Mortgage and Real Estate Blog

U.S. Home Foreclosures UP 68% last month... Or NOT?

Saint paul, Minnesota. December 2007: Home owners increasingly failed to keep up with their mortgage payments in November, as the number of foreclosure filings APPEARED to increase a whopping 68% compared with November 2006 according to Realty-Trac, Inc.

October 2007 filings had fallen 10% from Oct 2006 numbers, and August to September 2007 was down 8% from the same period in 2006.

If you look at November 2007 numbers, this works out to allegedly be 1 in 617 households in foreclosure.

You may notice I keep saying appear and allegedly? This is because as usual, one must look a bit deeper into quick disastrous doom and gloom sound bites from the media.

The filings report numbers include all default notices, auction sale notices, and bank repossessions.

But, a huge portion of these defaults are from people who took out mortgages in 2004, 2005, and 2006. These also correlate to a huge up-tick in 80/20 type loans. While I haven't been able to find exact numbers, I can tell you from my day to day loan originations that the vast majority of those people got two loans in order to purchase their home.

There is also statistical data of people overwhelmed by the HELOC (Home Equity Line Of Credit) they took out to pay credit cards, cars, vacations, and more. Many of these people previously were in good loan-to-value positions, but took out the equity loan up to 100% of the homes value. The big surge in equity loans was also in 2003 - 2006.

If you are defaulting on your first mortgage, your most likely defaulting on your second mortgage (or third for that matter). The numbers provided by Realty-Trac fail to compensate for that fact, and only make a small mention that some people may receive more than once notice if they have multiple mortgages. 

So is it really 1 in 617 homes, or something significantly less?

Read all my blogs at www.MetzlerMortgage.com/mortgageblog

Mortgage Insurance is Once Again Tax Deductible for Borrowers!   

Saint Paul, Minnesota. December 2007:

Turbulence in the mortgage marketplace has been big news in 2007. But here's something bigger...and better! MI Tax Deductibility is back and this time for three more years.

This week, our United States Congress has approved or renewed several tax relief measures to keep the dream of homeownership alive for both new homebuyers and existing homeowners. The extension of MI tax deductibility is top among them. The legislation itself is no different than what was passed last year. MI premiums are still fully deductible for taxpayers earning up to $100,000, and partially deductible for those with incomes between $100,000 and $109,000. The only difference is that the deduction now applies to policies written through the 2010 calendar year.

Extending MI tax deductibility is a crucial move for many reasons:

• Risky low down payment loans are no longer a viable option and are being replaced by more secure loans with mortgage insurance.
• Mortgage insurance is not only safe and predictable, but it's also cancelable and packed with features borrowers want today
• Consumers today have an increased understanding of how mortgage insurance can benefit them, and the extension of MI Tax Deductibility will help continue that trend.

Consumers, Lenders, and Realtors - Visit http://www.smartermi.com to learn more.

Adjustable (ARM) Loan Resets Cause Foreclosures - Fact or Fiction?

Saint Paul, Minnesota - Dec. 2007: A lot has been said from pundits everywhere, and support is growing on multiple fronts for home-owner-assistance programs with broader impact than the Bush Administrations 5-year interest rate freeze program.

The general belief is that homeowners are doing fine with their loans until their adjustable loans reset to higher rates.

According to recent nationwide data from Countrywide Financial Corp., one of the nations largest mortgage lenders, the No. 1 reason customers are defaulting on their home loans is because their income was cut. This accounted for just under 60% of Countrywide loans in default for the first 10 months of 2007. Once traditional causes of foreclosure are factored in (divorce, major illness), cash flow problems added up to a whopping 80% of all "causes" of defaulted mortgages nationwide.

Adjustable payment loans resetting to a higher payment alone accounted for just 2%, according to Countrywide data. Rather than being the cause, they appear to be the final straw that breaks the camels back.

My personal experience with customers calling for help, while I have no hard numbers, would seem to back that data up. Since FHA came riding up on a white horse to announce a new initiative alleged to save 240,000 homes owners called FHASecure, I have fielded many calls from people looking for help. The bulk of these people do not qualify for many reasons, but the No. 1 item I see that jumps out? They were in trouble far before any adjustable rate adjustments ever occured.

This fact also appears to be backed up by data from Fannie Mae. Florida and California are markets dominated by adjustable rate mortgages, while where I am at in Minnesota, and the upper Midwest in general, the vast majority of homeowners are more conservative and have fixed rates. Fannie Mae data shows the Midwest in general is suffering the largest loan losses. Of the top seven states, five are in the Midwest (In order: Ohio, Michigan, Minnesota, Indiana, California, Florida, and Illinois).

There are a lot of borrowers who are hurting out there, and as someone who talks to them daily, many of these stories really tear at the heart. Unfortunately, once you did deep into their full story, most of the time I hang up the phone wondering what ever happened to personal responsibility, understanding how credit cards works, and living within your means?

Learn more: www.JoeMetzler.com

Best Rate or Lowest Closing Costs - Plus No Lender Fee, or No Closing Costs Advertising

HOW DO THEY WORK?

A common mistake shoppers make is to ask: "What's your best rate?" or "What are your closing costs?" Both logical questions to ask, but they do not give the response most borrowers need to make a proper decision. Borrowers must understand both rates and fees. Rates are only half the answer to getting the best deal. It is possible end up with the lowest rate, or with low or no closing costs, but not necessarily the best deal.

Remember that nothing is ever free. Lenders simply use "reverse points" whenever they claim to offer any sort of low closing costs, or no fee mortgage.

Simply put, the lowest rate & the lowest fees do not go hand-in-hand. NO LENDER can offer both together. I can give you rock bottom rates, but it will cost you in fees. I can give you the lowest fees, but it will cost you in interest rate. Most lenders quote their best rate in combination with covering all third party fees (appraisal, credit report, title company, state taxes, county recording fees, etc) with 1% origination. See the example below.

Here is an example of Rate vs. Costs on a $150,000 - 30 year fixed loan

The combination of rate & fees can be very confusing. One lender is screaming "No closing costs." A second lender may quote you 7.00% with $2246 in fees, while another lender is offering 6.75%% with $4130 in fees. So are closing costs and fees bad? Well if you ask everyone's brother who has a real estate license and knows everything about mortgages, then the answer you will most likely hear is yes.  I am here to tell you everyone's brother is probably wrong.

Good enough answer?  I didn't think so...

Begin by asking yourself "How long am I going to be in this property?" This is the single most important question to determine which option is best for you. Now look at the chart above. It becomes very obvious based on how long you are going to be in the home if 'Best Rate or Lowest Cost' makes the most sense for you and your family.

Congratulations, you are now smarter than everyone's brother, mother and sister with a real estate license.

Protecting yourself against predatory lenders, mortgage scams, and Loan Officers screw-ups

Saint Paul, Minnesota: Mortgage rates are still great. That's great news for veteran loan hunters. But for inexperienced shoppers who don't watch their backs, the mortgage business can be a scary place to travel.

The internet especially has make it easier for sly mortgage lenders and brokers to mislead and take advantage of naïve consumers using any number of tricks, from quoting bogus rates over the telephone to slipping gratuitous costs into their loans. To avoid these problems -- as well as other trip-ups posed by the confusing mortgage process itself -- consumers have to brush up on their shopping skills.

Market is ripe for tricks and trip-ups
In the past few years, when the market was hot, a lot of rookie Loan Officers and small brokers came into the market that may not have the experience level you're comfortable with. There was money to be made, and it was easy. Just sit back, and the phone will ring with customers wanting to refinance. The number of lenders and Loan Officers TRIPLED from 2001 to 2005. Lending volume also TRIPLED to the highest numbers in history!

Now that the big refinance period has ended, and mortgage volume has returned to pre 2001 levels, these newer people are desperate to stay in the business. They will say and do anything to capture a deal. 80% of current Loan Officers came into the business AFTER 2002.

The reality is that most lenders and brokers aren't out to fleece customers and the complexity of the home loan process -- rather than anyone's malfeasance -- takes the blame for some of the obstacles consumers face. Many trip-ups don't rise to the level of "predatory lending" either. Nevertheless, they can cost borrowers serious time and money, and guarding against them becomes even more important during the boom times.

There's kind of a range of games that get played and they're pretty broad, from fairly benign stuff to outright fraud.

Problems can pop up long before a borrower fills out any paperwork. Indeed, just finding out how much a mortgage costs can be confusing.

Be as specific as possible
Many potential customers simply call lenders up and ask, "What's your rate?" But they fail to indicate what kind of loan they need, how long of a lock period they want, how many discount points they're willing to pay, how long the rate is good for or anything else. Consumers have to specify all of these things or lenders can pretty much say whatever they want, then provide different figures when the customers come in and blame the lack of specificity.

A loan with a lock period of just 15 days, for instance, usually has a lower rate than one that a consumer can lock in for 60 days. Most consumers opt for loans with longer locks because they need more than two weeks to close. But loan officers sometimes quote rates on their shortest-lock loans over the phone or in print just to sound cheap, knowing full well that many callers will never be able to obtain those loans. Companies can provide interest rates that include several discount "points" to make their rates look better, even though most of our customers either can't or don't want to put down several thousand extra dollars at closing for "points" to lower the interest rate.

In most of newspapers, once a week or more, they'll have a list of rates by lender. But frequently you'll find the rates they put in the paper were rates that were really never available. They kind of low ball their rate. When you come in, they'll tell you the market has moved and the rates are now higher. They get away with this because the rate they list in the Sunday paper is usually submitted on Thursday. You read the paper on Sunday, then call the lender on Monday...

Figure in the fees
Borrowers often forget to ask about fees, and don't compare lenders based on their closing costs. That allows companies to pad their bottom lines by adding "processing fees" and other miscellaneous charges to the loan at closing. Lenders don't control certain fees for services provided by third parties, such as title searches and appraisals. But they can adjust their own fees.

Don't believe everything you read
It's a competitive business. Lenders understand this, so creative advertising is everywhere. Consumers need to watch out for advertising tricks, too. Companies have been plugging "no cost" refinance loans lately, but the tagline really means "no out-of-pocket costs at closing." Borrowers pay higher rates on these mortgages and lenders use the extra money to pay the costs themselves. There is no such thing as a no cost loan!

The annual percentage rate, or APR, found in advertisements can be misleading as well. Mortgage lenders don't always include all the fees they charge in the calculation that determines APR, so customers who use that figure to shop rather than an itemized breakdown of rates, points and fees may end up comparing apples to oranges.

Of course, it's difficult for borrowers to compare fees when they don't know what they are. By law, lenders and brokers don't have to give what's called the Good Faith Estimate document to customers until three days after they apply. But there's nothing preventing shoppers from asking for it before committing to anything. Reputable lenders will provide one. Please read my article- Beware of the Bad, Good Faith Estimate, so you know what to look for when you do get your estimate!

Banker, Broker, or Direct Lender. All are "Loan Officers", so who is best?
When you're looking to get a mortgage loan, you may work with a loan officer, but where they work makes a difference! People often confuse the lender types even though all will glean the same results: a home loan. However, it is important to understand the difference between the three types of lenders so you know what to expect from them during the mortgage application process.

Currently the industry is seeing the biggest problems with loan officers exactly where most customers wouldn't expect. The big banks. Why? Most states have enacted strict guidelines for non-bank lender and brokers. These include criminal background checks, mandatory education, stricter underwriting guidelines, mandatory disclosures, and more. BUT, state banking laws can not trump federal banking law. Federally Chartered Banks (all the big bank names you know) only have to follow less restrictive federal law. Basically they get to do whatever they want! Thanks Washington!

Federal Law says Bank Loan Officers are NOT required to get background checks, have any up-front or ongoing education, and do not have pass a test to get a license.

Know the score
After customers apply and have their credit scores pulled by their lenders, they should ask for those too. Companies have no obligation to share them, but those scores often dictate whether borrowers get loans and how much they have to pay for them. Customers who obtain their scores can get rate quotes tailored to them, rather than receive quotes that may apply only to borrowers with better or worse credit.

If I would say at the application stage to my lender, "Hey, when you pull my credit report, will you tell me what my scores are?" and he said no, I think I would go somewhere else. Why not go with somebody who is willing to tell you? You need to know.

Last-minute maneuvers
Closer to closing, borrowers also have to watch out for counteroffers from their current mortgage lender. When borrowers refinance their loans, their new lenders request "payoff letters" from their old lenders. These letters spell out exactly how much the old lenders are entitled to at closing and are often the only indication that a borrower is refinancing.

To avoid losing customers, lenders who are about to get the boot sometimes swoop in and offer to lower their borrowers' rates or refinance them into new loans themselves. While the offer may sound competitive, they almost always aren't so.

Another source of confusion is the assumption that your current lender can do a loan for lower fees. The vast majority of the time this is NOT true. Loans are 'packaged' to be resold. The vast majority of lenders resell their loans and therefore any changes to the original loan require a complete new package, new closing, new note, new closing costs, new appraisal, new everything, etc. Plus, they usually come very late in the process. Borrowers who accept them can end up having to forfeit application fees or other monies to the lenders they planned on using.

By learning about all of these miscellaneous traps, consumers can take advantage of today's lower rates and refinance without worrying about being taken for a ride. After all, experts say, preparation is the best defense against shady lending practices.

It comes back to education. If I've called five respectable lenders - I know about what rates and costs are. It's going to be pretty easy for me to know whether one lender is pulling the wool over my eyes.

How do you know if they are are respectable lender? Read "How to Shop for a Lender" for some good clues.

One final word of advice. NEVER EVER use an out state lender. If the lender you are thinking of using does not have a local office - DO NOT USE THEM. Out state lenders are by far the worst in terms of misleading quotes, miscellaneous traps, and shady lending practices. Does this mean you won't stumble on a bad local lender? Of course not, it just means you've significantly reduced your chances.

Saint Paul, Minnesota. Dec 2007: The number of licensed Mortgage lenders in Minnesota has dropped dramatically recently as a double wave of trouble has washed many lenders away. According to figures from the Minnesota Department of Commerce, the number of licensed mortgage originators has dropped to 1,202 as of the latest two-year license renewal date of Oct 30th, 2007. This is down from the previous license renewal count of about 4,000 in 2005. These numbers include all in-state and out-of-state licensed lenders.

While this number looks impression, it is actually a bit misleading. Many smaller companies, in an attempt to circumvent previous lending laws required their Loan officers to hold an individual license. Sweeping new legislation, which went into effect recently no longer allowed this loop hole. Individuals can no longer hold a license. They must incorporate as a company. A brokerage may previously have had 30 Loan Officers, who each held an individual license. They now will only be able to operate as a company, reducing the number from 30 to just 1. Other new rules require higher fees to acquire or renew a license, and companies now must maintain a minimum net worth of $250,000 or have a $50,000 surety bond.

Many other small companies were one or two man operations run out of the individuals homes. These smaller companies have simply vanished, or the Loan Officers have gone to work for larger companies. Many of the smaller companies also merge together or merged with banks in order to meet the new guidelines.

New educational and background requirements will sweep even more out of the business by March 2008, when the educational requirements go into effect. The requirements include out-state lenders who continue to be the biggest source of trouble for Minnesota homeowners.

So are there truly less Loan Officers and Mortgage Companies doing business in Minnesota? Yes. The severe housing slump and current credit crunch has sweep huge numbers of Loan Officers and companies out to sea. The initial wave of companies and people out of the business has been mainly people who lived off of refinance transactions, had little or no training, provided sub-prime loans, or those who worked at the high-pressure telemarketing or Internet type lenders.

For the most part, those still successfully providing loans tend to have been in the business prior to 2001, focused primarily on purchase transactions, and are dedicated to repeat and referral business. This of course was the intent of all the legislative action at the Capital in Saint Paul, to get ride of the bad and retain the good.

FED's Cut Short-Term Interest Rates - What Does It mean To You?

For the first time in more than four years, the Federal Reserve has made it cheaper to borrow in Spetember 2007, and by an unexpectedly big margin by cutting the short-term rates 1/2%

The Fed surprised many economists and traders with a half percent cut in both the Fed Funds and Discount Rates. Stocks soared higher and enjoyed their largest gain since 2003.

What does the Fed cut mean? Rates on consumer debt, car loans, and Home Equity lines will all benefit. But because FIXED RATE Home Loan rates are tied more closely to investors' expectations of inflation, it is not uncommon to see less of a reaction...or even an opposite reaction in mortgage rates, they might fall a bit, they might rise a bit.

The Fed cut also hurts rates of return on investments, which gives foreign investors less incentive to invest in US securities. This has sent the Dollar much lower against the currency of most major foreign countries. This makes foreign goods more expensive for us to buy, which adds to inflation pressures.

Overall, the Fed cut is good news for the economy, but may nudge inflation a bit higher.

The central bank's rate-setting committee lowered the target for the federal funds rate by half a percentage point, to 4.75 percent. The prime rate will fall to 7.75 percent. Consumer interest rates based on the prime rate, mainly home equity lines of credit and most variable-rate credit cards, should fall a half-point in coming weeks.

Yields on certificates of deposit are likely to fall, too -- especially on shorter-term CDs -- even though they're not tied directly to the prime rate.

Everyone had expected a Fed rate cut, from investors and economists to teachers and car valets. The principal uncertainty had been about the size of the upcoming cut -- would it be a quarter of a percentage point, or half a point?

Most were expecting a smaller, quarter-point cut. The Fed sprung the surprise half-point decrease with this explanation:

"Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally. Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time."

The committee added that inflation has been dropping, but that "some inflation risks remain."

This rate cut is intended to undo some of the damage caused by the housing bubble and the resulting credit crashes. The idea is to get people and businesses to buy on credit -- just not so recklessly this time.

Some economists and analysts worry that the Fed behaved recklessly with this half-point cut. A quarter-point decrease would have been preferable, they say.

Will the cut affect mortgages?
The biggest economic story of the year concerns housing: Home sales and average house prices have fallen nationwide, and it's harder to get jumbo and subprime mortgages. Lower mortgage rates might ease those troubles, but a Fed rate cut doesn't necessarily spell lower fixed-rate mortgages.

From Jan. 3, 2001, to June 25, 2003, the Federal Reserve cut the federal funds rate 13 times. When you look at what happened to the 30-year, fixed-rate mortgage in the month after each cut, here's what you find: Mortgage rates fell eight times and rose five times.

There is a huge amount of misperception among consumers that if the Fed reduces the rate half a point, my mortgage rates will go down too. Unfortunately, the media often adds to this confusion with bad reporting.

Remember, Long-term fixed mortgage rates go up and down mostly in response to investors' expectations of inflation, NOT what the Fed does.

This is the Federal Reserve's first rate decrease since June 25, 2003. Back then, the central bank worried that deflation might descend, crippling the economy, so the Federal Open Market Committee cut the federal funds rate to a 45-year low of 1 percent to fuel economic growth. The rate remained there for a year, and then the Fed raised short-term rates 17 meetings in a row, a quarter point at a time -- a gradual increase that took a little over two years. The target federal funds rate topped out at 5.25 percent in June 2006, and remained at that level until today's decrease.

In June 2003, the Fed justified its rate cut by invoking the specter of "an unwelcome substantial fall in inflation." The central bank succeeded in its aim of holding off catastrophic deflation. Indeed, the Fed did such a good job of suppressing deflation that it invited the opposite -- inflation -- but with a twist. Overall consumer prices remained under relative control, but prices of houses skyrocketed.

The fabled housing bubble occurred because the Fed made it cheap to borrow money. The federal funds rate was below 1.5 percent for 21 months. Mortgage rates were low, too. First-time and subprime homebuyers rushed in, driving up house prices. Subprime lenders, eager to make a buck, relaxed their underwriting standards. Meanwhile, from June 2004 to June 2006, the Fed was gradually raising rates.

Early this year, the double whammy of rising interest rates, plus poorly qualified borrowers, caused the subprime mortgage market to collapse. Millions of homeowners fell behind on their monthly house payments, leaving us where we are at today.

FHA Mortgage Demand Doubles In Early October

It's the start of a new fiscal year in Washington, and for the FHA it's been a great time to be in the mortgage insurance business.

The latest figures from HUD show that FHA applications had an annual run rate of 1,285,800 inquiries in the first 15 days in October. This is up 74.6% when compared with a year ago.

Actual FHA applications during the first two weeks of October totaled 51,287 inquires, a figure that rose a whopping 99.4% over the past year.

A total of 25,823 loans were actually endorsed. Of this number, 53.1% were for home purchases, 32.1% were refinances and 14.9% or reverse loans, or what HUD calls "home-equity conversion mortgages" or HECMs.

What these figures mean is that the FHA program - which had actually been on the ropes for the past couple of years - is doing quite well. The program is insuring loans, loss levels are tolerable, and a vast new market for government insurance has begun to appear with the introduction of the FHASecure product. No one would be surprised if fiscal 2008 turned out to be another banner year for the government program.

Why is FHA "back"? Simple. FHA has always been the loan of choice for those with weak credit and low down payments. It fell out of favor as lenders offered similar products without a lot of the rules FHA loans had to follow. For example, Realtors never liked them because FHA could require repairs to the home before it could be sold to an FHA buyer. Items like painting, railings, and roofs quickly come to mind, while conventional or subprime loans did not have these guidelines. Furthermore, the requirements for lenders to actually to allowed to provide FHA loans was much more stingent, including net worth requirements and yearly audits. Therefore, most small lenders, especially since 2000, when a lender opened up on every corner - could NOT even offer FHA loans.

Unfortunately, many of the people who took subprime loans over the past few years could have and probably should have taken an FHA loan.

Today, many (not all) of the alternative weak credit and low down payment loans have disappeared. For many people, FHA now is the only route to homeownership. Because of this, many mortgage companies, unable to provide subprime loans anymore, are now desperately trying to stay in business by getting FHA approved.

We are proud to have been, and continue to be, a long time FHA provider. Call me today to discuss an FHA loan. It's a great loan - probably the same one YOUR parents used to buy their home!

Visit us online at www.JoeMetzler.com

Home buyers are getting more conservative - Back to Home Loan Basics

The one-two punch of a tighter mortgage environment and tougher credit standards is forcing buyers back towards more conservative home loans. Home buyers and homeowners who want to refinance are moving away from shorter-term higher risk adjustable rate loans in large numbers.

Shorter-term adjustable-rate mortgages (anything that reverts to an adjustable rate in less than five years), which two years ago accounted for more than one out of every three closings, are dropping dramatically in popularity. So have so called Piggyback mortgages or 80/20 as they have become unattractive, pricey, and very hard to find lenders willing to lend for the second mortgage.

So where does that leave the borrower who needs a more nontraditional loan? Pretty much out of luck.

Borrowers tend to fall into two camps. Conservative/tradtitional, and those who focus almost solely on the monthly payments, asking "what is the smallest payment I can get."

For conservative borrowers, the chance that the payment could increase beyond their comfort level is a very real and unwelcome possibility. They prefer the certainty of a fixed-rate 15- or 30-year mortgage.

For buyers intent on getting the smallest possible monthly payment, adjustable rates are no longer automatically the ideal. As so many people are learning, payments can go up and the ability to refinance in a few years is not a sure thing. For clarity, payments can also go down. I have many customers who took adjustable loans in the late 1990's who saw their payments go down nicely from 2001 - 2005. Also, if you know for sure you are moving in 3-5 years, why take a higher 30-year fixed payment rate?

Homeowners who put down less than five percent the past two or three years are finding they can't qualify for refinancing because they don't have enough equity in their home as the market flattened. Many of these people banked on the idea that home prices always rise dramatically, and that they could easily refinance their loans later with no problem.

By the spring of this year, the percentage of buyers taking out shorter-term adjustable-rate mortgages had dropped from 36 percent to 17 percent.

The market is tightening up, and at the same time, borrowers are finally realizing that teaser-rate mortgages are not a automatic free lunch. Each customer needs to work with a professional loan officer to analyze their exact situation to make an educated loan decision.

With several lender bankruptcies coupled with tighter lending standards in the subprime market, even if people wanted to take riskier subprime loans, they would have difficulty as loans are no longer available. As a result, many low to moderate income households will now be trying to get into FHA government-backed mortgage products, which had traditionally been the choice of low- to moderate-income households. These loans fell out of favor as new non-conforming loans were easier to get, and most small brokers are not able to provide FHA financing. We have seen a HUGE increase in our FHA applications.

Interest-only loans also no longer popular as they recently were. Almost 29 percent of mortgages in the second half of 2006 were interest-only loans, up 3 percent from the first half of the year. Interest-only loans are sometimes tagged "exotic" because they focus on paying only the interest rather than interest plus principal for a period of time -- allowing borrowers to sign on for more house with smaller monthly payments. Proponents see them as a tool that allows buyers who will soon be earning a much larger paycheck to secure that more expensive home. I see them as a bad crutch for most people, as they use them to buy more house than they should, as opposed to a smart financial tool for unique situations.

Interest only loans haven't received the negative attention that has plagued the subprime lending market recently, so they are still available. But, lenders have recently made these loans dramatically less attractive as they have raised the rates on them. Not long ago, you could get an interest only loan for about 1/8th percent higher rate than a standard loan. Today it is about 1/2% higher, taking away the vast majority of the monthly payment savings and effectively killing the interest only loan.

What was old is now new again. Plain traditional 30-year fixed rate loans with mortgage insurance (if less than 20% down).

RETIREMENT - ARE YOU READY?

Did you know: That if you wait until you're 45 years old to start investing for retirement, you'll need to save about $24,000 per year just to reach a reasonably comfortable retirement level? But if you start when you're 25, you can reach that same level by saving just $4,000 per year. So starting as early as possible is important - but even if you didn't, you can use the simple tips below to get on track right away.

Give Yourself a Retirement Raise: The more you make the more you spend, right? The next time you get a raise or a bonus, break the cycle! Set aside that extra money and invest it in your future. You will not even notice it now...but you will in the long run.

Make a Big Impact Without Denting Your Budget: If you're about to pay off a car, student loan, or some other monthly expense, you can make a huge impact on your investment plans by simply adding that extra money to your retirement account. You're already used to living without it, so it won't impact your monthly spending money at all.

Out of Sight, Out of Mind Investing: Don't forget to make your investments automatic. It's much easier--and a lot less painful--to have that money simply deducted from your paycheck and electronically deposit. You'll save the same amount every month...and save yourself the trouble of writing that check!

Eliminate High Rates: Want to earn a 17%, 18% or even 19% return right away? It's easy...put together a plan to pay off your credit cards faster, starting with the highest rates. By paying it off quickly--and keeping it paid off--you'll eliminate the high interest charges that tighten drain budget and often put people into a downward spiral of debt.

Make the Most of Matching Contributions: If you have access to a 401(k) retirement plan, make sure you are using it - especially if you get matching contributions from your employer. See how much you have to contribute to earn the full matching amount from your employer - and if you can't contribute that much right away, start small and steadily increase your contribution over time until you reach it. You'll double your money with the employer's match...and your contributions are generally taken out of your check pre-tax, so your savings costs even less in real, after tax dollars.

It's NOT All or Nothing: Don't feel like you have to jump in with everything you've got. The most important point is to get started right away...not next month or next year, but right now with whatever amount you can. You can always increase the amount you invest...but you can never get back the compounding interest you'll lose by waiting.

And remember, if you have any questions - including how a mortgage can be structured to jumpstart your retirement plan with programs like the HOME OWNERSHIP ACCELERATOR  (www.PayOffQuick.com) - please don't hesitate to call!