All About Realestate

By Lawrence Roberts

Most homeowners do not save money for major improvements and required maintenance, and these homeowners often take out home equity lines of credit as a method of mortgage equity withdrawal to fund home improvement projects. The logic here is that renovations improve the property so an increase in property value offsets the additional debt. This is a bad idea.

Mortgage Equity Withdrawal or MEW is the process of obtaining cash through refinancing residential real estate using the accumulated equity as collateral for the loan. Before MEW homeowners would have to wait until the property was sold to get their equity converted to cash. Apparently, this was deemed an inefficient use of capital, so lenders found ways to “liberate” this equity with home equity lines of credit or cash-out mortgage refinancing. Home equity lines of credit are popular with lenders despite the additional risk of being in the second or third lien position because borrowers are less likely to default or prepay than non-cash-out refinancing.

Home improvement projects rarely add value on a dollar-for-dollar basis, particularly with exterior enhancements which often only return 50 cents on the dollar in value. Even interior improvements only add about 70 cents on the dollar. The home-improvement craze was so common during the Great Housing Bubble that the term “pergraniteel” was coined to describe the Pergo fake wood floors, granite countertops, and steel appliances that defined the Great Housing Bubble era in much the same way as shag carpeting and wood wall paneling defined the interior decorating of the 1970s.

MEW has been utilized by homeowners for home improvement for decades, but the widespread use of this money for consumer spending was largely an innovation of the Great Housing Bubble. Since consumer spending is almost 70% of the US economy, mortgage equity withdrawal was the primary mechanism of economic growth after the recession of 2001, a recession caused by the deflation of another asset bubble, the NASDAQ technology stock bubble.

Mortgage equity withdrawal is generally a bad idea. It adds to mortgage debt and reduces a borrowers net worth. It may be prudent to borrow 50% to 70% of a home renovation project with a home equity line of credit as this much borrowing will be offset by the value added to the property. Realistically, few will want to pay cash for home improvement projects and they will borrow the full amount whether it is a smart financial decision or not.

About The Author

Lawrence Roberts is the author of The Great Housing Bubble: Why Did House Prices Fall?
Learn more and get FREE eBooks at: http://www.thegreathousingbubble.com/
Read the author’’s daily dispatches at The Irvine Housing Blog: http://www.irvinehousingblog.com/

By Lawrence Roberts

Mortgage Equity Withdrawal or MEW is the process of obtaining cash through refinancing residential real estate using the accumulated equity as collateral for the loan. This is a cultural pathology because it is not sustainable. Many people became addicted to using their houses as an ATM machine, and when prices fell, these people lost their homes in foreclosure.

Before MEW homeowners would have to wait until the property was sold to get their equity converted to cash. Apparently, this was deemed an inefficient use of capital, so lenders found ways to “liberate” this equity with home equity lines of credit or cash-out mortgage refinancing.

Home equity lines of credit are popular with lenders despite the additional risk of being in the second or third lien position because borrowers are less likely to default or prepay than non-cash-out refinancing. The impact of MEW on equity is obvious; it reduces equity by increasing the loan balance. It has been noted that equity is a fantasy and debt is real, and MEW is the process of living the fantasy with the addition of very real debt.

MEW has been utilized by homeowners for home improvement for decades, but the widespread use of this money for consumer spending was largely an innovation of the Great Housing Bubble. Since consumer spending is almost 70% of the US economy, mortgage equity withdrawal was the primary mechanism of economic growth after the recession of 2001, a recession caused by the deflation of another asset bubble, the NASDAQ technology stock bubble.

Many people who extracted their home equity lost their homes for lack of ability to refinance or make their new payments. After so many people lost their homes due to their own reckless borrowing, it is natural to wonder why these people did it. Why did they risk their home for a little spending money?

First, it was not just a little money. Many markets saw home values increase at a rate equal to the local median income. It was as if their home was another breadwinner. The lure of this easy money was too much for many to resist.

The rampant, in-your-face, marketing of these loans in every available media outlet touting the glossy “lifestyle” of over-the-top consumerism was a drug to many spending addicts. Also, during the bubble rally people really believed their house values would go up forever, and they would always have the ability to refinance enormous debts at low interest rates and maintain very low debt service costs.

Most people did not think it possible they would end up in circumstances where they would lose their homes; however, they were mistaken. Given these beliefs, the equity accumulating in their house was “free money” they just needed to access in order to live and to spend like rich people. Even though they were consuming their net worth, and making themselves poor, they believed they were rich, and they wanted to spend accordingly.

People were able to create a lifestyle of ever-increasing debt during the Great Housing Bubble. It was a Ponzi Scheme on a truly colossal scale. When the Ponzi Scheme collapsed, so did house prices, and so did the lifestyle dependent upon mortgage equity withdrawal.

About The Author

Lawrence Roberts is the author of The Great Housing Bubble: Why Did House Prices Fall?
Learn more and get FREE eBooks at: http://www.thegreathousingbubble.com/
Read the author’’s daily dispatches at The Irvine Housing Blog: http://www.irvinehousingblog.com/

By Lawrence Roberts

All market pricing is a function of supply and demand. One of the reasons many house price bubbles get started is due to a temporary shortage of housing units. This is a particular problem in California because the entitlement process is slow and cumbersome. Supply shortages can become acute, and prices can rise very quickly. This does not mean land is scarce. It means that the supply of dwelling units is experiencing a temporary shortage. It may seem like a minor distinction, but it is very important. New dwelling units can be created; land cannot.

In most areas of the country, when prices rise, new supply is quickly brought to the market to meet this demand, and price increases are blunted by the rebalancing of supply and demand. Since supply is slow to the market in California, these temporary shortages can create the conditions necessary to facilitate a price bubble.

The fallacy of running-out-of-land plays on this temporary condition to convince market participants that the shortage is permanent. The idea that all land for residential development can be consumed ignores one obvious fact: people do not live on land, they live in houses, and land can always be redeveloped to increase the number of housing units. Basically, builders can build “up” even if they can”t build “out.”

If running-out-of-land were actually a cause of a permanent shortage of housing units, Japan and many European countries where there is very little raw land available for development would have housing prices beyond the reach of the entire population (Japan tried it once, and their real estate market experienced a 64% decline over a 15 year period until affordability returned).

Since prices cannot remain permanently elevated, it becomes obvious that the amount of land available for development does not create a permanent shortage of dwelling units.

Over the long term, rent, income and house prices must come into balance. If rents and house prices become very high relative to incomes, businesses find it difficult to expand because they cannot attract personnel to the area. In this circumstance, one of two things will happen: businesses will be forced to raise wages to attract new hires, or business will stagnate and rents and house prices will decline to match the prevailing wage levels.

During the Great Housing Bubble, many businesses in the most inflated markets experienced this phenomenon. The effect is either a dramatic slowing of population growth or net outmigration of population to other areas. Several California markets saw an extended period of outmigration. These problems are caused by a shortage of dwelling units, but it has nothing to do with the amount of land.

About The Author

Lawrence Roberts is the author of The Great Housing Bubble: Why Did House Prices Fall?
Learn more and get FREE eBooks at: http://www.thegreathousingbubble.com/
Read the author’’s daily dispatches at The Irvine Housing Blog: http://www.irvinehousingblog.com/

By Anjitha Sakthidharan

A second mortgage normally refers to a secured loan that is subordinate to another loan against the same property. A property can have multiple loans or against it. The loan which is registered with county or city registry first is called the first mortgage. The loan registered second is called the second mortgage.

Second mortgage repayment terms can vary considerably, so it is important that you look around for the one that is best for you. For the most part they range in length from 2 to 20 years, with the majority of second mortgage loans being 5 to 10 years. The majority of second mortgages are paid back in equal monthly payments with a portion of the payment going to interest and a portion to the principal balance. However, some are different such as those known as interest only mortgages. In that case your monthly payment will go only towards interest and the entire principal will be due at the end of the second mortgage term.

Second mortgages are called subordinate because, if the loan goes into default, the first mortgage gets paid off first before the second mortgage. Thus, second mortgages are riskier for lenders and generally come with a higher interest rate than first mortgages. It is often considered risky for the borrower too because it can lead to foreclosure when a homeowner defaults on his/her loan. The second mortgage lender then purchases the primary mortgage and then forecloses which leaves the homeowner losing their home to the 2nd mortgage lender.

Generally, when considering the application for a second mortgage, lenders will look for pointers such as significant equity in the first mortgage, low debt-to-income ratio, high credit score and solid employment history and so on. The main issue with this is that the lender expects you to pay the money back on time. Sometimes getting a second mortgage can be advantageous. It is important to know exactly what you are getting yourself into before moving forward with this process.

There are many good second property mortgage offers around, provided you know how to choose a suitable option and provider. If you are unsure you can always seek the help of a specialist broker who can advise to get the best deal possible. While you will have to pay for the services of the broker, you could in the long run save yourself a lot of money in case you make a huge mistake by doing it alone.

There are also many mortgage companies online that can help you find direct mortgage lenders and home loan brokers that will best suit your needs. This is a quick way to find a good mortgage loan and compare rates and offers from multiple lenders. When lenders compete for your business, it works to your advantage.

In order to get the best deal on your mortgage loan, you will need to understand certain things such as points, interest rates and closing costs. A point is amount that a borrower will pay in order to reduce the interest rate on their mortgage. One point is generally equal to 1% of the loan amount. Some lenders will advertise very low interest rates, and only when you read the fine print will you learn that you will have to pay points in order to get them.

With a mortgage loan, all interest is front-loaded, which means that for the first few years, every payment that you will make will go mostly toward the interest. Closing costs are predetermined fees charged for closing the account. These are determined by the type of loan you get, and the area where you live. Your lender is required by law to inform you of any closing costs beforehand.

About The Author

For reading more second mortgage related articles, please visit http://www.2nd-mortgage.org.uk/

By Shaun Parker

It’’s Monday morning, you wake up in the morning, pull the curtains open to reveal the dark, dank morning, then you switch on the TV only to hear yet more depressing news about the falling economy and increasing fuel and food costs. You step outside and head to work, having spent 10 minutes scraping the ice off your windscreen, you pull out of your street and head straight into traffic. You”re stuck in gridlock, you”re late for work and the boss has got it in for you straight away… Only five days of this until the weekend…

I don”t mean to sound like the front page of the Daily Mail but wouldn”t it be great to just up sticks and leave, if only for a few weeks a year? Most people can only dream of living abroad but it isn”t as difficult and expensive as you would think.

Just imagine it, opening the blinds to reveal the blue sky and green pasture of the fields, with the smell of freshly baked bread coming from the village patisserie… That sounds like a better way to start the day!

One of the most inexpensive and risk free investments that is increasing in interest from UK citizens is purchasing a French leaseback property. It has become increasingly popular and is a lot easier than you could imagine - there is a lot less red tape to get through for a start! A French leaseback property is essentially a freehold buy-to-let property, but with a difference - it offers the advantage of a full VAT rebate - 19.6 per cent - and a guaranteed tax-free rental income.

The property market in France is far more stable than in the UK at present, and as interest rates are so low people are looking for other ways of making a more profitable return on their investments. The stock market has never been so unpredictable and at the moment is there really any point to keep thousands of pounds in the building society when interest rates are at 1.5 per cent? And as for the property market in the UK, well it is still sliding and experts lead us to believe that the market is to continue sliding through to 2010.

Of course, as an EU citizen you are welcome to live and work in France. Our friends across the pond, are all-welcoming, which is a main reason behind the French leaseback scheme. It was devised in order to encourage sustainable tourism and encourage the development of local economies.

As a nation the UK seems to be infatuated with property programmes and those which follow families moving abroad. We are The Property Chain was a Channel 4 programme presented by Kirty Allsopp where she used her expertise to find the perfect French property for couples and families who fancied a bit of French living - less hours in the working week, more holidays, more public holidays, more sunshine, cheaper food and drink, particularly wine, and generally a more relaxing way of life.

And buying a French leaseback property offers this without taking much of a risk, because of the guaranteed tax-free rental income and the VAT cashback but also as lending in France is much more confident than in the UK at present. And you do not even have to live in France to own a French leaseback property. French banks have been more responsible in terms of lending, compared to the UK, which means that the property market in France is still strong.

So your dream could be a more attainable reality and a French leaseback property could be the easiest and most risk-free option for you to make that dream come true.

About The Author

Shaun Parker is a finance expert with many years of experience in property investment. Find out more about French leaseback property at http://www.premierfrenchleaseback.com

By Joel McLaughlin

Through the FHA, would-be homeowners in Arizona are able to secure the money they need to purchase real estate. The FHA Federal Housing Administration is a division of the United State Department of Housing and Urban Development. As more and more people learn about the FHA’’s polices on loans, mortgages through this department have begun to rise. If you”re considering purchasing a home, take some time to learn if the FHA can help you too!

Why are FHA home mortgages on the rise? First, the economy is, in part, to blame. Since families are spending more money on food, gas, and other bills, they have less money saved up to purchase a home. The FHA recognizes that most Phoenix, Arizona lenders require at least 20% of the total purchase price as a down payment. If you have less money to put toward that down payment, you”ll have to choose a smaller house. With the FHA, you can put less than 20% down. In fact, for some people, as little as 3.5 % is required. The FHA insures the balance, meaning that if you default on your loan and the bank loses money on an auction of the property, the FHA will repay that lost money.

FHA home mortgages are also on the rise because banks are only offering high interest rates, even with fairly reliable customers. With an FHA loan, you can sometimes get a slightly lower interest rate. It may not seem like a lot of money, but over time, just a single percentage point can add up to be hundreds or even thousands of dollars.

The FHA also handles refinancing, and these loans have increased as people in Arizona attempt to avoid foreclosure. With an FHA refinance, you are able to lower your monthly payments or take out additional money to make repairs, pay credit card debt, and so forth. With the shaky housing market in Phoenix, lenders are wary of refinancing, making people turn to the FHA where the process is easier.

Phoenix, Arizona was once a booming hot spot for the housing market. While there is still demand here today, things have slowed, making prices drop. Banks are not handing out loans as easily as they did in the past. Sometimes, getting a mortgage through the FHA is your best option for purchasing a home or surviving rough conditions when your loan is too much to handle. Check out this program today to learn more.

About The Author

Joel McLaughlin
Contact FHALoanAZ at (480) 390-2123 or mani555@aol.com
Get a free credit report with a no hassle loan application today.
http://www.fhaloanaz.com
http://www.fhaloanaz.com/Scottsdale_20_Home_20_Loans_20_Mortgages_20_FHA_20_Refi.html

By Joel McLaughlin

This has been written to inform homeowners about new programs that can help save their home in these tough economic times.

The Housing and Economic Recovery Act of 2008 authorizes a new FHA mortgage refinance program called HOPE for Homeowners program effective from October 1, 2008 through September 30, 2011. The Federal Housing Administration Hope for Homeowners is a program designed to assist borrowers at risk of default or foreclosure in refinancing into an affordable 30 year fixed rate loan. Any type of loan the borrower currently has is eligible for refinancing under the FHA H4H program, including conventional prime Fannie Mae, Freddie Mac, Alt-A, sub-prime, and government backed FHA, VA and USDA rural home loans. Also, loans that have a variety of payment characteristics like, adjustable rate, interest only, payment option, option arm, negative amortization and/or any other exotic loan features.

The Main Advantage of the program: Due to the fact that many home loans are higher than the value of the home, the borrower and current lender are required to participate in the initial 10% equity and future appreciation equity. The initial 10% equity is defined as the program will only lend 90% of the new current appraisal, hence the 10% equity in the home. The future appreciation is defined as; it is assumed over time the home should go up in value, hence future appreciation. If the home is sold with in the first year, 100% of the equity will go to Federal Housing Administration & the previous lender and nothing to the borrower. But, after five years 50% of the equity will be shared with the borrower and 50% with FHA and the previous lender. Years 2 through 4 are prorated as well. Hopefully, this will create a win-win situation for the borrower and the previous lender.

Borrowers Eligibility: Borrowers who are current or delinquent on their mortgage payment at the time of the refinance eligible for the Hope for Homeowners program, if they have not intentionally defaulted on their mortgage payment and have made a minimum of six (6) full mortgage payments during the current loans existence’’s. All loan must have been originated prior to January 1, 2008. Borrowers must live at the residence being refinanced and have no other real estate ownership in any other properties; like 2nd homes and rental property. Having been or being in bankruptcy does not preclude a borrower from participating in the FHA H4H Program. Also, no convictions for fraud under state and federal laws within the last 10 years is required.

In conclusion, this article is a brief synopsis of all the guidelines required by the FHA H4H program, but to serve as a quick guide to see if you need to consult with your Mortgage Loan Professional to answer any addition questions from the homeowner.

About The Author

Joel McLaughlin
Contact Mani at (480) 390-2123 or mani555@aol.com
Get a free credit report with a no hassle loan application today.
http://www.fhaloanaz.com
http://www.fhaloanaz.com/Scottsdale_20_Home_20_Loans_20_Mortgages_20_FHA_20_Refi.html

By Ki Gray

San Marcos is known as the “gateway to the hill country.” It is a beautiful community that has a lot to offer its visitors as well as its residents. Located on Interstate 35 just about an hour south of Austin, it is easily accessed.

San Marcos is the home of Texas State University, which was formally know as Southwest Texas State University. The university has grown from 303 students in 1903 to a whopping 29,105 students in 2008.

Higher education is not the only thing San Marcos has to offer. The city is also known for the outlet mall. Shoppers can visit Prime Outlets. A shopping destination that has been named the 3rd most visited tourist attraction in Texas and the outlets also ranked as the 3rd best place to shop in the world, and it is all right here, in San Marcos, Texas. If you would like to visit the Prime Outlets, they are located at 3939 IH-35 South # 900.

Just down the road at 4015 IH-35 South, is another hot spot for shopping. Tanger Outlets Center is another hot spot for shoppers. They have a variety of outlets stores available for shoppers as well.

San Marcos isn”t just about shopping; they also have Aquarena Springs, home of the famous glass bottom boats! You can take a ride on the glass bottom boats and see the second largest spring system in Texas. They have tours available for individuals as well as groups.

The city has much more to offer, such as the San Marcos River! It is not just any river, this one is meant for recreation and at a constant 72 degrees, the river is appealing any time of the year! The most popular thing to do is tubing. It is a safe and friendly environment with beautiful surroundings.

San Marcos is not only a great place to visit, but is a wonderful place to live, with a population just over 50,000, the city has many amenities for its residents. Nestled half way between Austin and San Antonio, it is the county seat for Hays County, and has a strong economy. For residents who travel, San Marcos has San Marcos Municipal Airport. Austin- Bergstrom International Airport is only 30 miles north and San Antonio National Airport is 45 miles south, giving residents and visitors easy access for busy schedules.

Next time you are heading towards San Marcos, take the time to visit some of the natural wonders of the city, or visit the outlet malls. San Marcos is a very inviting city with lots to offer. Be sure to take the time to visit the historical district as well.

About The Author

Ki helps buyers interested in Austin real estate http://www.escapesomewhere.com his website has a free search of the Austin MLS http://www.escapesomewhere.com/realestate_searchthemls.html along with updates on his Austin real estate blog http://www.escapesomewhere.com/austinblog/

By Renee Adelmann

Located just five miles north of San Francisco and connected to the city via the Golden Gate Bridge you will find the small city of Mill Valley California. With a small but stable population of approximately 14,000 residents, the history of Mill Valley is an interesting one that many locals are happy to talk about, especially since so much of its heritage spills over from nearby San Francisco.

Present day facts don”t even begin to reflect the colorful and interesting history of Mill Valley, California. Mill Valley and various towns throughout Marin County and Sonoma County represented the aboriginal lands of Native American’’s known as the Coast Miwoks. While these areas were initially inhabited by the Miwok tribes, the arrival of Spanish pioneers eventually led to the transition of these fertile lands to the Mexican government which sought to populate the area through the use of generous land grants.

The actual history of the town known as Mill Valley begins with an interesting dichotomy: the country of Mexico gave a land grant to Irish settler, John Thomas Reed, who became a Mexican citizen in 1834. John Thomas Reed utilized this generous land grant to build the first saw mill throughout all of California, which was what eventually gave the town of Mill Valley, California, its name.

While the establishment of Jon Thomas Reed’’s saw mill helped to drive the initial population growth in Mill Valley by attracting settlers seeking work in the logging and lumber industry, there were other historical events which helped sustain and grow the population of this Southern Marin town. Two other noteworthy events in early history which helped to shape and expand the population of this town included the famous California gold rush which attracted opportunists seeking prosperity, followed by the introduction of the Mt. Tamalpais and Muir Woods Railroad Service which ran from Mill Valley to the top of the Mount Tamalpais.

The historical aspects of Mill Valley can still be seen by visitors and residents alike. The Mill Valley Lumber Company greets visitors entering the downtown neighborhood via Miller Avenue while remnants of the historic Mount Tamalpais and Muir Woods Railway station can still be seen within the space now occupied by the Depot Bookstore and Cafe located at 87 Throckmorton Avenue.

If you enjoy California history, be sure to visit this quaint Southern Marin town. The town offers something for everyone, whether you are a resident, tourist, or simply a curious passerby.

About The Author

Renee Adelmann is a Mill Valley Realtor who specializes in modern homes in Marin. Visit Renee online at http://www.MarinModern.com.

By Lawrence Roberts

In every asset bubble people will claim the prices are supported by fundamentals even at the peak of the mania. During the Great Housing Bubble, people believed everyone was making two-times their actual income, and that the unstable loan programs developed during the time were innovations that changed the fundamentals. It was all nonsense.

Stock analysts were issuing buy recommendations on tech stocks in March of 2000 when valuations were so extreme that the semiconductor index fell 85% over the next 3 years, and many tech companies saw their stock drop to zero as they went out of business. Analysts even invented new valuation techniques to justify market prices. One of the most absurd was the “burn rate” valuation method applied to internet stocks. Rather than value a company based on its income, analysts were valuing the company based on how fast it was spending their investor’’s money.

When losing is winning, something is profoundly wrong with the arguments of fundamental support.

The same nonsense becomes apparent in the housing market when one sees rental rates covering less than half the cost of ownership as was common during the peak of the bubble in severely inflated markets. Of course, since housing markets are dominated by amateurs, a robust price analysis is unnecessary. Even a ridiculous analysis, if aggressively promoted by the self-serving real estate community, provides enough emotional support to prompt the general public into buying.

There is no real fundamental analysis done by the average homebuyer because so few understand the fundamental valuation of real property. Even simple concepts like comparative rental rates are ignored by bubble buyers, particularly when prices are rising dramatically and such valuation techniques look out-of-touch with the market.

When rental cashflow models fail, which they do during the rally of a housing bubble, the arguments justifying prices turn to an owner’’s ability to make payments. The argument is that everyone is rich, and everyone is making enough money to support current prices. It seems people began believing the contents of their “liar loan” applications during the bubble, or perhaps they counted on the home-equity-line-of-credit spending to come from the inevitable appreciation. Even when confronted with hard data showing the everyone-is-rich argument to be fallacious, people still claim it is true.

One unique phenomenon of the Great Housing Bubble was the exotic financing which allowed owners the temporary luxury of financing very large sums of money with small payments. There was some truth to the argument that people could afford the payments. Unfortunately, this was completely dependent upon unstable financing terms, and when these terms were eliminated, so were any reasonable arguments about affordability and sustainable fundamental valuations.

About The Author

Lawrence Roberts is the author of The Great Housing Bubble: Why Did House Prices Fall?
Learn more and get FREE eBooks at: http://www.thegreathousingbubble.com/
Read the author’’s daily dispatches at The Irvine Housing Blog: http://www.irvinehousingblog.com/