Obama signs stimulus bill, readies homeowner plan
Obama's first major piece of legislation, it's a $787 billion mix of tax cuts and one of the biggest public spending programs since World War II.
"I don't want to pretend that today marks the end of our economic problems. Nor does it constitute all of what we have to do to turn our economy around. But today does mark the beginning of the end, the beginning of what we need to do to create jobs for Americans scrambling in the wake of layoffs," Obama said.
The setting for the signing was the Denver Museum of Nature & Science, with solar panels on its roof, underscoring the investments the new law will make in "green" energy-related jobs. Workers in solar, wind, and other renewable-energy industries joined Obama and Vice President Joe Biden at the bill-signing ceremony.
Presidential spokesman Robert Gibbs told reporters the White House was open-minded about another stimulus effort. But he stressed that there were no plans in the works for one.
Meanwhile, General Motors Corp. and Chrysler LLC raced to complete recovery plans they were due to submit as part of their deal to receive billions of dollars in government loans. It was not clear they would make Tuesday's deadline.
The two automakers have been living off a combined $13.4 billion in federal bailout loans. They must persuade the administration that they can remain viable. Detroit's third major automaker, Ford Motor Co., did not request government help.
With the economy dominating Obama's first weeks in office, the president on Wednesday will unveil another part of his recovery effort — a $50 billion plan to help stem foreclosures.
All the activity also is allowing Obama to get away from Washington, with its intense partisan wrangling, and be cheered by people who may benefit from the huge government intervention.
Obama planned to outline his plan to help struggling homeowners in a speech in Arizona, one of the states hardest hit by home foreclosures that are at the center of the nation's economic woes.
The $50 billion program was mentioned last week by Treasury Secretary Timothy Geithner as part of a wide-ranging financial-sector rescue plan that could send $2 trillion coursing through the financial system. But details were not announced at the time.
Obama's announcement is expected to include details about how the administration plans to prod the mortgage industry to do more in modifying the terms of home loans so borrowers have lower monthly payments.
More than 2.3 million homeowners faced foreclosure proceedings last year, an 81 percent increase from 2007, and analysts say that number could soar as high as 10 million in the coming years, depending on the severity of the recession.
As for Tuesday's stimulus package, it will pump money into highway, bridge and other infrastructure projects, health care, renewable energy development and conservation.
It includes a $400 tax break for most individual workers and $800 for couples, including those who do not earn enough to pay income taxes. It will distribute tens of billions of dollars to states so they can head off deep cuts and layoffs and will provide financial incentives for people to start buying again, from first homes to new cars to shoes and cereal. It also provides help to poor people and laid-off workers, with increased unemployment benefits and food stamps, and subsides for health insurance.
Separately, GM and Chrysler raced to finish restructuring plans to present to the federal government but seemed unlikely to complete deals with debtholders and union workers by the government-imposed deadline on Tuesday.
Gibbs, Obama's press secretary, told reporters aboard Air Force One that he wouldn't rule out bankruptcy for Detroit automakers. Gibbs said the administration looks forward to reviewing GM and Chrysler's restructuring plans. Gibbs said it is important for the economy to have a strong and viable auto industry and that it's up to automakers to make choices about what is most helpful to their recovery.
GM earlier received $9.4 billion in government loans and Chrysler $4 billion. GM picked up the second installment of its loans, $4 billion, on Tuesday, according to Gibbs.
The Obama team had weighed appointing a "car czar." But Sunday night, the White House instead announced a task force to oversee the companies' restructuring.
The back-to-back government moves to try to lift the economy from a crippling recession had been eagerly awaited by Wall Street. But with the programs now being put in place, investors seemed concerned the impact might not be fast enough or big enough and stocks tumbled on Tuesday to near their November lows.
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Associated Press Writers Ben Feller and Ken Thomas in Washington and Tom Krisher in Detroit contributed to this report.
Calling The Shots
The New Year is a little over 2 week sold but that’s not stopping market “experts” from predicting what’s in store for 2009.
The calls on housing and mortgage rates run the gamut:
- Home prices have farther to fall
- Home prices have touched bottom
- Mortgage rates will dip
- Mortgage rates will rise
Their Guess Is As Good As Ours
Put it all together and it’s pretty clear that the experts have no better idea about the future than you or I. Their guesses are educated ones, but they’re guesses nonetheless.
Fair Warning
So, before you use predictions about the demise (or recovery) of the broader economy to make “personal economy” decisions, consider that the oft-quoted experts have a hugely better track record in analyzing the past than the future.
All we know for sure right now is that home prices are, in general, lower than at the time point last year, and mortgage rates are, too.
Don’t try to time the market. Make financial decisions based on your personal timing. If you have any questions about this post or need to talk about a specific situation, I encourage you to contact me today.
Get Ready for 2009 with these Tips for Buyers
1. Another King in Memphis is CASH! - If you can spare the cash it has a lot of buying clout right now. With equity markets depressed and loans harder to come by, those with cash will be ahead of the game.
2. Negotiate - There many sellers willing to negotiate and add many buyer incentives. Consult with The Jason Gaia Team on assistance with your negotiations.
3. Start Saving - The goal should be to save 20%. Set monthly goals. Even if you have to work an extra job the end result produces lower house payments and more equity for your future.
4. Determine Your Home Buying Budget - Do this before you even start shopping. Review your financial situation and talk with a lender to find out what you really can afford. Be realistic and work in a buffer for contingencies and emergencies.
5. Clean Up Your Credit - You've heard this before but now it is more important than ever. Keep checking this website for Credit Help and Tips.
6. Research - Let us do the research for you. We'll check housing inventory backlogs, average "for-sale" time, and average selling prices. We can give you a good sense of how much negotiating clout you have.
7. Don't Overlook Neighborhood Issues - Keep in mind the quality of the schools, traffic noise, upcoming zoning issues, neighborhood stability and home turnover.
8. Watch For Foreclosed Property To Loosen - Banks will be under greater pressure to cut their losses on property they own thru foreclosure.
9. Look For Other Opportunities - Can't get a loan? The financial markets "should" begin to untangle at least a little bit in 2009. But, don't expect to return to zero downpayments.
HOLIDAY SHOPPING
Black Friday is mere moments away, so before you hit the streets at unbelievable hours, prepare yourself with everything you need to know before you get shopping—after all, knowledge is power. I've prepared a one-stop crash course for Black Friday 2008, so get ready to get your read on, because this one is going to be a good one.
Before you go out and start shopping...
1. Find the ads: This is where it all begins. You can find scans of advertisements and other information from major retailers on a variety of sites, like bfads.net, blackfriday.info, and blackfriday.gottadeal.com, but my personal favorite Black Friday information source has been SlickDeals.net. SlickDeals.net has a constantly updated page with uploaded scans of all major Black Friday ads (located here), and the website also created a comprehensive Excel spreadsheet (located here) organizing all Black Friday items into one neat place, so getting a quick overview of items and prices won't require having to scan through tons of color ad pages. Once you've gotten a general idea of what you're interested in buying...
2. Prioritize your list: It's probably impossible to get every single thing that you want on Black Friday (I know it is for me), so prioritize your items so you know exactly what you're getting and where you're getting it. Try to have a printed list on hand with model numbers and prices for reference, because it's going to be hard to remember what's going on amidst all of the chaos.
3. Learn the rules: Many stores are having special store hours specifically for Black Friday. For instance, Best Buy, Sears, Circuit City, and Wal-Mart locations will be opening at 5:00am, while Kmart, Target, Meijer, and a few others will be opening at 6:00am. Additionally, some stores will be giving out tickets/vouchers several hours before opening, so be sure you know exactly what to expect before you you head out. Also, knowing the number of units in stock can be helpful—most ads usually print store minimums for reference, or if you're really hot for an item, scope out the store just before closing the night before, find the exact item's location, and remember it or stash it in a secret location.
4. Coordinate with others: If you can, go with at least one friend or family member. Not only will it help pass the time in the wee hours of the night, but having a friend/ally will also help you be able to pick up hot sale items, and they'll also be able to hold your place in line while if you should ever need a bathroom/food/random break. If you want "doorbuster" sale items from multiple locations, coordinate a "Strike Team" with other Black Friday adventurers to divide and conquer. Strength in numbers is always nice to have on your side. Additionally, if you can, try and make friends with others in line. This will not only help pass the time, but it will also keep order and will keep "line-jumping" to a minimum.
5. Pack accordingly: If you're thinking about waiting in line with just a coat, think again. As someone who has done many overnight camp-outs, I have to personally recommend that you bring a fold-out chair, a blanket, something to do (Nintendo DS or PSP is nice, or you can go old school with a book), snacks, and water. Trust me, if you're comfortable, the time will pass much faster, and you'll have a much better experience to remember.
Everyone has many different recipes and favorites they love to prepare for Thanksgiving. But, how many ways can you prepare left over turkey? That is a question we have all been dealing with for years. Try this recipe for some of your leftovers, you'll love it.
Turkey Sweet Potato Shepherd's Pie and Cran-applesauce Sundaes
Rachel Ray, The Food Network
Ingredients
- 2 tablespoons extra-virgin olive oil
- 2 pounds ground turkey or chopped leftover turkey
- Salt and freshly ground black pepper
- 2 teaspoons poultry seasoning
- 2 1/2 pounds sweet potatoes, peeled and cubed
- 1 onion, cut into 1-inch dice
- 2 carrots, peeled and grated
- 4 ribs celery, chopped
- 4 tablespoons butter, divided
- 2 tablespoons all-purpose flour
- 2 cups
turkey or chicken stock (recommended: Kitchen Basics)
- A few dashes Worcestershire sauce
- 1 (10-ounce) box frozen peas
- 1 very ripe banana
- A few dashes hot sauce
- 2 cups sharp shredded yellow Cheddar
- 1 1/2 cups all natural apple sauce
- 1/2 cup good quality whole berry cranberry sauce (recommended: Ocean Spray)
- 2 pinches ground cinnamon
- 2 teaspoons orange zest
- 2 pints French vanilla ice cream
- Whipped cream
- 1/4 cup chopped toasted pecans, available on baking aisle
Directions
Preheat oven to 425 degrees F.
In a deep skillet or a Dutch oven heat 2 tablespoons oil over high heat. Add meat and break up with a wooden spoon, season with salt and pepper and poultry seasoning.
Place sweet potatoes in a pot, cover with water, cover pot, bring to a boil, add salt and cook 15 minutes until tender.
Add onions, carrots and celery into the turkey. Stir, and cook for 5 minutes. While vegetables are cooking, heat 2 tablespoons butter in a small pot over medium heat. Add flour to melted butter and whisk 1 minute. Whisk in stock and season with salt, pepper and Worcestershire. Cook a few minutes to thicken.
Stir peas into meat and turn heat off.
Drain potatoes and return pot to heat. Add remaining 2 tablespoons of butter and melt over medium heat. Peel and slice banana and add potatoes to the pot. Season the potatoes with salt and pepper and a few dashes hot sauce. Mash potatoes and banana to combine, adjust seasoning. Top the meat with the potatoes. Cover potatoes with cheese and place in the oven to melt cheese, about 5 minutes.
For dessert, warm the apple and cranberry sauces in microwave or in a small pot over low heat and season with cinnamon and orange zest. Place a little cran-applesauce in the bottom of a sundae dish, top with 2 scoops ice cream, more sauce and whipped cream, garnish with chopped pecans.
Naturally both buyers and sellers are wondering what is in store after the election this week. Below is a transcript taken from the REALTOR Magazine.
Obama Victory: What It Means for Real Estate
With the election of Sen. Barack Obama (D-Ill.) as president of the United States, and gains by Democrats in U.S. House and Senate races, one big questions is on many REALTORS®' minds: How will the new government leadership affect the housing industry's ability to move forward with its top legislative goals?
“We’re in a good place,” says 2009 NAR President Charles McMillan. “REALTORS® are excited by this historic election and stand ready to work with our new president and the new Congress on issues that are at the heart of the American dream of homeownership.”
The availability of affordable mortgage financing and affordable health insurance top REALTORS®’ legislative priority list; more important, those issues are also priorities for both major parties.
“There is no partisan divide when it comes to homeownership, strong communities, affordable health insurance, and strong commercial real estate markets,” McMillan says.
Expect Renewed Focus on Fannie, Freddie
NAR analysts say REALTORS® can expect the Obama Administration and the new Congress to focus first and foremost on regulatory reform of the country’s financial services industry.
Lawmakers will be looking at what went wrong and what needs to change to ensure proper regulation of mortgage- and other asset-backed securities.
A large part of this review will focus on potential changes to secondary mortgage market companies Fannie Mae and Freddie Mac, which are under government conservatorship. Among the options on the table: folding them entirely into the government, making them 100-percent privatized companies, or keeping them as public-private hybrids.
NAR has formed a presidential advisory group (PAG) on the future of Fannie and Freddie, and the association will be weighing in as Congress takes on the issue, NAR analysts say.
Whether you are putting together the last touches on the Halloween Party or gearing up for Saturday's big college football games (i.e. The World's Largest Outdoor Cocktail Party) this recipe for Homemade Potato Chips is sure to please. Especially knowing it is from Pat and Gina Neely's kitchen. Get more recipe's from Down Home with the Neely's.
Ingredients
Peanut oil, for frying
1 1/2 pounds Yukon gold potatoes
Salt and freshly ground black pepper
Neely's BBQ Seasoning, recipe follows
Directions
Preheat peanut oil in deep-fryer to 375 degrees F.
Peel potatoes and then slice into very thin 1/8-inch slices using a mandoline with a straight blade attachment. Keep potatoes in very cold water until ready to fry after cutting. Drain potatoes in a colander and blot dry with paper towels.
Fry potatoes in batches, only a few at a time, for about 3 to 4 minutes. Once they reach a golden brown color, remove chips from the fryer and drain on a pepper towel lined sheet tray. Dust immediately with salt, pepper and Neely's BBQ seasoning, to taste.
Neely's BBQ Seasoning:
1 1/2 cups paprika
3/4 cup white sugar
3 3/4 tablespoons onion powder
Combine ingredients and mix well
-Provided by: Down Home with the Neely's
7 GREAT HALLOWEEN PARTY TIPS
Looking for ways to celebrate one of the year's most fun holidays with your kids? Plan a costume party for them! Halloween get-togethers can be a wonderful alternative for parents concerned about taking small children door-to-door for tricks or treats. Not sure where to start? Follow our seven steps below and you'll be sure to have a ghoulishly good celebration.
1. Keep it devilishly simple
Make the celebration short — the same length you would for a birthday party (about an hour and a half for tots under 6, about two hours for those between 7 and 12). This allows enough time for a costume parade, a few activities and some nibbles. Holiday-themed invitations, silly decorations and easy party games are the key to memorable and fun festivities.
2. Send out invitations at least two weeks in advance of the party
Your local party store or invitation web sites offer Halloween invites, or, better yet, you can make easy cards at home. Those handy with scissors can trace and cut out a spider or web (think of the fold-and-cut process used for paper snowflakes) — or a simple witch hat or pumpkin "carved" from construction paper.
3. Don't make it too scary
While it's great fun to transform your home or other location into a haunted house to set the mood, keep in mind the age of the littlest party guests. While black lights and eerie music can be amusing for elementary-age kids, it can frighten impressionable preschoolers. And you'll be sure to hear from parents whose children wake them in the middle of the night with nightmares.
4. Have fun with decorations
There are fabulous party decorations available that work with all ages — from creepy cobwebs and smiling bats to carved jack-o-lanterns, broomsticks, and friendly skeletons — that can be purchased from local party stores or five-and-dimes. You can also set your kids to work by taping butcher paper to the walls and letting them decorate their own haunted houses or graveyard scenes, complete with flying ghosts, red devils and witches.
5. Transform your kitchen into a laboratory
Rubber fingers swimming in tomato sauce, crumbled chocolate cake topped with gummy worms or eyeball deviled eggs are a few ways to create a spooky setting. Rubber bugs, pieces of fur or other objects with a distinctive feel work well in shoeboxes or drawers. Instruct guests to speculate the ghoulish item inside and award prizes for guesses that are right on the money.
6. Keep everyone busy
Have handy crafts and games for younger guests, and try filling a vat with fruit and let older kids bob for apples. Purchase
little pumpkins at the local farm, pass out magic markers and have a face-drawing contest. Play a game of Halloween character charades or pin the tail on the devil. Try to "catch" white skeleton heads — white balloons with faces drawn on in magic marker — with nets. Divide the kids into teams and enjoy a "mummy wrap" contest. Put plastic spider rings around the house for a great take-home favor.
7. Prepare a selection of spooky treats
Don't let all the little werewolves go home hungry. Please their picky palates with a Halloween-themed meal instead! From Pumpkin Ravioli to Polenta Fingers and 'Blood Red' Tomato Sauce, the recipes below are sure to be the perfect end to a spooky celebration. To make the day extra fun for your kids, have them help you whip everything up.
Read these great tips and get more at The Food Network.
Add a Touch of Green to This
Year’s HalloweenFood
Is there a parent alive whose heart sings when children come home with pillowcases full of candy, as young, sugar-soaked brains misfire on all cylinders?
A common defense is the Switch Witch, or Candy Fairy. After children have picked out a few pieces of sugary loot, they put the rest out for the Switch Witch. This beneficent witch comes while children are asleep to whisk away candy and leave a little gift in its place.
For treats to give out, among the most popular healthy alternatives are Fair Trade organic chocolates and organic fruit leathers. Favored non-food treats include nontoxic crayons and recyclable temporary tattoos.
Costumes and Decorations
Do It Yourself is the motto with costumes and decorations. Buying these things shortchanges children of the fun they have creating them, as well as putting more non-recyclable, petroleum-based garbage in landfills. It is time to reinvest in imagination instead – it's more fun. There are countless ideas online for great, self-made costumes that cost little or no money.
Out and About
The plastic Trick or Treat bag is dead. It's one creature that needn't rise again this Halloween night. Pillowcases and canvas sacks are wonderful options.
Parents no longer sit behind the wheels of idling cars while their ghost lings float door-to-door. Walking along with children gives parents a chance to share their joy close-up, to look at the Halloween moon, and to revel in the spooky atmosphere.
Should I Wait for the Market to Turn Around
The answer is to ask yourself these questions, "What is your goal and how long are you thinking it will take for the market to turn around?"
I ask these questions because circumstances are different for each person. I suggest thinking
about why you are selling in the first place; work, size, family, location, schools, etc.... Your goals will play a strong factor in your decision. I also recommend weighing in the amount of time you are willing to wait in order to achieve your goals. Your moving goals and/or flexibility in obtaining them may make the decision to sell now or later very clear. If not, then take into consideration the financial piece of the puzzle. Ultimately, your property is an investment. Based on the economic analysts, forecasters and all of the industry publications, the market is predicted to remain the same until Spring 2010. If the analysts are correct and it is 2010 before the market turns around, is the amount of money you are investing worth the return you will get? Or, is there an opportunity to get a higher return on your investment by selling and purchasing another home today? Now, evaluate your objectives by adding the following; goals + time + investment opportunity = decision. Overlooking short term impact, separating emotional ties and looking at the big picture to see the potential gain is usually the most difficult thing to do among most sellers. I include myself in the "most sellers" category.
However, our market is soft. I suggest that we look at the facts and take into consideration the whole equation before coming to any conclusions. The Memphis Area Association of REALTORS most recent market statistics report that the year to date total number of residential closings are down -19.8%. However, our market has not changed since February 2008. Simply stated, we are not losing or gaining any ground and holding flat. Therefore as the national media covers the real estate market, once again, they don't just look at the numbers in Memphis, our market is not declining on a daily basis like one would think after watching a cable newscast. For more information and details regarding our Memphis Real Estate Market, feel free to call my office at 901-751-4357.
Market Conditions
With so much of the U.S. economy hanging in the balance, where do the Presidential candidates weigh in federally insured limits on bank-deposit accounts?
According to a recent MarketWatch article, Both Senators Obama and McCain are calling for "a raising of federally insured limits on bank-desposit accounts in an effort to reassure voters that their funds are safe." The limit is proposed to be raised from $100,000 of FDIC coverage to $250,000.
This isn't the first time raising these limits has been suggested. Former FDIC Chairman William Seidman noted he suggested raising it 10 years ago.
And with recent bank failures, such a Washington Mutuall, this is an issue all consumers need to take note of. If a bank if unable to meet is obligations to depositors -- then the FDIC steps in. But are you fully covered?
All consumers should verify that their money is insured -- fully -- by the FDIC.
Get ready for hosting your football parties this season, enjoy this great cocktail with all your favorite Saturday foods. Come back to this page throughout the season for more great food and drink recipes.
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2 cups ice cubes
1/4 cup lemon slices
1/4 cup pineapple chunks
1/4 cup tequila
1/4 cup Triple Sec
1/2 cup orange juice
1/4 cup pineapple juice
1/4 cup high alcohol content rum (recommended: Bacardi 151)
Splash grenadine
1/4 cup maraschino cherries, plus more for garnish
In a pitcher, add all the ingredients and stir to combine. Garnish with maraschino cherries, if using. Pour into rocks glasses, garnish with maraschino cherries and serve.
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Buying your first home is a lot of fun but there is more to it than meets the eye when it comes to budgeting.
Most new home owners are financially savvy enough to calculate the mortgage, interest, taxes, and insurance payments; but tend to forget less obvious expenses.
Here to help are a few budgeting basics for first time home buyers.
Moving Expenses: Truck rentals, time off of work and, of course, - gasoline … moving takes money whether you do it yourself or pay others to do it for you so plan accordingly.
Maintenance: From lawn care to fixing a door knob, owning your own home involves maintenance. Few first time home buyers remember the expense of maintaining a yard until the neighbors start giving them dirty looks. Don’t be caught by surprise because this is one area where expenses can add up fast. Set aside funds for a lawn service and pool maintenance, or plan to purchase the tools required to do it yourself, including lawnmowers, garden and hand tools plus other general maintenance items.
Utilities & Communication: New home buyers are frequently surprised by the cost of utilities since many apartments include basics like cable, trash, or water. Set aside enough funds for deposits and the first payment for utilities, phone, cable and other necessities. Don’t forget to find out if your cell phone, cable, and other services are available in the new area - otherwise, you may be forced to break a contract to obtain services.
5 Quick and Easy Renovations and Remedies
Learn how to earn tidy profits when selling your home or investment property with these quick renovation and maintenance tips.
Color
Still living in sterile white walls? Does a boring beige and brown exterior greet potential buyers? Eliminate the institutional look and give your home a brand new appearance inside and out with a quality paint job.
Clean Air
The sense of smell is a powerful tool especially when it comes to selling a home. Pet odors, smoking or other unpleasant smells can dramatically alter the impression of the home. Deep clean carpet, air vents, upholstery, and drapes plus any other absorbent surface that collects odors. Make it a priority to change the air filter and consider using an enzymatic treatment for deep-set odors. Marketing companies use smell to sell everything from new cars to clothing; put the same tips to work when renovating by using fragrance to create the impression of quality, comfort, and cleanliness.
Clear Clutter
Visually a few well placed large objects of contrasting colors are more attractive than numerous small items. Use this knowledge to tackle objectionable areas and transform them into the center of attention both inside and outside the home. Expand small rooms by adding a window that draws the eye outward or coordinate colors to give the impression of uniformity instead of clutter to make a small kitchen or bathroom look larger.
Carpet Fixes
Before spending big dollars on new carpets, consult with a specialist capable of repairing and restoring the rugs throughout the home. It is often possible to blend or repair burns, snags and stains to make the carpet look nearly as good as new.
Conserve
Invest in low-maintenance lawns, water-saving devices and energy efficient appliances that will appeal to tenants and potential buyers alike. Green is in.
Should You Buy a Home?
The decision to buy a home is a complex one with many factors to consider, some of which may differ from person to person. But whether you’re a recent graduate, newlywed, single or single again, married with children, or an empty nester, there are common factors to take into account.
There are many benefits to home ownership. For starters, it’s a great long-term investment. Although you’re unlikely to see significant appreciation in price in the short term, an increase in value is almost certain over time. But remember: real estate is not a “liquid” investment. Should you find yourself wanting or needing to sell, it could take some time to find a buyer and close the sale, depending on market conditions at the time. Owning a home also offers a number of tax benefits. Interest and closing costs paid on a mortgage as well as property taxes are deductible if you itemize deductions on your federal income tax return.
In addition to financial benefits, home ownership offers other advantages. Many people experience a sense of pride and satisfaction in owning their own home. For some, it gives a sense of stability, of “setting down roots.” And when you own your home, you enjoy the freedom to improve your property according to your own wants and needs, which usually isn’t possible when renting.
With the privileges of ownership, however, come responsibilities. Maintenance and upkeep tasks that you may be accustomed to your landlord handling will fall squarely on your shoulders. In addition to the time it takes to care for your home properly, you’re likely to encounter both routine and unexpected expenses. It is important to anticipate these occurrences and prepare for them.
How do you know if you’re ready to buy a home? Do your research. Make a plan. Prepare a budget. Here are some questions to consider in making your decision.
- How long do you plan to live in your next home? Does your job or lifestyle dictate frequent moves? Remember that home values increase more over the long term, so if you’re moving more often than every few years, you may not see significant gain when you sell your home. You will, however, gain equity in your home as you pay down your mortgage, while rent money is gone for good.
- How healthy are your finances? Do you have money for a down payment, closing costs, insurance, taxes, and a buffer for unexpected expenses that can occur when you own a home? If not, talk with a mortgage lender to learn what steps you should take to put yourself in the best situation to purchase a home.
- What is the real estate market doing in your area? How are mortgage rates? What kinds of homes are available in your price range? Are they located in areas that suit your lifestyle? If you are not able to buy a home as nice as the ones you could rent, consider your willingness to live in a less desirable environment for a time. The equity you’ll gain can help you upgrade sooner than you could if you continued renting and tried to save the additional money. A licensed real estate agent can provide you with valuable market information and help you evaluate your options.
The Lease Option Option
The world of real estate investing is filled with mechanisms investors use to get into properties and turn a profit. As a new real estate investor, that avalanche of information can often seem insurmountable. Financing options alone on a real estate investment could take days to fully understand.
Nestled somewhere in that great array of information is the lease option, a mechanism used by some investors to get into a property quickly and with no down payment to speak of. It is a flexible solution to some investing issues and can provide a win-win situation for buyer and seller.
The basic form of a lease option dictates that a buyer and seller agree on a payment plan for a particular piece of real estate that includes the option to buy the property at some point in the future with a particular selling point. Should the buyer ultimately decide against purchasing the property, no harm is done and the agreement is simply terminated. However, if the buyer does decide to purchase the real estate, the seller is obligated to sell for the price and terms agreed to at the onset of the contract.
While this type of deal is not for every investor or every property, there are certainly some benefits. These agreements are often rapidly worked out, giving the buyer control of the investment property and the seller a monthly payment in short order. The buyer remains flexible in the investment, having the ability to decide later not to purchase the property and the seller benefits from that flexibility by keeping the monthly payments and perhaps keeping the whole property in the end.
The buyer benefits by escaping any sort of down payment to get into an investment property, only having to come up with the monthly payment. If the property is managed correctly, that monthly payment will come directly from the revenue seen by the property.
One of the most common ways this method is used is for investment properties that could use some renovation to ultimately command a better sale price. A buyer will enter into a lease option agreement, work on the home to improve its value and then pursue a separate buyer that will pay more than the cost of the lease option. With such an arrangement, an investor can turn a profit on a home he or she was never even the legal owner of.
Of course, there are some pieces of information to consider when deciding whether a lease option is right for your investing needs. The most important piece of advice when dealing with a lease option is to take special care when drafting the contract as it will largely determine whether your investment succeeds or fails.
Every lease option agreement will include a monthly payment amount, an option fee (a low amount paid to the seller to enter into the agreement much smaller than any kind of down payment), the option sale price and an expiration date for the agreement. You must decide whether you want to purchase the property or not before the expiration date or else the seller is freed from the obligation to sell. You can still make payments and enter into another agreement if the seller deems it worthy, but that obligation expires.
This is another original article by Joe Lane, co-owner of The Lane Real Estate Team at http://www.joelane.com/. Are you looking for an experienced Tri City WA Real Estate agency? With 20 years of service based, business experience, Joe and Colleen Lane work hard to serve home buyers and sellers for Tri Cities WA Real Estate, Kennewick Real Estate, Richland WA Real Estate, Pasco Real Estate, and surrounding areas. Website and SEO by 1stPageSEO.com
Bobby's Recipes for July 4th
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6 ripe peaches, halved, pit removed
1 stick (8 tablespoons) unsalted cold butter, melted, plus more if needed, divided
8 tablespoons light brown sugar, divided
1 teaspoon ground cinnamon, divided
1/2 cup granola
1 pint vanilla ice cream
1/2 cup prepared caramel sauce, heated Heat the grill to medium.
Place the peaches cut side down on the grill until browned. Remove from the grill, cut into wedges and place into a gratin dish. To the peaches add half the butter, half the brown sugar and half the cinnamon, and toss. Add the remaining butter, sugar and cinnamon to the granola in a small bowl and toss until combined, adding more butter if needed. Top the peaches with the granola mixture and place the gratin dish onto the grill. Close and bake until the peaches and granola are golden brown, about 15 minutes.
Place 1 large scoop of ice cream into 4 bowls and top with the peache mixture. Drizzle with some of the caramel sauce.
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| Spice-rubbed Chipotle-Molasses Ribs
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1 cup ancho chili powder
1/4 cup Spanish paprika
2 tablespoons ground cumin
2 tablespoons ground coriander
2 tablespoons dry mustard
2 teaspoons ground cayenne pepper
2 teaspoons dried oregano
2 tablespoons kosher salt
1 tablespoon ground black pepper
2 racks pork ribs (12 ribs each)
1 cup soy sauce
1/4 cup coarsely chopped ginger
Chipotle-Molasses BBQ Sauce, recipe follows Preheat oven to 400 degrees F.
Combine all spices in a bowl. Rub ribs on both sides with spice mixture.
In a saucepan over medium-high heat, combine the soy sauce, 2 cups of water, and the ginger and bring to a boil. Pour the mixture into the bottom of a roasting pan and place the ribs on a rack in the pan. Brush with the Chipotle-Molasses Sauce. Place in the oven and bake for 1 1/4 to 1 1/2 hours, basting every 15 minutes with the sauce.
Chipotle-Molasses BBQ Sauce:
2 tablespoons canola oil
1 large Spanish onion, coarsely chopped
3 cloves garlic, coarsely chopped
2 tablespoons ancho chili powder
1 tablespoon pasilla chili powder
1 tablespoon New Mexican chili powder
3 cups canned plum tomatoes with juices, pureed
1 cup water
1/4 cup ketchup
1/4 cup red wine vinegar
2 tablespoons Worcestershire sauce
1/4 cup dark brown sugar
1/4 cup honey
1/4 cup molasses
2 tablespoons Dijon mustard
2 chipotle chiles in adobo, pureed
1/2 cup smooth peanut butter
Salt and freshly ground black pepper
Heat the oil over medium heat in a heavy-bottomed medium saucepan. Add the onion and garlic and cook until translucent, 3 to 4 minutes. Add the chili powders and cook for 1 minute. Add the tomatoes and water, bring to a boil, and simmer for 10 minutes. Add the remaining ingredients, except the peanut butter, and simmer for an additional 20 to 30 minutes or until thickened slightly, stirring occasionally. Transfer the mixture to a food processor with the peanut butter and puree until smooth. Season with salt and pepper, to taste. Pour into a bowl and allow to cool at room temperature.
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The Art of Negotiation
Feeling comfortable with a real estate transaction is the easiest way to ensure that you have a positive experience, whether it be as buyer or seller. Knowing what is going on and taking an active role in the proceedings o f your real estate transaction will give you the piece of mind necessary to erase some of the worry and doubt inherent to any real estate deal.
With that in mind, while it is important to rely on your realtor, it is also important to take ownership of the process of either home buying or selling to truly understand what is going on. The negotiation of your home’s sale is one area where that extra knowledge will help you not only understand the methodology your realtor is using to get you the best sale or purchase price possible, but also understand what can be done to turn a negotiation’s key function, the compromise, in your favor.
One of the tactics often used in real estate negotiation is to take an extreme position and bargain down from that position, hoping to get the price you really want after offering something extremely low or high to begin with. There is certainly merit to that stance, but the nuance of the tactic comes in when deciding just how extreme a position can be without scaring off your potential partner in the real estate transaction.
For example, offering to purchase a home for $50,000 under its list price is not taking an extreme position, it is taking a hyper-extreme position sure to get you laughed at. What you’re shooting for is a number that is obviously too low but one that will get you to the negotiating table where your realtor can work at hammering out a price you can live with.
Many home buyers when negotiating a price will try to raise their offer by a particular amount to get you to lower your asking price by that same standard amount. One tactic for compromising involves not simply reacting in kind, but reacting with a drop in sale price somewhat lower than the increase in the offer price.
For example, you could offer me $1,000 more on my property, expecting me to drop my asking price $1,000 as a reaction. Instead, I’ll drop my asking price by $500 and go from there. While this move certainly has the potential to anger a potential buyer, it could also slow the rate at which you drop your price, netting you a higher selling amount in the end for your piece of real estate.
Finally, think about throwing in tangible benefits that may not be important to you, but sound impressive to your buyer. Perhaps instead of dropping the price of the home by a certain amount, offer to waive a particular fee or offer to pay a particular closing cost. Maybe they want something within the home or want you to replace a particular item.
Use these desires as bargaining chips and sometimes you can save money through offering services over hard cash. It may cost you $500 to replace a certain item and offering that replacement service could get you out of dropping your selling price by $1,000. These types of situations are common and can sometimes net you benefits in getting a compromise on your terms rather than a potential buyer’s.
No matter what your tactic, taking these negotiating tips can not only help you understand your home transaction, but prepare you for the world of real estate investment as well. Often, real estate investment opportunities have more negotiable terms and these tactics can come in handy in that arena as well. The compromise is an accepted part of most real estate transactions and using the art of the compromise to benefit you can save you thousands of dollars in your next negotiation.
This is another original article by Joe Lane, co-owner of The Lane Real Estate Team at http://www.joelane.com/. Are you looking for an experienced Tri City WA Real Estate agency? With 20 years of service based, business experience, Joe and Colleen Lane work hard to serve home buyers and sellers for Tri Cities WA Real Estate, Kennewick Real Estate, Richland WA Real Estate, Pasco Real Estate, and surrounding areas. Website and SEO by 1stPageSEO.com
Hunting Down the Perfect House
When the time finally comes to make a move to a new home, families can often times be on one hand extremely excited about the prospect of shopping for a home and on the other hand be unsure as to how to start the process. There are a few important steps that should be taken in any home-buying process to ensure a smooth real estate transaction.
Know What You Want
If you're upgrading from your current home, odds are you have a good reason. Perhaps your family has grown too large for your old home or perhaps a bump in income has given you the ability to upgrade any of the features of your home. You know why you want to move, now write those reasons down on paper.
When you come to a real estate agent or decide to go out on your own, knowing the kind of square footage you might be looking for, the number of bedrooms, the general area, the school district and other requirements will quickly narrow down your search to homes that are the most relevant to you. By having a good handle on the type of home you're looking to buy, you cut out a lot of the guess work and wasted time that can take place in the early going.
Pick the Right Real Estate Agent
The best real estate agent is not always the one with his face on the bus bench. Publicity gets the name of particular realtors and realty companies out into the public, but publicity does not always translate into the time and care it takes to make sure you get the home buying process you're looking for. Interview multiple realtors, asking plenty of questions each time.
You will probably be spending a large amount of time with whoever you choose, so make a wise choice. You are entrusting perhaps your biggest single possession into your realtor's hands, so feeling comfortable with your choice will go a long way towards feeling comfortable with the process as a whole.
Take Control of the Showing Process
Shopping for homes is usually the most time-consuming portion of the home-buying process and can often leave people frustrated if they feel that they are wasting their time on improper homes. Knowing what you want comes in to play big time in this step and can trim a lot of the fat from what is out there on the home market by narrowing down the entire set on a few key pieces of information. If you see a home online or just driving by, don't hesitate to ask you realtor to set up a showing. That's what they're there for so make use of them.
Don't ever be afraid to simply drive up to a home where you have a scheduled showing and never take a step inside. This is going to be your prospective home, so factors such as the appearance of nearby homes, the area of town and accessibility to things that are important to you are all entirely legitimate reasons to not want a particular home. Communicate that to your realtor and she/he will be able to get a better idea of the type of area you are looking for. Keeping that communication going leads to better showing and less time wasted on homes that just aren't right for you.
This is another original article by Joe Lane, co-owner of The Lane Real Estate Team at http://www.joelane.com/. Are you looking for an experienced Tri City WA Real Estate agency? With 20 years of service based, business experience, Joe and Colleen Lane work hard to serve home buyers and sellers for Tri Cities WA Real Estate, Kennewick Real Estate, Richland WA Real Estate, Pasco Real Estate, and surrounding areas. Website and SEO by 1stPageSEO.com
Navigate Your Buying Experience
Buying your first home can be an exciting, yet often overwhelming, experience. These tips will help you navigate the process.
1. Clean up your credit.
If you have poor credit, you are a bigger risk in the eyes of lenders. You’ll pay the price in the form of higher interest rates. Higher rates can reduce the amount of home you can afford or keep you out of the housing market altogether. Make a point of paying auto loans, credit card bills, and other payments on time and in full. For details on your credit or assistance with developing a plan of action, contact a Mortgage Consultant.
2. Save.
You may need money for your down payment, closing costs, moving and other expenses.
3. Get preapproved for your loan.
A lender can tell you generally what you can afford and how much you can borrow. This will give you an edge with sellers in a competitive market. Contact a Mortgage Consultant.
4. Be realistic.
Your dream house could quickly turn into a nightmare if you spend more than you can really afford. Pick a house with a mortgage payment that will allow you to be comfortable in other aspects of your life.
5. Research the neighborhood.
A good real estate agent can help you with this. Check out the ratings of the neighborhood schools. Even if you don’t have children, this could be important when you try to sell the house in the future. Also, make sure you know the proximity to anything that might be deemed undesirable, such as airports and major highways, and ask your real estate agent for zoning information on any areas surrounding the home and neighborhood.
Money Moves for Tough Times
While economists debate whether the country is in a recession, consumers are being buffeted by skyrocketing prices, growing debt, layoffs, the subprime lending squeeze and a stock market roller coaster.
While you may not be able to control the price of oil or the prime rate, there are some simple things you can do to shore up your finances, safeguard your future and ride out whatever the economy throws at you.
Here's a list of ideas that hopefully will help you get through any hard times, plus tips if the hard times have already hit your household.
1. Eliminate the nonessentials. One way to avoid putting spending on automatic pilot: Write down everything you buy and the price. Then go through the list and "be brutal," says Nancy Register, associate director for the Consumer Federation of America.
2. Consider cutting back (rather than cutting out) some expenses. Depending on your current situation and concerns, it might make more sense to just scale back. "It's much more effective if people cut back rather than cut out," says Cunningham, "because it's the change in behavior that's so tough."
3. Keep your debt load light. Use credit only if you are paying off balances in full every month. Otherwise, switch to cash, checks or debit cards, says Cunningham. "That way when the money's gone, the spending stops."
4. Swap extraneous spending for smart long-term moves. You can live another month without a new DVD player, but servicing your car or home heating system could net you a nice savings through fuel efficiency and keep you from having to shell out for expensive repairs later.
5. Investigate refinancing. If your credit is good and you're planning to stay in your house for a few more years, refinancing could be a smart move.
You can buy, but should you?
Even if you think you can't afford to buy a home under these conditions -- and with many distressed homeowners and builders desperate to sell, chances are you can -- the real question is, should you?
Homes are plentiful and will remain so, but financing will be getting more expensive. True, the Federal Reserve has slashed interest rates, but fixed mortgages don't directly follow the Fed. They reflect the bond market's expectations about inflation, which remains a concern. The 30-year, now at 6.1% on Conventional and 6% on FHA loans, the rates will likely reach mid 6% by December and 7% in 2009. With many changes in FHA and lending procedures there are many options. Loans are available with credit scores as low as 580 including 100% financing options. Contact a Mortgage Consultant for further details. You can't time the bottom. It's harder to do than you think, and this is the best buyers have had it in two decades, with inventories up and mortgage rates low.
Ideas for Outdoor Entertaining
Warm weather means outdoor picnics, barbecues and family get-togethers. Casual gatherings don't always have to mean plain paper plates and paper napkins. Here are some cheap and easy ways to entertain indoors or out with creativity, not cash! (Make sure you check out our recipe below for great Memphis Style Ribs! Straight from the Neely's)
- Create a theme for each event you host. This can be anything from a sports or garden theme, Fourth of July patriotic theme, or as simple as a cool ocean colors theme. A theme will give you direction in choosing your table adornments and make the whole gathering feel pulled together.
- Set a background for your food with what you already own. A colorful blanket draped over a table will give your outing a western or Mexican flair, or pretty pastel sheets and quilts can make a garden tea all the more charming. Make confetti for the Fourth of July table with a paper punch and junk mail. (The kids would love to help you with this!) Use Memorial Day to print out color copies of ones we have lost and wish to remember, and hang the photos from trees with ribbon. Use a few colorful bottles, tea cups or bud vases and fill with fresh flowers from your garden or supermarket.
- Display your foods in a festive manner. It doesn't take much money to line your serving platters with lettuce, to add a few sprigs of mint to your dessert trays, or to use rosemary sprigs to edge the huge platter of ribs you just pulled off the grill. You can find fresh herbs in the produce section of your grocery store. They are an inexpensive way to add a special touch in sight and scent to any meal, making it all the more special. Besides, there is something very outdoorsy about adding fresh herbs to a meal that will cause your summer outings to linger in your memory. After all, scent is the strongest sense the memory recalls.
- Use unconventional items for serving. Almost anything that can be run through the dishwasher can be used to hold silverware, napkins or condiments. Try terra cotta pots or large seashells. An old wagon can hold ice and soda. Think of your theme and then make a list of related items and see which ones you can use for serving pieces.
- Finally, enjoy the outdoors, breathe in the fresh air and listen to the kids play. Know you are making memories that will last a lifetime, and you have put your heart into creating the perfect backdrop for those memories!
Memphis-Style Hickory-Smoked Beef and Pork Ribs
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Recipe: Courtesy of the Neely’s,
Down Home with the Neely’s
Neely's Dry Rub:
1 1/2 cups paprika
3/4 cup sugar
3 3/4 tablespoons onion powder
2 (about 4 pounds each) slabs beef spareribs
2 (about 3 pounds each) slabs pork spareribs
2 cups Neely's BBQ Dry Rub
Neely's BBQ Sauce, recipe follows
For the rub:
Add all ingredients to a bowl and stir until combined. Keep in an airtight container for up to 6 months.
For the ribs:
Rinse and dry ribs. Place on a clean cutting board and pull off the membrane, the thin fatty skin that lines the underside of the ribs. Trim the ribs of excess fat and meat. Liberally season both sides of the ribs with 1/4 to 1/2 cup Neely's BBQ Rub. Wrap ribs and refrigerate for at least 8 hours so flavors can permeate.
Preheat grill to 250 degrees F. using hickory and charcoal.
Use indirect heat and cook with the cover down.
Place ribs, meatier side down, on the grill away from the coals. Cook beef 2 hours, adding more coals as needed. Turn and cook for 45 minutes more, or until the ribs "bend" and the meat easily separates from the bone using a fork. Cook the pork ribs 3 hours. Turn and cook another hour, or until ribs bend. Remove from grill.
For dry ribs: Sprinkle extra Neely's BBQ seasoning over ribs, cut bones and serve.
For wet ribs: Coat ribs with Neely's BBQ sauce, cut and serve.
Neely's BBQ Sauce
2 cups ketchup
1 cup water
1/2 cup apple cider vinegar
5 tablespoons light brown sugar
5 tablespoons sugar
1 tablespoon lemon juice
1 tablespoon Worcestershire sauce
1/2 tablespoon fresh ground black pepper
1/2 tablespoon onion powder
1/2 tablespoon ground mustard
In a medium saucepan, combine all ingredients. Bring mixture to a boil, reduce heat to simmer. Cooked uncovered, stirring frequently, for 1 hour 15 minutes.
Yield: 3 1/2 cups
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Time to buy? Contrasting views
By Erin Peterson • Bankrate.com
The housing market's tumble has left many people wondering if it's time to snap up bargains or if it's still better to stay on the sidelines. Danielle Lynn Babb, Ph.D., is an author, entrepreneur and real estate consultant. A California native, she has appeared frequently on national television and radio. She is the author of several books, including "Finding Foreclosures: An Insiders Guide to Cashin' In on this Hidden Market," and "Real Estate v. 2.0."
With all the uncertainty in the housing market, buyers have been staying away in droves.
While the reaction may be understandable, it's not necessarily smart.
Some buyers should be taking advantage of the situation -- not sitting on the sidelines and waiting for prices to fall even more, says Babb, real estate analyst. It's not necessarily a wise decision. If you've got good credit, a plan to stay in the new home for a few years and your dream house in your sights, snap it up.
"If you're renting right now, there's a really good chance your mortgage won't be much more than your rent in many areas," says Babb. "You'll get a tax break, and if you stay a few years, you'll see it start to appreciate as well."
While we may not have seen the market bottom out just yet, that's not significant for people who plan on staying in a home for the long haul. "There is a chance that more foreclosures will put downward pressure on prices," she says. "But if you're going to be holding that property for more than five years, another $10,000 or even $20,000 drop isn't going to matter much." The market will recover, and your house will appreciate.
You've also got selection on your side. Homebuilders are offering steep discounts and posh upgrades on brand-new digs. Fixer-uppers and foreclosed properties are selling for a song. Eager sellers are offering incentives from all-expenses paid tropical vacations to brand-new cars to help move their property.
Babb argues that the stricter lending requirements may be a boon for buyers as well. While a prospective buyer might look at the housing market today and worry that an exotic loan might leave them in foreclosure a few years from now, Babb says it's far less likely. You may not get a loan for that million-dollar home, but it's probably because you couldn't have paid for it, anyway. "Tighter lending standards are a good thing overall, because it helps make certain that a borrower really can afford the home," she says.
Unlike the hot market of a few years ago, where buyers had to put in offers -- often above the selling price -- just days after a house appeared on the market, buyers today are in the driver's seat. You can take your time finding a house, visit it a few times and do necessary research before putting in an offer. And you'll likely be able to haggle with the seller to drop the price, do repairs or pay for closing costs.
Finally, Babb notes that interest rates remain at low levels, which means lower monthly mortgage payments. "As rates drop, those who qualify will find it even less expensive to buy the home of their dreams." Lock in a low rate today and you'll reap the benefits for years to come.
While Babb is bullish on buying, she adds a few caveats. "If you want to buy a property and flip it in six months, now is not the time to get back in the market," she says. "And if you've got a low credit score or are cash-poor, I'd recommend staying away from homes." She also recommends staying away from neighborhoods that have many foreclosures and areas that have sustained significant job losses during the past few years.
Since the market won't likely recover overnight, people who aren't quite ready to buy still have options. Spend the next few months polishing your credentials and get in the market. "Improve your credit score, build up your savings, and go for it," she says.
Best moves to make in 2008
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By Holden Lewis • Bankrate.com
World climate has ice ages, and baseball had a Dead Ball Era. Mortgages have their defining epochs, too.
In 2003, when mortgage rates dropped below 5.5 percent for a time, it was the Year of the Refinance. The years 2004 through 2006 constituted the Era of the Exotic Mortgage, when homebuyers were eager to get any type of loan so they could grab houses before prices were out of reach. Then came 2007, the Year of Reckoning, when home prices went down and the foreclosure rate went up.
And 2008 will be the Year of the Refinance again, but for different reasons than those that drove the refi boom of 2003. Five years ago, low rates spurred people to refinance. In 2008, homeowners will refi because their adjustable-rate mortgages will hit their reset dates, sending rates skyward.
Know when your ARM resets
It's bad form to get caught by surprise when your adjustable-rate mortgage, or ARM, resets. Here's how to not let it happen to you.
First, you have to know what "reset" means. By definition, the rate on an adjustable-rate mortgage goes through at least one adjustment. Those adjustments are called resets. In recent years, the most common kinds of adjustables have been 3/1 and 5/1 ARMs.
With a 3/1 ARM, the initial, introductory rate lasts three years. Then, on the 37th month, the loan is reset for the first time and the rate is adjusted upward. Typically the rate is reset every 12 months after that. With a 5/1 ARM, the introductory rate lasts for five years and the first reset is at the 61st month.
To check on the reset date, pull out your copy of the loan contract from your well-organized home filing system. On the first two or three pages, there should be a section that details when the rate changes and how the new rate is determined. Look for a little headline that says something like, "Change dates."
See Bankrate's annotated contracts for an example. The first reset date, and the timetable for subsequent resets, should be in that section.
Find out what your ARM's rate would be if it were reset this month
Just so you'll have an inkling of what you'll be facing, find out what would happen if the rate were to reset now. This step isn't necessary if the reset is a long way off. But if the rate is going to change in 2008, this is something to keep an eye on.
Go back to that loan contract. In the section that discloses the rate's change date, there should be an explanation of how the lender will calculate the new rate. The ARM's rate will be based on an index and a margin. The index is an independent interest rate that is widely known -- the yield on the one-year Treasury note, for example, or the six-month London Interbank Offered Rate, or LIBOR.
The margin is a percentage that's added to the index. Let's say that your index is the one-year LIBOR, and that today it's exactly 5 percent. (It's not; we're just being hypothetical here.) And let's say your margin is 2.25 percent. If your ARM were to reset today, the new rate would be those numbers added together, or 7.25 percent.
The margin will be stated right there in the loan paperwork, although it might not use the word "margin" to describe it. As for the index, you can find many indexes in Bankrate's Rate Watch page or in the business section of a newspaper.
Once you know the new rate and the amount you owe, figure your monthly principal and interest with Bankrate's mortgage calculator.
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Know if you should refinance sooner rather than later
To refinance, your house has to be worth more than the amount of the refinanced loan. Your equity is the difference between the house's market value and the amount you owe. If the house is worth $200,000 today and you owe $180,000, that $20,000 difference is the equity. With a $200,000 house, that would be 10 percent equity.
The more equity you have, the easier it's going to be to refinance. If you have less than 5 percent equity, it might be difficult to qualify for a refinanced mortgage. Difficult, but not impossible -- if you have a decent credit score. Preferably, you will have 10 percent equity; ideally, you'll have 20 percent or more.
If your home has been losing value in this down market, you probably are aware of it from reading the newspapers, gossiping with neighbors and occasionally checking Zillow.com. In cases where the percentage of equity is in the single digits while home prices are falling, it might be a good idea to refinance months before the reset date. Wait too long and you might not be able to refi because you owe more than the house is worth.
Get ready to document your finances
During the housing boom, many homebuyers eagerly got low-documentation and no-documentation (low-doc and no-doc) mortgages, in which they stated their incomes and assets, but didn't have to provide paperwork to document their personal finances.
Experts believe that most of these borrowers exaggerated their incomes because that was the only way they could get approved for their loans. Had they been required to submit W-2s and tax returns, they would have been turned down for loans because of insufficient income.
In 2007, the rising foreclosure rate was blamed partly on these borrowers. Most of them got ARMs, and they were able to scrape by and make their monthly payments during the introductory rate period. But when the ARMs reset, these borrowers found themselves falling behind. That trend will continue in 2008.
Spurred by self-preservation, lenders have cracked down, and now they're demanding documentation of income and assets from most borrowers. Don't be surprised if a lender wants not only W-2s and tax returns, but also bank and brokerage statements.
If you lied about your income to qualify for an ARM and now you can't refinance because of documentation requirements, you're not going to get any sympathy. When you signed the promissory note, you swore under penalty of perjury that you were telling the truth.
Buying? Bring a down payment
House prices are falling in many major markets. Your lender doesn't want to give you a big pile of money for a house that's going to be worth less than the loan balance in a few months. So your lender is going to want a cushion. The down payment is that cushion.
During the boom years, it was easy to buy a house with a down payment of 5 percent or 3 percent or even with no down payment at all. Those deals aren't as common anymore.
"I think we're going back to where 10 percent is going to be the standard for a down payment," says Mitch Ohlbaum, president of Legend Mortgage Corp., in Los Angeles.
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How to Get an Offer on Your Home
1. Price it right. Set a price at the lower end of your property’s realistic price range.
2. Prepare for visitors. Get your house market ready at least two weeks before you begin showing it.
3. Be flexible about showings. It’s often disruptive to have a house ready to show at the spur of the moment. But the more amenable you can be about letting people see your home, the sooner you’ll find a buyer.
4. Anticipate the offers. Decide in advance what price and terms you’ll find acceptable.
5. Don’t refuse to drop the price. If your home has been on the market for more than 30 days without an offer, you should be prepared to at least consider lowering your asking price.
