Thursday, December 28, 2006

I'm in the Top 50

According to Broker magazine and a National Association of Mortgage Brokers survey, I placed #36 in the US for mortgage originations. Of course I had the list framed...

56% of the 8 out of 10

Wells Fargo & Co. did a survey of property owners with ARMs. Survey shows that 8 out of 10 are worried about their interest rate rising, but only 56% said that they would refinance when the rate changes. 21% said they would take no action when their rate adjusts. The survey found that only 14% of respondents had ARMs.

I wonder if this speaks more about the quality of the loan officer (broker or banker) than it does about homeowner's concern over a rising housing payment.

Anyway, it is important for those with ARMs to have a plan for when their rate adjusts, even if the best action is to do nothing.

Monday, December 25, 2006

Monday, December 18, 2006

The Next Carnival of Real Estate Investing

Cash Flow Treasures will be hosting the Sixth Edition. Be sure to check it out. For more information on the Carnival of Real Estate Investing, please click here.

Sunday, December 17, 2006

Carnival of Real Estate Investing 5th Edition

Welcome to the 5th Edition of the Carnival of Real Estate Investing. I didn't receive many posts this week, since we are in the full swing of the holidays, so I'll be able to comment on each post that I received.

The top post was a dead heat between two that I found very helpful on a practical level and in the end I chose Photo Marketing Tips To Say "Attention Buyers!" posted by Steve Burns. This is a more personal choice, since here in New York City, even for rentals, it's extremely important to have excellent photos or the ad won't even be viewed. I know that many prospects who search through Craigslist won't even look at the post unless there is a photo. So this information on how to take photos was extremely useful to me as a non-photographer who needs to learn more.

The rest of the posts were also very interesting. I very much enjoyed hosting this week's Carnival. The posts were varied enough to educate and entertain.

Anesia Springborn's New Manager Invites Excuses and Abuses was an excellent personal experience of how tenants are likely to test the waters when a new property manager takes over a rental property. I enjoy learning from others' personal experiences so this post was especially interesting to me.

In the same vein, Paul's Increasing your hourly rate in order to get rich reminds us to work smarter, not harder. I especially liked the focus on education.

Joshua Dorkin's timely post Keeping Your Tenants Happy During the Holidays was a nice reminder to keep our tenants happy and they will reward us by being timely rent paying happy tenants who may be more accepting of a new property manager in the future.

With the Fed being among the most watched bodies these days, Why The Fed Matters to Real Estate by Dan Green was helpful in putting the big picture into perspective.

In keeping with the Fed's influence on interest rates, Nick Gifford shows us some surprising conclusions that Adjustable Rate Mortgages might, in the end, be a better way to go than Fixed Rate Mortgages when historical data is taken into account in his post The ARM vs. Fixed Rate Mortgage Dilemma

Commercial Real Estate: How You Win Even If You Lose by Craig S. Higdon goes into the basics of using financing to purchase real estate even if you've put together a syndicate to provide the down payment. It shows us that when you put together all of the benefits of owning property, you can sell at a loss and still make an overall profit. A very basic primer for those interested in commercial real estate.

Praveen's post Top 10 Real Estate Books of 2006 might help in purchasing a gift for the real estate investor near and dear to your heart this year.

And lastly, Will Chen presents what is fast becoming (in my opinion at least) the "Save Karyn" of the real estate world with this video lecture Must watch video for new real estate investors. Is there a book deal in the works for this guy yet?

I had a great time reading these posts. The Carnival of Real Estate Investing is off for the next two weeks for the holidays. So check back for the next host of the Carnival of Real Estate Investing!

Update - Mortgage Insurance Payments are Deductible

Unfortunately it's not retroactive, but yes, MI (or PMI) payments are income tax deductible starting January 1st 2007. Any new mortgage insurance policies written after the new year will be deductible.

According to there are some caveats:

Caveat No. 1: The tax deduction applies only to mortgages that are closed in 2007. If you have a loan with mortgage insurance in 2006, you won't be able to deduct the premiums in the 2007 tax year unless you refinance in 2007.

Caveat No. 2: There are income limits. You get the full deduction if your adjusted gross income is $100,000 or less. The amount you can deduct phases out rapidly after that, and no mortgage insurance deduction is available if you make more than $110,000.

Caveat No. 3: This is a one-year deal, and Congress would have to renew the deduction to make it apply for the 2008 tax year and beyond. Congress probably will extend the deduction, but you can't know for sure.

Caveat No. 4: If you take the standard deduction instead of itemizing deductions, the new law makes no difference to you. "You need to have a mortgage of about $130,000 or so to even pay enough interest to hurdle the standard deduction," says Bob Walters, chief economist for Quicken Loans. In practice, he says, this means that the deduction is available to households with incomes between $50,000 and $100,000.

For more on the specifics and how mortgage insurance compares to taking a piggy back loan, please see

Monday, December 11, 2006

Mortgage Insurance is Now Deductible?

I read something today saying that Congress passed the bill making mortgage insurance, or private mortgage insurance deductible. I don't know the details yet, though I'm sure there's more information to come.

Mortgage Insurance is a type of insurance that the lender requires when the mortgage loan balance is greater than 80% of the value of the property. In the last few years, borrowers have been skirting this expense by obtaining second mortgages as piggy back mortgages. This made sense since the interest paid on these loans was deductible whereas mortgage insurance was not.

I was aware that the insurance companies were lobbying for a law change to make mortgage insurance deductible. The insurance lobby is very powerful, so it was only of matter of time.

Might create some more stable loans for buyers with lower down payments.

Carnival of Real Estate Investing

This week, I'm hosting The Carnival of Real Estate Investing. So please submit your posts at


Saturday, December 09, 2006

Home Equity Line of Credit for Coops

Yes, you can obtain a Home Equity Line of Credit for your cooperative apartment. Basically, the underwriting guidelines are essentially the same as with any other property type; they are based on loan to value, credit score, debt to income ratios.

Loan to value is the percentage that your total loan amount, including the Home Equity Line of Credit for which you are applying, is of your coop's market value. A $600,000 total loan amount on a $1,000,000 coop has a 60% Loan to Value (LTV). Generally speaking on a coop, the lenders will go a higher loan to value than the cooperative board will allow.

Credit score is the middle score that is pulled from all 3 credit repositories (Equifax, Experian, and TransUnion). Home Equity Line of Credit are very credit score driven, if your score is too low, then you cannot qualify at all, if your score is high enough, you will not have to verify income or assets in order to qualify.

Debt to Income Ratio (DTI) is the percentage that your monthly obligations is of your gross monthly income. If it's below 40% including your housing payment, then you should be in good shape.

A couple of things about the Home Equity Line of Credit, it can be a good financial tool when used properly. However the borrower should understand that the interest rate is generally adjustable based on the Prime Rate as published in the Wall Street Journal. This means that Prime goes, your payment goes -sometimes up, sometimes down. If you have a Home Equity Line of Credit pay attention to the Federal Funds Rate. That will let you know what your interest rate is going to do.

Lenders are now allowing Home Equity Line of Credit borrowers to fix a portion of their balance's interest rate and payment, so you might want to inquire about the details.