St. Cloud, MN - Real Estate Blog

While a lot of REO homes can pose big obstacles to buyers who are looking to come in with little or no money down, there are some other options that may be available to you.

First - The Wells Fargo 203K loan.  I have only had one client use this product and the house is still in the middle of repairs so I can't fully speak to how great it is yet.  Basically, how this one works is that you are able to finance the home and the cost of repairs to the house into one loan.  The closing takes place and the work begins on the home.  This is a streamlined version of an older product Wells Fargo used to carry.  It works similar to an FHA loan and has a lot of the same qualifying guidelines but the house doesn't really have to meet any standards.  If you want to check out this product, I highly recommend speaking with a Wells Fargo Home Mortgage Consultant for more information.  Patricia Dahl is the St Cloud market's local expert and her website is https://www.wfhm.com/loans/patricia-dahl/index_reno.page.  If there are any other lenders out there who have a similar local product, please post them here as well.  I would love to have more of this type of product in my arsenal for potential buyers.

Second - Fannie Mae's HomePath Financing - While this product is still a little hard to come by (not many lenders are qualified to sell it locally) it is a great way to get someone into a Fannie Mae foreclosure.  For this loan, the property has to qualify (Fannie Mae REO) and buyer has to meet certain qualifying guidelines for down payment and credit score.  Some of the benefits of this loan are that there is no mortgage insurance, the property can be purchased with as little as 3% down, and there are no appraisal fees.  This loan can also be used by investors to make purchases.  If you'd like more information about this product, I would recommend going to Fannie Mae's website at http://HomePath.comand go to their HomePath Financing Tab.

There are also some local incentives that the St Cloud HRA puts on from time to time that will allow for some silent second mortgages.  Their most recent one was offering $15K for home repairs.  These silent second mortgages had no payments or interest.  The money did have to be repaid at a time of refinance, selling, or paying off the mortgage on the home.  The best way to learn about these and other programs that the St Cloud HRA offers is to visit their website at http://www.stcloudhra.com/.

This is just some of the programs that are put in place to try and help sell some of the foreclosures and keep our neighborhoods strong.  If you know of more, please post them here for others' benefit.  There are also lots of incentives that other banks and foreclosure companies are using to help buyers.  Everything from purchasing appliances, paying for buyer's closing costs, and even providing home warranties.

Call (320) 492-2667 with requests for more information.

Jason Tangen - GRI, e-PRO - Real Estate Broker Associate with Edina Realty in St Cloud

http://StCloudEdina.com - Home of the e-Market Analysis (free home value estimator)

http://JasonTangen.EdinaRealty.com - Get Sauk Rapids City, School and Real Estate Information

Best on the Internet for Real Estate in St Cloud MN

Posted by Jason Tangen at 07:28 AM | Permalink | Comments (0)

options

So, as I had posted earlier, I am doing a little trimming from my budget and taking a little closer look at some of the frivolous things that I spend my money on from day to day.  My goal - to shave $100/mo off my home/work budget.

Step #1 - Removed cable.  While many people are going out to buy high-definition TVs and other fancy electronics, I don't use mine enough.  For all intensive purposes, the only TV that I watch is on the major networks (FOX, NBC, ABC, and CBS).  Further research shows that you can get most of their television programming on-line, just one day later.  Savings - $50/mo.

Step #2 - Stopped drinking Coke (and all soda in general).  I really love me a good Coke, but I have stopped buying them.  I went through approximately 2 - 12 packs every week.  Savings - $33/mo.

Step #3 - Meet for coffee instead of lunch.  I am a notorious "I will get it, you get the next one" kind of guy.  I usually meet at least one person for lunch every week and the bill is generally right around $25 when you add in the tip.  Instead, I am now going to meet over coffee (roughly $10 with tip).  Savings - $64/mo.

So far I am at a savings of $147/mo.  To be honest, I think I can do more.  New goal - find an additional $53 in savings and shave a full $200/mo off my budget.

It's scary, but this is kind of fun.

Jason Tangen - GRI, e-PRO - Real Estate Broker Associate with Edina Realty in St Cloud MN

http://StCloudEdina.com - Home of the e-Market Analysis (free on-line home value estimator).

http://JasonTangen.EdinaRealty.com - Search homes for sale in Foley, MN.

Best on the Internet for Real Estate St Cloud MN

Posted by Jason Tangen at 07:43 AM | Permalink | Comments (0)

options

I am frequently reminded by my wife to be aware of the "little things" that I spend money on.  I always respond the same way: "What do you mean??  I don't spend any money."

For the next month, I suggest that we all take a little extra time to analyze our entire budget.  This includes the little pack of gum here and there, the extra quick purchases at the grocery store (I am so guilty of this one - I just bought at least $50 of extra stuff that wasn't needed while grocery shopping today), the soda at work, or that cup of much needed coffee in the morning.

Here is my goal:  Even though I don't think I spend a whole lot of extra money, I will have a plan in place at the end of the month that will save me at least $100/mo before summer.  I'll get back to you and tell you what I have decided to cut out.

Jason Tangen - GRI, e-PRO - Real Estate Broker Associate with Edina Realty in St Cloud MN

http://StCloudEdina.com - Home of the e-Market Analysis (free home value estimator).

http://JasonTangen.EdinaRealty.com - Search open houses in Sauk Rapids, MN.

Posted by Jason Tangen at 10:02 AM | Permalink | Comments (0)

options

A big thank you to Mark Timpane at Edina Realty Mortgage for putting this to print:

Thinking about refinancing into another conventional?  There might be another option for you.  Fast forward three to five years from now.  The real estate market correction will be behind us and you decide that now is the time to move onto a newer home.  But what if rates are at 6.5 % or more and your home is valued at or a little higher than you bought it.  Is there an option that can make you home more attractive?  If you refinanced today with an FHA loan at 5.0% for example, when you go to sell, your buyer would be able to assume your mortgage (only $500) and take advantage of today’s lower rates.  The general rule is that for every 1% decline in interest rates a buyer gets 10% more purchasing power.  So the cost of assuming a $172,500 home has the same monthly payment as buying a $150,000 home at future interest rates.  So you have now positioned your home against homes with fewer amenities, and other $165,000 homes cannot compete on a costs basis.

Need to refinance-call me today

Mark Timpane

Edina Realty Mortgage

320.240.6157

www.markthemortgageguy.com

Jason Tangen - GRI, e-PRO - Real Estate Broker Associate with Edina Realty in St Cloud

http://StCloudEdina.com - Get a free list of the bank owned properties on the St Cloud MLS

http://JasonTangen.EdinaRealty.com - Find out what you home might be worth if sold.

Posted by Jason Tangen at 06:20 PM | Permalink | Comments (0)

options

I was speaking with Mark Timpane (Edina Realty Mortgage Home Loan Specialist) the other day about the recent spike in loan refinancing applications.  With the rates under 5% for most loan products, it only makes sense that people would want to get the better rate.  Two main points came out of our discussions:

1) Of the last 30 people he had requesting a refinance, only 3 qualified with the equity and/or cash to actually get the refinance done.

2) Many people were willing to add 8 years to their mortgage in order to save 3/4 of a point on their interest rate.

The first point sure makes it seem like that $750B economic bailout package is working perfectly as expected (please note my dripping sarcasm with that statement).  With all the talk about helping out the home owners to get out of these bad mortgages, it sure seems like we are missing out on a golden opportunity to get them out at good rates.

The second point makes me wonder when it is that they plan on actually saving money if they keep extending their loan to a 30 year mortgage again.

Jason Tangen - GRI, e-PRO - Real Estate Broker Associate with Edina Realty in St Cloud

http://JasonTangen.EdinaRealty.com - Home of the e-Market Analysis (Free Home Value Estimator)

http://StCloudEdina.com - Get a free list of the bank owned properties in Sauk Rapids MN and the surrounding central Minnesota areas

Posted by Jason Tangen at 08:44 AM | Permalink | Comments (0)

options

For those of you who waited too long and now don't have a home and still don't have the down payment saved, here's some hope.

If you are looking to purchase a home with $0 down, check out this website:

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?NavKey=home@1

This is a link to the United States Department of Agriculture, Rural Development.  The great thing about this website is that it allows you to punch in any address and find out if it qualifies for 0% down Rural Development loans.

Check with your lender to see if a Rural Development loan is something that you want to look into more seriously.  If you are unsure of which lenders are reliable and trustworthy in these crazy times, give me an e-mail at mailto:jason@stcloudedina.com.

Jason Tangen - GRI, e-PRO - Real Estate Broker Associate with Edina Realty in St Cloud

http://JasonTangen.EdinaRealty.com - With the new foreclosed property search feature you can see all foreclosed properties listed for sale on both the St Cloud and Minneapolis MLS systems.

http://StCloudEdina.com - If you want ultimate in Internet advertising for your home, use the REALTOR that knows how to utilize the Internet to sell homes.

Posted by Jason Tangen at 11:34 AM | Permalink | Comments (0)

options

I have had several buyers in the past month and a half that have come to me after choosing to sit on the fence about a home purchase.  They were a little leery of the real estate market and just didn't want to get burned - which I think is a fair objection.  Buying a home is a major decision and should not be entered lightly.  If you aren't sure whether or not you should buy a home, you should probably just continue to rent for the time being.  You will know when the time is right. 

To make a long story short, all of them had little to no money to put down on a home, but did have stable income.  They were also pre-approved for mortgages to make their first home purchases.  None of them are able to make a home purchase today.

Why?

Things have definitely changed in the lending world.  Lending institutions are realizing that without any money down, people have nothing to lose with foreclosure.

Why am I posting this today? 

Because I feel bad for a lot of good people who would be great homeowners that are no longer able to make purchases.

How do we solve this problem?

Pro-actively.  There are still a couple of $0 down options available for home buyers (Minnesota Housing Finance Agency has down payment assistance programs, VA home loan guarantee, and others).  Also, it is time to start saving some money.  If you aren't sure how to get started with savings, give me a call and I will be glad to direct you to the right people.

Lastly, if you are wanting to make a home purchase, no more than ever you need a quality lender to work on your behalf.  Someone who won't take away your pre-approval and leave you high and dry without a home.  If you have someone you trust, great.  If you don't, ask your real estate professional.  They will probably have several names of people they know and trust.  If you want my list, give me a call at (320) 492-2667 or just look at the Business Testimonials section of this blog.  I have a couple of real good lenders there with full contact information.

Jason Tangen, Broker Associate with Edina Realty in St Cloud MN

http://jasontangen.edinarealty.com - Search for open houses in Minnesota

http://www.StCloudEdina.com - Get a list of the foreclosed properties available on the St Cloud MLS

Posted by Jason Tangen at 10:37 AM | Permalink | Comments (0)

options

I received this information from Mark Timpane of Edina Realty Mortgage and I thought everyone could benefit from the statements he makes.  If you have any questions or concerns about the information provided, please post them here and I will get Mark to answer them for you or visit Mark's personal website at http://MarkTheMortgageGuy.com

I have had several of your clients that I have recommended to work with a professional to help fix their credit. It's surprising how many consumers make the same credit scoring mistakes over and over again. In an effort to educate your clients on credit and credit scoring, I've compiled 5 common credit scoring mistakes into a list that defines each mistake and explains why they are bad and how to avoid them:

Credit Mistake #1: Closing Credit Cards Accounts


This is probably THE biggest credit mistake that consumers make. What you may find surprising is that closing credit card accounts can hurt your credit score almost as badly as missing a payment.

Not only is this the number one on the top five credit scoring mistakes, it's also number one on the list of credit myths.

Ironically, most consumers make this mistake based on poor advice from a mortgage lender as a strategy for improving their credit scores. A word of advice people, when you're dealing with something as sensitive as your credit and credit scores, make sure you do your homework before trusting some of these so called 'industry experts' before following through with their advice.

There are two important reasons why you should not close credit card accounts:

1. Eventually, the accounts will fall off of your credit reports - The information in your credit reports are subject to certain rules in regards to how long it can remain in the report. In most cases, credit information will remain in your credit reports for seven years from the account's DLA or date of last activity.

When an account is open, the DLA will continue to update each month and the open account will never reach that seven-year mark.

If you close the account, the DLA will stop updating and the clock will start ticking. Eventually the account will be completely removed from your credit reports.

Why would this be a bad thing?

It's simple - you never want to get rid of old, positive information in your credit reports. This information actually helps your credit scores.

Credit scores want to see this positive account information. They want to see your long, perfect history of making your payments on time because this information significantly helps your credit scores.

This information significantly helps your credit scores so why would you ever want that history to disappear? You wouldn't! Here's an analogy for you: let's say you made straight A's in high school. What if the record of that perfect scholastic accomplishment were permanently deleted seven years after you graduated? Would you ever want that history deleted? Of course you wouldn't. The same is true for the credit reporting environment.

So, what should you do with old credit cards that you don't use any longer?

What you don't want to do is to let the account become inactive. When this happens, the credit card companies aren't generating any revenue for your account.

Eventually they'll close the unused account because you're more of a liability than an asset. You can prevent this from happening by using the card every few months for low dollar purchases like dinner or a tank of gas.

When the bill comes in, just pay it in full. If you do this, it will ensure that the account will never be closed and you'll always get credit for your good payment history.

2. You could cause a spike in your revolving utilization and tank your scores - The percentage of your available credit in comparison to the debt you owe is a very important factor in calculating your credit scores.

This is often called "revolving utilization," or your debt-to-limit ratio.

For example, if you have an open credit card with a $1,000 credit limit and a $500 balance then you are using 50% of your available credit. This means that you are 50% utilized on this particular credit card.

Now lets add a second credit card to the mix.

Let's say you have another open, but unused credit card account with a $1,000 limit and a $0 balance. This would put your total revolving utilization at 25% because you have $2,000 in available credit limits and $500 in total balances.

If you divide your total balances by your total credit limits, you'll get your total aggregate revolving utilization: $500 divided by $2000 equals .25 or 25%.

So how will closing unused credit cards hurt your credit score? When you close an account, the amount of available credit decreases, which could result in a higher revolving utilization and lower your score.

Let's use the example from above and close the second unused credit card account. When you close the account, you remove it from any utilization calculation and now you're stuck with one open credit card account with a $1,000 limit and a $500 balance.

This caused your utilization to go from 25% to 50%.

Remember, you divide the total balance by the total available limit so $500 divided by $1,000 is .50 or 50%. As this percentage increases, your credit score decreases.

When you're talking about several unused credit cards with high limits, you can just imagine what closing credit card accounts could do. I've seen consumers go from a 10% utilization to almost 100% utilization because they closed all of their credit card accounts except the one they were currently using.

Big mistake.

Credit Mistake #2: Missing Payments


It doesn't take a credit scoring expert to tell you that missing payments is a bad thing. The only reason I made missing payments second to Closing Credit Card Accounts is because this one is a no brainer.

It shouldn't take a credit expert to tell you that missing payments is bad. Common sense should tell you that missing payments is bad. Credit scores are designed to predict how likely you are to miss payments In the future.

This means that they look at your credit history to view how you've managed all of your credit obligations.

Missed payments is the most powerful predictor of future late payments. The FICO score evaluates previous late payments in three different layers:

How Severe - How severe is the late payment? It doesn't take a statistician to tell you that a 30-day late isn't as bad as a 90-day late. The more severe the late payment, the more damaging it is going to be to your credit scores.

Consumers who have missed payments by a few weeks and then bring their accounts current score much better than consumers that have gone 90+ days past due. In fact, a 90-day past due is the threshold that will wreak havoc on your scores.

If you are unable to avoid a late payment, the next best option is to get those accounts current as quickly as you can.

How Recent - How long ago did the late payment occur?

If you've read some of my previous articles on credit scoring, you'll know that the last 24 months of your credit history are critical because the FICO score places more emphasis on your recent credit patterns.

This means that a late payment 6 months ago is going to carry much more weight than a late payment from 4 years ago. To recover from late payments it's important that you get current and stay current.

How Frequent - How often have the late payments occurred? Consumers that miss payments frequently are penalized much more severely than those that have missed a payment here or there in their past.

If you have a tendency to make late payments your credit scores will reflect your bad habits. Make your payments on time and you'll never have to worry about losing points in this category.

Credit Mistake #3: Settling Accounts


One of the most common mistakes consumers make is assuming that 'settling' with a lender is a great way to save a little cash.

Unfortunately, they don't realize what that a 'settled' indicator in their credit reports is actually derogatory.

"Settling" is a term used in the consumer credit industry that means accepting less than the amount you owe on an account. For example, if you owe a credit card company $5,000 but you can't pay them the full amount then they will likely make you a deal for less than that full amount. They have "settled" for less than the full amount, which is likely much less than you contractually owe them.

This may seem like a good idea because you save quite a bit of money but as far as the credit scoring models are concerned, this is just as negative as other severe late payments.

The only way to avoid the damage to your credit scores is to arrange a deal with the lender to report the account as 'paid in full' as opposed to 'settled'. If they don't agree then it's in your best interest to figure out how to pay them in full or else be prepared to suffer the damage to your credit for the next 7 years.

It's also important to understand that if the account has already made it to the collection phase, the damage is already severe and settling won't really make a difference. Settling is only an option if the account has already made it to a severe delinquency state.

Credit Mistake #4: High Revolving Utilization on Your Credit Cards


Most consumers believe that making your payments on time is all it takes to have good credit and earn great credit scores.

What they don't realize is that almost a third of your score is determined by how much you owe on your credit card accounts. If you have high balances on your credit card accounts, you're credit scores could be severely impacted by your revolving utilization.

In order to score the most possible points in this category, I advise keeping your revolving utilization at 10% or less.

Don't be fooled when you hear some of these celebrity experts telling you that 50%, 30% or even 25% is best.

While 30% is considerably better than 50%, 10% or less is ideal. The lower the utilization percentage, the better your score will be. (*To read more about revolving utilization and how it's calculated, please read the revolving utilization bullet in Mistake #1.)

Credit Mistake #5: Excessively Applying for Credit

Whenever you apply for credit your application gives the lender permission to access your credit reports. When they pull your credit reports, it automatically posts an inquiry in your credit record. This inquiry is a record of who pulled your credit report and the date it occurred.


Credit scoring models use inquires to determine if and when you shop for credit. Statistics show that consumers who have more inquiries are higher credit risks than those with fewer inquiries.

It is for this reason that the more inquiries you have, the more points you lose in the credit score calculation.

The exact point value of inquiries is a much argued topic and is impossible to give an exact point value because it really depends on all of the other information included in your individual credit file.

The best strategy would be to only apply for credit when you absolutely need to.

This means that you should avoid those in store offers of "10% off" in exchange for applying for a store credit card. This may sound like a great idea but the reality is that while you may save a few bucks on your purchase, those inquiries could end up costing you a lower credit score which could result in higher interest rates on auto or mortgage loans in the future.

There you have it. Now that you know the top 5 credit mistakes, you can avoid making the same mistakes that so many other consumers make.


Mark "The Mortgage Guy" Timpane
110 Division Street Waite Park, MN 56387
320-240-6157 Office
320-240-6148 Fax

Jason Tangen, GRI - Edina Realty St Cloud MN

Broker Associate

http://jasontangen.edinarealty.com - Search real estate in St Cloud and Central MN

Posted by Jason Tangen at 09:59 AM | Permalink | Comments (0)

options

I am noticing a lot of people who want to "put the carriage in front of the horse" recently.  What I mean by this phrase is that there are many people who want to start looking at houses before the get pre-approved for a home purchase.

Getting pre-approved before you start looking at real estate is not only a good idea, it is something that most decent REALTORS mandate.  Why?  To be honest, we don't want to drive you all around town if a) you can't currently make a home purchase and/or b) we might be showing homes outside of your price range for a home purchase.

I can tell you that with the "credit crunch" making the whole real estate world topsy-turvy, there are a lot of good people that I could have gotten into homes a couple of years ago who can no longer purchase.  Most of the time it comes with the fact that it seems the vast majority of first time home buyers haven't saved enough money to cover even the closing costs for their new home purchase.  With most banks requiring 5% down for conventional loans and 3% down for FHA financing, this is just too much money for people who have none saved.

Don't get me wrong, I think one of the main reasons for the current state of the real estate market is that too many people have nothing at stake in their homes.  It's not to hard to understand why a person is willing to walk away from a home if they have none of their own money invested in it.  But if you make them have $10,000 or so at stake, all of a sudden they are willing to try a little harder to make their payments.  This isn't the only player in the foreclosure world and current real estate market, but it is a good piece of the puzzle.

If you don't want to end up like so many others and potentially lose your home to foreclosure, buy one that you can afford.  The best way to know what you can afford is to have a reputable lending institution give you a good pre-approval.  If you don't have someone in mind, give me a call or e-mail and I will get you in touch with some of the great lenders in the St Cloud area.  Do this before you contact a real estate professional to have them show you homes.  You can even ask the lender if they have some good real estate agents that they have worked with in the past.  Or better yet, ask them what they think about me:).

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty in St Cloud MN

http://jasontangen.edinarealty.com - Search for open houses in St Cloud, MN and surrounding areas.

www.StCloudEdinaRealty.com - Home of the e-Market Analysis (Free home value estimator)

Posted by Jason Tangen at 06:33 AM | Permalink | Comments (0)

options

I have a lot of people ask me if it is ok to pull the equity out of their homes.

I tell everyone the same thing - Don't pull the equity out of your home unless you are going to do one of the following three things with it:

1) Buy another home.

2) Start a business.  I know it's risky, but it is also part of the American Dream.  If you think you have a good idea and you are willing to take the risk, go for it.

3) Invest in other opportunities that you are well versed (stocks, mutual funds, etc.).  PLEASE NOTE - there are inherent risks in all forms of investing.  I only recommend this one for people who are professionals or have professionals working on their behalf.  The costs involved in these investments sometimes outweigh any monetary gain.

Did you notice what I didn't put on this list?  Paying off credit cards.  Why?  Because it isn't worth it in my opinion.  First off, budget yourself properly and you won't need to worry about credit card debt.  Second, your equity in your homestead is safeguarded against many creditors.  Everything on your credit card is free game.  Say for example you cannot pay some unexpected medical expenses.  Medical companies cannot put a lien against your property and take your equity in your house (see homestead law post).  They can however take the other stuff.

Got some other reasons to pull your equity?  I'd love to hear them.  Post them here for everyone to review.

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty St Cloud MN

www.JasonTangen.EdinaRealty.com - Search Open Houses in Minnesota

Edina Realty's New Lakeshore & Outdoors Property Search - 10,000 Lakes, Only 1 Place to Search Real Estate.  Find all of your lake properties, hunting and recreational land, and more.

Posted by Jason Tangen at 09:21 PM | Permalink | Comments (0)

options

With interest rates doing what they are, if you are planning on staying in your home for more than a couple of years it might be time to reconsider refinancing.

I placed the call to my loan officer today about refinancing one of my properties.  The interest rate that I will be getting is looking like it will be around 5.0% on a 30 year fixed. 

Will they go down further?  It's possible.  But I can't really pass up money at that rate.  I know that I plan on holding on to this home for at least 5-10 more years.  With that in mind, I will save lots of money by moving my interest rate from 6.25% to closer to 5%.

Also, for those of you who are in an ARM loan or other hybrid mortgage, give a call to your professional lender and get the ball rolling for yourself.  If your loan officer is no longer in the industry, send me an e-mail and I will get you a list of qualified lenders that will be more than willing to help you with a refinance.

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty in St Cloud MN

jason@stcloudedina.com

Posted by Jason Tangen at 08:40 PM | Permalink | Comments (0)

options

I recently had a request for the average interest rates on mortgages dating back to 1995.  I did not have anything like this in my database of information, so I had to track down someone who did.  The information used to create the graph in this post was obtained from the Federal Home Loan Bank of Chicago (FHLBC).  The graph below is for the average interest rates for previously occupied homes by the FHLBC's combined lender information.  For more mortgage rate information, you can go to their website http://www.fhlbc.com/index.shtml.

Below is the line graph of average mortgage interest rates on previously occupied homes since 1980.

Download file

Do you need additional information about a real estate topic?  Post your questions, comments, and concerns here for answers and review.

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty St Cloud MN

jasontangen.edinarealty.com - Search for Open Houses in St Cloud, Sartell, Sauk Rapids, and other Central MN areas.

www.StCloudEdina.com/blog - REAL ANSWERS for REAL ESTATE in St Cloud MN

Posted by Jason Tangen at 11:18 AM | Permalink | Comments (0)

options

I'm hearing the rumors that Countrywide Home Loans is planning on laying off some 1200 workers here in the midst of bankruptcy rumors that are floating around.  Countrywide Home Loans has stated resoundingly that they will not be going into bankruptcy today after huge losses on Wall Street.  My biggest concern is that people who are looking to get a home loan don't have their lender disappear on them overnight.  Does anyone out there know if these potential layoffs will be affecting the St Cloud MN real estate community?

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty St Cloud

www.StCloudEdina.com - Search Homes for Sale on the St Cloud MLS

Posted by Jason Tangen at 10:49 PM | Permalink | Comments (0)

options

I know of several people (including myself) who tend to put themselves in a little hole around Christmas with regards to their finances.  I know that we could all go out and buy one of the thousands of books related to budgeting and financing and just follow their simple rules.  

But why? 

Don't get me wrong, most of those books have 2-3 great pieces of advice for how to become more financially independent and responsible.  Some of them probably give similar advice to what I have in my "bill-killing" technique below.  What I would rather have here, in the spirit of the Christmas season, is for us to share our personal style of dealing with our own financial stresses.

I'll start.  This is my "bill-killing" technique:

1) Separate your monthly payments into monthly necessities (heat, water, phone, insurance, TV, Internet, etc.) and long term debt (house, car, student loans, credit cards, etc.).

2) Eliminate any wasteful spending on your monthly necessities. (i.e. - I no longer utilize a house phone because I never used it except to answer calls from telemarketers)

3) Take the money saved from the monthly necessities category and reallocate it for long term debt.

4) Organize your long term debt in order of the balances owed.  It seems that most financial planners say to organize your long term debt by the interest rates on each account.  I personally don't prefer this method because I like to see my results more rapidly.

5) Take your new list of long term debt and put it on your fridge (i.e. - 1)-house  2)-student loans  3)-credit card #1  4)-credit card #2  5)-car payment...etc).

6) Utilize the money you have saved from weening out your monthly necessities to pay off the long term debt with the lowest balance first.  I also recommend using tax returns for this purpose if you receive them on a yearly basis.  Note, if you are receiving big tax returns every year, talk to your financial planner and get that to stop.  Pay yourself first, not the government.

7) Step #7 is my favorite because you get a raise.  Once your first loan is paid off, keep 10% of that monthly payment for yourself and reallocate the other 90% (plus the original money saved from your monthly necessities) to payoff the next loan.  For example - No phone at the house saved me $20/mo.  My first bill to kill is my car because I only have $2000 left on the balance.  My car payment is $260/mo.  Once the car payment is gone, I get $26/mo to myself for extra spending and $254/mo moves forward to pay off my next loan.

8) Cross off each loan on the fridge as you pay them off so that you can visibly see your results.

9) Repeat steps again until you are financially stable once again.

I would love to hear any else who has a system for their finances that works for them.  I know that while this system works wonders for me, it isn't for everyone.  What you are currently using to get yourself out of debt might work better for someone out there.  Please share.

 Merry Christmas,

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty St Cloud MN

www.StCloudEdina.com - Search the MLS in St Cloud MN

www.StCloudEdina.com/blog - REAL ANSWERS for REAL ESTATE in St Cloud MN

Posted by Jason Tangen at 10:58 AM | Permalink | Comments (0)

options

I'm posting this entry a little in the dark because I do not currently have a Home Ownership Accelerator account, nor have I had any clients utilize this service.  Nevertheless, this new home loan (not really a loan) product is extremely intriguing.

The Home Ownership Accelerator (HOA) is basically an account that you set up against your home vs. using a tradition mortgage.  The reason for using a HOA is that as you deposit your paychecks into the account and it automatically pays off the principle balance of your mortgage first.  This keeps the amount of interest that you owe at the end of the month significantly lower because your principle balance has decreased in advance.  Over the month, as you need money for bills, etc., you pull money against the home.

This philosophy is undeniably great.  A person with a $200,000 home loan could feasibly pay it off in under 15 years and save over $100,000 in interest payments.  But there is another side of this that some people have to seriously consider.

Living paycheck to paycheck is not really an option with a HOA.  Also, for those of you who are not the most fiscally responsible people, and you know who you are, having free reign on the equity that your home is creating can be very tempting.  It would become very easy to justify a huge plasma TV or new car purchase with the savings you have created.

This would be my personal checklist for anyone who is thinking that a HOA is the right product for them:

1) You must have at least 15-20% equity in your home.  I don't recommend this product (nor do I think it's available) to anyone who is "equity challenged" in their home.

2) You must have at least a 5-10% surplus of income at the end of each month.  Similar to a credit card, not making a full monthly payment can really put you in a hole.

3) You must be able to recognize the difference between an asset and a liability.  For those of you who knew the difference off the top of your head, great.  For those of you who did not, I recommend reading "Rich Dad, Poor Dad" by Robert Kiyosaki to get you started in the right direction.  The reason for this item in my checklist is to remove many frivolous spenders before they get themselves into trouble.

4) You must be capable of maintaining a budget and monitoring your results.

5) You would like to save money.

I would love to hear some response to this post from people who are currently utilizing a HOA and/or lenders who have this product available to their clients.  This is a learning process for me as I do not have any direct relationship with someone who is currently utilizing a HOA.  More specifically, lenders - I might be interested in refinancing my personal property to a HOA if it's the right product for me.  I am interested in learning more about HOA's and how they might benefit my personal and my clients' situations.

Jason Tangen - Real Estate Broker Associate with Edina Realty of St Cloud

www.StCloudEdina.com - Search the St Cloud MLS

Posted by Jason Tangen at 10:35 AM | Permalink | Comments (1)

options

I've been on several listing appointments in the past few weeks that have turned into financial advising sessions.  The home owners in one place had great ideas about what they were going to do with the home they had just bought.  What they weren't expecting was the first $400 bill for heat last winter.  Unfortunately, these homeowners were not able to get to any of their home projects due to their finances.  Another potential seller is expecting to finalize the divorce proceedings soon and neither of them can afford the property on their own.  Both of these couples have not accrued enough equity to sell their home and break even at this point.  They also have noticed that the agents who sold them their homes are no longer in the market.  What should they do?

Too many real estate professionals are just hand holders through a transaction.  I believe that a real estate professional should be able to give you good advice on many different home owning issues.  If they don't know something, they should at least be able to get you in contact with the right people to get your queries solved.  This is to include the little quips of wisdom revolving around how to budget yourself once you are in your new home.  New home buyers are not always aware of the full expenses that are going to come about with home ownership.  Wouldn't it be nice if their real estate professional reminded them of the heating costs, property tax hikes, and other issues?

Sometimes you need to say things that people do not want to hear.  Both of these potential sellers had TVs that would be perfect in a million dollar homes, cell phones, home phones, newer cars, and quite a few other monthly commitments for various non-necessities.  A budget was what was direly needed to help them get back on track.  They had to spend some time figuring out what was a necessity and what wasn't.  One couple is able to keep their home and start making progress for the future.  The other set of home owners (divorcing) is going to start to rent out their home until they are in a better situation to sell.

If you are in need of some financial help and budgeting, visit the link below to start some basic and more complex personal budgets.  The simple act of accurately tracking a full months worth of expenses will help you further understand where your money is really going.  It takes some discipline to live within your means, but the stress that it removes from your daily life is well worth the work.  If you need more help, contact me or a local financial planner to get you going in the right direction.

Create a Personal Budget: http://www.free-financial-advice.net/create-budget.html

Jason Tangen, GRI

www.StCloudEdina.Com

www.StCloudEdina.com/blog - REAL ANSWERS for REAL ESTATE in St Cloud MN

Posted by Jason Tangen at 09:48 AM | Permalink | Comments (0)

options

The home refinancing market has slowed drastically of recent, but some people are still feeling the need to pull money out of their home for other uses.  Your home is one of the greatest piggy banks that you will ever own, do you really want to break into it?  Good advice- Only pull equity out of your home if you are going to invest it in something that will make you more money than having it just sit where it's at.  These are some of the examples that I will give people as good reasons to pull out their home equity:  1) To do home improvements that add value.  2) To buy another home.  3) To invest in the stock market or some other investment with better returns.  **Only if you are certain about returns and knowledgeable about what you are doing.  4) To start a business. 

I know that there are plenty of other good reasons to pull your home equity, but for most situations, if it doesn't fit into one of the four categories above you might want to reconsider.  If you are questioning whether or not to refinance and pull money out of your home, post your situation here for review.

I also found this financial calculator to help figure out what type of refinancing package is better for your situation.  It takes into consideration the time you expect to live at the property, your current loan, and the differences in refinancing the whole loan amount or just taking out a second mortgage for the money needed.  If you are going to pull the equity out of your home, you will want to do it in the cheapest method possible.  Follow this link to the calculator:

http://www.mtgprofessor.com/mpcalculators/RefinanceToRaiseCash/refiToRaiseCash1.asp

If you have any questions, comments, or concerns regarding real estate in and around St Cloud, MN. please post them here for answers and review.

Jason Tangen, GRI

http://jasontangen.edinarealty.com

www.StCloudEdina.com/Blog - REAL ANSWERS for REAL ESTATE in St Cloud, MN

Posted by Jason Tangen at 09:05 AM | Permalink | Comments (1)

options