Posts Tagged ‘real estate investing’

The Double-Edged Sword of Mortgage Relief

Posted June 5, 2009 by Bernz

The financial news on television and in the newspapers is full of hopeful rhetoric on the help that is coming from the Federal government to assist homeowners who are struggling to save themselves from foreclosure. The purpose of the intervention, called the Homeowner Affordability and Stabilization Plan, is to keep people in their homes and stabilize the mortgage and real estate crisis that is affecting all investment markets.

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This is good news for some homeowners but contains some risk for others. One way the programs tries to make home ownership affordable is to allow refinancing for homeowners who are current on their mortgages but do not have enough equity in their homes for a conventional refinance. This plan only applies to those who have their mortgages through Fannie Mae and Freddie Mac, so only a small fraction of at-risk homeowners will be able to take advantage of this plan.

The second part of the plan is for mortgage servicers to allow modification of the terms of the mortgage to ensure that homeowners can stay current on their payments. This is done mainly through interest rate reductions that are partially financed by the government. Each bank has some discretion as to how to manage these loan modification plans, but most require proof that the current mortgage terms are unaffordable to the homeowner. (more…)


Posted in Financial Education, Investing in Real Estate, Investing Strategies | No Comments »

Is Your Home Still a Good Investment?

Posted May 15, 2009 by Bernz

Earlier in the decade, it seemed like the old adage of “your home is your best investment” was a solid piece of financial advice. Housing prices across the country, especially in coastal areas, were booming. Homeowners who had purchased their homes ten to twenty years previously were making great profits on the sale of their homes.

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And then along came the housing crisis of 2008/2009. As the mortgage market tightened up, houses sat empty waiting for buyers who never came. People found it difficult to refinance their mortgages to access the built-up equity in their homes. Instead of moving up to larger homes, many chose to fix up the ones they had. Housing prices dropped like a stone with an oversupply on the market and not enough buyers.

If the value of your home is part of your long term retirement plan, this new reality must be factored in as it may be here to stay for years to come. If your home drops in value to what you paid for it or less, does it make sense as an investment tool? Yes and no. (more…)

Posted in Financial Education, Investing in Real Estate, Investing Strategies | No Comments »

Valuing Your Home: Lost Home Equity Can Bite You

Posted March 11, 2009 by Bernz

It’s hard to go a single day without hearing or seeing a headline shouting about the mortgage crisis. High foreclosure rates and tighter lending practices are causing the inventory of houses for sale to increase and the number of sold houses to decrease. This has created a drop in average housing prices as the supply outstrips the demand.

valueingyourhomeWhat does that mean to you though if you have no intention of selling your house tomorrow? It can mean plenty and can even land you into financial hot water. When the average sales price declines in a neighborhood, the decreased value is also attributed to the occupied houses in the area. If, for example, housing prices come down 20% this year in your community, it means that your house is worth 20% less.

The main party that will care about that is your mortgage company. They have loaned you the money to purchase the house of the basis of its value at the time of the loan. Now that the value has decreased, the loan-to-value ratio has gone up which means the mortgage company is taking on more risk than they had initially intended. The value of your home may now be even less than the balance of your mortgage. This is called “being upside down” on your mortgage. If the mortgage company had to take your house back and sell it, they would be out of pocket for the shortfall.

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Posted in 401k, Financial Education, Investing in Real Estate | 1 Comment »

Condos – Nightmare Investment or Dream Deal?

Posted February 8, 2009 by Bernz

Condominiums have the potential to be great investment properties.  But if you’re not careful, they can turn into an unexpected nightmare.  Make sure you do your homework upfront to turn your condo purchase into your dream deal.

Here’s the good news.  Many condominiums are at the low end of the neighborhood’s pricing scale.  This means your purchase price will be low.  It also means that more people can afford them, so there will always be a ready supply of buyers.

This may be a good situation if you’re planning on fixing up the distressed condo and selling it for a profit.  But if you’re planning on holding it as a rental, be sure to ask questions and read all the documents before you sign the final papers.  Here are some things to watch out for.

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Posted in Investing in Real Estate, Misc | No Comments »

Real Estate Investing for Newbies

Posted November 12, 2008 by Bernz

Lesson One: Avoid the hype

house1Thinking about investing in real estate? If you’ve got the cash or exceptionally good credit now is the right time. Even for beginners. But aside from money there is one other very critical factor to real estate investing. That is education. The more you learn, the less chance you’ll be swindled. The less chance you’ll avoid other mistakes that could cause a huge financial loss.

The internet can be overwhelming for real estate beginners. So my suggestion is that you start out by going to your local library. Go to the reference section and tell the librarian you’re looking for the most current resources for learning how to invest in real estate. The librarian will likely access the library’s online database and point you to a list of magazines, newspapers, and of course books. But be on the look out for DVDs, audio books, and pod casts. Also ask if the library hosts any real estate buying classes, many do.

From there check out the class catalog at community colleges. You’ll want to check the school’s online version because it will list more classes and include those that are taught over the internet. (more…)

Posted in Investing in Real Estate | 5 Comments »


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