wiki will post this rule to the internet very soon.  It will be a total game changer; learning will be obsolete.  As soon as this information is affirmed, it will be the second most incredible news I've ever heard.  Until that time comes I recommend, for all things real estate, individuals use the United States Department of Housing and Urban Development website (http://portal.hud.gov/hudportal/HUD).

        The HUD website contains useful press releases; updated housing laws; and helpful consumer tips.  The website also includes links to other government sponsored organizations associated with the housing market regulated by government.  I'm not saying an individual won't find this information on a similar website but in the months of searching,  I've found that most real estate websites are profit driven and flooded with advertisements.  Even websites traditional marketed as an .org have been misleading and tailored to realtors or mortgage brokers.  Limited information is provided to consumers. 

        To be an effective real estate writer, it's important to present all the information on a particular topic in a way everyone can understand and make his or her decisions based on the fact.  If information is omitted or unclear, it could lead to multiple problems for everyone in the housing market in the long run.  To avoid this, it's best to get the correct and complete information straight from the source (HUD.gov).   

The Logical Renter

        The United States Census Bureau reports home-ownership is down from 62% to 53% since 2009. It also reports that the average age for first-time homeowners increased from 31 to 38 years old. Some may argue that these changes are as a result of the 2008 housing market crisis but nothing could be further from the truth. These changes are solely the result of higher interest rates. As interest rates continue to rise more and more Americans choose to fore-go home-ownership. For these individuals, renting is the best alternative and proves to be more financially sound than purchasing.


  Renting vs. Buying a home: The math of renting vs. buying a home. Challenging the notion that it is always better to buy.
Renters are at a greater financial advantage than homeowners. For example, when an individual rents a place to live, he or she may only be required to pay some type of security deposit. This security deposit, in most cases, is equal to the first month's rent. It is refunded when an individual vacant the property provided that he or she has meets all contractual obligations. This is not the case for buyers. Buyers using a conventional mortgage are required to have 20% of the purchase price as a down payment plus additional money to cover closing cost. The down payment and closing cost could easily be 50 times more than any security deposit renters are required to pay.

        Another advantage to renting is renter are not required to pay maintenance or repairs cost unless the damage is directly caused by the renter. Maintenance and repairs are the responsibility of the homeowner. Maintenance and repair cost are the most expensive cost to homeowners followed by taxes. According to a report by the University of Illinois Extension, homeowners need to budget 1% to 2% of the purchase price of their home, each year, to cover the costs of home maintenance and repairs. Repairs on a 30-year mortgage at 1% to 2% of the purchase price could equal half the home's value by the end of the mortgage. Renter also have more flexibility and mobility than owners. Renters are generally under a yearly contract. At the end of the period, he or she has the option to renew the contract or relocate with no penalty. Owners are at the mercy of the housing market and could take a substantial loss if he or she attempts to vacant the premises. Also, in most cases, mortgage lenders require buyers live in the property for the first three years of the mortgage.

        These facts are irrefutable. From a financial standpoint, it is far better to rent than to own. Anyone that believes otherwise clearly does not understand the value of a dollars or how fragile the global economy is.

Are Biweekly Mortgage Payment Programs Necessary?

        After purchasing my first home I received numerous offers from mortgage lenders wanting me to participate in a biweekly mortgage payment program.  They promised to save me thousands of dollars; improve my credit; and reduce the years of my mortgage simply by converting my 30-year fixed mortgage to their mortgage program.  These promises captured my attention but promises are only as good as the character of the individual making them.  I needed to learn more about this program and what I found out allowed me to make a sound decision.

        I contacted one of the lenders and was informed that a biweekly mortgage is a mortgage paid every two weeks instead of once a month.  Since there are 52 weeks in a year,  26 payments or 13 months of payments are made.  This reduces the interest paid on the loan and reduces the term since additional payments are made each year.  This also improves credit by default.  Anyone who pays bills on time is improving his or her credit.  Now, knowing this information, I was ready to move forward.

        I made an appointment and was met by a sales agent.  The sales agent confirmed everything before mentioned and presented me with a contract.   All was well until it was explained to me that there is an enrollment fee of $695 plus a $9 processing fee for each payment.  I felt uncomfortable about this newly presented information and informed the agent that I needed additional time to think about it. 

        The following day, I contacted the bank where my current loan was originated.  I asked a loan officer to explain the biweekly mortgage payment program.  The loan officer informed me that enrollment with an outside agency is not necessary since most banks, including themselves, accept biweekly payments without any special enrollments or fees.   I then called my actual bank with the same concerns and was informed of the same information.  Now I'm comfortable.  I was able to set up a biweekly payment through the bank with no additional fees.

 

Scams Mortgage Reverse

        Home Equity Conversion Mortgage (HECM), also known as, a reverse mortgage is a financial tool for senior homeowners who want to access the equity in their homes without having to take-out an actual home equity loan or a second mortgage. This can be an excellent opportunity for seniors, who meet the qualifications and needs, to gain control of their financial lives. This is also an excellent opportunity for individuals of low character to take advantage of those seniors through reverse mortgage scams. A reverse mortgage scam is often committed by groups of individuals working together to steal the equity of unsuspecting homeowners. This scam usually ends with homeowners losing their homes or a large debt being passed to their heirs. Of all the reverse mortgage scams the most popular and common are the Foreclosure Rescue Scam, the Free Home Scam, and the Investment Scam.

        With the Foreclosure Rescue Scam, con-artist target seniors who are struggling to pay their mortgage and maybe at risk of losing their homes to foreclosure. The con-artist has an inflated home appraisal performed by an accomplice. The con-artist then works with the homeowner to obtain a reverse mortgage. During this period, the homeowner is convinced to transfer the title to the con-artist. Once the title is transferred, the homeowners is evicted from the home without gaining access to the reverse mortgage funds.

        In the Free Home Scam con-artist recruits seniors to live in a home; only requiring them to pay taxes and maintain regular up-keeping. The senior is then required to take out a reverse mortgage again using an inflated appraisal. The funds are then given to the con-artist. When the senior passes away, the reverse mortgage lender is stuck with a loss due to the lack of true value in the home.

        The Investment Scam is a simple scam that involves the con-artist presenting his or her target with an excellent investment opportunity with promise of huge returns. The con-artist convince the homeowner that a reverse mortgage is an great way to obtain the funds to pay for the investment. Once the con-artist receive the money, he or she informs the homeowner that the investment didn't workout; never to be heard from again.

        These are just a few of the scams associated with reverse mortgages. To prevent being a victim, seniors need to avoid solicitation from any organizations that their are not familiar with and research the background of any unknown organization through the Better Business Bureau before completing any financial transactions. For a list or more information about the above mentioned scams and other frauds, readers can search the Federal Bureau of Investigation or the United States Department of Housing and Urban Development websites.

All In Reverse

               A reverse mortgage is a financial tool for senior homeowners who want to access the equity in their homes without having to take-out a home equity loan. The significance of the reverse mortgage as opposed to a normal home equity loan is that it is paid back only when the home is sold, the last burrower dies, the owners fails to keep the taxes and insurance current, or moves out of the house for more than 12 consecutive months.  For some senior homeowners whom may have never heard of a reverse mortgages, also called Home Equity Conversion Mortgage (HECM), the process may seem like a scam.  The very idea of receiving a monthly annuity, a line of credit, or a lump sum from the equity already accumulated in their homes without adding an additional monthly expenses seems too good to be true. In most cases, when something is too good to be true, it usually is.  However that's not the case with reverse mortgages.  Reverse mortgages are a great option for seniors at least 62 years old to take control of their financial lives; who intend to stay in their homes and may not have income or savings to cover their monthly expenses.  For homeowners considering a reverse mortgage, for most, the pros far outweigh the cons.

               

                 The equity payment received from a reverse mortgage can be used to pay off an existing mortgage and whatever remains is available for the homeowner.  The homeowner would not be required to repay the funds received until the home is sold.  This is not the case with a normal home equity loan, the funds received during a normal home equity loans starts to be pay back almost immediately.  This creates an additional monthly payment which could also create a financial hardship to homeowners living on a fixed budget.  This hardship could also lead to foreclosure. With a reverse mortgage foreclosure does not come in the picture, however, the home could be loss when the last burrowers dies and the estate doesn't have the money available to repay the mortgage. This procedure is explained during counseling that the homeowners must receive prior to entering into a contract with a lender.

                Reverse mortgage counseling is a mandatory part of the reverse mortgage application process. The United States Department of Housing and Urban Development certifies housing counselors to provide homeowners with practical information about reverse mortgages.  This informs them of all the benefits, as well as, the downside to reverse mortgages.

                The main benefits to a reverse mortgage is that an individual can eliminate an existing mortgage putting that money back in his or her pockets in addition to the monthly annuity they will now receive. Individuals can also establish a line of credit to eliminate medical bills and complete home improvement projects that will add value to their homes.  Individuals can also receive a large lump sum that can be safely invested in a low risk mutual fund for growth.

                The downside of a reverse mortgage is it has high upfront fees and interest rates. This sounds scary to some but careful management of funds received make the impact of these downsides minimum.

               
                 Reverse mortgages are not for everyone but does provide stability for those who meet the requirements and need the additional assistance. Contrary to what some may believe reverse mortgages are not a scam. It's an actual mortgage program regulated by the government.  The uses of reverse mortgages have the potential to provide financial support to many senior homeowners.  The key is finding a reputable lender that is look to earn honest business without taking advantage of anyone.

Guide to Reverse Mortgages
US Department of Housing and Urban Development(HUD) Reverse Mortgage