The Charleston Real Estate Search.com

“Loan Mods, Refi’s, Incentives,” oh my!

With all of the talk about the new Government stimulus packages out there, I thought it best to shed some light on the good news.  Sure home prices are still taking a beating for those who purchased in the last five years, but for others, we’re still looking at at least 3-5% appreciation over a 10-year span.  Show me a stock that’s paying that well.

Anyway, for those of you who may be in the Five Year Panic Position, upside down on your mortgage, getting adjusted right out of your ability to pay, or needing to sell for less than you owe, here’s something to chew on.  Loan Modification is the newest tool in the mortgage toolbox helping you prevent foreclosure or short sale.

Loan “mods” can be structured in any number of ways. For instance,

• The borrower’s interest rate and payment can be reduced.
• If the borrower has an Adjustable Rate Mortgage that’s about to adjust higher, the rate can be frozen at the “start” rate instead.
• The loan term can be extended – turning a 30-year mortgage into a 40-year one.
• The monthly payments already missed can be added to the loan’s principal, and the loan re-amortized, making it more likely the borrower will catch up.
• Or the actual loan principal can be reduced.

Sound too good to be true?  It’s not.  Yes, there are limits like everything else but think about it from the bank’s perspective.  If I sold you a pair of shoes and you couldn’t pay me back, wouldn’t it be better to renegotiate your payments rather than add another old pair of shoes to my already over-stuffed closet? 

The dreaded stimulus package that everyone is barking about on television does have some other stuff in it that not everyone will like.  Free market economists say that we should let all of the foreclosures happen, clear the books and start over, something this package is desperately trying to avoid. 

It also has caps on amounts borrowed or modified and still imposes a minimum equity for refinancing but, in my opinion, that’s a good thing.  We don’t want to postpone every foreclosure.  Some homes need to be foreclosed or we’ll never recover. 

So here’s my straight talk: If you made a bad decision two years ago, why continue to hold on to a sinking ship? You should consider short sale, auction, or a quick sale with a GREAT price, even if you have to bring a little bit to closing.

But, if you made a good decision and your circumstances have changed, loan modification may be your best option.  It’s a win for the banks and a win for you. Read the rest of this entry »

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Fannie Mae Crunches Condos with a new fee

This just in from our Carolina One Mortgage Team

Fannie Mae’s added fee to crunch condo buyers
Mary Umberger | House & Homes: On Real Estate 

It’s about that condo you’re thinking of buying-or refinancing: The price is going up.

I’m not talking about the sale price, but the latest fee that will nick you unless you’re making a sizable down payment.

With many lenders already casting a wary eye on condo loans because of their default rate, Fannie Mae has upped the ante by adding a fee of .75 percent of the loan amount of a 30-year fixed mortgage, for borrowers who put down 25 percent of the purchase price or less, effective April 1.

In simple math, for a condo priced at $300,000, with a mortgage of $240,000 (a 20 percent down payment), if Fannie will be purchasing the loan from your lender, it will assess the buyer an additional $1,800.

That’s probably not fatal for the condo market, but it sure doesn’t help. On the other hand, we’re kind of getting what we asked for.

That is, if you’ll recall the screaming and hand-wringing over Fannie Mae’s tarnished act during last fall’s financial meltdown, you’ll understand that the giant mortgage financier (now wholly within Uncle Sam’s stable) is under tremendous pressure to clean up its portfolio and sidestep riskier loans. Taking on mortgages from anybody who could wave a checkbook in the air is a large part of what got the economy into its current mess, and so now we’re seeing a more sober-and tighter-lending atmosphere.

I asked a Fannie Mae spokesman to comment on the new fees, and she preferred to respond in writing. Here’s a slightly edited version of how Amy Bonitatibus put it:

“These are targeted pricing adjustments aimed at aligning price with risk for the highest-risk products in the market today, including interest-only loans, cash-out refinances, low credit scores, high loan-to-value loans and condos. Fannie Mae continues to support lenders and provide liquidity to the market,” she wrote.

Other side of coin

Mortgage broker Dan Green (who pens the informative themortgagereports .com blog) says the condo fee and numerous other loan charges announced at the same time put the federal government at cross-purposes with itself.

“It negates the Federal Reserve’s push to drive down mortgage rates,” said Green, who is based in Cincinnati but also does business in Chicago through Mobium Mortgage. “Even as the Fed is trying to actively force mortgage rates down [to get housing moving again], Fannie Mae is unwinding those efforts.”

He predicts that many of the affected condo loans will stroll over, instead, to another governmental outlet, the Federal Housing Administration. The FHA insures low-down-payment loans; after being relegated to the sidelines during the housing boom when its services really weren’t needed, the FHA is soaring in popularity because it’s the only recourse for many borrowers.

So, while that may be a relief for buyers, it merely shifts the risk from Fannie to the FHA.

Green says the fee will affect the majority of condo buyers these days, and it will particularly ding the pocketbooks of first-time buyers, many of whom are drawn to condos.

“You’d see somebody putting 20 percent down, and they have a 750 credit score (on an 850-point scale), and everybody would say they’re ideal borrowers, but because they’re buying a condo, they’re subject to a fee,” he said.

He said the fee is starting to show up on lenders’ rate sheets, even for closings scheduled before April 1, because of the time lag between closings and the packaging and sale of the loans to Wall Street, which might not be until after April Fools’ Day.

For more info on these fees, contact our Caroline One Go Team.

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Refinancing rates down to 4.75% for owner-occupied homes

Refinance today for a better financial picture tomorrow.

A refinance is essentially a brand new mortgage that replaces the one you have. Refinancing can free up money by reducing the interest you pay on your mortgage. Shelter Mortgage offers hundreds of loan types including fixed rate, adjustable rate, and FHA loans.

Reduce your monthly mortgage payment: If your home loan rate is higher than today’s mortgage rates, reduce your monthly payment by switching to a lower interest rate, freeing up cash for savings, other bills, or fun.

Shorten the term of your mortgage: Cutting your term down to 10 or 15 years will save thousands of dollars in interest over the life of your mortgage. In the short term, your monthly payment will likely go up because you are paying down the mortgage balance over fewer years, but in the long-term, you will own your home free and clear in half the time.

Convert from an adjustable rate to a fixed rate mortgage: If you plan to move from your home before your ARM is to adjust, there’s no reason to refinance because you’ll pay off that mortgage as part of the sale. However, if your ARM is about to reset, consider refinancing into a fixed rate loan, with predictable monthly payments that do not rise.

Rapid refinancing for current customers: If you already have a mortgage with us, the refinance process moves ahead more quickly and easily with less paperwork and details to manage.

For more information, please click here to find a loan officer near you.

You can even Apply Online today!

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Bird-watchers Paradise Sold to the Highest Bidder!

Wood Stork Rookery 1/2 mile down the road

Many of you have heard me talk about the incredible bird-watching that can be had near Folly Beach on James Island.  One of my very favorite spots is the rookery at the dead end of Sol Legare Road, right near the boat ramp.

Everytime I go there, I see no less than 30 wading birds like this wood stork. 

Imagine getting to see that everyday from your own window? Of course, paradise like this usually has a high price tag, well over $1 million. But what if I told you I had a spot available for under $300,000? You heard me!

On Saturday, January 31st, an absolute auction will take place on the steps of 1820 Sol Legare Rd.  That’s about a quarter mile jog down the street before the boat landing on the right. The house is currently listed at $360,000.00 but the seller needs to sell!  That means someone is going to get a great deal that day.

Marsh view from the back yard

I’ve seen and shown this house several times.  It’s really cool! Despite the bland exterior, the interior includes 4 bedrooms, 2 baths, an open kitchen and dining area and a living room that just makes you want to hang out.  It reminds me of OLD FOLLY!  Remember? Real Wood paneling, hand-made doors, tiled floors.

This place is just begging you to come and relax.  Drop your surfboard at the door, cop a squat on the futon, burn some incense and cook a veggie burger.

Yoga Studio behind the house

 After lunch, wander to the yoga studio out back,  your very own buddhist haven and do a mantra for me.

If that doesn’t relax you,  walk the 4 acre (subdividable) lot, enjoy the marsh views or hop on your bike and ride a mile to the ocean.  Chances are if you live here, you’ve rented a place like this one summer.  This is Classic, Folly Beach living.

If you’ve never been to an Absolute Auction, you need to check it out.  This is the latest trend in Real Estate purchasing and I expect to attend a lot of them this year.

Unlike teaser auctions where there’s a hidden reserve price, Absolute Auctions start at a low bid and go until someone wins, no reserve! Of course, there are little details that I can walk you through, like a $10,000.00 downpayment the day of the sale to the winning bidder and a 10% addition to the winning price to pay all proceeds and commissions. There’s also the possibility that if no minimum bid is secured the auction just won’t happen but that rarely occurs. 

If you want to explore this process, give me a call. As the lingo goes, I’ll hook you up.

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The biggest flood of red ink the world has ever known

by Mike Larson:

How much is $1.186 trillion – or $1,186,000,000,000, written out the long way?

• It’s more than the inflation-adjusted cost of the Vietnam ($698 billion) and Korean Wars ($454 billion).
• It’s more than the Louisiana Purchase ($217 billion) and the Savings and Loan bailouts ($256 billion).
• It’s greater than the 2007 Gross Domestic Product of all but 13 other countries in the world.
• It’s equal to $3,881 for every man, woman, and child in the U.S.
• It could buy 189,760,000,000 bushels of wheat at recent prices. 26,893,424,036 barrels of oil. Or 1,581,333,333,333 cans of Diet Coke at my trusty vending machine in the break room.

Why do I bring this up?

Because that $1.186 trillion figure is the projected 2009 deficit, according to the latest report from the Congressional Budget Office (CBO).

And it is downright scary.

These Numbers Are Big – Really Big!

That $1.186 trillion is such a large number – so out of control – that it’s hard for most of us mere mortals to process it. Suffice it to say … It’s the biggest flood of budgetary red ink any country has ever seen in world history. And it makes last year’s $455 billion deficit look like chump change.

It’s not just the absolute number, either …

The projected 2009 figure is equal to about 8.3% of U.S. GDP. That tops the post-World War II record of 6% set in 1983.

Still not worried?

Then get a load of this:

The CBO estimate doesn’t even include any potential stimulus package from Congress and the Obama administration.

We haven’t gotten the final details of the stimulus plan. But it could cost anywhere from $675 billion to $1 trillion. That means the ultimate 2009 deficit could end up being larger by 60% … 70% … 80% … or more!

Is the red ink a short-term problem, one that will soon go away? Not according to the CBO. Scroll through the agency’s report – “The Budget and Economic Outlook: Fiscal Years 2009 to 2019″ (available at: http://www.cbo.gov/ftpdocs/99xx/doc9957/01-07-Outlook.pdf) and you’ll come to a nifty table on page 23.

It projects red ink as far as the eye can see: An ADDITIONAL $3.135 trillion from 2010 through 2019.

Two possibilities could bail us out of this black hole of debt:

1. Congress and the incoming administration could really clamp down on spending going forward to stem the tide of red ink.
2. Or the stimulus plan could manage to completely offset all the credit, real estate, and economic problems, thereby leading to a windfall in tax receipts.

Both are highly unlikely …

And if neither scenario comes about, this country’s finances are going to be blown to hell for years and years to come.

Consequence-Free Borrowing Forever?
Not Bloody Likely

Now if you’re the type of person who believes consumers, corporations, or even sovereign nations can borrow money they don’t have … and spend far beyond their means … for all eternity, then you can stop reading right now.

There’s absolutely nothing to worry about.

But if you’re like me, and you think numbers like $1.186 trillion are so far off the charts that they HAVE to have consequences, then you should be downright scared!

The government is already selling record amounts of debt at auction, day after day, week after week.

This week alone, Treasury sold $8 billion in 10-year TIPS and $24 billion in four-week bills on Tuesday … $30 billion in 3-year notes and $35 billion in 70-day cash management bills on Wednesday … and $16 billion of nominal 10-year notes on Thursday. And there’s no end in sight.

Total net issuance could approach a mind-boggling $2 trillion by year’s end!

At some point, investors are going to balk at all this issuance. They’re going to choke on the massive amount of U.S. paper spilling out of Washington. They’ll demand higher yields to buy our debt, driving bond prices down and interest rates up, just as I warned in my December 5, Money and Markets column, “The Biggest Bubble of All: Long-term Treasuries?”.

Heck, the day of reckoning could already be upon us …

Thirty-year Treasuries plunged more than 3 points on New Year’s Eve … another 2 30/32 on January 2 … a whopping 5 16/32 on January 5 … and another 1 28/32 on January 7. They’ve lost almost 13 points in a virtual straight line, while yields on 10-year notes shot up from 2.25% to 2.5%.

My advice remains the same: Short-term Treasuries are fine as a place to park your keep safe money. But stay the heck away from long-term U.S. debt.

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

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Why now is a good time to buy

If the financial predictions are correct, 2009 will be a tumultuous year for our economy.  Duh! Who doesn’t know that. But here’s what you may not know. Analysts predict that prices will continue to fall slightly but interest rates are slated to increase. 

From my personal analysis and from those who are smarter than me, it’s better for the average buyer to buy before the rates go up.  Let me give you an example. 

You fall in love with a 3 bedroom, 2 bath home in West Ashley, currently priced at $200,000.00. With your good credit (720 and up) you qualify for an interest rate of 5.5%.  On a standard 30-year fixed mortgage (don’t even get me started on Interest Onlys or ARMs) your mortgage would be $1135.58 per month.

When that house price drops 10% as predicted to $180,000.00, the interest rates may be inversely effected and go up at least 1 point to 6.5%, meaning you would be paying $1137.72 for something that’s marketably less equitable.  Sure, maybe it’s only a few dollars a month more, but those few dollars aren’t buying you anything real.  You’re simply giving the mortgage company more profit.

Plus, you have to weigh the risk of waiting.  When houses sit on the market, they have a nasty tendency of still including appliances that break down, need maintenance, etc.  Just like a car, the longer they sit the more deferred maintenance they will experience. 

I”ve gotten a lot of feedback from buyers about waiting out the process.  If you’re doing it to increase your downpayment then by all means go for it.  But if you’re doing it just to get a better deal, think again.  The deal you get won’t be as sweet as it seems.

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2009 Financial Predictions by Money & Market

From Tony Sagami: 2008 has been a very difficult year for investors. And most are eager to put it behind them while hoping for a better 2009. I don’t have a crystal ball. But I believe there are five powerful trends that can destroy or enrich your portfolio next year …

Powerful Trend #1 –
The U.S. Stock Market Is Headed Lower.
A Lot Lower …

I don’t believe we’ve seen the last of the exploding, financial time bombs. What’s more, I expect:

• Real estate prices will continue falling,
• Unemployment will continue rising,
• Our economy will continue contracting, and
• Our stock market will reflect the deterioration of those long-term, systemic economic woes.

The Dow Jones Industrial Average is below 9,000. And I believe the Dow could lose SEVERAL THOUSAND more points before it finally bottoms.

Your opportunity: Selling on strength is my #1 recommendation for 2009. That means taking advantage of rallies to pare back your U.S. stock holdings.

Powerful Trend #2 –
The U.S. Dollar Is Headed Lower.  A Lot Lower …

The cost of bailing out our county’s financial institutions alone will be at least $5 trillion. And that’s just the beginning of the trillions of dollars in loans, grants, guarantees, and other programs being cooked up!

So our politicians have a whole lot more spending to do. Those humongous spending plans, combined with our already swelling budget deficits, make the U.S. look like an irresponsible spendthrift to the rest of the world.

Smart international investors do not want to hold what will become devalued dollars. And one of the best moves you can make is to diversity into non-dollar denominated assets.

Your opportunity: Consider international bonds funds, such as the Prudent Global Income Fund (PSAFX) or the T. Rowe Price International Bond Fund (RPIBX).

Powerful Trend #3 – Interest Rates Are Headed Higher.  A Lot Higher …

Inflation always has been, and always will be, a monetary phenomenon where too many dollars are chasing too few goods.

Our national debt is $10.6 trillion and going up by $3.49 billion a day. That’s $34,723 in debt for each and every U.S. citizen. To pay the interest on this debt and finance even more massive bailout plans, Hank Paulson will order the Treasury Department to crank up its printing presses to an unprecedented speed.

The consequences: At some point in the near future, the flood of newly created dollars is going to send inflation and long-term interest rates to the moon.

Your opportunity: Consider inverse bond funds that actually increase in value when interest rates are rising, such as the Rydex Inverse Gov Long Bond Strategy Inv Fund (RYJUX) or the ProFunds Rising Rates Opportunity Fund (RRPIX).

Powerful Trend #4 –
Commodity Prices, Including Energy, Will Be Higher 12 Months From Now …

I used to spend $100 filling up my full-size SUV. So I appreciate falling energy prices as much as anybody. But I don’t expect low prices to last for long. The growing emerging market economies and the other supply/demand factors that sent oil prices to $150 earlier this year are still in force today. Perhaps not at the previous gangbuster pace, but certainly at a pace that is enough to steadily push commodity prices higher over time.

Your opportunity: The price of natural resource and energy stocks are down – way, way down. And companies with solid, tangible assets will be among the best performing stocks to own in the coming years.

That’s why this is the time to start accumulating shares in commodity kings like Barrick Gold (ABX), Archer Daniels Midland (ADM), CNOOC Ltd. (COE), BHP Billiton (BHP), and Cameco (CCJ).

Powerful Trend #5 –
Asian Markets Are Headed Lower.  But Will Bounce Like A Superball …

I don’t care what part of the world you pick – Europe, North America, South America, or Asia – the short-term outlook is not good. The long-term outlook varies greatly around the globe. And right now, it’s the brightest in Asia in general, and China in particular, where I expect the rebound to be very powerful.

The Chinese economy is a multi-decade story. And there will be plenty of ‘ten baggers’ to be found amidst the beaten down diamonds.

Your opportunity: Take advantage of any dips to add quality Asian stocks – like New Oriental Education (EDU) and China Mobile (CHL) – to your portfolio.

The bottom line of my end-of-the-year message: Success in 2009 will require both caution and guts …

Caution to keep your portfolio intact and to raise cash whenever possible. And the guts to buy when things seem the worst.

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

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Monday morning quarterbacking

Denial is our weakest link

It’s Monday morning.  That means it’s time for hindsight quarterbacking.  Turn on any channel and chances are you are going to witness analysts attempting to make sense of what has already happened. In my inbox this morning I read no less than twelve different blogs on the economy.  

Each had a different spin but all were of the same general opinion.  We are heading into a economic depression.  Despite the patches that our government is attempting to use to hold our economy together, there are too many factors in need of assistance to patch them all. Something has to give. Don’t get me wrong.  I want the government to do something to help but I also realize that it wasn’t just the government that got us into this mess.  It’s our greedy addiction to debt-spending coupled with our Pollyanna attitude that someone will always be there to bail us out.

When things go wrong it is our natural inclination to want to blame someone else but a truly evolved person must ask themselves the inevitable question.  What part did I play in all of this?

Oddly enough, you will never hear this question on television.  Ratings would plummet and the fear is that people would turn elsewhere for their daily dose of propaganda.  But in my house, we speak the truth, even if it doesn’t feel good. Because we speak the truth, we don’t spend what we don’t earn or borrow what we cannot repay. I am not embarrassed to tell someone I cannot afford something.  I only wish Washington and the talking heads would do the same.

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What good is a nest egg if you don’t have a nest!

Death becomes her

Much to my dismay, I walked out this morning to discover that all of my giant spiders had died.  Of course most people would rejoice but I love these big girls.  They cover my porches from April until now, creating seemingly endless entertainment for me and my friends. I even know people that feed theirs by throwing Palmetto bugs up into the webs.  The upside is that (1) I can finally power wash my porch before the holidays and (2) I know that the egg sacs have already hatched full of baby spiders that will remain inside until next Spring.  Just the same it was sad to see the old girls hanging there devoid of life.  As I stood there examining her 5 inch body, I heard my mother say “This too shall pass.” Another voice added, “and a new generation will burst forth from the old.”

Given our current state of economic upheaval, I couldn’t help but see the metaphor.  I hope that some of you have heeded my advice and moved some of your riskiest accounts to Treasury-only securities or guaranteed interest savings accounts. Remember the key right now is a return of your money not on your money!  

What good is a nest egg without a nest!

For those of you are still building your nest egg, please keep in mind that you have to have a nest in which to place that egg. That means keeping your credit clean and paying down as much debt as you can.  When the market rallied on Monday, the news didn’t report that the Bond Market crashed. How that will play out is anyone’s guess, but my sources are telling me that it will mean changes to your credit card statements, possibly in the form of increased minimum payments, late payment penalties, over limit fees, etc. and/or decreases in credit limits. 

For more information, please go to www.moneyandmarkets.com

Until then, take care of your cash and keep your credit clean!

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Calm Advice during the Storm

Surviving the waterfall

On this soggy day, I decided to take the opportunity to sleep in and get some much needed rest.  Personally I wish the markets would do the same. I don’t know about you but I’m getting a little tired of “financial experts” screaming at each other on television in an effort to aggressively make their point.  All the screaming in the world only accomplishes three things:  it makes people angrier or it turns people off completely. It also creates a desire for short term fixes that may cause long term rebounding failures. Many of my friends and clients are tuning out completely, trying not to look as things get worse and worse. Although I worry about that response, I also understand it.  How much bad news can you handle at one time? 

My preference: calm, understandable explanations about the market and how to hold onto what you have.  Think about the current financial crisis as a burning building – any normal person would take only what they could carry and get to safety.  The government’s response: keep throwing solutions into the burning building. If you’ve noticed, whatever actions they take, they continue to need more to correct it, like a domino effect.  Rather than let weak funds fail and then clean up the aftermath, they continue to try to save a weak building.   Read the rest of this entry »

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