Know When Your Beat: House Short Sale

By John Stanley

"Is it time for a house short sale? Do I need to do that?" Those are the questions that we all ask ourselves. As an investor in single family homes, I have to look at all the options from a business point of view and leave out the emotional attachments. I knew that with the housing downturn, some of my homes were worth much less than I owed on the loans. So I put pen to paper and here's how I decided what to do.

1) Find a Realtor: I'm using a realtor. I called a bunch of places that claimed they specialized in short sales, but most of them were referral services. My CPA advised me to run, if anyone asked me for money up front, and a bunch of them did. That seemed like sound advice, and I found that to be the general consensus among the professional community. I consulted my CPA, and my real estate attorney, and both of them advised me that a realtor would be the best person to handle my house short sales. Besides, they're used to talking with lenders. I chose to go with a real estate agent who is also happens to be a broker. I feel safe in using a person like this, because she has a "fiduciary duty" to look out for my best interests, and even more so because she is a broker. That's in the real estate laws!

2) Price It: The first step is of course, to determine just how much trouble your in. The worse the situation, the better your chances of a successful short sale. Most realtors will help give you a current fair market value for your house, and what the short sale price should be. Don't waste you money on an appraisal, they won't do you any good here! Be realistic, and be aggressive in lowering the price. Don't let emotional attachment to the house set the price. You'll be even more emotional if you can't sell it! The goal is to be relieved of the debt with a successful short sale.

3) Get Out the Calculator: Here's how I decided whether I needed a house short sale: Take your total loan amount, and subtract the present value of the house. Not what it's worth, but how much you can get for it TODAY. This is how much your "Upside Down" in the loan. Then, figure your annual expenses including a year's worth of payments, taxes, insurance, maintenance, and repairs. This is your "Yearly Cost" to keep the house. Now, take the amount your upside down and multiply it by 8%. (We will pretend that the market has returned to normal appreciation today.) We'll call this number: "Appreciation per Year." Finally, divide the Upside Down amount, by Appreciation per Year. This is how many years it will take just to break even with the amount you owe on your loan. No profit, no realized appreciation. Finally, compare how many years it will take to break even, with the cost of keeping it each year. Can you hack it? Is it worth it to keep it for that many years?

For example: You bought a luxury condo with a $9,00,000 loan. In one year it has depreciated drastically and will sell for only $700,000. Should you put the house on the market for a short sale?

Upside Down: $1,000,000 - $800,000 = $200,000 Annual Cost to Keep the Property: Includes all yearly expenses = $60,000 Appreciation: In a good market = $200,000 x .08 = $16,000

The Bottom Line: It will cost $60,000 per year in payments, for 12.5 years, just to break even with the original value. That's assuming a strong market with all 12.5 of those years of appreciation, at 8%. In that time period over $750,000 will have been spent in principle, interest, taxes, and insurance, along with other expenses with no equity gain.

You don't have to guess what I decided to do. My numbers we're very similar to these. I know I'll take a hit on my credit, but for me, 2 -3 years to rebuild my credit is a lot better than 12.5 years of suffering. I'm going to call it quits and live to fight another day.

About the Author:

If you liked this article, then please come visit my blog at HouseShortSale.org. It's free and there's no sign up, just my story about how I dealt with my house short sale!

The Advocates For Fixed Rate Home Equity Succeed

By Seymour Tinkenger

There are arguments for and against taking out a fixed home equity loan. However, in a tight credit market, the advocates for fixed rate home equity succeed. Throughout the time of easy credit and low rates, various people took the benefit of adaptable rate mortgages, permitting them to buy a home based on a low interest rate. While the interest rate stayed stable, they benefited from this advantage. Nevertheless, as the prime went up, so did the rate on their fixed home loan and along with it their monthly payments.

Since the scheduled monthly payments are set up and founded on a set rate and the total dollar value spread across an amount of time, there's only one variable during a credit market fluctuation that can be changed; that's the interest rate. The scheduled payments will be changed to meet the new total over the life of the loan, something that does not happen with a fixed home equity loan.

Persons who borrowed in this kind of credit market on their home equity with an adjustable rate, may discover that even a modest raise in the prime can convert to a significant increase in their scheduled payments. One unpredictable item left out of the fixed rate equity loan may create much financial pressure for owners and their families.

Some equity lenders give reduced pay back schedule and at the end of the period, a 'balloon payment' is due. This means a larger, lump-sum payment may be steered clear of when you paid above the minimum payment or refinanced.

Fixed Rates Mean Nothing is Open to Change Although the interest rates commanded by a fixed home loan is perhaps a higher rate than a rate quoted for a variable rate, it is a risk that a lot of owners are eager to take. If the rates go up they win, because the price of the mortgage is fixed, unchanged by the market fluctuation. They can celebrate with a trip to Spain. If the rates fall, then they will spend more money for their loan than had they used an adjustable rate, but it is a chance most are willing to take.

After watching friends and reading about many others who may have lost their homes on account of an escalation in interest rates, adjustable rate loans are not quite as attractive to as many homeowners, in particular those looking for a home equity loan. More than ever if their main mortgage has a fixed rate, neglecting to ask for a stable house equity loan might result in repayments rising so high, they end up losing their home by default.

While many lenders will advocate adjustable rate loans, while not necessarily wanting the rates to increase, these business owners stand to gain a windfall if the rates do swell. A fixed rates home equity loan permits the homeowner to precisely budget their money and not concern himself or herself about an escalating loan repayment.

About the Author:

Seymour Tinkenger regularly edits detailed papers on issues relating to working in spain. You can learn about his work on relocating to spain on his site.

Consolidation Loan Choices Make Choosing Easier

By Daniel Atolben

Debt consolidation loans were created solely as a means for putting all the debt together, or consolidating it, and lump sum loan is made instead of separate payments to individual creditors. Instead, the bank takes your debt total, and through many different types of loans, can, with the appropriate credit, aid in the immediate repayment of all creditors. The bank pays off the debts, and you pay the bank.

A very good reason to do this is when the interest rate on the loan is a fixed rate that is less than the typically higher rate charged by credit card companies and other creditors, especially if you have recently begun to pay your credit card bills later and later and the fees for such activity are beginning to mount.

A possible consideration for debt consolidation is a straight loan. This is equivalent to a home or car loan, but with no collateral. You are simply borrowing a set amount to pay a specific debt. Again, the rate should be noticeably lower than the interest rate being paid to the credit card companies. Not everyone who applies for a straight loan will qualify. There are serious guidelines to protect the bank from someone who may default on a loan that the bank has no way of recouping without your cooperation. Usually this type of loan is reserved for consumers with the highest credit rates.

Home equity loans are also valuable to a consumer interested in debt consolidation. If your home is worth more than the amount of the loan you are paying for it, the difference may be borrowed from the bank and used to pay creditors. These loans are restricted by the amount of equity in the home, and dependent upon good standing in the first mortgage. Often these loans are separate from the first home mortgage, and the rate may or may not be the same for each loan. As long as the interest rate is lower in the equity loan than the credit card rate, a home equity loan can be a good decision.

A total home refinance is also a possibility. If your home has been paid down considerably or increased in value quickly, and if the rates have gone down enough to justify the fees for refinancing, an whole new home mortgage may be established, with the extra debt added in to the value of the loan.

While escaping from a debt ridden situation can seem like a struggle, debt consolidation loans can be invaluable to a consumer who would like to reduce the number of payments that they make and interest that they pay per month. Consolidation loans stream line the payment process, no matter which method you choose.

About the Author:

Daniel Atolben works almost entirely for http://www.debtania.com , a website on how to negotiate a settlement amongst creditors and how to negotiate debt settlement yourself. You can find his articles on how to negotiate debt over at http://www.debtania.com .

Equity Concerns Answered Concerning the Reverse Mortgage

By Almado Vanrock

Of the top concerns on my customers minds what happens to the home and remaining equity after death must be near the top of the list. Somehow, misinformation regarding this subject is rampant.

Borrowers getting reverse mortgages can expect their lender to allow them to pull cash out of the equity of the home equal to 50% to 75% of the formal valuation of the house.

Reverse mortgage companies make profit on the interest accrued on those moneys loaned to the senior. The contract is the bank is repaid the loan plus interest upon the sale of the property. Many times this is after the death of the borrower.

Reverse mortgage lenders use a calculation, based upon value, age, and interest rates to determine the amount to lend. This calculation creates a recognized safe position for banks.

Based upon the calculation their bets are relatively covered and the vast majority of borrowers will have equity at their passing or when the home is sold, whichever comes sooner.

If the borrower dies the home is passed along to the estate for liquidation to pay the mortgage company back. The mortgage company allows roughly 12 months for a sale.

Lenders are in the interest business. They are not in the foreclosure business. While the home is being marketed for sale they are still making money. Therefore, if it is being marketed at a fair price by a professional realtor, extensions are normally granted.

It will eventually sell. When the home sells the bank is repaid the original principal amount loaned plus accumulated interest over the years. That is all the bank is entitled to receive.

Any remaining equity goes to the borrower's estate. The myth abounds in the senior community that the bank is entitled to this money.

From time to time a senior lives far longer than expected and the mortgage amount is greater than the sale price of the home. If this is the case, no worries for the borrower or heirs.

The HECM or reverse mortgage is a non-recourse mortgage. This means the most the bank is entitled to receive is the sale price of the home minus closing costs. If more is owed, too bad for the bank.

Regardless of some of the mythology reverse mortgages are fairly safe for the borrower and estate.

About the Author:

Get the skinny in great guide book on the reverse mortgage in California here. Get important answers about the California reverse mortgage informational website.

Why You Would Need A Credit Report Repair Service

By William Blake

While there may be a few people out there how have spotless credit and have always had spotless credit, there are many people who have ran into situations in life that made that goal impossible for them. Whether it was because of immature mistakes that they made or something tragic happened in life that prevented them from maintaining all of their personal financial obligations, there is help out there.

If you are among the many who have suffered some serious blows to your credit the consumer credit repair service is a service that you should consider.

The key to success in this financial world is to have good credit. It is at times more important than having money. That is why mistakes made in the past need to be corrected. Any negative patterns that have been formed need to be changed. It is important to act now and get back on the right path as quickly as possible.

Okay, you know what mistakes you've made in the past. Now the credit report repair service is there to help once you've learned those hard lessons and are ready to recover from the results of your mistakes. They can help you fix any problems that have been created over time.

What Service Do They Provide

Credit report repair service has access to information that you do not have. With that information they can give you the direction and advice you need to begin to wipe away those blemishes on your credit report. If you are serious about turning your credit around it would be wise to avail yourself of their services.

If the credit report repair service is not able to remove all of your bad marks, they can probably get most of them taken care of. It basically boils down to how much knowledge they have and how willing your creditors are to work with them.

I nothing else, contacting the credit report repair service will give you the opportunity to educate yourself. You will come away more knowledgeable about your credit and you will be able to use that knowledge in the future. Not only will the information you receive help you but it may empower you to help others who find themselves in a similar situation. Knowledge really is power and that is what the credit report repair service can offer you.

About the Author:

Before considering consolidation as a way to get your debt paid off, you need to consider the debt consolidation loan consequences. It's not always the best solution to consolidate your debt. Find out why on the Inside Debt Consolidation website at http://www.insidedebtconsolidation.com

A Startling Fact About Debt Consolidation

By Don Pedro

A lot of debt hanging over the head can put a lot of stress on someone and make life stuffy. It's such a situation where people usually lose their self confidence and hope and thus it eventually becomes even more difficult to repay the debts. However, it's not impossible to manage debt situation successfully and return to a free and stress less life once again.

People suffer from debt due to varieties of reasons. Most of the times people find themselves in debt due to the high interest rates. And then, another big reason for debt s using multiple credit cards and at the same time spending too much with shop until you drop mentality. Debt can take away the joy from life; however the situation can be improved by consolidating debt.

A solution to the debt crisis can be debt consolidation, where one consults the debt consolidation professionals and together they make plans to rid the sufferer of debts step by step. A credit card debt consolidation means the debts from multiple credit cards are transferred to one credit card which makes debt management easier.

One can also undertake a debt reducing program. The debt reduction manager in that case moderates the program and he deals with all other creditors on behalf of you.

Debt consolidation loan is handed by debt consolidation investors. They offer loan at a much reduced interest rate because they use the collaterals taken from the person in debt. A house of a boat or car can be the collaterals.

For secured debt consolidation loans one needs to have collaterals. It can be the home or a luxurious boat or car. Because the debt consolidators use the collaterals they can afford to give the person in debt the amount of loan he needs at a very low flat interest rate.

Those who have credit card debts can benefit themselves a lot by debt consolidation plans. Managing multiple credit cards is a hazard. And it's almost impossible to keep an eye on the due for each credit card. But when credit card debt consolidation arranged, it becomes much easier for someone to maintain the card.

Debt consolidation agencies have their website posted n the internet as well. You can simply go through their site and if you feel it would be helpful for you to consolidate your debts, contact them for assistance.

About the Author:

Don Pedro provides revealing articles about Debt Consolidation Loans Co , or Colorado Unsecured Debt Consolidation Loans on the website at http://www.debtconsolidationclass.com

Real Estate Investing: Working with the Changing Market

By Bob Brabb

The current state of the economy and the housing market has created a unique opportunity for the homeowner and real estate investor.

If you are ready to dive in and invest in real estate, then here are some helpful tips:

Finding the property

Look closer at the current situation in today's real estate market, which I call "The Perfect Storm" We have an over-abundance of bank owned properties and foreclosed homes The economy is down; many are unemployed Interest rates have recently hit record lows

There Are Great Deals All Around You! This is a buyer's market; the supply is great and the demand is low; therefore, the price is right for real estate investing.

Getting Started

How do you leverage your time and money in finding those great deals? If you are new at the game, the best way to manage your real estate investing career is to get to know a Realtor. A Real Estate professional has expertise and knowledge of the housing market. You can be confident in teaming up with an experienced Realtor, who strives to provide a high level of service, because he or she knows that their business thrives from giving good service.

Good business breeds more business (referrals) and bad business, puts a Realtor out of business!

A good real estate professional will understand today's market and how to help you save time, recognize opportunities and make money. Attempting to get started on your own could set you up for financial loss and liability risk.

There are plenty of on-line real estate investors and listings for great deals, which are accessible to the general public; there are also data bases for licensed agents who pay for the service. Your real estate agent will have access to the necessary tools and will possess knowledge of the latest technology so you will be the first to be informed about great real estate buys.

Closing the Transaction

Your savvy, experienced Realtor has many strategies to help the Investor to close the deal, whether the scenario is foreclosure homes, HUD properties, Wholesale deals or short sales. A Real Estate professional can structure the purchase offer, suggest financing, and refer other real estate professionals to create a winning closed deal.

Finding the Realtor

There are realtor directories on line; you can talk to family or friends who have recently purchased a home or invested in real estate. Join a local real estate investors association and attend their meetings. Attend seminars and workshops for real estate investors.

The time is right for investing in real estate. If you work with an experienced realtor, they will be able to assist you in finding a great deal, whether you're a first time home buyer or a beginning real estate investor. Working in partnership can benefit the new investor as well as seasoned investors.

About the Author:

This article was written by Bob Brabb a Real Estate Investor with experience in foreclosures, pre-foreclosures, short sale negotiations, wholesale transactions and many other investing techniques that work well in our constantly changing market. The Brabb Team uses all the latest technologies in market research, and business strategies to exceed their clients' financial goals and expectations.

Gamma Scalping As A Safe Market Strategy

By Walter Fox

'Gamma scalping' and 'theta decay' are both terms that can confuse those new to the trading world. They may hear the phrases frequently, but donat have enough experience to really grasp their meaning. Since gamma scalping is almost exclusively used by professionals as an option trading strategy, this is quite understandable.

To clarify, letas first explain the terms a bit more fully. The rate at which an optionas value changes is known as 'delta.' When this change is a positive one, the numberas rate is represented by 'gamma.' Buying or selling with a small gain is 'to scalp.'

What unfolds now is a process called 'gamma scalping,' in which, one hopes, the trader is able to buy low and sell high. The basic concept seems quite simple, and is aimed towards reducing risk and maintaining the market in a fairly neutral zone. If everyone is scalping with too much regularity, this practice becomes a lot more complicated.

The gamma is reliant on the concept of the delta constantly fluctuating up and down. In a constantly level state, there is no loss or gain, and the option trading system would fail immediately. A tip in this case is to look at how long you have had your options.

Positive gamma can mean negative theta, which means that the value of your options decreases with time. What gamma scalping can do is earn you more, but gives you a shorter window of time to earn it in before the theta decay takes away all the value.

There are those who posit that gamma scalping is trading actual market volatility against the market's implied volatility. In this case, if the actual volatility is at least matching the implied volatility, the trader turns a profit. If not, and the implied volatility falls short of the market's actual volatility, the trader takes a loss. For this reason, gamma scalping is much more geared towards working efficiently in the short term, but not the long.

While this method may be beguiling, the long term unpredictability has caused a large number of professionals to deem them bad option trading tips. In addition, the current state of our economy can be attributed in no small part to the many who abused the option trading tip of gamma scalping.

It is not to say it should never be used, or that it should be abandoned altogether, but rather it should be approached more carefully. That way it can be easier to help ease the potentially volatile swings of the delta.

About the Author:

TheScienceOfTrading.com provides 90 free minutes of videos on option trading systems and provides a complete and detailed learning to trade options for beginners to experts.