Why Real Estate is the Best Road to a Prosperous Future

There are a number of reasons to invest in real estate. In this post, I will attempt to logically explain why investing in real estate is just as wise as investing in an IRA, 401-K, stocks, CDs, or any other platform we seek to collect compound interest. Let’s begin!

Real Estate is a dependable and growing flow of income. Weigh the amounts of income (rents, dividends, and interests). Investments that yield superior flows of income will show higher rates of long-term appreciation. Investors never buy assets. They buy flows of future income.

· Property versus Stock: Average yield of stock (S&P 500) is 1.5 to 2.0 percent. Average yield on Property (net annual income) is 6 percent to 12 percent on average.

· Nest Egg Dilemma: Low cash returns mean that relatively few Americans can ever hope to accumulate a stock market nest egg large enough to provide them a livable income in their later years. Stocks for retirements – you can run out of money before you run out of life. 1. Spend too quickly and live on food stamps. 2. Spend cautiously and not enjoy life.

· Volatility of Returns: Up until March 2000, most stock investors erroneously believed that the market just plugs along dependably. Bear markets can slumber for decades (1907-1924, 1929-1954, 1964-1982, 2000-?). Stock price volatility along with dividend yields can shatter the best-laid nest eggs.

· What about Bonds? Quality bonds pay more annual income than stocks, but they still lag leveraged returns from income properties. Purchasing power falls over the years. Inflation eats away at bonds while rental properties tend to increase over time.

· Don’t Fall for the Annuity Sales Pitches: Fixed annuities expose you to substantial inflation risk. Annuities eat into your capital. Annuities include heavy front-end expense loads and fees in addition to early redemption fees.

· Are Rent Collections Dependable? That depends – you need to review your market: Review your local rental housing market. If priced and promoted effectively, you should not find well-located, well-kept houses. And beware of superficial “market” vacancy rates: Market vacancy rates and rent concessions primarily refer to two types of properties: 1. apartment mega-complexes. 2. ill-maintained properties that attract the dregs of human populace.

· Why Rents Will Continue to Increase: For a number of reasons! Population growth: U.S. population will grow from a current population of 290 million to 330 million over 20 years. Household Growth: Increase of 20 million housing units. 2.3 persons per household on average. Household size may fall to 2.0 persons per household. Incomes: Outlook for productivity remains bright. Second Homes: Right now 9 million households have second homes. By 2025 20-25 million will have second homes.

· From Baby Bust to Echo Boom: Echo boom is coming.

· New Construction Can’t Keep Pace: Builders won’t be able to construct all of the homes that people will want. Can’t quickly and economically respond to bursts of demand. High Costs – Median price for a new home is $225,000. Most people can’t afford. Lack of Land – Most of land is located where people want to live. Priced at premium when land is where people want to live. Cumbersome Regulatory Approvals – Large-scale land developments require a lot of costly government permits. NIMBY power – You fight against neighbors, environmentalists, and public interest research groups who want to restrict development. Inadequate Infrastructure ­– New developments require additional rods, schools, parks, waste disposal, water systems, and recreational areas. Thousands of dollars per new unit in impact fees.

· More Good News for Property Appreciation: Market fundamentals (i.e., renters and homebuyers with money and limited housing choices) will push rents and property prices to successive new highs.

· But First, The Reckoning: Stock holders won’t shift to real estate for three reasons. The Perils of Land lording: Myth that owning a property means spending Saturdays with a pipe wrench under a tenant’s sink and taking calls at midnight to deal with a stopped-up toilet. E-mails and answering machines eliminate the bother of untimely phone calls. Stocks for long run: Belief that stocks will turn out in the long run if you hang tight. Property Prices have appreciated too much: Property appreciated two or four fold since 1980 but stocks have increased ten fold. Even without appreciation, property yields larger, inflation-protected cash returns than any other investment.

· The Relevance to Property Appreciation: Property investors typically value income properties according to a simple formula. Value = NOI (net operating income)/ R (capitalization rate) Net operating income (NOI) equals gross rent collections less all operating expenses (such as repairs, maintenance, property taxes, and insurance). R equals the unleveraged (i.e., no financing involved) prevailing rate of return for a given locale and property type (house, condo, quad). R ranges usually between 6 to 12%. (Ex: NOI of $24,000 and (r) of .10. 24,000/.10 means you could sell the house for $240,000.) Cap rates are falling so sellers can now force buyers to accept lower yields. Buy now before cap rates bottom out, good appreciation affects. Also echo boomers will soon be competing for a place of their own

· Reason, Not Faith: Stocks, social security, 401ks, IRAs, Keoghs, are not going to guarantee financial prosperity or survival. Facts eventually expose illusions. You Can Still Win with Properties (for Now): In terms of both expected income and appreciation, property stands as your best route to wealth. Use reasoning to Beat the Market: You will learn to enhance your profits through intelligent use of leverage, bargain hunting, sharp negotiating, creative improvements, commercial properties, strategic management, and moving your monies to undervalued properties and areas. Don’t fear a down market, take advantage of it. General problem restated – Opportunities will get tougher to find: Investing will become more difficult in the future. Solution – Start now: Times are tougher, prices are higher.

Check out these helpful links if you are needing some more information:

• Government Records
• Creative Real Estate Solutions
• The Ultimate Real Estate Solutions
• Smart Real Estate Investments
• Foreclosure Profits
  

Real Estate Terms

The first, and most complicated part of real estate is simply learning all of the terminology. I've found that when starting in the industry, bankers, lenders, real estate agents, etc. have dozens of words that they assume you know! It can be embarassing to stop and ask every time! Hopefully this word bank I've provided will be enough to get by when you are looking for a real estate investment.

• Acceleration-The right of the mortgagee (lender) to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor (borrower), or by
  using the right vested in the Due-on-Sale Clause.

• Adjustable rate mortgage (ARM) - A mortgage that permits the lender to adjust its interest rate periodically on the basis of changes in a specified index.

• Agreement of Sale - A written signed agreement between the seller and the purchaser in which the purchaser agrees to buy certain real estate and the seller agrees to sell upon terms of the agreement. Also known as contract of purchase, purchase agreement, offer and acceptance, earnest money contract or sales agreement.

• Amortization - The gradual repayment of a mortgage loan by installments. including accrued interest on the outstanding balance.

• Amortization table - The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.

• Annual percentage rate (APR) - The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points).

• Assumable mortgage - A mortgage loan which allows a new home buyer to take over the obligation of making loan payments with no change in the terms of the loan. Assumable loans do not have a due-on-sale clause. The lender has to be notified and agree to the assumption. The lender may require the buyer to qualify for the loan and may charge an assumption fee. The seller should obtain a written release from the lender stating clearly that he/she is no longer liable to make mortgage payments.

• Balloon mortgage - A mortgage that has level monthly payments that will amortize it over a stated term but that provides for a lump sum payment to be due at the end of an earlier specified term.

• Buyers market - Market conditions that favor buyers i.e. there are more sellers than buyers in the market. As a result buyers have ample choice of properties and may negotiate lower prices. Buyers markets may be caused by an economic slump or overbuilding.

• Capital gains - Profit earned from the sale of real estate. A seller may defer taxes on the capital gain of his/her primary residence by buying a higher priced residence within 2 years.

• Capital improvement - Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.

• Cash-out refinance - A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose.

• Closing - A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called "settlement."

• Closing costs - Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney's fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country; lenders or realtors often provide estimates of closing costs to prospective homebuyers.

• Collateral - An asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.

• Co-maker (co-signer) - A person who signs a promissory note along with the borrower. A co-maker's signature guarantees that the loan will be repaid, because the borrower and the co-maker are equally responsible for the repayment. See endorser.

• Common areas - Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD) or condominium project's homeowners' association (or a cooperative project's cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.

• Comparables - An abbreviation for "comparable properties"; used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location , and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.

• Compound interest - Interest paid on the original principal balance and on the accrued and unpaid interest.

• Contingency - A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.

• Convertibility clause - A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination.

• Net cash flow - The income that remains for an investment property after the monthly operating income is reduced by the monthly housing expense, which includes principal, interest, taxes, and insurance (PITI) for the mortgage, homeowners' association dues, leasehold payments, and subordinate financing payments.

• Owner financing - A property purchase transaction in which the property seller provides all or part of the financing influence changes in other rates, including mortgage interest rates.

• Prime rate - The interest rate that banks charge to their preferred customers. Changes in the prime rate

• Counter offer - An offer made by the lender to grant credit other than in the amount or terms requested by the application.

• Credit life insurance - A type of insurance often bought by mortgagors because it will pay off the mortgage debt if the mortgagor dies while the policy is in force.

• Debt-to-income ratio - The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her gross monthly income. See housing expenses-to-income ratio.

• Deed - The legal document conveying title to a property.

• Deferred interest - When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance. See negative amortization

• Deposit - A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan. See earnest money deposit.

• Due-on-sale provision - A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.

• Easement - A right of way giving persons other than the owner access to or over a property.

• Effective gross income - Normal annual income including overtime that is regular or guaranteed. The income may be from more than one source. Salary is generally the principal source, but other income may qualify if it is significant and stable.

• Endorser - A person who signs ownership interest over to another party. Contrast with co-maker.

• Equal Credit Opportunity (ECOA) - A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

• Equity - A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage.

• Equity sharing - Joint ownership of a property between the owner/occupant and the owner/investor, that results in tax advantages for both parties. Upon sale of the property the joint owners split profits based on the percentage they own.

• Escrow - An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.

• Fair Credit Reporting Act - A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one's credit record.

• Fair market value - The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

• Federal Housing Administration (FHA) - An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.

• Fee simple - Absolute ownership of real property; owner is entitled to the entire property with unconditional power of disposition during the owners life and upon his death the property descends to the owner's designated heirs.

• Finance charge - Interest charged by a lender.

• First mortgage - A mortgage that is the primary lien against a property.

• Fixed-rate mortgage (FRM) - A mortgage in which the interest rate does not change during the entire term of the loan.

• Foreclosure (Repossession) - The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt against any other claim to title of the property.

• General Warranty Deed - A deed in which the grantor (seller) agrees to protect the grantee (buyer)

• Graduated Payment Mortgage (GPM) - A type of flexible-payment mortgage where the payments increase for a specified period of time and then level off. This type of mortgage has negative amortization built into it.

• Step-rate mortgage - A mortgage that allows for the interest rate to increase according to a specified schedule (i.e., seven years), resulting in increased payments as well. At the end of the specified period, the rate and payments will remain constant for the remainder of the loan.

• Subdivision - A housing development that is created by dividing a tract of land into individual lots for sale or lease.

• Subordinate financing - Any mortgage or other lien that has a priority that is lower than that of the first mortgage.

• Grandfather clause - The clause in a law permitting the continuation of a use, business, etc., which was permissible but because of a change in the law is now no longer permissible.

• Home equity line of credit - A mortgage loan, which is usually in a subordinate position that allows the borrower to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower's equity in a property.

• Home inspection - A thorough inspection that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.

• Homeowner’s association - A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.

• Homeowner’s insurance - An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.

• Homestead - Status provided to a homeowner's principal residence in some states that protects the home against judgments up to specified amounts.

• Housing expense ratio - The ratio of the monthly housing payment in total (PITI - Principal, Interest, Taxes, and Insurance) divided by the gross monthly income. This ratio is sometimes referred to as the top ratio or front-end ratio.

• Housing and Urban Development (HUD) - A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. The blank form for the statement is published by the Department of Housing and Urban Development (HUD). The HUD-1 statement is also known as the "closing statement" or "settlement sheet."

• Index - A number used to compute the interest rate for an adjustable-rate mortgage (ARM). The index is generally a published number or percentage, such as the average interest rate or yield on Treasury bills. A margin is added to the index to determine the interest rate that will be charged on the ARM.. This interest rate is subject to any caps that are associated with the mortgage.

• Insurance binder - A document that states that insurance is temporarily in effect. Because the coverage will expire by a specified date, a permanent policy must be obtained before the expiration date.

• Interest rates buy down plan - An arrangement wherein the property seller (or any other party) deposits money to an account so that it can be released each month to reduce the mortgagor's monthly payments during the early years of a mortgage. During the specified period, the mortgagor's effective interest rate is "bought down" below the actual interest rate.

• Jumbo mortgage - Loans with balances higher than the Fannie Mae and Freddie Mac set limits. The current jumbo loan limit is $240,001 and above.

• Land contract - A real estate installment selling arrangement whereby the buyer may use and occupy land, but no deed is given by seller until the sales price has been paid.

• Lease with the option to purchase - A lease under which the lessee has the right to purchase the property. The option may run for a portion or for the full length of the lease.

• Lien - A legal claim against a property that must be paid off when the property is sold.

• Junior mortgage - A mortgage subordinate to another mortgage. In the case of a foreclosure a senior

• Line of credit - An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time to a specified borrower.

• Loan-to-value (LTV) percentage - The relationship between the principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property. For example, a $100,000 home with an $80,000 mortgage has a LTV percentage of 80 percent.

• Margin - For an adjustable-rate mortgage (ARM), the amount that is added to the index to establish the interest rate on each adjustment date, subject to any limitations on the interest rate change.

• Mortgage - A legal document that pledges a property to the lender as security for payment of a debt.

• Warranty Deed- A deed conveying the title to a property with a warranty of a clear marketable title.

• Zero Lot Line - A form of housing where individual units are on separate lots, but are attached to one another.

• Wraparound mortgage - A mortgage that includes the remaining balance on an existing first mortgage plus an additional amount requested by the mortgagor. Full payments on both mortgages are made to the wraparound mortgagee, who then forwards the payments on the first mortgage to the first mortgagee.

• Zoning - Areas may be zoned to specify use of a property i.e. residential, commercial, agricultural. These zoning ordinances are normally enforced by the city or the county.
  
  
• Private mortgage insurance (MI) or (PMI) - Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.
• Qualifying ratios - Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.

• Quit claim deed - A deed which transfers whatever interest the maker of the deed may have in the particular parcel of land. A quitclaim deed is often given to clear the title when the grantor's interest in a property is questionable. By accepting such a deed the buyer assumes all the risks. Such a deed makes no warranties as to the title, but simply transfers to the buyer whatever interest the grantor has.

• Real estate agent - A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.

• Real estate broker - An individual who often owns a real estate company or is in a management position, and who is licensed to represent a buyer or a seller in a real estate transaction.

• Real Estate Investment Trust (REIT) - A trust that uses investors’ money to purchase and manage real estate. Investors realize some of the tax advantages in owning real estate.

• Real Estate Settlement Procedures Act (RESPA) - consumer protection law that requires lenders to give borrowers advance notice of closing costs.

• Realtor - A real estate broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors.

• Refinancing - The process of paying off one loan with the proceeds from a new loan using the same property as security.

• Reverse Mortgage - A mortgage used by the elderly that provides income as long as they live in exchange. Payments made cause the loan principal to increase.

• Reverse Annuity Mortgage (RAM) - A form of mortgage in which the lender makes periodic payments to the borrower using the borrower's equity in the home as collateral for and repayment of the loan.

• Rollover loan - A loan that is amortized over a long period of time (e.g. 30 yrs) but the interest rate is fixed for a short period (e.g. 5 yrs). The loan may be extended or rolled over, at the end of the shorter term, based on the terms of the loan.

• Sale-leaseback - A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.

• Satisfaction of Mortgage - The document issued by the mortgagee when the mortgage loan is paid in full. Also called a "release of mortgage."

• Secondary Mortgage Market - The buying and selling of existing mortgages.

• Secured loan - A loan that is backed by collateral.

• Sweat equity - Contribution to the construction or rehabilitation of a property in the form of labor or services rather than cash.

• Tax escrows - Most lenders require the impounding of taxes, especially when the amount you are borrowing represents a large percentage of the value of the property. Lenders will typically require that you prepay a two month reserve of these amounts along with the amount the lender will need to pay the property tax installment when it comes due. A monthly tax payment will be collected with your regular mortgage payment. Your tax bills will be paid from this separate account.

• Tenancy at will - A license to use or occupy land and buildings at the will of the owner. The tenant may decide to leave the property at any time or must leave at the landlords will.

• Title - A legal document evidencing a person's right to or ownership of a property.

• Title company - A company that specializes in examining and insuring titles to real estate.

• Title insurance - Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.

• Title report - A document indicating the current state of title. The report includes information on the current ownership, outstanding deeds of trust or mortgages, liens, easements, covenants, restrictions, and any defects.

• Total debt ratio - Monthly debt and housing payments divided by gross monthly income. Also known as Obligations-to-Income Ratio or Back-End Ratio.

• Triple-net lease - One in which the tenant pays all operating expense of the property. The landlord receives the net rent.

• Trust account - A separate bank account maintained by a broker or escrow company to handle all money collected for clients. A broker may not commingle these funds with his/her own funds.

• Trustee - A party who is given legal responsibility to hold property in the best interest of or "for the benefit of" another. The trustee is one placed in a position of responsibility for another, a responsibility enforceable in a court of law.

• Underwriting - The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself.

• Unencumbered Property - Real estate with free and clear title.

• Unsecured loan - A loan that is not backed by collateral.

• Usury - Charging a rate of interest greater than that permitted by law.

• Variable Rate Mortgage (VRM) - see adjustable rate mortgage.

Check out these helpful links if you are needing some more information:

• Government Records
• Creative Real Estate Solutions
• The Ultimate Real Estate Solutions
• Smart Real Estate Investments
• Foreclosure Profits
  

Alright gang, hope this was helpful! We'll see you soon.

10 Things You Need to Know About Mortgages

After taking a course called "Personal Family Finance" and "Real Estate Investment", I was able to put the information together and create and cross reference 10 things you need to know about mortgages. I'm currently using these tips to buy my first home!

1. You can buy a house with a down payment of as little as 0%. Yes, it is possible. No down payment at all; 100% financed via a mortgage. You may even find a government agency that will help with your closing costs. These options aren't available to everyone, but first-time homeowners and/or homebuyers of limited means may be able to find good deals here and there. Check out the Department of Housing and Urban Development website for more info.

2. Adjustable rate mortgages (ARMs) come in many varieties. You might think of an ARM as a mortgage with an interest rate that goes up or down each year. Some ARMs do work that way, but consider this: If you're pretty sure you'll be staying in your home for just five or six years, you can get something called a "5-1" ARM, where the rate is fixed for the first five years, after which it fluctuates each year. Whereas 30-year fixed mortgage rates can be as low as around 5.5% these days, 5-1 ARMs are in the 4.5% range. That 5-1 ARM might save you $100 per month, or $1,200 per year. There are 7-1 ARMs, 10-1 ARMs, and many other related beasts as well.

3. Adjustable rate mortgages are generally limited in how much they can adjust each year. Naive renter that I was, I always assumed that ARMs were especially risky, because if interest rates skyrocket over one or two years, your mortgage rate will also skyrocket. Fortunately, I learned that ARMs typically have caps on how much rates can increase each year. (Still, over the long run, they can increase a lot.)

4. Small changes in interest rates can make a big difference. Imagine that you recently got a 30-year fixed mortgage on a $200,000 house at 6.5% with a 20% down payment. That results in a monthly mortgage payment of roughly $1,011. You might not think it's worth refinancing now, with rates around 5.625%, but think again. The same mortgage at that interest rate results in monthly payments of about $921. The difference per month? $90, or $1,080 per year. If closing costs on the refinancing will be $2,000, just divide that by $90 to see how many months it will take before you break even: 22. So if you're planning to live in your home for at least two years, refinancing may well be worth it. Learn about mortgage cycling by clicking here

5. Mortgage brokers can be very useful for many people. My uncle is actually a mortgage broker, but I'd never really discussed mortgages with him until I began house-hunting. A good mortgage broker will advise you on what kinds of mortgages would best suit you, and will find you the best rate and deal that he or she can, searching through the loan products of many lenders. Of course, just as with many professions, there are conflicts of interest in the mortgage broker biz that can result in you getting ripped off. One way to avoid that is to read up on the topic and to seek out ethical mortgage brokers. This site is a good place to learn more.

6. Not everyone needs a mortgage broker. Mortgage brokers tend to be most useful when you've got some financial issues, such as a poor credit history. If you've got a pristine credit report and plan to put at least 20% down on your new home, you may be able to just walk into a few local banks and ask for their best rates.

7. You might find even more attractive mortgage rates from your local credit union. For example, at the time of this writing, my local bank is offering 30-year fixed-rate mortgages for 5.625% (with no points). But a credit union to which I belong sports 5.375% rates for the same thing. If you don't belong to a credit union, you may be able to join one through a family member, your workplace, or an association to which you belong. Learn more about credit unions in this article.

8. Some websites will crunch many helpful numbers for you. Here's a mortgage payment calculator where you can learn exactly how much of each mortgage payment will go toward the principal of the loan vs. interest. (This might be useful to know, since the interest portions are deductible on your tax return.) In this example, only about $200 of your $1,200 monthly mortgage payment goes toward the principal in the first year (with $1,000 being interest), compared to about $800 in year 25. We've got some nifty calculators here in Fooldom, too, such as one that will help you determine your mortgage-related tax savings.

9. Paying points on your mortgage may or may not be smart. Points are an extra fee you pay (or don't) when you close on your mortgage. They're expressed as a percentage of the loan -- so on a $200,000 loan, two points would be $4,000. By paying points upfront, you can often get a lower interest rate. This is a sensible thing to do if you're pretty sure you'll be sticking with that home and mortgage for many years. If you're planning to only be there a while, skip the points.

10. The world of mortgages isn't a static one. In 2003, E*Trade introduced mortgages that you can take with you, transferring them from one house to another if you move. You pay a small premium in interest rates for the privilege, but given that most people these days don't stay put for 30 or even 15 years, this option could well be worth it. I won't be surprised if additional lenders begin offering portable mortgages soon. This is just one of many Mortgage Secrets Out There.

There's much more to learn about mortgage options. Here are a few sites to check out:

• Mortgage Secrets
• Mortgage Savings
• Mortgage Cycling Revealed

I hope some of this information was helpful! We'll see you out there!

Welcome

This is a blog that has some useful information I have obtained thus far in my life. It's not a lot, but it's enough to get by in our ever-changing society. I've just finished my undergraduate degree and now have a Bachelor of Science in Marketing and Business Administration. I have a love for real estate, innovative marketing techniques, and strategic business planning.

However, I realize there are a majority of Americans who do not share this love. In fact, I know there are a majority of Americans that don't know a whole lot about any of these things. That is why I've created this blog. Over the course of four years, I've spent close to $100,000 on my college education. I want to impart as much of this knowledge absolutely free in effort to help others get by.

I hope you find this page useful, interesting, and perhaps even lucrative. Over the course of the next few weeks, I want to post I want to share information on finding a good mortgage, branding techniques, understanding credit, how to invest, and much more. Like I've said, it's not a lot, but it's enough to get by. Enjoy.