There’s Sunshine after the rain…and rainbows too! Sharing the great site from my office window we saw yesterday
“The indispensable first step to getting the things you want out of life is this: decide what you want. “ – Ben Stein
NEWS & HEADLINES
Six Federal agencies have to sign off on the QRM provisions, and apparently the first will be early next week. Early next week the FDIC opines on, “What counts as a “Qualified Residential Mortgage (QRM)?” as it scheduled a meeting of its Board of Directors for next Tuesday to vote on the issue. A draft of the proposed rule will be made available to the public at that time. Industry folks believe that the FDIC will move first on the rule, followed by (in random order) the OCC, the Fed, HUD, SEC and the FHFA — will be approving the rule in the days following the FDIC’s notice. Once all six agencies have approved the proposed rule it will be published in the Federal Register, and the comment period will begin. For more information visit CMBP.
Freddie Mac notified its servicers of some changes to its servicing requirements that should be noted. The changes are numerous but include, “Permitting Servicers to postpone foreclosure sales handled by designated counsel as long as the newly scheduled foreclosure sale date is within Freddie Mac’s State foreclosure time lines” and “Eliminating the option to foreclose in the name of Mortgage Electronic Registration Systems Inc. (MERS).” Best to check out the bulletin: Freddie.
Anyone looking for a rebound in the housing market did not find it in yesterday’s release of New Home Sales for February. Anyone in the market for a home is asking, “Why buy a new one when there are so many others around?” And indeed, New Home Sales were down nearly 17%, and are at their lowest level since 1970, and following NAR’s Existing Home Sales drop of 10% announced earlier this week. Most analysts are not looking for any rebound this year. It was the third monthly decline in a row and far below the 700,000-a-year pace that economists view as healthy, with the median sales price dropping to $202k.
In terms of interest rates, Treasuries opened higher (rates lower) on more flight-to-safety (European sovereign debt, Libya and Japan issues continue) but then tailed off during the day. The 10-yr closed nearly unchanged at 3.35%. MBS prices and spreads ended mixed with lower coupons mostly “lower and wider”, while higher coupons were “higher and tighter”.
Today we have seen Jobless Claims and the volatile Durable Goods. Last month Durable Goods orders remained positive, increasing 3.6%, and expectations were running around +1.3% for February. They came out +.9%. Jobless Claims were at 382k, down from 387k – good new. We will also have the Treasury’s announcement for next week’s 2, 5, and 7-yr auctions. Currently the 10-yr is sitting around 3.39% and MBS prices are worse about .125.
4 STAGES OF WEALTH BUILDING AS A HOMEOWNER
One of the primary objectives of owning a home is to let the home appreciate over time and become a pillar of a family’s financial strength.
But before we can discuss “wealth”, we need to identify the stages to get there.
Stage 1
Having “Emergency Cash” is the first stage. It’s having $5-7,000 liquid for life’s inconveniences (the boiler breaking down, the car needing work, etc). When faced with the inevitable challenges that arise, many people are forced to run to their credit cards to make it through. They become stuck with high interest rate, non-tax deductible borrowing.
Stage 2
The second stage is the elimination of “Bad Debt”. We define “Bad Debt” as any debt whose interest is not tax deductible. Obviously, those high interest rate credit cards must be the first to go. But we also want to divest ourselves of the borrowing associated with car loans, boat loans, student loans, and personal loans because it typically can be done cheaper.
Stage 3
Shockingly, when you arrive at stage three, you will be considered in the Top 5% of Americans in terms of financial security. Stage three is accomplished when you have 3-6 months of your total expenses in reserves. The average homeowner (who is logically financially better off than the non-homeowner) has less than one month’s expenses in reserve! When life shows them more than a minor inconvenience (like a job loss, an illness/disability, or worse), most people are in a panic situation. With 3-6 month’s reserves, you will have time to weigh options and make better choices.
Stage 4
True financial security is attained when you become “Debt Free”. But not without debt. We consider our clients “Debt Free” when they have enough liquid assets to pay off whatever mortgage they have outstanding. Wealth building almost requires utilizing the tax benefits of having a mortgage in combination with strategies that utilize The 3 Miracles of Money…
The 3 Miracles of Money
Compound Interest – The impact of money left to grow upon itself can be dramatic. If you had $1 on Monday and you could double it every day ($2 on Tuesday, $4 on Wednesday, etc.), by the end of 20 days, you would have $1,048,576.00!!! Now, you can’t double your cash every day, not even every year, but the concept holds true…..compounding interest is a good thing!
Tax Free Growth – The ability to accumulate assets without giving Uncle Sam a third of it (in the form of Federal and State Income Taxes) is how the $1 became $1 million. If the growth was taxed at 33% ($1 on Monday gave you $1.67 on Tuesday (instead of $2- and so on), your $1 would only grow to $28,466.20 after 20 days!!! THAT IS NOT A TYPO! You would have “lost” over $1 million.
Leverage and Arbitrage – If you can put up minimum of cash and take title to a significant asset (like a down payment on a home…the smaller the down payment the better), you can leverage that cash investment to large returns. At the same time, if you can take the cash that you don’t bury in home equity and effectuate a spread between your “after tax cost of money” (mortgage payment) and your investment options (hopefully, in a tax free environment), you can gain the exponential growth that creates wealth.
Bottom Line
Please take the time to investigate all that is possible, by harnessing the POWER of a mortgage to help you move your family towards wealth. Work with a loan officer who can educate you on the power behind properly leveraged real estate via tax savings and reallocation of equity.
3 BASICS OF SOCIAL MEDIA ENGAGEMENT
(This is Part 1 of 2 part series, check Monday for part 2)
Everyone says that you have to be on Facebook, Twitter and LinkedIn. The question is, “How are you converting your social networking activities into an income stream for your business?”
Eighteen months ago, at a National Association of Realtors conference, I was in the audience for a social media panel composed of five of real estate’s best social media experts. When an agent stood up and said, “I’m on Facebook, Twitter and LinkedIn, but how am I supposed to make money with them?” sadly, there was not a direct answer from the panel.
Establishing connection consists of three basic steps: curiosity, communication and commonality.
Step 1: Curiosity
Are you curious about the people you meet? Do you inquire about what recreational activities they enjoy? What hobbies they have? How about where they like to spend their free time? What is their favorite type of food? Avoid very personal questions until you develop rapport. Do your best to learn what matters to them and what gives their lives meaning.
Step 2: Communication
Communication implies a two-way conversation. Engage your friends and followers by asking questions and commenting on what they post. This is the quickest and easiest way to get to know them. The law of attraction says, “We attract who we are.” The more the people in your database of friends and followers feel that you are like them in some way, the more likely they are to do business with you rather than someone else.
Step 3: Commonality
The moment you say, “I’ve done that” or “I have eaten there,” your shared experience or commonality forms the basis for building connection. People prefer to work with others who share similarities. You can observe this any time you have a party where new people meet. People will group themselves with those who share similar interests. The cooks and the sports enthusiasts always seem to find each other.
To make yourself more attractive to more people, stay up on movies, current events and sports. Take time to read major best sellers or business books. Know where to find the best ethnic food in town as well as the best-kept secret about where to shop. In most cases, a little bit of knowledge goes a long way in building connection.
There’s an old adage that says, “You get what you give.” When you give connection, you get connection. Connection ultimately forms the basis for all great business and personal relationships. Once people connect with you, you are no longer perceived as that “pesky real estate salesperson.” Instead, you become “my friend” who sells real estate.
NEW-HOME SALES REMAIN SLUGISH
New-home sales continued to fall in February as prices took another tumble, the Commerce Department reported Wednesday.
New-home sales dropped 16.9 percent last month–the third consecutive monthly decline. New-home sales were at a seasonally adjusted annual rate of 250,000 homes; economists view a 700,000 a year pace as healthy for the sector.
The median price of new homes dropped nearly 14 percent to $202,100–its lowest level since December 2003.
The new-home market has been pummeled by the sluggish housing market in recent years as it tries to compete against low prices and a huge inventory of foreclosures on the market.
A turnaround in the new-home market may not come for another three years, analysts say.
Residential construction continues to slow nationwide. Builders started on fewer homes last month than in nearly two years as building permits fell to their lowest level in more than 50 years.
SMARTER AGENT OFFERS MLS’ FREE MOBILE APPLICATION
Mobile real estate applications company Smarter Agent will build a free, branded mobile application for any interested multiple listing service, the company announced last week.
The consumer-facing app will be branded with the MLS name and logo, and all leads will be directed to the listing agent. In the last year, the company has built apps for agents and brokers from more than 250 MLSs, and “we’ve had a lot of interest at the MLS level for their own mobile solution,” said Shelly Schwartz, spokesperson for Smarter Agent.
The apps are designed for a variety of phone platforms, including the iPhone, BlackBerry, Android and Palm operating systems; and non-smartphone systems on Sprint, T-Mobile, AT&T and Verizon.
“For the MLS to get this valuable mobile app, it’s a requirement that its members are not charged additional fees. We can do this because we are (a) venture-backed mobile firm and we want the industry to go mobile to meet consumer demand,” Schwartz said.
“By offering our base product for free to an MLS, Smarter Agent hopes to reduce costs and frictions to brokers and agents as MLSs become more familiar with mobile, while at the same time providing a member benefit for MLSs.”
The apps can contain ads from local retailers, Schwartz added, and “if these are revenue-generating, it is shared with the MLS as auxiliary income.”
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