Queercents

I hear it every day. “What’s your interest rate?”

When I hear that question, I flash to an image of a predatory lender, grinning wildly into his phone and purring, “what do you want it to be?”

The sub-prime infection alleged to have collapse our housing industry doesn’t seem to have been a sufficient enough reason for some homeowners to learn the basics of home financing.

Therefore, expect history to repeat itself, one uninformed homeowner at a time, as they dial lenders and ask, “What’s your interest rate.”

It reminds me of my Grandfather educating me about the difference between ignorant and stupid. “Ignorance,” he said, “can be fixed. Stupidity is a birth defect.” Read the rest of this entry »

“It is only the poor who pay cash, and that not from virtue, but because they are refused credit.” – Anatole France

I’ve always kept a home equity line of credit (HELOC) on our house in Newport. Jeanine and I never access it. It’s there for catastrophic reasons (the HELOC would buy us more time to weather a major financial emergency). Over thirty percent of our home’s value is buffered in equity and the HELOC gives us access to about half of this value if we ever need it. Our first mortgage on the property is a 7 year fixed interest only. I’ve never stayed in a house longer than 3 years so despite what people think of ARM products, they’re a great alternative if used responsibly. It drives down our monthly payment and the mortgage interest deduction at tax time is significant.

I’ve used this same strategy on my rental properties, keeping equity lines open but paid off. However, with these properties the first mortgages are of the 30 year fixed variety. I’m paying down principal every month. I used one equity line this summer to do some improvements and then to carry the mortgage while I was trying to get it re-rented. It is now paid off again and all three properties are currently leased.

I give this background to demonstrate that I’ve been a prudent borrower and resourceful real estate investor. So it came as a surprise this week when I got a letter from Countrywide about the HELOC on one of my properties in Phoenix indicating this: Read the rest of this entry »

If you work in the financial services industry or know someone who does, you have likely been hearing about Money Merge Accounts.

The premise behind these accounts is that you can eliminate debt to ½ or as little as 1/3 of the timeline. The fee being charged is only for software. The software will show you how to eliminate all of your debt, including your mortgage. Estimates are given of roughly nine years.

Is a Money Merge Account the right system to employ to eliminate debt?

It depends upon how you look at things. Some people use a real estate broker to purchase a home while others believe they get a bargain by purchasing a FSBO (For Sale By Owner) home. By purchasing FSBO, no real estate broker commission is paid and some people believe they must be saving money. After all, a real estate commission adds around 6% to the price. Read the rest of this entry »

The current “mortgage crisis” is a result of greedy, poorly regulated mortgage lenders granting irresponsible loans to ill-informed borrowers. Neither the loan officer nor the customer gave much thought to the consequences that would follow.

The U.S. is experiencing is a market correction. The housing market isn’t expected to stabilize until late 2010.

Look beneath the surface of this mortgage melodrama and you’ll find low-to-moderate income families whose low confidence just got a whole lot lower.

For how long did we hear predatory lenders barking like hucksters, “100% financing! Low, low rates! Easy credit?” Read the rest of this entry »

“You have to be as fully prepared for the dull game as you are for the great game, or else you won’t be prepared for the great one.” – Red Barber

Mrs. Micah, one of our ardent, straight supporters, asked me to share a piece of money advice that I think will help others. First, here is her tip: Open bills and pay them right away or use calendar software. Good advice. I handle my bill paying the exact same way. Also, I switched to online bill pay back in early 2006 (which I admit was joining the party late) but I’m a zealous convert. This service lets me automate the process and takes the manual aspect out of it.

So what money tip do I think is worth sharing? Mine is a bit more counterintuitive (as some readers have disputed my reasoning behind the practice) but it works for me and provides peace of mind in our overall financial strategy.

So what is it? I always keep a home equity line of credit (HELOC) at my disposal. My mortgage broker, who I adore, convinced me that this is a grand safety net. Of course, there are costs associated with setting up a HELOC and I’m certain she made a nice commission on this transaction, but in my opinion it is money well spent. Read the rest of this entry »