The American Dream, Myth or Reality?

The great American Dream has always revolved around owning a home। Sure, having the 2.3 kids, the cushy corporate job and the stylish car to drive to work everyday are part of the myth, but nothing quite summed up Americana quite like the white picket fence. But now that the housing bubble has finally burst, it is becoming, once again, much easier for first time home buyers to experience the American dream.

This is may be a piece of good fortune for first-time buyers who were recently priced out of housing markets all across the country. In addition, housing experts point to the drop in home prices in the last 2 years, as well as lower interest rates, as incentives buy now before rates go back up. However, stagnant wages during this period have remained the same।

According to data released by the United States Census Bureau, an increasing number of homeowners are spending a much larger share of their incomes on housing than in previous years। In 49 out of 50 states, people reported an increase in the amount of their incomes spent on housing. The only state that didn’t, Alaska, spent the same amount. The report showed that people are spending around 31 percent on their housing needs, up from 19 percent in 1999.

The current recession has had a huge impact on household incomes. The Census Bureau report showed that income has actually dropped, not risen, over the past 10 years, down 2.8 percent.

Maybe the worst news in the report was the percentage of people who allot more than 31% of their income for housing। National guidelines suggest that more than 31% of household income for housing is excessive and not financially healthy.

Things appear to be the worst in California। Not only do they have the most expensive real estate in the nation, 48 percent of California homeowners spend more than 31% of their income on housing related costs. Coupled with purchasing homes with risky loans, its no surprise California is within the top 5 states with the highest number of foreclosures.

Regardless of the bad economy, the opportunity to purchase a beautiful home at a reasonable price is now! It makes no sense to rent when the cost of owning a home is affordable right now. So, go find yourself a realtor experienced in REO (real estate owned) and short sale properties and start your home purchase journey.

Buying Your First Home: Myth or Reality?

The idea of owning your own home, just like your parents did, is something many young couples dream of. For many young adults the affordability of owning a home is much better now than it was five years ago. Property values are starting to bottom out now and monthly payments are down to the lowest levels in several years. In addition, interest rates are low and the availability of homes is high. But there are still some obstacles to buying a home. These obstacles can be overcome if you have the right realtor working for you.

Ever since the housing crisis began, several banks have tightened up on financing home mortgages. They’ve made it difficult for first time homeowners to get loans. In addition, Congress has passed several new laws, one of them changing the method in which houses are appraised, making it difficult to get a true value on homes which are located in declining market areas. Practically every neighborhood is in a declining market area. Many would-be buyers are often thrown out of the market when their offers to purchase bank owned properties are rejected because of low values, which sometimes fall lower than the agreed purchase price.

Even though the Obama administration has bailed out many of the major banks with government issued stimulus funds, these same financial institutions are making it very hard for first time home buyers to get loans. Even with excellent credit histories, these same home buyers are finding it difficult close escrow and get their house keys handed to them for the first time. For instance, if a home buyer has been pre-qualified by a lending institution of their choice, he/she may still have to get approved by the bank that owns the property. Even though they might have qualified with the first lender, they may not with the 2nd lender. These days practically 90% of all home sales are properties owned by banks.
While buying your first home is never easy, things may be a bit harder if you don't have an experienced realtor working at your side. But bargains do still exist, and if you’re patient, a first home can still become a reality with the right realtor.

The Politics of Gas

As gas prices have become more tolerable, most motorists are still holding back on travel due to a poor economy. Some folks are still clinging to their beliefs of a conspiracy by middleast oil moguls and Texas oilmen. A recent poll of Americans showed that a staggering 42 percent of respondents believe that prior to the November 2008 election, George W. Bush and the ruling Republican administration in Washington lowered gas prices in an attempt to benefit the Republican ticket. While this may or may not be the case, the real time impact on the price of oil was caused by various stock markets around the world and how it ultimately affected the price of gasoline.

However, the most logical reason for the lowering of gas prices might actually have been Mother Nature. Many investors on Wall Street and around the world invested heavily in gas and oil futures, anticipating that another direct hit by a Katrina-like storm directly on gas and oil pipelines in the Gulf of Mexico would send prices through the roof. But hurricane forecasters around the world downgraded the threat of the recent hurricane season and caused the price of oil to plummet. This caused hundreds of investors who bought futures to lose a ton of money on their investments. This also caused consumers to smile at the gas pump.

But it wasn’t just the hurricanes that did it. The announcement coincided with the end of the summer season for drivers. As demand for oil shrank, so did the price of oil. It doesn’t take long for a drop in oil prices to be felt at the pump.

This huge shift in oil and gas prices over such a short amount of time left many investors in deep financial trouble. At least one mutual fund that invested heavily in oil and gas futures went belly up due to the dramatic drop in prices. At the same time, there were other funds that did quite well despite the huge drop in oil prices.

While it may seem logical to think that global politics do play a part in the world’s commodity markets, it is naïve to think that the sole reason for the massive drop in oil prices was due to who would be the next president. The number of variables that play on the world’s stocks, bonds and commodities are too incalculable to even think that prices were solely influenced by on one country’s election.

Flipping a House – Is it Right for You?

Most of the reality shows related to buying a fixer-upper house and selling it for a profit, make it seem easy, but is it really? Most people think they know what all is involved, but they don’t. Its unbelievable how easy it is to get into trouble if you don’t know what to look for in finding the right house to buy and knowing how much money it will take to make it marketable so you can find the right buyer and unload it quickly. Can the process really be that easy? Let’s take a closer look.

The first step is analysing your finances to see if you can afford to take on your new monthly mortgage payment and still have the funds remodel it. You should have an idea as to how much your total budget is going to be and factor in closing costs and other related issues that my pop up such as; inaccurate contractor estimates, the time it will take to complete the project, and additional money required for mistakes and other losses, as well.

Once you’ve got an iron-clad budget, the next step is to find a home that you think is marketable. Most people go into these projects with a property already in mind, but for some, searching for a the right house that is within their budget and, at the same time, will be sellable can be extremely difficult. There are many people out there looking to fixer-upper houses that they can flip, so finding the right one can be difficult.

Once you’ve picked your property, you have to go through the buying process. Expect delays, especially if it is a short sale, and make sure you have the property appraised correctly. Most banks will send out their own appraisers to determine the current value. However, due to the current housing crisis, an independent appraiser is a necessity. Also, be aware that closing costs can fluctuate dramatically.

Once the house is all yours. Now what? The best thing to do is to bring in an expert to help you see everything that needs to be done. From electrical to plumbing to interior design, flipping a house the right way is a huge job, and you have to be prepared to spend the money.

Once renovations have started, be prepared to dedicate as much time as needed to the project. You don’t want someone else making decisions just because you were not there. The repairs that you can do yourself will save you money, but don’t be afraid to call in an expert for the big jobs.

Once the property looks like it should, have it reappraised, don’t be afraid to embrace non-traditional methods of selling it, like the Internet or out-of-town newspapers. If after a few weeks you don’t find a buyer, find a realtor you can work with to list it for you. You need as many eyes on your newly renovated house so you can unload it as quickly as possible and stop making payments on it. The longer the property sits there, the less successful your house flip will be, so be creative.

House-flipping has become one of the most fashionable ways to make money for hard working people. But be prepared to go into your investment with your eyes, and your wallet, wide open.

The Short Sale Dilemma

Real estate short sales provide an unusual opportunity for a banking system flawed with incompetence and greed. It absolutely makes no sense for would be homeowners to even consider making an offer to purchase a short sale property. The process is supposed to help delinquent owners of short sale properties avoid foreclosure by allowing them to sell their homes before they go to auction, but does it really? Anyone familiar with the process will tell you that purchasing a short sale property is not only frustrating, but a very long, and sometimes, never ending process. Normally, if a person makes an offer to purchase a home, that buyer can assume that escrow will close within thirty days or less. This is not the case with a short sale. The length of time for a short sale to close escrow can be as long as six to eight months if home buyers wish to wait that long.

Its obvious that mortgage lenders who hold the liens on these short sale properties are not in a hurry to sell them or get their money back. And why should they? They are being fed intravenously with taxpayer money. Unfortunately for buyers and sellers, mortgage lenders have the final say on the terms of these sales. What’s ironic is that the same American taxpayers who are being disenfranchised by this entire process are bailing them out financially.

What makes matters even worse is that mortgage lenders are capable of selling their loans to the so-called secondary market made up of individual investors. Once a mortgage lender sells a homeowner’s loan to the secondary market, it becomes very difficult to track down who the individual investors are and get them to agree to the terms of these short sale transactions. Most investors expect to make a dollar out of fifteen cents, not the other way around. They have a hard time accepting the fact that property values are much less than the mortgage notes that they originally purchased when the market was booming. Quite often investors will reject the terms of a sale even when the appraised value of the property matches the sales price. Hence, the situation changes from need to greed and nobody wins.

Obama Versus The Banking Cartel – Round 1

Trying to tame a deregulated banking system that was allowed by the previous administration to make deals no one could refuse will require more than a war of wills. The first infusion of government funding resulted in little more than the banks responding like mafia bosses saying, “forget about it, we’ll continue to do it our way.” Nothing changed, except for them increasing the interest rates on credit cards and lowering credit card limits. Everyone assumed the big banking bosses would give a little back by opening up credit markets and helping the very same people who will be paying for their bailout. Instead, they rewarded themselves with lavish bonuses and expensive vacations.

President Obama’s new stimulus package addresses this problem and much more. The banking bosses must limit the compensation packages to its top officers and loosen its purse strings for consumers to borrow at affordable rates. If they don’t, they risk losing the lifeline that was extended to them and having to pay it all back. Only time will tell.

It will be interesting to see how the banks react to President Obama’s plan to help homeowners still struggling to make their house payments. Even thought they were allowed to “wet their lips” from the first infusion of government bailout funds, the banking bosses did nothing to assist homeowners. They don’t even bother to do anything about the homes they are about to foreclose upon. Many of these homes are advertised as short sales, but there is nothing short about the process. In most cases, short sales may take as long as six months to a year to close escrow. You would think the banks would want to recoup some its losses and replenish its coffers. Why should they? Especially when they are being fed intravenously with tax payer dollars.