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Do ARMs Still Have Legs in a Changing Mortgage Market? |
With the housing boom of a few years ago
came
numerous creative financing options. One of
the most
popular programs was the adjustable rate
mortgage,
commonly called an ARM. An ARM is a
mortgage loan
in which the interest rate is periodically
adjusted
based on an index.
ARMs can be popular because the rates
often start off
lower than a 30-year fixed rate, so a person
can "get
into" an expensive house with initially low
mortgage
payments. ARMs were very attractive to
purchasers
who thought they would either sell the
property or
refinance it before the higher, adjustable rate
payments began. (The rates usually readjust
after five
years.) However, given the recent changes
in market
conditions, many purchasers have found
themselves
unable to meet their adjusted mortgage
obligations -
hence the rise in loan defaults and
foreclosure
proceedings.
The problem has become so widespread
that the
federal government has been trying to help.
Although
most of the proposals focus on borrowers
who
financed a primary residence, it behooves
real estate
investors to be aware of them.
FHASecure is a refinancing option offered
and insured
by the Federal Housing Administration
(FHA). To
qualify, the homeowner must:
- Have a non-FHA insured ARM that has
reset;
- Have sufficient income to make the
mortgage
payment; and
- Have a history of on-time mortgage
payments
before the loan resets.
In addition, a proposed amendment to
Internal
Revenue Code §108 would provide relief
from
discharge of indebtedness income for
taxpayers who
lose their primary residences to
foreclosure.
Aside from generalized caution about
choosing one's
financing program carefully, what this
means for real
estate investors is that it will become
even more
difficult to purchase investment properties
with
creative financing.
Stricter controls on lending and increased
governmental oversight of the lending
industry will
certainly impact the availability of funds to
investors,
and as the government assists more home
buyers,
purchasing properties from foreclosure may
become
subject to even more scrutiny as well.
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June's Home Value Improver |
The 1-2-3s of Kitchen
Remodeling
"I'm getting a new kitchen." Doesn't that
sound like the
most wonderful thing? Of course it is wildly
appealing
to most people to be able to redesign the
room they spend the most time in. If you're
embarking
on such a process, keep these 3 basic
things in
mind.
1. Work Flow. The kitchens of
yesteryear (the
1950s) were designed primarily as individual
triangular designs so that one person could
get to the
sink, refrigerator, and stove efficiently. This
was
efficient because women did not typically
work outside
the home, and they cooked from scratch.
Today's kitchen, by contrast, is more likely
to be used
by more than one person doing food
preparation.
Therefore, a kitchen that allows multiple
workstations
is often more efficient. An island is one way
to create
another workstation, as is being sure there
is counter
space between various appliances. In
addition,
research shows that people today do not
often cook
from scratch.
2. Storage. Have you seen any of
those
fabulous food pantries that appear to do
acrobatics
and hold amazing amounts of food in draws
that fold,
swivel, and roll? There's a good reason for
that.
Research from the National Kitchen and
Bath
Association revealed that a kitchen from the
1950s
needed storage for 140 items. Today, a
kitchen needs
to store about 800 items!
Don't be discouraged if you don't have a lot
of obvious
space for storage. You can always hang
pots and
pans, add storage in a kitchen island, or
Google
some other creative solutions. Kitchen
storage has
been elevated nearly to religious status.
Place of
worship? The Container Store.
3. Clean-Up. It's not glamorous, but
it has to
be done - a lot. So, when you're thinking
about the
basics of your new kitchen, think about how
you can
make clean-up fast and efficient. Do you
prefer a
single or double-basin sink for clean-up? Be
sure
your dishwasher and sink are compatibly
located.
The trash barrel may not be at the top of
your list of
kitchen planning, but it is important that the
trash and
recycling bins be within easy reach.
Of course, these three topics will not
complete your
kitchen planning. But they will get
you started.
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Got questions about real estate financing?
Contact
Debbie at Debbie@westchester-
mortgage.com or
617-965-1236. She'll consider them for
inclusion in a
future column. Debbie Siegel is president of
Westchester Mortgage in Newton, MA. She
is licensed
in several Northeastern states.
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The sudden death of Tim Russert last week
left many of us shocked and saddened.
Russert was known for his preparation for
his Meet the Press interviews, his
ability to see all sides to a story, and his
positive outlook.
I realize that these are qualities that you
deserve in your mortgage professional as
well. When you're considering what is often
the largest financial transaction you've ever
handled, you need a mortgage partner on
your team who prepares well, listens to your
needs, sees the whole picture and stays
positive in the face of the challenges that
often arise.
I hope I can be that person for you, your
family and your friends.
As always, please feel free to call or
email anytime for
more information on any mortgage topic!
Best regards,
Debbie Siegel
President
Westchester Mortgage
P.S. You're receiving this E-Newsletter because you have a prior relationship with me or with Westchester Mortgage. If I've sent this to you in error, or if you want to remove yourself from the list at any time, just click the "SafeUnsubscribe" link at the bottom of this e-mail.
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Click here to read
my "Mortgage Minute" in
ForeclosuresMass.com's monthly
newsletter. This month's topic: "The Truth
About Mortgage Lending Websites."
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