Sometimes it’s good to get back to basics. Credit score plays a huge role in the real estate business, yet a lot of real estate professionals don’t know much about it. There are five components to credit score:
1. Payment History — 35%
2. Amount Owed — 30%
3. Length of History — 15%
4. New Credit — 10%
5. [...]
How bad are things, actually? Economist Arthur Okun, advisor to President Lyndon Johnson in the 1960s, created the Misery Index. It is basically the unemployment rate added to the inflation rate.
Unemployment rate (5%) + Inflation rate (3.94%) = Current U.S. Misery Index (8.94%)
Under President Carter in 1980 our country experienced a Misery Index of 20.76, [...]
If you read blogs, you probably engage in blog conversations by commenting. There are three ways that I know of to stay up with Internet conversations. First, you can revisit the website, which is cumbersome, of course. Next, you can usually click a box that allows you to subscribe to the thread. The major downside [...]
I’m embarrassed to say that I never finished Wealth of Nations by Adam Smith. I did make it much of the way through, however, and Mr. Smith taught me an important lesson about efficiency. Making a wagon, for example, is far less efficient if you construct it from start to finish in the traditional craftsman [...]
The tax man cometh, and it seems like he wants more every year. Fortunately, there is an easy way to pay less taxes this year than you paid last year — file a property tax appeal. According to the National Taxpayers Association, approximately 60% of taxable property in the U.S. is over-assessed. That’s the majority, [...]
State Street Corporation, the country’s largest money manager for institutions, is in hot water with its investors. More than 200 retirement plans have brought suit against the money giant. Bloomberg has reported that the damages are expected to exceed the $625 million originally set aside for that purpose. The Bloomberg story sources place the damages [...]
There was a lot of talk a while back about how the 2005 American personal savings rate fell into negative territory for the first time since the Great Depression. Journalists cried, “We’re spending more than we make!” To make matters worse, the 2006 personal savings rate was also negative.
What is the “personal savings rate,” anyway? [...]
More and more people are paying their credit cards instead of their mortgages. Capital One says that 2/3 of their customers who are 90 days or more delinquent on their mortgages are still current on their credit cards. This is a major paradigm shift. For the first time in American history, consumers are defaulting [...]
I wanted to respond to a recent post by a popular real estate blogger, Shailesh Ghimire. The article is entitled “Blogging Begets Referral Sources,” and Mr. Ghimire is a big fan of blogging. He likes blogging, and he thinks you should blog too. I believe in blogging myself, but I also stand firm that [...]
If you’re reading this blog, you most likely read other blogs and articles on a regular basis. If you’re like me, when you come across something that you want to save for later reference, you probably bookmark it in your browser. Despite my best efforts, my bookmarks had gotten out of control. Something had to [...]
When Todd first announced the Zillow Marketplace, I was ready to give it a go. I’m not usually so quick to change my opinion, but after thinking about it, I believe I’ll pass. At first I planned on giving it a try because I am all for technology. The idea that borrowers can rate me [...]
Other than the tears shed by mortgage brokers, is there any downside to paying cash for a house? If you decide to pay cash for a home, there could be a hiccup later if you decide to refinance in order to pull cash out. As long as you itemize, home mortgage interest is tax deductible [...]
Bank failures are on the horizon. According to USA Today, The FDIC is making plans for a rash of bank failures. They plan to raise their staffing levels by 60% to make sure they are prepared when the banks begin to topple. They plan to add 140 workers to their current staff of 220 to [...]
Google claims to be “a strong believer in the self-publishing phenomenon represented by blogging,” and in response, they have created Google Blog Search. Whereas Google itself is an index of the entire web, Google Blog Search is an index of what people are talking about, continually updated. Whether you’re looking for political commentary, mortgage comments [...]
The uptick rule is a former financial regulation that was eliminated by the SEC, effective July 6, 2007. Established after the great crash of 1929, the uptick rule was designed to restrict short selling by permitting short sales only following a trade where the traded price was higher than the previously traded price (uptick). Let’s [...]
In addition to the industry information present on colleague to colleague blogs, there is one very important reason not to just read blogs — you should comment on them as well. The reason is simple. Comments provide backlinks (a link from one site leading to your site, also known as an incoming link). A site [...]
Lately I have heard from a few mortgage brokers who keep some unusual company. One guy’s best referral partner is a hot tub salesman. Another broker gets several deals a month from a hair stylist. I guess that shouldn’t strike me as unusual — I mean hair people talk all day, and they are sure [...]
I’m doing a little poll to find out what you think the Fed will do at their next meeting. They meet at the end of the month. What will they do to the target Fed Funds Rate? Will they vote to raise the rate, drop it by 1/4 point, drop it by 1/2 point or [...]
Goldman Sachs has upped the possibility of a recession in 2008 to 40%-45%, up from 30% previously. Reflected in the data below, the good news is that over the last 100 years, recessions have become shorter and shorter.
Recessions of the 20th Century
Duration in Months | Date
23 —— Sept. 1902-Aug. 1904
13 —— May 1907-June 1908
24 —— Jan. [...]
There weren’t any Ninja loans in 1945; hence homeownership rates were lower than today’s rates. As you can see from the graph below, the homeownership rate in 1900 was just above 45%, whereas today’s home ownership rate is in the neighborhood of 70%.
New housing starts are on the down slide, which is more than bothersome [...]
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