History of Housing Market

A new video from the John Burns Team about the current Real Estate market cycle. It's a general overview cartoon and worth the time to watch plus a nice history lesson of housing from 1970 to today.

How Did My Loan Balance Increase?

Wow~! Take a look at these stats on negative amortization (or "pay option") mortgages in today's L.A. Times. This real estate stat is a bit scary - if the individual is unaware of the possible effect of just paying the minimum payment each month.

New negative amortization mortgages in California:

• 2003 -- 8 of every 1,000
  
• 2005 -- 1 in 5
  
• 2006 -- 1 in 3

Note: To all with this type of loan - Negative amortization starts when the mortgage payment is smaller than the interest due and that causes your loan balance to increase rather than decrease. Not sure if your loan has negative amortization - usually you can find an 800 number on your statement each month to call and ask questions.

Something's Fishy

What is the best way to protect yourself from fishy real estate deals.


How do you know that you're not being taken advantage of when you get involved with a real estate transaction? The best answer might be to maintain a "buyer beware" mentality. Ask all the questions you can think of, read all the small print, check references. Also you could call your state attorney general's office if something seems too good to be true, or doesn't feel right.

The good news is that the IRS is taking real estate fraud crimes seriously. The IRS started 309 fraud cases against individuals so far this year in 2006. Real estate fraud continues to grow and with the increase of home values the sleezbag scams will most likely not go away. There's an old saying that proclaims - "To find the problem find the money." Well it applies with real estate, especially when dealing with loans. In an attempt to vent some clean air into the rotten tank of real estate scams - I've listed a few below:

Equity Stripping: A lender convinces you to take out a home equity loan that you can't really afford by padding your income on the application to help get it approved.

Hidden Loan Terms/Balloon Payments: To avoid having your home foreclosed after falling behind on the payments, a new lender helps you refinance by offering lower monthly payments. But read carefully.

Loan Flipping
You feel you could use some extra money, so a lender convinces you to refinance. A few months later, he offers you more cash by repeating the procedure. But with each loan, you incur more charges in points and fees. You'll have a pile of cash, but the pile of debt is much larger and must be paid back with interest.

Home Improvement Loans
A contractor offers to arrange a loan through which you can pay for a remodeling or a major repair. After he begins the work, you're asked to sign a bunch of papers--he'll threaten to walk off the in the middle of the job if you don't.

Credit Insurance Packing
At a loan closing, the lender "packs on" credit insurance you didn't ask for at additional cost to you. Often, the lender casually tells you the insurance is a "standard" part of the loan.

Mortgage Servicing Abuses
You receive letters from a lender shortly after taking out a mortgage explaining that your monthly payments will be higher than previously discussed due to escrow payments for taxes and insurance.

Signing Over Your Deed
A distressed homeowner having trouble keeping up with the mortgage is pursued by another lender, who tells him it's necessary to deed the house over to him in exchange for new financing. Often, the money never comes.

Forged Deeds
Undeveloped land is prime fodder for a forged deed: A scammer takes over a piece of land illegitimately, then flips it before he has to repay the loan.

Straw Buyers
This scam involves a home owner who sells his property to an accomplice. The seller forges appraisal documents to help inflate the value of the house he is selling to the fake buyer. The bank lends money to the fake buyer, then he disappears--and gets a cut of the profits from the seller.

Lease Options
Landlords lure wannabe homeowners by signing them up to rent a home with an option to buy.

Also check out CNNMoney.com - they list some of the most common and destructive swindles to watch for when looking at home repair.

Sybil Pryor thought she was getting a deal. Early last year, a contractor showed up at the 77-year-old's Oakland, Calif. home and offered to install a new roof and new siding. The cost? Not to worry, he told her. All Pryor had to do was sign a few papers. Big mistake. The documents turned out to be for a home-equity loan, one that authorized a bank to pay out the proceeds of the loan -- more than $90,000 -- directly to the contractor... "It's awful, but I probably see 20 of these cases every year," says William Denny, the deputy district attorney on Pryor's case.

How much house can I afford?

Most often the first step a Realtor takes when working with a homebuyer is to get the consumer Pre-Qualified or Pre-Approved with a lender. This process is used to determine your buying power and will target your home search to be within a affordable price range. Moreover a Pre-Approval Certificate together with a solid purchase agreement contract to the seller shows you’re a qualified and serious buyer that will likely not fall out of contract before the close of escrow. The number 1 reason why deals "fall out" of escrow is that the buyer is turned down for the loan amount needed to purchase the property. This is why a Pre-Approval Certificate is a great tool to help ease the concerns of the seller.

How much house can you afford?
Home affordability calculator

Should I Rent or Buy a house?
Buying vs. Renting