Borrow Smart

HARP - Housing Affordability Refinance now at 125%

Download 125_LTV_release_and_fact_sheet_7_01_09 as a PDF File.

As of July 1st, the HARP program is now allowing consumers who are upside down on their equity (about 13 million according to Moody's Consumer Research) to go up to 125% of their home value to take advantage of lower rates...  Stopping the foreclosure rates is key to stabilizing housing and finding a 'bottom' to the market.

What does this mean for you?  If you own a home that is worth $200,000, and you owe $250,000, you can still refinance to much lower interest rates.  One key difference to this new initiative, is the goal of having home owners reduce their term from 30 years to a lower 25 or 20 year term.  The shorter term might keep the house payment about the same, BUT provide a home owner a break even recovery in 4 to 5 years, versus the 10 plus years that is forcing many homeowners to throw in the towel.

Want to watch a video on the new program, become a student at NIFE and watch a short video on all the ins-and-outs of the new HARP program.  It's FREE, and you can refer the video to friends after you watch it.

New Predictions Out on Housing Bottom

Case/Shiller has new predictions on their housing bottom... and it means we still have a ways to go if they are correct.

Making Home Affordable Article for Ameriprise Financial

Making Home Affordable:  I had an opportunity to write a guest article for Ameriprise Financial's ViewPoint newsletter.  Check it out:  View Article

Lifestyle Inflation?

 

Isn't it amazing, that we feel like we are working so hard for less.  Yet, we've said before that the richest man in the world couldn't afford air conditioning.  Who was that?  It was Getty, and air conditioning wasn't invented in his life time.  We take it for granted now don't we?  It would take us almost 8 months of work to afford the same material goods in 1950, versus less than 2 months today.  You would think we would be awash in 'free time', but our lifestyle inflates to absorb the new efficiencies.

Remember, the two industries that cost more today than in 1950, are Healthcare and Education.  It might pay to focus in the future on how you can better align with those two industries.  Cost may come down on goods because they are discretionary, but if you have to choose between a new refrigerator and an appendectomy I would guess the debate will end quickly as to how you'll spend your money. 

Education?  You can become an educator, but I'd start with personal education.  The cost of ignorance is getting steeper, and as Benjamin Franklin says:  "An investment in Education pays the greatest interest."

HASP - Housing

Download NIFE - hasp q&a

The new program begins March 4th, this top Q&A helps to answer many of the questions, including the Moral Hazards of rewarding only those who aren't/can't make payments.

One key relief in the new plan provides a way for people who can't refinance because of lower value to refinance a Fannie Mae or Freddie Mac loan after March 4th if the combined first and second mortgages do not exceed 105% of the house value on a primary residence.  This makes way for those who have low/no equity to lock in possible 37 year low interest rates. 

To find out if you can refinance, contact your lender after March 4th.

*thanks to John Thompson for this post.

How I lost, and then found, a few thousand bucks!

I have to say, I'm pretty skeptical about things like this, but I received a call a few months ago from a company saying that they'd found money for me (actually my old mortgage company), and they'd secure it for me for 35% of the claims received. 

I did a little research and found this site:  www.unclaimed.org.

It is a national site where I could search for claims by state.  I searched my name, and my company name and it confirmed that I did in fact have money from a 1999 personal tax refund, and 1998 insurance claim, a 2000 surety bond refund, a 2003 phone bill credit, and other misc.

I spoke with the NC Treasurer today confirming my check was being sent for all my 11 claims spanning almost 10 years. 

I then searched the site and quickly found two friends whose companies had similar claims that they could file for now at no cost, which gave me an idea.  If you are a financial advisor, lender, you might consider having your assistant search for your clients, put in one name after the other, and then you can bring them the good news that there is money waiting for them by simply filling out a free online claims form.  Good news can be hard to come by these days, if 10 of your 100 clients had a few hundred dollars, or a few thousand, you've got a great story for them to tell about you.

TARP 2.0 / Key Emerging Factors

In the future it looks like banks will be subject to a "stress test" before receiving new money... it the bank isn't healthy enough to stay the course, and lend money, they don't get it.  Like handling 50 victims in a trauma ER, if the patient is likely to die the doctor might be better off not dispensing antibiotics.

Treasury will give $100 billion of the remaining $350 billion left in the Troubled Asset Relief Program directly to shore up bank capital.

New lending program is being created that will leverage up to $1 trillion to bring down borrower costs. Additionally a new $50 billion foreclosure mitigation program could be announced in the new two weeks.

A "bad bank" will buy problem assets. What's interesting about this?  To avoid putting taxpayers on the hook for the large expense, the Treasury plans to use private capital to buy the assets.

The big problem still remains, how to you price and value these assets?

They are planning to be more transparent, I recently signed a petition to have full disclosure of all funds to the public so there is better accountability of where the funds go.

"This comprehensive strategy will cost money, involve risk, and take time," Mr. Geithner said. "We will have to adapt it as conditions change. We will have to try things we've never tried before. We will make mistakes. We will go through periods in which things get worse and progress is uneven or interrupted."

Now that is a statement of the obvious, but worth putting on the record.

How Much Land? Leo Tolstoy

Enjoy reading books, but find yourself a little time starved?  This classic short story by Leo Tolstoy is a 15 minute read, and well worth the investment.  It shares a personal and financial message that is so timely, about the pursuit of money and stuff, that I had to share it here.  I really recommend you share this story with a high school or college student you know.

Download NIFE - how much land

Can the U.S. Spend US back to Prosperity?

It makes so much sense.  We 'overpledge' our future time by spending money we don't have, we borrow for wants, not needs, and eventually we pledge more time than we have, we can't keep up, we don't have the money to keep up, and things collapse.  The U.S. seems to think that the way it will get us out of this mess is to spend for us, since we can't spend money we don't have, and can't borrow. 

I've heard recent numbers citing an average spend so far of over $4,500 per U.S. Citizen for the bailouts.  That's money being spent for you to stimulate 'our' economy.  We've gone from being Citizens, to Consumers, and now we are trying to spend our way to Prosperity.  Estimates say we could average $35,000 per U.S. Citizen before this is over.

Fred Thompson says it better here than I ever could.  Please invest 5 minutes of your time and watch this witty commentary on an interesting approach to fixing our economy.

We have a new project, at www.whatisenough.org.  Take a few moments and explore it with us, take the pledge to 'Enough'.

Sign of the Times

It would make things much easier if corporations would place corruption and personal greed right up front in their marketing.

This logo was sent to me by a friend, and if you don't think it's funny, read it again.