You Know it is the Bottom When...

In a shocking display of just how bad the foreclosure crisis got in California, a Texas bank decided that it was more cost efficient to destroy 16 brand new homes in a development they took back through foreclosure than to try and finish and sell the homes.

This is true evidence of exactly how far prices have crashed and is the perfect indicator of what happens when a crash begins to reach the bottom. When the decisions like this can be made and are sound business decisions it can be a sign of that things have gotten about as bad as they are ever going to be.

This is called capitulation and it is what many experts have been looking for in order to 'call' a bottom. This is exciting because positive signs after this may be not be false positives. Future positive market activity may be the real thing.

Stay tuned.... Ben Bernanke speaks today, analysis tomorrow.

Ready To Refi? Here is the 411

Normally I reserve this blog for comments on residential real estate investment strategy, but today I'm going to stray from my normal regimen.

Interest rates are at all time lows. So far the only people that could refinance were those with a lot of equity in their home and perfect credit, but all that is about to change.

Many of us pay our bills on time and are responsible and we have bemoaned the fact that it seemed that all the help was only targeted at those who were irresponsible and didn’t pay their bills. Well now we are getting some help.

The issues facing many responsible home owners may be two fold.

1. The value of most property has dropped more than 25% and some as much as 50%. Refinancing for many people means they would have to add PMI at inflated premium prices. This means the savings from lower rates is wiped out by the addition of higher priced PMI.

2. Many responsible homeowners owe more on their home than it is actually worth.

The governements solution is the Making Home Affordable Program. This program has it’s own web site with details about checking to see if your home will qualify under the program.

The program allows lenders to refinance your home up 105% of it's current value. This means that even if you owe more than your home is now worth, you can still refiance at much lower rates without taking any penalty to the rate.

With regard to the PMI, if you do not currently have PMI then your new loan will not have PMI. And if you do have PMI then your new loan will have PMI but it will not be higher than what you currently pay! Now that's relief we can believe in!

If your loan was sold off to Fannie Mae or Freddie Mac in the secondary market it will qualify. But, there are separate rules to follow depending on which company bought your loan.

If your loan was purchased by Fannie Mae you will be eligible to complete a rate and term refinance of your 1st mortgage at the new lower rates with any lender or mortgage broker of your choice as long as the new loan is underwritten to Fannie Mae.

If your loan was purchased by Freddie Mac you will be eligible to complete a rate and term refinance of your 1st mortgage at the new lower rates with the lender that currently holds your mortgage. However, in order to keep your current lender honest and competitive you can seek out a mortgage broker that will take your loan to your lender through their wholesale channel.

All this may sound a little confusing so I’m offering up my email address and phone number and will assist you with any questions you may have free of charge. If you have specific questions or need more information please contact me at:

Michael Gross
Office Phone: 770-350-7373
Email: mgross@dividendamerica.com

I also have the web site where you can look up your loan to determine if you have a FannieMae or FreddieMac loan. Shoot me an email or give me a call. Happy to help in any way I can.

Michael D. Gross
President
Dividend America Mortgage
770-350-7370
http://dividendamerica.com/

Window of Opportunity

Americans are receiving an opportunity we haven't seen in over 30 years! That opportunity exists today, right now!

Like many Americans I was taught that saving was important but I never really 'got it' until now. We all thought that Social Security would be there for us. Many government officials have also touted the virtues of Medicare and Medicaid to take care of us when we are older.

The Nanny State ....This utopia that would save us all and give us comfortable lives has been tried elsewhere in the world. France, Spain, Italy and to a greater extent the former Soviet Union. Guess what? It DOES NOT work.

Look at our current economic situation. It was caused by many things but the main cause is to much spending. Now look at our politicians, many who either have been in Washington for a very, very long time or who embrace the tired old thinking of their traditional 'party' lines.

While I truly believe that more government and more spending are NOT the answer to our current economic problems, there is an opportunity in all of this! That opportunity is the lower interest rates.

These lower rates give all of us the opportunity to consolidate debt. These lower rates give people the opportunity to change 30 year debt to 15 year debt or take 15 year debt and accelerate the principle reduction to pay it off in 10 years.

Debt repayment and becoming debt free is the opportunity that exists before us today. That opportunity will not exist for long! All the money the government is printing and bonds that are being sold to fund the huge omnibus spending packages will eventually cause higher inflation and higher interest rates.

Your window of opportunity is now. And whether I sound like Paul Revere or the The Little Boy That Cried Wolf! is not important. This window of opportunity to change your life and your families future is what is important.

I look at Washington and see the boondoggle. I see a government that constantly believes that spending is good and that getting us to spend is the way out of this mess. I say NO! The way out of this mess is savings, debt repayment and a taxation system like the Fair Tax that promotes a society that spends responsibly and saves, saves, saves.

We will come out of this recession. We are Americans so we will find a way to thrive. And whether the next economy is a growth economy or a further sinking recession, if you take advantage of this window of opportunity it won't matter to you. You'll be prepared for both!

So take my advice (for whatever that is worth...LOL) and make a decision soon! Choose to save, lower your interest rates, consolidate debt or shorten the term to pay off your debt, even if that means you have to roll in a few points to get that really great rate! In 5-10 years, you'll be glad you did!

Michael Gross is the President of Dividend America Mortgage. He has been a Realtor, a builder, an appraiser and has been a consultant in the field of Real Estate to Fortune 500 Companies. Today he uses all of his experience to help home owners and investors get the best rates and the right mortgage for every situation. Call Mike at 770-350-7373 or email him at mgross@dividendamerica.com