Archive for April, 2008
RE Bloggers Networking Event a Grand Success
By Shailesh Ghimire, April 24, 2008 at 2:08 pmThis mornings inaugural AZ EV RE Bloggers Network meeting was fantastic and I personally enjoyed it tremendously. Agents from around the valley (and Tucson) attended and participated in this sharing of the minds event. I want to personally thank agent Candace Robinson (HomeSmart) and Shelli Bates for organizing the first of what is hoped to be many blogging forum.
I apologize for the lack of pictures, but I didn’t take my camera with me and so don’t have any to share right now. But I’m sure Candace will send some over and I’ll be sure to put it up once I have a few. In fact the whole program was taped - so hopefully we’ll be able to have that available soon.
Just to recap, all the speakers shared some great information - from tips and tricks to how much increase they have seen in their business since they started blogging. I learned a lot - so thank you for sharing. For me it was a pleasure to finally meet the Lady in Red, Teri Ellis, Paul Slaybaugh and Mike Jones from Tucson. Jay Thompson (our local celebrity) was the keynote speaker and he spilled the beans on the key to his blogging success! It’s always a pleasure to hear him speak - so thank you!
As promised I have uploaded and made available my PowerPoint presentation for those interested. It is from my blogging 101 seminar from last year and is a bit outdated (that is how fast the blogging world is evolving). Click below to download:
The organizers and sponsors are discussing the possibility of holding these kind of get together events on a monthly basis and in a more central location. Please contact them directly if you are interested in attending the next event.
Thank you to Shelli Bates of Land America Title and Ron Kohatsu of Win Gateway (Home Inspection) for sponsoring this event.
4.29 pm update: Teri has posted pictures on her blog.
Friday AM update - some pictures courtesy of Teri:
The captive audience (there were a lot more people than what can be seen here)
Friday (4/25) PM update: Paul Slaybaugh has a complete re-cap with a whole new set of pictures!
Mysterious Lights Over Phoenix, Aliens Maybe?
By Shailesh Ghimire, April 22, 2008 at 11:31 amSo everyone is talking about the lights that appeared over the Phoenix sky last night. The strange thing is the lights hung in the sky for a while and didn’t appear to be moving. AZCentral has a sideshow of pictures and a video of the lights for those interested.
Talk radio is abuzz with those who saw it. I personally didn’t see it but here are some eyewitness reports form the local radio KTAR:
“From my position, it looked like they were just hanging, not moving at all,” said one man, who called 92-3’s “Gaydos After Dark.” He said he “absolutely” saw something.
A woman caller said, “It looked like four red tower lights, but it was pretty high up in the air. I called my husband and he said, `Get home, what’s wrong with you?’”
A man in north Phoenix told CBS-5: “They were about 3,000 feet high, approximately. They looked as though they were kind of hovering or floating from west to east, very slowly. They were up there for 15 or 20 minutes.”
Those who saw them said the lights were visible about 13 minutes before moving off to the east.
I’m not a conspiracy theory type person. Nor am I one to think that we have been visited - yet. But, this is kind of strange. However, if these are indeed alien visitors, I want to welcome them and make peace with them so we can live together in harmony! Maybe they are interested in buying some of our real estate? That to me is great news!
However, we currently do not have an alien loan program. Despite this, the Phoenix market does offer some excellent deals for buyers who can make cash offers. Once you establish some degree of US credit, we can certainly look into refinancing you into a suitable loan program, and help you leverage your assets with this debt to build long term wealth. Unless of course all you want to do is just enslave us and take over our planet.
What A Lower Credit Scores Costs You Today
By Shailesh Ghimire, April 21, 2008 at 9:26 am
Not all mortgage interest rates are the same. The radio may blast away advertisements claiming low low low rates in the low 5.00% range, but alas how misleading these messages are. The truth of the matter is that while the 30 year mortgage rate remains at historic lows not everyone gets the same interest rate. Mortgage interest rates are determined by your credit score. The higher your score the better the rate you will receive. Consequently, if you have lower scores you will need to pay some fees to receive the same rate offered a higher credit score borrower.
During the credit boom lenders kept a pretty low barrier before slapping on additional charges for riskier borrowers. This has all changed and the thresholds are higher and there are additional layers . The table below is sample of what Fannie Mae/Freddie Mac have been charging lenders(and what lenders then pass on to you the borrower).
The example below is of the additional fees a borrower is charged in order to receive a 6.00% interest rate on a $200,000 mortgage:
In my opinion the numbers above provide ample reasons to work on improving your credit score and positioning yourself for a home purchase. To help you get started, below, I have provided additional links on credit score and credit report related posts on Arizona Mortgage Guru Blog:
Should I Borrow From 401(k) For Down Payment
By Shailesh Ghimire, April 18, 2008 at 10:56 am
During a recent loan pre-qualification process a mortgage applicant disclosed that he wanted to put 10% down on the purchase using money from his 401(k). We quickly pointed out that this may not be a good idea - considering the impact of taxes, withdrawal penalties and loss of future earnings. Additionally, since this borrower qualified for a FHA loan albeit for a lower amount, it didn’t make financial sense to make such a move.
I certainly can understand the temptation to use money from a 401(k) plan for a home purchase or even using it for emergency purposes. This is especially tempting if you have a decent amount of money in your account and you have recently faced some difficulties. However, I suggest taking a long hard look at this before deciding on a withdrawal. To help in this, MSN Money Central has a good article on this subject which outlines the pro’s and con’s of borrowing against a 401(k) plan:
The pros:
1. There is no credit check.
2. There is a low interest rate.
3. It provides a great return.
4. The interest is tax-sheltered.
5. It’s convenient.The cons:
1. About that credit check: Of course there isn’t one. You’re not borrowing anything. You’re spending your own money.
2. You’re losing interest. The net effect is that you have less money to invest and to earn interest.
3. It’s not tax-sheltered money anymore. Whether you repay the 401(k) loan out of your salary or from a bank account, those payments are all made back into the 401(k) with after-tax dollars.
4. Unless you repay the loan, it is considered a premature distribution. You would owe federal and state income taxes as well as that 10% penalty if you are under age 59 1/2.
5. The loan isn’t tax deductible. It’s considered a consumer loan, so there is no tax advantage.
6. It affects your psychology toward retirement saving.
While it is up to an individual to decide if they want to make a withdrawal on their 401(k) I personally would not recommend this course of action - certainly not for a home purchase. My main concern is point #6: your psychology towards saving for retirement. I think the moment you tap into your 401(k) it’s easier to do that again and again. Then it just becomes another savings account (very expensive one), but you destroy your ability to save!
The main reason to not borrow is because there are still so many loan options available to purchase a home. FHA allows you to borrow up to 97% of the home value and allows 3% gifts. So, in essence you can do a 100% loan with little out of pocket money. The FHA loan limits have been recently increased and in many markets this limit is well above the median home price. So it’s not like you can only buy the bottom of the barrel homes with FHA. You can actually buy your dream home.
The better option is therefore for you to work with a mortgage loan professional and make a six or twelve month plan to reposition your credit, income, savings and investments. This effort on your part can help you purchase a home without touching your 401(k). Home prices are not increasing at astronomical levels - so there is no reason why you shouldn’t wait until you’re much better positioned to make a sound purchase. That way you’ll have a home and something for retirement - not just a home.
Fixing the Foreclosure (Mortgage) Mess
By Shailesh Ghimire, April 17, 2008 at 3:03 pmA few weeks ago I started a weekly series on the mortgage market attempting to cover important elements from news items to blog posts. Regular readers know I slacked off on this promise after week one. However, I must say I did have good intentions. Inertia is the main issue here and converting potential energy into kinetic energy is difficult. However, I have not forgotten my desire to keep a weekly mortgage round up alive and kicking.
In that spirit, today I want to bring to your attention a brilliant post by the North Phoenix Agent, Heather Barr. She has proposed a very practical way to fix the foreclosure mess. Since she doesn’t trust any of the “big three” presidential candidates to offer anything that would work (she does admire the Obama overall theme though). So in the spirit of citizen government Heather proposes her own “real world” solution. This is a great post and a wonderful read. If only our leaders could think like her!
If you haven’t read it already, then head on over to the North Phoenix Agent Blog. We’d all love to hear from you on what you thought about her plan - so leave your comments. If you like the plan then maybe we can convince one of the candidates to select Heather as their running mate? 
I’ve already made a campaign sticker!
Help Improve the IRS
By Shailesh Ghimire, at 2:18 pmRenters Fight Back Against Government Bailouts
By Shailesh Ghimire, April 15, 2008 at 9:57 amWhy You Pay Taxes
By Shailesh Ghimire, at 8:21 amApril 15th - the day you render on to Caesar what is Caesars. And how does Caesar spend your hard earned money. Below is a useful pie chart that breaks it down for us simple minded folks.
FHA Loans For Moms Returning to Work
By Shailesh Ghimire, April 14, 2008 at 3:11 pmRecently I wrote about how a mortgage approval pretty much lives and dies through income verification these days. While it may seem like a dramatization it really is not, in fact its almost an understatement. This is because not only is income verification important but your employment history is equally important. I bring this up because recently I’ve had to qualify a young couple for a home and the employment history of the co-borrower became a cause for concern.
This young couple, whom we eventually were able to approve, had an excellent credit history and were not first time home buyers. In fact considering how young they were I was very impressed with their home buying savvy. The main issue for this couple was that they needed both of their incomes to qualify for the house they wanted. Using both incomes meant they were well within the DTI limitations for the loan program and were in a very strong financial position.
The kicker was that the co-borrower had recently rejoined the work force after having stayed home with the kids for a few years. This posed a slight problem for the loan approval because certain criteria had to be met in order to use this co-borrowers income for loan qualification purposes. Since we were doing a FHA loan program the co-borrower had to me the following criteria:
- The borrower must have been working for at least one year on the current job.
- The borrower must have worked at least two years before leaving the workforce to stay at home with the children.
Both of these conditions needed to be met in order for the co-borrowers income to be used. The FHA underwriter made it clear that meeting only one was not sufficient. In our case the co-borrower was able to furnish W2’s for two years from their last place of employment and it helped that she had been working for the past year. So, we passed on both counts. Certainly a hurdle that no one had expected had been crossed and everyone was pleased.
FHA certainly doesn’t want to penalize a stay at home mom or any other kind of borrower who had to temporarily leave the workforce. But a stable job history is the only way to determine the earning potential for a borrower. So, if you are in this kind of situation make sure you have the necessary documents to prove to a lender that you will indeed be able to make the monthly payment.
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