Now that we have looked at interest rates and inflation, its time to look at the Flow of Investment Funds and how they affect foreclosures and Real Estate in general.
Flow of Investment Funds refers to the number of people that are involved in Real Estate. When money flows into Real Estate, more people are buying homes and selling homes. In reverse, when money flows out of Real Estate, less people are buying and selling. The important thing to know where is the more people that are buying and selling, the more prices fluctuate. Just like the Supply and Demand curve.
Pay close attention to the Flow of Investment Funds. When people are shifting their money from Real Estate to something else, its the time to buy. The reason its the time to buy is because people want money quickly. Its important here to avoid following the crowd. This is where the money is made. Also realize that there are few things you can invest in that is safer and pays like Real Estate. The stock market crashes quickly, the Real Estate market takes months or even years to change.
You can figure out how the Flow of Investment Funds are going by talking to a Realtor, a member of the National Association of Realtors. The National Association of Realtors send out information to its members about the status of the National Market. You will also want to talk with a local realtor about the local market, but we will get into that a little later on.
Charlottesville Real Estate
Tuesday, April 1, 2008
Foreclosure Lesson #3 - National Factors - Flow of Investment Funds
Now that we have looked at interest rates and inflation, its time to look at the Flow of Investment Funds and how they affect foreclosures and Real Estate in general.
Flow of Investment Funds refers to the number of people that are involved in Real Estate. When money flows into Real Estate, more people are buying homes and selling homes. In reverse, when money flows out of Real Estate, less people are buying and selling. The important thing to know where is the more people that are buying and selling, the more prices fluctuate. Just like the Supply and Demand curve.
Pay close attention to the Flow of Investment Funds. When people are shifting their money from Real Estate to something else, its the time to buy. The reason its the time to buy is because people want money quickly. Its important here to avoid following the crowd. This is where the money is made. Also realize that there are few things you can invest in that is safer and pays like Real Estate. The stock market crashes quickly, the Real Estate market takes months or even years to change.
You can figure out how the Flow of Investment Funds are going by talking to a Realtor, a member of the National Association of Realtors. The National Association of Realtors send out information to its members about the status of the National Market. You will also want to talk with a local realtor about the local market, but we will get into that a little later on.
Charlottesville Real Estate
Flow of Investment Funds refers to the number of people that are involved in Real Estate. When money flows into Real Estate, more people are buying homes and selling homes. In reverse, when money flows out of Real Estate, less people are buying and selling. The important thing to know where is the more people that are buying and selling, the more prices fluctuate. Just like the Supply and Demand curve.
Pay close attention to the Flow of Investment Funds. When people are shifting their money from Real Estate to something else, its the time to buy. The reason its the time to buy is because people want money quickly. Its important here to avoid following the crowd. This is where the money is made. Also realize that there are few things you can invest in that is safer and pays like Real Estate. The stock market crashes quickly, the Real Estate market takes months or even years to change.
You can figure out how the Flow of Investment Funds are going by talking to a Realtor, a member of the National Association of Realtors. The National Association of Realtors send out information to its members about the status of the National Market. You will also want to talk with a local realtor about the local market, but we will get into that a little later on.
Charlottesville Real Estate
Foreclosure Lesson #2 - National Factors - Inflation
Alright, we have looked at interest rates and how they affect your purchasing power, now we will look the the second Nation Factor that affects foreclosures and Real Estate in general. It is important to know all the factors before making any decision to buy, whether it is a foreclosure or any other home. The second National Factor is Inflation.
Inflation is defined by wikipedia as a rise in the general nominal level of prices over time. Inflation is is measured as the percentage rate of change of a price index. The governments main gauge of inflation is the Consumer Price Index.
Basically, inflation tends to follow the supply and demand curve, although it isn't affected by any single factor. Inflation causes prices to rise - whethere its a pair of jeans at American Eagle, or the house you want to buy. The higher the inflation, the less your money will buy.
Without getting really technical about inflation, the thing to realize here is this: Whenever inflation changes moderately up or down, investing in Real Estate is good. Classic case of when to buy and when to sell. If inflation goes down, you want to buy. If inflation goes up, you will want to sell. Pay attention to inflation and figure out where we are in as a nation with inflation. You can look at inflation data here.
Charlottesville Real Estate
Inflation is defined by wikipedia as a rise in the general nominal level of prices over time. Inflation is is measured as the percentage rate of change of a price index. The governments main gauge of inflation is the Consumer Price Index.
Basically, inflation tends to follow the supply and demand curve, although it isn't affected by any single factor. Inflation causes prices to rise - whethere its a pair of jeans at American Eagle, or the house you want to buy. The higher the inflation, the less your money will buy.
Without getting really technical about inflation, the thing to realize here is this: Whenever inflation changes moderately up or down, investing in Real Estate is good. Classic case of when to buy and when to sell. If inflation goes down, you want to buy. If inflation goes up, you will want to sell. Pay attention to inflation and figure out where we are in as a nation with inflation. You can look at inflation data here.
Charlottesville Real Estate
Foreclosure Lesson #2 - National Factors - Inflation
Alright, we have looked at interest rates and how they affect your purchasing power, now we will look the the second Nation Factor that affects foreclosures and Real Estate in general. It is important to know all the factors before making any decision to buy, whether it is a foreclosure or any other home. The second National Factor is Inflation.
Inflation is defined by wikipedia as a rise in the general nominal level of prices over time. Inflation is is measured as the percentage rate of change of a price index. The governments main gauge of inflation is the Consumer Price Index.
Basically, inflation tends to follow the supply and demand curve, although it isn't affected by any single factor. Inflation causes prices to rise - whethere its a pair of jeans at American Eagle, or the house you want to buy. The higher the inflation, the less your money will buy.
Without getting really technical about inflation, the thing to realize here is this: Whenever inflation changes moderately up or down, investing in Real Estate is good. Classic case of when to buy and when to sell. If inflation goes down, you want to buy. If inflation goes up, you will want to sell. Pay attention to inflation and figure out where we are in as a nation with inflation. You can look at inflation data here.
Charlottesville Real Estate
Inflation is defined by wikipedia as a rise in the general nominal level of prices over time. Inflation is is measured as the percentage rate of change of a price index. The governments main gauge of inflation is the Consumer Price Index.
Basically, inflation tends to follow the supply and demand curve, although it isn't affected by any single factor. Inflation causes prices to rise - whethere its a pair of jeans at American Eagle, or the house you want to buy. The higher the inflation, the less your money will buy.
Without getting really technical about inflation, the thing to realize here is this: Whenever inflation changes moderately up or down, investing in Real Estate is good. Classic case of when to buy and when to sell. If inflation goes down, you want to buy. If inflation goes up, you will want to sell. Pay attention to inflation and figure out where we are in as a nation with inflation. You can look at inflation data here.
Charlottesville Real Estate
Foreclosure Lesson 1 - Digg
In light of all the news surrounding foreclosures, I thought we should take an in depth look at foreclosures. Over the next couple of weeks, we are going to define National and Local Factors affecting foreclosures, as well as Foreclosure laws in Virginia, the types of foreclosures, the types of property, and how to make money with foreclosures.
We will start with the National Factors that Affect Real Estate. The first is the interest rate. When most people buy a house, they have to borrow money, this is known as a mortgage. The bank however, doesn't give money away, the bank wants something in return - the interest on the money borrowed. This is the reason for the interest rate. The interest rate is based on the Federal Funds Rate. The Federal Funds Rate is the interest that banks charge each other for overnight loans of federal funds, which are held by the Federal Reserve.
From this we can determine the Prime Rate. The Prime Rate is what banks charge their largest and best customers. Everyone else gets interest rates above the Prime Rate. Interest Rates DIRECTLY affect your purchasing power. Let's look at an example.
Let's say there is a foreclosure going to the courthouse steps for $150,000. Unless you have $150,000 in the bank, the house is going to be financed. If a real estate investor gets a loan from a bank for $150,000 at 6% interest and we will assume a marginal tax rate of 25%, the monthly payment on a 30 year fixed loan will be $899.33. The total payment over the 30 year period will be $323,755 and the total interest paid will be $173,755.
Now, let's say an investor gets a loan from a bank to finance the foreclosure, but this time the interest rate will be 8% instead of 6% and we will assume the same tax rate. The monthly payment on a 30 year fixed loan will be $1,100.65. This is just over $200 more per month than the six percent quote. The total payment over the 30 year period at an 8% interest rate is $396,230 and the total interest paid will be $246,230.
For current investors, people wanting to become investors, flippers, or people looking to buy a home at a great price, need to be aware of interest rates. I could be the difference between making money or losing money. To look at historical interest rates, check out these sites:
Federal Reserve Statistical Release
Interest Rate Trends from Mortgage-X
Wall Street Journal - News and Analysis (Subscription Service)
Of course you can always Google or Digg historical interest rates. Later we will look at the next National Factor Affecting Real Estate and Foreclosures - Inflation.
We will start with the National Factors that Affect Real Estate. The first is the interest rate. When most people buy a house, they have to borrow money, this is known as a mortgage. The bank however, doesn't give money away, the bank wants something in return - the interest on the money borrowed. This is the reason for the interest rate. The interest rate is based on the Federal Funds Rate. The Federal Funds Rate is the interest that banks charge each other for overnight loans of federal funds, which are held by the Federal Reserve.
From this we can determine the Prime Rate. The Prime Rate is what banks charge their largest and best customers. Everyone else gets interest rates above the Prime Rate. Interest Rates DIRECTLY affect your purchasing power. Let's look at an example.
Let's say there is a foreclosure going to the courthouse steps for $150,000. Unless you have $150,000 in the bank, the house is going to be financed. If a real estate investor gets a loan from a bank for $150,000 at 6% interest and we will assume a marginal tax rate of 25%, the monthly payment on a 30 year fixed loan will be $899.33. The total payment over the 30 year period will be $323,755 and the total interest paid will be $173,755.
Now, let's say an investor gets a loan from a bank to finance the foreclosure, but this time the interest rate will be 8% instead of 6% and we will assume the same tax rate. The monthly payment on a 30 year fixed loan will be $1,100.65. This is just over $200 more per month than the six percent quote. The total payment over the 30 year period at an 8% interest rate is $396,230 and the total interest paid will be $246,230.
For current investors, people wanting to become investors, flippers, or people looking to buy a home at a great price, need to be aware of interest rates. I could be the difference between making money or losing money. To look at historical interest rates, check out these sites:
Federal Reserve Statistical Release
Interest Rate Trends from Mortgage-X
Wall Street Journal - News and Analysis (Subscription Service)
Of course you can always Google or Digg historical interest rates. Later we will look at the next National Factor Affecting Real Estate and Foreclosures - Inflation.
Foreclosure Lesson 1 - Digg
In light of all the news surrounding foreclosures, I thought we should take an in depth look at foreclosures. Over the next couple of weeks, we are going to define National and Local Factors affecting foreclosures, as well as Foreclosure laws in Virginia, the types of foreclosures, the types of property, and how to make money with foreclosures.
We will start with the National Factors that Affect Real Estate. The first is the interest rate. When most people buy a house, they have to borrow money, this is known as a mortgage. The bank however, doesn't give money away, the bank wants something in return - the interest on the money borrowed. This is the reason for the interest rate. The interest rate is based on the Federal Funds Rate. The Federal Funds Rate is the interest that banks charge each other for overnight loans of federal funds, which are held by the Federal Reserve.
From this we can determine the Prime Rate. The Prime Rate is what banks charge their largest and best customers. Everyone else gets interest rates above the Prime Rate. Interest Rates DIRECTLY affect your purchasing power. Let's look at an example.
Let's say there is a foreclosure going to the courthouse steps for $150,000. Unless you have $150,000 in the bank, the house is going to be financed. If a real estate investor gets a loan from a bank for $150,000 at 6% interest and we will assume a marginal tax rate of 25%, the monthly payment on a 30 year fixed loan will be $899.33. The total payment over the 30 year period will be $323,755 and the total interest paid will be $173,755.
Now, let's say an investor gets a loan from a bank to finance the foreclosure, but this time the interest rate will be 8% instead of 6% and we will assume the same tax rate. The monthly payment on a 30 year fixed loan will be $1,100.65. This is just over $200 more per month than the six percent quote. The total payment over the 30 year period at an 8% interest rate is $396,230 and the total interest paid will be $246,230.
For current investors, people wanting to become investors, flippers, or people looking to buy a home at a great price, need to be aware of interest rates. I could be the difference between making money or losing money. To look at historical interest rates, check out these sites:
Federal Reserve Statistical Release
Interest Rate Trends from Mortgage-X
Wall Street Journal - News and Analysis (Subscription Service)
Of course you can always Google or Digg historical interest rates. Later we will look at the next National Factor Affecting Real Estate and Foreclosures - Inflation.
We will start with the National Factors that Affect Real Estate. The first is the interest rate. When most people buy a house, they have to borrow money, this is known as a mortgage. The bank however, doesn't give money away, the bank wants something in return - the interest on the money borrowed. This is the reason for the interest rate. The interest rate is based on the Federal Funds Rate. The Federal Funds Rate is the interest that banks charge each other for overnight loans of federal funds, which are held by the Federal Reserve.
From this we can determine the Prime Rate. The Prime Rate is what banks charge their largest and best customers. Everyone else gets interest rates above the Prime Rate. Interest Rates DIRECTLY affect your purchasing power. Let's look at an example.
Let's say there is a foreclosure going to the courthouse steps for $150,000. Unless you have $150,000 in the bank, the house is going to be financed. If a real estate investor gets a loan from a bank for $150,000 at 6% interest and we will assume a marginal tax rate of 25%, the monthly payment on a 30 year fixed loan will be $899.33. The total payment over the 30 year period will be $323,755 and the total interest paid will be $173,755.
Now, let's say an investor gets a loan from a bank to finance the foreclosure, but this time the interest rate will be 8% instead of 6% and we will assume the same tax rate. The monthly payment on a 30 year fixed loan will be $1,100.65. This is just over $200 more per month than the six percent quote. The total payment over the 30 year period at an 8% interest rate is $396,230 and the total interest paid will be $246,230.
For current investors, people wanting to become investors, flippers, or people looking to buy a home at a great price, need to be aware of interest rates. I could be the difference between making money or losing money. To look at historical interest rates, check out these sites:
Federal Reserve Statistical Release
Interest Rate Trends from Mortgage-X
Wall Street Journal - News and Analysis (Subscription Service)
Of course you can always Google or Digg historical interest rates. Later we will look at the next National Factor Affecting Real Estate and Foreclosures - Inflation.
Thursday, March 27, 2008
Foreclosure Update
According to a release on INMAN News on Friday loans entered the foreclosure process at a record rate during the fourth quarter, and things are likely to get worse before they get better, the chief economist for the Mortgage Bankers Association said today.
Although reductions in short-term interest rates have lessened the shock of interest-rate resets for many borrowers with adjustable-rate mortgage (ARM) loans, falling home prices are leaving more homeowners with little or no equity in their homes -- and less incentive to keep up on their mortgage payments.
Although reductions in short-term interest rates have lessened the shock of interest-rate resets for many borrowers with adjustable-rate mortgage (ARM) loans, falling home prices are leaving more homeowners with little or no equity in their homes -- and less incentive to keep up on their mortgage payments.
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