Thursday, December 22, 2011

ARMs are Bad !

A  Adjustable Rate Mortgage is bad- no matter how you package it.   Most of my  chapter 13 homes are either purchased between 2005-2009 during the bubble or their ARMS.   Just say NO and get a fixed rate.

Two new packagings for ARMS are:

A 2/28 Mortgage is an adjustable rate mortgage loan where interest is paid for two years at a relatively low rate, and then the interest rate “floats,” or changes, upwards.

With a 50 Year Mortgage the lender gives you a fixed introductory rate for five years, followed by an adjustable rate mortgage for the remaining 45 years

Home Sales

Economists and real estate experts project U.S. home prices to bottom out late next year or in early 2013, according to Zillow's Home Price Expectations Survey.'

Shadow Inventory

The number of distressed properties not currently listed on multiple listing services stood at 1.6 million as of October 2011, according to CoreLogic. This shadow inventory is approximately half of the industry's visible inventory, the company says, meaning for every two homes available for sale, there is one home in the "shadows." CoreLogic's latest shadow inventory assessment represents a supply of five months and is down from October 2010, when it stood at 1.9 million units, or 7-months' supply.  Currently, Florida, California, and Illinois account for more than a third of the shadow inventory, CoreLogic reports. The top six states, which would also include New York, Texas, and New Jersey, are home to half of the shadow inventory.

Pay the Mortgage Before you Shop!

There’s often a balloon in bankruptcy and foreclosures soon after Christmas in part because people “skip a payment” to buy presents. This is never a good idea and now it is even worse. First, if you want to keep your home, the mortgage comes before virtually everything. I tell my clients it comes before they eat!!  I know try explaining that to the spouse not handling the budget or the kids.

It may be satisfying to pay several smaller bills first — feels like solving  problems, right? — but if the biggest bill you didn’t pay was your mortgage then your problems are getting worse, not better.

It is easy to think “well, I’ll make this up next month, I don’t want to disappoint the kids.” The problem is that you won’t be making more money next month . Your expenses will be the same or maybe higher, given the prices of food, gas and electricity. So where will the “make-up” payment come from? If you are not already in the “Robbing Peter to Pay Paul” cycle, this could start it. Remember the old adage can I  pay my Visa with my mastercard?

It is easy for me to sit back and suggest disappointing the kids during the holidays. They’re not my kids. My son would not understand, he's six though and is satisfied with jacks.

Perhaps keeping a roof over their heads is a worthy goal as well. Also  teaching the lesson of taking care of “needs” before “wants” could be the best present you can give them this year.

If you do plan on filing bankruptcy in the new year wait three month from your last Holiday shopping and do not use those cards in the mean time.

Do you owe what I owe?

I found this on the web:

St. Louis bankruptcy attorney Wendell Sherk published his riff on a popular Christmas song – Do You Owe What I Owe?

(To the tune of “Do You Hear What I Hear?”)

Said the neighbor to the young man,

“Do you owe what I owe?

Bills up to the sky, young man,

Do you see what I see?

A choice, a choice, waiting in the night

A new start to end the year alright,

A fresh start for a New Year’s Night.”

Said the collector to the young man,

“I know what you owe,

Bills up to the sky, little debtor man,

Do you hear what I say?

Pay what you can’t pay, little debtor man!

With a voice as big as the sea,

With a voice as big as the sea.

Said the young man to the lawyer kind,

“Do you know what I owe?

In your palace warm, lawyer man,

Do you know what I owe?

An arm, a leg, I’ll be out in the cold–

Help me save a little silver, or gold,

Help me save a little silver, or gold.”

Said the judge to the people everywhere,

“Listen to what I say!

Be at peace, people, everywhere,

Listen to what I say!

A fresh start, a new start, waiting in the night

To bring you peace and goodness,

To bring you quiet in the night.”

With apologies to Noel Regney & Gloria Shayne Baker