I just read a great article by nationally recognized financial guru Dave Ramsey. In the article, appropriately titled, “Don’t Foreclose on Your Future,” Dave gives three sound reasons why walking away from your mortgage just isn’t a good idea. The three reasons are:

Reality #1 – Your home is an investment, and any investment—even real estate—will go up and down in value. Walking away from your mortgage now is the equivalent of selling your stock portfolio at the bottom of the market. You guarantee yourself a loss if you don’t stick with your investment until values come back up.

Reality #2 – Home values will recover. If our homeowner sticks it out and stays in his home, he’ll be back to even in five years, based on a conservative 5% rate of appreciation. In less than 20 years, his home will have doubled in value. That is wisdom!

Reality #3 – The bank is not letting you off that easily. Lenders are covered up with foreclosures, so while homeowners who walk may not hear from the bank right away, they are by no means off the hook. Some banks will pull credit reports to see who is current on their other payments to determine if a default is “strategic.” Banks will go to court to garnish wages or hijack tax refunds—whatever it takes to get what they’re owed.

You can view the whole article on Dave’s website. Dave Ramsey is a bestselling author and radio host. I have been a huge fan of his Financial Peace University program, and strongly recommend it to everyone.

There are alternatives to foreclosure. A loan modification or short sale could be possible options for you. Your local real estate professional can help you with these options. Don’t be afraid to contact your lender, either. By staying in touch with your lender, you’ll find many more options available to you.

Don’t just walk away, though. As Dave points out in Reality #3, banks can, and eventually will come after the money they lost.

Don't walk away and let your home go into foreclosure

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New RESPA regulations now require additional “cooling off” periods when the HUD Settlement Statement is changed. While the intent of the changes is to protect the consumer, the changes are causing delays in the time it takes to move a home sale from the time the offer is accepted until the time the closing of escrow occurs.

The majority of the burden of these new changes falls into the laps of Mortgage Companies and banks. Starting at the time of loan application, the mortgagee (bank) provides the buyer with a Good Faith Estimate. From the time the buyer receives the GFE, the buyer has ten days to review the GFE and decide whether or not to move forward. OK, great idea, no problem.

If the costs in the settlement statement change, for any reason, the borrower must be informed in writing, and there will then be an additional “cooling off” period. If the written changes are presented face-to-face between the borrower and the buyer, then the waiting period is THREE days. If the presentation of changes is done by fax, email, mail, etc, then the wait is SEVEN days. This is for every time something changes on the HUD.

So how is this different? Lenders have always advised the borrower of when there were changes. The borrower would look at the changes, decide whether to accept them or not, and move forward. Now, because of these new RESPA changes, the borrower must wait the 3-7 day cooling off period.

To me, it’s as if the government is telling the buyer, “You’re not capable of making a mature decision about your finances, so we’re making you take a few days to think about it.” Imagine if you changed the HUD three times through the course of a transaction. The inspection costs came in higher, the seller agreed to pay more money in seller concessions,  and a second appraisal is required. You are now looking at postponing the closing by 9-21 days, plus the time it takes to do the appraisal, and/or inspection repairs.

Closings are already taking 45-60 days on average. It used to be 30 or less.

You can learn more about RESPA at the US Department of Housing and Urban Development website http://www.hud.gov

From the HUD website:

“RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD.”

“…designed to help homebuyers be better shoppers…”

Laws to help homebuyers be better shoppers. This is the part that just rubs me raw. Essentially the government is saying that the average consumer isn’t smart enough to make an educated decision, so they’re going to pass  laws to do it for you. Protecting the consumer is a noble idea, but I question if perhaps this time it’s gone a bit overboard.

Decide for yourself. Like it or not, it’s in effect, for better or for worse. Just be advised that it may take a bit longer to close your home purchase.

If you’re like me, you’re sick of hearing the phrase, “Think outside the box.” I’ve been outside the box for so long now, I can’t even see the dang box anymore!

I have had some success this year by utilizing some unorthodox means to get my real estate deals in Oceana County closed, however. The most prominent, by far, is not even original, just a resurgence of an old practice from the ’80’s. That’s right, the infamous LAND CONTRACT.

I have two pending sales right now that I wouldn’t have had I not been able to educate both buyer and seller as to the benefits of a land contract (or a purchase money mortgage, but that’s a whole ‘nother blog in and of itself).

In one of these deals, I represented the buyer, and the seller was not offering LC as one of the terms. My buyer had a three year old foreclosure, was working on repairing some credit divots, and financing wasn’t looking likely. My home buyer needed a home, though, so I got flexible. I took the time to prepare a package that would excite the seller, and convince him to entertain a land contract. This is the step that I think a lot of people are missing.

The package contained a credit report, a letter of explanation regarding the failings of the credit report, income verification (including length of employment), proof of funds for the down payment, our offer, and our earnest money deposit. Working with the seller’s agent, we presented the package, and the seller accepted our offer.

Now, I have had many calls from agents who will call on one of my listings and just ask, “Will the seller take a land contract?” In most cases, the answer would simply be, “No.” (Unless, of course, the seller and I had already agreed to that in the original listing contract.)

I have taken to getting in the practice of asking the agent to prepare a package like I described above. I then present the whole package to the seller, and have been pleasantly surprised when a few of them changed their stance and accepted a land contract offer.

I’m not suggesting that land contracts are the answer to everything. Obviously there are issues that come into play that must be addressed, such as “due-on-sale” clauses which are in most every mortgage agreement. The seller may also need the funds to move onto their next home. So no, LC’s are not for every situation.

I do firmly believe, however, that if you’re not educating your buyers and sellers on the possibilities of a land contracts and purchase money mortgages, you’re missing out on business, and I don’t know anyone in Michigan that can afford to do that these days.

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After staying fairly consistent around 4.75% through late April and most of May, mortgage rates began a climb last week. Today they are a full percentage point higher than they were this time last month. This is not entirely unexpected, since noone believed we could maintain historic low interest rates forever.

So how does this affect the average home buyer?

Let’s assume you are borrowing $100,000, at a fixed rate, for 30 years.

If your rate were 4.75%, your monthly payment (principal & interest only) would be $521.65.

If your rate were 5.75%, your monthly payment (principal & interest only) would be $583.57.

With an interest rate difference of just 1%, you would pay an additional $61.92 per month.I don’t know about you, but I could use an extra 60 bucks a month. It might buy me a tank or two of gas at today’s prices.

But let’s look at the bigger picture: How much interest you will pay over the course of the 30 years.

At 4.75%, you will pay $87,794 in interest on your loan after 30 years. At 5.75%, you will pay $110,085 in interest. That’s a difference of $22,291!

I’m writing this with the hope of visually demonstrating to you how critical it is that you buy a home at the lowest interest rate possible. I know many people are holding out on buying a home, waiting for the best time to get the best deal. If interest rates continue to climb, you may have already missed the peak opportunity.

If you wait, and interest rates climb another percentage point to 6.75%, you stand to pay an additional $23,411 more in interest than if you bought today at 5.75%.

In addition to still being able to get a good interest rate, the first time home buyer tax credit is only available for 5 more months. Combine the $8000 from the tax credit with what you would save in interest, and you are looking at over $31,000 in savings. Do you have $31,000 to waste?

I’m not even going to start in on how low the home prices are today. I think you can see already that now is truly a great time to buy. If you would like more information on the benefits of buying a home today, please visit my website and contact me today for a personalize home buying plan that fits your individual needs.

Welcome to Harborview Condos in beautiful downtown Pentwater, Michigan.

Harborview Condos in downtown Pentwater, MI

Harborview Condos in downtown Pentwater, MI

Relax, and make yourself at home in one of our luxurious condominiums overlooking scenic Pentwater Lake. Watch sailboats drift by on their way to the nearby channel as they head out to Lake Michigan. Do some crowd watching as the thousands of tourists walk the streets of downtown Pentwater. Grab your towel and head down to Charles Mears State Park for a swim in Lake Michigan. Or take an afternoon charter fishing trip at the marina and try your luck on “the big lake.”

There’s always something to do in Pentwater.

Whether you’re a regular visitor to Pentwater, or this is your first time, you owe it to yourself to stop in and check out Harborview Condos. Starting at just $299,000, you can’t afford to miss this opportunity to make Pentwater your summer destination.

Our website, http://www.pentwatercondos.com will be up soon. There you’ll be able to find out more about the condos,  Pentwater, and how you can own a piece of West Michigan Paradise. In the meantime,  call or email me to schedule a showing today!

6111 N Oceana Dr Hart, MI

$159,900

This beautiful ranch home features an open floor plan in a country setting. The main floor includes a living room, dining area, and kitchen under a cathedral ceiling. Master suite includes a full bath and walk-in closet. Two bedrooms and another full bath are located on the opposite end of the home from the master suite. There are lots of closets for storage, and main floor laundry.

The home sits on an unfinished walk-out basement, and is pre-plumbed for a future bathroom. A built in egress window allows for a future basement bedroom.With 1344 square feet of finishable basement space, this could become a 2600+ sqft home with 4 beds, 3 baths, and added living areas.

The exterior is maintenance free vinyl, and since everything is new, you don’t need to fear having to replace the roof or furnace. Many of the home’s products are still covered by manufacturer’s warranties.

Back view 6111 N Oceana Dr Hart, MIThe two car attached garage includes an electric opener. Relax on the 10×12 deck and enjoy watching birds and deer. Lots of trees provide privacy. The deck has a retractable awning to provide shade on a summer day. The home sits on over 3 1/2 acres of land with lots of trees and a view of the neighboring pond.

Located just a few miles from Pentwater and Silver Lake, this home would make a great year round home or summer vacation getaway. The location is just a couple of mile from US-31, which is on the West Michigan Fall Color Tour circuit. At this new price, this one won’t last long. To see more of the home, visit http://www.timwhitehomes.com

First time home buyers may be eligible for $8000 federal tax credit when purchasing this home.

Dear Mother Nature…

April 26, 2009

Dear Mother Nature,

Thunder CloudI am writing this letter to you to express my unhappiness with your selection of weather today. I gave two weeks notice that I was planning open houses this weekend for some highly valued clients. You have apparently either missed the notice, or you received the notice, and chose to quite literally rain on my parade anyway.

This is not cool. As I was driving to Grand Rapids this morning, the rain had stopped, and I began to think that maybe, just maybe, you had softened your heart. As I pulled into Avalon Pointe, there was still no precipitation. You seemed to have decided to be kind, and perhaps would allow some favorable weather.

Then, just as I exited my car, and was putting out my sign, you felt the need to release a downpour of rather cold water from the sky. I am now soaked, and will remain so for the duration of this open house. Gee, thanks.

In case you haven’t been watching Fox News, “Mother”, the real estate market is already plenty full of challenges. There are lots of homes for sale in Grand Rapids, and the prices are low. As a Realtor, I am working harder than ever, and overcoming these challenges one at a time. I do not need you placing additional obstacles in the way of my success.

For future reference, kindly save your inclement weather fits for Wednesdays. That day works for me, and I have no problem with you throwing a meteorological fit on that day. In addition, because I am thoughtful and generous, I would have no objection to you throwing a thunderstorm tantrum between the hours of 9pm and 5am Eastern Standard Time.

Please take this message to heart, and rethink your actions. Should you not, I shall have no further recourse but to begin buying Styrofoam dinnerware, stop recycling plastic, go back to buying AquaNet hairspray loaded with CVC’s (despite my rapid hair loss), and attempt to annoy you in general.

Get your act together, and behave accordingly.

Sincerely,

Tim White – Realtor, Coldwell Banker Woodland Schmidt, Hart, Michigan

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