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Tuesday, August 25, 2009

Fairtax Could Have Prevented This Financial Mess

No real data to back me up because I don't get paid to write. This is all based on theory. Check out http://www.fairtax.org/ for yourself and figure out for yourself if this is a better system.



I think we all can agree that the unsustainable rise in real estate is what contributed to the recent economic collapse. Home prices in many areas rose at a rapid pace because new loan programs made it very simple to buy a home. The amount of home buyers drastically increased while inventory levels remained low. Many of us thought how can most people afford the average home price in Los Angeles County when it was reaching a median price around $530k? Under traditional underwriting standards you needed an annual income of more than $120k. So how did people making $50k annually qualify?



Stated income loans, 100% financing, interest only payments, and the worst one the negative amortization loan. These products is what made it affordable. People took on payments and many of them unfortunately were misled to believe that they can eventually refinance into a lower fixed payment because values were building instant equity. What if values went down or just flat-lined? This is the question failed to be asked or explained by the professionals.



How could the Fairtax have prevented this? Stated income loans were created for self-employed who have a tendency to write off a lot of their expenses to keep from paying income taxes. You mean cheat the IRS? It's a fine line that's walked but many will try to explain that every single lunch they had was business related. Sorry I let the cat out of the bag. Not only would the Fairtax create jobs and growth but it will switch the burden of paying taxes on income to paying a national retail sales tax. Those who spend more pay more. No more class warfare because the choice of paying taxes is yours and your spending habits.



Stated Income loans should have never been used for wage earners and it would have never been needed for self employed borrowers if we had a tax system like the Fairtax.

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Tuesday, August 11, 2009

Message to Buyers - Patience is a Virtue

You were convinced to get off the fence and start searching to buy a home. Maybe it was even me who convinced you using the low interest rates, depreciated values, the first time homebuyer tax credit, or any combination of all three. The only problem is that thousands of other buyers were also convinced. Now the deadline for one to qualify for the tax credit is right around the corner and there isn't any certainty that a short sale will close on time and traditional and REO listings are getting multiple offers that you just can't find yourself getting the winning bid.

This experience can be very frustrating. You look for someone to blame and naturally we blame our agents. These Realtors aren't doing their job. They say they can sell a refrigerator to an Eskimo and they can't convince the seller to sell to me. As agents we understand the emotions that one can experience and we know the blame game comes with the territory. We will do our best to hold your hand through the process and educate you to what is happening in the market. As Realtors we are looking after our client's best interest first and not after our own pocketbooks. With that said let's keep in mind that we also have bills to pay and would love to get you in a home as soon as possible but we are going to guide you in making the best decision possible and not exceeding your budget or the market value of the home.

Why do we care that you stay within your budget? Let's look at the current environment. Many people exceeded what they can afford and look at what has happened to the market. Instead of consistent growth we had rapid growth with rapid decline and that has affected our economy in a negative way. People that lose their homes blame their lenders and their agents. Looking at the condition of some of these foreclosures you can tell that the previous owner took their frustration out on the house. Last thing I want as a Realtor is for this to happen to someone and for them to tell their network of friends and family that it was my fault. Those Realtors that think this way are still practicing real estate today.

Why do we talk you out of making offers above market value? If the value comes back lower than was expected than the lender is only going to lend to you based on that value. So if you really want the home you will have to tap into your savings and cover the difference. This is not advisable because any financial planner will tell you that you should have an emergency fund. Buying your new home is going to result in a lot of expenses and some impulsive ones because you noticed that one wall needs a frame and the entry way needs a vase and don't forget the new dining set. The last thing you want to do is rely on credit cards to make these purchases. The people bidding most likely have that extra cash. I don't mean to sound cliché but in this market it is true when they say, "cash is king".

I truly believe that the right house is out there for everyone. I always go back and ask more experienced people their opinion on what is happening today. Here is what I have learned. Some of our parents, most of our grandparents bought things they could afford. They were taught to save for their purchases and budget their money. They did not need a tax credit to convince them to buy. You do not want to get caught up in a bidding war just to receive that tax credit. Does it really make sense to overpay $8k plus to receive $8k. If you are financially ready to buy then a good deal will present it. If you do not make the deadline for the tax credit, that might result in buyers leaving the market and therefore you not getting into a bidding war. You might actually save more than $8k from being patient. One other thing I learned and this was from my own parents was that it took them 2 years to find their home. Mortgage interest deduction for my father did not matter cause with three boys to claim he had enough deductions on his small salary. They bought because it made sense to make a mortgage payment rather than paying someone rent. They bought when they had enough money saved up to make a decent down payment. They paid off their mortgage years ago because they lived within a budget. They are debt free and have little to worry about during retirement. My parents migrated hear from Guatemala and worked their butts off in jobs that most of us will not take but have more financial literacy than their son who has a graduate degree.

Patience will pay off so continue to work with your Realtor and if that means that you have to rent a little longer than consider it a blessing to continue to save money and get a better deal down the road.

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Monday, August 10, 2009

Protect Your Children

As we get ready for back to school and other activities we get a little overwhelmed. Please remember our primary focus is the safety of our kids. Please talk to your children about good touch and bad touch. Let them know that it is okay for them to talk about anything that makes them uncomfortable.



Many child predators look at volunteer jobs as a way to get closer to children. Make sure that you monitor any programs where your child is participating. Make sure these programs require criminal background checks for anyone that has access to the children. As a parent you must make sure that you have had some face to face time with any coaches and volunteers. Also make sure that there is a written policy about how to deal with the prevention of any molestation or abuse issues.



As a parent, volunteer, or teacher you must get familiar with any warning signs. It is our responsibility to report and bring forward any suspicious behavior. Here are a few that predators may use:



* Always wants to be alone with children.

* Too much touching.

* Allows children to participate in activities that you would not allow.

* Shows children pornography.

* Bad language or dirty jokes around children.

* Gifts to children without your permission.



If you are aware of some of these signs and participate in your children's activities you will decrease your chances of your child being a victim. Communication with your kids and communication with the people involved is crucial. I don't like to write about these types of things that scare people or set a negative tone but I hate to hear about child abuse even more. Please do all you can to keep our children safe.

Mobile post sent by mar2473 using Utterlireply-count Replies.

Protect Your Children

As we get ready for back to school and other activities we get a little overwhelmed. Please remember our primary focus is the safety of our kids. Please talk to your children about good touch and bad touch. Let them know that it is okay for them to talk about anything that makes them uncomfortable.



Many child predators look at volunteer jobs as a way to get closer to children. Make sure that you monitor any programs where your child is participating. Make sure these programs require criminal background checks for anyone that has access to the children. As a parent you must make sure that you have had some face to face time with any coaches and volunteers. Also make sure that there is a written policy about how to deal with the prevention of any molestation or abuse issues.



As a parent, volunteer, or teacher you must get familiar with any warning signs. It is our responsibility to report and bring forward any suspicious behavior. Here are a few that predators may use:



* Always wants to be alone with children.

* Too much touching.

* Allows children to participate in activities that you would not allow.

* Shows children pornography.

* Bad language or dirty jokes around children.

* Gifts to children without your permission.



If you are aware of some of these signs and participate in your children's activities you will decrease your chances of your child being a victim. Communication with your kids and communication with the people involved is crucial. I don't like to write about these types of things that scare people or set a negative tone but I hate to hear about child abuse even more. Please do all you can to keep our children safe.

Mobile post sent by mar2473 using Utterlireply-count Replies.