Apr 14
The full quote, “There are three kinds of lies: lies, damned lies, and statistics” has been attributed to Mark Twain, and it continues to ring true for me. Last week, I quoted a CNNMoney article which stated, “The national median price drop of 5.8%, to $206,200 from $219,300, was the steepest ever recorded by the National Association of Realtors (NAR), which has been compiling the report since 1979.” Now, I cannot dispute the facts. This statement is likely true, but what is the definition of median? Median simply means the middle number, half are higher, half lower. So far so good? But these numbers only represent transactions, not changes in existing values. Without digging deep into the data, one cannot understand the cause of such a drop. A large turnover in the lower end of the market will skew the data to reflect those sales. It’s possible (though not likely) that homes in a given area increased in value, but a combination of people in the higher priced homes simply moving at a below average rate combined with high transactions in the lower end results in median transaction values dropping.
Joe
written by JOE
\\ tags: Finance, money, Mortgage, Real Estate, Savings, Subprime
Feb 27
In the March issue of Smart Money, there was an article “10 Things Your Tax Preparer Won’t Tell You,” which, like many articles in this series takes a shot at the least reputable people in a given profession. What caught my eye reading this story was this one sentence “On average tax preparers make more mistakes, and costlier ones, than Josie Taxpayer does.” I quickly Googled “Josie Taxpayer” and found two results, both referencing Joe and Josie Taxpayer, as the Smart Money story had not hit the web yet. I found the avoidance of the phrase Joe Taxpayer interesting, as I’m sure it was intentional. Just my random observation today.
JOE
written by JOE
\\ tags: Finance, foreclosure, mma, Mortgage, mortgage acceleration, pre-pay, Real Estate, sub-prime loans
Feb 11
This month’s Consumer Reports has an article “Your mortgage, It rarely pays to prepay“. They think it doesn’t, suggesting that since the stock market (measured by the S&P) has averaged 10% per year over the last 20 years, that it would make financial sense to choose investing in the stock market over pre-paying your mortgage. On one hand, there’s a neat logic to this. But, as I posted in my blog article Disappointing Results, we see that despite the 11.8% return of the S&P cited by the study, the average equity fund investor only saw a return of 4.3%. In that case, CR might rethink their numbers and their blanket statements offering what may be unsound financial advice.
Whatever you decide, the decision has to be based on your individual situation, your risk tolerance, and investing style.
JOE
written by JOE
\\ tags: Finance, foreclosure, mma, Mortgage, mortgage acceleration, pre-pay, Real Estate, sub-prime loans
Feb 01
I’ve finished up another article for my main site, this month titled BiWeekly Mortgages. I’ll give you the punchline here. I have no objection to paying one’s mortgage down faster if the rest of their investments and debts are in order. Why pay down a 6% or 7% mortgage faster when you owe money on a 15% credit card?
What I do object to is paying a third party or your bank an extra fee plus monthly service charges when you can do this your self. I mention other mortgage acceleration programs such as Money Merge Accounts, which I’m still researching and will discuss here or on the main site in the near future.
JOE
written by JOE
\\ tags: Finance, foreclosure, mma, Mortgage, mortgage acceleration, pre-pay, Real Estate, sub-prime loans
Nov 09
A homeowner owes $200,000 and for whatever reason, finds he can no longer pay the mortgage. The bank accepts the deed in lieu of foreclosure and sells the house for $150,000. The homeowner breathes a sigh of relief to be out, but in January receives a 1099. He now has taxable income for the amount of money he cannot afford to pay the bank. Surely the tax on $50,000 is a better deal than the whole $50,000, but for the guy who couldn’t come up with the $1500 mortgage payment each month, where is he supposed to find the $12,500 (I’m assuming a 25% tax bracket) to pay the tax due?
Congress is considering legislation that would change the law that taxes the loan amount which goes unpaid, but that’s not likely to happen overnight.
Enjoy the weekend,
JOE
written by JOE
\\ tags: Finance, foreclosure, Mortgage, Real Estate, sub-prime loans
