Informed Investor Alliance
Gorgeous Newport Beach, CA – an ideal retirement and vacation spot for so many. Balboa Peninsula is seeing lots of changes this year – a new marina going in, lots of new restaurants and shops, multiple properties adding 2nd and 3rd stories – the area is truly in a ‘build up’ phase similiar to what we saw with Huntington Beach 10-15 years ago.For many, the “Newport” lifestyle is far out of reach. Currently there is only ONE lonely condo on Balboa Peninsula under 1 million dollars, and it’s HOA is almost $800/mo – OUCH! Is there anything affordable? Are there any opportunities? There sure are. Lots of times with the higher end areas, buyers will opt for a multi-unit property as a stepping stone to get up to their McMansion. They live in one unit, and rent out the other(s) so that the mortgage becomes affordable. Many property owners keep the multi-unit forever, because rental rates on the peninsula can be insane. Newport Beach vacation rents range from $150-1000 per NIGHT, so you can see the potential a second unit could have on your mortgage payment! If you don’t like the vacation rental crowd, you can still rent on a 6 month or 1 year lease for a minimum of $2000/mo, even if the unit is the size of a closet without a garage or parking. Ya, Newport Beach CA is that expensive and exclusive.
Here are the 3 best property duplex deals on Balboa Peninsula right now:
2 BR/1 BATH Lower unit
2 BR/1 BATH upper unit
1,900 sq ft
2,666 lot size
Situated in the bustling area of the peninsula, this duplex is walking distance to shops, beach, harbor, nightlife, and a ton of restaurants. It is only one block to the sand.
2 BR/1 BATH Front unit
2 BR/1 BATH Rear unit
2,119 sq ft
2,178 lot size
Harding is a quiet, interior peninsula street (rare!) walking distance to the Balboa Ferry, Fun Zone, harbor, beach, shops, bars, Sunday Classic Car show, Catalina Flyer and Balboa Pier. Such an ideal location. A tear down recently sold a couple doors down for about the same price.. so this property also offers big opportunity.
2 BR/2 BATH unit
3 BR/3 BATH unit
2118 sq ft
2563 lot size
The only available peninsula duplex that offers units with more than 1 bath, this cottage style property is on the ocean side of Balboa Blvd with bigger units than the first two options. It’s the closest listing to the new marina under development, and it’s still close to the Newport Pier, harbor, shops, restaurants and nightlife.
Balboa’s Best Deals
If you’re interested in more properties in Newport Beach, or Balboa Island’s best deals, just give us a call toll free at 877-230-3211, or tweet @AngieWeeks or @AskAngieTeam with your questions so we can get details. You can also register your own property search through our website at: http://properties.askangie.comRead Full Post | Make a Comment ( None so far )
Appraisers…..we love to hate them. They scrutinize your house, call your ‘baby’ ugly, and they tell you it isn’t worth as much as you would like. But they are a critical part of every real estate transaction when you’re getting a loan, so we have to learn to speak appraisal language. What does an appraiser do, anyway? In a nutshell, appraisers determine an unbiased price your property is worth at any particular moment in time. They do this by pulling ‘comps‘ or comparable properties near you, and then factoring in upgrades and features to nail down a property price. The bank hires an appraiser to confirm the loan they are about to give you is on a safe, solid, properly priced property. This week we had the pleasure of hearing long time Laguna Beach appraiser Mary “Vicky” Wilson tell us how we can get closer to the right numbers. As an agent in the business 11 years, some of this info was totally new to me! I’m sure you’ll learn a few things too – so read on :)
First off, appraisers take a completely factual and non-emotional approach. So to get on the same page with them…you’ve gotta use your head, not your heart. Every price adjustment and comparable property needs to be validated with a series of facts behind it, not just thoughts or feelings.
Basic guidelines Orange County Real Estate appraisers follow:
- **Appraisers do NOT NOT NOT use a price per square foot average.** Don’t even try to value your property like this. You may be able to justify it to the buyers agent, buyer, and yourself, but the appraiser isn’t buying it, and they give the bank the green light needed to lend the money needed & close this deal. Now, lots and land are an exception to this rule, but the main dwelling is NOT.
- Comps must be reasonable substitutes. ie single level properties vs 2 story properties are NOT comparable. Read that again because it takes a minute to sink in. SERIOUSLY?? The 2 story that is 3 doors down is not a comp if you’re a single story??? Notsomuch in the eyes of the appraiser. Be careful not to price a less desirable model in a neighborhood the same as the most desirable if they differ in stories.
- To follow along these lines, lenders don’t want an appraiser to compare properties that are 15% plus or minus in size. If you are the smallest model, you may not be a comp with the largest, and vice versa.
- Lenders require 4 closed sales AND 2 backup or pending sales that support the value opinion & your price tag. Pay attention to active, pending, & backup listings because the appraiser is! They are looking for upward or downward trends in your local market. One high closing in your area won’t help you, remember FOUR closed properties are needed, plus 2 more that are under contract.
- Did you know there are only 17-20 line items on an appraisal? Appraisers stick to the cold, hard facts.
- L O C A T I O N is the #1 consideration. Location also trumps distance from property. So if you are the only ‘ocean view’ in your community, an appraiser may go to a neighboring community to pull other ocean view comps instead of other non-view properties in your same neighborhood. Same would go for a ‘corner lot’ or ‘end unit’ location.
- Time is of the essence. Appraisers like 3-6 month old closed comps, not more than 1 mile away. Pull up this data before you price your property so you are in line with the realities of today’s market.
- No, your converted detached garage, pool house, or Mother In-Law suite is not part of the square footage of your property. Ever. Rule of thumb: If you have to walk outside the main structure and have air or water or wind touch you then it’s not part of the square footage :( Furthermore, to be considered square footage, permitted improvements must be above soil grade & under the main roof. Sorry, but your cool casitas or underground grow and wine rooms can be appraisal line item adjustments, but NOT included in the square footage.
- .75 bath (toilet, sink, shower) is counted as a full bath in appraisals!!!! .5 baths with no tub or shower, on the other hand, are only noted as .1….so if your property is 5 full and 3 1/2 baths… it’s a 5.3 on the appraisal; not 6.5.
- Appraisers only have 48 hours to send their appraisals in, and they get paid less than $500 per report. Banks have high expectations and short timelines, so this is where a good agent comes in to assist your appraiser in understanding your home’s true value, quickstyle. More agent tips coming if you keep on reading….
- The market will *usually* pay back 50-60% of what you spent on upgrades!!! Sellers who try to add the entire price of remodels or upgrades into a purchase price always end up disappointed. Remember this ratio and come to terms with it now.
- If you do have an unpermitted addition, appraisers will ask: Does it have intrinsic value to the property? Is the addition positive or negative to the overall home? How is the condition? Remember, non-permitted additions won’t count toward square footage, ever, but it can be added as a line item to the overall valuation.
Tips for Realtors and homeowners to better work with appraisers:
- Be present at the appraisal appointment with a comp packet. Or email it early. The appraiser is in the field NOW, not in 3 hours when you get back to the office and your email. Don’t expect appraisers to drive back to see your comps. Make sure to support upward and downward trends with comps and a possible market report, too.
- Inform – appraisers need to know what was upgraded and how much was spent. Readily offer full access to everything.
- Don’t approach an appraiser negatively or with an attitude if you don’t agree with their valuation.
- Don’t say: “You should have no problems with the value”. Famous last words.
- During follow up: don’t ask the value, they can NOT tell you the number directly. Instead ask: “Did you find any problems with the home that may be an issue?”
Wanna Ask the Appraiser more specifics?
Want an Orange County Market Report and professionally pulled comps?
Contact the AskAngie team and we’re happy to help! You can reach Angie direct at 949-338-7408. Or just email Angie@AskAngie.com or tweet @AskAngieTeam so we can help you get the research you need to sell your biggest asset for top dollar!Read Full Post | Make a Comment ( None so far )
As an Orange County Realtor, I can’t technically offer advice on taxes, but I always try to network and meet great tax professionals who can help our clients! Today I sat in on a great session by Irene Mack, CPA, and I wanted to share some notes and insight with you. Irene’s website is http://www.oc-cpa.com if you have any particular questions – she is always happy to talk taxes with you :)
Homeowner Tax Benefits
– Mortgage debt relief on up to 2 million loss ($1M if married / filing separate)
Will California extend our debt relief? The answer is still up in the air, but there is a bill on the table. This concerns many homeowners who are thinking about a short sale, so be sure to contact your legislators and let them know you want an extension!
Energy Tax Credits for Homeowners
– many have a $500 max lifetime credit
– some include on site installation costs, some don’t, so be sure to check
– must be on principal residence
– includes central air
– allows tankless water heaters
– energy star
California Short Sale Tax Benefits
Sb931 focuses on 1st Trust Deed, and ensures lien holders can’t come back to homeowners for deficiency judgement after the short sale.
Sb458 focuses on 2nd trust deeds, and this law came a little after sb931 to help homeowners steer clear of judgements from 2nd mortgages and HELOCs.
Equity Sale Tax Benefits
– No taxes on $500k profit for married couples
– No tax on $250k profit for single filers
Capital Gains Taxes
Will you be taxed if you sell for a profit? Yes, unless your profit is below the $500k/$250k mentioned above.
– Long term (1 year and one day+) is determined on your tax bracket
– It’s best to keep your home ‘long term’ when it comes to taxation
First Time Homebuyer Tax Credit
– 2008 credit – when your home is no longer your personal residence, the balance of repayment becomes due immediately instead of over 15 years, so be careful!
-2009-2010 credit – 36 months of primary residence is required, most of you are almost ready to move up with no penalties ;)
Wow!! Taxes are confusing!!! Make sure to consider your tax benefits and / or penalties when you go to sell your home in Orange County. Irene’s number is 714-957-6936 if you’d like more info.
Remember The Weeks Team is here to help you navigate through tough real estate waters. Be sure to call 877-230-3211 or comment here if we can help you in any way!Read Full Post | Make a Comment ( 2 so far )
If you are interested in what is to come in Orange County real estate, then listen up as Leslie Appleton Young has provided us with some great insights. We had the chance to attend one of Leslie’s recent luncheons, and she gave us great information we needed to know for the upcoming Real Estate shift.
As mentioned in our recent video summary on YouTube (embedded below), Leslie stated California Realty is a “Bright Spot in the California Economy; and that the bottom has been reached and is on its way up.” We also found demand is starting to grow, big time! 83% of Real Estate investors are buying to hold. 57% of homes in Orange County are recieveing multiple offers of more than asking. There are an average of 4.3 offers per property!!! Homes are flying off the market right now as well – the average days on the MLS is cut in half from a year prior. Southern California Median home prices are up 14.3 %. Things are looking much better for Orange County and California real estate in general…great news!!
Are you ready to get your Orange County home on the market and upgrade? Call The Weeks Team…877-230-3211
|SFH Resales (000s)||441.8||546.9||492.3||497.9||523.3||530.0|
|Median Price ($000s)||$348.5||$275.0||$305.0||$286.0||$317.0||$335.0|
f = forecast
The Weeks Team
949 – 338 – 7408
Mission Viejo Real Estate is selling like no other! Homes come on the market and are off just like that. Here are some of the stats for Mission Viejo Real Estate, but 1st I will allow you to view the meanings of each before anyone is confused as to what each stand for…
- Active - indicates the property is on the market and accepting buyer offers.
- Backup – means the home has technically accepted a buyer offer and is sold, but the buyer is still in his/her contingency period of due diligence investigations and full loan approval. California buyers get 17 days after offer acceptance to complete all contingencies and inspections.
- Pending – implies all contingencies have been removed on this listing and its only a matter of time until close.
- Closed – entails the buyer’s loan has funded, and title has officially recorded in the new owner’s name.
There are a few other status’ you may see:
- Hold – property is on hold and not being shown to new buyers for various reasons. (there are 36 of those right now)
- Cancelled – means the property listing was cancelled by the owner before a sale took place.
- Expired – indicates the listing agreement on the home for sale expired before a sale occurred.
- Withdrawn – similar to cancelled status, this property has been withdrawn from the market.
Current Mission Viejo Real Estate Statistics
Back Up: 154
Closed (last 30 days): 114
Now lets compare these stats with last years Mission Viejo home statistics.
Average Sale Price in Mission Viejo 1 Year Ago: $416,951
Average Sale Price in MV in the Past 30 Days: $428,500
Avg. Square foot price 1 year ago: $231.31
Avg. Square foot price Today: $280.77
Avg. Days on Market 1 year ago: 93
Avg. Days on the Market Now: 76
We are currently moving towards a seller’s market in Mission Viejo. There are an average of 4.5 offers for every one property, and we are seeing properties sell in 1 day or even before they hit the MLS!! Now is a perfect time to move up and get more square footage for less than ever before. If your interested in upgrading your home, or adding to your Mission Viejo real estate portfolio, please contact The Weeks Team 888-281-7665 for more info on how you can take advantage of this ideal real estate opportunity!Read Full Post | Make a Comment ( 1 so far )
Happy Memorial Day!! We hope you have a nice and relaxing long weekend planned :) Here’s an interesting email we received about homebuyer recovery from the folks at FirstTuesday.us and Barry Zanck, one of our preferred lenders. What do you think?
California Home Buyer Recovery
2005-2009 California economic development stagnates.
2007-2009 The Great Recession
2009-2010 The Federal Reserve takes direct control of long-term interest rates – all new mortgages are Fed funded by bonds.
2009-2016 The Lesser Depression, characterized by persistent slow job growth and low demand from home buyers, while dominated by speculators.
2010-2015 Home sales remains on a “bumpy plateau” recovery approximating their 2010 numbers. The state’s homeownership rate drops below 55% (state’s historic point of stability) to near 50%. Collectively, short sales, foreclosures sales and REO resales remain high.
2012-2013 The most likely bottom for home sales volume to users, followed by an extremely gradual sales volume recovery for lack of user demand. Apartment construction begins to rise noticeably in response to tenant demand.
2014-2015 Prior low pricing and low interest rates spark a bounce in home sales volume. This bounce is short-lived, as the Federal Reserve raises rates to control the pace of recovery and prevent momentum buying. Property prices keep pace with the rate of consumer inflation. Speculators holding SFRs acquired two or three years earlier begin to dump them
2014-2016 Home sales stabilize. Shortsales, foreclosures, bankruptcies and REOs remain high. 300,000-400,000 new jobs are created annually for a return to the December 2009 peak level. Generation Y begins to come of age and buy homes.
2016-2017 Full recovery mode for employment, home sales, then pricing. SFR construction rises, though no where near Boom-time heights.
2017-2018 Interest rates rise again.
2018-2020 Excess inventory of vacant homes finally returns to pre-recession levels. Generation Y begins to pick up homebuying activity en masse. Homeownership in California is at 50%.
2020-2025 Negative equity homeowners who refused to strategically default finally work their way out of debt and return to a stable financial status, the poorer for it.
2025+ Home prices return to peak levels of 2006. The lessons of the Great Recession forgotten, and home sales hedonism returns. The mistakes of the past are repeated and the cycle continues.
We agree that we are probably at the bottom right now, as we’re already seeing an uptick in California homebuyer interest, and a decrease in inventory. We disagree that interest rates will stay low until 2017…..although wouldn’t that be nice???! We also agree (unfortunately) that the lessons of the past will be forgotton by 2025, and the market will again cycle. It always does!
What do you think? Please comment below or tweet us @angieweeks or @weeksteam. Should you be interested in buying ‘at the supposed bottom’, please call us at 877-230-3211, and we’re happy to show you homes over this Memorial weekend!Read Full Post | Make a Comment ( None so far )
Just got back from OCAR’s annual meeting held at the beautiful Aliso Viejo golf course. I thought I would record a video update for you :)
I know you have comments, let ‘em fly!!Read Full Post | Make a Comment ( None so far )
Mission Viejo Book Signing – ‘Making the Most of Your Money’
Last week I visited the Mission Viejo Library to get a copy of what is supposed to be the best personal financial planning book on the market right now. Entitled ‘Making the Most of Your Money’, it was written by Jane Bryant Quinn. Honestly, I had never heard of Jane Bryant Quinn until recently, but she definitely is a highly respected voice in the money management community.
Jane got off to a light start, joking that she almost named her book ‘Making the Most Out of What’s Left of Your Money’. She agrees that the economy is in a bad place, adding that the government needed to step in in order to prevent a full-on depression. But this cloud has a silver lining – the economy is recovering. Nevertheless, we’re still feeling some economic aches and pains, which is why keeping our finances in mind and tightening up our ship is such a good idea.
Jane covered quite a bit of financial planning territory. Regarding our current bull market, she recommended diversifying accordingly. She also touched on inflation, predicting that fortunately this monster won’t go very high.
For the U.S. government’s role, Jane pointed out that Congress may soon be restoring the Paygo law, which is intended to control government spending. This, along with a tax increase, could significantly help our budget.
So how do savers and investors pick their way through the current financial wilderness?
First and foremost, according to Jane, get OUT of consumer debt. “Debt is like feeding your dollars to squirrels.” Do NOT make it normal. Debt and credit are not glamorous. Sure, they seem fun at first, but when it’s time to retire and your mortgage is soaring, the debt beast will likely bring you to ruin.
In the Real Estate arena, Jane cautioned that we shouldn’t expect the height of where we were in 2007 for many, many years. OK fine. Thanks for that. In general, home prices follow the inflation rate. Currently, consumers aren’t thinking of their homes as investments. But that’s OK. Because when all is said and done, according to Jane, it STILL PAYS to OWN a HOME!!!!!! But watch those HELOCs. Let’s get back to that concept of paying down our mortgage, people. Jane also advised don’t take a reverse mortgage until you’re in your 80’s, even though you are allowed to in your 60’s.
If you’re underwater on your rental investment, it’s probably a good idea to lower your rent to keep your tenants. You must be prepared for losses for years and years if you are a serious real estate investor. Make sure you have liquid cash flow. You can also consider short sale or foreclosure if the property is a huge drain. Talk to a professional Orange County financial planner and / or consider some by the book investment education.
As for stocks, Jane mentioned that she talked with many of the top financial masterminds all over the nation. Apparently, the majority of them have the bulk of their own funds in a broad market index, something like S&P…
She added that for young people, lifestyle funds are a good idea, even though they’ve received a bit of a bad rap.
Jane also stated a good formula for your retirement fund risk is this: subtract your age from 110. Whatever that number is, that’s the percent you should be investing in stocks. As you get older, this formula helps you safely transition into a majority of bonds and a lower risk portfolio.
There are so many valuable insights in this book, it was THICK! I’m sure ‘Making the Most of Your Money’ is truly a valuable guide to sound financial planning. But seriously, no matter how many books we read someone, who does financial planning for a living will always be better than we are, IMO. You should have a professional on your side. Just like you should in real estate!!
Speaking of property, if you would like your diversification strategy to include owning some Orange County Real Estate, I’m happy to help. Contact me at 949.338.7408 or firstname.lastname@example.org. Or follow me @AngieWeeks or @WeeksTeam. Happy investing – feel free to post what has and has not worked for you here!Read Full Post | Make a Comment ( None so far )
First let me wish a ‘Happy New Year’ to all. Yes, folks, 2010 is here. And with the new year, there promises to be a wealth of new opportunities emerging in the bustling world of Orange County Real Estate. So get up off your comfy couch and do what you’ve been wanting to do for a long time. Don’t let opportunity pass you by. Add that to your list of New Years resolutions right now.
So maybe you’re thinking about buying your first home. Perfect! If you’re an Orange County first time home buyer, the time has never been better. A major reason for such bright prospects is that there currently are a number of available incentives created to improve your overall experience.
If selling your home for the first time is on your mind, optimism is in order. Buyers are returning to the marketplace. So sellers rejoice! The market is definitely moving in the right direction. In fact, there are a number things going on that will make selling easier, from listing to close. If you’re worried about Uncle Sam taking a chunk, be aware you might be able to reduce your tax obligation with a few easy and yes, legal steps.
Perhaps you’re opting to make your first Real Estate investment. Believe it or not, there are well-focused ways to improve your financial future without getting an advanced degree from the school of hard knocks.
Indeed, the door of opportunity is opening wide in 2010. If you’re ready to learn more about the diversity of emerging Orange County Real Estate opportunities, I’ll be happy to help. Contact me at 949.338.7408. Or follow me @AngieWeeks or @WeeksTeam.Read Full Post | Make a Comment ( 1 so far )
So, you can’t find any decent REO’s, or you’re getting outbid.
And there’s not enough equity sales.
You want the 8k homebuyer credit.
You find youself here, fishing in the sea of short sales in Orange County.
You’ve already read our post about what every buyer needs to know about a short sale.
But you’re still stuck! Short sales won’t close in time for the 8K first time buyer credit, right?! Honestly, probably not 80% of them. But a small percentage will. What clues should you look for?
1. Check for the word “approved” in the notes. Short sales that have been approved by the bank can many times sell within 30 days. Its getting the bank’s approval that usually takes months.
2. Look for experience / feel of the listing agent or team. Do they respond? Are they on top of things? If the listing agent doesn’t know how to deal with the bank it can add months to the process. Go ahead, Google them.
3. Do you see Short Sale – Notice of Default on the MLS report ? This means the property is in process of foreclosure and the bank has filed a notice of default on the property. You’d think notices would be filed immediately, but many times the bank waits for 3, 6, or 9 months of no payments until filing the NOD. After the notice is filed, stats are very high that a foreclosure will occur within the next 90 – 120 days. On short sales with a NOD the bank has a little more motivation because they aren’t receiving any money from the current owner, and they are being offered in essence, a settlement and solution with your offer.
4. Check for Short Sale – offers submitted – this indirectly tells you the current owner has submitted the hardship package, because it usually needs to be submitted with the offer. That being said, I have seen this status used when agents had a lowball offer in hand but NOT submitted to the bank. It depends on the agent, and their ethics. This status is better than a short sale with no offers submitted, but you are still probably looking at at least 60 days and multiple offers when here. Not worth chancing for your 8K credit, we need to find you an approved short sale or one close to foreclosure. PERIOD!
5. Check notes for only one mortgage! We’re currently STILL WAITING for an answer to one of our “approved” short sale offers that was literally submitted in JUNE. (Its Sept.) The first “approved” the price, but the second loan had not approved their settlement, and the agent didn’t notate that detail in the listing.
Short sales are complicated, but we can help. Mostly by having the best Orange County MLS searches so you get new REO and equity listing emails the DAY they come on the market! We still recommend buying foreclosures or equity (normal) sales to have the best experience with today’s market.Read Full Post | Make a Comment ( None so far )
Thought you’d enjoy this real estate update from Suze Orman – feel free to post questions below!Read Full Post | Make a Comment ( None so far )
We love selling Laguna Beach homes! Today is absolutely GORGEOUS, and I am sitting at 637 Loretta Drive in Laguna Beach. The view of Catalina island is completely unobstructed… I can also see South Laguna, North Laguna, and Newport Beach from the wrap around balcony. Its so beautiful, I promise my treo pictures don’t do it justice but I will post below anyway.
Alright, alright. I’m big on views. I’m sure you want to know about the property… Its immaculate :) The trilevel offers 3 bedrooms, 4 bathrooms, 2 car attached garage and 2700 square feet. EVERYTHING is upgraded, Hardwood floors, granite counters, a nice corner fireplace and wonderful dining/living area to entertain, patios and balconies off of EVERY room, master bathroom with a perfect view of the ocean…definately somewhere you would want to check out.
Laguna Beach is ON SALE right now, there’s 3 active listings on Loretta alone. One is going for 4.2M, the other for 1.6M, and the one I am holding open today is asking 2.4M. What a range, huh? This is one of the reasons its so important to work with a Realtor, we can help you understand why the house next door is twice as much.
I’ll be here for another hour if you want to come and check it out – or I can schedule an appointment to show you any afternoon. I recommend to come check it out around sunset…it will be spectacular :)Read Full Post | Make a Comment ( None so far )
Special thanks to William Jordan, our favorite Orange County financial planner, for taking time out from his hectic week to help educate our clients on what is REALLY going on with the economy right now. Mike & I highly encourage all of you to call your financial advisors this week, and if you don’t have a financial advisor, go and talk to William at his Laguna Hills office – he rocks :)
It’s an earthquake!
This week, the financial markets were shaken with an earthquake unlike almost anything we have seen in our lifetimes! The one similar example is the infamous “black Monday” on October 19th, 1987. On that one day, the stock market dropped over 500 points for the first time ever. A decline of more than 25% which dwarfs the declines we saw this week.
So what do we do? Panic? Run for the hills? Convert your cash to gold and start buying ammunition? Of course not. But to hear it discussed in some circles, that’s exactly what should happen.
On Monday evening, I was interviewed on CNBC in the midst of the “AIG crisis”. Yet another massive financial firm experiencing financial duress. I was asked what my counsel was to people who have been told to “buy and hold”. The point I made was that this is a call to arms for people to get their financial houses in order. Too many people have been speculating financially, and the results are as we have seen.
For many people, including most of my clients, this was an expected though unwelcome event. We know that bear markets and financial downturns will happen. In fact this bear market has currently been less severe than the average bear markets we have seen in the past! It certainly doesn’t feel like it, but it’s true.
So what do you do? For starters, do a complete financial physical on where you are at. You need to examine your assets as well as your debts. Look in detail at your investment holdings, and decide if you need to make changes. Don’t make changes for just any old reason, but with a practical and well thought out plan.
As I pointed out in a separate CNBC appearance a month ago, this is a great time to sell highly appreciated assets and pay capital gains. Those tax rates are still very low historically, and are likely to rise in the future. You can use the proceeds to pick up some excellent investments that are trading well below their values.
Bottom line is, like in any earthquake, don’t panic! Stop and pick up the pieces. Make new plans moving forward, but make them with a clear mind and well thought out options. It’s a perfect time to meet with your financial planner if you have one, or find a new one if yours isn’t up to the task.
Earthquakes happen. Those who are prepared and don’t panic will be okay.
William Jordan, President of The Sentinel Group, Inc, is a well respected speaker and media resource for quality financial advice. He’s been interviewed by CNBC, Forbes, The Wall Street Journal and was a featured financial expert in Kiplinger’s September cover story. You can reach William Jordan at (949) 380-8600 or visit www.SentinelOC.com.
Yes, this is a blog about Orange County real estate. But this week Mike and I have invited a couple guest bloggers to get involved, because you can’t get real estate without financing and loans. Right now the media is all over what happened with IndyMac bank, and Fannie and Freddie. We want you to hear from local mortgage and financial EXPERTS, not just the media, what is really going down, and how it may affect you and your current home loan situation. The following info has been provided by Derek Beisner, one of our trusted OC CERTIFIED Mortgage Specialists. We encourage your comments, rants, and other expert opinions on this post too!!
Uncertainty in Financial Markets Could Cause Dramatic Rise in Existing ARMs at Next Adjustment
If you or anyone you know has an Adjustable Rate Mortgage, this is an important point to consider. Many ARM loans are tied to the London Interbank Offered Rate (LIBOR). In fact, there are six million loans in the United States that use LIBOR to determine the interest rate and as the name suggests, many banks use this rate to lend money to each other.
But, today, banks lack confidence that the money they lend will be paid back. In light of what has happened with Lehman Brothers, IndyMac Bank and others, as well as AIG, banks are requiring much higher rates on LIBOR to offset the added risk.
The Federal Reserve Left Rates Unchanged but…
The Federal Reserve met yesterday leaving the target rate unchanged at 2.00% but just like LIBOR the actual rate being charged by banks to each other is closer to 6.00%. This again suggests that those with ARM loans should consider a refinance into historically low fixed rates.
Financial companies have been under attack. IndyMac was the largest bank to falter in twenty years. What brought IndyMac down was their exposure to defaulting loans. This sapped investor confidence and drove down the stock price until they filed for bankruptcy.
Following IndyMac, we saw Fannie Mae, Freddie Mac, Lehman Brothers and Merrill Lynch succumb and were either forced into conservatorship, to close their doors, or to sell themselves. AIG, the world’s largest insurance company was also impacted, forced to make a deal with the U.S. government to stay in business.
What You Can Do Now?
ASK AN EXPERT! DON’T try to figure out this complicated situation yourself!!!! I’d be happy to go over your loan situation and help you understand how the recent events may affect you, and how you can best be protected. Additionally, chaotic times like these often present opportunities. I look forward to hearing from you.
Certified Orange County loan advisor
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