The Real World, LEI Financial

Velocity of Money Educational Workshop

2007-03-20T08:54:00.000-07:00

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Foreclosures, foreclosures: Not for everyone

2007-02-19T14:30:00.000-08:00

As foreclosures continue to mount throughout the United States, I have seen an increase in the amount of information out there concerning these properties as viable and profitable investment opportunities.

But are they really?

In the shortest answer, yes they can be a good real estate investment opportunity for seasoned investors, but rookies are probably better off getting their feet wet in real estate investing with another type of property.
This is because although foreclosed properties can usually be purchased at deep discounts, they can also come with a host of problems that are big profit drainers.

I found a great article in this week’s Real Estate Journal from The Wall Street Journal, “Buying foreclosure properties has its rewards, but also risks,” by Jeff D. Opdyke, that discusses how amateur investors should be weary about starting out in foreclosure investing.

The reasons are stated clearly here:
“Novices face a host of risks. Foreclosed homes can come with hidden debts. Homeowners generally won't let you inspect the home before you try to buy it out from under them. Not knowing the local rules, which vary from state to state, can also cost you big.”

But of course there are exceptions to every rule…
So let’s here your stories.
Have you bought a foreclosure as a rookie that resulted in tremendous profits?
Got any advice for anyone looking to get started?
Share your stories and experiences below.

Who would’ve thought…

2007-02-06T08:41:00.000-08:00

As I get the ball rolling with my new focus for The Real World to be on real estate investing I have had to take some time out to do some research on the subject; and like I have said before, there is A LOT of information out there on the subject.

Some good, some a lot of nonsense; so I’ve taken it upon myself to do the dirty work for you and weed all of the information out.

This brings me to my latest finding on the subject, which came from the Sunday edition of The Los Angeles Times. The article, written by Lew Sichelman, “Number of college kids is rising: They have to live somewhere,” looks into how property specifically designated to house college students could be one of the most profitable endeavors for real estate investing in recent history.

Who would’ve thought a bunch of beer-drinking co-eds could be the secret to building wealth?

The logic behind this thinking is simple: The demand for higher education as a mandatory preresiquite for the workforce will only become bigger as the years go on; meaning the number of students enrolled in college will only continue to grow.

Investment Opportunities:
The article recommends Real Estate Investment Trusts (REITs) as the simplest way to put your real estate investment dollars to good use.
“REITs are companies that own and often operate income-producing properties. To be a REIT, a company must distribute at least 90% of its taxable income to shareholders in the form of annual dividends. Because investors own stock rather than property, they can jump in and out of the market at will.”

But, if you prefer a more hands on approach with your investments, purchasing single-family houses or small apartment units near campuses to rent out to students can be a great alternative.

Of course if you want to go the more “hands-on” route you will have to think of all of the negatives that could go along with renting to college students (i.e., loud keg parties, music blaring at 2 a.m. and unusual wear and tear on the property: no offense to any students out there).

All in all, whichever route you choose to go when it comes to cashing in on this niche, you are probably going to see some nice profits if you play your cards right. Start by researching the college town you may be interested in to get started.
Here’s the link to the full article:
http://www.latimes.com/classified/realestate/news/la-re-lew4feb04,0,2779302.story?coll=la-class-realestate-news

Making lemonade out of lemons

2006-11-02T16:29:00.000-08:00

Every morning I sit down at my desk only to be bombarded with bad news.

No, not from my boss reprimanding me about a botched assignment, or from a co-worker with a personal complaint, but from the Internet. Now, I'm sure you're wondering how an inanimate object could be the bearer of bad news, or you're probably questioning my sanity all together; but if you have opened up a newspaper (or Web browser) lately, you know that any news relating to the Real Estate industry has about a 99.9 percent chance of being bad news.
And guess what? My job is to look at this bad news All...
Day...
Long...
And for a glass-half full gal like myself, this can prove to be a bit harsh sometimes; and I don't even own a home. Every headline screams of the "Housing Bust" and the "Bursting Bubble," but one has to wonder: Are things really that bad?
And the answer to that question is quite the conundrum since nobody really knows. Although it may seem like every economist and analyst out there just HAS to have a crystal ball in their arsenal, enabling them to see the future of the real estate market before anyone else, chances are they’re relying on the good ol' Magic 8 Ball, just like the rest of us.
Sure, studies, reports and data can help us see where the market is headed, but those who claim to know EXACTLY where the housing market is heading really aren't fooling anyone but themselves.
So that is why it is time to put the bad news behind us and focus on the good. There is no sense in worrying about something we can’t change.
One thing we have going for us is mortgage rates are the lowest they have been in recent months. CNN just reported the 30-year fixed-rate mortgage averaged 6.31 percent, and ARMs also saw a drop in their average rates as well.
This is good news for pretty much everyone: meaning regular homeowners, cash-strapped homeowners and those who are looking to buy a home (and writers like me who are tired of reporting dreadful statistics.)
It could be just the news we’ve needed to give the market a kick start.
Other than making this a good time for struggling homeowner’s to refinance themselves into a new manageable mortgage, the time could never be better for anyone to take their very own slice out of the “American Dream.”
With the surplus of homes on the market and low interest rates, new homeowners are in the prime position to jump on the real estate bandwagon. After all, the National Association of Realtors estimates that there are 4 million homes on the market, so house hunters should have no trouble finding one that is just right for them.
Now, there is no doubt that things aren’t as cheery for homeowners looking to sell, but things will hopefully start to pick up (although that could just be the optimist in me piping up.)
So I end this entry that has actually eased my anxieties about the health effects of too much bad news, with a toast:
To everyone else out there who is sick of hearing all the bad news about housing – Raise your cup and pour yourself a tall glass of lemonade from all those housing lemons.

Part Two: Which glass slipper is right for you?

2006-11-29T16:28:00.000-08:00

As part of my ongoing series in taking the mystery out of mortgages, we will be looking at the two main types of mortgages: Fixed-rate mortgages and Adjustable-rate mortgages. Before you close out of this window due to sheer indifference or terror at the thought of an explanation on mortgages, give me a chance to explain myself:

Not to toot our own horn, but LEI gives a simple, cut-and-dry explanation of these two types of mortgages in the glossary section:

“Fixed-Rates Mortgage: A mortgage with an interest rate and monthly payments that remain constant over the life of the loan.”
“ARM (Adjustable Rate Mortgage): A mortgage in which the interest rate is adjusted periodically, based on the movement of a financial index.”

With a fixed-rate mortgage, the interest rate you are given when you sign your final papers is the one that will stay with you and your home for the life of the loan. It never changes. No matter what.
Typically, fixed-rate mortgages are for the terms of 15 years and 30 years. But now as the mortgage market continues to change and evolve we are seeing fixed-rate mortgages for even longer periods of time.

Now on to the more complex, but often times more beneficial ARM:

Normally, with an ARM, the interest rate stays fixed for a specific amount of time, such as 3, 5 or 10 years. During the initial period, the borrower will have a very low introductory interest rate, after that period is up; the rate adjusts according to the market.

ARMs can be beneficial for a variety of reasons, and once you understand the complexities behind them, the concept makes a lot of sense (it even made sense for me and let’s just stay numbers are anything but my strong point).

One benefit of taking out an ARM as opposed to a fixed-rate is since the rate is lower in the beginning period, you will therefore be paying lower payments than you would in any other situation. This frees up extra cash that you would not have with a loan with a higher interest rate.
This extra money can be used for a variety of different reasons such as paying off high-interest credit card debt (see “Don’t shop ‘till you drop entry below), or investing in more real estate or other profitable endeavors. The options are endless.

ARMs have been getting a lot of bad press lately (those darn paparazzi) due to the fact that borrowers were unaware that they were even in a loan that adjusted, or did not prepare to potentially make higher payments on occasion. That is why it is crucial that borrowers thoroughly understand the loan they get into, and make sure it fits their specific situation before they sign into anything.

Regardless of whichever loan (or glass slipper) you decide to use, be sure to understand it thoroughly and contact a qualified loan officer to answer any questions you may have.

The Ad EVERYONE is talking about

2007-01-24T15:51:00.000-08:00

Word has been buzzing about The National Association of Realtor’s new $40 million ad campaign to renew consumer interest in buying homes, and I was lucky enough to see it with my very own eyes last night.

The campaign, which includes radio, print advertisements and one TV commercial, has been getting a lot of criticism from people who claim they are just trying to rake in more money. Others say it’s a good way to stimulate the market, encourage home sales and raise public awareness….

What do you think?

Here’s an excerpt with a little more information about the ads from Mortgage News Daily:
"The NAR blitz is targeting a number of audiences; buyers, sellers, FSBOs, owners of commercial real estate and those looking for commercial space or property. Hispanics will come in for a good deal of attention as will real estate agents themselves; a group which may or may not be in need of a bit of morale boosting by mid year.”
“The one television ad available for previewing on-line, A Good Time to Buy, was straightforward and covered a lot of ground in 30 seconds: ‘When you have a family it is always a good time to buy; prices are favorable; every real estate market is different; there are a lot of options; working with a Realtor took all of the guesswork out; it's a great move up market; it's the best market in years in terms of choice; if we didn't buy now we would have missed the opportunity.’ It all makes sense when you see it with quick cuts from one of the speakers of the above lines to the next. All of course were attractive and covered the spectrum of ages and races. $26 million of the NAR campaign budget is targeted to television ads.”

It was definitely an interesting ad to see airing on TV, especially since I have read various articles, blogs and discussion boards with input from both those who are opposed and those who think it’s a good cause.
I just wish I had Tivoed it.
Leave me your feedback, and let’s see what readers of The Real World think.

Is it "hot" in here?

2007-01-22T14:34:00.000-08:00

As the housing market continues to stall throughout many local markets, I have noticed a renewed interest in real estate investing across virtually every type of media.
The timing could not have been better.
Just last week, there were a few different articles published on the subject in The Wall Street Journal alone. Analysts, writers and real estate professionals are all saying the same thing: Yes, you can still profit in real estate investing even when the market is not “hot.” I put this in quotes since many buyers would argue that it is indeed “hot” right now.

The renewed interest in buying real estate for profit is probably due to the fact that we are in the midst of a full-blown buyer's market right now. Buyer’s markets occur when there is more than a 6-month supply of homes for sale on the market; which is what we are seeing in many areas across the United States.

This new state of affairs gives many potential investors the opportunity to get their hands on a piece of property for what is probably below market value; always a key to success in any real estate investing transaction.
But as with any investment, there are some inherent risks involved; the biggest one in this situation being that your property depreciates in value and you sell at a loss.

If you are warming up to the idea of real estate investing, there are some important things you should know in advance to minimize risk and maximize growth and earning potential.
A January 10, 2007 article by David Crook of The Wall Street Journal Online, “Think small: Getting started as a real estate investor,” gives some pointers on the best properties to start out with if you are a newbie to R.E. Investing.
The article notes that would-be investors should start investing in the following order:
Start property investment with an in-law unit or guesthouse, next is vacation or weekend homes followed by single-family homes. You then enter the big leagues of real estate investing by purchasing multiple units such as apartment complexes and the like.
“Even in today's uncertain climate, novice real-estate investors can make money, especially in smaller properties that are easy to acquire and manage. A buyer with cash can drive a hard bargain and make out very well. And the worse the market, the better for the buyer. But don't get carried away. If you simply take over an existing 90% or 95% note, you won't make any money. Let the lender foreclose and take over the place. Then lowball the lender.”
So if you are like many other savvy professionals who are feeling the temperature rise in this niche, then it’s time to get started. There are countless resources and information out there to get you started on your journey.
If you have any stories about your days as a beginning real estate investor or any tips for all of the newbies out there, feel free to leave a comment.

New Year, New Mission

2007-01-16T15:33:00.000-08:00

Tomorrow marks my sixth month “Anniversary” of my career as a copywriter here at LEI Financial, and looking back on the past few months it’s interesting to see how much I have learned and grown.
Just a few short months ago I can honestly say I knew little to nothing about the industry and now I can talk about an adjustable-rate mortgage and current market conditions for hours.
I’ve covered the basics in the mortgage and real estate industries for a while now, and I feel it’s time to move on to some more specialized information.
As I’ve gathered more and more information about the industry, I have become increasingly fascinated with the real estate side of the equation.
Although we are definitely seeing a correction in the single-family and condominium housing markets; opportunity abounds throughout the real estate investing sector.

Real estate investing has been a time-tested strategy to build wealth for years. Look at two of the richest men in America; Warren Buffett and Donald Trump.
Where did the majority of riches come from?
You guessed it, REAL ESTATE!

If you have surfed the Internet lately or picked up any trade publications, you have probably been bombarded with a lot of information about how you can get rich quick with real estate investing.
Well sorry to disappoint, but there is no “get rich quick” scheme involved with real estate investing.
That is why I am here to guide you through the art of real estate investing by weeding out all of the bogus information out there and finding all of the pertinent, interesting and exciting information that concerns this industry.
I’ll take a look at the hottest spots to invest, featured properties and just general advice when it comes to real estate investing.

So be prepared to make “The Real World, LEI Financial,” your one stop place for finding the most relevant and informative information about the “Real World” of Real Estate Investing.

To Own or to rent: That is the question

2007-01-11T08:12:00.000-08:00

Searching for a place to live; whether you’re renting or buying is never the easiest or most enjoyable task.

I know this all too well.

My quest to find the perfect post-college place of dwelling has finally ended after what seemed like decades of searching with lots of dumpy places along the way. Along with two friends, I found a great three-bedroom, two bath place on the outskirts of Pacific Beach. Perfection.
For me, the decision on whether to rent or buy was obviously easy. I have just landed my first job after school and have learned extensively of the financial commitments involved with owning property – especially in pricey S.D.
But for others, the decision can be a lot more difficult. Sometimes there is a very fine line on whether it makes more financial sense to buy or rent.

Owning a home
Obviously, if you have the finances, owning a home has a lot more benefits than renting. Not only do you get to build up equity (which can be used for future investments or other funding needs), but you can paint the walls purple and have as many cats as you want!
In addition to all of this, the tax benefits that come with homeownership are also something to smile about.

So with all of these perks, why would someone with the money want to rent instead of buy?

Renting
Well, there are various reasons as to why it sometimes makes financial sense to rent for a while and then take the plunge into homeownership. First of all, if you are not in a job that is extremely secure (meaning you basically have a 0% chance of not being fired), then you should consider renting for a while. Continuing with finances, you should also have some cash saved before you think about buying a home, even if you don not put any of it towards the down payment. There are countless other costs associated with home ownership, such as closing costs, furniture and general maintenance; the list goes on.
Also, if the market is in a rollercoaster state (think right now) and you are just unsure about it in general, you should hold off for a bit.
For people who are a bit more on a lazy side, they may find renting favorable in that if something breaks, they can just call maintenance or their landlord to come and fix it.
The same cannot be said for owning a home.
Although the sooner you buy a home, the sooner you can start accumulating equity and building wealth, you do not want to get into a situation where you cannot afford the home you just bought.
With the increasing amounts of mortgage foreclosures and delinquencies lately, it is much better to have an adequate amount of money saved up before buying a home.

All in all, it comes down to a person's individual situation. If you have any helpful tips on how to better decide to rent or buy; feel free to share them in a comment.

This link: http://buyvsrent.movingavg.com/calculate.html, provides a helpful calculator for people deciding on whether it is better to rent or buy. You can enter the amounts you would pay in both situations and see which one comes out more financially favorable.

Dodging the Down Payment

2006-12-21T16:18:00.000-08:00

Running with the theme of homeownership, this week brought us some more good news for the many people worried that they will be renting that crummy studio in the alley for the rest of their lives.
Everyday, things seem to be looking brighter for anyone who thought buying a home was absolutely impossible.

Traditionally, anyone looking to buy a home had to come up with 20 percent of the value of the home as the down payment. And with today’s real estate prices, I don’t even need to say that this was one of the biggest stumbling blocks for potential buyers on their journey to homeownership.

But this hasn’t been the case for a number of years with the development of piggyback loans and a little thing known as private mortgage insurance (aka PMI).

Before we begin, let’s make it clear that it is obviously the best situation (financially, emotionally and economically) to come up with the cash for a down payment; there are just ways of getting around it.

Basically, if you can’t come up with the dinero for your down payment you have two choices:
*Piggyback loans (which are also known as 80/20 loans) are essentially second mortgages that are taken out on top of the original mortgage (hence the clever name…).
*Then there is PMI, which is another payment tacked on to your regular monthly mortgage payment that protects the lender should you default on your fully financed home loan.

In the past, most people chose the first option because interest rates were extremely low, making piggybacks less expensive than PMI. But now, the tables seem to be turning in favor of the once-shunned PMI – Drum Roll Please:

“A $40 billion tax bill signed into law Wednesday by President Bush extends several popular tax breaks and introduces a new one - tax-deductibility of private mortgage insurance (PMI). Only homeowners with adjusted gross income less than $110,000 and who itemize their deductions will be eligible to reap the benefit.” –via CNNMoney.com
(‘New tax law tweaks home-buying math,’ by Les Christie, December 20, 2006)

Although this new legislation will not prove to be beneficial to everyone, it will help some people achieve the dream of home ownership; which is always a step in the right direction if you ask me.

Next Post: Our two guiltiest pleasures; luxe real estate and celebs!

Trivia Results and a Sneak Peak

2007-01-08T12:02:00.000-08:00

Although we had no winner for “The Best trivia game EVER!” here are the answers:

1. C
2. A
3. C
4. A
5. B

Sneak Peak of what’s coming up on The Real World, LEI Financial:

As part of an ongoing series, I will be looking into the age-old dilemma of Buying vs. Renting. This comes at a time when I have become quite familiar with the rental market right here in San Diego as I searched for my first post-college apt. We’ll take a look at some different scenarios of when it makes sense to buy vs. rent and vice-versa. Drop me a line if you’re grappling with this predicament, and we’ll weigh it out right here...

The best trivia game EVER!

2006-12-29T16:18:00.000-08:00

Since we are approaching the New Year and most of us are headed for a long holiday weekend, I wanted the last blog entry of 2006 to be a littl more on the lighter side…

And what better way to do so then with a little Celebrity Real Estate Trivia!?!?!?!?!?!?!?

So all of you real estate/celebrity gossip junkies out there, submit your answers to me as a comment and I’ll post all of the answers (and the genius winner) when I post the results next week…

1. Which misbehaving pop-star is currently house shopping in Beverly Hills in the $7 million range?
a. Paris Hilton
b. Lindsay Lohan
c. Britney Spears

2. How much did lip-synching sensation Ashlee Simpson sell her Encino, Calif. home for?
a. $5.7 million
b. $4.9 million
c. $2 million

3. Which “Friend” recently bought a home in Beverly Hills for $15 million?
a. Courtney Cox-Arquette
b. Mathew Perry
c. Jennifer Aniston

4. Talk show host recently purchase a house near Santa Barbara California for a reportedly $16.9 million.
a. True
b. False

5. Which “Best Actor” Oscar winner recently put the home he bought in 1998 for $7 million on the market for 5 times that amount?
a. Jack Nicholson
b. Nicolas Cage
c. Kevin Spacey

Give me your answers posted in a comment for YOUR 15 minutes of fame! Don't forget your name...

The Affordability Factors

2006-12-13T11:28:00.000-08:00

As I continue to learn more about the real estate and mortgage industries every day, I find myself more and more intrigued by the concept of homeownership.
Wouldn’t it be wonderful to paint every room turquoise with gold polka dots and blast 80s music at all hours of the day?

Well, I think so…

But I just happen to live in one of the most expensive places to both buy and rent in the entire country. It is pretty ironic that I moved from one of the cheapest places to live (Tucson, Ariz.) to one of the most expensive places. Go figure!

San Diego (and most of California) is notorious for its over-the-top real estate prices, where it takes a small fortune to buy a one-bedroom studio 30 miles inland! But things could be turning around ever so slowly for those who have previously thought that homeownership would only be possible if they robbed a bank.

STOP THE PRESS! We have some good news about the housing market

Sellers who have waited and waited to get a buyer for their home the past couple of months are finally giving in and cutting their listing prices.
This is affordability factor #1.

In addition to lower prices on homes, mortgage interest rates have also been going down, and have definitely not increased in months.
Enter affordability factor #2.
The Federal Reserve recently left the benchmark interest rate unchanged at 5.25%.

“First-timers begin looking at houses again,” a December 13, 2006 article by Ruth Simon of The Wall Street Journal, reports this good news for prospective buyers.
“The National Association of Realtors reported that the median price of an existing home fell 3.5% in October from a year earlier, the largest decline since the group began collecting these data in the late 1960s.”
Although this is not the best news for all you home sellers out there, this is definitely a good sign for people who have been thinking about buying a home, but thought it was out of their reach.

Combine these lower prices with favorable interest rates, and we have homes that have suddenly become a little more affordable. Although you are not going to find bargain basement prices any where in San Diego County, homes are more affordable for those looking to make this life changing purchase for the first time.

We're bringing ARMs back

2006-12-06T15:12:00.000-08:00

Them other mortgages don’t know how to act
I think it’s special what’s in those terms and rates
So turn around and sign those docs

What better way to lighten the mood and open up a discussion about adjustable-rate mortgages (ARMs) than an ode to one of the hottest songs and artists of the year, Justin Timberlake. Well I know we could sit around all day and discuss the prince of pop, but it’s on to business…

As discussed before, an ARM has an interest rate that is fixed for a specific period of time and then adjusts to the current market’s standards. So depending on the type of ARM you have, you will have the same payment for a set amount of time, and then it will change after that. It all depends on the specific terms of your loan as to when the initial interest rate will change.
There are many different types of ARMs out there, with many different terms and payment options. This is where things can get confusing for some borrowers if they haven’t done their research.

One of the most common types of ARMs on the market is the Option-ARM. This is a great choice for the educated borrower because it has the most flexibility and options.
Wikipedia gives a nice concise explanation of this type of loan:
“An ‘option ARM’ is a loan where the borrower has the option of making either a specified minimum payment, an interest-only payment, or a 15-year or 30-year fixed rate in a given month.”

The payment options available on this loan make it easy for people with sporadic or irregular income to own a home. They also usually come with extremely low initial interest rates, which can provide even more wealth building opportunities for people who use this money they are saving in the beginning on other investment opportunities.
In addition to the ARMs discussed in the previous entry (3, 5 and 10 year ARMs) there are also hybrid ARMs and interest only ARMs, that combine a variety of features.

Do a quick Internet search or talk to one of our mortgage coaches on how to bring an ARM into your financial portfolio.

The Cinderella Conundrum: Part 1

2006-11-22T15:48:00.000-08:00

You wouldn’t buy a pair of shoes without trying them on.
You also wouldn’t buy a car without test driving it first.

So why on earth do homeowners’ across the country get into loans that they do not first fully understand?
This should be the eighth wonder of the world.
Just like one of Cinderella’s ugly step sisters, Americans across the nation are shoving themselves into loans that don’t really fit their specific needs or financial circumstances. And the worst part about this all is that half the time, borrowers don’t even know what they are getting themselves into.

Mortgages can be hard to understand (trust me, I know this). There are many different types and variations available on the market today. So whether you are planning on buying a home tomorrow, or in two years, it is important to familiarize yourself with this industry early on (and you’ll impress your friends with your new-found financial knowledge).
First of all, there are fixed-rate mortgages and adjustable-rate mortgages. The interest rate stays the same throughout the life of the loan with a fixed, and can adjust with the latter option (more on this later.)
To take out an adjustable rate mortgage (also known as an ARM, in industry lingo) you should first know what one is. And even if borrowers do understand what these loans are, and know they will have trouble making any more than the minimum payment, many still sign up anyway.

That is why not only understanding the loan product thoroughly, but also employing a competent and patient loan officer are key elements in any mortgage transaction.

Take it from Mike Spanos, a homeowner who was featured in an article published in The Press-Enterprise on people who are in a lot of trouble because they did not understand their ARM. “Trouble in ARM’s way,” by Leslie Berkman, features a photo of Spanos with the caption: “Mike Spanos, 42, bought this four-bedroom house in Montclair but says that until recently, he did not know how his option adjustable-rate mortgage worked or that the payment he was making was increasing the debt on his home.”

Not to make poor Mike feel any worse then he probably already does, but it saddens me to read about smart, educated, grown men who do not even know what type of loan they are in! It is especially baffling when you acknowledge the fact that homes and mortgages are the biggest financial commitments and investments that people deal with in their lifetime!!!!

So that is why the next few Blog entries will be dedicated to understanding the intricacies between a few of the most popular types of ARMs, as well as revealing the mystifying facts on the differences between ARMs and fixed-rate mortgages.

Hopefully this will help people slide into their next loan as if they were Cinderella herself trying on that glass slipper.

Poor Whitney Houston!

2006-11-17T12:13:00.000-08:00

I feel so bad for the girl.

First there were the allegations of severe drug abuse…

Then the divorce from Bobby….

And now, her house goes into foreclosure.

The poor thing just can’t catch a break. (Let’s just try and forget that heinous reality show altogether). Reports of Whitney’s New Jersey home entering foreclosure have slammed every media outlet this week.
An Associated Press report states:

“Whitney Houston's New Jersey mansion is slated to be sold at a sheriff's sale because she is more than $1 million behind on the mortgage and taxes have not been paid this year, according to reports published Wednesday.”
“The January 4 sale was scheduled Tuesday by the Morris County Sheriff's Office, the Daily Record of Parsippany reported. The service agent for Chevy Chase Bank, the mortgage holder, sued Houston in June.”

But instead of capitalizing on one starlet’s pain, let this be a lesson to us all.
It seems as if the topic of foreclosure has been the only thing related to the real estate industry that has been making the news lately (besides declining housing starts again, but that’s a whole other can of worms). RealtyTrac (scroll down two posts back for more info on this company), recently reported that real estate foreclosures are the highest they have been all year long…

Pay your mortgages people!

Now, I don’t mean to sound harsh, and there are some people who have extenuating circumstances, but for the most part, people are just lazy – lazy enough that they would rather have the roof taken from over their head (literally) than seek help. Contrary to popular belief, lenders and banks want to help, and most foreclosures can be avoided altogether if homeowners would seek help when they first feel as if they’re falling behind on their mortgage.
I really don’t mean to sound like some crazy mortgage tyrant, because I am anything but. It is just frustrating and actually really sad to read about so many foreclosures when there are so many options. Refinance, sell, work out a payment plan; homeowners should be doing WHATEVER they can not to be another statistic.
I really hope the foreclosure numbers improve because I don’t want to keep blogging about such a depressing topic.
In the meantime, let’s keep all of Whitney Houston’s mistakes (including her impending foreclosure) as a reminder of what improper financial planning can do to a person.
So Whit, if you’re out there, keep your chin up; and start rebuilding your credit and looking for an apartment…NOW!

Don’t shop ‘til you drop

2006-11-15T16:24:00.000-08:00

I love to shop. But what girl doesn’t?
Actually, I may be one of the only individuals on the face of the planet who knows a female who actually loathes the whole institution of shopping - and she’s my very own older sister.
And without even knowing it (no offense sis), she is actually more financially savvy than most of America.
You see, the problem doesn’t lie in the fact that we, meaning men and women (there’s no denying your secret little shopping sprees anymore boys), like to shop; the problem lies in the fact that the majority of people are doing it with money they don’t even have…
Enter Mr. Visa and Mrs. Mastercard.
There is no problem with using credit cards to make purchases, a problem is created when these purchases begin to become excessive or out of control, and they start to hurt the good ol’ credit score.

“Credit score?!?” you say….

If you are one of the many people who think that a credit score can range into the thousands, and has about as much importance as your recent bowling score; keep reading immediately!
Contrary to popular belief, your credit score affects whether you get approved for a home or car loan, and can even get you denied from a job nowadays. That means a low score could not only cost you that dream home you’ve been saving for, but an employer could turn down your resume despite all of your other fabulous qualifications.
A credit score can range anywhere from about 450 to 850, and most lenders give the best rates to those in the 700s and up.
I had no idea how important a credit score was to the mortgage approval process until I heard one of our loan officers pleading with a company who cleaned up their credit in the past to help out one of their client’s who was applying for a loan but didn’t qualify because of their low score.
This is just one small example of the importance of a high credit score in today’s society. Paying those bills on time and not going over the limit on any credit cards (yes, most do have limits), should help you keep on top of the credit score mountain. If you didn’t even know you had a credit score until reading this blog, now would be a good time to take a look. You can get one free annual credit report a year.
So, next time you think about maxing out your Visa at the Nordstrom’s Anniversary sale, think again – because it could cost you your home in the future.

(To get the full low-down on your credit score, including its components and the main credit bureaus, Wikipedia has a lot of info http://en.wikipedia.org/wiki/Credit_score)

I don’t wanna grow up, I’m an LEI kid

2006-11-09T16:11:00.000-08:00

As I get ready to take a long weekend and head back to the desolate desert town known as Tucson for homecoming celebrations at the U of A, I start to think about how much my life has changed….
Just a few months ago I was a carefree college co-ed finishing up my studies and going out to the bars on Thursday nights. Classes were unheard of on Fridays and my biggest concern was turning in a one-page essay on time. Those were the days.

Fast forward to now:

Thursday nights consist of going home, eating dinner, and maybe going over to a friend’s house for Grey’s Anatomy (that’s if I’m not too tired already). This notorious night owl has surely turned over a new leaf.
It’s amazing how much things have changed in just six months, and here I am, going back for one more crazy weekend to relive it all. It will be interesting to see if my Wildcat cohorts have also entered into the real world like myself. I know some already have…big time.
Two of my close friends have gotten engaged since graduation (which I personally feel is way too young, but don’t tell them I said that), and another has bought a house, (well let’s just say that she chipped in and her parents are paying the mortgage). Which leads me to wonder, how are these kids that could barely pass Algebra 210, going to be able to handle all of the responsibilities and obligations that come along with homeownership?
Are my friends going to be another statistic on the growing tally of homeowners going into foreclosure and falling behind on mortgage payments?
Hopefully not.
For their sake, a lot of these foreclosures could be avoided in the first place if the people just sought help when things first started to get tough financially.
But unfortunately, many people do not seek help and just end up as another number on RealtyTrac’s website (http://www.realtytrac.com).
For all of you who don’t know who or what RealtyTrac is (don’t worry I didn’t either until a few weeks ago), they are: “the nation’s leading online marketplace for foreclosure properties.”
They also just received the distinction of being the 52nd fastest growing company in North America from Deloitte’s 2006 Technology Fast 500 (which obviously shows that homeowners need additional education on how to manage mortgages if a foreclosure company is one of the fastest growing companies in the N.A.!!!)
Moving on; the reason why I bring them up is because they track the amount of foreclosures in the nation, which are at an overwhelmingly high amount, due to a variety of different factors.
They just reported that foreclosures are up 43 percent from 2005, which is quite honestly a shocking figure. It just solidifies the fact that anyone buying a home and taking out a mortgage really needs to know what they are getting themselves into, or else they could end up as yet another listing on RealtyTrac’s homepage.
Owning a home is a part of growing up, that doesn’t (and shouldn’t) have to end in foreclosure. It’s just something that everyone who has never owned a home, or who is thinking of owning a home should think about.
As for me, I realize that homeownership may not be in the too distant future. But for now, I’m just going to soak all the information in that I can, and be a kid (with a full-time job) for a little while longer.

Welcome to the Real World

2006-10-31T15:56:00.000-08:00

Greetings from cubicle number one of LEI Financial's offices in San Diego, Calif. My name is Melissa Wirkus, and I will be your new guide to everything related to the mortgage, real estate and financial industries.
Now, I know what you are thinking - Why should I care about topics normally only featured on a Suze Orman show? Well my friends, that is exactly what I was thinking when I took a job as a copywriter at this young financial company, but let me tell you how the tables have now turned.
At 22, I had just recently graduated from the University of Arizona in May with a degree in Journalism and a minor in Spanish. As soon as I graduated, I high-tailed it out of the desert and made my way back to my hometown of San Diego (yep, proudly born and raised). I knew I wanted to get into something with writing, since it’s been my passion since I can remember, but I was pretty unclear on the exact career path.
So I went on interview after interview for different writing-related jobs; from small start-up magazines to a nightmare where they tricked me into standing outside of Sport Chalet selling t-shirts (the horror!).
And then finally came the LEI Financial interview, where I would take the position of one of two copywriters; except their was only one problem, I knew nothing about loans, mortgages or real estate. And I mean nothing. I attribute my out of this world writing skills, tireless dedication and flawless interview skills to landing me this job (wink, wink).
Now that I landed my first real job (as in 40 hours a week, with no college "personal days") in an industry I knew very little about, I am finding that I am learning more than I really ever thought I would.
Anyways, the past couple of months have taught me a wealth of information on an industry I honestly had little interest in and knew nothing about. And now I can't get enough of it. As a copywriter, our job is to scour every newspaper, magazine and website for pertinent information about our related industries, and it has never been a better time to do so.
I look at myself as a young person who knew nothing about some very important topics and want to share what I learn with other uneducated people, and even professionals who have been in the business for years.
Owning and financing a home is a vital part of life, and it is something they should really start to teach in college. The rising number of foreclosures and defaults show us that the American public really has no idea what they are doing when it comes to owning a home.
So that is why I started this blog, to give the public an inside look on an industry that really is shrouded in mystery, and honestly fairly overwhelming. My goal is to take readers on a day-to-day journey of my experiences, thoughts, opinions, trials and tribulations as I get adjusted to the real world of mortgages and real estate. From the eccentric personalities that dominate the industry to finding out exactly what an adjustable-rate mortgage is; stay tuned and you just may learn something you never thought you would, because I know I did.

Buying a house is sooo last year…

2006-11-08T08:41:00.000-08:00

Just like Britney and K-Fed’s marriage and wide leg jeans.
I have found that in the few months I have been at my job, looking for pertinent stories on every credible website imaginable, that there are some days when there is a lot of information out there, and other days where it seems like the most interesting story involves an 80 year old couple and their reverse mortgage (zzz…).

But what a jackpot I stumbled across today!

Not only did I find an interesting article on how fashion is related to the real estate industry but my Google homepage also alerted me to an unthinkable news event (gasp!)
Yep, you guessed it; Britney Spears filed for divorce from Kevin Federline, and I bet that more than a few people are wondering why it didn’t happen sooner. First it was Brad and Jen, then Reese and Ryan… and now the Federlines! It seems like divorce is all the rage right now.
And speaking of trends, it seems as if the un-coolest thing to do right now is to buy a house. You may laugh at this statement, but it has never been truer. The real estate world and housing markets are definitely not immune to the trials and tribulations of fads and trends.
I know everyone thinks that “peer pressure” is only a thing that teens experience, but it is quite prevalent in today’s housing market.
I stumbled across an article today from the November 5 edition of The Los Angeles Times that perfectly discusses how the surplus of homes on the market is a direct result of some form of “adult” peer pressure. Why didn’t anyone think of this before? It makes perfect sense.
The article, “Meet the Flockers,” by Diane Wedner discusses how buyers waiting for other buyers to make their first move, as well as sellers waiting for other sellers to lower their price first is the same “herd mentality” we see in today’s fashion and music trends.
No one wants to be the first to step off the sidelines. Yes, of course people are still buying and selling homes, but the majority of people are all waiting for someone else to make the first move.
In today’s environment, home owners are more likely to follow the advice or actions of their neighbor in contrast to what make sense for them economically and financially.
Just like during the “boom” of a few years ago people who had no previous interest in real estate were suddenly agents, and those who had never even bought a home were scooping up investment properties like they were going out of style; all because they saw others getting rich so quickly and wanted to cash in.

I honestly never thought I could compare the housing market with today’s denim trends, but it makes perfect sense. The newest trends in high fashion only become “out” or “in” because a majority of people think so. The same goes for the housing market.

Just like skinny jeans and ankle boots, buying a house will start to become “in” again before we can even spot the next trend.