Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers

People look for the lowest monthly payment they can get on a car, on an apartment and on a house - often the lowest monthly rate, at least at the start of the loan, will be with an adjustable rate mortgage so a lot of folks jump on this in favor of paying a lower out of pocket than they would be paying on a fixed rate loan. This can work very well in some situations, but with the current state of the economy in Canada - this may not be the best option for a first time home buyer.

When Adjustables can be good

If you are only planning on staying in your new home for a very short period of time and the current trend with adjustable rate mortgages is substantially lower than that of the lowest fixed rate mortgage that you can qualify for then the adjustable rate mortgage could work out well for your situation - or if you're exceedingly confident that nothing will make the rates rise during the duration of your stay at the home it could also be the better option - but this is practically impossible to predict.

Some people don't mind the unpredictability that goes along with an adjustable rate mortgage, they don't get flustered with every little fluctuation of the market and can handle the up and down trends with confidence that their rate will rebound. Owning a home can be a stressful situation, especially if it's your first home - if you don't think you can handle the uncertainty of your monthly payment, which could constantly be going up and down, along with all of the other common stresses that go along with home ownership - an adjustable rate mortgage may not be the best for you.

The Pros of a Fixed Rate Loan

With a fixed rate mortgage, you know exactly what you are in for - there will be no secrets or surprises when your statement comes, you bill will remain the same each month. For a first time homeowner this can relieve a lot of the stress associated with the added responsibility of paying for a home. Before you sign your name to the dotted line you can sit down with all of the facts and figures and develop a budget that you are confident that you'll have no trouble paying. With an adjustable rate mortgage, this stability and confidence is impossible to have - sure your rate could go down, but if it goes up will you be able to still pay it? With a fixed rate mortgage this is a question that you won't have to worry about answering.

Some people will say that being bound to an interest rate for the life of your loan can be a bad thing. The truth of the matter is, that rates often do fluctuate - they go up and down, but having a fixed rate loan isn't like a life sentence in prison without the possibility of parole - if rates go down and stay down, you can consult your mortgage company about refinancing your loan to bring your current interest rate down. You may even be able to restructure your loan to pay less each month, while taking some equity out for necessary repairs or improvements at the same time. Locking yourself into a low rate should feel like a safety net, if you start seeing the rates drop after you've had your loan for a while - by all means, refinance and save yourself the money, but if the rates start to climb as the often do, you can rest easy that you are locked in at a good rate.

Your home should feel stable and secure, and with the current state of the economy in Canada things are very unpredictable. The best bet for a first time homebuyer is to compare mortgage rates for the lowest rate the can find and to lock it in for the duration of the loan - that way you'll be safe from any disasters that may occur in the near or distant future and free to make changes at a later date should they become necessary.

MICHAEL MERGELL (317) 645-8717 MICHAELMERGELL@REMAX.NET

Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers

 Before you finalize your first purchase as a property investor, you’ll have to ensure that your investment property financing is set up properly. The choices you make about financing an investment property make all the difference in the world in terms of the total cost of the property, as well as to the net capital gain which you will have as a result of your property investment activities. With this in mind, you’ll want to examine all of your investment property financing options and choose well from among them.

Do you intend to keep the property as a long-term investment or do you intend to improve it and sell it relatively quickly? Your purpose in purchasing the property will influence the type of financing for investment properties you choose. For example, if you intend to sell quickly, you need to establish financing which will not charge you large fees to pay out your loan early.

The regulations governing financing investment properties vary from state to state, so you’ll want to look into what the obligations will be on you. A fixed rate mortgage is generally a good idea for financing investment properties, as this will ensure stability and make planning for your costs much easier.

You should always have a plan B when it comes to financing an investment property. If you find your lender backing out of the deal, you’ll have an alternate source of investment property financing that will allow you to proceed with your investment. Due to the current state of things in the financial world, this is especially important.

Before you go about trying to secure financing for investment properties, you’ll need to have a good credit rating. This will let you secure financing for investment properties on the best possible terms. The best way to do this is to get yourself in some debt and manage it well. For example, use your credit card rather than cash and keep your balance paid off. This can build you a good credit rating in short order.

Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers

The last situation that a homeowner wants to face is losing their home in the foreclosure process. That is why I wanted to provide you some tips on how to avoid foreclosure. We all take our homes seriously and we love the fact that we have a roof over our heads.

In case you have no idea what a foreclosure is; it basically states that when you purchase your home you enter a contract with the lender that you will be able to pay back the loan that they lent you. If you fail to repay the loan then the bank can step in and take back the home. Even though banks do not like to foreclose on the property. It is a way to protect them from losing money in the long run.

Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers

If youre looking to sell your home fast, youll need to attract as much attention as possible. A real estate agent can help, although he can only do so much. He can show your home and help to get it out there to buyers, although he cant make it sell. If you want to sell it fast, youll need to do some work yourself. If you put the effort into selling your home fast, chances are that you will.

The quickest way to sell a home is by staging it. Staged homes literally invite the buyer in, making him feel right at home. Staged homes are also appealing both inside and out, and are more or less ready to be moved into immediately. They dont sit on the market for long at all, yet they bring a top dollar sell. If you are familiar with staged homes - you should know that they are among the fastest selling homes on the market.

MICHAEL MERGELL (317) 645-8717 MICHAELMERGELL@REMAX.NET

Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers

Making a quick sell has a little to do with luck, but it has more to do with how you market your home and present it to buyers. The following tips will help you sell your home fast:

• Market your Home - Marketing your home involves a lot more than placing an ad in the paper. You need to place ads, post signs, host open houses...Basically, you need to do everything possible to get people in to look at your home. Host a neighborhood fundraiser in your home. Put your home on the auction block. Do anything it takes to generate attention.

• Hire a Real Estate Agent - When it comes to marketing your home, the greatest asset you can have on your side is a real estate agent. A real estate agent can present your home to the largest amount of potential buyers. Yes, you should continue to market your home yourself, but having the help of an agent can take a lot of the pressure off.

• Spruce It Up - No one wants to buy an ugly house or a house that doesn't leave a lasting impression. Buyers usually visit numerous homes before they make a decision. Make your house stand out by giving it a fresh coat of pain. Make all necessary repairs and give it some curb appeal.

• Stage for Success - In order to sell quickly, you need to stage your home. Take out all clutter and items that you have stored. Put these in storage. Leave only the basic necessities. Furniture and decorative items are a must. However, if yours are worn, borrow some other items to change the "feel" of your home.

• Set a Competitive Price - Homes that are sold for less than their value sell quickly. If you have some room to negotiate, lower the list price of your home. If your home is a bargain, it will not last long on the market no matter how unstable it is.

MICHAEL MERGELL (317) 645-8717 MICHAELMERGELL@REMAX.NET

by Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers

I have been given some VERY good news that just can't wait till monday

Here are some some-what detailed and tentative guidelines for Fannie Mae's return to a 10 financed property limit.  I was tipped off early this week that Fannie was going to make this move, but I had seen nothing yet from within Countrywide.  I did find that Fannie Mae is indeed working on rolling this out.  This is tentative, but I like to try to be on the leading edge of things as much as I can be...

1.  The projected date for the first loans eligible for purchase by Fannie Mae looks to be March 1st, though we&other lenders may not be working in "real time" with that date.  These things can be complicated.  

2.  There are serious strings attached when you get to the 5 - 10 range of financed properties.  If the property being purchased (or refinanced) is for investment there will be limited loan-to-values, credit score requirements, and some SERIOUS reserve requires.  Reserves are liquid funds verified that are looked at as the number of months those dollars would translate into making mortgage payments on the properties owned by the borrower.  It looks like they would need to document assets to cover about six months of payment on essentially all their mortgages, not just on the subject property.

3.  I do not see ANY allowance for Cash-out refinances in these guidelines, so don't expect to be cashing out homes under these limits.  That includes getting a home paid for with cash to make the purchase happen quickly & expecting to get your cash back with a mortgage after the fact...not going to happen.

4.  For single unit homes, it looks like the LTV max is 75%.  It appears to be 70% for 2-4 unit homes.  Both require a minimum 720 credit score.

5.  Other notes:  NO bankruptcy or foreclosure for 7 years.  NO mortgage lates (30 days or greater)  in the last 12-months.  Everything fully documented, regardless of what the automated underwriting says...treat it like a manual underwrite with MAXIMUM documentation.

In other words, yes, Fannie Mae is planning to go back to the 10 financed properties limit, but you had better get your borrower prepared for a ride, and they had better bring their "A game".  Investors better be ready to jump through hoops on this one and be prepared for probable price adjustments.

None the less, 10 is better than 4. Sell On!!!

 MICHAEL MERGELL (317) 645-8717 MICHAELMERGELL@REMAX.NET

by Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers

FHA's Streamlined 203(k) program permits homebuyers to finance up to an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this new product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser.

Call me for more details.

by Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers

Renting a home or apartment is commonplace. It's clear that some people simply just can't afford to buy their own home because of the down payment required. With FHA financing back in the mainstream, as little as 3.5% down payment can get you into your home!

My key mortgage partners have invested a lot of time learning the ropes of FHA financing and have taught me to understand that it represents an unprecedented opportunity for first time homebuyers RIGHT NOW. Most renters don't realize how easy the cost justification is for owning versus renting. Once I'm able to clear up the down payment challenge by introducing FHA financing, then the next hurdle is to show the $ justification for buying. I am pleased to say that I can confidently turn any renter into a homeowner by showing how much more money they are really spending by renting versus owning. Just let me know if you'd like me to take you through this.

The problem with renting is two-fold: you will never get back what you pay towards your rental property since you don't own it (and you're simply paying the landlord's mortgage) and secondly you will have restrictions imposed on you that you would not have if you owned your own home. The cost of buying a home isn't cheap. We all know and appreciate this fact. Depending on the location that you choose within the Indy area, the costs can vary.  But the market is so soft right now that there are some amazing deals to be had.

When I work with first-time homebuyers, I always try to set a framework for homeownership. It's not uncommon that first-timers that come to me, have it in their heads that the house they buy has to be their ideal house...like the one they grew up in. A house they will live in for a zillion years. Here's the paradigm shift I try to instill: your first property will more than likely be deficient. Buy something you love that's imperfect. The key is to get in sooner than later so you can enjoy the tangible and intangible benefits of homeownership. Wait out the market cycle. Can you live in it for 3-5 years? Then buy it! In the meantime, save as much money as you can, build equity passively and proactively, and get lots of raises or bonuses at work. What I mean by building proactive equity refers to what I mentioned earlier-buy a place that's imperfect. This way, you have the opportunity to enhance the property's value by making improvements. Owning your own home is about benefiting from long term personal and financial satisfaction. Ownership means security and having the opportunity of creating the dream home the way you have always wanted it. Home ownership is also about benefitting from the freedom of having your own adult-person investment.

A key point of emphasis lies in being armed with the right kind of help to assist you in choosing which home is right for you. Talking to someone who can help you know what your options of owning are, without a doubt, is the right step to take. In the Indy area there is an abundance of houses and condos to choose from. Property prices during '08 and 09' have steadily dropped, and it's truly an ideal time to buy your dream home. Normally the best thing to do is to talk to a great Realtor who can give you a realistic idea of what's possible for you. Naturally, what's most important are your own needs and wants. Let's see if it's realistic for you to be a homeowner! Give me a call or drop me an email!  The type of lifestyle you envision will help us determine if buying is a feasible option.

MICHAEL MERGELL (317) 645-8717 MICHAELMERGELL@REMAX.NET

  

by Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers

When a company falls on difficult times, one of the things that seems to happen is they reduce their staff and workers. The remaining workers need to find ways to continue to do a good job or risk that their job would be eliminated as well. Wall street, and the media normally congratulate the CEO for making this type of "tough decision", and his board of directors gives him a big bonus.

Our government should not be immune from similar risks.

Therefore: Reduce the House of Representatives from the current 435 members to
218 members and Senate members from 100 to 50 (one per State). Also reduce remaining staff by 25%.

Accomplish this over the next 8 years. (two steps / two elections) and of course this would require some redistricting.

Some yearly monetary gains include:

$44,108,400 for elimination of base pay for congress. (267 members X $165,200 pay / member / yr.)

$97,175,000 for elimination of the above people's staff. (estimate $1.3 Mil in staff per each member of the House, and $3 Mil in staff per each member of the Senate every year)

$240,294 for the reduction in remaining staff by 25%.

$7,500,000,000 reduction in porkbarrel ear-marks each year. (those members whose jobs are gone. Current estimates for total government pork earmarks are at $15 Billion / yr)

The remaining representatives would need to work smarter and would need to improve efficiencies. It might even be in their best interests to work together for the good of our country?

We may also expect that smaller committees might lead to a more efficient resolution of issues as well. It might even be easier to keep track of what your representative is doing.

Congress has more tools available to do their jobs than it had back in
1911 when the current number of representatives was established. (telephone, computers, cell phones to name a few)

Note:
Congress did not hesitate to head home when it was a holiday, when the nation needed a real fix to the economic problems. Also, we have 3 senators that have not been doing their jobs for the past 18+ months (on the campaign trail) and still they all have been accepting full pay. These facts alone support a reduction in senators&congress.

Summary of opportunity:

$ 44,108,400 reduction of congress members.

$282,100,000 for elimination of the reduced house member staff.

$150,000,000 for elimination of reduced senate member staff.

$59,675,000 for 25% reduction of staff for remaining house members.

$37,500,000 for 25% reduction of staff for remaining senate members.

$7,500,000,000 reduction in pork added to bills by the reduction of congress members.

$8,073,383,400 per year, estimated total savings.

Big business does these types of cuts all the time.

If Congresspersons were required to serve 20, 25 or 30 years (like everyone else) in order to collect retirement benefits there is no telling how much we would save. Now they get full retirement after serving only ONE term.

MICHAEL MERGELL (317) 645-8717 MICHAELMERGELL@REMAX.NET

by Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers

We all have been hearing about the new "Stimulus Package" that congress is "going" to pass, right. If you haven't you must never turn on your tv, radio or log onto the net. It seems that congress is clogged again with arguments between the two parties, separate agendas and a disagreement between what's best for the American people.

Three things need to be evaluated as most important. Jobs, Real Estate and Small Business. They all agree publicly that the housing or real estate market is at the heart of a recovery (as it has always been and has pulled us out in the past). I once read that for every one home sold 27 jobs are created. From real estate agents to title companies to movers to inspection companies to contractors to... and so on and so on.

It always blows me away that we even let these politicians decide such matters..business matters. Virtually all of them have Never been in business for themselves much less understand the very principle of making a profit.

So congress agree on something and do it quick. our wasting our time and our money. More on congress cut back suggestions from me to come, next time.

MICHAEL MERGELL (317) 645-8717 MICHAELMERGELL@REMAX.NET