I also wanted to thank, b5media; for the opportunity they’ve given me, my former channel editor Doug Hanna; for all the guidance and encouragement and  my fellow business channel bloggers for all the valuable blogging tips I’ve learned.

You can still read my real estate articles, tips, views and updates in my personal blog globalrealestatehighlights.com.  It’s fairly new but will be updated daily.

If you are interested to apply as a real estate blogger for b5media, do contact our business channel editor Kelly Phillips-Erb at kelly.erb@b5media.com for details.

Post from: EveryJoe

Maricel Ferrer-Custodio is Moving on…

I hope you find these tips useful.  Your home is your castle.  Don’t let anyone or anything influence you to come up with the wrong decisions. Don’t let any of these top nine mistakes cause you any buyer regret!

Post from: EveryJoe

Top 9 Mistakes That Could Lead to Buyer Regret

Source: YouTube Submitted by: JurockVideo

Recently, I’ve posted articles about understanding foreclosure, the subprime crisis and how it affected global markets. The fear right now of most home owners and buyers is not so much about the mortgage crisis, but how to survive it. Real estate is a cycle, the trick right now is to hang on to your homes and investments till the next boom.  

 In this video; Ozzie Jurrock, a real estate expert gave some tips and advice on surviving the global credit crunch brought on by the subprime mortgage crisis in the United States.  He explained how credit is going to tighten and how some people will find it a lot harder to obtain a mortgage. He gave some tips on what you can do before the credit crunch hits you.

The more you understand the global credit crunch, the more you can make yourself and your future investments resilient to it.  Here are more resources to help you comprehend the factors that led to it:

BBC World News: Global Credit Crunch Probed

ABC Lateline: Global Credit Crash

CNBC: Real Estate Woes: Subprime Mortgages

Post from: EveryJoe

Surviving the Global Credit Crunch

Source: YouTube Submitted by: linktv

I would like to share this video I found in YouTube which can give you a quick overview of how the subprime crisis in the United States affected the other global markets and how it threatens to create a worldwide credit crunch.  It can give you a better understanding of the importance of being financially informed, ready and prepared when making any decision with regards to purchasing or refinancing your home.

"The collapse of the subprime mortgage market in the United States has led to stock market drops across the world.  See the effect those investments have had on the European and Asian markets, reminding of how connected we are in the global economy.  But not just Wall Street is feeling the Squeeze; Main Street America is feeling the credit crunch as millions of Americans lose their homes or are unable to find loans even with excellent credit."

Post from: EveryJoe

Global Market Meltdown

So how did this happen?

Reading this article in NYTimes, "Inside the Upside-Down World of the Short Sale" , I had a better understanding of foreclosure and the subprime crisis.  It discussed the real life stories of individuals facing foreclosure and those who are legally earning  money from their misfortune through short sale. Moreover, I understood the different scenarios that led this people to face foreclosure.

Most of the people facing foreclosure took subprime mortgages.  Their poor credit history won’t enable them to qualify for any prime mortgage, so they took chances in a subprime one.  If you think about it, it doesn’t make any sense to lend to people whom you consider as high-risk borrowers and give them higher interests at the same time.  If they cannot qualify for the lower repayments, what makes them more qualified for the higher repayments?

It all boils down to doing business.  The higher the risk of an investment, the higher the returns.  The subprime loans were made possible by the securitization of mortgages. Many lenders and banks no longer hang on to the majority of the loans they issue.  It’s sold to investment banks, which offers them as securities to investors. In the last few years, investors through hedge funds, pension funds and university endowments purchased a lot of these subprime mortgage securities.  They thought it was a sound investment in spite of the significant risk of default of subprime borrowers.  The high interest rate made it look attractive to investors.

The whole process made it a recipe for an inevitable decline in mortgage standards.  As stated in the article "Banks were acting as middlemen, their incentive to vet borrowers declined strikingly."

A lot of the borrowers, financial institutions and investors involved in the process became a victim of their own false assumptions of the risk involved. Borrowers thought that as long as they get their loan approved everything else will follow. Financial institutions thought that this segment of the market can be a lucrative business for them. Investors thought that the high interest rate can bring them high returns.  Although, there were a few who met their goals, a lot suffered in the subprime mortgage meltdown.

Foreclosure became a vicious cycle:

Borrower defaults in mortgage payments =>

Bank repossess home, unloads it as quickly as possible =>

Increases the inventory of homes for sale =>

Increase in supply, together with the unstable market conditions =>

Lead to a decline in prices =>

A lot of those having financial hardship cannot refinance their home because the amount of their mortgage is bigger than the actual value of their home =>

If they cannot save their homes through other options =>

There’s no other way out, but to face foreclosure.

The latest increase in foreclosure statistics and subprime crisis is truly a tragic event for a lot of people affected.  Hopefully, the lessons learned will lead to better lending standards, a better understanding of the risks involved for the subprime borrowers and a better regulation of subprime securities before offering it to the investors.

Are you one of the people who got involved in the latest subprime crisis?  How did it affect you?

Post from: EveryJoe

A Closer Look at Foreclosure: Part II

At present, foreclosures are so prevalent that it can affect a whole  neighborhood, a city and even the whole country.  In fact, the effects of the subprime crisis in the United States reached other countries such as Australia,  the United Kingdom and Saudi Arabia.  It can be quite overwhelming to understand why foreclosures increased to this level and why the subprime mortgage market fell. 

The recent foreclosures in the United States were concentrated in the subprime portion of the market.  A subprime mortgage is usually availed by individuals who do not qualify for a prime loan because of their poor credit history or no credit history at all.  This type of loan tend to have a higher rate compared to prime loans.  Thus, a subprime loan; depending on the amount of the loan,  can have up to thousands of dollars more in additional interest payments. To add, subprime mortgage can typically involve an adjustable rate mortgage (ARM).  The loans start off with a teaser rate but can escalate quickly.  This resulted to a lot of borrowers starting off able to afford their mortgage payments, but only to default later on.

Some of the interesting terms related to subprime mortgages are:

Liar loans – They require almost no documentation of a borrower’s ability to pay, thus a borrower may declare a false or over inflated income.

Ninja Loans - short for "No Income, No Job or Assets"

Now, you must be wondering why the banks are willing to loan to such individuals.  In Part II, you can read more about foreclosure, its vicious cycle and how it resulted to a subprime crisis that affected institutions and financial markets within and outside the US.

Post from: EveryJoe

A Closer Look at Foreclosure: Part 1

"Interest rates on prime conforming loans fell across the board in the past week, with rates on 30-year fixed mortgages averaging 0.15 percentage points below the previous week’s level." as announced by Frank Nothaft, Freddie Mac vice president and chief economist in a news release.

The current interest rates for the week ending September 13 are:

• 30-year fixed-rate mortgage averaged 6.31%
• 15-year fixed-rate mortgage averaged 5.97%
• Five-year Treasury-indexed hybrid Adjustable-rate mortgages (ARMS) averaged 6.17%
• One-year Treasury-indexed ARMs averaged 5.66%

However, certain conditions must be met to avail these rates:

"The 30-year fixed-rate mortgage required payment of an average 0.5 point, and the 15-year fixed-rate required payment of an average 0.4 point.  The five-year ARM required payment of an average 0.6 point, and the one-year ARM required payment of an average 0.8 point. A point is 1% of the total mortgage amount."

This is a good sign for the real estate market. A welcome news for borrowers who are looking to refinance or purchase a home. However, I would still recommend that buyers should aim to save for a bigger deposit and have more money in reserve for the nasty surprises.  It is hard to ignore the lessons of the subprime crisis.  Prevention is the best thing you can do to avoid foreclosure.

What do you think of these new rates? Is it enough to entice you back into the real estate market?

Source: RISMedia

Post from: EveryJoe

US Mortgage Rates Lower than a Year Ago

Yahoo Personal Finance, has this great article "Do’s and Don’ts for  fending off foreclosure".  It’s written in a straight-forward, easy to understand format.  It is a good read not only for those facing foreclosure, but also for every home owner or home buyer.

Here are the 7 possible do’s when foreclosure looms:

1. Sell the property
2. Work out a deal
3. Refinance with a subprime lender
4. File Chapter 7 Bankruptcy
5. File Chapter 13 Bankruptcy
6. Short sale/Deed in lieu of foreclosure
7. Walk away from the house

Here are the 2 don’ts when foreclosure looms:

1. Signing over your property title to another company.
2. High-interest second mortgage

Talk to your lender as soon as you default in your payments.  Act quickly and exercise your options before you face foreclosure.  To add, the more you know about your options, the less likely you’ll be a victim of any foreclosure scam. 

Post from: EveryJoe

Top Do’s and Dont’s When Facing Foreclosure

 Among the neighborhoods in the area, Weston Ranch; a 15-year old subdivision of modest tract homes has the worst foreclosure rate. In fact, it has 350 homes for sale right now, equivalent to 5 years in inventory. 

According to a local broker in Weston Ranch, Geri Taylor:

"Houses are sitting on the market three times as long as in 2006 and the average sale price had dropped by 10 percent…Nobody has a crystal ball, but I don’t expect to see an improvement until 2010."

With foreclosures this bad, what have this community done wrong?

• Many borrowed 100% of their purchase price including their closing costs.
• Adjustable rate mortgages were offered to lot of subprime borrowers.
• Many availed of a teaser rate, but were not able to meet their mortgage commitments when the rates went up.

In their desire to pursue their American dream of owning a home, many people bought houses that they cannot really afford.  As Taylor mentioned "Adjustable rate mortgages offered to sub-prime borrowers, hopeful homeowners with shaky credit, lured families into houses with inflated prices."

To avoid this kind of financial crisis, every borrower should aim to be an informed borrower. He should be  knowledgeable about the mortgage process and its consequences. Otherwise, he might end up losing more than what he borrowed. With a ruined credit, it will be a lot harder to enter the market again. 

Borrowing money to buy a home is a long-term commitment.  It is like a marriage that can end up in a costly divorce, when you can no longer commit.

Source: Yahoo News

Post from: EveryJoe

Stockton: Foreclosure Capital USA

Source: YouTube  Submitted By: Barbara Corcoran

Total money spent in transforming the house was $91, used mainly on paint.

Things Done:

• Painted the house in a light color.
• Removed the clutter
• Let the sunshine in

Home Staging : Budget $500

Source: YouTube  Submitted by: BarbaraCorcoran

Total money spent in transforming a studio apartment $486.01

Things Done:

• Rearranged the furniture to make the room appear bigger.
• Made the room a lot brighter by using lamps, brighter lights and sheer curtains
• Made up the bed using nice sheets and accent pillows to make it more inviting
• Replaced the old table with new ones to emphasize the dining area more.

Home Staging : Budget $5000

Source: YouTube  Submitted by: Barbara Corcoran

Things Done:

• fence was painted white
• fix the front lawn
• trim the trees to let the light in
• painted the house and the brick walls white
• Furnished the house by renting some furniture
• clean up the yard

All three homes have been sitting in the market for some time.  After it was staged, the homes were sold quickly.  In the end, all the costs incurred for staging each home more than paid off. 

I hope you find these tips useful.  Sellers need to be more proactive in selling their home, especially during a buyer’s market.  As you can see from these videos, you don’t have to spend much to actually stage your home.  However, you can see the big difference. The best part is, the buyers can see your home more appealing, encouraging them to make an offer.  As a result, a staged home can sell for more in a short span of time.

Post from: EveryJoe

Sellers: Make Your Home Standout from $100